EMPLOYEE COMPENSATION PRACTICES AND EMPLOYEE RETENTION IN NON-GOVERNMENTAL ORGANIZATIONS IN KENYA
Abstract
Purpose of the study: The purpose of the study was to establish the relationship between employee compensation practices and employee retention in non-governmental organizations in Kenya.
Statement of the Problem: Non-governmental organisations (NGOs) in Kenya are facing high employee turnover rates. According to a 2021 report from The National Council of NGOs, the turnover rate is as high as 26%.
Research methodology: The study used an explanatory research design. The target population study was drawn from the 1,191 NGOs registered in Nairobi. The study's respondents were the top managers of each of these NGOs. The sample size was 238 individuals out of the total target population of 1,191. The study used simple random sampling technique to select one top manager from each of the 238 sampled NGOs. SPSS was used to carry out the analysis. Pearson’s product-moment correlation coefficient was used to assess the association between the variables in the study. Regression analysis was used to establish the relationship between variables.
Findings: The findings of the study showed that compensation is positively and significantly related to employee retention in non-governmental organizations in Kenya (β=0.555, p=0.000).
Conclusion: The study concluded that compensation, which includes things like salary, benefits packages and bonuses, had a significant impact on employee retention. Providing fair and competitive compensation, along with a comprehensive benefits package, can help to improve employee satisfaction and retention, but it is important to take a holistic approach that considers multiple factors that influence employees to stay.
Recommendations: The study recommends that enhancing compensation package is an effective strategy for increasing employee retention in Kenyan NGOs. NGOs should aim to provide competitive market rates that will enable them to attract and retain the best talent in the labour market. NGOs in Kenya should also improve their benefits packages to increase employee retention. The benefits may include health insurance, retirement savings plans, and paid time off. NGOs should regularly review and update these benefits packages to ensure they continue to meet employee needs and remain competitive enough to attract new talent.
Keywords: Employee compensation practices, Employee Retention, Non-Governmental Organization, Kenya
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