“Factors affecting employee retention: An empirical study in Nepalese commercial banks”

This paper aims to identify the factors affecting employee retention in Nepalese financial institutions, especially commercial banks. Through a questionnaire, the primary data were collected from 400 respondents. The study is based on a dichotomous and 5-point Likert scale questionnaire. The collected data were analyzed using SPSS and structural equation modeling (SEM). SEM smart PLS-4 is used to examine the association between the dependent and independent variables. The results indicate that company image/goodwill, employee benefits, job satisfaction, organizational performance, recruitment and selection, and work environment and culture have a relatively significant relationship with employee retention. Among them, organizational performance was found to be highly significant among all other variables. However, labor unions, leadership support, performance appraisal, training and development


INTRODUCTION
It is commonly known that human capital is crucial to a business organization's success (Rajput et al., 2023).The quality of service a company provides is directly related to the behavior of its employees (Wu et al., 2024).Therefore, employees are considered assets for service-sector institutions.Competitive companies adopt proactive approaches and favorable policies to achieve organizational objectives and retain employees.The biggest challenge facing organizations today is employee retention (Rustiawan et al., 2023).Energetic, intelligent, and young employees are always willing to shift jobs if they are dissatisfied with any aspect of their work.One of the main ways to gain an advantage over rivals is to retain employees for longer (Harriet et al., 2024).When an employee stays with a company for a longer period, this enhances the organization's performance and productivity.Due to the intense rivalry between companies searching for skilled and experienced individuals, keeping staff is a critical challenge (Sija, 2022).Because of the intense competition, it is important to remember that banks must set themselves apart from one another.They require workers who are driven to work hard and push their company to new heights (Madan & Srivastava, 2015).
The banking sector is undergoing a dramatic transformation that is being fueled by disruptive technologies, increased regulatory and compliance pressure, and new competition from evolving business models (Singh et al., 2021).To develop and implement policies that will allow for the maintenance of competitive advantages over time, it is necessary to investigate the intention and practices behind employee turnover, which give rise to a complex phenomenon that may result from several factors.The employee turnover rate affects not only hiring and training decisions but also revenue and the organization's reputation (D.Gautam & P. Gautam, 2022).To meet the expectations of customers, banks need to be more competitive.Like many other countries, Nepal faces employee attrition and retention challenges.The banking sector in Nepal is finding it increasingly difficult to find and keep experienced and qualified staff.Employee retention is a major problem in the Nepalese banking industry.Therefore, Nepalese commercial banks need to focus on employee retention.There are still several disagreements on the relationship between retention variables and staff retention, both theoretically and practically.Previous research produced contradictory findings.Consequently, further research has to be done in the context of Nepal using current information.

LITERATURE REVIEW AND HYPOTHESES
Employee retention is a strategy that organizations use to encourage their employees to stay with them for as long as possible or until the completion of a project (Das & Baruah, 2013).Likewise, employee retention pertains to the organization's capacity to hold onto its workforce for a longer period (Ghani et al., 2022).A worker will decide to continue working for the company.An employee's decision to leave or remain with their current employer can be affected by various variables, including job security, pay and benefits, training, and unique incentives (Abubakar et al., 2022 Similarly, organizational culture is the most important factor that influences employee decisions to leave their jobs, while salary has the least impact (Adhikari, 2020).Comparably, corporate culture influences employee retention favorably and significantly, which aids in developing workers' morals, attitudes, and behaviors (Meybodi et al., 2024).Employees with similar values and beliefs can be drawn to and kept by an organization with a strong organizational culture.Employee retention is higher in organizations where employees feel like they fit in with the culture (Contreras-Cruz et al., 2023).Likewise, the workplace environment and compensation management both have a significant impact on employee retention.Employees often leave their jobs in the hopes of finding better compensation and a better working environment.So, the bank should develop a plan to improve work-life balance and career planning for employees, as this could help to increase employee stability (Chaudhary, 2022).It can be concluded that there are various factors that influence employee retention.
The aim of this study is to investigate the connection between employee retention (dependent variable) and retention factors (independent variables).The banking industry in Nepal needs to properly handle the most delicate issues, which are those involving employees.This study will further improve our understanding of the factors that affect employee retention in Nepalese commercial banks.This study also aimed to fill the gap in the study of human resources in general and financial institutions in particular in terms of employee retention.The paper tests the following hypotheses: H01: There is no association between work-life balance and employee retention.
H02: There is no association between recruitment & selection and employee retention.
H03: There is no association between performance appraisals and employee retention.

H04: There is no association between training & development and employee retention.
H05: There is no association between work environment & culture and employee retention.
H06: There is no association between leadership support and employee retention.
H07: There is no association between employee benefits and employee retention.
H08: There is no association between job satisfaction and employee retention.
H09: There is no association between labor union/ trade union and employee retention.
H10: There is no association between company image and employee retention.
H11: There is no association between organizational performance and employee retention.

METHODS
This study uses a purely quantitative method and a positivist research approach.It also used a descriptive research approach to collect data.This study is conducted among bank employees of commercial banks in Nepal.Since the census method is impractical for this study, the sample respondents were selected for primary data collection using simple random sampling, where each employee in the population is equally likely to be selected (Ngwira & Phiri, 2023).Nepalese commercial banks have employed 44,605 individuals as of mid-July 2021 (NRB, 2021).A total of 450 employees from 21 commercial banks were chosen at random and asked to complete a questionnaire survey.After removing incomplete responses, a total of 400 filled-out questionnaires were obtained.To collect data, employees were given structured questionnaires, whereas close-ended and dichotomous questionnaires were given to the respondents to collect the information.Likewise, a Likert scale with levels ranging from 1 to 5 was employed for quantitative analysis.Reliability and validity tests were also conducted for this study.
Descriptive statistics and SEM model tests were used to analyze the data.SEM-smart PLS 4 was employed to investigate the association between retention factors (independent variable) and employee retention (dependent variables); alternative hypotheses were also tested.

RESULTS
In this paper, partial least squares (PLS) modeling was carried out using the Smart PLS 4 program to investigate the measurement and structural model.Reflectively defined constructs were employed in this study, and measurement quality was assessed using consistency reliability, discriminant validity, convergent validity, and indicator reliability.In addition, the multi-collinearity issue was examined using a structural model, and the path coefficient and hypotheses of the model were assessed.The values that are shown in In the analysis and validity of the structural model, the multi-collinearity test and structural model path coefficient were obtained.(Sukamani & Wang, 2020).This study followed the same threshold values.
The predictive construct's effective size (f2 value) is in the range of those rated significant.F2 had  a value of 0.35 for large structural level, 0.02 for small, 0.15 for medium, and 0 for no effect size (Sukamani & Wang, 2020 ).The relationship between the organizational performance factor and employee retention was found to be highly significant among all other constructs, as evidenced by the inspection and identification the inner structural model's path coefficient.This relationship had the highest t-value of 4.315 and a beta value of 0.206, demonstrating that the organizational performance factors are the most significant and critical factors that positively affect employee retention.Likewise, with a t-value of 4.248 and a beta value of 0.196, the company image/goodwill factor showed the second highest significance to employee retention.Additionally, with a t-value of 3.491 and a beta value of 0.175, an employee benefits factor showed third significance to employee retention.
Furthermore, job satisfaction factors showed the fourth significance to employee retention with a t-value of 2.931 and a beta value of 0.171.Additionally, with a t-value of 2.801 and a beta value of 0.154, work environment and culture factors showed the fifth significance to employee retention.Correspondingly, recruitment and selection factors showed the sixth significance to employee retention with a t-value of 2.082 and a beta value of 0.111.Subsequently, the data analysis shows that work-life balance (beta value = -0.111,t-value = 1.018) and performance appraisals (beta value = -0.064,t-value = 1.134) negatively affect employee However, these two factors were not statistically significant at a 5% significance level.The finding also shows no relationship between training & development and employee retention.Similarly, the result also shows no relationship between trade unions and employee retention.

Coefficient of determination (R 2 )
As per Hair et al. (2017), the coefficient of determination (R 2 ) measures independent variables' contribution to the dependent variable.Its value is in the range of 0 to 1.A value closer to 1 means a bigger contribution to the dependent variable than the independent variable.Generally, the R 2 values are 0.25, 0.50, and 0.75 for the variable that is considered weak, moderate, and substantial, respectively (Hair Jr et al., 2017).The coefficient of determination (R 2 ) for the dependent variable (employee retention) was 0.554, which was moderate and higher than the value of 0.26 (Cohen et al., 2013).Most hypotheses were confirmed at the 5% significance level using the bootstrap subsample method from 5,000 samples.

Model fit
Creating a structural model determined the connection between the constructs in the proposed model.The fact that the measured goodness-of-fit indices fall within the suggested ranges indicates that the data fit the structural model.

Standardized Root Mean Square (SRMS) residual
The SRMS residual value was found to be less than 0.087 (< 0.10), indicating a good fit with the model.A value of less than 0.10 or 0.08 indicates a good fit (Hwang et al., 2023).Henseler et al. (2014) introduce SRMR as a goodness-of-fit metric for PLS-SEM to prevent model misspecification.

Normed Fit Index (NFI)
The NFI index value of 0.91 (>0.9) was discovered.This value suggests that the model fits the data well.The values obtained from the NFI fall between 0 and 1.When the NFI is closer to 1, the fit is better.NFI values larger than 0.9 usually indicate an acceptable fit (Hong et al., 2023;Rai et al., 2019).

DISCUSSION
Eleven research hypotheses were examined empirically in this study.The first predictor variable, company image/goodwill factors, showed the highest significance to employee retention in Nepalese commercial banks.This finding is similar to previous studies (Alzaid & Dukhaykh, 2023;Sthapit & Shrestha, 2018).Likewise, the results show that employee benefits and employee retention have also a positive relationship.The outcome of this study is consistent with previous studies (Abubakar et

CONCLUSION
Employee retention is one of the major challenges in human resource management in Nepal.The aim of this study was to determine the retention variables and how they affect the retention of employees in commercial banks in Nepal.It is concluded that company image/good will, employee benefits, job satisfaction, organizational performance, recruitment and selection, and work environment & culture had a significant relationship with employee retention.However, labor union, leadership support, performance appraisal, training and development, and work life balance has no relation with employee retention.It is also revealed that the relationship between the organizational performance factor and employee retention was highly significant among all other factors.This indicated that the organizational performance factors are the most important critical factors that positively affect employee retention.Similarly, a company's image/goodwill factors showed the second highest significance to employee retention.Likewise, employee benefit factors showed the third significance to employee retention.Moreover, job satisfaction factors showed the fourth significance to employee retention in the Nepalese banking sector.Additionally, work environment and culture and recruitment and selection factors showed the fourth, fifth, and sixth significance to employee retention.Additionally, the data analysis shows that work-life balance and performance appraisals negatively affect employee retention.

Table 1 for
(Nurrahman & Roostika, 2024)site reliability (CR), and average variance extracted (AVE) are used to evaluate the measurement value of the construct's indicator in the model.The value of composite reliability and Cronbach's alpha values are greater than 0.7.Hence, data has high internal consistency(Aldosari, 2024).Likewise, the AVE value in the table below is more than 0.5, indicating high validity(Nurrahman & Roostika, 2024).

Table 2
displays the collinearity assessment results.With two exceptions, two of the VIF values were marginally higher than 5, with the majority falling between two and five.Given that every VIF value is less than 10, multi-collinearity is neither strongly indicated nor absent.It suggests no problems related to multicollinearity because the variance inflation factor (VIF) is less than 10 (Sulaiman et al., 2021).

Table 2 .
Multicollinearity test table