Leveraging Financial Performance for Recruitment and Retention of Intellectual Capital through Financial Participation

Abstract

In recent years, substantial attention has been given to the impact of Financial Participation on Financial Performance. However, there is a lack of research of the impact of Financial Performance on Financial Participation and the mediating role of Fnancial Participation between Financial Performance, Employee Recruitment and Employee Retention. In this paper, Financial Performance, Financial Participation, Employee Recruitment and Employee Retention is examined, including two types of financial participation; Employee Stock Options and Profit Sharing. The purpose of this research was to understand the role of financial participation in attracting individuals and retaining them. Non-probability-based convenience sampling technique was used in this study. The technique was used mainly due to ease of access of respondents, geographical proximity and cost-effectiveness (Etikan et al. 2016). Structural Equation Modelling was applied on the data analysis using Partial Least Squares method on SMART-PLS Software. Drawing on the data collected from 211 respondents from various national and multinational companies in the FMCG Sector of Karachi, Pakistan. The results indicated that Financial Participation has important interaction effects with Financial Performance, Employee Recruitment and Employee Retention. It is also found that indirect effect of Financial Participation has a strong mediating relationship with Employee Retention as compared to Employee Recruitment. The findings suggest that by incorporating financial participation by employees, HR can effectively recruit and retain better individuals. Also, ESOPs are a better form of attracting and retaining better employees. Keywords: Employee Stock Ownership, Financial Participation, Profit Sharing, Financial Performance, Employee Recruitment, Employee Retention.