State-owned enterprises: Developing and validating a model of employee retention

Abstract

Orientation: The high turnover rate of essential core skills in South African state-owned enterprises (SOEs) is a significant issue, raising serious concerns about employee retention. Failure to retain talented employees threatens the performance and survival of SOEs. Research purpose: The main purpose of the study was to develop and validate an employee retention model that could be applied by South African SOEs. Motivation for the study: Employee retention in South African SOEs is under-researched, and there is no empirical evidence supporting the effectiveness of their current retention models. This necessitates a new, validated employee retention model for these SOEs. Research approach/design and method: The study used a quantitative, cross-sectional survey design, and data were collected from a sample of 685 SOE employees using a self-report questionnaire. After a new theoretical model of employee retention for South African SOEs was developed, it was validated by subjecting the data to structural equation modelling (SEM). Main findings: The SEM process revealed three key factors that significantly impact employee retention in South African SOEs. These factors, which are essential for retaining employees in SOEs, include organisational culture (OC), compensation and benefits (CB) and training and development (TD). Practical/managerial implications: The findings of the study provides the management of South African SOEs with valuable insights into the critical factors that should be considered in retaining talented and valuable employees. Contribution/value-add: The study provides a validated model of employee retention for SOEs in South Africa. No such validated model existed previously.