Iranian Journal of Management Studies (IJMS) 2021, 14(2): 437-468

RESEARCH PAPER

Strategic Human Resource Management Practices and Employee

Retention: A Study of the Moderating Role of Job Engagement
Reza Sepahvand1, Razieh Bagherzadeh Khodashahri2

1. Prof., Department of Management, Faculty of Economics and Administrative Sciences, Lorestan

University, Khorramabad, Iran
2. Ph.D. Candidate in Human Resources Management, Faculty of Economics and Administrative
Sciences, Lorestan University, Khorramabad, Iran

(Received: December 4, 2019– Revised: September 17, 2020 ‫ ؛‬Accepted: September 22, 2020)

Abstract
The purpose of the present paper was to investigate the moderating role of job engagement in the
impact of SHRM practices on the employee retention of Guilan Technical & Vocational Training
Organization, and therefore, to provide an empirical and practical contribution in order to enhance
employee retention through job engagement. The statistical population consisted of 372 managers and
employees, and the optimal sample was determined by Cochran's formula to be 189. The results
revealed that SHRM practices and dimensions have a significant impact on employee retention, and
job engagement has a moderating role in the impact of SHRM and all its dimensions except
performance appraisal on employee retention. The findings also indicate the moderating effect of job
engagement in the relationship between SHRM practices and employee retention for three types of job
engagement, namely vigor, dedication, and absorption. The association between the demographic
variables and the factors also investigated. This study provides an empirical and practical contribution
to improving employee retention through job engagement. The theoretical implications, future
directions, and limitations are also discussed.

Keywords: Job engagement, Employee retention, Strategic human resource management practices,
Technical and Vocational Training Organization, Turnover.

Introduction

One of the current questions in the field of business administration is that how some
organizations have succeeded in their career despite economic, financial, and social crises.
Intellectual capital is a new topic in human resource management (HRM) literature, and
includes three different components called human, structural, and relational capitals. As a basic
element of the real wealth of organizations, the human capital is considered as the most vital
part of the intellectual capital. Because of the intense market competition and the scarcity of
experienced and skilled employees, it is vital for today's organizations to find and retain well-
educated and skilled employees, which in turn leads to creating competitive advantages.
Therefore, recruiting, training, and retaining are powerful and reliable factors that significantly
improve organizational performance and resolve crises. Human resource management,
especially in the areas of employee recruitment and retention, is essential to organizational and
personal success in the public sector, and recruitment and retention continue to be a top priority
for today’s public sector (Yang, 2019). Further, SHRM is frequently described as the pattern of
long-term planned human resource decisions and interventions that convey an organization’s

Corresponding Author, Email: bagherzadeh.ra@fh.lu.ac.ir
438 Sepahvand & Bagherzadeh Khodashahri

willingness to invest in its employees and to recognize their contribution to value creation.
Successful employee retention is essential to an organization’s stability, growth, and revenue.
Without properly implemented strategies for employee retention, the organization may face
high employee turnover rates. The bottom line is that the increased longevity of an employee’s
tenure is better for the organization’s overall performance. High employee turnover increases
cost in resources, recruitment, and time when replacing open positions. The increased cost
related to recruitment includes advertising and overlapping of salary, which make it difficult to
maintain positive employee culture and morale (Cloutier et al., 2015). Researchers contend that
SHRM practices lead to higher commitment and limit the voluntary leave of employees and,
therefore, can be used to predict the voluntary staff turnover rate (Fahim, 2018). Employees are
particularly productive and satisfied when they are in an attractive working environment. It is,
therefore always an advantage to be as interesting an employer as possible. In addition,
employer quality increases the number of applications received and reduces voluntary turnover.
Only those who are substantially attractive as employers have realistic prospects of doing well
in the war for talent and of developing a positive employer image in the long term (Trost, 2020).
Retention means preventing good employees from leaving the organization and thereby
increases organization’s profitability and productivity. Effective employee retention
management ensures that good and experienced employees will remain in organization;
therefore, organization’s performance will improve, and customer satisfaction will be met
(Dechawatanapaisal, 2018). Organization’s inability to attract and retain human resources and
to prevent voluntary leave of good and experienced employees leads to negative consequences
such as increased organizational costs, reduced organizational growth and progress, failure to
achieve collaborative goals (Khadka, 2018), reduced organizational performance (Bose, 2018),
reduced synergy, and organizational mistrust (Soares & Del Gaudio). Indeed, although retention
and turnover research has experienced considerable theoretical expansion in the past few years,
an overview of previous studies has indicated a lack of adequate research about the relationship
between SHRM practices and employee retention, particularly in the public sector, as much of
this discourse in literature is associated with business. The big question here might focus on
finding those HRM practices that are more likely to contribute to sustainable competitive
advantage, and specifically staff retention (Fahim, 2018, p.21).
Guilan Technical & Vocational Training Organization has been successful in expanding the
culture of innovation and learning skills as well as in promoting the knowledge acquisition and
human resources allocation. Despite the organization’s participatory workplace and good work
and organizational ethics, observing standards, human capital development, and talent
management development, the evidences and statistics of the organization's human resources
department show that the number of people who have left the organization in recent years has
increased and, as a result, the organization’s success has reduced. The statistics of the Technical
and Vocational Organization indicate that a considerable number of the experienced trainers of
this organization have left it to set up private vocational institutes. In addition, the key
employees of the organization who are unable to leave the organization because of labor market
conditions and the difficulty of finding new jobs suffer from emotional resignation due to lack
of progression in their career. In fact, the recessive conditions dominating the national economy
have made the phenomenon of emotional resignation rampant in a great majority of
organizations such as the Technical and Vocational Organization.
It is widely accepted that employee retention depends heavily on recruitment policies and
human resource practices of the organization. Training and development, competitive
compensation systems are among the important factors of employee retention. As an indicator
of employee loyalty that has recently attracted attention of researchers and academics, the
retention of expert employees is an important subject in private and public sectors. Most
Iranian Journal of Management Studies (IJMS) 2021, 14(2): 437-468 439

employees believe that motivating factors such as responsibility, success recognition, and the
sense of being important are of a greater importance compared to material factors and
economic returns. Therefore, psychological and social factors as well as variables such as
interaction and work engagement can be very effective in the reduction or increment of
employee retention indicators (Yao et al., 2019). More than half of all organizations globally
have difficulty retaining some of their most valued employee groups. Today, organizations
can engage employees in order to leverage their talent and gradually this can be the culture at
organizations to nurture talent and raise human potential. This eventually leads to supporting
the retention measures at the organization (Radadiya & Pandey, 2020). Given the importance
and necessity of training and empowerment of individuals to enter the labor market and
improvement of their career anchors and their job career, maintaining competent employee
and transferring their experience and skills to individuals is very important.
One of the contributions of this paper is to study the distinction between HRM and SHRM
in maintaining organization’s strategic employees. The strategic employees are those who are
engaged in executing the organization mission, and their turnover endangers the
organization’s entity and philosophy of being. In terms of theory and planning, SHRM is
responsible for developing strategies in the field of strategic human resources maintenance in
line with the organization’s general strategies, while HRM is responsible for executing the
developed strategies in the form of SHRM to maintain these kinds of employees. In fact,
SHRM is theoretical and subjective, and HRM is practical and objective. Given the
abovementioned instances of the literature, this study aims at investigating the impact of
strategic HRM practices on employee retention as well as to answer the following questions.
To what extent does work engagement have an effective moderating role in the relationship
between strategic HRM practices and employee retention? To what extent has the employee
retention measures in Guilan Technical & Vocational Training Organization been influenced
by strategic HRM practices such as education, service compensation, and so on?

Literature Review

Employee Retention

The objective of employee retention is to retain the qualified employees of the company as
long as possible, because qualified employees are invaluable intangible assets of the
organization. Employee retention is a process whereby an organization is able to retain its
potential employees in order to remain loyal to the organization with a longer period of time.
More precisely, human resources (HR) professionals should proactively address dysfunctional
turnover (Wulansari et al., 2020). Retention of employees in the organizations is an important
parameter of assessing the success rate of any organization. Industrial sector has been moving
towards globalization and that changes the behavior of employees towards their organizations.
Thus, the firms have to retain the educated and talented employees in their firms during the
time of high turnover rate (Diah et al., 2020).
The most important challenge that large company leaders are faced with is the employee
retention, which in turn is caused by the scarcity of skilled workforce, reduced economic
growth, and employee turnover. Previous studies have shown that the loss of important
employees imposes great costs to organizations. For example, employers have stated that the
recruitment costs of an employee are equal to 50 to 60 percent of the first-year salary of that
employee, and in certain cases (due to skills promotion), this indicator might even reach the
100% rate. Other studies have reported that the cost of losing a talented employee is more
than 70% to 200% of his/her annual salary. Therefore, organizations should identify their
440 Sepahvand & Bagherzadeh Khodashahri

important and effective employees, and try to meet their job, family, educational, and social
needs. Benefits of retaining important employees include the company's ability to reach its
strategic business objectives as well as obtaining competitive advantage over its current and
old competitors. Employee retention leads to many benefits such as customer satisfaction,
better services, lower costs, reduced sensitivity, positive interactions, increased market share,
and increased efficiency (Karimi & Parsafar, 2017). Retaining strategic employees of
organization depends on the recruitment and promotion practices as well as human resource
practices. Human resource measures directly affect employee retention. In addition, providing
trainings on the missions and objectives of organization, proper employee recognition, and the
use of the reward system in each organization can reduce the turnover of non-managerial
employees (Yao et al., 2019).

Strategic Human Resource Management

Human Resource Management (HRM) suggests the execution of the management standards in
order to deal with the workforce of an association. It is concerned with employing, creating, and
holding the labor, and its end goal is making them progressively effective. At the point when
regular HRM is investigated with the vital HRM or SHRM, it gets more clear (Hadi et al., 2020).

Table 1. Traditional HRM vs. SHRM

Point of distinction Traditional HR Strategic HR
Transactional change follower Transformational change leader and
Role of HR
and respondent initiator
Short, medium and long (as
Time horizon Short-term
required)
Bureaucratic-roles, policies, Organic-flexible, whatever is
Control
procedures necessary to succeed
Tight division of labor;
Job design Broad, flexible, cross-training teams
independence, specialization
Key investments Capital, products People, knowledge
Accountability Cost center Investment center
Responsibility for HR Staff specialists Line managers

SHRM contains strategy concept, while HRM has resources concept. Strategy is associated
with HRM systems. HRM becomes strategic when it is associated with organization strategy
and objectives. Management is to create fit between HRM and strategy. HRM is to improve
individual performance in organizations, and SHRM is related to organizational performance
(Uysal, 2019). Strategic HRM can be defined as a human resource development plan to
empower the organization in achieving its goals. The HRM practices can be considered as a set
or a system that collectively improves the skills and motivations of the workforce (Boon et al.,
2018). The HRM practices have two main purposes: improving skills and increasing
motivation. The previous studies show that skill-enhancing activities include selection, training,
and development, which are related to the turnover of employees as well as their financial
performance. The motivating activities include performance appraisal and compensation, which
lead to productivity (Fahim, 2018). The basic functions of SHRM involve designing and
implementing a set of internally consistent policies and practices that ensure that the human
capital of an organization contributes to the achievement of its objectives. SHRM reflects a
more flexible arrangement and utilization of HR to achieve the organizational goals.
Importantly, SHRM emphasizes developing the capacity to respond to the external environment
through a better deployment of human resources (Muideen, 2020). SHRM practices are aligned
with the organizational intention about its future direction. These include:
Iranian Journal of Management Studies (IJMS) 2021, 14(2): 437-468 441

 Recruitment and selection: Recruitment refers to activities that an organization performs

to identify and attract individuals that can help the organization achieve its strategic
goals. These activities examine a set of suitable volunteers to increase their interest in
the organization as well as to increase the likelihood that they accept the offered jobs.
This definition specifies the difference between recruitment and selection functions and
highlights the relationship between recruitment and strategy (Brandão et al., 2019).
 Training and career development: It refers to the process of acquiring or transferring the
needed knowledge, skills, and abilities to perform an activity. Training and career
development provide employers and employees with strategic and extensive benefits
(Hammond & Churchill, 2018).
 Performance appraisal: Judgment on whether employees have carried out their duties
with respect to a set of standards.
 Compensation and benefits: Compensation refers to “all the extrinsic rewards that
employees receive in exchange for their work,” such as wages, bonuses, and benefits.
Benefits can be monetary, such as health insurance and paid leave, or non-financial,
such as flexible work arrangements and well-being programs to increase employee
morale, satisfaction, and commitment (Patiar & Wang, 2020).

The Relationship Between Strategic Human Resource Management Practices and Employee
Retention

Creating strategic capability through attracting skilled, committed, and motivated employees
in organization is the main purpose of strategic human resource management. Although
management cannot always prevent the voluntary turnover of its valuable employees,
implementing effective policies and measures in relation to the management of its personnel
can greatly reduce the turnover decisions. For example, by implementing different strategies
based on development of human resource management systems, employers can easily retain
their employees. Similarly, it is shown that when employees feel that organization attempts to
meet their needs to training and development, their commitment to their jobs, their motivation
to achieve the organization’s goals, and their desire to stay in the organization increase. In
addition, the measures such as training and development, development of a career path, and
incentives and rewards directly affect employee satisfaction, and consequently employee
retention (Martin, 2011; Shirazi & Hosseini Robat, 2015;). Several HRM practices can be
introduced as its dimensions. It is widely believed that these dimensions have the possibility
of motivating employees and help prevent employees from leaving their work by offering
them some level of safety, independence, continuity, and opportunity to achieve career
satisfaction (Aburumman et al., 2020). Thus, we hypothesize that:
H1: SHRM practices are positively related to employee retention.
Selection strategy is about finding the best source, hiring the best talents, keeping the
organization competitive advantage in the job market, and maintaining its ability to retain its
best employees. Once a pool of potentially qualified candidates has been identified through
the recruitment process, the next step in the process is to select the most qualified candidates
from that pool who fit the long term, effective employee exemplar. Therefore, the employees
are more likely to stay in the organization using this method. Organizations could pay more
attention to recruitment and selection, thereby ensuring that the organization has the kinds of
human resources that grant it a high probability of survival and the ability to remain
successful within the organization (Tafamel & Akrawah, 2019). Based on the above
discussion, we hypothesize that:
H1a: Recruitment and selection is positively related to employee retention.
442 Sepahvand & Bagherzadeh Khodashahri

Career development opportunities and training have a direct effect on employee retention.
The challenge for the HR professionals is to develop and identify the career development
strategies and train them that would improve the commitment of employee; then, he or she
would feel that they are taken into account. This will help the organization to retain
employees, and keep the employees more motivated to work hard and enthusiastically; this
will help the organization achieve its goals effectively and efficiently (Jeffrey & Prasetya,
2019). Based on the above discussion, we hypothesize that:
H1b: Training and career development is positively related to employee retention.
Performance appraisal can also serve as a means of communication between management and
employees. This can then support retention, because employees can view the assessment process
positively. It is important for organizations to understand how employees feel the effectiveness of
their performance appraisal systems to obtain positive employee performance results (Jeffrey &
Prasetya, 2019). Based on the above discussion, the following hypothesis is given;
H1c: Performance appraisal is positively related to employee retention.
The remuneration that an organization gives to its employee is the primary factor, which
reveals the commitment and intention towards the employee and is one of the compelling
reasons for an employee to stay in that organization. However, payment is not sufficient by
itself to motivate employees to stay in the organization. An employee may decide to leave the
organization for better monetary considerations, but high payments do not necessarily make
the employees stick with an organization. There can be different other factors as well that
affect the employees’ decision to stay in the organization. These factors play a vital role in
influencing the employee’s commitment to the organization. The management must pay
attention to these factors along with compensation (Haider et al., 2019). Based on the above
discussion, the following hypothesis is given:
H1d: Compensation and benefits is positively related to employee retention.

Job Engagement

Job engagement is a work-related state that is characterized by vigor, dedication, and

absorption (Bakker et al., 2020). It refers to one’s active allocation of personal resources and
energies in performing his/her job (Eldor et al., 2020). Job engagement is a positive mental
state to fulfill and finish the work with the following three dimensions:
 Vigor: mental toughness and strong effort to struggle while working (Wiroko &
Fadillah, 2020).
 Dedication: emotional involvement with one’s work and the experience of a sense of
enthusiasm, inspiration, and pride.
 Absorption: cognitive concentration on one’s work to the point of experiencing time as
passing quickly (Eldor et al., 2020).

Job Engagement, Strategic Human Resource Management and Employee Retention

Efficient human resources are important and essential ones that organizations need to obtain
their objectives. Although management cannot always prevent the leaving of its valuable
employees, the implementation of effective policies and measures relating to human resources
management can reduce its occurrence to a large extent (Shirazi & Hosseini Robat, 2015).
What values the managers and employees own directly guides their way of thinking,
regarding all the talent management stages, e.g., attracting, hiring, compensating and
rewarding, developing, and retaining talents (Kamel, 2019). Strategic human resource
management is valuable and has an immense influence on employee retention. Some people
Iranian Journal of Management Studies (IJMS) 2021, 14(2): 437-468 443

view employee retention as the result of the implementation of strategic human resource
policies and processes that assist employees to remain with the company because of the
provision of a work environment that meets the employees’ needs. Organizations can increase
and sustain competitive advantage through effective management of human resources, as the
success of any organization is dependent on the quality and efficiency of its human resources
(Atieno, 2019). Effective human resource management (HRM) practices can influence levels
of work engagement and improve the client's service quality, satisfaction and retention, offer
a distinctive competitive advantage, and improve the performance of the organization (Shibiti,
2020). Based on the discussion above, the following hypothesis is presented:
H2: Job engagement moderates the relationship between SHRM practices and employee
retention.
Job engagement is a display of vigor, dedication, and absorption in one’s job. It is an
undefined force that inspires employees to move toward advanced stages of performance and
illustrates the degree to which workers are satisfied with their occupations, feel appreciated in
their roles, and experience teamwork and trust. Job engagement is an individual’s
participation and satisfaction displayed through their eagerness for work and strong effort to
struggle while working. Engaged employees generally feel involved, loyal, enthusiastic, and
empowered, and exhibit those feelings in their work behavior. More specifically, such
employees have great energy, are passionate about their work, and are often fully absorbed in
it such that work time passes quickly in their eyes, which will significantly contribute towards
productivity, efficiency, and effectiveness of the organization with lower employee turnover
rates. In addition, effective human resource management practices can influence job
engagement such as vigor, dedication, absorption and can improve the employee retention
(Singh et al., 2016). Based on the above discussion, the following hypotheses are as follows:
H2a: Vigor moderates the relationship between SHRM practices and employee
retention.
H2b: Dedication moderates the relationship between SHRM practices and employee
retention.
H2c: Absorption moderates the relationship between SHRM practices and employee
retention.

Job Engagement, Recruitment and Selection, and Employee retention

Employee recruitment and selection is a process of choosing individuals who have relevant
qualifications to fill existing or projected job openings. The firms with less than 20 employees
implement easy attitude towards employee recruitment and selection, which in turn could lead
to high employee turnover. Therefore, recruitment and selection have effects on employee
retention (Mohammad, 2015). The acquisition and retention of skilled employees assume a
significant purpose in any organization, since the skills and knowledge of employees have
paramount effects on organization's capability to be economically competitive. Managers in
both service and production sectors do realize that it is the individual within an organization
that ultimately ensures its perpetual existence. This heavily depends on proper selection and
recruitment that support retention of the employees in the organization (Miheso et al., 2019).
Company leaders should only invest in recruitment, training, and development practices to
reduce employee turnover. Relating to employee recruitment and retention, the
implementation of various HR policies to enhance job performance improves job satisfaction
and lowers turnover (Fitz-Lewis, 2018). Evidences indicate that engaged and committed
workforce can bring about abundant benefits for the organization, essentially in terms of
lower turnover intentions and reduced absenteeism. Employees who have trust in senior
444 Sepahvand & Bagherzadeh Khodashahri

management show higher levels of engagement and lower intention to leave the organization
(Kundu & Lata, 2017). In other words, the more highly engaged the employee, the more
likely he or she will be to say positive things about the organization, thereby contributing to
the development of a positive employer brand; that is to say, they want to remain within the
organization, thereby the turnover is minimized (Erwin et al., 2019). Based on the above
discussion, we hypothesize that:
H3: Job engagement moderates the relationship between recruitment and selection and
employee retention.
Organizations utilize several techniques to recruit and eventually hire employees to help
their company perform successfully. Candidates will get the opportunity to make the correct
job choice, will be more satisfied with the job because of the fit between expectations and
reality, and will be more committed to the organization. In addition to this, the high levels of
energy, sense of significance, and deep engrossment with one’s work can be utilized to
increase work engagement, which is an important aspect in the employee retention (Fahim,
2018). Based on the above discussion, the following hypotheses are as follows:
H3a: Vigor moderates the relationship between recruitment and selection and employee
retention.
H3b: Dedication moderates the relationship between recruitment and selection and
employee retention.
H3c: Absorption moderates the relationship between recruitment and selection and
employee retention.

Job Engagement, Training and Career Development and Employee Retention

Career development opportunities and training have a direct effect on employee retention.
Career development is a system which is organized; it is a planned effort of achieving a
balance between the career needs of the individual and the organization's workforce
requirement. The challenge for the HR professionals is to develop and identify the career
development strategies and train them, which would improve the commitment of
employee, where he/she would feel that they are being given importance and significance.
This will help the organization retain employees, as they will be more motivated to work hard
and enthusiastically, which will help the organization achieve its goals efficiently and
effectively. HR professionals should try to create career development opportunities and train
them and make employee satisfied and retain them in organization (Hassan et al., 2013).
Employees are expected to learn new skills and knowledge to improve themselves and the
work they do. It is important to them to feel that they are learning, growing, and remaining
competitive comparing to their industry peers (Al-Sharafi et al., 2018). Organizations are
completely at a loss when the employees leave their job once they are fully trained and
developed, and more so when they already have the experience of operations in the
organization. Thus, employee retention should take into account the various measures so that
an individual stays in an organization for the maximum period of time. HR managers try to
prevent the employee turnover by implementing effective retention strategies. Employees are
less likely to leave when they share similar values as their organizations, HRM practices can
be used strategically to improve the employee–organization value fit to improve retention.
The retention of employees can be further increased through job specific training, career
development chances, friendly work environment, rewards, and other benefits that should be
planned by the organization. Job engagement and rewards, work-life balance, and promotion
policy have a big role in increasing job satisfaction, which may secure employee retention in
organizations. Creating an amicable and conducive working environment can make the
Iranian Journal of Management Studies (IJMS) 2021, 14(2): 437-468 445

employees to work and stay in the organization. Thus, job engagement can affect employee
retention, with a focus on opportunities for development (Akther & Tariq, 2020). Based on
the above discussion, we hypothesize that:
H4: Job engagement moderates the relationship between training and career
development and employee retention.
Organizations that provide continuous training and skills upgrading programs can maintain
their competitive advantage, and they are at the same time more likely to satisfy and retain
their valuable employees. Organizations that implement career development programs are
more likely to have a high level of commitment and retention among their employees. The
career development opportunities among other unpopular factors such as job content and
work-life balance have a higher impact on employees’ retention (Al-Sharafi et al., 2018). In
addition to this, employees armed with vigor present strong motivations toward exceling in
workplace duties (regardless of the challenges they face), and are interested in learning.
Highly engaged employees are more positive about their jobs and organizations, treat co-
workers with more respect, help others improve work efficacy, continually improve work-
related skills, are highly active, and demonstrate in- and extra-role performance (Lu et al.,
2016). Based on the above discussion, the following hypotheses are as follows:
H4a: Vigor moderates the relationship between training and career development and
employee retention.
H4b: Dedication moderates the relationship between training and career development
and employee retention.
H4c: Absorption moderates the relationship between training and career development
and employee retention.

Job Engagement, Performance Appraisal and Employee Retention

Employee performance appraisal is frequently used for the purpose of making distinctions
among employees, identifying employees’ strengths and weaknesses, evaluating HR systems,
documenting personnel decisions, and enhancing employee performance. PA is a key aspect of
establishing performance goals, addressing performance problems, distributing rewards, and
initiating disciplinary procedures, including dismissals (Eyoun et al., 2020). Feedback,
selection, communication, performance evaluation, and periodic analysis are key components of
the performance assessment. Employee feedback encourages behavioral shaping and improves
learning that helps drive retention and performance. The communication system also
encourages employees to participate voluntarily in the evaluation process, which results in a
positive influence on the retention of employees. The performance review has helped maintain
employee retention, because trust is provided to employees that the company is dedicated to
meet employee needs and performance growth (Kalyanamitra et al., 2020). It is a management
philosophy that retaining talent is better than frequent hiring. This can be due to various reasons
such as the cost involved in the recruiting process, the loss of expert staff that have been in the
job for a long time, the loss of consistency and control, etc. Voluntary turnover results in
employees departing and switching over to competing firms. Performance appraisal techniques
play an important role in employee retention (Rajarajeshwari & Cynthia, 2020). In the data
related to job engagement, it is noted that through increased job satisfaction, organizations can
retain their employees easier (Sergio & Rylova, 2018). An employee with the intention to stay
in an organization is usually engaged with the job and has higher productivity (Jaharuddin &
Zainol, 2019). Based on the discussion above, we hypothesize that:
H5: Job engagement moderates the relationship between performance appraisal and
employee retention.
446 Sepahvand & Bagherzadeh Khodashahri

The systematic feedback on work performance may influence intrinsic motivation through
increased experienced responsibility for the outcomes and knowledge of the actual results of the
work. Feedback received through PA activities may increase intrinsic motivation to the extent
that it increases employees’ perceived competence and it may affect the employee retention.
The elements of job engagement types – including vigor, dedication, and absorption – also can
be internal, affective representations of the individual’s energy reservoirs related to the job.
Thus, an individual experiencing vigor at work perceives him/herself to be peppy, physically
enlivened, cognitively quick and creative, and able to have meaningful interactions with others.
Thus, highly engaged employees show lower intention to leave the organization (Jeffrey &
Prasetya, 2019). Based on the discussion above, the following hypotheses are as follows:
H5a: Vigor moderates the relationship between performance appraisal and employee
retention.
H5b: Dedication moderates the relationship between performance appraisal and
employee retention.
H5c: Absorption moderates the relationship performance appraisal and employee
retention.

Job Engagement, Compensation and Benefits and Employee Retention

Pay is an important driver of turnover. Compensation is correlated with public sector

employees’ intention to stay, and compensation is a significant predictor of employees’
retention. Extrinsic monetary rewards and intrinsic rewards are motivating for employees, and
motivate them to stay in the organization (Rasdi & Chen, 2018). Compensation is a valuable
tool for employees’ effectiveness and can affect the staff behavior positively. Moreover,
compensation governs the attraction and retention of talented workers to accomplish goals and
it is the main source for encouraging and retaining employees. The employees could best
retained by providing them with higher salaries (Adil et al., 2020). A profound understanding of
the factors that may improve employee retention is needed along with an understanding of the
way in which variables such as retention factors and job engagement affect the retention of
employees. Work engagement is imperative because, in general, engaged employees are very
fond of the organization they work for, and are more likely to remain indefinitely. Work
engagement has been linked strongly with employee retention in the literature (Shibiti, 2020). In
addition, an attractive benefits package that includes professional development support and
flexible work options that rival those of an organization’s competitors could help with employee
retention (Antony, 2020). Based on the discussion above, the following hypothesis is proposed:
H6: Job engagement moderates the relationship between compensation and benefits and
employee retention.
An effective way to maintain employee engagement is to show them that they are
appreciated. A good organization must have a good compensation management system and be
able to increase employee engagement in the organization. Compensation can also be given in
the form of recognition or appreciation of the work of employees and can increase work
attachment to the organization. Employee work engagement with vigor, dedication, and
absorption reflects individual involvement and satisfaction as well as enthusiasm in working.
Employees who have a high level of engagement will have a high emotional attachment to the
organization (so, it will have an effect on completing work) and tend to have satisfying work
quality (Robianto & Masdupi, 2020). Based on the discussion above, the following
hypotheses are given in:
H6a: Vigor moderates the relationship between compensation and benefits and
employee retention.
Iranian Journal of Management Studies (IJMS) 2021, 14(2): 437-468 447

H6b: Dedication moderates the relationship between compensation and benefits and
employee retention.
H6c: Absorption moderates the relationship compensation and benefits and employee
retention.

Age, Gender, Education and Work Experience as Moderators

The study of human population is called demographics. It consists of such personal

information as race, family size, income level, educational level, location, ethnicity, gender,
and age. Age is still a source of discrimination in the workplace and a potential barrier for
employees’ involvement and participation in HR development practices. Research shows that
companies devote most training investments to young ‘high potentials’ and older employees
are more likely to be discriminated in the workplace in respect to learning and development
compared to their younger colleagues. Gender is the social distinction between women and
men, their roles, and the way they construct the society. Education level has emerged as an
important factor in human behavior, and has thus been used as the criterion in a variety of
categorizations such socioeconomic status (Akram et al., 2016). Work duration also has an
important effect on the relationship between SHRM and employee retention in organizations.
Based on the discussion above, the following hypotheses are proposed:
H7: Age moderates the positive relationship between SHRM practices and employee
retention.
H8: Gender moderates the positive relationship between SHRM practices and employee
retention.
H9: Education moderates the positive relationship between SHRM practices and employee
retention.
H10: Work experience moderates the positive relationship between SHRM practices and
employee retention.
H11: Age moderates the positive relationship between job engagement and employee
retention.
H12: Gender moderates the positive relationship between job engagement and employee
retention.
H13: Education moderates the positive relationship between job engagement and employee
retention.
H14: Work experience moderates the positive relationship between job engagement and
employee retention.

Methods

The study used a quantitative approach by carrying out a survey to collect primary data. The
research statistical population included all the managers and employees working in the strategic
jobs of Guilan Technical & Vocational Training Organization. Iran Technical and Vocational
Training Organization was founded in 1980 by integrating three training bodies – MOLSA'S
General Directorate for Vocational Trainings, Apprenticeship Fund, and Apprenticeship Society
– into Technical and Human Force Training Organization. Later in 1981, it was renamed as
Technical and Vocational Training Organization. The organization's main missions are skills
training, research, developing training standards, and labor force assessment. In this
organization, target groups include job seekers, employees (enterprises, unions, guilds, etc.),
college students and graduates, students, soldiers, inhabitants of deprived areas, borders, and
non-formal settlements, vulnerable groups (breadwinner women, child laborers, etc.),
448 Sepahvand & Bagherzadeh Khodashahri

housewives, the disabled, villagers and nomads, prisoners and their families, rehabilitated ex-
addicts, social sufferers, foreigners and refugees, and other countries' instructors.
Tactical work focuses on what needs to be done today. Strategic work tackles what
managers and experts do when they enact strategy growth such as ‘collaborative work,’
‘private work,’ and ‘negotiating work’ (Jarzabkowski et al., 2015). It focuses on the future
and on the improvements and innovations needed to create an exceptional organization. It
starts with conceiving the dream, vision, purpose, and mission of organization and then
building the systems that produce exceptional results for labor market and all other
stakeholders. It should be explained that in this organization, 650 organization employees,
372 people (either as managers or decision-makers or as professional and experienced
trainers) consider the organization’s major mission as causing some distinction in the field of
skills training needed to labor market. Moreover, they deem that the failure of the
organization in designing suitable plans for maintaining strategic employees endanger the
organization’s mission. In this study, the population consisted of 372 people and the sample
based on Cochran's formula was equal to 189. Given the limited and definite number of these
individuals, the sample size by the Cochran formula is:
p 1-p  NZα2 0.5×0.5×372× 1.96 
2
2
n= = =189
e2  N-1 +p  p-1 Zα2  0.05  372-1 +0.5×0.5× 1.96
2 2

The stratified random sampling method was used so that the population would be
homogeneous with respect to the characteristics under study. Initially, 200 questionnaires
were distributed within the organization. In total, three of the original 200 participants did not
respond. A total of 197 questionnaires were received. Finally, 197 questionnaires were
completed and collected for final analysis.
The questionnaire of the research consisted of two parts. The first part relates to the
demographic variables such as gender, age, educational level, and work experience. Table 3
presents results of the demographic analysis of this questionnaire.

Table 2. Distribution of the Sample Based on Stratified Sampling Method

Population Sample
Group Name Number of Number of collected
Frequency Percent
samples questionnaires
Industry 182 49% 91 92
Agriculture 55 15% 28 29
Art & Culture 75 20% 39 40
Services 50 13% 26 29
International Interactions 10 3% 5 7
Total 372 100 189 197

Table 3. Distribution and Characteristics of the Sample

demographic variables Number %
Gender
Female 50 25.4
Male 147 74.6
Age
20-30 12 6.1
31-40 122 61.9
>40 63 32.0
Educational level
BSc./B.A. 136 69.0
MSc./M.A. 33 16.8
Ph.D. 28 14.2
Work experience
5-10 12 6.1
11-15 54 27.4
16-20 86 43.7
>20 45 22.8
Iranian Journal of Management Studies (IJMS) 2021, 14(2): 437-468 449

The second part of the questionnaire included 12 questions to measure strategic HRM
practices, and 12 questions to measure employee retention, which was validated by Fahim’s
standard questionnaire (2018), that is in turn designed based on El-Ghalayini (2017), Allui
and Sahni (2016), Mbugua (2015), and Francis (2014) studies. A 12-item strategic HRM
practices questionnaire developed and validated by Fahim (2018) was used. The sample items
of strategic HRM practices were “The organization conducts impartial tests and personal
interviews to assess the potential of candidates and their qualifications to choose the best,
with preference to internal hiring” and “The organization encourages staff career development
through job enrichment and periodical job rotation, in addition to the commitment to promote
capable employees into higher positions.” A 12-item employee retention questionnaire
developed and validated by Fahim (2018) was used. Sample items were “You like your work
at the organization and enjoy the sense of challenge and achievement you get from doing your
job” and “You feel valued and your job efforts are appreciated at work.” In addition, the
second part of the questionnaire included 17 questions to measure employees’ job
engagement, and it was validated by the standard questionnaire of Schaufeli et al. (2002).
Sample items included “At your job, you feel strong and vigorous” and “When you are
working, you forget everything else around you.” As it is clear-cut in the questionnaire items,
the employees and trainers answered the questions pertaining to employee retention and job
engagement, and the managers answered the SHRM-related items. It is worth mentioning here
that the study used the questionnaire to gather data using a five-point Likert scale as the
measurement tool, ranging from 1 = strongly disagree to 5 = strongly agree. The Smart PLS-2
and the structural equation modeling (SEM) with the partial least square’s method were used
to test the research hypotheses. Figure I shows the model used in this study. Following the
methodology used by Fahim (2018), strategic HRM practices with dimensions of recruitment
and selection, training and career development, performance appraisal and compensation, and
benefits comprised the research independent variable and the employee retention was the
research dependent variable. In addition, following Kundu and Lata (2017), job engagement
with the three dimensions of vigor, dedication, and absorption was used as the research
moderating variable.

SHRM Practices
Employee
Recruitment and Retention
selection
Training and
Career
Development Job Engagement

Performance Vigor
Appraisal Dedication
Compensation Absorption
and Benefits
Figure 1. Proposed Conceptual Model

We used opinions of several management faculty members to confirm the content validity
of the questionnaire and to ensure that the questionnaire content was suitable for measuring
variables in the target population. As can be seen, Cronbach's alpha coefficient was greater
than 0.7 for all the components, indicating the good internal compatibility of the model. In
addition, the values of the composite reliability coefficients for the research variables were
450 Sepahvand & Bagherzadeh Khodashahri

greater than 0.7, which confirms the composite reliability of the research questions in
measuring variables, and as a result, the fitness of the model was confirmed. As can be seen,
items 35 and 29 (out of the 41 measurement items) had unacceptable factor loadings, and thus
were removed from the research model and the rest of the factor loadings were greater than
0.7; thus, they were suitable for estimating the relevant variables. According to the results of
the convergent validity, which are presented in Table 4, the average variance extracted for all
the research variables was greater than 0.5, confirming the convergent validity of the
measurement model.

Table 4. Factor Loadings, Validity, and Reliability Values

Composite

Composite
reliability

reliability
Indicator

Indicator
Cronbach’s Alpha: Cronbach’s Alpha: Variable

Loading

Loading
variable
AVE

AVE
Cronbach’s Alpha:
1 0.93 19 0.91
2 0.95 20 0.91
0.936

0.978
Rec.

Ret.
0.96 0.89 21 0.91 0.98 0.81
22 0.92
3 0.94
23 0.93
24 0.90
4 0.93 25 0.88
Cronbach’s Alpha: 0.929

5 0.94 26 0.91
0.929
Tra.

0.95 0.88
Vig.

6 0.94 27 0.79 0.95 0.78

7 0.95 28 0.91
Cronbach’s Alpha:

8 0.92 30 0.93
0.933
Per.

0.96 0.88
Cronbach’s Alpha: 0.883

9 0.94 31 0.87
Ded.

0.92 0.74
Alpha: 0.932

10 0.95 32 0.89
Cronbach’s
Com.

11 0.95 0.96 0.88 33 0.82

12 0.92 34 0.85
13 0.87 36 0.90
Alpha: 0.978

Alpha: 0.963
Cronbach’s

Cronbach’s

14 0.84 37 0.86
15 0.89 38 0.91
Abs.
Ret.

0.98 0.81 0.97 0.84

16 0.91 39 0.94
17 0.89 40 0.95
18 0.90 41 0.93
Notes: Rec., Recruitment and Selection; Tra., Training and Career Development; Per. Performance Appraisal;
Com., Compensation and Benefits; Vig., Vigor; Ded., Dedication; Abs., Absorption; Ret., Employee Retention.

Fornell and Larcker criterion (1981) was used to examine the discriminant validity of the
questionnaire, and the results showed that the square roots of the variance for the main
variables of the research, which are placed in the original diameter of the matrix are greater
than the correlation between the variables, which are located in entries below the main
Iranian Journal of Management Studies (IJMS) 2021, 14(2): 437-468 451

diameter (Moazen Jamshidi & Khani, 2013). Accordingly, the discriminant validity of the
research model is also confirmed.

Table 5. Discriminant Validity

Com.

Ded.
Abs.

Rec.

Tra.
Per.

Ret.

Vig.
Abs. 0.92
Com. 0.54 0.94
Ded. 0.54 0.47 0.86
Per. 0.45 0.68 0.44 0.94
Rec. 0.62 0.75 0.50 0.75 0.94
Ret. 0.64 0.59 0.42 0.59 0.67 0.90
Tra. 0.50 0.75 0.44 0.78 0.78 0.65 0.94
Vig. 0.78 0.52 0.56 0.43 0.57 0.62 0.52 0.88
Notes: Rec., Recruitment and Selection; Tra., Training and Career Development; Per. Performance Appraisal;
Com., Compensation and Benefits; Vig., Vigor; Ded., Dedication; Abs., Absorption; Ret., Employee Retention.

Data Analysis and Results

To estimate the conceptual model and analyze the structural path, the hypotheses were analyzed
with Smart-PLS2. After examining and verifying the model validity, regression coefficients and
“t” statistics were used to test the hypotheses. Table 6 and Figure 2 evidently outline a positive
relationship between SHRM Practices and employee retention (β=0.897, T= 47.137>1.96). In
addition to this, the findings in Table 6 and Figure 3 confirm that recruitment and selection
significantly influence employee retention (β= 0.234, T= 2.867>1.96). Hence, H1a is supported.
Furthermore, the findings from Table 6 and Figure 3 endorse that training and career development
positively influence employee retention (β= 0.252, T= 3.209>1.96), and confirm H1b. The
influence of the performance appraisal on employee retention was positive and significant (β =
0.207, T = 2.762>1.96), showing that H1c is supported. Similarly, the findings in Table 6 provide
empirical support for H1d, where the influence of the compensation and benefits on employee
retention is positive and significantly affects the employee retention (β = 0.263, T = 4.193>1.96),
confirming the hypothesis (H1d).

Table 6. Path Coefficient and T-Statistics/ Model 1 without Moderating Construct

Path/ Hypothesis β T-Value Result
SHRM.  Ret. 0.897 47.137 Supported
Rec.  Ret. 0.234 2.867 Supported
Tra.  Ret. 0.252 3.209 Supported
Per.  Ret. 0.207 2.762 Supported
Com.  Ret. 0.263 4.193 Supported

Figure 2. Results of the Structural Model, SHRM and Retention

452 Sepahvand & Bagherzadeh Khodashahri

Figure 3. Results of the Structural Model, Dimensions of SHRM and Retention

The greater the beta coefficient (β), the stronger the effect of an exogenous latent construct
on the endogenous latent construct. Table 6 and Figure 3 show that the compensation and
benefits have the topmost path coefficient of β = 0.263 when compared to other β values in
the model, which shows that it has a greater value of variance and high effect with regard to
affecting the employee retention. However, the performance appraisal has the least effect on
employee retention with β = 0.207.
Table 7 and Figure 4 illustrate the results from PLS analysis, and show the statistical
significance of each hypothesis under path coefficients (β) and t-tests. We added the
moderating construct of " SHRM Practices * Job Engagement" to investigate the moderating
effect in the model. As indicated in Table 7, this hypothesis is confirmed. These findings
confirm this hypothesis at the confidence level of 95% (β= 0.188, T= 2.194>1.96), as the T-
Value is greater than the threshold value of 1.96.

Table 7. Results of the Structural Model /H2

Path/ Hypothesis β T-Value Result
SHRM.  Ret. 0.458 5.951 Supported
H2 0.188 2.194 Supported

Figure 4. Results of the Structural Model

Iranian Journal of Management Studies (IJMS) 2021, 14(2): 437-468 453

To better understand the nature of the identified moderating effect of job engagement in
the relationship between SHRM practices and employee retention, we created a plot of the
interaction (Figure 5). As can be seen in Figure 5, job engagement has a beneficial effect and
strengthens the positive relationship between SHRM practices and employee retention. In
contrast, in a situation when the job engagement is not perceived, the association becomes
dampened.

Figure 5. Interaction Plot of SHRM and Eng

In addition to this, the findings in Table 8 and Figure 6 confirm that vigor, dedication, and
absorption interact significantly with SHRM to influence employee retention.

Table 8. Results of the Structural Model

Path/ Hypothesis β T-Value Result
SHRM.  Ret. 0.444 5.046 Supported
H2a 0.202 2.212 Supported
H2b 0.299 2.964 Supported
H2c 0.233 2.787 Supported

Figure 6. Results of the Structural Mode

As can be seen in Figure 7, vigor, dedication, and absorption have beneficial effects and
strengthen the positive relationship between SHRM practices and employee retention.
454 Sepahvand & Bagherzadeh Khodashahri

Figure 7. Interaction Plot of SHRM and Vig, Ded, Abs.

The moderating construct of "Recruitment and selection * Job Engagement" was added to
investigate the moderating effect in the model. As indicated in Table 9 and Figure 8, this
hypothesis is confirmed. These findings confirm this hypothesis at the confidence level of
95% (β= 0.161, T= 2.095>1.96), as the T-Value is greater than the threshold value of 1.96

Table 9. Results of the Structural Model /H3

Path/ Hypothesis β T-Value Result
Rec.  Ret. 0.411 5.565 Supported
H3 0.161 2.095 Supported

Figure 8. Results of the Structural Model

As can be seen in Figure 9, job engagement has a beneficial effect and strengthens the
positive relationship between recruitment and selection and employee retention. In contrast, in
a situation where the job engagement is not perceived, the association becomes dampened.
Iranian Journal of Management Studies (IJMS) 2021, 14(2): 437-468 455

Figure 9. Interaction Plot of Rec and Eng

In addition to this, the findings in Table 10 and Figure 10 confirm that vigor, dedication,
and absorption interact significantly with recruitment and selection to influence employee
retention.
Table 10. Results of the Structural Model
Path/ Hypothesis β T-Value Result
Rec.  Ret. 0.436 5.883 Supported
H3a 0.249 2.460 Supported
H3b 0.247 2.376 Supported
H3c 0.228 2.287 Supported

Figure 10. Results of the Structural Model

As can be seen in Figure 11, vigor, dedication, and absorption have beneficial effects and
strengthen the positive relationship between recruitment and selection and employee
retention.

Figure 11. Interaction Plot of Rec and Vig, Ded, Abs.

456 Sepahvand & Bagherzadeh Khodashahri

The moderating construct of " Training and Career Development * Job Engagement" is
added to investigate the moderating effect in the model. As indicated in Table 11 and Figure
12, this hypothesis is confirmed. These findings confirm this hypothesis at the confidence
level of 95% (β= 0.186, T= 2.156>1.96), as the T-Value is greater than the threshold value of
1.96is.

Table 11. Results of the Structural Model /H4

Path/ Hypothesis β T-Value Result
Tra.  Ret. 0.391 6.625 Supported
H4 0.186 2.156 Supported

Figure 12. Results of the Structural Model

As can be seen in Figure 13, job engagement has a beneficial effect and strengthens the
positive relationship between training and career development and employee retention.

Figure 13. Interaction Plot of Tra and Eng.

In addition to this, the findings in Table 12 and Figure 14 confirm that vigor, dedication,
and absorption interact significantly with training and career development to influence
employee retention.
Iranian Journal of Management Studies (IJMS) 2021, 14(2): 437-468 457

Table 12. Results of the Structural Model

Path/ Hypothesis β T-Value Result
Tra.  Ret. 0.412 6.120 Supported
H4a 0.267 2.555 Supported
H4b 0.302 2.965 Supported
H4c 0.210 2.743 Supported

Figure 14. Results of the Structural Model

As can be seen in Figure 15, vigor, dedication, and absorption have beneficial effects and
strengthen the positive relationship between training and career development and employee
retention.

Figure 15. Interaction Plot of Tra and Vig, Ded, Abs.

The results of testing the “H5” of the research are presented in Table 13 and Figure 16. We
added the moderating construct of "Performance Appraisal * Job engagement" to investigate
the moderating effect in the model. Since the T-Value for this variable is (0.810), and it is
between -1.96 and 1.96, this hypothesis is rejected at the confidence level of 95%.

Table 13. Results of the Structural Model /H5

Path/ Hypothesis β T-Value Result
Per.  Ret. 0.348 5.254 Supported
H5 0.111 0.810 Rejected
458 Sepahvand & Bagherzadeh Khodashahri

Figure 16. Results of the Structural Model

As can be seen in Figure 17, this hypothesis is rejected.

Figure 17. Interaction Plot of Per and Eng.

In addition to this, the findings in Table 14 and Figure 18 confirm that vigor, dedication,
and absorption do not alter the relationship between performance appraisal and employee
retention. Hence, H5a, H5b, H5c are not supported.

Table 14. Results of the Structural Model

Path/ Hypothesis β T-Value Result
Per  Ret. 0.338 4.071 Rejected
H5a 0.017 0.118 Rejected
H5b 0.028 0.476 Rejected
H5c 0.098 0.482 Rejected
Iranian Journal of Management Studies (IJMS) 2021, 14(2): 437-468 459

Figure 18. Results of the Structural Model

Figure 19 presents a graphical representation of these interactions, showing similar slopes

of performance appraisal and employee retention based on the three types of job engagement,
i.e. vigor, dedication, and absorption.

Figure 19. Interaction Plot of Per and Vig, Ded, Abs.

The moderating construct of "Compensation and Benefits * Job Engagement" was added to
investigate the moderating effect in the model. As indicated in Table 15 and Figure 20, this
hypothesis is confirmed. These findings support confirm this hypothesis at the confidence
level of 95% (β= 0.224, T= 3.093>1.96), as the T-Value is greater than the threshold value of
1.96.
Table 15. Results of the Structural Model /H6
Path/ Hypothesis β T-Value Result
Com.  Ret. 0.339 4.789 Supported
H6 0.224 3.093 Supported
460 Sepahvand & Bagherzadeh Khodashahri

Figure 20. Results of the Structural Model

As can be seen in Figure 21, job engagement has a beneficial effect and strengthens the
positive relationship between compensation and benefits and employee retention.

Figure 21. Interaction Plot of Com and Eng.

In addition to this, the findings in Table 16 and Figure 22 confirm that vigor, dedication,
and absorption interact significantly with compensation and benefits to influence employee
retention.

Table 16. Results of the Structural Model

Path/ Hypothesis β T-Value Result
Com  Ret. 0.347 4.289 Supported
H6a 0.251 2.947 Supported
H6b 0.299 3.664 Supported
H6c 0.267 2.996 Supported
Iranian Journal of Management Studies (IJMS) 2021, 14(2): 437-468 461

Figure 22. Results of the Structural Model

As can be seen in Figure 23, vigor, dedication, and absorption have beneficial effects and
strengthen the positive relationship between compensation and benefits and employee
retention.

Figure 23. Interaction Plot of Com and Vig, Ded, Abs.

Figure 24 represents a graphical representation of this different demographic interaction,

showing a clear difference in the slopes of SHRM practices and employee retention as well as
job engagement and employee retention based on different demographic variables. Hence,
H7, H10, and H13 were supported.

Figure 24. Interaction Plot of Com and Vig, Ded, Abs.

462 Sepahvand & Bagherzadeh Khodashahri

The f2 coefficient was calculated for the confirmed hypotheses to determine the intensity of
the effect of the moderating variable, and the results are shown in the table below. It can be
concluded that the intensity of the moderating effect of the "Training and Career
Development" and "Compensation and Benefits" are relatively stronger than that of other
variables.
Table 17. F2 Coefficient
SHRM. Rec. Tra. Com.
Effectless f2<0.02
0.02<f2<0.15
0.15<f2<0.30 0.117
Relatively 0.249
Strong f2>0.30 0.369 0.410

Discussion and Conclusion

Today, regarding rapid environmental changes and the growing trend of global competition,
retaining talented employees is a vital factor for the organizations’ success and failure.
Therefore, effective policies and procedures based on proper analysis of conditions should be
employed to retain valuable human resources. Given the relationship between strategic HRM
practices and employee retention and the relationship between job engagement and employee
retention, the expected results can be achieved. Therefore, this research aimed at investigating
the impact of strategic HRM practices on the employee retention with the moderating role of
the job engagement. The results obtained from testing the first hypothesis confirmed a
positive relationship between SHRM practices and employee retention, and showed that the
compensation and benefits had a greater value of variance and high effect with regard to
affecting the employee retention, which are consistent with the theoretical foundations of the
research. According to Haider et al. (2019), the compensation and benefits, which an
organization gives to its employee, comprise the primary factor that reveals the commitment
and intention towards the employee and is one of the compelling reasons for an employee to
stay in that organization. However, the pay by itself is not sufficient to motivate employees to
stay in the organization. There can be different other factors as well that affect the employees’
decision to stay in the organization. These factors play a vital role in affecting employee
commitment with the organization that must pay attention to these factors along with
compensation. The results obtained from testing the second hypothesis confirmed the
moderating role of the job engagement in the relationship between employee retention and
strategic HRM practices, which is consistent with the theoretical foundations of the research.
For example, our findings are consistent with results obtained by Fahim (2018), Kundu and
Lata (2017); besides supporting this hypothesis, they concluded that high level of job
engagement and interaction increases the motivation and engagement of employees, and
consequently helps keep valuable employees in the organization. Martin (2011) believes that
by effective implementation of human resources practices, organizations can demonstrate a
high level of commitment to their employees, which in turn leads to increased organizational
effectiveness, increased job engagement, and ultimately the retention of employees in the
organization. Results of testing the third hypothesis indicated that job engagement moderates
the impact of the recruitment and selection on employee retention, which is consistent with
the theoretical foundations of the research. Our findings are consistent with the results
obtained by Kundu and Lata (2017). Since an organization recruits its employees, it should
perform some measures to retain its valuable employees. To this end, organizations should
have competitive advantages in attracting and retaining their valuable employees and should
provide opportunities for the employees and the recruitment candidates that similar,
Iranian Journal of Management Studies (IJMS) 2021, 14(2): 437-468 463

neighboring, and competing organizations do not provide, so that in addition to attracting

active volunteers they can also manage to attract inactive volunteers. In other words, even if
someone is employed and he does not look for a new job, he might become attracted to
interesting and tempting suggestions. Results of testing the fourth hypothesis indicted that job
engagement moderates the effect of training and career development of human resources on
employee retention, which is consistent with the theoretical foundations of this research. Our
findings are consistent with those obtained by Fahim (2018) and Reina et al. (2018). Training
aims at socializing new employees, increasing commitment, and introducing values, methods,
and goals. If employees feel that the organization is willing to use their potential capabilities
and understand that promotion is realized through education, then their engagement and
interaction with work environment – which depends on employees’ attitude, intention, and
behavior to the organization – and consequently their interest to remain in the organization
increases. Suitable trainings should provide opportunities for learning and growth, and
consequently it should improve the performance of employees and organization through
creating competitive advantages. The results of testing the fifth hypothesis do not support the
moderating effect of job engagement on the relationship between performance appraisal and
employee retention, which is not consistent with theoretical foundations of the research. The
reason for this may be related to the intended population, which consists of specialists who
are responsible for the strategic affairs of an organization and have potential and actual
capabilities. Performance appraisal of these valuable employees is usually carried out through
self-controlling and, in general, all the efforts carried out on integrating the goals of
employees and organizations somehow have aimed to realize self-controlling. Inasmuch as
self-control is an internal process, and it can be implemented enthusiastically and without any
coercion and threat, one considers him/herself responsible for his/her behavioral evaluation
and consequences, and makes the organizational atmosphere replete with confidence,
eagerness, and honesty. Therefore, this kind of individual attitude has made the job
engagement internalized, and its external mechanism in increasing or decreasing the
employees’ retention is not effective.
Balozian et al. (2019) stated that drawing from McGregor’s Theory of X and Y, some
managers might operate under the assumption that the average user has an inherent dislike for
responsibility and avoids compliance wherever possible. Managers holding this assumption
may apply coercion, command-and-control, and the threat of punishment for noncompliance.
Other managers may operate under the assumption that users are self-directing, self-
controlling, and responsible beings in the service of objectives to which they are committed.
A person displays self-control when, in the relative absence of immediate external constraints,
he engages in behavior whose previous probability has been less than that of alternatively
available behaviors. Self-control is the ability to keep emotions under control and to restrain
negative actions when tempted, when faced with opposition or hostility from others, or when
working under conditions of stress. These trait competencies are characteristics of successful
human resources.
The results of testing the sixth hypothesis indicated that job engagement moderates the
effect of compensation and benefits on employee retention. In addition, the intensity of the
moderating effect of job engagement in this hypothesis was greater than that in other
hypotheses, which is consistent with the theoretical foundations of the research. Our findings
are consistent with those obtained by Karimi and Parsafar (2017) and Shirazi and Robat
(2015). Karimi and Parsafar (2017) stated that payment aims at facilitating the organization
performance, controlling operation costs, attracting and retaining competent employees, and
rewarding employee partnerships and performance. Rewards greatly affect the employee
retention, so that organizational rewards greatly affect the employee satisfaction and they
464 Sepahvand & Bagherzadeh Khodashahri

think leaving such a competitive reward is costly, and it is unlikely that they can find such a
reward elsewhere. However, the reward system can encourage and motivate employees only
if it grants awards to effective performances.
At last, the hypotheses related to demography indicated that the variables of age and
service experience had a moderating role in relation to SHRM and employee retention, as the
level of education had a moderating role in relation to job engagement and employee
retention. Employees’ continuing education leads to the acquisition of specialized knowledge,
which in turn helps them to understand client’s behavior resulting in more effective
communication. The motivational structures of older and younger employees and work
experience may differ due to changes across the life span in terms of certain individual
differences, organizational rewards, and career situations.
As we push forward in our business, we are lamentably confronting an expanded lack of
profoundly talented employees. Employee retention is important for organizations’ current
showcase. There are broad business doors open for talented professionals. The higher skilled
the employees are, the more noteworthy the interest for their administrations. The information
related to the workforce is becoming quicker. The expense to supplant an employee is getting
progressively recorded and the news is not useful for managers. It costs a lot to supplant an
employee. Findings of this research give sufficient evidence that compensation is one of the
essential factors for building loyalty amongst employees. Recognition of works by the
organization can motivate them and will enhance their job satisfaction. All the major factors
of compensation, especially salary, lead to an influential relationship with the employee
retention plan, and could conclude that the remuneration, especially salary, is the basic and
most important factor of employee retention. In addition, our research findings provide other
valuable insights into how strategic HRM practices interact with job engagement in
influencing employee retention. That is, we found strategic HRM practices to be positively
related to employee retention when employees perceived organization as a place with high
participation, high level of commitment, brand reputation for competitive advantage,
communicating effectively with colleagues and their superiors as encouraging, and enabling
them to engage in expressing their comments and suggestions for addressing and solving
critical work problems and issues. The study also showed that the performance appraisal of
valuable employees is usually carried out through self-monitoring.
In this hypothesis, the moderating role of job engagement has less strength and intensity. In
this regard, there is less time span in selection and recruitment compared with training and
service compensation, and less trial and error opportunities, and ultimately there is less
efficiency in communications and interactions, leading to the employees’ retention. Therefore,
the educational organizations’ managers, e.g., Guilan Technical and Vocational Education
Organization, prior to executing strategic human resource management plans for maintaining
strategic and value-creating employees, must be informed of the coordination of these plans
with the organization’s general strategies causing distinctions in the field of skills training that
is suitable to the labor market. Theoretical the confidence in the coordination of SHRM with
the organization’s general strategies causes the development and execution of plans in order
to recruit the best and most skillful educational trainers who are dispatched to new skills
training courses to develop professionally and to benchmark the best educational institutions.
In addition, the organization, in line with its distinction strategy, must consider designing and
executing forced distribution performance appraisal systems to guarantee the flow of the
arrival of the new talents to organization while triggering competition in performance. In the
end, those educational organizations intending to cause distinction in education service
market must design a compensation system whose main part is based on the members’
Iranian Journal of Management Studies (IJMS) 2021, 14(2): 437-468 465

performance, and is supported and magnified through indirect rewards in order to maintain
their strategic employees.
It must be emphasized that we examined the joint impact of strategic HRM practices and
job engagement on employee retention in only one type of organization. It is possible that
work environment and organization type shape the magnitude of the effects of strategic HRM
practices on employee retention, and the extent to which these effects are moderated by job
engagement. For example, the joint effects of strategic HRM practices and job engagement
might be more pronounced in work and organizational settings characterized by complex
tasks and rapidly changing environments, as was partly the case in the organization in this
research project. Likewise, as the present findings are based on the responses of participants
who worked in a single geographic area, one may argue that our results are culturally specific
and thus cannot be generalized to other contexts.
466 Sepahvand & Bagherzadeh Khodashahri

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