World Applied Sciences Journal 32 (4): 605-610, 2014

ISSN 1818-4952
IDOSI Publications, 2014
DOI: 10.5829/idosi.wasj.2014.32.04.376

Motivation-A Catalyst to Employee Retention

K. Chitra and V. Badrinath

School of Management, SASTRA University, Thirumalaisamudram, India

Abstract: Employee Retention plays a predominant role in the field of Human Resource Management.
This paper provides a synthesis of how employee motivation affects employee retention and other behaviours
within organization. Though the ethics in corporate is on continuous rise, elite studies show that there is a
good rapport between motivation and employee retention. The researchers hypotheses is tested which is
collected from 300 employees in 2 private sector banks in Chennai region, India. The results indicate that
employee retention and motivation are intervening processes that connect corporate ethics on retention of the
employees. The findings of the survey has been presented and discussed in detail. The paper also discusses
motivation as a tool to retain employees besides offering suggestions and recommendations for overcoming
the present impasse faced by the banking sector. The retention rate can reach the pinnacle only when the
management chooses the right strategy to hold back the employees.

Key words: Employee retention Motivation Organization Advancement

INTRODUCTION retention rate through effective management practice.

Employee motivation and retention is considered as a vital
In a developing economy, it is innate for people at all concern for organisations productivity and profitability
levels to hanker around in building a career. The passion [5-7] gives a statistical study of people suffering with pain
to change jobs is convinced by employees ambition, in their neck and head. The present banking industry
professional, economic and social aspirations. Yesteryear, attempt to become more competitive while attention is
organisation raised at a steady and stable pace, being diverted to the epitome of management approach,
employees viewed career growth in the organisation they employee retention and motivation. The basic principles
worked in and adhered to them. Whereas in the present of the study were based on the opinion of the private
global scenario, versatile factor stays behind an sector bank employees at Chennai region. It also outlines
employees decision to leave a job. While employees how the concept of motivation affects retention [8, 9]
depart from a job it is considered as labour turnover by deals about the behaviour of the employees in an
the organisation. But then it is considered as talent organization and [10, 11] explains the traits of a leader.
acquisition by the new organisation to which the
employee moves. Earlier research highlighted that a Earlier Studies on Employee Retention: To create a
motivated employee is more likely to stay on longer with theoretical account for this study and to answer to the
the organisation than a demotivated employee [1]. question How motivation acts as one of the tool for
The study identifies how motivation acts as a key employee retention? It was significant as a researcher to
character for employee retention [2, 3] briefs about the critique the relevant literature related to this study.
evolution of an organization and the relationship between To heighten the employees retention rate the
employees. It is statistically proved that the lack of management need to ascertain ways to motivate
motivation is considered as one of the major factor that employees to take an interest in the organisation [12].
bestows towards a high employee turnover [4]. On the Studies have shown that 90% of todays managers think
other hand it is argued that organisation should attempt that employees leave organisation for better
for a highly motivated workforce and increase its opportunities or more money and dismiss job turnover as

Corresponding Author: K. Chitra, School of Management, SASTRA University, Thirumalaisamudram, India.

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an acceptable cost of doing business [13] Whereas [14]

opines in his study that all companies will have some
percentage of turnover and the goal behind is to
reduce the turnover and retain high performing
employees who are considered as the top talent.
Employee discontentment is described as another factor
that impacts retention. There is growing workers
dissatisfaction, mainly as an event of layoffs, lack of
career growth and minimal pay increase in recent years.
Factors that contribute to employee dissatisfaction
include less or no support from management perspective,
poor incentives scheme and autocratic leadership [15, 16]
deals about the stress faced by the employees in the work
atmosphere. In summary, the benefits of retention are
many, successful retention efforts can result in
substantially good motivation level in an organisation. Fig. 1: Impact of Motivation in Employee Retention
[17] deals about the factors that would affect the attitude
towards the usage of communication and information. Major Questions That Guided this Study Are:
Enhancing employees motivational level results costs
reduction, ultimately increases shareholder profitability Research Question 1: Whether motivated employee
and results in overall maximisation of organisational have positive attitude towards
growth and prosperity. It also results in increased retention?
customer satisfaction because long term employees are Research Question 2: How motivation acts as a
able to build relations with customers and the longer that retention tool?
employees stay with an organisation, the more their Research Question 3: Is motivation a paramount issue
knowledge and experience help them to better serve the of concern for management?
customers [18] explains the applications of various case
study in research. The best retention efforts also results The Sample and Validity of the Instruments: To select
in happier employees, which helps an organisation to some of the elements with the intention of drawing out
become an employer by choice [19, 20] studied about the opinion of the employees (population) it is referred to
quality of research methods used and the perception of such group of elements as sample. The instrument for the
professionals. primary data (questionnaire) is indented to measure the
opinion of the employees regarding the impact of
Research Methodology of the Study Undertaken: The motivation on employee retention. The authenticity of the
population for the present study comprised the entry level study was determined with the use of Cronbachs Alpha
and middle level officers employed in the private sector reliability test. It is described that Cronbachs alpha of 0.8
banks, functioning in Chennai. Since it was not possible or greater was an indication of good internal consistency
to include all the elements of the population in the for research work.
investigation, the study was conducted on a
representative sample, having the salient feature of the Analysis and Interpretation:
population. The purport of the study was to identify
whether motivation acts as a conducive factor in retaining H0: There is no substantial difference in the opinion of
the workforce or not. The outcome of this study will assist employees on retention where motivation acts as a
organisations in narrating how motivation plays a tool in the banking industry.
predominant role in employee retention. There were two
major fundamental grounds for channelling this research: In order to assess the effect of motivation on
employee retention the employee were categorised into
To ascertain how motivation regulates employee middle level officers and entry level officers based on their
retention. median scores. The table value was calculated to test the
To ascertain the homogeneity between motivation of significance level. The mean scores between the two
employees and their confinement in the job. groups are presented in table 1 where the mean score for

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Table 1: Differences between entry level and middle level officers (n=300)
Middle Level Group
----------------------------------------------------------------------------------
Variable N Mean SD
Overall opinion on Retention (Motivation as a tool in Banking Industry) 148 89.57 20.18
Entry Level Group
-----------------------------------------------------------------------------------
Variable N Mean SD
Overall opinion on Retention (Motivation as a tool in Banking Industry) 152 75.22 21.34
t-value 20.87**

Table 2: Mean, standard deviation, correlation, co-efficent alphas among the independent, mediating and dependent variables
Variables X1 X2 X3 X4 X5 X6 X7 ER
X1 .83
X2 .62** .90
X3 .48** .51** .94
X4 .96
X5 .74** .56** .43** .68** .82
X6 .69** .68** .55** .76** .76** .81
X7 -.28** -.37** -.30** -.38 -.35** -.48** .82
X8 -.25 -.34** -.28** -.35** -.30** -.47 .70 NA
Mean 5.43 4.52 5.38 5.21 5.94 5.47 3.68 .399
SD 1.15 1.58 1.40 1.14 1.00 1.29 1.64 .198

middle level officers were 89.57 and for entry level officers years of age. Moving to the educational background of
were 75.22. This implies that middle level officers agrees the sample respondents 3% of the sample respondents
that motivation acts as one of the strongest tool for had doctorates, 31% with masters degree, 59% with
retaining the workforce which has been statistically university degree and 17% with professional degree.
proven with a higher mean values of 89.57 and a lesser As these demographic factors (length of service, gender,
standard deviation value which is 20.18. Moving to the age, responsibility level and educational level) may affect
other group of sample respondents where they state that the relationships of interest, stepwise multiple regression
motivation doesnt act as a retention tool and statistically analysis was used to determine their effects on intention
proved that mean value with 75.22 and a standard to leave and turnover.
deviation of 21.34.
The difference between the two set of sample Where:
respondents was found to be 0.01 levels. Hence the null X1: Employees satisfaction level from management
hypothesis is rejected and the alternative hypothesis is X2: Management interest in motivating the employees
formed. X3: Employee satisfaction level regarding the incentives
X4: Periodical hike in the salary
H1: There is substantial difference in the opinion of X5: Available promotional opportunities
employees on retention where motivation acts as a X6: Perception of employees on organisation support
tool in the banking industry. (boss/supervisor) higher is the retention rate.
X7: Well motivated employees have positive attitude
Statistical Description of the Sample Respondents: The towards work
selected sample had the following demographic X8: The perception of the employees perception on
characteristics: (1) 4% had been with the banking industry incentives offered by the management higher is the
less than 0 to 3 years, 17% for 3 to 6 years, 24% for 6 to 10 retention rate
years and 35% for more than 10 years. (2) 23% of the
sample respondents were of age group between 20 to 30 From table 2 (Refer annexure 1) the variable scores (i.e
years of age, 42% of them were in the age group of 31 to mean), standard deviation, correlation and coefficient
40 years of age, 17% of the respondents were in the age alpha estimates of internal consistency are noted in
group of 41 to 50 years of age and finally 18% of the table 2. The study variables had a good acceptable
sample respondents were in the age group of more than 51 internal consistency which estimates the reliability and

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demonstrates the factor structure is consistent with the H04: The greater the perception of the employees
content of each formed scale. The strong correlation perception on employees periodical increase in the
among the five independent variables (rs of 0.43 and salary higher is the retention level.
higher) suggests that common method variance may
detract from a clear interpretation of results. There exists A one way ANOVA test was run (Table 3) to test
a high correlation between the two dependent the attributes against the major factors on employee
variables-motivation as a surgical tool for retention and retention. The ANOVA shows a significance of 0 for each
employee perception of the employees having a positive of the four factors on motivational tool as a concept on
stakeholder culture on retention. The various components employee retention. A significance of 0 displays that
of retention factors that comes under motivation are analysing one or more of the factors of motivation against
employee satisfactory level with the immediate boss, each other is not essential to determine which of the four
incentives offered, reasonable periodical increase in salary factors of motivation (satisfactory opinion from the boss,
and prevailing promotional opportunities in the management interest on employees incentives schemes
organisation was significantly correlated (p < 0.001) with offered by the management, periodical hike in the salary,
the opinion of the sample respondents as motivation as a sense of personal achievement) is primarily responsible
strong element for retention (rs of -0.27, -0.37 and -0.30) for employee retention in organisation from the
and on the other hand where it is not a retention perspective of motivation.
strategy (rs of -0.24. -0.32 and -0.26) as shown in table 2.
These results provide direct support of the framed null DISCUSSION
hypotheses. Table 1: employee satisfactory level with the
boss where the value (r = 0.68), management interest in The study investigated how motivation plays an
motivating the employees (r = 0.76). The significant and effective role in maintaining the workforce in the banking
meaningful relationship between the various factors industry. The analysis also examined the relationship
satisfied with the incentives offered, periodical increase in between employee actual perception on motivation
the salary (r = -0.35 and -0.30) and not a pertaining factor and the outcome of variables on employee retention.
(r = -0.48 and -0.46). The final part of the analysis narrates This results in meaningful work experience for the various
about the required regression of the dependent and factors like quality output, high motivation level and
independent variable to obtain the paralleled effects of the reducing the intention to leave the job. This is due to the
dependent variable. result of increase in motivation. Retention redirects an
organisations employment policies and practices to focus
H02: The greater the perception of employees on on building thriving employee community. The total
organisation support (boss/supervisor) higher is sample of the bank employees were subdivided to two
the retention rate. groups as entry level officers and middle level managers.
H03: The greater the perception of the employees It results in the entry level officers mean value on
perception on incentives offered by the employee retention score to be lower than the mean score
management higher is the retention rate of the middle level managers. This leads to an overview

Table 3: Summary statistics on Anova

Variables Sum of squares Df Mean square F Sig.
Satisfactory opinion from the boss Between Groups 41.81 14 2.917 8.344 .000
Within groups 26.345 72 .350
Total 68.155 86
Management interest on employees Between Groups 51.32 14 3.732 11.747 .000
incentives schemes offered by the Within groups 21.24 72 .318
management Total 72.56 86
periodical hike in the salary Between Groups 26.379 14 1.884 6.208 .000
Within groups 20.89 72 .303
Total 47.269 86
Sense of personal achievement Between Groups 44.87 14 3.272 13.115 .000
Within groups 16.99 72 .249
Total 61.86 86

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that there is a significant difference in employees opinion pessimism and frustration. Employee motivation is
in employee retention. Whereas moving to the one way considered as an inhibitor of performance. Hence the bank
ANOVA the study variables had a good acceptable ought to intend seriously of adopting new policies and
internal consistency which estimates the reliability and framework for motivation which in turn leads to employee
demonstrates the factor structure which was consistent retention. It is desired that the findings of the research
with the content of each formed scale. The strong work facilitate the banking fraternity in retention.
correlation among the five independent variables (rs of
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