AN EXAMINATION OF THE IMPACT OF EMPLOYEE RETENTION ON ORGANIZATIONAL PERFORMANCE IN SERVICE INDUSTRY IN DOUALA, CAMEROON

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The performance of an organization is a vital feature that frequently relies on its employees. Rita, Namsonge, and Kabare (2018) assert that organizations have prioritized the implementation of employee retention strategies in order to enhance overall performance. Employee retention is the act of employees choosing to stay with their current organization and not actively seeking other job prospects. Ensuring employee retention is vital for organizations to sustain their performance. However, having experienced employees in an organization allows for improved efficiency and production (Tirta and Enrika, 2020). Furthermore, the primary objective of a retention procedure is to uphold employee satisfaction across all levels while reducing the pace at which employees leave an organization (Ayinde et al., 2021). Thus, ensuring employee retention is crucial for organizations. In today's world, it is especially important for an organization to have a stable workforce in order to maintain a positive reputation, to allure and keep employees. Ensuring employee retention is crucial as it directly impacts staff turnover. In addition, retaining qualified employees is the most crucial responsibility of human resource departments across all organizations. This is because businesses need capable employees to survive and thrive (Kossivi et al., 2018). Consequently, one of the main challenges faced by modern organizations is retaining talented employees to ensure organizational performance. Ma et al. (2018) indicate that organizations lacking talented employees will struggle to achieve their goals and objectives, as poor employee retention strategies often lead to high turnover. Similarly, Ekhsan (2019) notes that many organizations experience significant losses due to excessive turnover, which results in increased recruitment and training costs, as well as work disruptions. The adverse effects of a high turnover or attrition rate are significant, as the departure of an employee leaves a knowledge gap, placing additional burden on remaining team members. This situation necessitates costly and time-consuming recruitment and training for new hires (Ohunakin et al., 2018). Singh (2019) emphasizes that organizations invest substantial resources in recruiting suitable and competent employees to prevent these negative outcomes. Furthermore, in a research conducted by Frank et al.(2018), the talent retention elements that were studied include the effectiveness of the firm's flexible hours, motivated leadership, employee contentment, attractive non-monetary benefits, company image, remuneration structure, and internal recruitment policy. These elements had a substantial impact on the performance of the organization. However,  Mendez & Standar (2021) assert that organizations should prioritize investing in staff retention initiatives to enhance performance, by establishing a connection between personal behaviour and these efforts. Therefore, a survey will be conducted in order to examine the impact of employee retention on organizational performance in service industry in Douala, Cameroon.

1.2 Statement of the Problem

Recently, organizations face challenges in maintaining high-quality workers through retention methods in order to achieve a competitive advantage over rival organizations (Jackson, Schuler, & Jiang, 2019). Similarly, Rawat (2018) states that organizations face issues such as pay packages, working conditions, and job dissatisfaction, which have an impact on employee turnover. While high employee turnover has a negative impact on organizational performance, so it is important to prioritize strategies that promote employee retention. Nevertheless, it is crucial to take into account the succession, retention, development, allocation, and acquisition of personnel in order to enhance performance and achieve a high level of competitiveness. Additionally, a study conducted by Mokoena and Dhurup (2018) found a correlation between staff retention, market orientation, and organizational effectiveness. Market orientation significantly impacts both personnel retention and the financial performance of an organization. According to Fatema, Sofri, and Shehnaz (2018), having superior market power leads to better financial performance and serves as motivation for managers and employees. Likewise, Hunyra, Raza, & Munir (2019) identified a correlation between employee retention and organizational effectiveness The data suggested that the productivity of each individual employee had a crucial role in determining overall employee success. Additionally, multiple studies have shown that the success of most organizations may be attributed to their emphasis on valuing their employees and, more crucially, investing in their employees' development (Annand, 2021). Thus, it is in the light of these that the study seeks to examine the impact of employee retention on organizational performance in service industry in Douala, Cameroon.

1.3 Objectives of the Study

The main purpose of this study is to examine the impact of employee retention on organizational performance in service industry in Douala, Cameroon. Specifically, the study will;

Identify the factors that contribute to employee retention in the service industry.

Investigate the correlation between employee retention and organizational performance in service industry in Douala, Cameroon.

Assess the impact of employee retention on organizational performance in service industry in Douala, Cameroon.

1.4 Research Questions

The following questions have been prepared for the study:

What factors contribute to employee retention in the service industry?

Is there a significant correlation between employee retention and organizational performance in service industry in Douala, Cameroon?

How does employee retention impact organizational performance in the service industry in Douala, Cameroon?

1.5 Research Hypotheses

Ho: Employee retention has no significant impact on organizational performance in the service industry in Douala, Cameroon.

Ha: Employee retention significantly impact organizational performance in the service industry in Douala, Cameroon.

1.6 Significance of the Study

The findings of this study will help business owners and managers in the service industry create and execute successful retention strategies. These strategies include providing competitive salaries, opportunities for career advancement, and fostering a positive work environment. Also, it will inspire employees to actively participate in cultivating a favourable work environment that fosters enduring employment. Furthermore, this study will help investors and stakeholders make informed decisions about where to allocate their resources and how to support companies in developing effective retention strategies. Additionally, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to the impact of employee retention on organizational performance in service industry in Douala, Cameroon.

1.7 Scope of the study

The scope of this study is to impact of employee retention on organizational performance in service industry in Douala, Cameroon. Empirically, this study will identify the factors that contribute to employee retention, investigate the correlation between employee retention and organizational performance and assess the impact of employee retention on organizational performance 

Geographically, the study will be delimited to service industry in Douala, Cameroon.

1.8 Limitation of the study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed. 

More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

1.9 Definition of Terms

Employee retention: is the ability of an organization to keep its employees engaged and committed to their jobs for an extended period. It involves implementing strategies and practices to retain talented and skilled employees within the organization, thus reducing turnover rates.

Organizational performance:  how well an organization achieves its goals and objectives, including financial performance (profitability, revenue growth, cost management), operational performance (efficiency, productivity, quality of service), customer satisfaction, employee satisfaction, and overall market competitiveness.

Employee turnover: the rate at which employees leave an organization and need to be replaced. 

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