Relationship Between Employee Engagement and Employee Retention

Employee engagement is related to individual's attitudes, intentions, and behaviors [22]. Employee engagement has a substantial impact on organizational outcomes, employee productivity, and ease of recruitment and employee retention [24]. Lockwood [30] states “In a global survey of the engagement levels of 50,000 employees in 27 countries, research by the Corporate Leadership Council emphasizes the link of engagement to business success and its direct impact on employee performance and retention” (p. 9). Further, the Tower Perrin Global Workforce Study (2007–2008, p. 6) also concludes the same thing that “It is certainly true that the more engaged employees are also more likely to stay with an organization.” However, research that investigates the degree to which employee engagement in their work might influence retention is sparse [34]. Therefore, it is hypothesized that:

Hypothesis 4 (H4): There is significant relationship between employee engagement and employee retention.

The Mediating Effects of Employee Engagement

According to Baron and Kenny (1986) and Preacher and Hay [39], there are three prior conditions that must be met to establish mediation. Condition 1, the independent variable (talent management practices), is directly related to dependent variable (employee retention). Condition 2, the independent variable (talent management practices), is directly related to mediating variable (employee engagement). Condition 3, the mediating variable (employee engagement), is directly related to dependent variable (employee retention). A significant relationship between the independent variable (talent management practices) and dependent variable (employee retention) will be reduced (partial mediation) or no longer be significant (full mediation) when controlling for the mediator (employee engagement) (Baron and Kenny 1986; [39]).

Previous studies have indicated that there are significant relationships between antecedents of employee engagement and employee engagement [21, 23] and significant relationship between employee engagement and consequences of employee engagement [40]. Further, employee engagement has been researched and found as a mediating variable in previous studies [21, 22]. However, few empirical studies on employee engagement as a mediator on the relationship

between talent management practices and employee retention make it particularly valuable to extend the body of evidence in this field [19, 24]. Thus, this study seeks to analyze whether employee engagement mediates the relationship between talent management practices (managerial support, employee career development, and rewards and recognitions) and employee retention. Therefore, it is hypothesized that:

Hypothesis 5 (H5): Employee engagement mediates the relationship between talent management practices (managerial support) and employee retention.

Hypothesis 6 (H6): Employee engagement mediates the relationship between talent management practices (employee career development) and employee retention.

Hypothesis 7 (H7): Employee engagement mediates the relationship between talent management practices (rewards and recognitions) and employee retention.

 
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