EFFECT OF REWARD POLICIES ON EMPLOYEE RETENTION IN COMMERCIAL BANKS IN NAIROBI COUNTY
Abstract
Employee retention in commercial banks remains a critical challenge, with high turnover rates negatively impacting organizational performance and increasing recruitment costs. Despite various reward systems in place, it is unclear to what extent these policies effectively influence retention in the competitive banking sector. The objective of this study was to determine the effect of reward policies on employee retention in commercial banks in Nairobi County. Grounded in High-Performance Work Systems (HPWS) Theory, the study employed a descriptive research design targeting Tier 1 banks, namely Equity Bank, KCB, ABSA, Cooperative Bank, and NCBA. Stratified sampling was employed to achieve a sample size of 595 employees, determined using Slovin’s formula to ensure a high confidence level. Data collection involved a structured questionnaire distributed to managers within the banks. Reliability was evaluated using Cronbach's alpha coefficient. Data analysis was conducted using SPSS version 26, focusing on descriptive, correlation, and regression analysis. A significant positive correlation (r = 0.547) was found between employee retention and reward policies, indicating that as reward policies improve, employee retention tends to increase. This suggests that better reward systems, such as competitive salaries, bonuses, and recognition programs, are likely to enhance employee satisfaction and loyalty, leading to a lower turnover rate. The study recommends collaboration between policymakers and banks to develop comprehensive human resource policies that prioritize employee retention.
Keywords: Employee retention, Reward policies, High-Performance Work Systems (HPWS), Commercial banks, Nairobi County.
CITATION: Nzyimi, I. K., Gachuru, G., & Siele, E. (2024). Effect of reward policies on employee retention in commercial banks in Nairobi County. The Strategic Journal of Business & Change Management, 11 (4), 681 – 690. http://dx.doi.Org/10.61426/Sjbcm.v11i4.3111
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DOI: http://dx.doi.org/10.61426/sjbcm.v11i4.3111
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