The Effect of Reward Practices on Employees Retention in Selected Garment Factories in Addis Ababa: The Case of Bole Lemi Industry Park

Abstract

Rewarding employees is critical in this era of competition due to the fact that organizations need to survive, grow and develop. Consequentially, reward has become an issue of strategic importance. The present study was undertaken to investigate the effect of selected reward practices on Employee Retention in the Garment companies of Bole Lemi Industry Park. Questionnaire was an instrument for the primary data collection. It is a quantitative study. Descriptive statistics based frequency tables were used to provide information on the variables. The results were investigated in terms of descriptive statistics followed by inferential statistics on the variables. A total of 347 questionnaires were distributed to the employees in the concerned garment companies and a total of 334 employees completed the questionnaire properly. Hypotheses were formulated to test the relationship of all the independent variables (salary, benefit, promotion, recognition and working condition) and the dependent variable (Employee Retention). The findings obtained indicated that reward practices have a positive influence on employee Retention. Especially the benefit package like Insurance, Medical care, Education Opportunities and Loan policies influence employees retention at most. Furthermore, it provided suggestions to overcome the problems related on the employees’ retention. Garment companies must clearly communicate its reward policy and procedure to its employees and they should include both financial and non-financial rewards with appropriate mix by considering employees demand. In addition, timely offer and improvement of its reward practices must be considered.

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