Factors Affecting Employee Retention in Small and Medium Enterprises in Babati Town, Tanzania

Abstract

The study assessed the factors influencing employee retention in small and medium-sized enterprises in Babati, Tanzania. The specific objectives that guided this study included: To determine the effect of remuneration on employee retention in SMEs in Babati town, to assess the relationship between organizational performance and employee retention in SMEs in Babati town and to examine the effect of working conditions on employee retention in SMEs in Babati town. The study employed a positivist philosophy, a deductive approach, an explanatory design, and simple random sampling. The survey strategy and structured questionnaires were used to collect data from 326 SME employees. The data were cleaned, coded, and entered into IBM SPSS software version 27 for analysis. The analysis employed descriptive statistics and ordinary least squares multiple regression. The study revealed that remuneration packages, working conditions, and SME performance significantly and positively influenced SME employees’ retention in Babati town. The study concludes that remuneration packages, working conditions, and SME performance were essential determinants of employees’ retention in Babati town. The study recommends that SMEs continue improving the remuneration packages, the working conditions and their performance so as to have sustainable employee retention practices. Policymakers should devise policies to improve remuneration packages, working conditions, and SME performance.