Psychological Contract and its Influence on Talent Retention

Today's growing “war for talent” is making it more and more difficult for organizations to keep current employees and to find qualified replacements. This study examines the challenges that organizations face with employee retention in an increasingly competitive labor market. This article examines employees’ views on the factors affecting employee retention. This is done by integrating findings from the literature on retention management with the theoretical framework of the psychological contract in this study, respondents from a diverse group of private organizations described the factors they believed to affect employee retention and the retention practices set up in their organizations. Employees were asked to report on the importance attached to four types of employer inducements commonly regarded as retention factors. They also evaluated their employers’ delivery of those inducements and provided information on their loyalty; intentions to stay and job search behaviors. The results of the study are discussed and implications for HR managers are highlighted.