Final

CHAPTER ONE
INTRODUCTION OF THE STUDY

1.1 Introduction
This chapter introduces the study; it contains the background of the study, statement
of the problem, objectives of the study, research questions, and significance of the
study and limitations of the study.
1.2 Background of the Study

According to Greenberg (2005) Employee retention refers to the ability of an
organization to retain its employees. Employee retention can be represented by a
simple statistic (for example, a retention rate of 80% usually indicates that an
organization kept 80% of its employees in a given period). However, many consider
employee retention as relating to the efforts by which employers attempt to retain
employees in their workforce. In this sense, retention becomes the strategies rather
than the outcome.
A distinction should be drawn between low performing employees and top

performers, and efforts to retain employees should be targeted at valuable,
contributing employees. Employee turnover is a symptom of a deeper issue that has
not been resolved. These deeper issues may include low employee morale, absence of
a clear career path, and lack of recognition, poor employee-manager relationships or
many other issues. A lack of satisfaction and commitment to the organization can also
cause an employee to withdraw and begin looking for other opportunities. Pay does
not always play as large a role in inducing turnover as is typically believed. (Gupta,
2007)
According to Cole (2004) in a business setting, the goal of employers is usually to

decrease employee turnover, thereby decreasing training costs, recruitment costs and
loss of talent and organizational knowledge. By implementing lessons learned from
key organizational behavior concepts employers can improve retention rates and
decrease the associated costs of high turnover. However, this isn't always the case.
Employers can seek "positive turnover" whereby they aim to maintain only those
employees who they consider to be high performers.
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According to McShane (2006) for organizations and employers, understanding the
environment is the first step to developing a long-term retention strategy.
Organizations should understand why employees join, why they stay and why they
leave an organization. This join, stay, leave model is akin to a three-legged stool,
meaning that without data on all three, organizations will be unsuccessful in
implementing a proper retention strategy. Why employees join, the attractiveness of
the position is usually what entices employees to join an organization. However,
recruiting candidates only half the problem while retaining employees is another.
High performing employees are more likely to retain when they are given a realistic
job previews. Organizations that attempt to oversell the position or company are only
contributing to their own detriment when employees experience a discord between the
position and what they were initially told. To assess and maintain retention,
employers should mitigate any immediate conflicts of misunderstanding in order to
prolong the employee’s longevity with the organization. New-hire surveys can help to
identify the breakdowns in trust that occur early on when employees decide that the
job was not necessarily what they envisioned.
Why employees stay- Understanding why employees stay with an organization is

equally as important to understanding why employees choose to leave. Recent studies
have suggested that as employees participate in their professional and community life,
they develop a web of connections and relationships. These relationships prompt
employees to become more embedded in their jobs and by leaving a job; this would
severe or rearrange these social networks. Organizations can ascertain why employees
stay by conducting stay interviews with top performers. A stay survey can help to take
the pulse of an organization’s current work environment and its impact on their high
performing employees. Employers that are concerned with over-using stay interviews
can achieve the same result by favoring an on-going dialogue with employees and
asking them critical questions pertaining to why they stay and what their goals are.
(Gupta, 2007)
Chandra (2006) explains that today's labor force is different. Supervisors must take
responsibility for their own employee retention. If they do not, they could be left
without enough good employees. Wise employers learn how to attract and keep good
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employees, because in the long run, this workforce will make or break a company's
reputation. New supervisors must be prepared to be collaborative, supportive, and
nurturing of their people. The old style of "my-way-or-the-highway" style of
management is a thing of the past. Most new supervisors need training to understand
what it really takes to retain employees. Employee retention involves being sensitive
to people's needs and demonstrating the various strategies.
It is challenge for today HR Managers to identify the organization developmental

strategies which enthuses the employee commitment to the organization vision
and values to motivate the employees and help the organization to gain and sustain
the competitive advantage. People always work for a reason and the cause should
be provided by work, organization, co-workers or from within. Organization desire
to strengthen their bond with employees must spend on the development of
employees. It creates promotion opportunities within organization and provides
training opportunities and skill development to improve their employee’s
employability on the external and or external labor market still as shown (Sharma,
2006)
Buchanan (2007) to keep good employees, the employee must grow and develop. A
particular job can become stagnant or the employee feels as if she is not advancing.
When an employee receives additional training, she learns new skills that increase her
knowledge and improves her job performance, employee is weak in an area, and
training will help improve a specific function. For example, if an employee is a high
performer on most of her job tasks but struggles to complete a monthly report,
additional.
1.2.1 Kenya Literature Bureau

The Kenya Literature Bureau (KLB) is a publishing house and State Corporation in
Kenya founded in 1947. It is located in South-C off Popo Road in Nairobi. KLB was
initially established by the British High Commission in 1947 as the East African
Literature Bureau, to publish books for the general public in Kiswahili, East African
vernacular languages and English. This regional status continued after independence
with the establishment of the East African Community (EAC). In the early 1970s
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the Bureau published many pioneering anthologies of English-language poetry from
East Africa: It is significant of East African writers' indifference to political
boundaries that such anthologies were all compiled, without a single exception, on
an inter-territorial basis, with Kenya and Uganda supplying the greater part of the
material. They were often multiracial as well, incorporating contributions by
European and Asian writers.
However, in 1977, the EAC collapsed and the reins of the bureau were transferred to
the Kenyan Ministry of Education thereby making it a department under that
ministry. In 1980, the KLB Act was passed by the Kenyan Parliament making it a
state corporation a status it holds to this day.
Figure 1.1 Organizational Chart Kenya Literature Bureau
Director
General
Finance Operations Inspection HRM
Manager Manager Manager Manager
Communication Supply Chain Brand Marketing

service
Source: Kenya Literature Bureau, (2014)
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1.3 Statement of the Problem
Most organizations understand the importance of employee retention and its impact
on the overall performance and vitality of an organization. The importance of
retaining top performers is consistently increasing over the years which are also
constraining the human resource as a function. Employee retaining is the most
essential but their retention is more important than hiring. In this organization, it is
observed that when employees leave the organization it becomes very expensive or
still, there is huge amount spend on the orientation and training of the new
employees, this is because, cost of replacing of old employees with new is
estimated up to twice the employee annual salary. Employees undergo different
challenges that affect them either positively or negatively, and this determines their
retention. Organizations Endeavour to achieve best and suitable solutions to these
challenges as a way of justifying their existence. Effective solutions to curb them are
the center of any organization success and it is important task of the organization as a
result KLB has its goals and objectives that are set regarding efficiency of its work
force. However the various factors have hindered the company from achieving its
mission. The main challenges faced were being made in consideration with other
factors that involve employee retention. These organizational policy, employee
competence, motivation, finance, and job security towards the employees. Another
cause was the design which was being used to make and implement those possible
and effective solutions. It’s for their reactive that the researcher choose this topic
concerning factors affecting employee retention in parastatals in Kenya.
1.4 Objectives of the Study.

1.4.1 General Objectives
The aim of this study was to assess the factors affecting employee retention in
parastatals in Kenya with reference to KLB of Kenya.
1.4.2 Specific Objective.

i. To find out the effects of organizational policy on employee retention in
parastatals
ii. To determine the effects of employee competence on employee retention in
parastatals
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iii. To determine the effects of employee motivation on employee retention in
parastatals
iv. To find out the effects of finance on employee retention in parastatals
v. To find out the effects of job security on employee retention in parastatals
1.5 Research Questions

i. How does organizational policy affect employee retention in parastatals?
ii. To what extent does employee competence affect employee retention in
parastatals?
iii. How does employee motivation affect employee retention in parastatals?
iv. To what extent does finance affect employee retention in parastatals?
v. How does job security affect employee retention in parastatals?
1.6 Significance of the Study

1.6.1 To the Management of KLB
This research study will be of help to the target organization. It will be of help to the
managers to capture the factors affecting employee retention in order to place it
strategically to know the contribution of employees towards organizational goals.
1.6.2 Other Parastatals

The research study will give other parastatals better sight into what affect employee
retention and will help them formulate policies which will remedy this, giving a
competitive edge over other competitors who do not understand what affect their
employee retention process and plan.
1.6.4 Future Researchers

Future researchers will benefit from the use of the results from the study. The study
will act as a reference point for future studies on same or similar subtract. Acting as a
reference, it may also stimulate the interest among academicians and thereby
encourage further researchers about the problems and solutions and hence leading to
reduce human resource challenges.
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1.7 Limitations of the Study
1.7.1 Confidentiality
Some of the information required to make the study more successful happen to be very
confidential due to the fact that such information could easily leek to the company’s
competitors. The researcher overcame this limitation by clearly explaining the purpose
of the study and how it was going to be beneficial to them. Confidentiality of the
information obtained was also emphasized.
1.7.2 Lack of Cooperation

Some respondents were reluctant to give information or they were simply not
interested in sharing out their views concerning the subject matter of the research
hence pausing a lot of information. By convincing the respondents that the research
work was very important to the researcher, the researcher was able to overcome this
obstacle.
1.8 Scope of the Study

This research was limited to the factors affecting employee retention in parastatals in
Kenya with reference to Kenya Literature Bureau head office which is located at
South C, Off Popo Road; Nairobi. The study covered Senior Management, Middle
level management, and Support Staff. The research study was carried out within a
period of three months September 2014 to November 2014 with a target population of
140 employees.
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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter presents a review of related literature and various concepts on the subject
under study presented by various researchers, scholars, analysts, theorists and authors.
It has enabled the researcher to gain knowledge from previous research and come up
with other useful information to strengthen the study.
2.2 Review of Theoretical Literature

2.2.1 Organizational Policy
A policy is a standing plan that furnishes broad, general, guidelines for channeling
management thinking toward taking action consistent with reaching organizational
objectives Certo (1990). For example, an organizational policy relating personnel
might be worded as follows: “our organization will strive to recruit only the most
talented employees.” This policy statement is very broad, leaving managers only a
general idea of what to do in the area of employment. The policy is intended to
display the extreme importance management as attached to hiring competent
employees and to guiding action accordingly.
A procedure is a standing plan that outlines a series of related actions that must be
taken to accomplish a particular task. In general, procedures outline more specific
actions than do policies. Organizations usually have many different sets of procedures
covering the various tasks to be accomplished. A rule is a standing plan that designates
specific required action. In essence, a rule indicates what an organization member
should or should not do and allows no room for interpretation. An example of a rule
that many companies are now establishing is No smoking capital. The concept of rules
may become clearer if one thinks about the purpose and nature of rules in such games
as scrabble and monopoly. Policies for quality-oriented is a special type of policy,
Certo (1990). A quality oriented policy is a standing plan that furnishes broad, general
guidelines for channeling management thinking toward taking action consistent with
reaching quality objectives. Quality oriented policies can be made in virtually Any
organizational area and can focus on issues like the quality of a new employees
recruited, the quality of plans developed within the organization, the quality of
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decision-related information gathered and distributed within the organization, the
quality of parts from suppliers to be used in the final assembly of products, and the
quality of training used to prepare employees to work in foreign subsidiaries.
According to Cole (2004) Companies that lack policy guidelines would not be able to
offer effective management due to lack of discipline among its staff. Policies offer
guidelines to both staff and customers by setting standards of service to maintained and
adhered to. In addition, policies ensure that management stays on course as they can fall
back on them when in doubt or when issues are not clear to them or their staff.
Moreover, without company policies, nothing can be achieved effectively; hence, codes
of conduct must be adhered to at all times. Policies are rules or procedures put aside by
an organization, department or the government in carrying out specific functions. It is a
deliberate plan of action to guide decision and achieve rational outcome. The term may
apply to government, private sector organizations and individuals.
According to Thompson (2004) public institutions can limit or even bar entry by
requiring licenses and permit. Also stringent public institutions are mandated by
government policies to follow procurement procedures as they are set. Thompson added
that Government policies also encourages or foster procurement procedures. The
contents of the policies include a purpose statement, outlining why the organization is
issuing the policy and what is desired effect of the policy should be effective date which
indicates when the policy comes into force. The public procurement oversight board
was established as an incorporated body which consisted of nine members appointed by
the minister and approved by the parliament from persons who are nominated by
prescribed departments and director general.
According to Lyson (2006), most of organizations that received funding are likely to
be affected by European procurement legislation such organizations include central
government department and local authority among others. The legislation covered
most contracts for supplies, goods and services. MF1’S rules and regulation are
intended to ensure that institution maintain a specified level of capital to promote
public, ensure adequate capital is maintained and the safety of depositors funds in
order to absorb advance event either within their control or due to external factors.
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This included minimum capital requirement for deposit taking. Treasury bills and
bonds which are freely marketable and re-discountable, such as assets may be
specified even though statutory prescribed minimum is 20% liquidity requirements
will vary from institution to institution depending on the cash flow requirement and
each institution shall therefore identify its unique. Liquidity requirement over specific
time period and plan for appropriate funding.MF1’S while in place mechanism that
will play out potential funding problem in order to explore ways and means of raising
additional funds of the right mix and amount.
Highlights of the regulatory frequency and reporting MF1’S will be required to

reviews loans advances attached a month and report to the CBK monthly. This is
different from the requirement for banks where review and reporting is on a quarterly
basis. Classification of loans and advances include normal, watch, substandard,
doubtful and loss. Unlike in commercial banks where classification is based on the
day a facility is in areas, microfinance institution will be required to classify their
facilities based on the no of installment in arrears. The Internet and E-Commerce have
created new situations that have generated sweeping proposal for fundamental
changes in contract law. According to Lyson (2006), a government is an organization
that has the power to make and enforce laws for a certain territory. To govern means
the power to administrate whether over an area of land, a set of group of people or an
association. This author also emphasized that the growing business should be aware
that the government intervenes in the operation of E-Commerce.
2.2.2 Employee Competence

Employee competence is the ability of an individual to do a job properly. A
competency is a set of defined behaviors that provide a structured guide enabling the
identification, evaluation and development of the behaviors in individual employees.
Employee competence as a combination of knowledge, skills and behavior used to
improve performance; or as the state or quality of being adequately or well qualified,
having the ability to perform a specific role. For instance, management competency
might include systems thinking and emotional intelligence, and skills in influence and
negotiation. Competency is also used as a more general description of the
requirements of human beings in organizations and communities. Supplier
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competency is sometimes thought of as being shown in action in a situation and
context that might be different the next time a person has to act. In emergencies,
competent people may react to a situation following behaviors they have previously
found to succeed. To be competent a person would need to be able to interpret the
situation in the context and to have a repertoire of possible actions to take and have
trained in the possible actions in the repertoire, if this is relevant. Regardless of
training, competency would grow through experience and the extent of an individual
to learn and adapt (Shippmann et al., 2000).
Employee competency has different meanings, and continues to remain one of the
most diffuse terms in the management development sector, and the organizational and
occupational literature. The process of competency development is a lifelong series of
doing and reflecting. As competencies apply to careers as well as jobs, lifelong
competency development is linked with personal development as a management
concept. And it requires a special environment, where the rules are necessary in order
to introduce novices, but people at a more advanced level of competency will
systematically break the rules if the situations require it. This environment is
synonymously described using terms such as learning organization, knowledge
creation, self-organizing and empowerment. Within a specific organization or
professional community, professional competency, is frequently valued. They are
usually the same competencies that must be demonstrated in a job interview. But
today there is another way of looking at it: that there are general areas of occupational
competency required to retain a post, or earn a promotion. For all organizations and
communities there is a set of primary tasks that competent people have to contribute
to all the time (Kesser, 2004).
Employee competencies required for a post are identified through job analysis or task
analysis, using techniques such as the critical incident technique, work diaries, and
work sampling. A future focus is recommended for strategic reasons. Competencies
refer to skills or knowledge that leads to superior performance. These are formed
through an individual/organization’s knowledge, skills and abilities and provide a
framework for distinguishing between poor performances through to exceptional
performance. Supplier competencies can apply at organizational, individual, team,
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and occupational and functional levels. Competencies are individual abilities or
characteristics that are key to effectiveness in work. Supplier competencies are the
characteristics of a manager that lead to the demonstration of skills and abilities,
which result in effective performance within an organizational area. (Kesser, 2004).
Once the job requirements have been clarified, then competency interviewing helps
interviewers look for evidence of those requirements in each candidate. For people
already in jobs, competencies provide a way to help identify opportunities for growth
within their jobs. Employee competencies are not fixed they can usually be developed
with effort and support. Employees and their managers together can identify which
competencies would be most helpful to work on to improve the employee’s
effectiveness. They can then integrate that into a learning plan that may include on-
the-job experience, classroom training, or other developmental activities. Supplier
competencies are not a tool to be used for evaluating people for layoffs. Competencies
are only a way of talking about what helps people get results in their jobs. What
matters is performance being effective and meeting job expectations (Sanghi, 2004).
A core competency is fundamental knowledge, ability, or expertise in a specific

subject area or skill set. For example, an individual who becomes certified as a
Microsoft Certified Software Engineer is said to have a core competency in certain
Microsoft systems and networks. Companies with specific strengths in the
marketplace, such as data storage or the development of accounting applications, can
be said to have a core competency in that area. The core part of the term indicates that
the individual has a strong basis from which to gain the additional competence to do a
specific job or that a company has a strong basis from which to develop additional
products. Competency as a measurable pattern of knowledge, skills, abilities,
behaviors, and other characteristics that an individual needs to perform work roles or
occupational functions successfully. Competencies specify the how of performing job
tasks, or what the person needs to do the job successfully. Competencies represent a
whole-person approach to assessing individuals. Competencies tend to be either
general or technical. General competencies reflect the cognitive and social capabilities
required for job performance in a variety of occupations. On the other hand, technical
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competencies are more specific as they are tailored to the particular knowledge and
skill requirements necessary for a specific job (Shippmann et al., 2000).
Employee competency mapping is a process through which one assesses and

determines one's strengths as an individual worker and in some cases, as part of an
organization. It generally examines two areas: emotional intelligence or emotional
quotient and strengths of the individual in areas like team structure, leadership, and
decision-making. Large organizations frequently employ some form of competency
mapping to understand how to most effectively employ the competencies of strengths
of workers. They may also use competency mapping to analyze the combination of
strengths in different workers to produce the most effective teams and the highest
quality work. Competency development is the design of a competency model to be
used by an organization. As challenges change, businesses need to adapt. Individuals
need to know how to respond, and what specifically they need to do differently. They
need this information in credible language and models they can understand. The best
approach to competency framework design is to work closely with key players in
organizations to develop or update their competency models, positioning the content
to the end user needs. This ensures there is buy-in and ownership of the model at all
levels of staff. (Sanghi, 2004)
2.2.3 Employee Motivation

Motivation has been defined as the psychological process that gives behavior purpose
and direction. Kreitner, (1995) states that predisposition to behave in a purposive
manner to achieve specific, unmet needs; an internal drive to satisfy an unsatisfied
need and the will to achieve, for this research, motivation is operationally defined as
the inner force that drives individuals to accomplish personal and organizational
goals. He says that at one time, employees were considered just another input into the
production of goods and services. What perhaps changed this way of thinking about
employees was research, referred to as the Hawthorne Studies, conducted by Elton
Mayo from 1924 to 1942. This study found employees are not motivated solely by
money and employee behavior is linked to their attitudes. The Hawthorne Studies
began the human relations approach to management, whereby the needs and
motivation of employees become the primary focus of managers.
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Understanding what motivated employees and how they were motivated was the
focus of many researchers following the publication of the Hawthorne Study results,
five major approaches that have led to our understanding of motivation are Maslow's
need-hierarchy theory, Herzberg's two- factor theory, Vroom's expectancy theory,
Adams' equity theory, and Skinner's reinforcement theory. Employees have five levels
of needs physiological: safety, social, ego, and self- actualizing. Maslow argued that
lower level needs had to be satisfied before the next higher level need would motivate
employees. Herzberg's work categorized motivation into two factors: motivators and
hygiene. Motivator or intrinsic factors, such as achievement and recognition, produce
job satisfaction. Hygiene or extrinsic factors, such as pay and job security, produce
job dissatisfaction. Vroom's theory is based on the belief that employee effort will
lead to performance and performance will lead to rewards. Rewards may be either
positive or negative. The more positive the reward the more likely the employee will
be highly motivated. Conversely, the more negative the reward the less likely the
employee will be motivated (Spreitzer, 1996).
Adams' theory states that employees strive for equity between themselves and other
workers. Equity is achieved when the ratio of employee outcomes over inputs is equal
to other employee outcomes over inputs. Skinner's theory simply states those
employees' behaviors that lead to positive outcomes will be repeated and behaviors
that lead to negative outcomes will not be repeated. Managers should positively
reinforce employee behaviors that lead to positive outcomes. Managers should
negatively reinforce employee behavior that leads to negative outcomes. Why do we
need motivated employees? The answer is survival. Motivated employees are needed
in our rapidly changing workplaces. Motivated employees help organizations survive.
Motivated employees are more productive. To be effective, managers need to
understand what motivates employees within the context of the roles they perform. Of
all the functions a manager performs, motivating employees is arguably the most
complex. This is due, in part, to the fact that what motivates employee’s changes
constantly. For example, research suggests that as employees' income increases,
money becomes less of a motivator. Also, as employees get older, interesting work
becomes more of a motivator (Gupta, 2007).
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Nicola (2011) states that motivation is a psychological feature that arouses an
organism to act towards a desired goal and elicits, controls, and sustains certain goal
directed behaviors. It can be considered a driving force; a psychological drive that
compels or reinforces an action toward a desired goal. For example, hunger is a
motivation that elicits a desire to eat. Motivation has been shown to have roots in
physiological, behavioral, cognitive, and social areas. Motivation may be rooted in a
basic impulse to optimize well-being, minimize physical pain and maximize pleasure.
It can also originate from specific physical needs such as eating, sleeping or resting,
and sex. Motivation is an inner drive to behave or act in a certain manner. It's the
difference between waking up before dawn to pound the pavement and lazing around
the house all day. These inner conditions such as wishes, desires, goals, activate to
move in a particular direction in behavior.
The purpose of psychological cause of action Mono-motivational theories. A class of

theories about why people do things seeks to reduce the number of factors down to
one and explain all behavior through that one factor. For example, economics has
been criticized for using self-interest as a mono-motivational theory. Mono-
motivational theories are often criticized for being too reductive or too abstract. A
number of motivational theories emphasize the distinction between conscious and
unconscious motivations. In evolutionary psychology, the "ultimate", unconscious
motivation may be a cold evolutionary calculation; the conscious motivation could be
more benign or even positive emotions. For example, while it may be in the best
interest of a male's genes to have multiple partners and thus break up with or divorce
one before moving onto the next, the conscious rationalization could be, "I loved her
at the time". Freud is associated with the idea that human beings have many
unconscious motivations that cause them to make important decisions because of
these unconscious forces, such as choosing a partner (Robbison, 2007).
Robbison, (2007) attributes the educational results to factors under their own control,
also known as autonomy. Believe they have the skills to be effective agents in
reaching their desired goals, also known as self-efficacy beliefs are interested in
mastering a topic, not just in achieving good grade. Extrinsic motivation refers to the
performance of an activity in order to attain an outcome, whether or not that activity is
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also intrinsically motivated. Extrinsic motivation comes from outside of the
individual. Common extrinsic motivations are rewards (for example money or grades)
for showing the desired behavior, and the threat of punishment following
misbehavior. Competition is in an extrinsic motivator because it encourages the
performer to win and to beat others, not simply to enjoy the intrinsic rewards of the
activity.
A cheering crowd and the desire to win a trophy are also extrinsic incentives. Social
psychological research has indicated that extrinsic rewards can lead to over
justification and a subsequent reduction in intrinsic motivation. In one study
demonstrating this effect, children who expected to be (and were) rewarded with a
ribbon and a gold star for drawing pictures spent less time playing with the drawing
materials in subsequent observations than children who were assigned to an
unexpected reward condition. While the provision of extrinsic rewards might reduce
the desirability of an activity, the use of extrinsic constraints, such as the threat of
punishment, against performing an activity has actually been found to increase one's
intrinsic interest in that activity. In one study, when children were given mild threats
against playing with an attractive toy, it was found that the threat actually served to
increase the child's interest in the toy, which was previously undesirable to the child
in the absence of threat. (Nicola, 2011)
2.2.4 Finance
According to Gitman (2006), finance is the art and science of managing money.
Finance is concerned with the process institutions, market and instructions involved in
the transfer of money among individuals, business and governments. He continues to
explain major areas and opportunity in finance as finance services and managerial
finance, financial services. It is the area of finance concerned with the design and
delivery of advice and financial products to individual, business and government. It
involves a variety of interesting career opportunities within the area of banking and
related institution, personal financial planning, investments, real estates and
insurance. It is concerned with the duties of the financial manager in the business
firm. Financial manage actively manage the financial affairs of any type of business.
Finance is the study of how people allocate scarce resources overtime. He goes on and
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explains two features that distinguish financial decision from resources allocation
decision, as that cost and benefits of financial decision are spread out over time. The
reasons as to why we study financial is managing personal resources and dealing with
the words of business. Making informed public choices as a citizen this leads to
expanding of ones mind.
According to Gitman (2006) financial decisions involves choices between two or

more possible courses of action, no decision is needed. Often continuing with a
situation that has existed until the time of the decision is one option open in decision
maker. All decision making should involve the following steps. Define objective: A
decision maker should be clear what the outcome of the decision intended to achieve.
It is necessary to know the immediate objective is, if the objective is to get to work it
mighty require a decision to turn to the right; if it is to visit to the local shop, the
decision is to the left, if our decision maker does not know the desired destination, it
is possible to make a sensible decision on which way to turn. Identifying possible
course of action this can be done by recognizing available course of action. In doing
this, consideration should be given to any restrictions on freedom of action imposed
by law or other forces not within the control of the decision maker. Each possible
course of action must be reviewed and the relevant data identified. Not all data on a
particular course of action are relevant. Assess the data and reach the destination. This
involves comparing the options by using the relevant in such away as to identify this
course of action that will best work towards the achievement of the objectives.
According to Gitman (2006) finance cannot be anything but “international” while

political strife continues to take its tool of human lives and enormous, economic
losses and same barriers to international flows of goods, services and investment are
still in place, there is not doubt that in many ways the world economy is becoming a
single gigantic and complex organism with highly interdependent constituents
supersonics transport, satellite communication and internet have literally shrunk the
world while the phenomenal growth in international exchange of goods and services,
technology and finance has knit the national economics into a vast network of
economic relationships. No nation today can afford to think of itself as an economic
entity unto itself. Gitman (2006) suggests two types of funds that a company cans its
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finances of equity funds and borrowed funds. Firms sell shares to acquire equity
funds. Shares represent ownership rights of their shareholders represent ownership
rights of their shareholders. Buyers of shares are referred to as shareholders and they
are legal owners of the firm whose shares they hold. Shareholders invest their money
in shares of a company in the expectation of return on the invested capital. Another
important source of securing capital is creditors or lenders. Lenders are not the owners
of a company. They make money available to the firm as loan or debt and retain title
to fund rent.
Firms borrow money from banks, financial institutions, public or by issuing bonds or
debentures. There exist an inseparable relationship between finance on the one hand
and production, marketing and other functions on the other hand. Almost all business
activities, directly or indirectly involve the acquisition of funds and use of funds. For
example recruitment and promotion of employees in production is clearly a
responsibility of the production department, but it requires payment of wages and
salaries and the other benefits and thus involves finance. Similarly buying a new
machine or replacing an old machine for the purpose of increasing productive
capacity affects the flow of funds Sales promotion policies come within the purview
of marketing, but advertising and other sales promotion activities requires outlay of
cash and therefore affect financial resource & Finance also makes money available to
meet the cost of production. Alphones (2005) suggests that financial industry has
become highly competitive since products and services being offered are
homogenous. The environments upon which the milk industries operate affect their
performance in much way. Nevertheless with the prevailing competition leading
business most enterprises have failed the market simply because they offer poor
quality to customers.
As noted by Chandra (2008) there are different sources of long-term finance. For an
organization to support its investments, a firm must find the means to finance them.
Equity is the shareholders’ funds. It consists of equity capital, retained earnings and
preference capital. Debt is a loan fluid, it consist of the long-term loan, debentures
and short-term borrowing. The key difference between equity and debt is that debt
investors are entitled to a contractual set of cash flow (interested and principal),
18
whereas equity investors have a claim on residual cash flows of the firm, after it has
satisfied all the other claims and liabilities. Interest paid to debt investors represents a
tax deductible expense, whereas dividend paid to equity investors has to come out of
profit before tax. Debt has a fixed maturity whereas equity ordinary has an infinite
life. Equity investors enjoy the prerogative to control the affairs of the firm whereas
debt investors pay a passive role of the course; they often impose certain restrictions
on the way the firm is rim to protect their interest.
According to Chandra (2008) there are various terms of loans. Firms obtain long-
term debt mainly by raising terms of loans or issuing debentures. Historically,
financial institutions and banks have been the primary source of long-term debt for
private firms and public firms. Terms of loan also referred to as terms of finance
represent a source of debt finance which is generally repayable in less than 10 years.
They are employed to finance acquisition of fixed assets and working capital margin.
The term loan differ from short-term bank loans which are employed to finance short
term working capital need and tend to be self-liquidating over a period of time,
usually less than one year. As indicated the features of terms of loans which are
currency, security, interest payment and principal repayment and the restrictive
covenants. For currency financial institutions like bank give rupee term loans and
foreign currency term loan. The most significant form of assistance provided by
financial institutions, rupee term Loans are given directly to industrial concern for
setting up new project as well as for expansion, modification and renovation projects.
These finds are provided for incurring expenditure for plant land; building, plant and
machinery, technical knowhow, miscellaneous fixed assets. Preliminary expenses,
preoperative expenses and margin money for working capital Security means that
term loans typically represent secured borrowing. Usually assets which are financed
with the proceeds of the term loan provide the prime security.
According to Prasanna (2008) there are various terms of loans. Firms obtain long-
term debt mainly by raising terms of loans or issuing debentures. Historically,
financial institutions and banks have been the primary source of long-term debt for
private firms and public firms. Terms of loan also referred to as terms of finance
represent a source of debt finance which is generally repayable in less than 10 years.
19
They are employed to finance acquisition of fixed assets and working capital margin.
The term loan differ from short-term bank loans which are employed to finance short
term working capital need and tend to be self-liquidating over a period of time,
usually less than one year. An organization has one main goal, to be the most
successful company in business industries; it will have key performance of financial
that measures profit and relate to fiscal measure like pre-tax profits and shareholders’
equity among others. Whatever key performance of financial selected they must
reflect industry goals. They must be key to its successful and they must be
quantifiable, key performance of financial are usually term consideration.
With investments, Chandra (2008) said, investment whether physical or financial

involves individuals in sacrificing current consumption of wealth in return to increase
in future wealth. This wealth is expected but is never guaranteed each investments
involves a degree of challenge, hence, an investment is assessed for its expected
performance. Finance is the process of identifying, measuring and communicating
economic information to permit informed judgment and decisions. Accountings are
the records in which financial information is contained. Accounting is a process,
which involves the art of recording, classifying and summarizing in as significant
manner and in terms of funds, transitions, and events which are in part at least, of
financial character and interpreting the result thereof. Every human organization
whatever the size requires written records of matters which the management or
administration need for routine action and taking of decision making.
2.2.5 Job Security

According to Gupta (2007) job security is the probability that an individual will keep
his or her job; a job with a high level of job security is such that a person with the job
would have a small chance of becoming unemployed. Factors affecting job security is
dependent on economy, prevailing business conditions, and the individual's personal
skills. It has been found that people have more job security in times of economic
expansion and less in times of a recession. Also, some laws bolster job security by
making it illegal to fire employees for certain reasons. Unemployment rate is a good
indicator of job security and the state of the economy and is tracked by economists,
government officials, and banks.
20
Typically, government jobs and jobs in education, healthcare and law enforcement
are considered very secure while private sector jobs are generally believed to offer
lower job security and it usually varies by industry, location, occupation and other
factors. To some extent, job security also varies by employment laws of each country.
Personal factors such as education, work experience, job functional area, work
industry, and work location play an important role in determining the need for an
individual’s services, and impact their personal job security. Since job security
depends on having the necessary skills and experience that are in demand by
employers, which in turn depend on the prevailing economic condition and business
environment, individuals whose services are in demand by employers will tend to
enjoy higher job security. (Cole, 2004)
According to Salemi (2009) a job security score is a numerical expression of an

individual's unemployment risk based on a statistical analysis of a person's individual
demographics, such as location, industry, and occupation, as well as external factors,
such as technology, outsourcing, and overseas competition, which is captured in
macroeconomic data and trends. Job Security Score also represents the
creditworthiness of an individual based on their ability-to-pay by predicting an
individual's probability of unemployment risk. It is similar to the Credit Score, which
represents the creditworthiness of an individual based on their willingness-to-pay by
evaluating an individual's probability of paying debts in a timely manner. The Job
Security Score is a patent-pending payment risk scoring technology that was first
developed by Scorelogix, a pioneer in consumer risk analytics.
Job security index is a measure of job conditions. Developed by Scorelogix, Job

Security Index is represents how economic factors, internet and computers,
international trade and competition, outsourcing, off-shoring, job migration, etc., are
impacting the demand and supply of employment. A higher Job Security Index for a
region, such as a ZIP code, county or metropolitan statistical area (MSA), indicates
that people in that region have a better opportunity of finding jobs and remaining
employed. A lower Job Security Index for a ZIP or county means that job is relatively
difficult to find and keep. Typically, cities and counties that have a larger
concentration of government jobs or education related jobs have a higher Job Security
21
Index values as these jobs are less impacted by the economy. (Cole, 2004)
Job security in the United States depends more upon the economy and business
conditions than in most countries because of the capitalist system and the minimal
government intervention in businesses. Job security in the United States can vary a lot
since the supply and demand for jobs depends on the economy. If the economy is
good, companies experience more demand for their products and create more jobs,
which increases job security. However, in periods of economic slowdown or
recession, companies try to cut costs and layoff workers which decrease job security.
Importantly, employment in the United States is at will, meaning that apart from
certain limited exceptions, an employee's job security is generally at the mercy of the
employer. (Gupta, 2007)
In most European countries many employees have indefinite contracts which, whilst
not guaranteeing a job for life, make it very difficult for the employer to terminate a
contract. Employees who have legally acquired these rights, for example because they
have been with a company for two years continuously, can only be dismissed for
disciplinary reasons (after a number of formal warnings and subject to independent
appeal) or in the case of a company undergoing restructuring (subject to generous
laws on redundancy payments and often with retraining paid for by the company). In
Spain, for example, such employees are entitled to 45 days redundancy pay per year
worked. The high cost of redundancy payments is in practice what gives employees
job security. (Gupta, 2007)
2.3 Review of Critical Literature

The company sets the rules of conduct and enforces them to control and regulate the
conduct of people to protect their property and contractual rights with an access to
security justice. Policy is a standing plan that establishes general guidelines for
decision making. It sets boundaries around decisions including those that can be made
and eliminating those that cannot. The policies are made to ensure that a level playing
field so that there is no unfairness in exploitation or use of resources. However the
author has failed to show us how organizational policyaffects employee retention in
22
parastatals in Kenya. Due to this reason the study was conducted to find out the extent
to which it affects the employee retention in parastatals.
According to Pigots and Myers (1997) employee competence as an enhancement of

knowledge which acts not only as motivator to the employee but also an opportunity
or a better job that has more responsibilities and authority with good involvement. It’s
purposes in the work place is to develop the individual and to satisfy the current and
future manpower needs of the organization employee competence help in staff
motivation, it improves individual, team and corporate performance in terms of
output, quality, speed and overall productivity. Whereas this is true the author failed
to show us how employee competence affects employee retention in parastatals in
Kenya. This study intended to find out how employee competence affects employee
retention in parastatals.
Motivation has been defined as the psychological process that gives behavior purpose
and direction. Kreitner, (1995) states that predisposition to behave in a purposive
manner to achieve specific, unmet needs; an internal drive to satisfy an unsatisfied
need and the will to achieve, for this research, motivation is operationally defined as
the inner force that drives individuals to accomplish personal and organizational
goals. He says that at one time, employees were considered just another input into the
production of goods and services. Although this is true, the author did not show us
how motivation affects employee retention in parastatals in Kenya. This problem
created the need for study to be conducted to fill the gaps left.
According to Gitman (2006), finance is the art and science of managing money.
Finance is concerned with the process institutions, market and instructions involved in
the transfer of money among individuals, business and governments. Finance is
concerned with the process institutions, market and instructions involved in the
transfer of money among individuals, business and governments. Whereas this is true,
the author failed to show us how finance affects employee retention in parastatals in
Kenya. This study intended to find out how employee competence affects employee
retention in parastatals.
23
According to Gupta (2007) job security is the probability that an individual will keep
his or her job; a job with a high level of job security is such that a person with the job
would have a small chance of becoming unemployed. Factors affecting job security is
dependent on economy, prevailing business conditions, and the individual's personal
skills. It has been found that people have more job security in times of economic
expansion and less in times of a recession. Although this is true, the author did not
show us how job security affects employee retention in parastatals in Kenya. This
problem created the need for study to be conducted to fill the gaps left.
2.4 Summary
The organization sets the rules of conduct and enforces them to control and regulate
the conduct of its employees and to protect contractual rights with an access to
security justice. Policy is a standing plan that establishes general guidelines for
decision making. It sets boundaries around decisions including those that can be made
and eliminating those that cannot. The policies are made to ensure that a level playing
field so that there is no unfairness in exploitation or use of resources.

Employee competence as a combination of knowledge, skills and behavior used to
improve performance.
Motivation is the psychological process that gives behavior purpose and direction.
Predisposition to behave in a purposive manner to achieve specific, unmet needs; an
internal drive to satisfy an unsatisfied need and the will to achieve, for this research,
motivation is operationally defined as the inner force that drives individuals to
accomplish personal and organizational goals. He says that at one time, employees
were considered just another input into the production of goods and services.
Finance is the art and science of managing money. Finance is concerned with the
process institutions, market and instructions involved in the transfer of money among
individuals, business and governments. The finances sourced by the organization
24
should be used by the organization to widen their operations so that they can maintain
their standards.
Factors affecting job security is dependent on economy, prevailing business

conditions, and the individual's personal skills. It has been found that people have
more job security in times of economic expansion and less in times of a recession.
Also, some laws bolster job security by making it illegal to fire employees for certain
reasons. Unemployment rate is a good indicator of job security and the state of the
economy and is tracked by economists, government officials, and banks.
2.5 Conceptual Framework

Fig 2.1 Conceptual Framework
Independent Variables Dependent Variable
Organizational Policy
Employee Competence
Employee Motivation Employee Retention
Finance
Source: Job
Author (2014)
Security
Source: Author (2014)

The regulations that are required should be obtained by the organization to ensure that
the rule and procedures are right. The organization should have better policies to
attract even more customers to the services that they are providing. It covers the
setting of laws and or statutes that deny or allows the country or institution, freedom
to do the activities they were set up for.
25
Employee competence is the ability of an individual to do a job properly. Employees
have different ways of approaching production processes hence this may be used to
determine the production schedules. Employee competence as a combination of
knowledge, skills and behavior used to improve performance; or as the state or quality
of being adequately or well qualified, having the ability to perform a specific role. For
instance, management competency might include systems thinking and emotional
intelligence, and skills in influence and negotiation.

Motivation is the psychological process that gives behavior purpose and direction.
Predisposition to behave in a purposive manner to achieve specific, unmet needs; an
internal drive to satisfy an unsatisfied need and the will to achieve. Motivation of the
customers through offering quality customer service will lead to customer’s loyalty.
2.5.4 Finance
Finance is the art and science of managing money. Finance is concerned with the
process institutions, market and instructions involved in the transfer of money among
individuals, business and governments.
2.5.5 Job Security

Job security is the probability that an individual will keep his or her job; a job with a
high level of job security is such that a person with the job would have a small chance
of becoming unemployed. Factors affecting job security is dependent on economy,
prevailing business conditions, and the individual's personal skills.
26
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.1 Introduction
This chapter represents the research design, target population, description of the
instruments used for the data collection and data analysis procedure applied the
researcher.
3.2 Study Design

A study design is the arrangement of condition for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in
procedure Kothari, (2004). A descriptive research design was used in this study since
it enabled the researcher to seek new ideas from the respondents and develop an
insight to the problems under study. Questionnaires as a method of collecting data
were used whereby they were issued out to the selected population.
3.3 Target Population

Target population is a set of complete individuals, cases or objects with some
common characteristic to which the researcher wants to generalize the results of the
study Mugenda and Mugenda, (1999). The study focused mainly on the employees of
the company targeted in various departments in the following categories, which had a
population of 130 numbers of persons.
Table 3.1 Target Population

Category Frequency Percentage
Senior Management 8 6
Middle Management 18 14
Support Staff 104 80
Total 130 100
27
3.4 Sample Design
Sampling is a procedure by which some elements of the population are selected as
representatives of the total population through the use of probability to acquire a
representative degree of reliability in the selected area, (Saleemi, 1997). Stratified
random sampling was used because the group was heterogeneous and the researcher
wanted each member of the target population to have an equal chance of participating
in the study. The study used a sample size of 40% of the targeted population.
Table 3.2 Sample Size
Category Frequency Sample Size Percentage

Senior Management 8 3 6
Middle 18 7 14
Management
Support Staff 104 42 80
Total 130 52 100
3.5 Data Collection Procedures

3.5.1 Questionnaires
This study used primary data, collected through questionnaire. The researcher gave
out the questionnaires personally to the respondents. The questionnaire were used
because of its economy, also to ensure anonymity, permit use of the standardized
questions and has uniform procedures, provide time for subjects to think about
responses and it is easy to score. The questionnaire were made up of closed ended
and open ended questions to avoid being too rigid and quantify data especially where
structured items were used (Kothari, 2004). This method helped the study to collect
enough information, which was otherwise be impossible using interviews and
observations. Secondary data was collected from published materials.
28
3.5.2 Validity and Reliability of Research Instruments
Validity refers to whether the research measures what it was intended to. Reliability
can be identified as the extent to which the measurement of a test remains consistent
over repeated tests of the same subject under identical conditions. A pilot study was
done to identify elements of study population and unit of analysis. During the study,
draft questions were pre tested to remove ambiguity and achieve high degree
precision. On the other hand, questions which will not yield the required data will be
discarded. All the units of analysis were comprehensively studied and whole
population taken into account. Before the questionnaire being administered they
underwent pretesting with five respondents to confirm validity and reliability of the
research instrument and also ascertain whether the target population was able to
comprehend and give information needed by the researcher.
3.6 Data Analysis Methods

This involved qualitative and quantitative analysis. The data collected by use of
various instruments was first edited to get the relevant data for the study. Data
analysis is a process of gathering, modeling and transformation data with the goal of
highlighting useful information, suggesting conclusions and supporting decision
making hence preparing crude data into interpretable designs, (Mugenda, 2004). Data
was analyzed using statistical methods by use of tables, charts, frequencies and
percentages. It envisaged that the comparative methods were the best since the data is
quantitative in nature prior to the summarization of the data. The questionnaires were
checked to ensure that they are fully completed and accurate.
29
CHAPTER FOUR
DATA ANALYSIS, PRESENTATION AND INTERPRETATION OF FINDINGS
4.1 Introduction
In this chapter the researcher carries out an analysis of date using both quantitative
and qualitative methods. The analysis process is done on the basis of the variables of
the research objectives. The analysis and interpretation of data is done by the help of
analyzed tools such as graphs, pie charts and through judgment due to observations
made.
4.2 Presentations of Findings

4.2.1 Response Rate
Table 4.1 Response Rate
Response 47 90
Non Response 5 10
Total 52 100
Figure 4.1 Response Rate
The response rate was the actual representation of the population. Out of 52
questionnaires distributed 47 were returned, that is 90% of the total population and
only 5 which is 10% was not returned. Most of the targeted employee responded.
30
4.2.2 Gender Analysis
Table 4.2 Gender Analysis
Male 26 55
Female 21 45
Total 47 100
Figure 4.2 Gender Analysis
Analysis from the above table 4.2 and figure 4.2 shows that 55% of the respondents
were male while 45% were Female. This can be interpreted that majority of the
respondents were male.
31
4.2.3 Management Levels
Table 4.3 Management Levels
Senior Management 2 4
Middle Management 4 9
Support staff 41 87
Total 47 100
Figure 4.3 Management Levels
Table 4.3 and figure 4.3 indicate the response of the management levels of persons
who filled the questionnaires. Senior Management respondent by 4%, middle
management 9%, while the response of support staff being the highest with 87%.
32
4.2.4 Number of Years of Service
Table 4.4 Number of Years of Service
Less than 5 years 5 11
5 – 8 years 7 15
9 – 14 years 16 44
14 – 18 years 8 17
Above 18 years 11 24
Total 47 100
Figure 4.4 Number of Years of Service
Table 4.4 and figure 4.4 above indicates the analysis of work experience. 11% had
less than 5 years, 15% had 5-8 years’ experience, 34% 9 – 14 years, 17% represented
those within 14 – 18 years and 23% had above 18 years of experience.
33
4.2.5 Highest Level of Education
Table 4.5 Highest Level of Education
Primary 5 11
Secondary 7 15
College 9 19
University 26 55
Total 47 100
Figure 4.5 Highest Level of Education
Majority of the respondents 55% were graduates. 19% of respondents had college
education while 15% had secondary education. 11% of respondents had primary
education. This indicates therefore that most of the respondents were learned, hence
well informed of their rights and expectations as both internal and external customers
of the organization.
34
4.2.6 Marital Status
Table 4.6 Marital Status
Single 7 15
Married 25 54
Separated 10 21
Divorced 4 6
Window(er) 2 5
Total 47 100
Figure 4.6 Marital Status
Table 4.6 and figure 4.6 indicates that the marital status of the respondents based on
the analysis 15% were single, 53% married, 21% separated, 6% divorced while there
was 5% of widowed respondents.

35
Table 4.7 Whether Organizational Policy Affects Employee Retention in
Parastatals
Yes 41 87
No 6 13
Total 47 100
Figure 4.7 Whether Organizational Policy Affects Employee Retention in

Parastatals
Analysis from the table 4.7 and figure 4.7 above indicates that 87% of the respondents
agreed that organizational policy do affects employee retention in parastatals whereas
13% of the respondents disagreed. Respondents indicated that organizational policy
should be daily sourced to keep the employees well updated with the current
regulations.
36
4.8 Extent to Which Organizational Policy Affects Employee Retention in
Parastatals
Very large extent 26 55
Large extent 10 21
Low extent 5 11
Very low extent 6 14
Total 47 100
Figure 4.8 Extent to Which Organizational Policy Affects Employee Retention in

Parastatals
From the table 4.8 and figure 4.8 above majority of respondents indicated that
organizational policy affects the organization. This was represented by 55% who
indicated very large extent, 21% large extent, 11% low extent while 13% indicated
that very low extent. This showed that organizational policy does affect employee
retention with a very high extent.

37
Table 4.9 Whether Employee Competence Affects Employee Retention in
Parastatals
Yes 34 72
No 13 28
Total 47 100
Figure 4.9 Whether Employee Competence Affects Employee Retention in

Parastatals
From the above table 4.9 and figure 4.9, 72% of respondent, indicated that employee
competence affects the organization while 28% indicated that employee competence
does not affect. This shows that employee competence do affect employee retention in
parastatals Kenya.
38
Table 4.10 Extent to Which Employee Competence Affects Employee Retention
in Parastatalss
Very high extent 19 40
High extent 14 30
Moderate extent 5 11
Low extent 6 14
None at all 4 6
Total 47 100
4.2.10 Extent to Which Employee Competence Affects Employee Retention in

Parastatals
From the findings in table 4.10 and figure 4.10 the response of 40% indicated very
high extent, 30% high extent, 11% moderate extent, 6% indicated none at all while
14% indicated low extent. This shows that employee competence do affects employee
retention in parastatals Kenya by a very high extent.
39
Table 4.11 Whether Employee Motivation Affects Employee Retention in
Parastatals
Yes 45 74
No 12 26
Total 47 100
Figure 4.11 Whether Employee Motivation Affects Employee Retention in

Parastatals
Analysis from the table 4.11 and figure 4.11 above indicates that 74% of the
respondents agreed that technology affects the organization whereas 26% of the
respondents disagreed. This shows that motivation do affect employee retention in
Parastatals Kenya.
40
Table 4.12 To What Extent Does Employee Motivation Affect Employee
Retention in Parastatals
Very high 20 43
High 12 26
Moderate 9 19
Low 6 12
Total 47 100
Figure 4.12 To What Extent Does Motivation Affect Employee Retention in

Parastatals
Analysis from the above table 4.12 and figure 4.12 indicates that 43% of the
respondents agreed that motivation affects employee retention in Parastatals Kenya in
a very high, 26% high, 19% moderate and 12% low extent. This indicates that
motivation affects employee retention in a very high extent.
41
4.2.13 Finance
Table 4.13 Does Finance Affect Employee Retention in Parastatals
Yes 38 81
No 9 19
Total 47 100
Figure 4.13 Does Finance Affect Employee Retention in Parastatals
Table 4.13 and figure 4.13 showed the response on effects of finance with 81%
indicating it does affect the organization while 19% diagreed. This shows that finance
affect employee retention in Parastatals Kenya.
42
4.2.14 Finance
Table 4.14 Extent to Which Finance Affect Employee Retention in Parastatals
Large extent 21 45
Moderate 14 28
Small extent 8 17
No extent 5 10
Total 47 100
4.2.14 Extent to Which Finance Affect Employee Retention in Parastatals
From the table 4.14 and figure 4.14 a response of 10% indicated no extent, 17% small
extent, 28% indicated moderate while 45% indicated large extent. From this finance
does affect the organization at a large extent.this showed that finance do affect
employee retention in parastatals Kenya with a high extent.
43
4.2.15 Job Security
Table 4.15 Whether Job Security Affect Employee Retention in Parastatals
Yes 36 77
No 11 23
Total 47 100
Figure 4.15 Whether Job Security Affect Employee Retention in Parastatals
Analysis from the table 4.15 and figure 4.15 above indicates that 77% of the
respondents agreed that job security do affect employee retention in Parastatals in
Kenya with a high extent whereas 23% of the respondents disagreed. This shows that
job security do affect employee retention in Parastatals in Kenya
44
4.2.16 Job Security
Table 4.16 Extent to Which Job Security Affect Employee Retention in
Parastatals
Very high 20 43
High 12 26
Moderate 9 19
Low 6 12
Total 47 100
Figure 4.16 To What Extent Job Security Affect Employee Retention in

Parastatals
Analysis from the above table 4.16 and figure 4.16 indicates that 43% of the
respondents agreed that job security affects employee retention in Parastatals in
Kenya in a very high, 26% high, 19% moderate and 12% low extent. This shows that
job security affects employee retention in Parastatals with high extent.
45
4.3 Summary of Data Analysis
4.3.1 General Information
Out of 50 questionnaires distributed 47 were returned, that is 94% of the total
population and only 4 which is 6% was not returned. Analysis from the above table &
figure shows that 55% of the respondents were male while 45% were Female. This
can be interpreted that majority of the respondents were male. Senior Management
respondent by 4%, middle management 9%, while the response of support staff being
the highest with 87%. Majority of the respondents 55% were graduates, 19% of
respondents had college education while 15% had secondary education while 11% of
respondents had primary education. Marital status of the respondents based on the
analysis 15% were single, 53% married, 21% separated, 6% divorced while there was
5% of widowed respondents.

From the study analysis it was noted that organizational policy does affect employee
retention in Parastatals Kenya. This was represented by 87% of the respondents who
said that organizational policy affects employee retention in Parastatals whereas 13%
of the respondents disagreed with the rest. This implied that more employees find the
policies set by the organization to enhance employee retention process very favorable.
The company policies should be followed effectively by the organization to avoid
misunderstanding between the employees and the employer.

From the study analysis it was noted that employee competence and the training
process carried out in the organization does affect employee retention in Parastatals
Kenya, 72% of the respondents indicated that employee competence affects employee
retention in Parastatals in Kenya whereas 28% of the respondents disagreed.

Analysis showed that motivation affects employee retention in Parastatals in Kenya.
This was indicated by the response of 74% for those who agreed while 26% of them
indicated that they disagree. The respondents suggested that the more positive the
46
reward the more likely the employee will be highly motivated. Conversely, the more
negative the reward the less likely the employee will be motivated.
4.3.4 Finance
Majority of respondents pointed out that finance affects employee retention in
Parastatals Kenya and this was indicated by 81% of the respondents who indicated
that it does affect the organization while 19% of them disagreed. Funds are the
requirements for retention and the number of the participants in the programmed in
order to run the organizations activities smoothly. Unavailability of funds would
strongly affect effective management. The respondents pointed out that finance
affected the resources acquitted in the firm and how fast some of the essential
resources were acquired the employees.
4.3.5 Job Security

Majority of respondents pointed out that job security affects employee retention in
Parastatals Kenya. This was indicated by the response of 77% for those who agreed
while 23% of them indicated that they disagree. Since job security depends on having
the necessary skills and experience that are in demand by employers, which in turn
depend on the prevailing economic condition and business environment, individuals
whose services are in demand by employers will tend to enjoy higher job security.
47
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
This chapter summarizes, discusses and makes conclusions on the findings of this
study in relation to the objectives put forward in chapter one. It also discusses the
recommendations for further research as well as recommendations for policy and
practice.
5.2 Summary of Findings

5.2.1 To What Extent Does Organizational Policy Affect Employee Retention in
Parastatals?
Analysis shows that organizational policy affects the employee retention in parastatals
in Kenya. Majority of respondents indicated that organizational policy affects the
organization. Respondents rated organizational policy as highly advance represented
by 55%. Advanced 21%, fairly advanced 11% while not advance had 13%. The
regulations that are required should be obtained by the organization to ensure that the
rule and procedures are right. The organization should have better policies to attract
even more skilled work force to maintain quality human resource planning.
5.2.2 How Does Employee Competence Affect Employee Retention in

Parastatals?
From the study analysis it was noted that employee competence do affect employee
retention in parastatals in Kenya. From the findings a response of 6% indicated no
extent, 14% low extent, 11% indicated moderate, 30% indicated high extent while
40% indicated very high extent. This showed that, the employees of the organization
are well trained and have the respective skills to perform the tasks assigned to them.
5.2.3 To What Extent Does Employee Motivation Affect Employee Retention in

Parastatals?
Researcher identified that the respondents rated motivation as highly advance
represented by 43%. Advanced 26%, fairly advanced 19% while not advance had
12%. This showed that the employees of the company are well motivated thus
48
keeping them in good position to perform well. The respondents indicated that the
motivation has greatly changed and transformed the employee retention process and
management.
5.2.4 How Does Finance Affect Employee Retention in Parastatals?

From the study analysis it was noted that finance does affect employee retention in
Parastatals. From the findings a response of 10% indicated no extent, 17% small
extent, 28% indicated moderate while 45% indicated large extent. Budgetary
constraints can lead to challenges facing employee retention in parastatals. This
therefore calls for managers to seek findings to sustain their activities.
5.2.5 How Does Job Security Affect Employee Retention in Parastatals?

The analysis depicts that job security affect employee retention in Parastatals in
Kenya. The respondents gave different responds to the extents to which job security
affect employee retention in Parastatals in Kenya as highly advance represented by
43%. Advanced 26%, fairly advanced 19% while not advance had 12%. .
5.3 Conclusions
A policy is a standing plan that furnishes broad, general, guidelines for channeling
management thinking toward taking action consistent with reaching organizational
objectives. The policy is intended to display the extreme importance management as
attached to hiring competent employees and to guiding action accordingly. Policies
ensure that management stays on course as they can fall back on them when in doubt
or when issues are not clear to them or their staff.

It is also important for the management to ensure that training should be for all levels
of management that when they can achieve the much need objective of the firm.
49
Analysis showed that motivation affects employee retention in Parastatals in Kenya.
The respondents suggested that the more positive the reward the more likely the
employee will be highly motivated. Conversely, the more negative the reward the less
likely the employee will be motivated. Well motivated employees will be able to
perform well in their assigned duties.
Finance is a very important factor to the operations of the organization thus it has a
direct effect to the organization. The management should invest more on the funds to
improve the welfare facilities in the organization to enable employees to improve on
their service delivery to their clients and also increase competitiveness of the
organization.
Since job security depends on having the necessary skills and experience that are in
demand by employers, which in turn depend on the prevailing economic condition
and business environment, individuals whose services are in demand by employers
will tend to enjoy higher job security. The respondents indicated that job security had
a great role in influencing employee retention in Parastatals.
5.4 Recommendations
5.4.1 Company Policy
Organizational policy is a key factor in every decision making process of any
parastatals company in their employee retention processes. Policies are an important
factor to the organization and it was recommended that the management should
source daily the new regulations that are required and also inform the clients at any
moment they are changes in the regulations.

Employee Competence should be enhanced to improve on the performance of the
employees through taking them to seminars or holding workshops for them to learn
more on the necessary operations pertaining the well-being of the organization.
50
Motivation is a key factor in every decision making process of parastatals. Motivation
is a factor affecting the organization and it is important for all the levels of
management to be involved in ensuring that their organization undertakes projects to
help the society as a way of giving back to the society.
5.4.4 Finance
Managers should seek funds to sustain their activities other than just organizations
income funding. The management should seek various ways of getting funds. This
will enable the comparing to run their activities throughout without difficulties hence
improving on performance and reaching their goals.
5.4.5 Job Security

Job security has become an increasingly rare commodity in a global economy that
offers no lack of cheap labor alternatives. Employees who settle into a position are
more likely to achieve long-term career goals, better position themselves financially,
and gain marketable skills that appeal to future employers. All these factors provide
sufficient reminders about the importance striving for job security.
5.5 Suggestions for Further Study

This study was on factors affecting employee retention in Parastatals in Kenya. The
research was only carried out on five variables. The researcher suggests that a further
study to be carried out to investigate the effects of leadership styles, training and
government policy on employee retention in the same sector.
51
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53

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CHAPTER ONE

INTRODUCTION OF THE STUDY

1.2 Background of the Study

A distinction should be drawn between low performing employees and top

According to Cole (2004) in a business setting, the goal of employers is usually to

Why employees stay- Understanding why employees stay with an organization is

It is challenge for today HR Managers to identify the organization developmental

1.2.1 Kenya Literature Bureau

Figure 1.1 Organizational Chart Kenya Literature Bureau

Finance Operations Inspection HRM

Manager Manager Manager Manager

Communication Supply Chain Brand Marketing

Source: Kenya Literature Bureau, (2014)

1.4 Objectives of the Study.

1.4.2 Specific Objective.

1.5 Research Questions

1.6 Significance of the Study

1.6.2 Other Parastatals

1.6.4 Future Researchers

1.7.2 Lack of Cooperation

1.8 Scope of the Study

2.2 Review of Theoretical Literature

Highlights of the regulatory frequency and reporting MF1’S will be required to

2.2.2 Employee Competence

A core competency is fundamental knowledge, ability, or expertise in a specific

Employee competency mapping is a process through which one assesses and

2.2.3 Employee Motivation

The purpose of psychological cause of action Mono-motivational theories. A class of

According to Gitman (2006) financial decisions involves choices between two or

According to Gitman (2006) finance cannot be anything but “international” while

With investments, Chandra (2008) said, investment whether physical or financial

2.2.5 Job Security

According to Salemi (2009) a job security score is a numerical expression of an

Job security index is a measure of job conditions. Developed by Scorelogix, Job

2.3 Review of Critical Literature

According to Pigots and Myers (1997) employee competence as an enhancement of

Employee competence is the ability of an individual to do a job properly. A

Factors affecting job security is dependent on economy, prevailing business

2.5 Conceptual Framework

Employee Motivation Employee Retention

Source: Author (2014)

2.5.1 Organizational Policy

2.5.3 Employee Motivation

2.5.5 Job Security

3.2 Study Design

3.3 Target Population

Table 3.1 Target Population

Support Staff 104 80

Total 130 100

Source: Author (2014)

Table 3.2 Sample Size

Category Frequency Sample Size Percentage

Total 130 52 100

Source: Author (2014)

3.5 Data Collection Procedures

3.6 Data Analysis Methods

4.2 Presentations of Findings

Figure 4.1 Response Rate

Source: Author (2014)