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 its limitations.

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 strategy 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
addressed. Such issues may include low employee morale, absence of a clear career
path, lack of recognition, or poor employee-management relations, among others
factors. Lack of job satisfaction and commitment to the organization by an employee
can also lead to an employee’s exit to go in search of better opportunities. Pay does
not always play a big 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, 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 is not always the case.
Employers can seek "positive turnover" whereby they aim to maintain only those
employees 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 towards 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. The attractiveness of the position is usually
what entices employees to join an organization. However, recruiting candidates only
halves the problem while retaining employees is another. High performing employees
are more likely to be retained when they are given realistic job previews.
Organizations that attempt to oversell the position only contribute to their own
detriment when employees experience a discord between the position and what they
were initially promised. To assess and maintain retention, employers should mitigate
any immediate conflicts of misunderstanding in order to prolong the employee’s stay
in the organization. New-hire surveys can help to identify the level of confidence in
new employees before they decide that the job is not what they envisioned.

Understanding why employees stay with an organization is just as important as

understanding why they choose to leave. Recent studies have suggested that as
employees participate in their professional and social life, they develop a web of
connections and relationships. These relationships prompt them to become more
embedded in their jobs and by leaving a job; this would severe or re-arrange 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. These interviews involve the use of dialogue with employees and asking
them critical questions pertaining to their 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 otherwise they could be left without
adequate high performing employees. Wise employers learn how to attract and keep
good employees, because in the long run, this workforce will make or break a an
organization’s reputation. New supervisors must be prepared to be collaborative,
supportive, and nurture their subordinates. The old style of "my-way-or-the-
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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 human resource managers to identify the organization’s

development strategies which enthuse the employee’s commitment to the
organization’s vision and values to motivate the him/her and help the organization to
gain and sustain the competitive advantage. People work for a reason and the cause
should be provided by work, organization, co-workers among other. An organization
that desires to strengthen its bond with employees must be willing to invest in the
development its workers, creates promotion opportunities and provide training
opportunities and skills development to improve their employee’s employability on
the internal and/or external labor market. (Sharma, 2006)

According to Buchanan (2007), in order for an organization to keep good employees,

they must be facilitated to grow and develop. A particular job is deemed to become
stagnant if the employee feels that he/she is not advancing. When an employee
receives additional training, he/she learns new skills that increase his/her knowledge
and improves job performance. Training helps an employee improve in his/her weak
area, thus leading to improvement in a specific function.

1.2.1 Kenya Literature Bureau

Kenya Literature Bureau (KLB) is a publishing house and State Corporation in
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,
the Bureau published many pioneering anthologies of English language poetry from
East Africa. It was significant of East African writers' indifference to political
boundaries that such anthologies were compiled without on an inter-territorial basis,
with Kenya and Uganda supplying the greater part of the material with contributions
by European and Asian writers.
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However, in 1977, the East African Community 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, (2016)

1.3 Statement of the Problem

Most organizations understand the importance of employee retention and its impact
on the overall performance and subsequently, the existence of an organization. The
importance of retaining top performers is increasing over the years. Employee
retraining is essential but their training is more important than hiring. In this
organization, it has been observed that when employees leave it becomes very
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expensive to replace them. A lot of funds are spent on orientation and training of the
new employees and the cost of replacing old employees with new ones is estimated to
be twice the employees’ annual salary.

Employees undergo different challenges that affect them either positively or

negatively, and this determines their retention. Organizations endeavour to achieve
the best possible and suitable solutions to these challenges. Effective solutions to curb
them are the center of any organization’s success. KLB has its goals and objectives
set with regard to efficiency and effectiveness of its workforce. However, various
factors have hindered the organization from achieving its goals. The main challenges
faced will be made in consideration with other factors that involve employee
retention. These are: organizational policy, employee competence, motivation,
finance, and job security. Another cause will be the design which will be used to
make and implement those possible and effective solutions. It is for this reason that
the researcher chose this topic on “Factors affecting employee retention in parastatals
in Kenya.”

1.4 Objectives of the Study

1.4.1 General Objectives
The aim of this study will be to assess the factors affecting employee retention in
parastatals in Kenya with reference to Kenya Literature Bureau.

1.4.2 Specific Objective

i. To find out the effects of organization’s human resource policy on employee
retention in parastatals with reference to Kenya Literature Bureau.
ii. To determine the effects of employee competence on employee retention in
parastatals.
iii. To determine the effects of employee motivation on employee retention in
parastatals.
iv. To find out the compensation and remuneration on employee retention in
parastatals.
v. To find out the effects of job security on employee retention in parastatals.

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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 compensation and remuneration 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 Kenya Literature Bureau
This research study will be beneficial to Kenya Literature Bureau in that it will enable
management to be informed about the factors affecting employee retention and to
make informed decisions.

1.6.2 Other Parastatals

The research study will give other parastatals a better insight into factors related to
employee retention and thus formulate policies with a view to employee retention and
by so doing, gaining a competitive edge over their competitors who may not be
informed.

1.6.4 Future Researchers

Future researchers will benefit from the use of the results from the study since it will
act as a reference point for future studies on same or similar abstract. As a reference
for future use, the study may stimulate the interest of future researchers who may
provide solutions with regard to employee retention, thus addressing this human
resource challenge.

1.7 Limitations of the Study

1.7.1 Confidentiality
Some of the information required to compile the study is very confidential in nature and
therefore there may be fear that if given out, such information could easily leak and
reach the organization’s competitors. The researcher will overcome this limitation by
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assuring KLB management that all information given will be handled with
confidentiality and clearly explaining the purpose of the study and how it will be
beneficial to the organization.

1.7.2 Lack of Cooperation

Some respondents may be reluctant to give information or may not be interested in
giving their views when sought. By convincing the respondents that the research work
will not only be important to the researcher, but to the organization as well, and by
extension, to them, the researcher able to overcome this obstacle.

1.8 Scope of the Study

This research will be limited to the factors affecting employee retention in parastatals
in Kenya with reference to Kenya Literature Bureau’s head office. The study will
cover senior Management, middle level management and support staff. The research
study will be carried out within a period of three months, from June to August 2016
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 as presented by various researchers, scholars, analysts, theorists and
authors. This enables the researcher to gain knowledge from previous research and to
get 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 (2001). For example, an organizational policy relating to personnel
can be stated as: “our organization will strive to recruit only the most talented
employees.” This policy statement is very broad, leaving managers with only a general
idea of what to do in the area of employment. The policy is intended to display the
extreme importance management attaches to hiring competent employees and to
guiding action accordingly. A quality oriented policy is a standing plan that is
formulated with a view to decision making that is consistent with attaining quality
objectives. Such policies can be made in relation to virtually any organizational
function such as recruitment, strategic plans, decision-related information gathered
and distributed within the organization, the quality of products from suppliers the
quality of training used to prepare employees to work in foreign subsidiaries. (Certo
2001).

According to Cole (2004) companies that lack policy guidelines are not be able to offer
effective management due to lack of discipline amongst employees. Policies offer
guidelines to both internal and external customers by setting standards of service to be
maintained and adhered to. In addition, policies ensure that management stays on course
and is guided. Moreover, without organizational policies, nothing can be achieved
effectively; hence, codes of conduct must be adhered to at all times.

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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 policies do. Organizations have different types of procedures in relation
to the tasks to be accomplished.

A rule is a standing plan that designates specific required action. In essence, a rule
indicates what an employee should or should not do and leaves no room for
interpretation. An example of a rule that many organizations are now establishing is
“No smoking”. The concept of rules may become clearer when one thinks of the
purpose and nature of rules in such games as scrabble and monopoly.

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 provides a structured guide enabling the
identification, evaluation and development of the behaviors in individual employees.
Employee competence is 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, skills in influence and
negotiation. Competency is also used as a more general description of the
requirements of human beings in organizations and communities. 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 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
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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,
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 organization. (Kesser, 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 is a measurable pattern of knowledge, skills, abilities,
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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 in order to do the job successfully. Competencies
represent a whole-person approach to assessing individuals. Competencies are
classified as 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 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 or 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
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goals. He says that “at one time, employees will be considered just as another input
into the production of goods and services.” What perhaps changed this way of
thinking about employees will be research, referred to as the Hawthorne Studies,
conducted by Elton Mayo from 1924 to 1942. This study found out that 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.

Understanding what motivates employees and how they will be motivated will be 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. According to Maslow,
employees have five levels of needs physiological: safety, social, ego, and self-
actualizing. He argues that lower level needs have to be satisfied before the next
higher level needs would motivate employees. Herzberg's work categorized
motivation into two factors: motivators and hygiene. Motivators 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 either be 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 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
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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).

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
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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).

2.2.4 Compensation and Remuneration (Reward)

Compensation refers to any reward or payment given to a person for services
performed. It includes but is not limited to direct or indirect financial rewards. The
purpose of formalized compensation is to attract sufficient number of qualified
persons to fill the positions the organization has, to retain them in the organization so
that turn-over is held to acceptable levels; and to motivate employees to perform to
the fullest extent of their capabilities (Donald L. Caruth & Gail D. Handlogten, 2001).
Human resource managers define compensation as the package of financial rewards -
wages, salaries, commission, bonuses, insurance and other financial types of indirect
monetary benefits given to employees in exchange for their services. Remuneration
on the other hand refers to the subset of rewards that encompasses the total monetary
income that employees receive, together with those benefits with perks that are of
monetary value, which the individual receives by virtue of being an employee. (Keith
Macky, Marie Wilson, 2013).

According to Christiane Zugner and Stefan Ullrich (2005), payment systems are
significant for employees as well as for the organization, remuneration might be the
main reason why people are willing to work. In general, there are three different
approaches to compensation and remuneration which are mainly used in human
resource management. Fixed levels of payment consist of salaries and wages which
do not change except for general pay increases. Payment is fixed on the skills and age
of the employee and the position. In this case, remuneration is not affected by the
performance and productivity.

In the second approach, reward is linked to performance, meaning the wages and
salaries depend on the quantity and quality of work which might change within a
period of time. Most companies use a mixture between these two systems in order to
exchange the received workforce of an employee. This system is a good way to give
feedback to employees. If performance in the last period was better, they will receive
14
a higher salary as in the previous phase. The third approach is where reward is linked
to the results of the company. In this case, employees receive a monthly base
(minimum) wages and get certain bonuses which depend on the successful
performance of the company.

According to Christiane Zugner and Stefan Ullrich (2005), there are three main
factors influencing compensation strategy: workforce expectations, internal variables
(mission targets, strategy and organizational culture), and external variables (e.g.
government policy, certain lobbies and competitors). Workforce expectations by
employees demand fairness of pay amongst individual employees in an organization
who do the same kind of job. Individual equity therefore refers to pay differentials
among employees in the same organization, who do similar work. Internal equity
refers to pay differentials between different jobs within the organization while
external equity refers to fairness in remuneration relation to different organizations.

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
are dependent on the 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. In addition, some laws bolster
job security by making it illegal to dismiss employees for certain reasons. Typically,
government jobs and jobs in education, healthcare and law enforcement sectors are
considered 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 the education level, 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 needed by employers, which in
turn depend on the prevailing economic condition and business environment, highly
skilled employees tend to enjoy higher job security. (Cole, 2004)
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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 credit worthiness 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. It represents how economic factors, internet and
computers, international trade and competition, outsourcing, off-shoring, job
migration, among others, 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 Index values as these jobs are less impacted by the economy.
(Cole, 2004)

2.3 Review of Critical Literature

Organizations set rules and codes of conduct and enforce 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 to ensure fairness in the use of resources. However, the author has failed to
show us how organizational policy affects employee retention in parastatals in Kenya.
Due to this reason the study will be conducted to find out the extent to which it affects
the employee retention in parastatals.
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According to Pigots and Myers (2000) employee competence is an enhancement of
knowledge which acts not only as motivator to the employee but also an opportunity
for a better job that has more responsibilities and authority with good involvement. Its
purposes in the work place is to develop the individual and to satisfy the current and
future manpower needs of the organization. Employee competence enhances 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 intends 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 will be 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 missing link
created the need for study to be conducted to fill the gap.

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
are 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 gap.

17
2.4 Summary
Organizations set the rules of conduct and enforce them to control and regulate the
conduct of 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. Policies are made to ensure a level playing field so that
there is fairness in exploitation or use of resources.

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 is a combination of knowledge, skills and behavior used to
improve performance.

Motivation is the psychological process that gives behavior purpose and direction.
Pre-disposition 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 the purpose of
this research, motivation is operationally defined as the inner force that drives
individuals to accomplish personal and organizational goals.

Compensation refers to any reward or payment given to a person for services

performed. It includes, but is not limited to direct or indirect financial rewards. The
purpose of formalized compensation is to attract sufficient number of qualified
persons to fill the positions the organization has, to retain them in the organization so
that turn-over is held to acceptable levels; and to motivate employees to perform to
the fullest extent of their capabilities.

Factors affecting job security are 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 dismiss 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 ministries and banks.
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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 (2016)
Security

Source: Author (2016)

2.5.1 Organizational Policy

Organizations should be guided by the government regulatory framework when
setting rules and procedures and when formulating policy. Policies should be made
with a view to attracting more customers towards an organization’s services or
products.

2.5.2 Employee Competence

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 is 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.
Management competency includes systems thinking, emotional intelligence, and skills
in influence and negotiations.

2.5.3 Employee Motivation

Motivation is the psychological process that gives behavior purpose and direction.
Pre-disposition to behave in a purposive manner to achieve specific, unmet needs; an

19
internal drive to satisfy an unsatisfied need and the will to achieve. Motivation of
customers through quality customer service will lead to enhance customer loyalty.

2.5.4 Compensation and Remuneration

Compensation refers to any reward or payment given to a person for services
performed. It includes but is not limited to direct or indirect financial rewards. The
purpose of formalized compensation is to attract sufficient number of qualified
persons to fill the positions the organization has, to retain them in the organization so
that turn-over is held to acceptable levels; and to motivate employees to perform to
the fullest extent of their capabilities.

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 are dependent on economy,
prevailing business conditions, and the individual's personal skills.

20
 CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.1 Introduction
This chapter constitutes the research design, target population, description of the
instruments used for data collection and data analysis, procedure to be applied by the
researcher and finally, the research ethics.

3.2 Study Design

A study design is the arrangement of conditions for collection and analysis of data in
a manner that aims at combining relevance to the research purpose with economy in
procedure Kothari, (2004). A descriptive research design will be used in this study
since it will not influence the outcome of the study in any way. Questionnaires as a
method of collecting data will be used; these will be 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 a
study, Mugenda and Mugenda, (2000). The study will involve employees of Kenya
Literature Bureau from various departments, targeting a population of 130
respondents as indicated in the table below:

Table 3.1 Target Population

Category Frequency Percentage

Senior Management 8 6

Middle Management 18 14

Support Staff 104 80

Total 130 100

Source: Author (2016)

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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, 2000). Thew study
will adopt stratified random sampling because the group will be heterogeneous and
the researcher would like each member of the target population to have an equal
chance of participating in the study. The study will use 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

Source: Author (2016)

3.5 Data Collection Procedures

3.5.1 Questionnaires
This study will apply primary data, collected through questionnaires. The researcher
will give out questionnaires to respondents. The use of questionnaires as an
instrument of data collection is economical and will ensure anonymity, will allow use
of standardized questions, provides uniform procedures, provides time for subjects to
think about responses and it is easy to score. The questionnaire will comprise of
close-ended and open-ended questions to avoid being rigid and quantify data
especially where structured items will be used (Kothari, 2004). This method will
facilitate ccollection of enough information, which would otherwise be impossible
using interviews and observations. Secondary data will be collected from published
materials.

22
3.5.2 Validity and Reliability of Research Instruments
Trochim (2006) defines validity as the degree to which a test measures up to its
expectations. It is almost impossible that an instrument can be 100% valid. Validation
involves data collection and analysis to assess the accuracy of an instrument. To
confirm validity, the researcher supervisor and research assistant will assess the
questionnaires.

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 will be done to identify elements of the study population and unit of analysis.
Draft questions will be 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 will be comprehensively studied and the whole
population taken into account. Before the questionnaires are administered pre-testing
will be done with five respondents to confirm validity and reliability of the research
instrument and to ascertain whether the target population will be able to comprehend
and give information needed by the researcher.

3.6 Data Analysis Methods

This will involve qualitative and quantitative analysis. The data will first be edited to
get the relevant data for the study. Data analysis is the process of gathering, modeling
and transforming data with the goal of highlighting useful information, suggesting
conclusions and supporting decision making hence preparing crude data into
interpretable designs, (Mugenda, 2004). Data will be analyzed using statistical
methods by use of tables, charts, frequencies and percentages. It is envisaged that the
comparative methods will be the best since the data is quantitative in nature prior to
the summarization of the data. The questionnaires will be checked to ensure that they
are fully completed and accurate.

3.7 Research Ethics

In the process of carrying out the study, research ethics will be observed. The
researcher will seek permission from the Moi University administration on the
procedures and requirements on how to undertake this research study. Permission

23
will also be sought from the management of Kenya Literature Bureau to allow the
research access and conduct the research study within their premises.

24
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