The Impact of HRM Practices on Employee Retention in the BPO Sector of Karachi: The Mediating Role of Job Satisfaction

Abstract

This research analyzes the effects of the Human Resource Management (HRM) practices in the employee retention aspects at the BPO, a Karachi based organization in the Business Process outsourcing (BPO) industry in Pakistan. The study aims at addressing the effect of the main HRM practices recruitment and selection, training and development, compensation and benefits, and employee engagement on employee retention intentions with the organization. The type of a quantitative research design was used and the data has been gathered via the use of a structured questionnaire that was given to current employees. Much descriptive statistics and correlation analysis were used to analyze responses in order to investigate the relations between HRM practices and retention. The results show that excellent practices of HRM contribute to high employee retention. It was found that open recruitment, lifelong learning, equitable and competitive pay, and conducive work environment are major elements that facilitate the desire of employees to remain. These relations were found to be partially mediated by job satisfaction, with special emphasis given to the role of perception of fairness, starting growth opportunities and organizational support by employees. This research adds to the literature as it offers the empirical data of the HRM practices and employee retention, which are highly organization-specific in the Pakistan BPO industry. The results provide viable suggestions to the HR practitioners and organizational leaders at the BPO to formulate strategic, evidence-based HR policies that would help to curb the rate of turnover and enhance the overall performance of the organization. Using one Karachi-based BPO company, the study will have an in-depth insight into the HRM-retention dynamics within a local environment, which has a paucity of empirical research in the outsourcing sector, especially in the post-pandemic world. The results give practical implications to HR managers to craft a set of policies that will increase organizational performance and retention.