The Effect of Organizational Culture and Corporate Governance on Employee Retention ()
1. Introduction
Employee retention is the most common challenge in any organization and this is because organizations spend much money, time and energy in recruiting employees. Therefore, when employees leave the organization, it affects it negatively. Employee retention affects the organizations in all ways, positive and negative, when employees stay in the organizations, it helps the organizations to achieve its goals but when they leave, it affects the accomplishment of the organization’s goals.
Tenny (2020) found that employee retention has both positive and negative effects on an organization’s profitability, culture, productivity, performance, and customer satisfaction. Staff attrition is expensive, recruiting and training new hires too frequently results in costly onboarding procedures, and low staff retention detracts from a company’s culture. Employee retention is critical to the health and success of your business. It takes a lot of time, effort, and money to hire and educate new employees, and employee departures can negatively impact business performance. Low staff retention results in a variety of problems, including excessive expenses, knowledge loss, and low output (Paulsen, 2021).
Moreover, employee retention lowers operating expenses, increases productivity throughout the entire company, and lets you avoid costly candidate searches while maximizing training time and minimizing lost knowledge (Tiaa, 2022).
The problem of employee retention is a serious one in Congo because employees hardly stay within the organization till the end of their contracts. This makes organizations keep recruiting while other organizations just have to stay with few employees because they do not want to recruit and see employees leaving before the end of the contract. Because employees have different reasons not to stay, this creates another problem of unemployment as mentioned by many authors. This current study sought to answer the following questions:
1) What is the extent of organizational culture of the respondents in terms of:
a) Mission Culture
b) Consistency Culture
c) Involvement Culture
2) What is the extent of corporate governance of the respondents in terms of:
a) Accountability
b) Transparency
3) What is the extent of employee retention of the respondents in terms of:
a) Recognition
b) Work Environment
c) Company Policies
4) Is there any significant relationship between:
a) Organizational Culture and Employee Retention
b) Corporate Governance and Employee Retention
5) Is there any significant difference on employee retention considering the following:
a) Sex
b) Age
c) Years of Experience
According to Cancialosi (2017), organizational culture is characterized as the fundamental attitudes, presumptions, ideals, and modes of interaction that give an organization its distinct social and psychological climate. Moreover, the key element in an organization’s success is its organizational culture. Organizational culture has a major impact on an organization’s productivity and performance, employee morale and morale, and ability to draw in and keep talented workers (Warrick, 2017).
Madueke and Emerole (2017) studied the organizational culture on employee retention of selected commercial banks in Anambra state of Nigeria. The population was limited to 37 employees and the result revealed that there is a significant positive relationship between organizational culture and the retention of employees in a selected Nigerian commercial bank. Iqbal, Yun, and Akhtar (2019) studied the effects of organizational culture, benefit, salary on job satisfaction ultimately affecting employee retention. A sample size of 152 respondents was collected and this included top, middle, lower management, lecturers, professors, and other administrative employees in selected organizations in China. The study revealed that organizational culture has no effect on employee retention.
2. Corporate Governance
According to Chen (2023), corporate governance refers to the set of guidelines, customs, and procedures that regulate and control an organization. It generally entails striking a balance between the needs of all of an organization’s various stakeholders, including shareholders, senior management, clients, suppliers, financiers, the government, and the local community. Moreover, Larcker and Tayan (2020). Defined corporate governance as a group of controls that a company uses to stop or discourage managers who might be self-serving from taking actions that are harmful to the interests of stakeholders and shareholders.
Apat (2022) studied the organization governance on employee retention, an industry risk and outlook during the pandemic. Descriptive research and purpose sampling were employed with 350 retrieved questionnaires. The questionnaire used in this study was subjected to reliability testing with acceptable to good internal consistency. Data were evaluated using statistical tools of frequency, rank, mean, weighted mean and ANOVA. The result revealed that corporate governance has a positive significant relationship on employee retention. The study suggested that organizations should develop a program for a governance management and employee empowerment program to aid the recovery program for service-based business.
3. Employee Retention
Employee retention is essentially referring to the different steps that businesses take to motivate their staff members to work there for longer periods of time. Preventing talented people from leaving is the main motivation for employee retention (Arora & Bodhanwala, 2018). In addition, employee retention is regarded as the core of a successful corporation. It is described as A procedure whereby employees are motivated to stay with the company for the longest possible duration or until the goals are achieved (Khalid & Nawab, 2018).
According to Afridi, Afridi, and Asadullah (2019). Employee retention is regarded as the core of a successful corporation. It is described as “A procedure whereby employees are motivated to stay with the company for the longest possible duration or until the goals are achieved”.
4. Methodology
This study is a survey research that has been designed into a descriptive-correlation. It sought to examine the impact of organizational culture and corporate governance on employee retention. In this study, correlational research describes the relationships between the variables. It was utilized to determine whether there is a relationship between organizational culture, corporate governance and employee retention. The private hospitals were purposively selected, and nurses were participants, who responded to the survey questionnaires at their convenience time. A total number of 348 nurses participated in the study out of 350 nurses.
The relationship’s strength is measured and interpreted using Cohen’s (1988) absolute values, where r = .10 to .29 denotes small/low, r = .30 to .49 denotes medium/moderate, and r = .50 to 1.0 denotes large/high.
5. Results
The overall organizational culture is presented in Table 1 which answers research Question 1 “What is the level of organizational culture of the respondents in terms of Mission, Involvement and Consistency?”. Based on the grand mean of 3.78 (SD = .20), the results revealed that the organizational culture of the nurses at a private hospital is very strong. Among the three-dimension, Mission has the highest mean of 3.85 (SD = .29), Involvement has the mean of 3.72 (SD = .43), and Consistency has the mean of 3.71 (SD = .32). This implies that the nurses completely agree with the organizational culture of the hospitals and this is interpreted as very strong organizational culture. This also implies that employees understand the mission of the organization, the organizations involve them in their decisions of the company and also the consistency which includes the processes, systems, and procedures of the organizations.
Table 1. Summary of descriptive results of organizational culture.
Organizational Culture |
M |
SD |
SR |
VI |
Mission |
3.85 |
.29 |
C. agree |
Very strong |
Involvement |
3.72 |
.43 |
C. agree |
Very strong |
Consistency |
3.71 |
.32 |
C. agree |
Very strong |
OVERALL |
3.78 |
.20 |
C. agree |
Very strong |
Legend: 1) 1.00 - 1.49 = Completely Disagree (Very Weak) 2) 1.50 - 2.49 = Disagree (Weak) 3) 2.50 - 3.49 = Agree (Strong) 4) 3.50 - 4.00 = Completely Agree (Very Strong), C. agree = Completely Agree, SR = Scale Response, VI = Verbal interpretation.
The overall results for Corporate Governance are presented in Table 2 which answers research question 2, “What is the extent of corporate governance of the respondents in terms of in terms of Accountability and Transparency?”. Based on the grand mean of 3.73 (SD = .30), among the two-dimension, Transparency has the highest mean of 3.78 (SD = .47), and Accountability has the mean of 3.69 (SD = .32). This means that employees agree with the corporate governance in the hospital, and it is interpreted as good corporate governance. This implies that the employees perceive the corporate governance in their hospitals and that they are accountable for their actions. The hospital, too, is transparent about everything that happens in the company.
Table 2. Summary of descriptive results of corporate governance.
Corporate Governance |
M |
SD |
SR |
VI |
Accountability |
3.69 |
.32 |
Agree |
Good |
Transparency |
3.78 |
.37 |
Agree |
Good |
OVERALL |
3.73 |
.30 |
Agree |
Good |
Legend: 1) 1.00 - 1.49 = Strongly Disagree (Very Poor) 2) 1.50 - 2.49 = Disagree (Poor), 3) 2.50 - 3.49 = Moderately Agree (Fair), 4) 3.50 - 4.49 = Agree (Good), 5) 4.50 - 5.00 = Strongly Agree, SR = Scale Response, VI = Verbal interpretation
The overall results of employee retention are presented in Table 3. To answer research question 3, “What is the extent of employee retention of the respondents in terms of employee recognition, work environment and company policies?” Based on the grand mean of 3.72 (SD = .21), the results revealed that the respondents from the private hospital completely agree with the employee retention which is interpreted as very good. This implies that the nurses perceived employee retention as a very good employee retention. The private hospitals acknowledge the efforts of the employees, provide them with all the necessities they need in their work environment and also understand the hospital policies.
Table 3. Summary of descriptive results of employee retention.
Employee Retention |
M |
SD |
SR |
VI |
Employee Recognition |
3.86 |
.33 |
C. agree |
Very good |
Work Environment |
3.64 |
.33 |
C. agree |
Very good |
Organizational Policies |
3.63 |
.45 |
C. agree |
Very good |
OVERALL |
3.72 |
.21 |
C. agree |
Very good |
Legend: 1) 1.00 - 1.49 = Completely Disagree (Very Weak) 2) 1.50 - 2.49 = Disagree (Weak) 3) 2.50 - 3.49 = Agree 4) 3.50 - 4.00 = Completely Agree (Very good) C. Agree = Completely Agree, SR = Scale Response, VI = Verbal interpretation.
To answer research Question 4, this study examined the relationship between organizational culture, corporate governance, towards employee retention. by using Pearson product-moment correlation coefficient. This study adopted the interpretation of Cohen (1988) which states the correlation values as r = .10 to .29 is small, r = .30 to .49 is medium, and r = .50 to 1.0 is large.
Relationship Between Organizational Culture and Employee Retention. This study examined the relationship between organizational culture and employee retention. The findings revealed that there was a significant relationship between organizational culture and employee retention r = .177**, n = 348, p = .001 as shown in Table 4. Thus, the null hypothesis “There is no relationship between Organizational Culture and Employee Retention” was rejected.
Table 4. Correlation of organizational culture and employee retention.
Employee Retention |
Organizational Culture |
Pearson Correlation |
.177** |
|
Sig. (2-tailed) |
.001 |
|
N |
348 |
**Correlation is significant at the .01 level (2-tailed). *Correlation is significant at the .05 level (2-tailed).
Relationship Between Corporate Governance and Employee Retention. This study examined the relationship between Corporate Governance and employee retention. The study findings revealed that there was a significant relationship between corporate governance and employee retention r = .174**, n = 348, p = .001 as shown in Table 5. Thus, the null hypothesis “There is no relationship between Corporate Governance and Employee Retention” was rejected.
Table 5. Correlation of corporate governance and employee retention.
Employee Retention |
Corporate Governance |
Pearson Correlation |
.174** |
|
Sig. (2-tailed) |
.001 |
|
N |
348 |
**Correlation is significant at the 0.01 level (2-tailed). *Correlation is significant at the 0.05 level (2-tailed).
Difference in employee retention when moderators of nurses are considered.
This section discusses the moderator variables. The results compared Employee Retention when the different moderator variables were considered. One-way ANOVA and T-test were used to compare the ranks in each category. This present study used independent sample t-test to compare employee retention on the sex of the nurses working in the private hospitals. Levenes’s Test for equality of variables p-value = .359 indicated that the study uses equal variances assumed. The findings revealed that there is no significant difference in the score of sex t (346) = .716, p = .474 and two-tailed as shown in Table 6. The study failed to reject the null hypothesis “There is no significant difference in employee retention when sex of the respondents is considered”.
Table 6. Difference in employee retention when grouped according to sex.
|
Sex |
N |
Mean |
SD |
t-value |
Sig. |
VI |
ER1 |
Male |
172 |
3.8663 |
.34408 |
.296 |
.483 |
NS |
|
Female |
176 |
3.8557 |
.32368 |
|
|
|
WE |
Male |
172 |
3.6478 |
.33330 |
.070 |
.944 |
NS |
|
Female |
176 |
3.6453 |
.34522 |
|
|
|
CP |
Male |
172 |
3.6564 |
.45936 |
.702 |
.483 |
NS |
|
Female |
176 |
3.6222 |
.45105 |
|
|
|
ER2 |
Male |
172 |
3.7235 |
.21141 |
.716 |
.474 |
NS |
|
Female |
176 |
3.7077 |
.19997 |
|
|
|
Significant at the .05 level Legend. ER1 = Employee Recognition, WE = Working Environment, CP = Company Policies, ER2 = Employee Retention.
In this section, the age of respondents was used to find a result on whether there is a significant difference in employee retention when grouped according to age. The results show that there was no statistical difference when employee retention is considered: p = .841, p = .776, p = .289 respectively from Employee Recognition, Working Environment, and Organizational Policies. The overall core of a significant relationship between the age of the respondents and employee retention is t value = −.1.437 and p = .151. The study failed to reject the null hypothesis “There is no significant difference in employee retention when Age of the respondents is considered”.
The age was grouped into 2 categories:
1) From the age of 20 - 30 and
2) From the age of 31 and above as shown in Table 7.
Table 7. Difference in employee retention when grouped according to age.
Age |
N |
Mean |
SD |
t-value |
Sig. |
VI |
ER1 |
20 - 30 |
180 |
3.8606 |
.34504 |
−.021 |
.983 |
NS |
|
31 - Above |
168 |
3.8613 |
.32166 |
|
|
|
WE |
20 - 30 |
180 |
3.6079 |
.34472 |
−2.213 |
.028 |
NS |
|
31 - Above |
168 |
3.6879 |
.32854 |
|
|
|
CP |
20 - 30 |
180 |
3.6322 |
.47232 |
−.291 |
.771 |
NS |
|
31 - Above |
168 |
3.6464 |
.43663 |
|
|
|
ER2 |
20 - 30 |
180 |
3.7002 |
.20406 |
−1.437 |
.151 |
NS |
|
31 - Above |
168 |
3.7319 |
.20650 |
|
|
|
Significant at the 0.05 level. Legend. ER1 = Employee Recognition, WE = Working Environment, CP = Company Policies, ER2 = Employee Retention.
Professional Experience. In this study, the professional experiences of the nurses of private hospitals were divided into 3 categories: 1. 2 - 4 years of professional experience, 2. 5 - 6 years of professional experience, and lastly 7 - above years of professional experiences. The result revealed that there is no significant difference in employee retention when grouped according to professional experiences where F = 1.260 and p = .285 as shown in Table 8. The study failed to reject the null hypothesis which “There is no significant difference in employee retention when the Professional Experience of the respondents is considered”.
Table 8. Difference in the employee retention when grouped according to professional experience.
PE |
N |
Mean |
SD |
F-Value |
Sig. |
VI |
ER1 |
2 - 4 |
111 |
3.8450 |
.39028 |
.664 |
.515 |
NS |
|
5 - 6 |
111 |
3.8910 |
.28173 |
|
|
|
|
7 - above |
126 |
3.8484 |
.32193 |
|
|
|
|
Total |
348 |
3.8609 |
.33348 |
|
|
|
WE |
2 - 4 |
111 |
3.6049 |
.35412 |
1.371 |
.255 |
NS |
|
5 - 6 |
111 |
3.6538 |
.32891 |
|
|
|
|
7 - above |
126 |
3.6769 |
.33279 |
|
|
|
|
Total |
348 |
3.6466 |
.33889 |
|
|
|
CP |
2 - 4 |
111 |
3.6928 |
.44060 |
. 2.819 |
.061 |
NS |
|
5 - 6 |
111 |
3.6712 |
.44526 |
|
|
|
|
7 - above |
126 |
3.5635 |
.46880 |
|
|
|
|
Total |
348 |
3.6391 |
.45484 |
|
|
|
ER2 |
2 - 4 |
111 |
3.7142 |
.21435 |
1.260 |
.285 |
NS |
|
5 - 6 |
111 |
3.7387 |
.19650 |
|
|
|
|
7 - above |
126 |
3.6963 |
.20502 |
|
|
|
|
Total |
348 |
3.7155 |
.20556 |
|
|
|
Significant at the 0.05 level. Legend. ER1 = Employee Recognition, WE = Working Environment, CP = Company Policies, ER2 = Employee Retention, PE = Professional Experience.
6. Discussion
The finding shows that the nurses of the private hospitals perceive the use of organizational culture in the hospital. The overall mean was 3.78, SD = .20, which means that the nurses of the private hospitals agree with the hospitals organizational culture. It is interpreted as very strong organizational culture. This is supported by the study by Kotrba, Gillespie, Schmidt, Smerek, Ritchie, and Denison (2012) who studied about organizational culture in 137 American companies by using the Denison’s dimension of Organizational Culture and found out that American companies agree that they perceive the use of organizational culture: mission, involvement, adaptability, and consistency. Furthermore, the results are supported by the study done by Frye, Kang, Huh, and Lee (2019) which examined the organizational culture on employee retention of the employees from heath care industry. 252 registered nurses from four hospitals participated in the study. The result revealed that the registered nurses agreed with the hospitals’ organizational culture which implies that there is strong organizational culture; employees are aware of hospital culture; they understand the culture; and the hospital communicates with them when there is any change in the organization.
In addition, our findings support Madueke & Emerole (2017), showing that culture does influence retention. This contrasts with Iqbal et al. (2019), whose study found no significant relationship. A possible reason for this difference may be the context of our research in hospital field, where cultural practices play a stronger role in retention.
The findings also revealed that the nurses perceive the use of corporate governance with the mean of 3.73 and SD = .30, which means that the nurses perceives the use of corporate governance in the organizations and this is interpreted as good corporate governance. This study is supported by Brown (2019) who found out that corporate governance is one of the tools to retain employees in Australian hospitals. The study concluded that the employees perceive the corporate governance in the hospitals as a very good example of corporate governance. In addition, the findings are in accordance with the study of Ogunlokun, Adeparusi, and Akinfolarin (2022) who explained that organizations with good corporate governance are well positioned to support the company. This implies that a good corporate governance will make the company to achieve their objectives. Also, the finding of this study found out that the respondents of this study completely agreed with the employee retention of the organization with the mean of 3.72 and SD = .21. This study is further supported by Jadon and Upadhyay (2018) who examined employee retention in public and private sectors in India. The findings of their study revealed that there is a good employee retention in the public and private hospitals and implies that the employees from public and private hospital agree with employee retention.
This study examined the relationship between organizational culture and employee retention and organizational culture and organizational communication. The finding revealed that there is a relationship between organizational culture and employee retention. This is parallel to the study of Maduele and Emerole in 2007, examined the relationship between organizational culture and employee retention. Descriptive survey research design was adopted, and the research hypotheses were tested using the Pearson Moment Correlation Coefficient. The study worked with a population of 35 employees. The study revealed that there is a significant positive relationship between organizational culture and employee retention. In addition, Adeoye and Hope (2020), studied the relationship between organizational culture, employee loyalty and employee retention. The study adopted a descriptive research design and survey method.
This study also found out that there is a relationship between corporate governance and employee retention. However, this study also revealed that there is no relationship between corporate governance and organizational communication. The study done by Apat (2022) on the corporate governance on employee retention, an industry risk and outlook during the pandemic employed descriptive research, regression was done and purposive sampling were employed with 350 retrieved questionnaires. The result revealed that corporate governance has a positive significant relationship on employee retention. The study suggested that organizations should develop a program for a governance management and employee empowerment program to aid the recovery program for service-based business.
While this study provides important insights into the relationship between organizational culture, corporate governance, and nurse retention, certain limitations should be acknowledged. The methodology relied on non-probability sampling techniques (purposive and convenience sampling), which facilitated access to participants who were directly relevant to the research. However, this approach limits the generalizability of the findings, as the sample may not fully represent the broader population of nurses in the DRC. Future research employing probability-based sampling and larger, more diverse samples would help to strengthen the external validity of the results.
7. Conclusion
The nurses agreed with the organizational culture, there is a good corporate governance, and there is a good organizational communication and a good employee retention. There is a relationship between organizational culture and employee retention, there is also a relationship between corporate governance and employee retention.
Employee retention has no significant difference when the nurses’ sex, age and professional experience is considered.
8. Recommendations
Based on the findings and conclusions of this study, the following recommendations were drawn:
1) The private hospitals should maintain their organizational culture, corporate governance for it helps them to retain their employees
2) Future study should consider the use of different moderators apart from sex, age, and professional experience to enhance the relationship between the organizational culture, corporate governance and employee retention.
3) Further studies should make the sample size bigger than in this current study and also focus on a big number of instruments.