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European Journal of Applied Business Management, 5(4), 2019, pp. 17-29.
ISSN 2183-5594
17
Research Paper
Effect of Recruitment and Selection on Employee Retention:
Mediating Factor of Employee Engagement
Submitted in May 25, 2019
Accepted in December 13, 2019
Evaluated by a double blind review system
EDWIN. AGWU1
NGOZI I. NWOKE2
ABSTRACT
Purpose: This study aims at identifying the effect recruitment and selection has on
employee retention in selected SMEs in Nigeria, using employee engagement as a
mediating variable.
Design/Methodology/Approach: It employed descriptive research design, stratified
sampling technique and questionnaires as instruments for gathering the much needed data
Findings: Findings revealed among others, that recruitment and selection on their own
has no substantial effect on employee retention, but with the combination of employee
engagement, a strong significance on employee retention can be achieved. Conclusively,
employee engagement mediates the outcome of recruitment and selection on employee
retention.
Research limitations: This study has two limitations. First, though employment cuts
various sectors of the Nigerian economy, this study only dwelt on the SMEs. Second, the
study utilized the quantitative method, further studies can utilise either the qualitative or
mixed method approaches.
Pratical implications: Based on the findings, the study recommends among others that
small and medium enterprises (SMEs) management should endeavor to carry out a robust
recruitment and selection process to ensure that they recruit talents that are valuable,
uncommon, inimitable, and not substitutable. However, they should also, ensure to
implement employee engagement strategies so as to retain the selected talents in the firm.
Originality/Value: To the best of this researcher’s knowledge and the various literatures
reviewed, no study has been conducted within the Nigerian setting and at this time on the
effect of recruitment and selection on employee retention: mediating factor of employee
engagement.
Keywords: Recruitment and Selection, Employee Engagement, Employee Retention,
Talent Management, Small and Medium Enterprises.
1
Lagos Business School, Pan-Atlantic University, Lagos, Nigeria. E-mail: edwinagwu@lbs.edu.ng
2
Department of Business Management, Convenant University, Ota, Ogun State, Niogeria. E-mail:
ng.nwoke@gmail.com
European Journal of Applied Business Management, 5(4), 2019, pp. 17-29.
ISSN 2183-5594
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1. Introduction
Uncertainty and globalization in the business settings have increasingly caused firms to
turn majorly to their human capital to supply them with the commensurable advantage
that will not only uphold their businesses but also enhance their bottom lines
(Poorhosseinzadeh & Subramaniam, 2012; Hassan 2016). Most small and medium
enterprises (SMEs) still lack understanding of how important human resource
development and talent management are, which invariably have created barriers to the
successful implementation of their talent management policies. The concept of talent
management, as it is, are understood and practiced by multinational firms and large
domestic companies (McDonnell, Lamare, Gunnigle, & Lavelle, 2010). However,
Mendez (2013) stressed that talent management and human resource management are
increasingly becoming more significant in few SMEs. Unfortunately, the
implementations of talent management practices in these SMEs are not the same with the
larger firms. Studies in different settings stressed that talent management is very vital in
current economy, but to the knowledge of the researchers none has analyzed its effect on
employee retention in SMEs in Nigeria, hence this paper fills the void. Recruitment has
been identified as one of the talent management practices by many scholars in literature,
including: Oladapo, (2014); Chitsaz-Isfahani & Boustani, (2014); and Iles, Chuai &
Preece, (2010). As such this study aims at identifying the effect that recruitment and
selection has on employee retention in selected SMEs in Nigeria, using employee
engagement as a mediating variable. Therefore, this work contributes to extant literature
on recruitment and selection as well as employee retentions and serves as a reference
document for practitioners, academics and policy makers.
2. Review of related literature
2.1. Recruitment and selection
Recruitment and selection of employees include those activities of the organization that
affect the types or number of candidates who apply for a position and influence whether
there will be an acceptance of a job offer (Ramki, 2015; Khan, Khan, & Khan, 2017). The
author in underlining the vital significance of these functions, views the notion as moves
and exercises undertaken by a company to distinguish and draw in talents that have the
ability to help the firm achieve its key objectives. Lyria, (2013) and Mohammad, Miah,
Rahman, & Rahaman, (2017) submitted that recruitment and selection in organizations
requires that the firm utilize different techniques or strategies in choosing the appropriate
talents that mirrors the value and culture of that company. The author further states that
the enlistment of individuals in a talent pool is the primary undertaking of talent
management technique. The talent pool is an assemblage of potential workers with
exceptional qualities and the foundation of future senior executives. The development
capability of companies worldwide hinges on the capacity of firms to have the appropriate
person or persons for a role, in the correct place at the appropriate time (Kibui, 2015).
Human resource specialists and academics believe that growth, survival and development
of a firm largely rely on an efficient and effective culture of recruitment, selection and
positioning of individuals endowed with extensive and more profound scope of preferred
attitudes, core competencies, knowledge, experiences and skills (Ofori & Aryeetey,
2011). Recruitment and selection in firms is an important issue and their effectiveness
and performance, relies on the nature of talents from the recruitment and selection process
(Ezeali & Esiagu, 2010; Pradhan, Dash, & Jena 2017).
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2.2. Employee Engagement
Engagement is about zeal and responsibility, the eagerness to give and stretch oneself
beyond average to promote the success of the business, which is part basic satisfaction of
the employment arrangement (Sridevi & Markos, 2010). Contemporary firms require
employees who are mentally associated with their work, who are eager and ready to put
themselves completely in their parts, and who are proactive and focused on astounding
benchmarks. According to Ahlowalia, Tiwary and Jha (2014), individuals' attachment of
"meanings" with respect to the work environment are unmistakably connected to how
much of engagement they display and, eventually, their performance. Employee
engagement is a major predictor of positive performance in an organization and it visibly
demonstrates the two-path connection between employee and employer (Rana, & Malik,
2017). The authors further stressed that engaged workers are openly joined to their
organization and profoundly involved in their occupation with an incredible excitement
for the employer’s success; they may also go additional miles way past the business’s
legally binding agreements. Sridevi and Markos (2010) additionally added that the drivers
of employee engagement is that feeling of being included and appreciated, which has the
elements, such as participation in decision-making, workers readiness to give voice to
their thoughts, the available opportunities that employees need in order to build up their
professions and how much the organizations are ready to care for workers' prosperity.
2.3. Employee Retention
Baruah, 2013) asserts that employee retention is urging workers to stay in the company
for a longer stretch of time, additionally; it is a process of encouraging workers to remain
with the firm for the greatest time period or till the end of a project. Employee retention
is viewed as a vital Human Resource (HR) activity as it includes long-term development
and retention of talented employees, forecasting strategic organizational needs,
identifying talents for succession planning to fulfill future business needs (Govaerts,
Kyndt, Dochy & Baert, 2011). Some believe that firms simply need to pull in and develop
talents and not focus on the vital issue of retention, as such when the time comes to pick
up profits for their investments, the talents leave their firms (Poorhosseinzadeh &
Subramaniam, 2012). However, the success of firms relies on workers retention which
helps the firms in decreasing turnover of employees and improving efficiency (Chitsaz-
Isfahani & Boustani, 2014). The principle reason for retention is to keep skilled
employees from leaving the company as this could adversely affect efficiency and service
delivery (Ng'ethe , Iravo & Namusonge, 2012) According to Ratna and Chawla (2012)
the procedure of worker retention will profit a firm as the cost of worker turnover results
in countless cost to an organization's bottom-line, it likewise implies that if an
organization’s rate of retention of employees is high, it will spur prospective employees
to be part of the organization. Accordingly, more companies are beginning to explicitly
concentrate on keeping their best talents, (Liang, 2013; Rana, & Malik, 2017).
2.4. Recruitment and selection and employee retention
Chitsaz-Isfahani and Boustani (2014) further asserts that the fight for retention begins at
the stage of hiring, with organizations selecting employees whose interests and talents fit
with the needs of the company, whether short or long term in nature. Recruitment need
to be made in line with what is essential to the organization and its future goals by keeping
in view the retention of the workers (Aibieyi & Henry, 2015). To draw and retain talent,
European Journal of Applied Business Management, 5(4), 2019, pp. 17-29.
ISSN 2183-5594
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compatibility hiring, that is the “fit” between employer and worker is critical. The author
further stressed that recruiting the right individuals in right positions is vital to empower
firms to enhance retentions. Based on these, this paper infers that:
Hypothesis One:
H0: Recruitment and selection have no significant effect on employee retention in SMEs
in Nigeria.
H1: Recruitment and selection have significant effect on employee retention in SMEs in
Nigeria.
2.5. Employee engagement and employee retention
According to Kibui (2015), employee engagement is a key factor in talent management
and retention. It is the drive that inspires workers to higher or lower levels of
performances, and the level of involvement and commitment an individual has towards
the company. The author added that it is a prevailing source of competitive advantage and
in this manner has become attractive because of its reported capacity to solve challenges
of the organization, for example, diminishing turnover rates and expanding profitability.
Employee engagement has positive connections to several main organizational results,
for example, profitability, productivity, business development, quality, consumer loyalty,
retention of workers and job performance (Sundaray, 2011). In their exploration on
individual elements of employee engagement, Ologbo and Sofian (2012) inferred that
employee engagement maybe a solid element for organizational performance and
accomplishment as it has a huge ability to influence workers’ steadfastness, efficiency
and retention. Muhammad Asad khan , Rosman Md Yusoff , Altaf Hussain , Fadillah
Binti Ismail (2019) argued that the absence of employee engagement could debilitate
employees lasting commitment to the company, creating difficulty in pulling in,
developing, adjusting and retaining very skilled workers; as such employee engagement
is of key importance to effective retention of individuals that are talented. Donald (2014)
stressed that employee engagement substantially affects worker’s efficiency and retention
of talents; the author further pointed out that dedicated workers perform 20% better and
are also 87% more averse to quit. Rana, & Malik, (2017) opined that large amounts of
employee engagement happen when workers are involved with, focused on, eager, and
energetic about their work, and all things considered, those employees who have high
amounts of engagement are not anticipated to quit, though, those disengaged are probably
going to do so. Based on these, this paper infers that:
Hypothesis Two:
H0: Employee engagement has no significant effect on employee retention in SMEs in
Nigeria.
H1: Employee engagement has significant effect on employee retention in SMEs in
Nigeria.
Hypothesis Three:
H0: Employee engagement does not mediate the effect of recruitment and selection on
employee retention in SMEs in Nigeria.
H1: Employee engagement mediates the effect of recruitment and selection on employee
retention in SMEs in Nigeria.
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ISSN 2183-5594
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3. Theoretical Underpinning
3.1. Resource-Based View (RBV)
Jang, (2013) echoing Barney (1991) who presented and developed core tenets of RBV,
suggested that an organization may sustain competitive advantage for a longer period
when its resources are valuable, uncommon, inimitable, and not substitutable. Kubui
(2015), agreeing with Jang (2013) stated that the Resource Based view postulates that
human and organizational resources above other forms of resources, physical, financial
or technical, can provide an organization with a sustainable competitive advantage
because they are exceptionally difficult to imitate. In the context of this study RBV
showed that great importance need to be attached to recruitment and selection of
employees that are valuable, uncommon, inimitable, and not substitutable and their
retention, if a firm is to achieve competitive advantage over their competitors,
(Muhammad, Rosman, Altaf, & Fadillah, 2019).
3.2. Herzberg’s motivation-hygiene theory
Herzberg believes that there are two groups of factors that enhance motivation. They are
motivators and hygiene factors. Motivators are associated with good feelings felt by
workers and are generally related to job content, whereas bad feelings related to job
contexts are associated with hygiene factors. Motivator factors are intrinsic to the task
itself; these include responsibility, accomplishment, recognition, the chance of personal
growth and advancement, and the work itself. Hygiene factors include personal life,
interpersonal relationships, work conditions, salary, supervision, administration, job
security, status and company policy (Herzberg, 1966). The motivational-hygiene model
suggests that motivation of employees is accomplished when they are presented with
seemly difficult but pleasurable work that gives them the opportunity to register some
achievements, growths, and exhibit responsibility and advancement in the firm (Dartey-
Baah & Amoako, 2011). It is a general belief that a combination of motivation and
hygiene factors leads to employee job satisfaction. When companies achieve employee
job satisfaction, employees equip themselves with a high level of confidence that
influence them to stay longer, become deeply engaged in the business, suggest channels
of enhancing the firm’s services or products, and to put in extra effort to satisfy the
customers and stakeholders (Loiseau, 2011; Afsana Afrin, & Tarannum, 2016). In this
context, the Herzberg’s motivation-hygiene theory explains the relationship between
employee engagement and retention.
4. Methodology
Descriptive survey and stratified sampling methods were utilized for the gathering of data.
The outcomes reported here are based on a study of selected SMEs in Ogun state of
Nigeria, which has the highest number of SMEs (SMEDAN, 2013). The sampling frame
comprises all the employees of the fifty eight SMEs in Ogun state. The researchers
calculated the sample size of 289 with the aid of the method developed by Cochran (1977)
cited in Singh & Masuku (2014). Samples are then distributed in such way that units of
the 12 heterogeneous strata are represented having being given equal chance of selection.
Finally, the respondents were randomly chosen from each stratum. The questionnaire
used in this study was vetted by researchers who are experts in the field to ensure its
European Journal of Applied Business Management, 5(4), 2019, pp. 17-29.
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validity, considering its content, criterion, construct and readability in order to comply
with the research objectives. Cronbach alpha aided the definition of the reliability of the
measures in the research tool (questionnaire). The Cronbach alpha coefficient measures
the internal consistency of the test and the range is between 0 and 1. The nearer the
coefficient value is to 1 the higher the reliability and the nearer it is to 0 the lower the
reliability. The value of 0.7 or more is accepted as being reliable.
4.1 Hypothesis testing
Hypothesis One: Examined the result of recruitment and selection on employee retention.
The dependent variable (employee retention) is regressed with the independent variable
(recruitment and selection).
H0: Recruitment and selection have no significant effect on employee retention in SMEs
in Nigeria.
H1: Recruitment and selection have significant effect on employee retention in SMEs in
Nigeria.
Decision rule:
i) When the p-value (level of significant value) is < 0.01 or 0.05, reject the null
hypothesis (H0) and accept the alternative hypothesis (H1).
ii) When the p-value is > 0.01 or 0.05, fail to reject the null hypothesis (H0) and
not accept the alternative hypothesis (H1).
Table 1 – Model summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .077a
.006 .002 .69448
a. Predictors: (Constant), recruitment and selection
The model summary table 1 reveals the outcome of recruitment and selection on
employee retention. It shows that 0.6% of the variation in employee retention can be
explained by recruitment and selection and the variables have a correlation value of 0.077.
Table 2 – ANOVA
Model Sum of Squares df Mean Square F Sig.
1
Regression .762 1 .762 1.580 .210b
Residual 126.845 263 .482
Total 127.607 264
a. Dependent Variable: employee retention
b. Predictors: (Constant), recruitment and selection
The ANOVA in Table 2 shows the F-value of 1.580 @0.210. This implies that
recruitment and selection do not make significant contributions to employee retention.
The Coeffients in Table 3 does not show a significant effect of recruitment and selection
on employee retention. However, the result shows that the independent variable is not
significantly correlated with the dependent variable based at 1% (p<0.01) or 5% (p<0.05)
level of significance, while the beta and t-value of independent variable value are
0.077and 1.257 respectively.
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Table 3 – Coefficients
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
B Std. Error Beta
1
(Constant) 3.282 .269 12.195 .000
Recruitment
and selection
.082 .065 .077 1.257 .210
a. Dependent Variable: employee retention
Decision: Since the p value of recruitment and selection is more than 0.05, the study fails
to reject the null hypothesis, which states that recruitment and selection have no
significant effect on employee retention in SMEs in Nigeria., and the alternative
hypothesis, which states that recruitment and selection have significant effect on
employee retention in SMEs in Nigeria., is not accepted. Therefore, we can conclude that
there is no significant effect of right recruitment on employee retention in SMEs in
Nigeria in this study.
Hypothesis Two: Examined the outcome of employee engagement on employee retention.
The dependent variable, which is employee retention, is regressed with the independent
variable (employee engagement).
H0: Employee engagement has no significant effect on employee retention in SMEs in
Nigeria.
H1: Employee engagement has significant effect on employee retention in SMEs in
Nigeria.
Decision rule:
i) When the p-value (level of significant value) is < 0.01 or 0.05, reject the null
hypothesis (H0) and accept the alternative hypothesis (H1).
ii) When the p-value is > 0.01 or 0.05, fail to reject the null hypothesis (H0) and
not accept the alternative hypothesis (H1).
Table 4 – Model summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .255a
.065 .061 .67445
a. Predictors: (Constant), employee engagement
The model summary in table 4 displays the effect of employee engagement on employee
retention. It shows that employee engagement makes a contribution of 6.5% to every
change in employee retention and the variables have a correlation value of 0.255.
Table 5 – ANOVA
Model Sum of
Squares
df Mean Square F Sig.
1
Regression 8.358 1 8.358 18.373 .000b
Residual 120.544 265 .455
Total 128.902 266
a. Dependent Variable: employee retention
b. Predictors: (Constant), employee engagement
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The ANOVA in Table 5 ANOVA reveals an F-value of 18.373 @0.0001. This suggests
that the model is measured to be fit and that employee engagement has substantial
influence on employee retention.
Table 6 illustrates a significant effect of employee engagement on employee retention.
The result shows that the independent variable is significantly correlated with the
dependent variable based at 1% (p<0.01) level of significance, while the beta and t-value
of independent variable value are 0.255 and 4.286 respectively.
Table 6 – Coefficients
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
B Std. Error Beta
1
(Constant) 2.804 .195 14.397 .000
Employee
engagement
.220 .051 .255 4.286 .000
a. Dependent Variable: employee retention
Decision: Since the p-value is less than 0.05, the null hypothesis, which states that
employee engagement has no significant effect on employee retention in SMEs in
Nigeria, is rejected and the alternative hypothesis, which states that employee
engagement has significant effect on employee retention in SMEs in Nigeria, is accepted.
Therefore, we can conclude that employee engagement has significant effect on employee
retention in SMEs in Nigeria.
Hypothesis Three: Examined the result of employee engagement on the relationship
between recruitment and selection, and retention of employees. The dependent variable
(employee retention) is regressed with the independent variables (recruitment and
selection, and employee engagement).
H0: Employee engagement does not mediate the effect of recruitment and selection on
employee retention in SMEs in Nigeria
H1: Employee engagement mediates the effect of recruitment and selection on employee
retention in SMEs in Nigeria.
Decision rule:
i) When the p-value (level of significant value) is < 0.01 or 0.05, reject the null
hypothesis (H0) and accept the alternative hypothesis (H1).
ii) When the p-value is > 0.01 or 0.05, fail to reject the null hypothesis (H0) and
not accept the alternative hypothesis (H1).
Table 7 – Model summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .255a
.065 .058 .67557
a. Predictors: (Constant), employee engagement, recruitment and selection
Table 7, the model 1 shows the effect of recruitment and selection, and employee
engagement on employee retention. It shows that 6.5% of the variation in employee
retention can be explained by the combination of the two variables.
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Table 8 – ANOVA
Model Sum of Squares df Mean Square F Sig.
1
Regression 8.414 2 4.207 9.218 .000b
Residual 120.488 264 .456
Total 128.902 266
a. Dependent Variable: employee retention
b. Predictors: (Constant), employee engagement, recruitment and selection
In table 8 ANOVA, model 1 shows the F-value of 9.218 @0.0001 for a combined
regression of recruitment and selection, and employee engagement. This implies that the
model makes significant contributions to employee retention.
Table 9 – Coefficients
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
B Std. Error Beta
1
(Constant) 2.875 .281 10.225 .000
recruitment and
selection
-.023 .066 -.022 -.351 .726
employee engagement .226 .054 .262 4.164 .000
a. Dependent Variable: employee retention
In table 9 model 1 the Coefficient table shows the relevance of the two variables
(Recruitment and selection, employee engagement) to employee retention. For
recruitment and selection: Beta = -0.022, t = -0.351 @ 0.726 and while employee
engagement has the following statistical findings: Beta = 0.262, t = 4.164 @ 0.0001.
These higher values for employee engagement shows that it assists the effect of
recruitment and selection on employee retention.
Decision: Based on the results in the tables above, the null hypothesis, which states
employee engagement does not mediate the outcome of recruitment and selection on
employee retention in SMEs in Nigeria, is rejected and the alternative hypothesis, which
states that employee engagement mediates the outcome of recruitment and selection on
employee retention in SMEs in Nigeria, is accepted. Therefore, we can conclude that
employee engagement mediates the effect of recruitment and selection on employee
retention in SMEs in Nigeria.
5. Discussion and conclusion of Findings
This study sets out to determine the mediating effect of employee engagement on the
relationship between recruitment and selection, and employee retention. The results based
on analysis, discovered that recruitment and selection have no significant effect on
employee retention in SMEs in Nigeria; i.e., the study fails to reject the null hypothesis,
which states that recruitment and selection have no significant effect on employee
retention in SMEs in Nigeria and the alternative hypothesis, which states that recruitment
and selection have no significant effect on employee retention in SMEs in Nigeria, is not
accepted. This supports Ofori and Aryeetey (2011) statement that the overall aim of
recruitment and selection within a company is to secure the number and types of workers
that are needed to fulfill the critical goals of the firms, at trivial cost. However, the
hypothesis tested reveals a presence of significant outcome of employee engagement on
retention of employees. That is, the null hypothesis, which states that employee
European Journal of Applied Business Management, 5(4), 2019, pp. 17-29.
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engagement has no significant effect on employee retention, is rejected and the alternative
hypothesis, which states that employee engagement has significant effect on employee
retention, is accepted. In addition, the regression analysis revealed that a combination of
recruitment and selection, and employee engagement has a very strong significant
outcome on retention of employees, with employee engagement being highly significant
@0.0001. This implies that employee engagement makes a very high contribution to the
combination in retaining of employees. As such the null hypothesis that states that
employee engagement does not mediate the effect of recruitment and selection on
employee retention is rejected and the alternative hypothesis is accepted. This finding
agrees with Sundaray (2011) that employee engagement has positive links to several main
organizational results, which includes, among others, retention of workers and job
performance. Human capital has become an important asset for any organization in which
they need to invest in. And one of the major challenges before firms today is the retention
of their talented workers, which plays a very essential role in any organization. It is
therefore important for firms to implement strategies that will enhance the retention of
their talents. This study infers that recruitment and selection on their own has no
significant effect on employee retention, but with the combination of employee
engagement and other factors as mentioned, they all come together as a and pose a strong
and significance factors on employee retention. This study also infers that employee
engagement mediates the outcome of recruitment and selection on employee retention.
These findings endorse the presented theories in this study, which include Resource
Based View and Herzberg’s Motivation-Hygiene theory. These theories by extension and
in combination with the aforementioned factors lead to a very strong and compelling
reasons for talent retention in organizations. The provision of the requisite resources,
motivation, and hygiene will to a large extent retain some talents within the confines of
an organization as opposed to instances where there are dearth of resources, poor
motivation and inadequate hygiene, comparatively, the best talents will be attracted to the
former as against the latter.
6. Recommendation and further studies
Small and medium enterprises (SMEs) management should endeavor to carry out a robust
recruitment and selection to ensure that they recruit talents that are valuable, uncommon,
inimitable, and not substitutable. However, they should ensure to implement employee
engagement strategies so as to retain the selected talents. This study was restricted to
selected SMEs in Nigeria; further studies on the same topic can be carried out in other
African countries. Comparison can also be done between SMEs of more enlightened
cities and less enlightened cities within a country to identify any difference with the
mediating ability of employee engagement on the result of recruitment and selection on
employee retention. Also, other combinations of talent management variables other than
employee engagement can be used to identify their outcomes on the relationship between
recruitment and selection, and employee retention in SMEs.
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Effect of recruitment and selection on employee retention mediating factor of employee engagement

  • 1. European Journal of Applied Business Management, 5(4), 2019, pp. 17-29. ISSN 2183-5594 17 Research Paper Effect of Recruitment and Selection on Employee Retention: Mediating Factor of Employee Engagement Submitted in May 25, 2019 Accepted in December 13, 2019 Evaluated by a double blind review system EDWIN. AGWU1 NGOZI I. NWOKE2 ABSTRACT Purpose: This study aims at identifying the effect recruitment and selection has on employee retention in selected SMEs in Nigeria, using employee engagement as a mediating variable. Design/Methodology/Approach: It employed descriptive research design, stratified sampling technique and questionnaires as instruments for gathering the much needed data Findings: Findings revealed among others, that recruitment and selection on their own has no substantial effect on employee retention, but with the combination of employee engagement, a strong significance on employee retention can be achieved. Conclusively, employee engagement mediates the outcome of recruitment and selection on employee retention. Research limitations: This study has two limitations. First, though employment cuts various sectors of the Nigerian economy, this study only dwelt on the SMEs. Second, the study utilized the quantitative method, further studies can utilise either the qualitative or mixed method approaches. Pratical implications: Based on the findings, the study recommends among others that small and medium enterprises (SMEs) management should endeavor to carry out a robust recruitment and selection process to ensure that they recruit talents that are valuable, uncommon, inimitable, and not substitutable. However, they should also, ensure to implement employee engagement strategies so as to retain the selected talents in the firm. Originality/Value: To the best of this researcher’s knowledge and the various literatures reviewed, no study has been conducted within the Nigerian setting and at this time on the effect of recruitment and selection on employee retention: mediating factor of employee engagement. Keywords: Recruitment and Selection, Employee Engagement, Employee Retention, Talent Management, Small and Medium Enterprises. 1 Lagos Business School, Pan-Atlantic University, Lagos, Nigeria. E-mail: edwinagwu@lbs.edu.ng 2 Department of Business Management, Convenant University, Ota, Ogun State, Niogeria. E-mail: ng.nwoke@gmail.com
  • 2. European Journal of Applied Business Management, 5(4), 2019, pp. 17-29. ISSN 2183-5594 18 1. Introduction Uncertainty and globalization in the business settings have increasingly caused firms to turn majorly to their human capital to supply them with the commensurable advantage that will not only uphold their businesses but also enhance their bottom lines (Poorhosseinzadeh & Subramaniam, 2012; Hassan 2016). Most small and medium enterprises (SMEs) still lack understanding of how important human resource development and talent management are, which invariably have created barriers to the successful implementation of their talent management policies. The concept of talent management, as it is, are understood and practiced by multinational firms and large domestic companies (McDonnell, Lamare, Gunnigle, & Lavelle, 2010). However, Mendez (2013) stressed that talent management and human resource management are increasingly becoming more significant in few SMEs. Unfortunately, the implementations of talent management practices in these SMEs are not the same with the larger firms. Studies in different settings stressed that talent management is very vital in current economy, but to the knowledge of the researchers none has analyzed its effect on employee retention in SMEs in Nigeria, hence this paper fills the void. Recruitment has been identified as one of the talent management practices by many scholars in literature, including: Oladapo, (2014); Chitsaz-Isfahani & Boustani, (2014); and Iles, Chuai & Preece, (2010). As such this study aims at identifying the effect that recruitment and selection has on employee retention in selected SMEs in Nigeria, using employee engagement as a mediating variable. Therefore, this work contributes to extant literature on recruitment and selection as well as employee retentions and serves as a reference document for practitioners, academics and policy makers. 2. Review of related literature 2.1. Recruitment and selection Recruitment and selection of employees include those activities of the organization that affect the types or number of candidates who apply for a position and influence whether there will be an acceptance of a job offer (Ramki, 2015; Khan, Khan, & Khan, 2017). The author in underlining the vital significance of these functions, views the notion as moves and exercises undertaken by a company to distinguish and draw in talents that have the ability to help the firm achieve its key objectives. Lyria, (2013) and Mohammad, Miah, Rahman, & Rahaman, (2017) submitted that recruitment and selection in organizations requires that the firm utilize different techniques or strategies in choosing the appropriate talents that mirrors the value and culture of that company. The author further states that the enlistment of individuals in a talent pool is the primary undertaking of talent management technique. The talent pool is an assemblage of potential workers with exceptional qualities and the foundation of future senior executives. The development capability of companies worldwide hinges on the capacity of firms to have the appropriate person or persons for a role, in the correct place at the appropriate time (Kibui, 2015). Human resource specialists and academics believe that growth, survival and development of a firm largely rely on an efficient and effective culture of recruitment, selection and positioning of individuals endowed with extensive and more profound scope of preferred attitudes, core competencies, knowledge, experiences and skills (Ofori & Aryeetey, 2011). Recruitment and selection in firms is an important issue and their effectiveness and performance, relies on the nature of talents from the recruitment and selection process (Ezeali & Esiagu, 2010; Pradhan, Dash, & Jena 2017).
  • 3. European Journal of Applied Business Management, 5(4), 2019, pp. 17-29. ISSN 2183-5594 19 2.2. Employee Engagement Engagement is about zeal and responsibility, the eagerness to give and stretch oneself beyond average to promote the success of the business, which is part basic satisfaction of the employment arrangement (Sridevi & Markos, 2010). Contemporary firms require employees who are mentally associated with their work, who are eager and ready to put themselves completely in their parts, and who are proactive and focused on astounding benchmarks. According to Ahlowalia, Tiwary and Jha (2014), individuals' attachment of "meanings" with respect to the work environment are unmistakably connected to how much of engagement they display and, eventually, their performance. Employee engagement is a major predictor of positive performance in an organization and it visibly demonstrates the two-path connection between employee and employer (Rana, & Malik, 2017). The authors further stressed that engaged workers are openly joined to their organization and profoundly involved in their occupation with an incredible excitement for the employer’s success; they may also go additional miles way past the business’s legally binding agreements. Sridevi and Markos (2010) additionally added that the drivers of employee engagement is that feeling of being included and appreciated, which has the elements, such as participation in decision-making, workers readiness to give voice to their thoughts, the available opportunities that employees need in order to build up their professions and how much the organizations are ready to care for workers' prosperity. 2.3. Employee Retention Baruah, 2013) asserts that employee retention is urging workers to stay in the company for a longer stretch of time, additionally; it is a process of encouraging workers to remain with the firm for the greatest time period or till the end of a project. Employee retention is viewed as a vital Human Resource (HR) activity as it includes long-term development and retention of talented employees, forecasting strategic organizational needs, identifying talents for succession planning to fulfill future business needs (Govaerts, Kyndt, Dochy & Baert, 2011). Some believe that firms simply need to pull in and develop talents and not focus on the vital issue of retention, as such when the time comes to pick up profits for their investments, the talents leave their firms (Poorhosseinzadeh & Subramaniam, 2012). However, the success of firms relies on workers retention which helps the firms in decreasing turnover of employees and improving efficiency (Chitsaz- Isfahani & Boustani, 2014). The principle reason for retention is to keep skilled employees from leaving the company as this could adversely affect efficiency and service delivery (Ng'ethe , Iravo & Namusonge, 2012) According to Ratna and Chawla (2012) the procedure of worker retention will profit a firm as the cost of worker turnover results in countless cost to an organization's bottom-line, it likewise implies that if an organization’s rate of retention of employees is high, it will spur prospective employees to be part of the organization. Accordingly, more companies are beginning to explicitly concentrate on keeping their best talents, (Liang, 2013; Rana, & Malik, 2017). 2.4. Recruitment and selection and employee retention Chitsaz-Isfahani and Boustani (2014) further asserts that the fight for retention begins at the stage of hiring, with organizations selecting employees whose interests and talents fit with the needs of the company, whether short or long term in nature. Recruitment need to be made in line with what is essential to the organization and its future goals by keeping in view the retention of the workers (Aibieyi & Henry, 2015). To draw and retain talent,
  • 4. European Journal of Applied Business Management, 5(4), 2019, pp. 17-29. ISSN 2183-5594 20 compatibility hiring, that is the “fit” between employer and worker is critical. The author further stressed that recruiting the right individuals in right positions is vital to empower firms to enhance retentions. Based on these, this paper infers that: Hypothesis One: H0: Recruitment and selection have no significant effect on employee retention in SMEs in Nigeria. H1: Recruitment and selection have significant effect on employee retention in SMEs in Nigeria. 2.5. Employee engagement and employee retention According to Kibui (2015), employee engagement is a key factor in talent management and retention. It is the drive that inspires workers to higher or lower levels of performances, and the level of involvement and commitment an individual has towards the company. The author added that it is a prevailing source of competitive advantage and in this manner has become attractive because of its reported capacity to solve challenges of the organization, for example, diminishing turnover rates and expanding profitability. Employee engagement has positive connections to several main organizational results, for example, profitability, productivity, business development, quality, consumer loyalty, retention of workers and job performance (Sundaray, 2011). In their exploration on individual elements of employee engagement, Ologbo and Sofian (2012) inferred that employee engagement maybe a solid element for organizational performance and accomplishment as it has a huge ability to influence workers’ steadfastness, efficiency and retention. Muhammad Asad khan , Rosman Md Yusoff , Altaf Hussain , Fadillah Binti Ismail (2019) argued that the absence of employee engagement could debilitate employees lasting commitment to the company, creating difficulty in pulling in, developing, adjusting and retaining very skilled workers; as such employee engagement is of key importance to effective retention of individuals that are talented. Donald (2014) stressed that employee engagement substantially affects worker’s efficiency and retention of talents; the author further pointed out that dedicated workers perform 20% better and are also 87% more averse to quit. Rana, & Malik, (2017) opined that large amounts of employee engagement happen when workers are involved with, focused on, eager, and energetic about their work, and all things considered, those employees who have high amounts of engagement are not anticipated to quit, though, those disengaged are probably going to do so. Based on these, this paper infers that: Hypothesis Two: H0: Employee engagement has no significant effect on employee retention in SMEs in Nigeria. H1: Employee engagement has significant effect on employee retention in SMEs in Nigeria. Hypothesis Three: H0: Employee engagement does not mediate the effect of recruitment and selection on employee retention in SMEs in Nigeria. H1: Employee engagement mediates the effect of recruitment and selection on employee retention in SMEs in Nigeria.
  • 5. European Journal of Applied Business Management, 5(4), 2019, pp. 17-29. ISSN 2183-5594 21 3. Theoretical Underpinning 3.1. Resource-Based View (RBV) Jang, (2013) echoing Barney (1991) who presented and developed core tenets of RBV, suggested that an organization may sustain competitive advantage for a longer period when its resources are valuable, uncommon, inimitable, and not substitutable. Kubui (2015), agreeing with Jang (2013) stated that the Resource Based view postulates that human and organizational resources above other forms of resources, physical, financial or technical, can provide an organization with a sustainable competitive advantage because they are exceptionally difficult to imitate. In the context of this study RBV showed that great importance need to be attached to recruitment and selection of employees that are valuable, uncommon, inimitable, and not substitutable and their retention, if a firm is to achieve competitive advantage over their competitors, (Muhammad, Rosman, Altaf, & Fadillah, 2019). 3.2. Herzberg’s motivation-hygiene theory Herzberg believes that there are two groups of factors that enhance motivation. They are motivators and hygiene factors. Motivators are associated with good feelings felt by workers and are generally related to job content, whereas bad feelings related to job contexts are associated with hygiene factors. Motivator factors are intrinsic to the task itself; these include responsibility, accomplishment, recognition, the chance of personal growth and advancement, and the work itself. Hygiene factors include personal life, interpersonal relationships, work conditions, salary, supervision, administration, job security, status and company policy (Herzberg, 1966). The motivational-hygiene model suggests that motivation of employees is accomplished when they are presented with seemly difficult but pleasurable work that gives them the opportunity to register some achievements, growths, and exhibit responsibility and advancement in the firm (Dartey- Baah & Amoako, 2011). It is a general belief that a combination of motivation and hygiene factors leads to employee job satisfaction. When companies achieve employee job satisfaction, employees equip themselves with a high level of confidence that influence them to stay longer, become deeply engaged in the business, suggest channels of enhancing the firm’s services or products, and to put in extra effort to satisfy the customers and stakeholders (Loiseau, 2011; Afsana Afrin, & Tarannum, 2016). In this context, the Herzberg’s motivation-hygiene theory explains the relationship between employee engagement and retention. 4. Methodology Descriptive survey and stratified sampling methods were utilized for the gathering of data. The outcomes reported here are based on a study of selected SMEs in Ogun state of Nigeria, which has the highest number of SMEs (SMEDAN, 2013). The sampling frame comprises all the employees of the fifty eight SMEs in Ogun state. The researchers calculated the sample size of 289 with the aid of the method developed by Cochran (1977) cited in Singh & Masuku (2014). Samples are then distributed in such way that units of the 12 heterogeneous strata are represented having being given equal chance of selection. Finally, the respondents were randomly chosen from each stratum. The questionnaire used in this study was vetted by researchers who are experts in the field to ensure its
  • 6. European Journal of Applied Business Management, 5(4), 2019, pp. 17-29. ISSN 2183-5594 22 validity, considering its content, criterion, construct and readability in order to comply with the research objectives. Cronbach alpha aided the definition of the reliability of the measures in the research tool (questionnaire). The Cronbach alpha coefficient measures the internal consistency of the test and the range is between 0 and 1. The nearer the coefficient value is to 1 the higher the reliability and the nearer it is to 0 the lower the reliability. The value of 0.7 or more is accepted as being reliable. 4.1 Hypothesis testing Hypothesis One: Examined the result of recruitment and selection on employee retention. The dependent variable (employee retention) is regressed with the independent variable (recruitment and selection). H0: Recruitment and selection have no significant effect on employee retention in SMEs in Nigeria. H1: Recruitment and selection have significant effect on employee retention in SMEs in Nigeria. Decision rule: i) When the p-value (level of significant value) is < 0.01 or 0.05, reject the null hypothesis (H0) and accept the alternative hypothesis (H1). ii) When the p-value is > 0.01 or 0.05, fail to reject the null hypothesis (H0) and not accept the alternative hypothesis (H1). Table 1 – Model summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .077a .006 .002 .69448 a. Predictors: (Constant), recruitment and selection The model summary table 1 reveals the outcome of recruitment and selection on employee retention. It shows that 0.6% of the variation in employee retention can be explained by recruitment and selection and the variables have a correlation value of 0.077. Table 2 – ANOVA Model Sum of Squares df Mean Square F Sig. 1 Regression .762 1 .762 1.580 .210b Residual 126.845 263 .482 Total 127.607 264 a. Dependent Variable: employee retention b. Predictors: (Constant), recruitment and selection The ANOVA in Table 2 shows the F-value of 1.580 @0.210. This implies that recruitment and selection do not make significant contributions to employee retention. The Coeffients in Table 3 does not show a significant effect of recruitment and selection on employee retention. However, the result shows that the independent variable is not significantly correlated with the dependent variable based at 1% (p<0.01) or 5% (p<0.05) level of significance, while the beta and t-value of independent variable value are 0.077and 1.257 respectively.
  • 7. European Journal of Applied Business Management, 5(4), 2019, pp. 17-29. ISSN 2183-5594 23 Table 3 – Coefficients Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 3.282 .269 12.195 .000 Recruitment and selection .082 .065 .077 1.257 .210 a. Dependent Variable: employee retention Decision: Since the p value of recruitment and selection is more than 0.05, the study fails to reject the null hypothesis, which states that recruitment and selection have no significant effect on employee retention in SMEs in Nigeria., and the alternative hypothesis, which states that recruitment and selection have significant effect on employee retention in SMEs in Nigeria., is not accepted. Therefore, we can conclude that there is no significant effect of right recruitment on employee retention in SMEs in Nigeria in this study. Hypothesis Two: Examined the outcome of employee engagement on employee retention. The dependent variable, which is employee retention, is regressed with the independent variable (employee engagement). H0: Employee engagement has no significant effect on employee retention in SMEs in Nigeria. H1: Employee engagement has significant effect on employee retention in SMEs in Nigeria. Decision rule: i) When the p-value (level of significant value) is < 0.01 or 0.05, reject the null hypothesis (H0) and accept the alternative hypothesis (H1). ii) When the p-value is > 0.01 or 0.05, fail to reject the null hypothesis (H0) and not accept the alternative hypothesis (H1). Table 4 – Model summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .255a .065 .061 .67445 a. Predictors: (Constant), employee engagement The model summary in table 4 displays the effect of employee engagement on employee retention. It shows that employee engagement makes a contribution of 6.5% to every change in employee retention and the variables have a correlation value of 0.255. Table 5 – ANOVA Model Sum of Squares df Mean Square F Sig. 1 Regression 8.358 1 8.358 18.373 .000b Residual 120.544 265 .455 Total 128.902 266 a. Dependent Variable: employee retention b. Predictors: (Constant), employee engagement
  • 8. European Journal of Applied Business Management, 5(4), 2019, pp. 17-29. ISSN 2183-5594 24 The ANOVA in Table 5 ANOVA reveals an F-value of 18.373 @0.0001. This suggests that the model is measured to be fit and that employee engagement has substantial influence on employee retention. Table 6 illustrates a significant effect of employee engagement on employee retention. The result shows that the independent variable is significantly correlated with the dependent variable based at 1% (p<0.01) level of significance, while the beta and t-value of independent variable value are 0.255 and 4.286 respectively. Table 6 – Coefficients Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 2.804 .195 14.397 .000 Employee engagement .220 .051 .255 4.286 .000 a. Dependent Variable: employee retention Decision: Since the p-value is less than 0.05, the null hypothesis, which states that employee engagement has no significant effect on employee retention in SMEs in Nigeria, is rejected and the alternative hypothesis, which states that employee engagement has significant effect on employee retention in SMEs in Nigeria, is accepted. Therefore, we can conclude that employee engagement has significant effect on employee retention in SMEs in Nigeria. Hypothesis Three: Examined the result of employee engagement on the relationship between recruitment and selection, and retention of employees. The dependent variable (employee retention) is regressed with the independent variables (recruitment and selection, and employee engagement). H0: Employee engagement does not mediate the effect of recruitment and selection on employee retention in SMEs in Nigeria H1: Employee engagement mediates the effect of recruitment and selection on employee retention in SMEs in Nigeria. Decision rule: i) When the p-value (level of significant value) is < 0.01 or 0.05, reject the null hypothesis (H0) and accept the alternative hypothesis (H1). ii) When the p-value is > 0.01 or 0.05, fail to reject the null hypothesis (H0) and not accept the alternative hypothesis (H1). Table 7 – Model summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .255a .065 .058 .67557 a. Predictors: (Constant), employee engagement, recruitment and selection Table 7, the model 1 shows the effect of recruitment and selection, and employee engagement on employee retention. It shows that 6.5% of the variation in employee retention can be explained by the combination of the two variables.
  • 9. European Journal of Applied Business Management, 5(4), 2019, pp. 17-29. ISSN 2183-5594 25 Table 8 – ANOVA Model Sum of Squares df Mean Square F Sig. 1 Regression 8.414 2 4.207 9.218 .000b Residual 120.488 264 .456 Total 128.902 266 a. Dependent Variable: employee retention b. Predictors: (Constant), employee engagement, recruitment and selection In table 8 ANOVA, model 1 shows the F-value of 9.218 @0.0001 for a combined regression of recruitment and selection, and employee engagement. This implies that the model makes significant contributions to employee retention. Table 9 – Coefficients Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 2.875 .281 10.225 .000 recruitment and selection -.023 .066 -.022 -.351 .726 employee engagement .226 .054 .262 4.164 .000 a. Dependent Variable: employee retention In table 9 model 1 the Coefficient table shows the relevance of the two variables (Recruitment and selection, employee engagement) to employee retention. For recruitment and selection: Beta = -0.022, t = -0.351 @ 0.726 and while employee engagement has the following statistical findings: Beta = 0.262, t = 4.164 @ 0.0001. These higher values for employee engagement shows that it assists the effect of recruitment and selection on employee retention. Decision: Based on the results in the tables above, the null hypothesis, which states employee engagement does not mediate the outcome of recruitment and selection on employee retention in SMEs in Nigeria, is rejected and the alternative hypothesis, which states that employee engagement mediates the outcome of recruitment and selection on employee retention in SMEs in Nigeria, is accepted. Therefore, we can conclude that employee engagement mediates the effect of recruitment and selection on employee retention in SMEs in Nigeria. 5. Discussion and conclusion of Findings This study sets out to determine the mediating effect of employee engagement on the relationship between recruitment and selection, and employee retention. The results based on analysis, discovered that recruitment and selection have no significant effect on employee retention in SMEs in Nigeria; i.e., the study fails to reject the null hypothesis, which states that recruitment and selection have no significant effect on employee retention in SMEs in Nigeria and the alternative hypothesis, which states that recruitment and selection have no significant effect on employee retention in SMEs in Nigeria, is not accepted. This supports Ofori and Aryeetey (2011) statement that the overall aim of recruitment and selection within a company is to secure the number and types of workers that are needed to fulfill the critical goals of the firms, at trivial cost. However, the hypothesis tested reveals a presence of significant outcome of employee engagement on retention of employees. That is, the null hypothesis, which states that employee
  • 10. European Journal of Applied Business Management, 5(4), 2019, pp. 17-29. ISSN 2183-5594 26 engagement has no significant effect on employee retention, is rejected and the alternative hypothesis, which states that employee engagement has significant effect on employee retention, is accepted. In addition, the regression analysis revealed that a combination of recruitment and selection, and employee engagement has a very strong significant outcome on retention of employees, with employee engagement being highly significant @0.0001. This implies that employee engagement makes a very high contribution to the combination in retaining of employees. As such the null hypothesis that states that employee engagement does not mediate the effect of recruitment and selection on employee retention is rejected and the alternative hypothesis is accepted. This finding agrees with Sundaray (2011) that employee engagement has positive links to several main organizational results, which includes, among others, retention of workers and job performance. Human capital has become an important asset for any organization in which they need to invest in. And one of the major challenges before firms today is the retention of their talented workers, which plays a very essential role in any organization. It is therefore important for firms to implement strategies that will enhance the retention of their talents. This study infers that recruitment and selection on their own has no significant effect on employee retention, but with the combination of employee engagement and other factors as mentioned, they all come together as a and pose a strong and significance factors on employee retention. This study also infers that employee engagement mediates the outcome of recruitment and selection on employee retention. These findings endorse the presented theories in this study, which include Resource Based View and Herzberg’s Motivation-Hygiene theory. These theories by extension and in combination with the aforementioned factors lead to a very strong and compelling reasons for talent retention in organizations. The provision of the requisite resources, motivation, and hygiene will to a large extent retain some talents within the confines of an organization as opposed to instances where there are dearth of resources, poor motivation and inadequate hygiene, comparatively, the best talents will be attracted to the former as against the latter. 6. Recommendation and further studies Small and medium enterprises (SMEs) management should endeavor to carry out a robust recruitment and selection to ensure that they recruit talents that are valuable, uncommon, inimitable, and not substitutable. However, they should ensure to implement employee engagement strategies so as to retain the selected talents. This study was restricted to selected SMEs in Nigeria; further studies on the same topic can be carried out in other African countries. Comparison can also be done between SMEs of more enlightened cities and less enlightened cities within a country to identify any difference with the mediating ability of employee engagement on the result of recruitment and selection on employee retention. Also, other combinations of talent management variables other than employee engagement can be used to identify their outcomes on the relationship between recruitment and selection, and employee retention in SMEs. References Afsana, J., Afrin, F., & Tarannum, T. (2016). Effect of training on employee performance: An empirical study on telecommunication industry in Bangladesh. Journal of Business and Technology (Dhaka), 10(2), 67–80.
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