This document provides an introduction to the study, outlining its objectives and significance. The study aims to explore the main factors that contribute to employee retention in the private sector in Kuwait. Specifically, it seeks to investigate the types of benefits, organizational strategies, and cultural issues that most impact retention. It also examines employees' future plans and how they relate to retention. The introduction establishes the importance of retention to organizational success and discusses challenges such as information asymmetry, agency costs, and motivational styles that can negatively impact retention. It sets up the problem statement around a lack of research on retention factors in the Middle East Gulf region context.

1. INTRODUCTION
This chapter is an introduction and intended to provide background information on the nature of the
present study and its objectives and purpose. It is divided into four sections. The first section presents
Background of the study the second part presents the problem statement, the objective, purpose and
significant of the study reviled in the third section. The final section presents how this study is
organized.
BACKGROUND OF THEY STUDY
The retention of employees has been shown to be significant to the development and the
accomplishment of the organization‘s goals and objectives. Retention of employees can be a vital
source of competitive advantage for any organization. This study attempted to explore the main factors
that contribute to employee retention. The next paragraphs discuss the background of the study by
clarifying the theoretical framework for the main problems with employee retention.
Today, changes in technology, global economics, trade agreements, and the like are directly affecting
employee/employer relationships. ―Until recently, loyalty was the cornerstone of that relationship. The
loss of talented employees may be very detrimental to the company‘s future success. Outstanding
employees may leave an organization because they become dissatisfied, under paid or unmotivated
(Coff 1996), and while trying to retain employees within the organization they may present other
challenges as well. They may demand higher wages, not comply with 2 organization practices, and not
interact well with their coworkers or comply with their managers‘ directions. Besides these problems
asymmetric information or lack of information about the employees‘ performance may complicate an
organization‘s Endeavour to retain productive employees. Without adequate information an
organization may not be able to distinguish productive workers from non-productive ones. Employees
often may take credit for the successes and deflect failures to other employees. This is known as a
moral hazard problem. In many in stances companies may reward or punish employees for an
organization out come for which they had no impact (Kerr 1975). Insufficient information about
employees‘ performance may result in adverse selection by them (Gross man & Hart 1986). The better
employees may move to other organizations for better opportunities. The coworkers who cannot
improve their positions are more likely to stay. This is especially possible when due to inadequate

2. information outstanding performance is not rewarded. Non productive and productive workers end up
receiving the same or nearly the same compensation and package of perks because of management‘s in
ability to distinguish talented employees from the rest of the labor force in the organization. The
problem of attempting to keep talented members of the work force is further complicated because of
bounded rationality (Simon 1976). It is another result of asymmetric in formation where both the
manager does not know the information for which to ask from the employee and the employee does
not know what to provide. Therefore, productive workers cannot distinguish themselves from non-
productive coworkers. 3 Even if an organization is fortunate enough to retain talented employees, the
company may still have to cope with agency costs resulting from them and their colleagues. When
information about an employee‘s activities are difficult to gather, the employee may be motivated to
act in his own interest which may diverge from the interest of the organization. This divergence of
interests results in costs to the organization in the form of excessive perquisite consumption, shirking
of job responsibilities and poor investment decision making. Jensen and Meckling (1976) explained
that it is in an employee‘s interest to over consume perks and shirk job responsibilities of the firm if
they are not sole owners of the organization. Employees may also be enticed to make suboptimal
investment decisions for the firm. Since most company employees have their wealth tied up in the
organization for which they work, employees may attempt to make investment decisions which are
less risky than the stock holders of the firm would prefer. This is doneto reduce the risk of failure by
the company, which protects the no diversified employee from loss of wealth. This investment strategy
may also reduce the return on investment that the diversified owners of the firm desire (Murphy 1985).
The employees or agents of the organization may also use a short sighted approach in investment
selection to enhance their own career chances (Narayanan 1985). The employee can signal the labor
market his superiority through the selection of a fast starting project, which may fizzle out later for the
firm. This strategy may cause the firm to miss profitable long-term projects or much needed research
and development. Employees may also attempt to increase the size of the firm through acquisitions
and project selection regard less of the effect on company profitability in order to increase their own
power base within the firm. 4 Another area contributing to decreased employee satisfaction is that of a
company‘s motivational style. For example, Weinberg (1997) states that ―Most companies relied in the
past on two traditional strategies for managing turnover. First, they raised wages until the situation
stabilized. If that did not work, they increased training budgets for new hires and first-level
supervisors. These solutions do not work anymore.

3. PROBLEM STATEMENT
Understanding employee perspectives and measuring their retention factors are critical to an
organization success. However, each employee in an organization creates his or her own
understanding of a phenomenon and assumptions (Argyris and Schon, 1978). It is the understanding of
the situation that provokes an action (Weick, 1979, 1995). an employee interprets their organizational
environment through his or her own mental model, creating his or her own world; a reality of the
second order thus arises (Watzlawick, 1976) that is in some way imperfect (Senge, 1990). Many
studies concerning employees retention have been conducted in mainly U.S and Europe to determine
the main factors that contribute to their satisfaction and motivation to exist, few of these researches
have conducted in Middle East, thus, scarcity of researches are indicated. Replication of such studies
in other regions is highly justifiable. One of the regions that lack such studies is the Gulf region
(Kuwait, Saudi Arabia, United Arab Emirates, Qatar, and Oman and Bahrain). It is one of the most
prosperous regions in the world (Azzam, 1989). In Kuwait, the retention of private sector employees
has not been fully addressed. Many questions related to private sector workforce retention have not
been reported yet. For 5 examples, how is the private sector workforce aware of any retention efforts
in their agency? What make private sector workforce think about leaving their work? How do private
sector workforce feels unique about their agency‘s retention situation? Does private sector
organizations discuss with the workforce specific reasons why they were leaving or not? Do private
sector workforce in know of specific retention problems in their agency? What type of work
environment or organizational culture e.g. supervisory style, work itself, is most appealing to
workforce? Thus, the present study aimed to enhance our understanding and improve the shortage of
literature by focus on the state of Kuwait to explore the main private sector workforce retention factors
that lead to their existing in their work place.
RESEARCH OBJECTIVE
Thus, the present study aimed deepens our understanding and improve the shortage of literature to the
main determinate of employee retention to existing in private sector. The main research objectives can
be summaries as follows:
• Explore what types of benefits those are most important for the private sector workforce.

4. • Assess the most important organizational strategies that contribute to the retention of the private
sector workforce.
• Investigate what issues related to organizational culture contribute to the retention of the private
sector workforce.
• Explore the future plan of Private sector workforce that contribute to their retention.
SIGNIFICANCE OF THE STUDY
This study derives its significant from its potential contribution at two primary levels: theoretical and
practical. At the theoretical level, the present study is expected to bridge a gap in the literature for
empirical research focusing on employee's retention. For the practical contributions, this study is
expected to provide new solutions and evidence on the usefulness of segmentation techniques for
human resource management.
PURPOSE OF THE STUDY
This paper aims to attempts to determine employee's retention in the private sector. The study
designed to explore the main retention factors for Private sector employees. The paper attempts to
deepen our understanding about employee's satisfaction and in private filed.
LITERATURE AND THEORETICAL BACKGROUND
In this chapter, the previous studies for employee‘s retentions are presented to be the framework to
understand and systematically analyze factors the affect employee‘s intentions. Retention defined as
―an obligation to continue to do business or exchange with a particular company on an ongoing basis‖
(Zineldin, 2000, p. 28). A more detailed and recent definition for the concept of retention is ―customer
liking, identification, commitment, trust, readiness to recommend, and repurchase intentions, with the
first four being emotional-cognitive retention constructs, and the last two being behavioral intentions‖
(Stauss et al., 2001). Studies have indicated that retention driven by several key factors, which ought

5. to be managed congruently: organizational culture, strategy, pay and benefits philosophy, and career
development systems (Fitzenz 1990). The above mentioned definitions explain many situations in our
contemporary life while many employees are no longer having the sense of organization loyalty once
they leaved. Increasing numbers of organization mergers and acquisitions have left employees feeling
displeased from the companies that they work and haunted by concerns of overall job security. As a
result, employees are now making strategic career moves to guarantee employment that satisfy their
need for security. On the other hand, employers have a need to keep their stuff from leaving or going
to work for other companies. This is true because of the great expenses associated with hiring and
retraining new employees. The adage, good help is hard to find, is even truer these days than ever
before because the job market is becoming increasingly tight (Eskildesen 2000, Hammer 2000). 8
Literature of employees retaining again show that attracting existed employees costs less than
acquiring new talents as organizations know their employees and what they want, and the initial cost
of attracting the new employees has already been expended (Davidow and Uttal, 1989). Employees
retention also attain benefits such as customers satisfaction, better service, lower costs (Reichheld,
1995), lower price sensitivity, positive word-of-mouth, higher market share, higher productivity and
higher efficiency (Zineldin, 2000).
Based on a review of the literature, many studies have investigated employee‘s intentions to
exist, for example Eskildsen and Nussler (2000) in their research suggested that employers are
struggling to be talented employees in order to maintain a successful business. In the same bases,
Mark Parrott (2000), Anderson and Sullivan (1993) and Rust and Zahorik (1993) believe that, there is
a straight line linking employee satisfaction and customer satisfaction. Thus, high satisfaction has been
associated to retention of both customers and employees. The literature of employee retention clearly
explain that satisfied employees who are happy with their jobs are more devotion to doing a good job
and vigorous to improve their organizational customers satisfaction (Hammer2000; Marini 2000;
Denton 2000). Employees who are satisfied have higher intentions of persisting with their
organization, which results in decreased turnover rate (Mobley et al., 1979). Fishbein and Ajzen‘s
(1975) attest the theory of reasoned action as the heart retention of both the employee and the
customer links between satisfaction and behavior. Potter-Brotman (1994) in his research explained
how service could affect retention and may result in improving the value of teaching employees to be
service providers, with the capability to enhance interaction with customers rather than 9 endanger
them. In the same research, the authors recommended that firms should focus on hearing customers

6. unique voices as result to find out what kind of service they consider to be extraordinary. The earlier
efforts of Desai and Mahajan (1998) in examine the concepts of acquiring customers from a rational
and affective perspective provides us with different approaches of how cognition and affects are
implemented to increase retention. The authors recommended that in order to retain employees,
companies must continually develop their products and services so as to meet the evolving needs of
customers. Desai and Mahajan (1998) assumed that retained customers are in fact satisfied, and not
simply retained because of habit, indifference or inertia. Included in retention strategies are the
development of new products and services to meet and satisfy the evolving required of the customers;
thus satisfaction is a component of retention. However, Johnston (2001) in his research negated the
relationship between customer's satisfaction and their retention clarifying that such relation is very
weak. He explains that an understanding of the two concepts cannot always be achieved by isolating
them from each other, but rather by examining the relationship between them. Gerpott et al. (2001) in
his research attest Johnston (2001) as he mentioned that customer retention and customer satisfaction
should be treated as distinct, but causally inter-linked constructs. Rust and Subramanian (1992), in
their study, link quality to customer satisfaction and argue that this has a direct effect on customer
retention and market share. In the same bases Athanassopoulos (2000) explain satisfaction as an
antecedent of customer retention. The authors study customer satisfaction cues in retail banking
services in Greece. The fining of his study shows that product innovativeness, convenience, staff
service, price and 10 business profile are dimensions of customer satisfaction. The authors also
mentioned that customers do not consider switching banks until they have encountered a series of
negative effects. Heskett et al. (1994) and Schneider and Bowen (1999) suggested that, in some cases,
service suppliers may be unable to retain even those employees who are satisfied. Thus, satisfaction
itself may not be sufficient enough to ensure long-term workers commitment to an organization.
Instead, it may be essential to look beyond satisfaction to other variables that strengthen retention such
as conviction and trust (Hart and Johnson, 1999). This explanation is consistent Morgan andHunt
(1994) research on marketing channel, which shows that organizations often look beyond the concept
of satisfaction to developing trust and ensure long term relationships with their employees. Further,
this suggestion is based on the principle that once trust is built into a relationship, the probability of
either party ending the relationship decreases because of high termination costs. Other studies have
proposed that the cost of replacing lost talent is even higher, as much as 70 to 200 percent of that
employee‘s annual salary (Kaye, 2000). Expanding on these thoughts, the EPF (2004) stated that ―for

7. a firm with 40,000 full-time employees, the difference between a 15- percent turnover rate and a 25-
percent turnover rate is over $50 million annually. The divergence between a 15-percent turnover rate
and a 40-percent turnover rate is over $130 million annually‖. Abundant studies have hypothesized
and empirically validated the link between satisfaction and behavioral intentions and behaviors such as
employee‘s retention and word of mouth (e.g. Anderson and Sullivan, 1993; Rucci et al., 1998, Bansal
and Taylor, 1999, Cronin et al., 2000). Indeed, this link is essential to the 11 marketing concept, which
holds that satisfying employee‘s needs and wants is the key to exist in the organization (Kotler et al.,
2002). Further, the importance of satisfaction on retention is well recognized that some major
economies now measure satisfaction at the industry level using large sample surveys to predict
employee's retention and future financial performance (Fornell et al., 1995). Kay (2000) describe
costs as in ―…advertising and recruiting expenses, orientation and training of the new employee,
decreased productivity until the new employee is up to speed, and loss of customers who were loyal to
the departing employee‖. The costs and expenses mentioned above open another area of concern
which is productivity. When highlevel of employee‘s turnover existed, most of the workforce is at an
entry level stage of production. A very high cost is associated with large numbers of employees who
have not accomplish full productivity. This cycle continues with very few employees performing at
maximum productivity. Numerous studies explain the importance of high employee‘s involvement and
how it could enhance their retention (Arthur 1994; Huselid 1995; Koch and McGrath 1996). Flexible
work schedules and assistance programs need to be considered, however, only a small share of the
workforce takes advantage of them (Perry Smith and Blum 2000). As earlier studies indicated that
young employees are more interested in payment, advancement opportunities and time off. Such
differences may reflect stages in the career plan or deeper generation differences. Additionally, there
are often gender differences within demographic groups; e.g., young female may want different things
from what young male want (Beck 2001). the lack of opportunities to learn and develop in the work
can be the top reason for employee dissatisfaction and thus turnover. a corporation namely Kimko,
implemented this information and provide a training program that gave employees 12 an opportunities
to develop their path and career direction. Turnover tumbled from 75 percent to 50 percent (Withers
2001). Studies indicated that employees stay when they have strong relationships with others with
whom they work (Clarke 2001). this explain the efforts of organizations to encourage team building,
project assignments involving work with colleagues and opportunities for interaction both on and off
the job (Johns et al 2001). Other studies indicated that effective communications improve employee

8. identification with their agency and build openness and trust culture. Increasingly, organizations
provide information on values, mission, strategies, competitive performance, and changes that may
affect employees enthuse (Gopinath and Becker 2000; Levine 1995). Many companies are working to
provide information that employees want and need in better way of communication, through the most
credible sources (e.g., CEO and top management strategies) on a timely and consistent basis.
In summary, the literature defines retention as continuing relation between customers
(employees) and their organization. The benefits of retention are lower costs for their agent, less price
sensitivity, greater market share, improve productivity, increase employees performance and thus
increase profits and meet their organizational goals and objectives. The relationship between
satisfaction and retention in many studies has described as weak, and researches shows that
satisfaction does not necessarily cause to retention.
RESEARCH METHODOLOGY
The researchers divided the chapter into three sections; the first section presents the data collection
procedures, the second section presents study population and sampling, the final section presents data
analysis. As mentioned in the first chapter, the objectives of the current study are to:
• Explore what types of benefits those are most important for the private sector workforce in the state
of Kuwait.
• Assess the most important organizational strategies that contribute to the retention of the private
sector workforce.
• Investigate what issues related to organizational culture contribute to the retention of the private
sector workforce.
• Explore the future plan of Private sector workforce that contribute to their retention.
DATA COLLECTION PROCEDURES
To accomplish the aforementioned research objectives, the data for this study was collected through
self-administered questionnaires. As part of its data gathering efforts, the researchers asked the focus

9. group participants to complete a written survey about various aspects of their work place. The
questionnaire used in the study was added and developed some factors through interviews with private
sector employees by visiting different organizations and workplace in the five main areas. By referring
to the literature review on this topic, many items in the organizational culture and retention strategies
sections of the survey were adapted 14 from Griffeth and Horn (1983). The primary aim of this study
is to explore the factors that affect private sector workforce attention in their work place. To achieve
this purpose the survey asked respondents to rate the degree of importance and level of agreement with
a number of statements related to:
• Benefits factors
• Retention strategies factors
• Organizational culture factors
The first part of the questionnaire asked respondents to rate the relative importance of 6 potential
benefits factors, on their retention, using a five-point Likert type importance scale ranging from ―very
important‖ to ―not important at all‖. Table 1 show these factors.
Table 1: Benefits Factors
Benefits Factors
1. Salary and monetary compensation
2. Leave benefits (including vacation, sick, personal, paid holidays).
3. Retirement plan
4. Health and other benefits (health insurance, vision, dental, prescription).
5. Deferred compensation.
6. Employee assistance program.

10. The Second part elicited retention strategies factors, respondents asked to rate the relative importance
of 13 potential strategies factors on their retention, using a five-point Likert type importance scale
ranging from ―very important‖ to ―not important at all‖. Table 2 show Organizational strategies
factors.
Table 2: Organizational strategies factors
Organizational strategies Factors
1. Alternative Work Schedule
2. Voluntary Reduction in Work Schedule
3. Telecommuting/Work at Home.
4. Wellness Programs
5. Mentoring and coaching
6. Job Rotation and New Assignments
7. Help with career planning
8. On-site day care
9. Rewards and recognition
10. Employee Suggestion Program
11. Education opportunities
12. Training opportunities - job related
13. Annual Performance Appraisal
The third part of the survey address the organizational culture factors, respondents asked to rate the
relative importance of 10 organizational culture factors on their retention, using a five-point scale type

11. agreement scale ranging from ―Strongly Agree‖ to ―Strongly disagree‖. The following table shows the
organizational strategies factors.
Organizational culture Factors
1. Supervisors in my workplace sit down with employees and discuss their development plans at least
every 6 months.
2. Employees are often given the opportunity to be part of task groups and assignments outside their
core job responsibilities.
3. My agency has a career development program that helps people become more aware of and
responsible for their own career development.
4. Working on a new projector assignment is an open process with few barriers.
5. Supervisors communicate effectively with employees. 16
6. the workplace where I work has a culture that recognizes and values diversity.
7. There is an environment of openness and trust in my agency.
8. Employees in my workplace are treated with fairness and respect.
9. Supervisors spend a good deal of time listening to employees' ideas.
10. Supervisors have a style that empowers people to take responsibility and authority.
One section of the survey ask respondents about their retirement plan, four options are given as
follows: leave workplace employment within 1-2 years, 3-5 years, 6-10 years or no plans to retire or
leave work place in the foreseeable future. The final section of the survey collects demographic
information, with few lines space, respondents are given an opportunity to provide general comments
on any other areas related to retention that they felt were not addressed in the focus groups or on the
survey. The focus group participants completed the survey for practical purpose of this study, thus the
findings cannot be generalized to the entire GCC countries. Rather, the results provide a snapshot of

12. opinions from a small sample of Kuwaiti private sector employees who conduced their work in the
state of Kuwait.
STUDY POPULATION AND SAMPLING
In convince approach, the authors selected five main cities to distribute the survey where private sector
workforce conducted their work. A total of 145 surveys were distributed in equal numbers to the
private organizations. In convenience method, private sector employees who conducted their work in
the sampling location during the chosen time intervals were selected. 17 Distribution process took
place in a two week period in the early part of April 2009. Private sector workforce was approached,
explaining the nature of the study and asked if they would be prepared to fill in the questionnaire.
The survey took approximately 10-15 minutes to complete. The survey was designed to obtain
information about the main determinants of employee‘s retention to exist.
From a total of 145 questionnaires distributed, 125 were returned (only 25 surveys were collected from
each city), out of which 20 were usable (valid and completed), thereby yielding a response rate of
about 86.2 percent, a response rate considered sufficiently large for statistical reliability and
generalizability (Tabachnick and Fidell, 1996; Stevens, 2002). This relatively high response rate
attributed to the self-administered approach undertaken in distributing questionnaires and approaching
respondents at the various locations.
METHODS
The responses obtained were analyzed using SPSS V.17. To ascertain which of the private sector
workforce retention factor criteria are perceived as more or less important, the data were analyzed
using descriptive statistics and factor analysis. These techniques were deemed to be appropriate for
this particular analysis because the main purpose of this thesis is to explore the main determinate of
employee exiting retention.

13. CHAPTERISATION SCHEME
This study comprises six major chapters.
Chapter I
Provide a discussion of nature, background and problems of the study and its objectives.
Chapter II
Presents an extensive review of the literature on employee's intention for the purpose of laying out the
theoretical foundation of the study.
Chapter III
Presents research methodology, it discusses the population and sampling, data collection procedures,
questions of the research and instrumentation.
Chapter IV
Presents the finding and result of data analysis.
Chapter V
Reveals the discussion of the study.
Chapter VI
Presents summary, conclusions.

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