The Impact of Talent Management Practices on Employee Retention: An Empirical Study on the SME Industry of Bangladesh

Abstract

Small and Medium Size Enterprises (SMEs) are considered major contributor in the overall development of an economy and Bangladesh is no different. But in case of retaining talent management SMEs are struggling with their limited resources, poor employee branding and formal human resource management practices within their organizations. This article investigated how the Talent Management Practices (TMP) influence the Employee Retention (ER) in SME sector where the mediating variables were identified as Workplace Culture (WC) and Employee Engagement (EE). TMP construct included identification of critical positions, compensation practices, training and development and talent recruitment. Coupling with Resource-Based View Theory, the study had taken seven hypotheses which examined the direct and mediated effect of TMP, WC, EE, and ER.
In order to examine the hypothesis the study conducted a survey on 425 employees and managers of SMEs of the manufacturing, services, trading, and technology industries in Bangladesh. Smart PLS 4 was used to analyse the data in order to measure model and structural model. All the offered hypotheses are confirmed in the results demonstrating that TMP has a positive impact on ER but not only directly, but also indirectly through WC and EE. The results of the analysis indicated that well-formulated talent practices and positive work environment play constructive roles in employee engagement and retention, which eventually can ensure the attainment of SMEs competitive advantage and corporate sustainability.
The theoretical contribution of the study is the contextualisation of TMP, WC and EE in the context of SMEs in developing economy, and its contribution to the body of empirical evidence of mediating mechanism of engagement and culture. The study suggested several recommendations for SME managers and policymakers that can be used in developing effective low-cost methods of retaining talents. This study also highlights the need of incorporating HR interventions to reflect their alignment with organizational culture and enhance workforce stability, and organizational performance in resource-poor settings