The Impact of Capacity Development, Employee Empowerment and Promotion on Employee Retention

Master's Thesis, 2016

81 Pages, Grade: A




Employee Retention is method or technique adopted by the management of any organization to provide help to the employees to stay with the organization for a long duration. Employee retention strategies are mandatory to motivate the people to stay long in organization and also contribute effectively with total commitment and dedication. There is need to do genuine work to make possible employees career growth and learning for the employees to perform their job effectively and also enjoy at their work place. Employee retention is one of the key concern in the current time as technical sound and trained Individuals have opportunity to switch over to other organizations for better prospects. Competitive salary package, relax job timings, better promotion opportunities and growth in career are key factors which motivate an employee to switch over for another job. It is responsibility of management and HR team to find the reasons when a trained employee express his desire to quit the job and want to join somewhere else. (Ragupathi, 2013).

Employee Retention is process in which different measures adopted to motivate employees to stay within the organization for long time. Employee retention is not only beneficial for organizations but also the employee as well. Successful employee retention is a methodical effort by organizations to provide and create an environment that motivates present employees to remain with the organization, by adopting policies and procedures in order to adverse their key needs. Retention of main employees is necessary to retain and organizational success. It is proven fact that retaining the key employees guarantees customer loyalty and satisfaction, enhanced product sales, happy and pleased colleagues / staff, effective planning, deep organizational knowledge. Employee retention has great importance for organizational issues including training time, technique and cost spend, insecure and unmotivated employees, and a very costly suitable employee search are involved. Therefore, failing to keep a main employee can be a very costly exercise for an organization. It can safely be guessed that losing a middle manager of any organization can be costs up to five times of his salary. Organizations are facing serious problems in retaining the employees these days. Hiring trained and well equipped employees for the job is essential for any organization or employer, but to keep these employees for longer period of time is even more important and difficult thing than hiring (Singh et al, 2011).

Employee orientation is a way to introduce new employees with company rules and regulations, organizational culture environment and other major thing directly relates with organization. Employee retention is the first impression or perception of employee about their job organization. It provides the organization an opportunity to achieve and maintain long term relationship with the employee. Employee orientation is a very constructive way to give positive feeling to newly hired employees for welcoming them and make them comfortable and provide them opportunity to absorb them within organization. In present day globalized environment and culture most of organizations are facing most important issue of employee retention. (Awan, 2013).

Presently, many organizations around the world is facing the challenge of employee turnover now a days and this problem is very high in the developed nations. Performance efficiency of the employees can be enhanced through better internal organizational environment. Employee’s turnover can affects performance of any organization. (Tariq et al, 2013).

If employee is satisfied with the organization than his performance level will also increased and he will work with more zeal and dedication for the betterment of entire organization. This situation can make them loyal with the organization and they stay for longer period of time and they can contribute to achieve the organization goals and objective. So they type of satisfied employee can become the valuable asset of their organizations. Keeping loyal employees with the organization for long time is real challenge for organizations now days (Zareen et al, 2013).

If an organization wants to remain competitive then it has to maintain continuous improvement and workplace education. Fast pace technological development and organizational change help employers to realize that success demands the enhancement of employee skills and abilities and it requires uninterrupted investment in training and development. Training is the systematic attainment and expansion of the knowledge, skills, and attitudes. Training is required by the employees to sufficiently execute a task or job and to improve performance in the job environment.

Today most of the companies are investing a lot of money on the training and development of employees in order to remain competitive and successful part of the organization. The importance of training for employees is rapidly growing and organizations are using this tool to compete with their competitors in the market (Jehanzeb et al, 2013).

Employee retention (ER) is a process in which the employees are encouraged to remain with the organization for the maximum period of time or until the completion of the project. Even though ER has now become a tough task, it is beneficial for the organization as well as the employee. The job of human resource personnel is done perfect if it places a right person for a right job at a right place in a right time. But retention is more important than hiring. A talented employee will never fall shortage of the opportunities. If a person is not satisfied with the present job, he may switch over to another, of his choice. The top organizations are on the top because they care for their employees and they know how to keep them glued to the organization (Sandhya et al, 2008).

Employee retention techniques can positively impact the organization as it increases employee productivity, performance, quality of work, profits, and reduces turnover and absenteeism (Chhabra) Factors Which Make Employee Leave

1. Less career growth 2. No appreciation of work 3. No support and lack of trust from management 4. Work overload 5. No proper Compensation 6. New Job opportunity 7. No job satisfaction (Chhabra)

Employee job satisfaction relates with retention. Satisfy employee will prefer to stay with organization for longer time and will not try to leave the organization (Kwenin et al, 2013).

Retention of employees is one of the major challenge mostly organizations are facing now a days because hiring is as important as retention of the key employees. Hiring is not a easy process there is lot of work and money involved in it so organizations tried to avoid new hiring and want to retain their best talent because one employee leave the organization he also take his loyal customers with him to the new organization (Irshad)

Today organizations are trying to retain their best talent with them for this they providing so many incentives to the employees including career development, leave policy, compensation and benefits, job satisfaction, promotion opportunities because only high salary is not sufficient to retain the best talent with organization (Irshad).


The basic purpose of study is to review literature and research work on employee retention. Employee retention is very favorite subject for the researcher to do research in this field there are so many literature / research work is available in this field. The major purpose of this study is to examine the different factor affecting the employee retention and also give the suggestions on the basis of the outcome of the study as retention is the key factor for the progress of any organization as any firm competing in the market wants to retain its best employee at any cost. As this the age of competition and only perfection will remain stay in the market in business. There are so many factors that help to increase the employee retention and bind them with the organization for long time. In this study the research work on Capacity Development, Empowerment and promotion and their impact on employee retention will be examined.


Employee retention is one of the challenges which is facing by the most of organizations in current time. There is a tough competition in business industry and organizations are offering best job packages to its employees in order to retain them for long period. On the other hand employees have also many options to switch over to other organization on better pay package and other benefits. Now a day’s organizations have to closely monitor the activities of other firms. As if one employee is doing excellent job in a specific field in some organization the other company can offer him to join the company on better pay package and other job benefits. Some time employee can leave the job if he feels himself unsatisfied with present job due to any reasons. So in this environment when employees have so many opportunities to switch over the job organizations have to give special intentions to the employee retention. In order to retain the best talent organizations have to take some key steps including job satisfaction, job rotation and relocation, training and development opportunities, leave policy, compensation and benefits, promotion opportunities etc without these key steps it is very difficult to retain the best talent for longer period of time. Promotion is also one of the key factors that organizations use a tool to retain the best talent. So promotion of employees on regular basis and in time can make the difference and employee can stay with organization.


Employee retention is one the core problem of modern era. As firms are facing difficulties to retain its best employees in current time employees also have best option for them to utilize their talent in different organizations. So in this environment firm to spent a lot on employees to retain them. In most of the business including banking sector as seriously facing employee retention problem as in every organization there are some key employees that became necessity for the organization due to their job knowledge, competency, honesty and dedication. These types of employees are surely assets for any organization and other organizations in the same business want to hire these employees on higher pay packages and other fringe benefits. If one employee leaves the organization then it became very difficult for the organization to immediate fulfill that position. Firm has to hire the new employee after fulfilling all the procedure i.e hiring, recruiting etc. Training is also necessary for newly hired employee to became an active part of the organization and sometime after doing lot of effort firm even not succeed to get the competent employees so therefore employee retention remains one of the biggest challenge for any organization to retain its best employees for the longer period. In this case firm has to increase the salaries of employees and other benefits from time to time, promotion and other incentive to retain its employees. Training and development for capacity building is also key figure to increase employee retention. So employee retention problem exists in the business industry. Apart from government sector in private sector employee retention is more serious problem as in government sector employees are not easily willing to leave the organization because they have job security in government sector but in private sector employees can move easily when they get any better opportunity.


1. How capacity development influence and help in retention.
2. Employee empowerment effects on retention.
3. Promotion impacts on retetion.


This study is very significant is many ways and it will reveal many the

1. Significance relation between capacity development and employee retention.
2. Relationship between empowerment and retention and finally
3. Promotion and retention.

The outcomes of the study will show that these factors affect employee retention or not. If it is proved that these factors help to employee retention than it will be very easy for banking sector to take necessary step keeping in mind these key factors and increases the employee retention. Banking sector is a key in the progress of any country and this sector directly deals with the economic activities in the country so it is very necessary for them to retain their best employees for the efficient service delivery.



Capacity Development

Capacity Development is very crucial factor and according to (Hassan et al, 2013) Employee retention directly relates with Career development opportunities and training. Capacity development is a system which is planned to improve the employee efficiency according to the organization requirement. An effective and well managed training and development program will definitely help the organizations to retain its human resource including those who have already worked a lot with the organization (Jehanzeb et al, 2013). With the passage of time and according to the requirements of new era the need and requirement of training and development has sufficiently increased. If an organization planned a training program according to latest requirement then it will surely help the organization to not only to retain its employees but also achieve its own goal (Khan et al, 2011). Training and development is not a onetime activity it is a continuous process as with passing of time and induction of latest equipment and technology training has now become an integral part of any employees (Sultana et al, 2012). Capacity development through training and development provides employees an opportunity to maximize their abilities and work better for the organization (Devi et al, 2012)

Training and development through modern and latest technology directly contributes towards organizational goals and objectives (Niazi, 2011).

If an organization wants to remain in business than capacity development through training and development must be its priority (Sultana et al, 2012). Training needs changes with the passage of time and induction of latest technology in business and now employees need to learn about new technology and improve their skills in order to meet the workplace changes. (Aroge, 2012). Although training and development is expensive program and it is difficult for the organization to spend huge amount of money on employees training but it is mandatory and organization must have to spend on it in order to train its manpower and remain in business (Jehanzeb et al, 2013).

Training is mandatory for every employee as it is difficult to acquire skill and knowledge without training and with the unskilled labor it is very difficult for the organization to survive (Obisi, 2011). Training and Development directly relates with employee performance (Devi et al, 2012). Capacity building enhances the employee motivation, job performance and skills which ultimately lead to organizational performance. It also increases the employee punctuality on the duty (Kolhatkar et al, 2011). Trained manpower not only benefits the organization but also play vital role in the development of country economic growth (Khattak et al, 2010). Employees are most important part of any organization trained and professionally developed staff can lead organization to success while incompetent and less developed employees can be the cause of organization closure. So the success or failure of the any organization is very dependent on employees. So it is necessary for organizations to spend lot of money on the employees training and development (Hameed et al, 2011). Training, on job training has positive impact on organizational performance and it enhances the organizational performance in effective way (Khan et al, 2013). Training and development is very necessary for an organization to meet the requirements of rapidly changing world as usage of new information technology and internet is increasing in routine organizational business. Training actually increases the ability and efficiency of employees but ultimately benefits goes in favor of organization because it is end user. (Khan et al, 2013). Training is necessary to increase the technical and social competency of employees and it is ongoing process to to develop employees efficiency and necessary part of the total quality management process (Sultana et al, 2012). Training is actually process of expansion of knowledge, skills and techniques and it is mandatory for employees to get requisite training for perfectly completion of job and its also improves the job performance and job environment (Sultana et al, 2012).

Training is necessary for improvement in performance and it helps to increase the level of performance both at individual and organizational level. It also helps to gain the set goals and targets by any organization in effective and efficient way (Sultana et al, 2012).

Training enables employees to develop and increase their capabilities, enhance their skills, increase efficiency which definitely improve performance and productivity of both employees and organization. Organizational productivity always depends on employees performance it means it is necessary for organizations to spend more and more on employees training in order to receive optimum results from employee’s performance (Sultana et al, 2012).

While selecting employees for training merit must be given top priority because each and every employee is different from each other in their abilities and capabilities, if management is biased for selecting employees for training on their personal liking and disliking than optimum results from training cannot be achieved (Sultana et al, 2012). Before start of training process every employees should clearly be informed with the benefits and results of training program so that they will participate with full zeal and confident. Organization must try to bring trainer from within organization so that employees can easily share their problem and difficulties with trainer and trainer also in position to solve these problems in effective way. Training evaluation must be done in order to check the results of training program and it will also help organization while setting training program in future (Sultana et al, 2012).

Training and development directly relates with the business of organizations and training activities has always positive impact on organization if done it properly according to the demand and need (Niazi, 2011).

Training is necessary because there is always change in work place in the shape of promotion, transfer and job rotation. It became necessary when an organization adopt new technology in order to improve the services and performance. Training is also necessary when an employee promoting to next grade. Training became important when job enrichment, job enlargement and job rotation took place in organization (Aroge, 2012).

In order to meet the rapid changes due to induction of new technology at the workplace employees needs training to develop their capabilities and skill. The process of identifying training needs and arrangement of training according to requirement is called Human Resource Development. The main objective of Human Resource Development is to improve the performance of organization by enhancing the capabilities and efficiency of employees. Human Resource develops and enhances the efficiency, capacity, performance, job satisfaction, motivation and work environment (Aroge, 2012).

Training and development helps to improve the employees knowledge and efficiency and they will be able to take the new responsibilities in changing work environment (Aroge, 2012).

Organizations who want to remain in business in this highly competitive and modern technology era must give top priority to capacity building and productivity in order to attain high organizational performance. Therefore, organizations are spending and investing heavily on the employees training program to equip them with latest technology so that they will be able to meet the challenges and also contribute for the betterment of their organization (Kolhatkar et al, 2011).

Job satisfaction and skill development boosts employee morale which increases productivity and customer loyalty. This clearly shows that capacity building and productivity increase organizational performance (Kolhatkar et al, 2011). Job performance, skill development, regularity, job satisfaction, motivation and public relation are the indicators that positively affect the quality, productivity, job efficiency, effectiveness, profitability and ultimately led organization to the path of success. Therefore organizations are fully aware about the effectiveness of capacity building and employee productivity to achieve maximum results (Kolhatkar et al, 2011).

The employee’s performance and job satisfaction directly relates with customer loyalty as customer will be more loyal to organization if he will get the best services. Therefore organizations must consider capacity building as key because it increase employee’s job performance and satisfaction and ultimately organization will get benefit in the form of customer loyalty (Kolhatkar et al, 2011).

Organizations that consider capacity building and employee productivity as their top priority will get the benefit in the shape of employee’s motivation, job performance and job satisfaction. This will not only increase the organizational productivity but also satisfied employee is more loyal and punctual to his job duties (Kolhatkar et al, 2011).

Capacity building and employee’s productivity are directly related with each other. Organization should arrange proper training program in order to increase the organizational efficiency (Kolhatkar et al, 2011).

Training is one of the most important factor to retain employee for the longer period of time (Hassan et al, 2013).

Management support, compensation and training are some of the factors that influence the employee satisfaction in positive way during the job in organization. Employee satisfaction is one of the major causes for employee retention whereas employee dissatisfaction is one of basic reason for high turnover (Hassan et al, 2013). To retain the employees, the organizations must provide career development and training opportunities for the job satisfaction. Promotion opportunities and skill development also help to retain employees because lack of promotion and training opportunities is one of the major causes for employee’s turnover (Hassan et al, 2013). Financial compensation is mandatory for employee’s loyalty. Better work environment, career growth opportunity and skill development also play vital role in employee’s job satisfaction and loyalty. Encourgement from seniors and supervisors also motivates the employees and every organization must considered training as their top priority (Hassan et al, 2013)

When an employee is motivated for training and learning he has so many opportunities like training workshops, seminars both on job and off job. This practice will definitely help in his career growth and development and also increase his performance (Hameed et al, 2011).

Training and development, training need assessment and training design has significantly impact on organizational performance and it increases the organizational efficiency as well (Khan et al, 2011).

Training is necessary for the organizations in order to meet the rapidly changing world and induction of new technology in the business sector. Training help a lot to employees to increase their abilities and efficiencies but ultimately beneficiaries of the training are organizations because they are end users and employees work the organizations (Khan et al, 2011).

The business environment has changed considerably at the global level with the rapid changes, innovations and induction of new technology so in this environment no organization can survive for the longer period of time without adopting the modern technology. Training is mandatory for adaptation and implementation of new technology. Training need assessment and arrangement of training according to the requirement is one the basic thing to perform effectively and gain maximum benefits for the organizations (Niazi, 2011).

Training and development has directly impact on organizational goals and business. Training and development will become more conclusive if combined with both latest tools and equipments i.e audio video sessions, through internet and conventional methods, lectures, case studies and seminars / conferences (Niazi, 2011) In the global economy organizations are facing competitive situation and quite often it is almost impossible for them to compete and survive in the highly competitive environment. Employees are the most important part of the organizations and the success or failure of organization depends on the employees. Therefore, organizations are spending huge amount on employees capacity building (Jehanzeb et al, 2013).

Every organization needs competent employees to remain active and alive in the highly competitive and challenging market. To keep employees intact with organization for longer period of time organizations must ensure job satisfaction and retention. Employees not only work for financial benefits but they also need good working environment with job satisfaction. Therefore to retain key employees, organizations required to be conscious about the job satisfaction and retention of employees. Most of organizations are spending huge finance on training and development in order to make their employees more competent and professional. So they can contribute well for the organization. (Jehanzeb et al, 2013).

Training is an integral part of any organization and in the organization only management is not responsible for training but it is responsibility of everyone. Employees must realize their responsibility regarding training and train themselves according to their requirements. In every organization four groups are responsible for training including higher management who is responsible for framing of training design, secondly HR department who organize and monitor the training activities, thirdly officers and supervisors who conduct training program and lastly employees who provide feedback (Obisi, 2011).

Training and development is like energizer that enhances the employee’s performance which ultimately enhance organization effectiveness (Obisi, 2011). Fair training need assessment is necessary for organization. Biasness while selecting employees for training may not be fruitful for organization and it may not give required results (Obisi, 2011).

It is not possible to get skills and without getting skills organization will not able to achieve their set goals and targets with their employees. Some organizations don’t give training as their top priority and they consider training as expensive venture and they spend money on the other projects. Organizations must give priority to learn through training and development. An organization can become leadership organization by continuously enhancing the skills of their workforce. Organizations should give sensitive approach towards training need assessment, training design, training philosophy, objectives and training evaluation. Sometime organizations do not give consideration towards employees before during and after training and because of this required results cannot be achieved (Obisi, 2011). Efficient workforce is great asset for every organization in the highly competitive and growing markets. Training and development provides opportunity to the workforce to enhance and increase their capabilities to perform their job in effective and efficient way. Training and development is necessary for human resource development and well equipped human resource is the only difference between good and great company. The organizations now understand the importance of training needs and spending valuable capital on the training activities. Training program will only be affected when it arranged according to the requirements and needs (Devi et al, 2012). Training and Development ensures that human capital is fully equipped with required skills and ability thus it is necessary for any organization.

To get new customers and retain them for the longer period of time is the desire of any organization and it is only possible when organization have highly skillful and efficient workforce fully equipped with latest technology and it is only possible with the capacity development through effective training and development session. Thus training and development is necessary for any organization and its importance cannot be denied (Devi et al, 2012).

Training and development helps employees to improve their abilities and there is strong relationship between training and employees performance. Training helps organizations to achieve their goals and targets. Organizations trained their employees to increase productivity. Training will be helpful if proper training need assessment done. Organizations should check whether training program is providing desired results or not. If evaluation is done properly than it provide strong base for training. Evaluators should regularly monitor training programs in order to make training more fruitful and effective (Devi et al, 2012).

Currently business world is highly competitive due to globalization and technological advancement. Only those organizations can survive who can give top priority to training and development and enhance the ability and skills of their workforce (Singh et al, 2012).

Training plays an important role in organizational productivity (Singh et al, 2012).

Training and career development was found motivating factor which leads to retention and career development was also associated with employee retention and was found important influencing factor in employee retention in the organization (Irshad)

Employee Empowerment

Employee empowerment is concept in which employees are authorized to make the decisions at their own. Empowerment is mandatory for achieving any goals and it is directly relates with employees and customer satisfaction (Akbar et al, 2011). Employee empowerment is a key factor and plays vital role in employee retention. Empowerment is a type of responsibility and authority given by an organization to its employees to manage work according to their ability and requirement keeping in view the organizations goal and empowerment also create better work environment and employee can manage their work without over burdening (Singh et al, 2011).

It is better for the organization to develop a good team and give employees a fair chance to act according to best of their abilities (Thamizhmanii et al, 2010).


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The Impact of Capacity Development, Employee Empowerment and Promotion on Employee Retention
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impact, capacity, development, employee, empowerment, promotion, retention
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MBA Shahid Durez (Author), 2016, The Impact of Capacity Development, Employee Empowerment and Promotion on Employee Retention, Munich, GRIN Verlag,


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