Effect of psychological contract on perceived employee retention among hotels in Mombasa county

Abstract

Psychological contract is a philosophy that is held between employer and employee in regard to benefits that would accrue to the employer and the expected performance of the employee. Psychological contract is determined through various factors. Organizations in the current modern business environment hold human capital with high regard as it has been pointed as the only resource that may not be replicated or copied by competitors. It therefore becomes vital for organizations to ensure that they keep their most competent, talented and reliable employees as it becomes almost impossible to replace top talents in many organizations. This study therefore was undertaken with the view to focus on the effect of psychological contract on perceived employee retention among hotels in Mombasa County. The study was undertaken by use of descriptive research design as it involves relationship between variables. Primary data was collected by the use of questionnaires and data was analyzed by use of SPSS version 23. The F statistic test was undertaken to determine significance between the relationship while regression model was used to show the effect between the variables. The study targeted a sample size of 134 employees employed on permanent and pensionable terms in various hotels. There were only 93 questionnaires that were duly filled and returned for analysis which represented a response rate of 69.4%.Psychological contract was represented by 5 factors that formed five independent variables: Training and development, performance appraisal factors, employee benefit factors, disciplinary procedures, and career growth and development. The questionnaire had a Cronbach’s Alpha of 88% that indicated that it was reliable. The regression analysis indicated a coefficient of determination of 42.6% which indicated a strong predictive capacity of the model. The analysis of variance indicated that the null hypothesis was rejected and there was a statistically significant and positive effect of psychological contract on employee retention among hotels in Mombasa County. The study found that increasing training and development, employee benefit factors, disciplinary procedures and career growth and development led to increased employee retention while increasing performance appraisal factors led to decrease in employee retention. The study concluded that psychological contract should be emphasized in hotels to ensure that there is increased employee retention.