Talent Management Practices and Employee Retention: Does It Make a Difference?

Abstract

The role of talent management is to ensure that employees’ special skills and talents are identified, and that the right jobs are assigned along their career paths. This study examines the relationship between talent management and employee retention within the Saudi Arabia government sector, specifically among civil service employees working for the Saudi government. A sample size of 440 participants was used in the study. The results revealed that talent management practices are positively related to employee retention. These findings highlight the importance for organizations, especially in the public sector, to implement effective talent retention strategies to retain their most skilled employees over the long term. This research contributes to closing the existing gap in understanding talent management and retention within the context of Saudi Arabia’s civil service sector.

1. Introduction

In today’s business environment, talent management is a vital topic as companies recognize it as a competitive advantage and a valuable asset. Consequently, employee retention involves encouraging employees to remain with the company as long as it meets its goals and objectives [1,2,3]. It is recognized that many organizations are concerned about employee retention; however, an organization must rethink its approach to talent management in order to remain successful in a highly competitive environment. According to Ochurub and Alweendo [1], developing an integrated talent management approach is essential to ensuring productivity, profitability, and sustainable growth over time. Therefore, best practice organizations treat employee retention as a strategic issue, and human resource teams, employee communications, and line management must work together to address the issue [4,5]. Management of talent is critical to ensuring an environment that is both productive and positive for the employees. Additionally, talent management is influenced by anticipated skills, which vary according to an organization’s size, sector, and industry [6]. As a result, organizations must rethink and reinvent their approach to talent management if they wish to maintain a competitive edge. To be successful in talent management, several factors should be considered, including alignment with strategic goals, active CEO involvement, HR management, the culture of the organization, and management processes. Moreover, employee engagement, leadership development, human resource policies, and organizational culture play an important role in retaining talent [3,7,8,9,10,11,12].

Although talent management focuses on improving employee retention, it is equally significant to also attract, develop, engage, retain, and utilize talent [13,14,15]. It is common for organizations to have difficulty retaining outstanding performers, which adversely affects the effectiveness of their leadership. In Saudi Arabia, organizations are experiencing a high employee attrition, including both public and private sector organizations [6]. For instance, the research reveals that Saudi Arabia’s hospitality industry is facing many issues regarding employee attrition [14]. In 2014, Azeem and Nadeem [6] conducted research to determine employee retention and job satisfaction among government sector employees in Saudi Arabia. The research indicated that employees working in Saudi government sector organizations were only mildly satisfied with the nature of their jobs, supervisors, and co-workers. However, they were less than satisfied with their salaries and promotional and career development opportunities [6]. A medium to low employee retention level is not enough to retain talent. Saudi Arabia’s public organizations need an effective human resource strategy to make employees fully commit. Talent management is one of the human resource strategies that can have a positive impact on employee retention [5,16]. It is a continuous process that involves attracting and retaining workers, focusing on their career and skill development, and motivating them to improve their performance. Therefore, Amushila and Bussin [17] examined whether talent management could contribute to employee retention using a qualitative approach based on 39 middle-level administrative staff. According to the study, organizations have not yet reached the level at which they should be in terms of attracting and retaining talent. Additionally, some shortcomings were observed during the implementation of the program, such as a lack of leadership commitment [17].

As much as talent management practices are one of the most important concerns for both leaders and practitioners, there are many challenges to overcome [10,18]. For the purpose of retaining talent and preventing the loss of talent from the organization, organizations employ a variety of activities and practices designed to enhance retention. For instance, ref. [19] argues that companies should adopt strategies to retain their existing employees in order to improve their ability to attract and retain employees at various levels throughout their organization. Since there have been very few studies on this subject in Saudi Arabia, the purpose of this study is to examine the relationship between talent management and employee retention so that ways to improve it can be determined.

2. Significance of the Study and Research Question

This research has great significance for all organizations that aim to reduce the attrition rate of their employees. Organizations can retain talent by encompassing talent management in their human resources strategy, as well as creating policies that are highly beneficial for their human resources. It is also expected that organizations would be able to increase profitability and productivity by implementing the recommendations of this study [20,21].

A significant contribution of this study will be made to the field of human resources by studying the relationship between talent management and employee retention. As a result of this study, other researchers in the leadership and human resource fields may be able to conduct further research that involves different variables or different research designs to gain a better understanding of this phenomenon. In the end, this study could be useful to government sector administrators in making the right talent management decisions.

3. Literature Review

Organizations can use talent management as an effective human resource management strategy to retain their employees. Research has defined talent in several ways [9,10,11,15]. As an example, Narayanan [15] differentiates objective and subjective talent. Objectively, talent is considered to be an individual’s innate abilities or personal characteristics, while the subjective approach considers it to be an individual who is exceptional. Furthermore, Kurdi and Alshurideh [22] compared exclusive and inclusive approaches to talent management. In the exclusive approach, talented employees are the organization’s most valuable assets, while the inclusive approach considers humanistic perspectives. According to this approach, all the organizations’ resources should be distributed equally among employees as each individual has potential [22].

A variety of techniques and human resource management practices can be used to improve employee satisfaction and psychological well-being. As an example, coaching, mentoring, and career development opportunities are the most effective talent management practices. This results in stronger relationships between employers and employees [14,15,18,23,24].

Many studies have explained that motivating employees can be accomplished in a variety of ways [3,10,25]. Hussainy [10], for example, discussed the factors that must be present in order for employees to remain motivated. According to the author, organizations can increase their employee retention by taking care of two primary needs: lower-level needs and higher-level needs. He identified physiological, safety, and social needs as the lower-level needs, while the higher-level needs included psychological, self-esteem, and self-actualization needs [10].

According to studies, talent management is a crucial element of human resource management. It has evolved from a traditional practice into a strategic approach aimed at attracting, developing, and retaining employees [10,21,26]. Today’s organizations face the challenge of retaining a high-quality workforce in order to achieve operational excellence and gain a competitive advantage. There are a number of challenges companies face when trying to replace experienced and talented employees [8,10,17,21,26]. As a company seeks to remain competitive, it finds it necessary to develop long-term talent management strategies to attract, recruit, develop, and retain talent. Hence, companies need to be aware that different factors contribute to the retention of talent or cause them to leave their organizations [26]. For example, Amushila and Bussin [17] stated that the compensation strategy plays a significant role in retaining employees, improving organizational commitment, and ensuring employee retention. In addition, Poisat Mey and Sharp [26] concluded that an effective talent management strategy contributes to the retention and motivation of employees, which in turn contributes to the success of the company.

To be successful, an organization must be able to compete in the market and retain its employees. Having talented employees in an organization leads to several benefits for the company. Some authors assert that employees are one of the most essential resources of any organization [2,20]. For example, Shakeel and But [20] explain that employees with high levels of performance and creativity are encouraged to stay with the organization, whereas non-performing employees are encouraged to leave the organization. It is imperative that organizations retain employees who are capable of contributing positively to their productivity in order to succeed. The study showed that organizations’ success depends on the ability of their workforces to remain productive, and, to do so, they must invest in their human capital. Another study conducted by Fahim [8] explains that keeping talented employees on board and keeping them in the organization would be a better and more beneficial act when compared to hiring new workers.

Therefore, organizational performance is also affected by employee retention. There has been a significant amount of research that has showed a positive correlation between employee retention and operating performance within an organization [16,21,26]. For example, WMTNK and Dilanthi [21] showed that there was a positive relationship between employee retention and the performance of the organization. Thus, employee retention was able to positively impact the financial and operational performance of the organization, which was in line with other studies [8,22]. As a result, organizations could find it very costly to hire a new employee as a substitute for a talented employee as the hiring cost can be very expensive.

Moreover, an increasing number of organizations are becoming aware of employee retention as a strategic tool that can be used to achieve a competitive advantage. An organization can keep their talented workforce if they implement effective human resource management programs. In a research paper by Khoreva, Vaiman, and Van Zalk [12], the authors claim that initially, within the employment relationship between employers and employees, employees often exchanged their loyalty, skills, and commitment for job security. Despite this, due to increased competition and a volatile economic climate, job security has declined in the current business environment [12]. Therefore, the implicit psychological contract between employers and employees has become obsolete. Currently, employees are examining human resource practices within an organization. An increasing number of employees are looking for incentives and career development opportunities. For that reason, most researchers agreed that positive human resource management practices not only result in human resources with better commitment and lower turnover but also help organizations predict voluntary turnover rates [8,10,15,21]. However, organizations that implement effective human resource policies can enhance employee retention and increase competitiveness. By using effective human resource policies and practices [10], some organizations can retain top talent by transforming the employer-employee relationship.

To increase employee retention, various factors must be considered that directly affect employees. Studies claim that employees tend to stay with organizations that provide them with psychological and economic security, meet their individual self-actualization needs, provide them with a sense of belonging, and foster an emotional attachment to the organization. As a result, if all the factors are met, the employee will be able to become more productive if these factors are met [7,8,9]. According to Bethke-Langenegger, Mahler, and Staffelbach [7], they studied the effects of various talent management strategies using 138 Swiss firms. Research indicates that retention and development management positively impact job satisfaction, motivation, commitment, and trust. Moreover, talent management practices aligned with corporate strategies improve productivity, profitability, and competitiveness. Furthermore, a study in the United Arab Emirates examines the impact of talent management practices on sustainable organizational performance. However, another study found that talent attraction has no impact on organizational performance, but learning and development does. As a result, coaching and training can help managers achieve sustainable organizational performance by helping employees learn and grow [4]. Furthermore, the purpose of the study conducted by Oladapo [25] was to learn more about talent management challenges and why some companies do not have a talent management system in place. The findings of this study indicate that organizations with talent management programs recognize their strategic value despite significant implementation challenges. Additionally, most participants cited advancement opportunities as a factor affecting retention rates. In Kumar’s study [19], which supports the previous study, the purpose was to examine the contribution of talent management practices to employee retention. According to the results, employees tend to be attracted to companies offering career development and growth opportunities as well as competitive salaries.

Moreover, as part of their research, Pandita and Ray [24] provide readers with information regarding engagement and talent management in the workplace. It was suggested in the study that an organization’s talent pool should be managed to ensure its employees are engaged and dedicated, which in turn will result in long-term retention. Ultimately, the paper proposes a model to improve talent retention by integrating talent management practices and employee engagement initiatives.

Additionally, talent management processes involve planning, acquiring, developing, deploying, retaining, and evaluating staff. For superior business results and competitive advantages, HR planning should conduct talent audits to identify pain points and develop career paths. An investigation conducted by Almomani, Sweis, and Obeidat [27] examines the impact of talent management practices on employee job satisfaction in Jordanian commercial banks. The results of the study demonstrated that talent management practices were associated with improved employee job satisfaction.

Further, the dynamic business environment and volatile economic environment make talented employees an important source of competitive advantage. In order to increase employee retention, one of the most widely implemented human resource initiatives is talent management [13,19]. The implementation of talent management practices demonstrates that organizations are concerned about the psychological well-being and career development of their employees. Consequently, it can reduce employee attrition by improving the psychological connection between employers and employees [16].

At this point, these employees need their organizations to appreciate and recognize their efforts. Furthermore, they want to grow and develop their identities within organizations and in society. To satisfy their needs, these employees seek promotions and better employment opportunities elsewhere. As a result, organizations need to provide career development opportunities or promote talented employees to management positions at this stage. It is also important to provide job opportunities that help employees realize their self-esteem and self-actualization needs. It is also possible to improve employee morale by offering mentoring, coaching, leadership development, and career development opportunities. Consequently, employees will not leave the company, and their job satisfaction and commitment to the company will rise, as well as their commitment to the organization. They will show their loyalty to the company by working harder and staying committed. In contrast, employees who are exposed to a toxic work environment may consider working for a competitor [2,10,17]. According to the literature, talent management plays a critical role in retaining employees. It is crucial for every organization to ensure successful talent management strategies are implemented and adopted.

4. Research Methodology

The purpose of this study was to identify and examine the relationship between an independent variable (talent management) and a dependent variable (employee retention). The research question guiding this study is: Do talent management strategies predict employee retention? The following hypothesis can be drawn:

H1. 

Talent management is positively associated with employee retention.

Further, the study employs the quantitative research method, which emphasizes the use of statistical or numerical analysis of data collected through various research tools such as surveys and questionnaires [28]. An online questionnaire survey was used to collect data for this study, which consisted of a series of questions distributed to participants. Furthermore, the questionnaire asks for the respondent’s age, education background, and employment history. Moreover, ten questions were included in the self-administered questionnaire related to talent management practices, employee satisfaction levels, and employees’ intentions to leave the organization.

In this study, data were gathered from Saudi government employees in the civil service sector who work for the Saudi government. A total of 440 employees responded to the online questionnaire survey. An analysis of the data was conducted using SPSS. The independent variable in this study was talent management, and the dependent variable was employee retention. A linear regression analysis was conducted to assess the relationship between two variables.

5. Research Results

5.1. Demographic Characteristics of the Respondents

As shown in

Table 1. Demographic characteristics.

Age	Frequency	Percent
29–20	170	38.64%
39–30	195	44.32%
49–40	50	11.36%
More than 50	25	5.68%
Total	440	100.0%
Sex
Male	230	52.3%
Female	210	47.7%
Total	440	100.0%
Education level
Diploma	55	12.5%
Bachelor	270	61.36%
Graduate Studies	115	26.14%
Total	440	100.0%

, descriptive information about the participants is provided. The demographic information includes the gender, age, and level of education of the individual. According to the gender factor, 52% of the participants were males and 47% were females. In terms of the age factor, the 20–29 age group represents 38.64% of the population, followed by 30–39, representing 44.32%, 40–49, representing 11.36%, and 50 years and older, representing 5.88%. In terms of educational levels, bachelor respondents constituted 61.36% of respondents, followed by graduate respondents with 26.14%, and lastly diploma respondents with 12.5%.

5.2. Pearson Correlation

Pearson correlation was conducted and presented in

Table 2. Pearson Correlation.

		Employees’ Retention	Talent Management
Employees’ retention		1	0.575 **
	Talent Management	0.575 **	1

** Correlation is significant at the 0.01 level (2-tailed).

. The correlation depicts the relation between one variable and another. This study analyzed the correlation between talent management and employees’ retention, highlighting that the correlation value is 0.575 **. The value of correlation should be between +1/−1. This value depicts a significant positive relationship, and they are highly correlated.

5.3. Regression Analysis

These results showed in

Table 3. Model Summary.

Model	R	R Square	Adjusted R Square	Std. Error of the Estimate
1	0.575 a	0.330	0.328	5.23108

^a Predictors: (Constant), Talent Management.

and

Table 4. ANOVA ^a.

Model		Sum of Squares	df	Mean Square	F	Sig.
1	Regression	4787.170	1	4787.170	174.943	0.000 b
	Residual	9714.281	355	27.364
	Total	14,501.451	356

^a Dependent Variable: Employees’ retention. ^b Predictors: (Constant), Talent Management.

that talent management significantly predicted employee retention (F(1, 191) = 174.15, p < 0.001). A total of 33% of the data variation in employee retention was explained by talent management ($R^2$ = 0.33, $R_{adj}^2$ = 0.328).

As seen in

Table 5. Coefficients ^a.

Model		Unstandardized Coefficients		Standardized Coefficients	t	Sig.	95.0% Confidence Interval for B
		B	Std. Error	Beta			Lower Bound	Upper Bound
1	(Constant)	22.156	2.120		10.449	0.000	17.986	26.326
	Talent Management	0.394	0.030	0.575	13.227	0.000	0.336	0.453

^a Dependent Variable: Employees’ retention.

, a similar attribute can be found in the talent management standard marks row, as it identifies the gradient of the regression line that can be derived from the regression coefficient (B). Based on this model, it is predicted that an increase of one standard mark in talent management score will increase employee retention score by 0.394 standard marks for every grade increase in talent management score. The regression analysis showed that there is a significant positive relationship between talent management and employee retention.

Employee retention provides a research platform for establishing notable benchmarks and highlighting specific factors relevant to reaching influential performance levels. As part of the organization’s talent management procedures and protocols, a trust and support scheme are essential for fostering positive relationships between management and employees. To fulfill that role, human resources practices must be implemented in a way that establishes a strong connection between employees and management, facilitating sustainable capacity and improving talent management.

6. Discussion

Developing an effective talent retention strategy can assist an organization in retaining its most talented employees for a long period of time. For a company to achieve productivity, talent management should be one of the most critical aspects used to ensure that talent is healthy and growing. In light of the findings of this study, it can be concluded that employers with better talent management tend to retain their top employees for longer periods of time as a result of their better talent management practices. Whenever talent retention is encouraged in an organization, it is more likely that talented and proactive employees will be motivated and recognized for their contributions to the organization.

Human capital has become one of the most valuable assets of a growing number of organizations over the last few years. Nowadays, companies face a challenge in retaining employees in a highly competitive business environment. As a result, talent management can be an effective means of retaining employees for organizations. Keeping skilled employees on board is essential to maintain a competitive advantage over the long term. By implementing talent management strategies, organizations can motivate their employees and increase their productivity. Clearly, the findings of this study are consistent with those of other authors and types of literature, indicating that talent management anticipates human resource management activities to retain employees. Consequently, organizations can improve their financial performance and operational efficiency. Studies have described talent management activities as a range of human resource management activities that include recognition, rewards, training, and development, as well as career and succession planning [9,11,21,29]. In contrast, research has demonstrated that talent attraction does not have an impact on organizational performance, while learning and development do. In this way, coaching and training can contribute to the sustainability of an organization, as well as to its productivity and growth [3,7].

Further, the results of this study confirm the findings of previous studies, which demonstrated that employees prefer companies with talent management strategies [3,10]. As a best practice, companies should evaluate their promotion policies and modify them to ensure that candidates are promoted only based on their performance. According to Al Aina and Atan [4], rewarding employees more and providing them with opportunities to utilize their strengths would be beneficial to the organization. Furthermore, if employees are recognized, their concerns are addressed, and they have the opportunity to succeed, they will become more motivated [15].

7. Conclusions

Retaining employees is one of the major challenges facing organizations that are trying to remain competitive. Due to this, businesses need to recognize that their employees play a crucial role in the success of the company. In terms of human resources, talent management is one of the most effective tools that employers can use to ensure that their employees remain loyal to them. In a number of studies, it has been shown that talent management in the workplace enhances employee retention and enhances job satisfaction for the employees [5,6,8,17,27]. It is also important to note that effective talent management strategies can also boost the performance of an organization in addition to providing a number of benefits [4,9,15]. As a result of these improvements, the retention rates of employees have increased, and the motivation levels of employees have increased significantly [20]. In the study presented here, there was a significant correlation between employee retention and talent management, indicating a link between the two. The findings of this study show that Saudi Arabian public sector employees perceive their organizations to have policies that are effective in managing their talent. It may be concluded from the results of this study that talent management activities do indeed improve employee retention in the workplace. By following these guidelines, organizations will be able to improve their financial and operational performance over time.

Accordingly, organizations should motivate their employees in order to retain them. It is imperative that human resources managers update and improve policies related to talent management and retention. Businesses can, for example, utilize internal talent pools and develop compensation packages to maximize their pool of talent.

In conclusion, due to multiple factors, it is necessary to conduct talent management studies in more cities and organizations. One limitation is the fact that medium-sized and small companies have different cultures than leading public organizations. It is possible that talent management activities in large organizations differ from those in small organizations. It may be possible to find out which programs and practices can enhance the present factors that are essential to employee retention, along with what can be done to facilitate employee needs. Moreover, it is important to consider expectations and reality when describing talent management programs. It is also helpful to compare organizational experiences with those without talent management systems, and to understand why organizations do not implement talent management. Additionally, it is important that future research studies consider the limitations of the present study. Researchers should employ a variety of research methods, including both quantitative and qualitative tools such as interviews and questionnaires. It is recommended that the sample size be larger, and the size of public organizations should be varied. Further, future studies should include additional research on demographic variables in addition to talent management in order to increase the relevance of the results.