Effect of strategic Human Resource Management strategies on employee retention: a case of FinTech companies in Kenya

Abstract

Strategic Human Resource Management (SHRM) plays a central role in shaping organisational performance and employee outcomes. This study set out to investigate how SHRM strategies influence staff retention within Kenyan FinTech firms. The general objective was to examine the overall effect of SHRM strategies on employee retention in the FinTech industry. The specific objectives of the study were to determine the effect of compensation on employee retention, examine the effect of career development on employee retention, establish the effect of work–life balance on employee retention, and assess the effect of employee engagement on employee retention. Guided by a positivist paradigm, the research employed a descriptive cross-sectional design and used quantitative data collected through structured questionnaires administered to one senior HR managers across all 85 FinTech firms licensed by the Central Bank of Kenya as of June 2024. The study was anchored on the Resource-Based View (RBV) and Human Capital Theory, which explain how strategic HR strategies serve as sources of sustained competitive advantage through effective retention of skilled employees. Data were analysed using SPSS, applying both descriptive and inferential statistics, including Pearson’s correlation and multiple regression analysis. The findings revealed strong positive and statistically significant relationships between SHRM strategies and employee retention. Specifically, Career development strategies exhibited the strongest predictive effect, followed by employee engagement, work-life balance and compensation strategies. The study concludes that SHRM strategies are critical determinants of employee retention in Kenya’s FinTech sector. It recommends prioritising career development through structured progression, training, and mentorship, alongside strengthening employee engagement via communication and recognition. HR managers should also improve work–life balance through better workload management and flexibility, while maintaining fair compensation complemented by non-monetary benefits.