Examining the mediating role of employee job engagement on employee retention among gen Y in Malaysian manufacturing sectors

In today’s emerging competitive business environment, employees play a vital role for the organisation to achieve success. The purpose of this study is to examine the direct influence of compensation, human resource development, work-life balance and person-job fit on employee retention with employee job engagement being the mediating variable. Gen Y was chosen as the focus group in this study. Moreover, the quantitative method was used to test the relationships. A survey was carried out among employees of the manufacturing sectors across three states (Selangor, Johor and Penang) in Malaysia with a total of 966 sets returned and utilized for data analysis. Structural Equation Modelling technique was used to test the conceptual framework by adopting the Partial Least Square approach. The results analysis reveals that compensation, human resource development and person-job fit are positively found to influence employee retention. However, work-life balance has an insignificant influence on employee retention. Meanwhile, all the independent constructs show significant results when mediated by employee job engagement towards employee retention. For the implications, various stakeholders such as employers, employees and policy makers from the manufacturing sectors could utilize the effective practices to satisfy and retain their employees (Gen Y) in order to increase their competitiveness. Besides that, limitation and recommendations for future researches are also discussed. In future, a comparison study between manufacturing sectors and service sectors is recommended. The comparison on the two largest sectors could provide a better understanding on the desire and needs of the Gen Y. Thus, the results could help to increase the employee retention rate within the organisations.