Organizational Determinants of Employees Turnover in Insurance Industry in Kenya

Abstract

Employee turnover is costly, causing workforce instability, reduced efficiency, lower effectiveness, and negative influence on organizational performance. Despite these consequences, there is often reluctance to invest resources to retain top talent. Existing studies on turnover in the Insurance Industry in Kenya are limited and show mixed results. Additionally, human resource management is evolving due to technological advances and changing worker expectations. This study, therefore, sought to fill the knowledge gap by establishing organizational determinants of employee turnover in the Insurance Industry in Kenya. The general objective was to assess organizational determinants of employee turnover, while specific objectives focused on the influence of management style, work environment, reward management, and career development opportunities. The study was anchored on multiple theories, including Maslow’s Hierarchy of Needs, Equity Theory, ERG Theory, Theory Z, Expectancy Theory, Job Matching Theory, McClelland’s Needs Theory, and Goal-Setting Theory. An explanatory research design was adopted to determine the relationships between the variables. The target population was 404 management staff from 48 insurance companies in Kenya. Krejcie and Morgan’s formula was used to determine sample size. A sample of 197 respondents was selected through purposive sampling. Primary data was collected using questionnaires, and a pilot study ensured the reliability and validity of the tool. Data was cleaned and analyzed using SPSS v25. Data from open-ended questions was analyzed on a thematic basis and the findings presented in a narrative form. Inferential and descriptive statistics were employed to analyse quantitative data obtained from close-ended questions. Descriptive statistics included means, standard deviations, frequencies, and percentages, while inferential statistics employed Pearson correlation, univariate and multiple regression analyses. Diagnostic tests confirmed that regression assumptions were met. The results showed that all four organizational determinants significantly reduced employee turnover: management style, work environment, reward management, and career development opportunities. Correlation analysis confirmed negative relationships: management style, work environment, reward management, and career development opportunities. The study found that management style, work environment, reward management and career development opportunities negatively influences employee turnover. The study further established that organizational culture significantly moderated these relationships. The inclusion of organizational culture increased the variance explained in employee turnover, demonstrating its enhancing influence. The interaction influence of management style, work environment, reward management, and career development opportunities with organizational culture showed negative and significant coefficients, indicating that organizational culture strengthens the influence of these determinants on reducing turnover. The findings suggest that improving leadership practices, enhancing work conditions, implementing effective reward systems, and offering career development opportunities, within a supportive organizational culture can substantially reduce employee turnover in Kenya’s Insurance Industry. The study provides empirical guidance for managers to retain talent, reduce unnecessary expenditure, and prevent human capital loss. Future studies should explore how these organizational determinants affect both employee and overall organizational performance.