Employee Demographic Characteristics and Their Effects on Turnover and Retention in MSMEs

Employee retention is one of the challenging issues faced by corporate leaders in any industry as the performance of any business unit depends on its employees. The ability to retain talented and committed employees contributes significantly to the success of the business. As employees are important, so is employee retention an important factor for all companies, especially the small businesses. In Micro, Small and Medium Enterprises, the skills of employees are the key human capital for efficient operations of the business. Therefore, the need for designing effective retention strategies arises. If the talent of the employees is retained and rewarded, the problem of turnover can be minimized. This study makes an attempt to analyze the various employee demographic characteristics and their effects on turnover and retention in MSMEs. The objectives of the study are to investigate the major factors that affect employee retention in MSMEs, to examine the relationships between the demographic variables and retention of employees and to identify the negative effects of voluntary turnover of key employees on MSMEs. Descriptive research approach has been followed and data was collected from 120 MSMEs randomly selected from the cotton textile, agro, jute and leather based sectors in Kancheepuram District through a structured questionnaire. To examine the hypotheses of the study, regression and chi-square analyzes were employed for analyzing the study variables. The findings reveal that retention factors are strongly associated to different demographic characteristics. Further, voluntary turnover of key employees have a number of adverse consequences for MSMEs, including, lowered productivity and profitability. It is therefore concluded that increasing job satisfaction, providing good working environment and career development opportunities, increasing recognition and rewards are some of the strategies that can help minimize the turnover rate.