Compensation Management and Employee Retention in Microfinance Banks in Akwa Ibom State

Abstract

This study was conducted to examine the relationship between compensation and employees’ retention in microfinance banks in Akwa Ibom State. Five microfinance banks in the state were studied. The study was a survey questionnaire as the research instrument. A sample size of 120 was extracted from a population of 138 using Taro Yamane’s formula. The study achieve 88.3% response rate. Data were analysed with simple and multiple linear regressions. The study revealed that about 84.1% of variance in employee retention in microfinance banks in Akwa Ibom State was attributable to the salary paid to employees in various microfinance bank: that about 40.1% of the variance in employee retention in microfinance banks in Akwa Ibom State was attributable to fringe benefits offered employees of microfinance banks in Akwa Ibom State: that about 52.8% of variance in employee retention in microfinance banks in Akwa Ibom State was attributable to performance bonus: that about 86.9% of the variance in employee retention in microfinance banks in Akwa Ibom State is attributable to the influence of salary, fringe benefits, performance bonus and incentive packages. It was concluded that a relationship existed between compensation management and employee retention in microfinance bank in Akwa Ibom State. It was recommended that microfinance should formulate compensation management policies that will enable them attract and retain best hands to help drive their operations; that microfinance banks do more in terms of payment of competitive salaries, performance bonus and fringe benefit sand that in view of outcome of the analysis which tends to suggest that incentive was not significantly related to employee retention in the microfinance sector in Akwa Ibom State, the option should not be considered in stimulating employee retention.