PurposeThe purpose of this paper is to explore HR managers' and employees' views on the factors affecting employee retention using the perspective of the psychological contract.Design/methodology/approachTwo studies were conducted. First, a sample of HR managers gave their view on the factors affecting employee retention and turnover and described their retention practices. Second, a large sample of employees reported on the importance attached to five types of employer inducements commonly regarded as retention factors, on their evaluation of these inducements and on their loyalty. Regression analysis was used to examine the impact of the delivery of employer inducements on retention.FindingsThe HR managers survey indicates that retention practices focus more on the factors believed to cause employee turnover (career opportunities and financial rewards) than on those believed to affect employee retention (social atmosphere, job content, work‐life balance). The focus on career opportunities is supported by the employee survey. The delivery of career opportunities had the strongest impact on employee loyalty while the impact of the delivery of financial rewards was much smaller.Research limitations/implicationsIt is useful to distinguish between different content dimensions of the psychological contract when studying its impact on employee outcomes. The psychological contract provides a relevant framework for studying employee retention.Practical implicationsThis paper offers HR professionals' insights into the effectiveness of retention practices.Originality/valueThe paper shows how the psychological contract can be applied in retention management and examines impact of different content dimensions of the psychological contract on employee outcomes.
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