The effect of human resource management practices on employee retention in small family businesses in Nairobi was addressed through the following objectives; to determine the relationship between recruitment and selection, and employee retention, to establish the relationship between training and development, and employee retention, and to determine the relationship between performance appraisal and employee retention in small family businesses in Kenya.
Descriptive research design was adopted to address the research objectives. Small family businesses were sampled and primary data collected using a researcher-administered structured questionnaire. The collected data was analyzed quantitatively to establish the relationships between the dependent variable and the independent variables.
Factor analysis was used to identify the main factors for each of the four variables measured from the set of 40 statements that were considered in the questionnaire. The factors generated from factor analysis were used to model the relationship between Employee Retention and the independent variables using regression analysis. Using Regression analysis, the independent variables measured in the study cause variation in employee retention by 53.3%. Using Correlation analysis, training and development has a significant relationship with employee retention by 64.6% while performance appraisal has a significant association with employee retention by 67.3%. Recruitment and selection, however, had a positive but weaker association with employee retention by 42.3%.
Based on the findings, this study recommends that small family businesses engage more in continuous training of their employees. They should open more development opportunities in their firms so as to realize higher employee retention rates. The study also recommends regular performance appraisals to be done since the practice highly enhances employee retention in the small family businesses.