Impact of Human Resource Management Practices on Employee Engagement and Retention

Human Resource Management (HRM) practices constitute a strategic lever through which organisations shape the psychological contract with their workforce, influencing discretionary effort, organisational commitment, and ultimately, the decision of employees to remain or exit. In the context of India's rapidly expanding private sector — characterised by high attrition rates averaging 18–26% across sectors and the concurrent challenge of retaining knowledge workers in a competitive talent market — the systematic empirical examination of which HRM practices most significantly predict employee engagement and retention outcomes is of both theoretical and practical importance. This study investigates the relationship between four core HRM practice dimensions — Training and Development (T&D), Performance Appraisal (PA), Compensation and Benefits (CB), and Work-Life Balance (WLB) — and the outcomes of employee engagement and retention intention, using a structured survey instrument administered to 384 employees across six industry sectors (manufacturing, IT/ITES, banking and finance, healthcare, retail, and education) in Tier-I and Tier-II Indian cities. Partial least squares structural equation modelling (PLS-SEM) was employed to test the measurement model and structural hypotheses. Results confirm that all four HRM practice dimensions significantly predict employee engagement (R² = 0.68), with Work-Life Balance emerging as the strongest predictor (β = 0.34, p < 0.01) followed by Training and Development (β = 0.31, p < 0.01). Employee engagement fully mediates the relationship between WLB and retention intention, and partially mediates the relationships between T&D, PA, CB and retention intention. Sector-wise analysis reveals that IT/ITES employees report the highest engagement scores (mean = 76/100) while retail sector employees report the lowest (mean = 65/100). The findings provide actionable guidance for HR practitioners in designing targeted HRM initiatives, particularly in medium-sized Indian firms where HRM formalisation is incomplete.