Factors Affecting the Employee Retention of Generation Z

Lee, Wan Yen (2025) Factors Affecting the Employee Retention of Generation Z. Masters thesis, Tunku Abdul Rahman University of Technology and Management.

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Abstract

Employee retention has become a strategic priority for organisations, particularly as Gen Z increasingly dominates the workforce. In Malaysia’s evolving labour market, retaining young talent poses unique challenges due to shifting values, work expectations and generational diversity. While many organisations invest in human resource strategies, empirical studies that link these practices to Gen Z retention especially in the Asian context remain limited. This study aims to close this gap by looking at how today’s factors affect Gen Z employee retention. Guided by Person-Organisation Fit theory, Social Exchange Theory and Job-Demand Resource Theory, this study develops a framework to investigate the factors affecting employee retention among Gen Z. A conceptual model was tested using quantitative data collected from 303 Gen Z employees across Malaysian industries. The research employed multiple regression, mediation and moderation analysis to identify the influence of sustainable human resource practices, workplace flexibility, ethical reputation and reward management on employee retention, through the mediating roles of person-organisation fit and meaningful work, as well as the moderating role of firm size. The results demonstrate that while the four dependent variables do not directly affect retention, their impact is significant when channelled through perceived organisational alignment and meaningful work experiences. Additionally, firm size moderates these relationships, with stronger effects observed in smaller firms. This research sheds light to the understanding of employee retention through a generational lens and offers practical implications for designing HR strategies that align with Gen Z’s expectations, ultimately fostering organisational commitment and long-term workforce stability.