The Remote Work Puzzle: Unravelling Key Factors in Employee Retention

The Remote Work Puzzle: Unravelling Key Factors in Employee Retention

Sharareh Shahidi Hamedani¹, Nik Anis Sazwani Nik Abdullah², Santhini Subramaniam¹, Muhammad Muzammil¹, Gan Poh Kat¹

¹Faculty of Business, UNITAR International University Malaysia

²Kuala Lumpur Metropolitan Business School, Kuala Lumpur Metropolitan University College

DOI:  https://dx.doi.org/10.47772/IJRISS.2025.9020266

Received: 13 February 2025; Accepted: 17 February 2025; Published: 18 March 2025

ABSTRACT

Employee retention in remote work settings is influenced by various workplace dynamics, particularly within fast-evolving industries like technology. This study investigates how non-financial factors, specifically work hours, conflict resolution, and peer acknowledgment, impact employee retention in the context of remote work within Klang Valley’s technology sector, Malaysia. Using a quantitative approach, data were collected from 104 non-managerial employee and analysed through Smart PLS, the findings reveal that conflict resolution and peer acknowledgment significantly enhance employee retention, whereas work hours show no notable effect. This insight can guide organizations in crafting effective remote work policies to boost employee satisfaction and commitment, contributing to the broader understanding of retention strategies in remote work environments.

Keywords: Remote Work, Employee Retention, Peer Acknowledgment, Work Hours, Conflict resolution

INTRODUCTION

Today’s work environment presents considerable challenges in retaining employees. A company’s success relies heavily on the commitment and performance of its skilled employees, whose expertise drives productivity and growth. According to [1] an organization’s culture significantly impacts employee interactions, work approach, and overall organizational performance. Long-term employees bring invaluable knowledge and stability, making employee retention a critical business priority. In remote work scenarios, the challenge of retention is further amplified by factors such as decreased direct supervision, blurred work-life boundaries, and reduced interpersonal interaction.[2]

In today’s competitive market, retaining employees is essential for maintaining stability and avoiding the high costs associated with turnover and recruiting. Companies are therefore increasingly focused on fostering a supportive, stimulating work environment to enhance job satisfaction and meet diverse employee needs [3].

Several strategies are used for managing employees who are talented by trying to keep them in the organisation for a longer period compared to competitors by using strategic retention management initiatives [4]. Unforeseen changes in the economy, changes in demographics and in business both domestically and internationally, have caused organizations to shift their focus towards employee retention [5] . Economic shifts, demographic transitions, and the widespread adoption of remote work have necessitated new approaches to retention. [5] highlight how these changes demand innovative strategies that go beyond financial incentives to focus on fostering engagement, collaboration, and well-being among employees. In the technology industry, which has seen rapid growth globally and in Malaysia, retention strategies have become increasingly important as competition for skilled workers intensifies. The study by [6], [7] noted that attractive salaries and benefits play a role in enhancing employee loyalty, but also factors such as work hours, conflict resolution, and peer recognition play a significant role.

A major challenge facing corporations in the 21st century is retaining employees [8]. Despite the fact that of researches are often emphasized financial as primary retention factors in research [9], yet few non-financial factors are taken into account, particularly in the context of  remote work environment [10] Developing effective retention strategies requires a deep understanding of how work hours, conflict resolution, and peer recognition impact employee engagement. Addressing this issue, this study scrutinizes the non-financial factors that affect employee retention in tech industry. Taking into consideration these aspects, the research seeks to provide a deeper understanding of how organizations can adapt to the unique challenges of remote work and foster commitment and engagement among their employees.

In addition to employee retention challenges, the technology industry also faces many other challenges that are influenced by various factors, such as work hours, conflict resolution, and peer recognition. [11]. To maintain a skilled workforce, businesses need to develop a talent management strategy that consists of these elements, especially in a competitive market where knowledge workers play a vital role in digital transformation and organizational growth. Due to the rapid growth of the technology sector, there is an acute shortage of skilled talent, which is resulting in an increase in turnover, and a pressing need for effective retention strategies. This research incorporates Maslow’s theory due to its emphasized on how different aspects of work affect employees’ psychological and social well-being, which set the stage for retaining them. Maslow’s hierarchy of needs states that employees are motivated to meet a sequence of needs, beginning with basic physiological needs, and ending with self-actualization [12]. According to this theory, a person must satisfy their needs sequentially, beginning with basic survival and ending with self-actualization. According to [13], to move from one level to another, a person should fulfil the needs from bottom to top. Yet, this study does not investigate the ascending order of the theory. Physiological needs (basic needs) include water, air, food, and other basic needs that are all, without a doubt, vital for human survival  and humans are motivated to satisfy these needs. While employee retention presented as the dependent variable of the study, independent variable categories as works hours (psychological needs), conflict resolution (social needs) and peer acknowledgment (esteem needs) has been investigated by this study.

 Having a flexible schedule is a key factor in achieving work-life balance while working remotely. The goal of conflict resolution strategies is not only to cultivate positive relationships between peers but also to cultivate a sense of belonging and appreciation among them, as well as to increase their esteem by recognizing them. These elements together increase employee engagement and commitment to the organization over the long term. In the following sections, we present a literature review and hypothesis development, as well as the research method and outcomes, while the final section focuses on conclusions and implications.

LITERATURE REVIEW, HYPOTHESES AND RESEARCH FRAMEWORK

Work hours and Employee Retention

To remain competitive and innovative, companies must retain skilled and knowledgeable employees [14]. Employee retention is not a turnover metric but it includes job satisfaction, engagement, and fostering a work environment that encourages long-term commitment [15]. The technology industry has seen a significant shift due to the COVID-19 pandemic, leading to remote work [16]. This shift presents new challenges in retaining talent, requiring a detailed understanding of the factors affecting employee commitment and longevity. Employee retention is not just about financial aspects but also maintaining institutional knowledge and ensuring smooth project and operation continuity [17]

Work hours, a constant part of the employee experience, have new implications in remote work. The flexibility of working from home can bring both positive and negative aspects, providing autonomy but also challenges blending in professional and personal life. Employees, now free from standard office hours, manage their workload within a home setting. The flexibility of remote work can lead to extended work hours and increased stress levels [18] . The lack of physical boundaries often pushes employees to be always available, showing their commitment to work from home. This constant availability can make disengaging from work during non-working hours challenging, possibly resulting in burnout. Stress can enhance performance, but excessive stress can lead to burnout, reduced productivity, and an increased likelihood of seeking other job opportunities [19]. Therefore, this study has proposed the hypothesis as follow:

H1: There is a significant relationship between the employees’ work hours and employee retention in the technology industry.

Conflict Resolution and Employee Retention

Effective conflict resolution is crucial in maintaining a positive work environment, both in traditional and remote settings. Conflict resolution challenges are found common in remote work, where physical distance can complicate the resolution process [20], [21] . One notable challenge is the potential delay in resolving conflicts when team members are geographically scattered [22] . Unlike traditional offices, where face-to-face interactions facilitate immediate conflict resolution, virtual workspaces require alternative methods. Managers might face difficulties in addressing conflicts remotely, necessitating an exploration of remote leadership’s effectiveness in conflict resolution [23]. Collaboration plays a significant role in conflict resolution in remote work dynamics. Coordinating responses and reaching resolutions demand heightened collaboration, posing challenges in ensuring cohesive teamwork in virtual settings. Therefore, this study has proposed the hypothesis as follow:

H2: There is a significant relationship between conflict resolution faced by employees and employee retention in the technology industry.

Peer Acknowledgement and Employee Retention

Peer acknowledgment is crucial for positive work dynamics and significantly influences employee retention, especially in remote work. A study by [24] mentioned that by having good engagement, employees will have enthusiasm, sense of pride, and positive feelings towards their works, hence it will bring positive implications for employees’ work performance, which can increase their productivity. Consistent peer acknowledgment contributes to increased employee engagement and job satisfaction. In the digital realm of remote work, peer acknowledgment becomes even more critical [25]. According to [26], remote employees, when consistently acknowledged, report higher job satisfaction and increased commitment to the organization. Recognizing and valuing employee contributions is essential in creating a virtual work environment that promotes loyalty, engagement, and contributes significantly to long-term employee retention. Therefore, this study has proposed the hypothesis as follow:

H3: There is a significant relationship between peer acknowledgment and employee retention in the technology industry.

Research Framework

The conceptual framework outlined in Figure 1 below will serve as a foundation for further investigation and exploration to show independent variables and dependent variable. The independent variables included within the conceptual framework are work hours, conflict resolution and peer acknowledgment.

Figure 1: Conceptual framework of the study

Research Methodology

Data Collection

This study utilized quantitative data analysis and was designed as a descriptive study. A sample size of this study aims to target 123 respondents. A set of questionnaires was distributed to NTT Data Centres CBJ1 and NSS IT Solutions which both are the listed company of technology industry in Klang Valley, Malaysia. The questionnaires were sent via Google form. To maximize the response rate, several follow-ups was made to the respondents. The respondents in this study consisted of non-managerial personnel from both companies. A total of 104 completed questionnaires were received, representing a response rate of 85 percent. The Statistical Package for Social Sciences (SPSS), Version 26 and Smart PLS 4.0 was used to analyse the data.

RESULTS AND FINDINGS OF THE STUDY

Table 4.1: Demographic Profile of Respondents

According to Table 4.1, the results indicate a relatively balanced representation, with 48 individuals (46.2%) identifying as female and 56 (53.8%) as male. The age distribution reveals that many respondents fall within the 31 to 40-year-old, comprising 39 individuals (37.5%), closely followed by those aged 41 to 50, accounting for 36 participants (34.6%). While 15 respondents are from the 21 – 30 age group (14.4%) and 14 respondents (13.5%) from the 51 – 60 age group respectively. The data on the highest education level demonstrates a considerable proportion of bachelor’s degree holders, with 48 respondents (46.2%), followed by those with a Diploma, totalling 28 individuals (26.9%). A smaller segment of the participants holds a master’s degree (22 individuals, 21.2%), and an even more minor proportion possesses a PhD (6 individuals, 5.8%). In terms of working tenure, the data shows a relatively even distribution across various categories, with the highest number of respondents falling within the below 10 years and 31 to 40 years, each accounting for 27.9% and 26.0% of the total respondents, respectively.

Assessment of the Measurement Model

Convergent Validity

Convergent validity refers to the degree to which measures of a particular construct converge or share a large proportion of their variance [27]. The reliability and validity of the reflective measurement model were evaluated based on [28].There are three main aspects that are evaluated in this model based on different criteria, namely internal consistency reliability, convergent reliability and discriminant validity as shown at Table 4.2.

Table 4.2 Table of Measurement Model

According to the Table 4.2, all four constructs met the threshold values or minimum cut-off values for CR and AVE, with all CRs greater than 0.7 and all AVEs greater than 0.5. [28]. Each of the variable has a Cronbach’s alpha greater than 0.7, the variable passed the reliability test [28]. All Cronbach’s Alpha for this study is above 0.7 and pass the reliability test.

Discriminant Validity

Fornell and Lacker’s Criterion

Table 4.3 Discriminant Validity using Fornell and Lacker’s Criterion

According to [29], indicators should have a higher weighting on their own construct than on the other constructs in the model, and the average variance distributed between each construct and the indicators should be higher than the variance shared between the construct and other constructs. Table 1.2 shows that all the reflective structures have adequate or satisfactory discriminant validity [29], where the square root of AVE (diagonal) is greater than the correlations (off-diagonal).

Table 4.4 Heterotrait-Monotrait Ratio of Correlations (HTMT)

As shown in Table 4.4 all of the values meet the HTMT.90 (Gold et al., 2001) and HTMT.85 (Gold et al., 2001) criteria (Kline, 2011). Thus, discriminant validity has been established for this study.

Testing of Hypotheses

In this study, 3 hypotheses were developed. The direct relationships of CR, PA, WH and ER were examined.

Based on the assessment of path coefficients for this study, three direct relationships were found as shown in Table 4.5. As a conclusion, all results show in Table 4.5, the predictors of CR and PA are positively related with ER. The standardized beta coefficient (β) is 0.432, with a t-value of 2.194 and a p-value of 0.028. Since the p-value is less than 0.05, this relationship is statistically significant. The standardized beta coefficient (β) is 0.371, with a t-value of 2.159 and a p-value of 0.031. The p-value is also below 0.05, indicating statistical significance. Thus, H2 and H3 supported. However, WH do not influence the employee retention. The standardized beta coefficient (β) is 0.046, with a t-value of 0.584 and a p-value of 0.56. The p-value exceeds 0.05, indicating no statistical significance. Hence, H1of this study was rejected.

Table 4.5 Hypotheses Testing for Direct Relationship with Employee Retention

CONCLUSIONS, AND CONTRIBUTIONS

This research paper focuses on identifying the key elements that have a significant influence on employee retention during work from home. The research delves deeper into critical factors such as the number of work hours, the effectiveness of conflict resolution strategies implemented within the organization, and the immeasurable value of peer recognition within a corporate environment, mainly the technological sector in Klang Valley, Malaysia. This study presents evidence that indicates that work hours are not influence employees in technology industry to stay long in the current company. The implementation of effective conflict resolution strategies, and the fostering of an environment that values peer recognition proved there are significant relationship towards employee retention in technology industry in Klang Valley, Malaysia.

This study provides key theoretical insights into remote work dynamics within the tech industry. Firstly, it addresses the need to enrich literature on employee retention and remote work challenges, offering insights specifically relevant to the technology sector. Further, this study provides an in-depth analysis of the relation between work hours, conflict resolution, peer recognition, and employee retention, highlighting the role that all these factors play in sustaining workforce commitment and longevity in the workplace. A solid conceptual framework is introduced in the research highlighting the importance of work hours, conflict resolution, and peer recognition in employee retention. As such, it provides a detailed understanding of the intricacies of remote work in tech industry. The study highlights these elements in order to gain insight into what drives employee commitment in a fast-changing industry filled with talent competition and rapid changes. In terms of practical implications, this research offers useful insights for technology professionals. The research underlines the importance of effective conflict resolution in remote work environments. (Morrison-Smith et al., 2021)Using strategies identified in the study, companies can pre-emptively resolve conflicts among remote members, ensuring smooth collaboration despite geographic and time zone differences [30]. This research could also aid companies in implementing employee retention strategies, which can have a host of positive effects.

ACKNOWLEDGMENT

The authors would like to thank UNITAR International University for the support of publishing this research.

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