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ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue X October 2025

Employee Reward Systems and Knowledge Retention in Non-

Governmental Organizations in Kenya

Otieno Arnold, Dr. Wycliffe Misuko Nyaribo

KCA University Nairobi, Kenya

DOI: https://dx.doi.org/10.47772/IJRISS.2025.910000647

Received: 26 October 2025; Accepted: 04 November 2025; Published: 20 November 2025

ABSTRACT

Knowledge retention is important for non-governmental organizations due to several factors that contribute to

their effectiveness, sustainability, and mission fulfillment. However, non-governmental organizations have

been experiencing a challenge in their knowledge retention. This study therefore sought to examine the effect

of employee reward systems on knowledge retention within NGOs operating in Nairobi, Kenya. The specific

objectives of the study were to establish the effect of monetary rewards, employee development, recognition,

and Skill-based reward on knowledge retention among non-governmental organizations in Kenya. The study

was anchored on Vroom's expectancy theory, human capital theory, and social exchange theory. The study

adopted a descriptive research design. The target population of the study was 636 heads of finance, fundraising

and communications, human resource, and programs departments in the 159 NGOs based in Nairobi County.

The study used Slovin's Formula in the determination of the sample size. Stratified random sampling was used

in the selection of the sample size. The study used primary data, which was collected by use of semi-structured

questionnaires. Both quantitative and qualitative data were generated by the questionnaires. The study

concluded that Monetary rewards are vital and significantly contribute to increased knowledge retention in

NGOs in Nairobi County Kenya. If employees receive monetary rewards in the form of bonuses, compensation

for overtime, and competitive salary, then knowledge retention will be maintained.

Keywords-Employee development; Employee reward systems; Knowledge retention; Monetary rewards;

Recognition, Skill-based reward.

INTRODUCTION

Nongovernmental organizations (NGOs) play a crucial role in complementing government efforts by

addressing social, environmental, and economic challenges within a nation. They often fill gaps in service

delivery, advocate for marginalized populations, and facilitate community development initiatives (Agyare &

Asamany, 2019). NGOs contribute to fostering democratic governance, promoting human rights, and

advancing sustainable development goals, making them indispensable partners in nation-building and fostering

inclusive societies. According to Cook-Lundgren and Carr (2022), knowledge retention in NGOs is crucial for

preserving institutional memory, sustaining organizational effectiveness, and facilitating continuity in

delivering impactful programs and services to communities.

Knowledge retention is the ability of an organization to capture, store, and effectively transfer critical

knowledge and expertise from experienced employees to new or existing employees (Letoluo, 2019). In

NGOs, where turnover rates can be high, preserving institutional knowledge becomes crucial for maintaining

continuity, enhancing organizational learning, and improving overall performance. This retention of

knowledge allows NGOs to build upon past successes, avoid repeating mistakes, and ensure that valuable

insights and lessons learned are not lost with the departure of experienced staff members (Alhmoud and Rjoub,

2019). Moreover, effective knowledge retention facilitates efficient decision-making, innovation, and

adaptation to changing environments, enabling NGOs to remain responsive to the needs of their beneficiaries

and communities.

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Employee reward systems encompass organizations' practices, policies, and strategies to recognize and reward

employee contributions, achievements, and performance. These systems aim to motivate employees, increase

job satisfaction, and promote employee retention by providing tangible and intangible benefits. Cook-

Lundgren and Carr (2022) Moreover, Employee reward systems play a vital role in ensuring knowledge

retention within organizations by incentivizing employees to remain with the organization, encouraging

continuous learning and development, and recognizing and rewarding valuable contributions (Ampofo,

Karatepe & Wilberforce, 2023). These systems help foster a positive work environment where employees feel

valued, motivated, and invested in the organization's success, leading to increased loyalty and commitment

(Arasanmi and Krishna, 2019). Rewards can be monetary on non -monetary rewards. In their study iClerkin

and Quinn (2021) found that non-monetary rewards such as public recognition, awards, and appreciation

events reinforce positive behaviors, foster a culture of appreciation, and enhance employee morale.

By nature of their operation NGOs are unique and they face exceptional challenges Chetty, Bangalee, and

Brysiewicz (2020) observed that NGOs face unique challenges that can affect the design and implementation

of employee reward systems. In a similar breath, Agyare and Asamany (2019) indicated that limited financial

resources, competing priorities, and the need to focus on the organization's mission constrain the types and

levels of rewards that can be offered by organizations. Additionally, cultural factors, such as the importance of

intrinsic motivation and social recognition, may influence the effectiveness of extrinsic rewards in knowledge

retention efforts.

Modern organizational structures have witnessed a shift in employee relations. Although production resources,

such as finance, remain critical to the organization’s functionality, workers are gradually perceived as the most

crucial component. In a study conducted in Kenya, Omolo and Mose (2019) state that employees possess

prerequisite skills and knowledge in a given line of the profession; therefore, their ability to execute their

mandate is vital in attaining desired outcomes. Such significance implies that an organization’s success

depends on its ability to nurture and retain its human capital. These trends are pronounced among NGOs

entities because their operations entail social interactions. As a result, modern organizational entities are

gradually shifting their functional priorities, and workers are becoming integral.

By understanding the relationship between rewards and knowledge retention, organizations can develop

tailored strategies that enhance employee motivation, foster a culture of learning and knowledge sharing, and

ultimately contribute to the long-term success of NGOs initiatives in diverse communities. Organizations can

positively impact employee morale, performance, and retention rates by developing a well-designed reward

system. However, developing a practical employee reward system depends on multiple factors.

Notably, Kumari et al. (2021) maintain that the reward system must be aligned with the overall goals and

strategies of the organization. The research has shown that when rewards are closely tied to organizational

objectives, employees are more likely to understand how their efforts contribute to the company's success. This

alignment enhances employee motivation and engagement. Additionally, defining clear and measurable

performance metrics is vital for an effective reward system. For instance, Rohim and Budhiasa's (2019)

findings suggest that using objective and quantifiable criteria for evaluating employee performance increases

fairness and perceived equity in the reward allocation process. Therefore, it is essential to establish

performance metrics that are specific, measurable, and aligned with the organization's goals. Clear metrics help

employees understand what is expected of them and enable managers to assess performance objectively.

Additionaly it important to strike a balance between individual and team based rewards for a well rounded

reward system .

Knowledge retention refers to the process of capturing, preserving, and transferring critical knowledge and

expertise within an organization to ensure its availability and continuity over time (Alhmoud & Rjoub, 2019).

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In particular, retaining skilled employees reduces recruitment and training costs while ensuring program

delivery continuity and organizational stability (Bussin & Brigman, 2019). Therefore, NGOs in Nairobi,

Kenya, should prioritize workforce retention strategies as a critical driver of their functionality and long-term

impact.

Knowledge retention helps streamline multiple organizational processes. Effective retention strategies help

organizations reduce expenses associated with employee turnover, including recruitment costs, training

expenses, and productivity losses during the transition period (Nguyen, 2020). As a result, organizations can

allocate resources more efficiently and minimize financial burdens by retaining employees. Additionally,

Arasanmi and Krishna (2019) assert that retention strategies enable organizations to preserve valuable

institutional knowledge and expertise built over time by experienced employees. When employees leave, their

knowledge leaves with them, potentially causing a loss in efficiency and productivity.

Furthermore, by implementing effective retention strategies, organizations can retain top talent and ensure the

continuity of critical knowledge. Also, retained employees are already familiar with the organization's systems,

processes, and culture, resulting in reduced onboarding and training time (Jayathilake, Daud & Annuar, 2021).

Knowledge management is often overlooked, yet it directly affects an organization’s productivity. Cirillo et al.

(2021) assert that companies and institutions often focus on diversifying their operation strategy scope and

ignore the significance of retaining their workforce. The use of misaligned employee reward systems further

exacerbates this scenario. Subsequently, organizations are prone to lose valuable employees, adversely

affecting their output due to the loss of valuable workers. In particular, developing nations, such as Kenya,

have been struggling with this phenomenon. For instance, Kamau et al. (2021) hold that employee turnover

rates in Kenya are highest regionally and worldwide, with records at more than 60%. These trends are

unsustainable for these entities du, e to their proneness to inefficiencies. Therefore, these dynamics illustrate a

prevailing challenge of high workforce attrition within Kenyan organizations.

This study therefore seeks to investigate the effect of employee reward systems on knowledge retention within

NGOs operating in Nairobi, Kenya. More specifically the study sought to find out the effect of monetary

rewards, employee development recognition and skill based reward on knowledge retention.

LITERATURE REVIEW

The study was supported a by various theories which include Victor Vroom's Expectancy Theory is a

psychological model that focuses on explaining individual motivation and decision-making in the workplace

(Nhung & Do, 2020). This idea, which was put forth by Victor Vroom in 1964, contends that people are driven

to behave a specific way by the results they anticipate from their activities.

The Human capital theory was developed by economists Gary Becker and Theodore Schultz in the 1950s and

early 1960s (Hsu & Chen, 2019). The theory suggests that individuals and societies can be viewed as

investments in human capital, much like physical capital such as machinery or infrastructure. Human capital

theory posits that education is a key determinant of an individual's productivity. Higher levels of education are

believed to be associated with increased skills, knowledge, and efficiency in the workplace.

George Homans, a sociologist, advanced the social exchange theory in 1958. At its core, the theory revolves

around the concept of reciprocity, where people anticipate that their actions will be reciprocated by others,

forming the foundation of social transactions. Central to Social Exchange Theory is the evaluation of

interactions in terms of rewards and costs. Individuals weigh the positive outcomes, or rewards, they receive

against the negative outcomes, or costs, they incur in a particular social exchange (Kim & Wirtz, 2022).

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Research has demonstrated that monetary rewards, encompassing both remuneration and bonuses have an

effect on employee retention. In their study, Alhmoud and Rjoub (2019) examined the effect of monetary

rewards on employee retention. The study hypotheses were tested using structural equation models (SEMs)

and the partial least squares (PLS) approach. The findings indicated that monetary rewards including

remuneration and bonuses had a significant effect on the retention of employees. In a related related study.

Natalia and Mundende (2023) examined the effect of monetary rewards on teacher retention. The study

employed a mied method approach. The results showed that financial incentives had a big impact on teachers'

retention. In contrary some some stuies have show an insignificant relationship between remuneration

preferences and knowledge retention (Bussin and Brigman 2019)

Monetary rewards have been found to have positive effect on employee retention in telecommunication firms

in Kenya. In their study, Rotich (2020) use an explanatory research design was employed and the target

population was 519 employees of telecommunication firms. Self-administered questionnaires were used to

collect data. The study findings indicated a positive significant relationship between monetary rewards and

employee retention in telecommunication firms in Kenya. This implies that when employees receive monetary

rewards, such as salary increases, bonuses, or other financial incentives, it is associated with higher levels of

retention within the telecommunication sector.

Remuneration, encompassing salary, benefits, and other financial incentives, plays a significant role in

influencing employee retention within the hotel industry. Sitati and Miringu (2019) investigated the impact of

remuneration on employee retention within the hotel industry. The study revealed that compensation has a

major and favorable impact on staff retention hotel sector. According to the study's findings, a company needs

an efficient compensation plan in order to draw in, keep, and motivate its workforce.

The enhancement of job performance through training and development has a major role in the retention of

young workers in general. Nguyen (2020) investigated the impact of job performance and training and

development on young employee retention in Vietnam. The retention of young employees is positively

correlated with training and development. There is a direct correlation between youthful employee retention

and job happiness.

Most work place are dominated by Generation Z workers. In the post-COVID-19 workplace, employee

development is vital. Jayathilake, Daud, and Annuar (2021) explored how employee development affected

Gen-Z employees' retention in the post-COVID-19 workplace. Employee development programs emphasize

continuous learning and skill development are crucial for retaining Generation-Z employees. These programs

should align with emerging technologies and industry trends. Employee development initiatives focus on

enhancing digital literacy and providing training on tools that facilitate remote collaboration. Generation-Z

employees value clear career pathing and opportunities for advancement

Training and development are recognized as essential elements of a successful retention strategy in India. In a

particular food industry, Shibu (2019) investigated the impact of training and development on employee

retention. The study discovered a connection between employee retention and training and development. The

findings imply that staff retention is positively impacted by training. The study found that employee retention

and training and development are positively correlated. It highlights how crucial it is for businesses to fund

training initiatives in order to improve skills and, in turn, keep workers in the cutthroat corporate world

Organizations that understand the value of employee development programs can enhance employee

performance and, consequently, retention, Tesfaye (2019) examined the effect of employee development

program on employee retentionThe study findings indicate that effective employee development programs

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contribute to employee satisfaction and the ability to retain valuable human capital. The study suggests that

effective employee development programs play a crucial role in fostering employee satisfaction and retention.

Employee recognition has a significant role in impacting both employee retention and job satisfaction.

Recognition of employees makes employees feel that their work is valued and appreciated. In their study Tirta

and Enrika (2020) studied the effect of employee recognition on employee retention with job satisfaction.. The

outcome of the study show that job happiness and recognition significantly improve employee retention. It was

discovered that the association between employee retention and recognition was mediated by job satisfaction.

The study came to the conclusion that it is critical to comprehend how employee retention is affected by

recognition and how job satisfaction is affected by it.

Employee recognition has a significant relationship with knowledge sharing among firms. Ampofo, Karatepe

and Wilberforce (2023) studied interrelationships among employee recognition, knowledge sharing, service

orientation, and abusive supervision. The study found that employee recognition had a significant effect on job

embeddedness (JE) and knowledge sharing. Job embeddness mediated the impact of recognition on both

knowledge sharing and service orientation. Recognition had a progressively mediated effect on service

orientation through JE and information sharing.

Recognition awards have a positive role in staff retention within non-governmental organizations (NGOs).

Esinyen (2023) examine the effect of recognition awards on staff retention in non-governmental organizations.

The study was grounded in a descriptive research design, The findings indicated that recognition had a positive

and statistically significant effect on staff retention in NGOs

Skill-based reward is a compensation strategy where employees receive additional pay or bonuses based on the

acquisition and utilization of specific skills, knowledge, or competencies relevant to their job roles. In

Pakistan, Kang (2023) investigated the meaningful differences between job-based pay and Skill-based reward

in the current literature. The comprehensive literature analysis reveals a clear comparison between job-based

pay and Skill-based reward, identifying one similarity and four differences. The study highlighted distinctions

in how pay is determined based on job duties or individual skills. The findings indicated that employees can

benefit from opportunities to advance in their careers by aligning with the right compensation schemes. The

findings encourage HR practitioners to consider the nuances of job-based and Skill-based reward systems and

their impact on employees' professional development.

Implementing Skill-based reward in private higher education institutions can have significant implications for

employee retention and job satisfaction among lecturers. In a recent study by Heng and Lau (2022) they

examined the effect of skill-based reward on employee retention and job satisfaction among private higher

education institutions’ lecturers. The study found a significant relationship between Skill-based reward and job

satisfaction. This implies that the level of satisfaction with remuneration has an impact on the overall job

satisfaction of academic employees.

The implementation of competency-based pay in the banking industry in Malaysia can have various effects on

pay satisfaction among employees. Yap and Ng (2019) examined the impact of competency based pay on pay

satisfaction in the banking industry in Malaysia. The research adopted a systematic literature review as its

methodology to synthesize existing knowledge and develop a conceptual framework for the study. The

findings indicated that competency based pay has a significant effect on pay satisfaction in the banking

industry in Malaysia. Competency-based pay is designed to reward employees for the skills they bring to their

roles and their contributions to the organization, potentially leading to a greater sense of fairness and

satisfaction. .

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CONCEPTUAL FRAMEWORK

Figure 2.1 is a diagrammatic presentation of the relationship between the independent variables and dependent

variables The independent variables will be monetary rewards, employee development, recognition and Skill-

based reward. The dependent variable will be knowledge retention among non-governmental organizations in

Kenya.

Figure 2. 1: Conceptual Framework

Independent Variables Dependent Variable

RESEARCH METHODOLOGY

Research design refers to the overall plan or structure that guides the systematic investigation and collection of

data in order to answer a specific research question or test a hypothesis. The study adopted a descriptive

research design. In a descriptive research design, the researcher observes, records, analyzes, and interprets data

without intervening or altering the conditions under study. Descriptive research design is used to identify

"what exists" in connection to the variables or conditions in a certain setting and acquire information about the

current state of phenomena. Descriptive research design is reliable in giving responses to when, how, who and

where which are connected to the topic being studied.

The target population included all Nairobi County's non-governmental organizations served as the analytical

unit. Nairobi County is home to 159 registered non-governmental organizations, as reported by the NGOs Co-

ordination Board (2022). In a research endeavor, the individual entities or cases that are examined and

analyzed are referred to as the unit of observation. The heads of the departments of finance, communications,

fundraising, human resources, and programs served as the unit of observation for this study. They represent

critical stakeholders whose perspectives and decision-making influence the design, implementation, and

impact of employee reward systems A total of 636 heads of the finance, communications, fundraising, human

resources, and programs departments of the 159 NGOs with headquarters in Nairobi County were the study's

target population.

Monetary rewards

 Competitive Salaries

• Overtime allowances

• Performance bonuses

Employee development

 On-job Training

 Mentorship

 Scholarships

Recognition

 Awards

 Certificates

 Public acknowledgement



Knowledge retention

 Application of learning

 Retention rates

 Documentation

Skill-based reward

 Skill Acquisition Rates

 Skill Utilization

 Skill Proficiency Levels

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Table 3.1: Target Population

Departments

Target Population

Finance

159

Fundraising and communications

159

Human resource

159

Programmes

159

Total

636

Source: NGOs Co-ordination Board (2020)

The sample size for the study was determined using Slovin's Formula. When the population is huge and the

researcher wants to take a representative sample, they can utilize Slovan's formula to estimate the sample size

(Krishna, 2020). The formula is expressed as follows:

𝑛 =

𝑛

1 + 𝑛𝑛

Where:

n is the required sample size;

N is the total population size.

e is the desired margin of error or precision (expressed as a decimal).

The margin of error (e) represents the acceptable level of variability or uncertainty in the estimates made from

the sample. In this study the margin of error will be 0.05.

𝑛 =

636

1 + 636 ∗ 0.05

𝑛 = 244

Table 3.2:

In this study, 244 respondents were chosen from the target population using stratified random sampling. In this

study, the strata was four departments in non-governmental organizations: finance, fundraising and

communications, human resource and programmes.

The study used primary data, which was collected by use of semi-structured questionnaires. A questionnaire is

a research tool used to collect information from participants in a structured and systematic manner. Structured

questions comprised of nominal scale, which was used to collect basic demographic data, such as age, gender,

education. In addition, a 5 point Likert Scale (strongly agree, agree, neutral, disagree and strongly disagree)

was used to collect data on both the independent variables and the dependent variable.

A pilot study was conducted on group of 24 people participated in the test, which was carried out to ascertain

the validity of the instrument This comprised 10% o the population. The study focused on two types of

validity: content validity and face validity.

Reliability in the context of a research instrument refers to the consistency and stability of the measurements or

scores it produces. A reliable instrument should yield consistent results when administered under the same

conditions and to the same group of participants To test reliability Cronbach's alpha was used . A Cronbach's

alpha of 0.70 or above is usually regarded as adequate.

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The drop-off and pick-up later strategy was used in this investigation. Two weeks passed after which the

research tools—questionnaires—were gathered from the respondents. The study participants' limited

availability made the drop-off and pick-up later technique the most suitable.

Descriptive as well as inferential statistics were employed in analyzing quantitative data with an assistance of

SPSS version 25 statistical software. Descriptive statistics comprised of mean, standard deviation, percentages,

and frequency distribution. Inferential data analysis was carried out using Pearson correlation coefficient and

linear regression analysis. Since independent variables in this research are four, the multivariate regression

model was as follows;

𝑌 = 𝛽

+ 𝛽

𝑋

+ 𝛽

𝑋

+ 𝛽

𝑋

+ 𝛽

𝑋

+ 𝜀

Whereby:

Y = Knowledge retention among non-governmental organizations in Kenya;

𝛽

= Constant;

𝛽

, 𝑛

= Coefficients of determination;

= Monetary rewards;

= Employee development;

= Recognition;

= Skill-based reward; and

ε = Error term

Diagnostic tests are used to assess the assumptions and identify potential violations of those assumptions in

regression models The assumptions include: normality, linearity , multicollinearity and heteroscedasticity. The

linearity assumption in regression analysis states that the relationship between the predictor variables

(independent variables) and the response variable (dependent variable) is linear Scatterplots was used to test

linearity assumption. A scatterplot is a graphical representation that displays the relationship between two

continuous variables. It is used to visualize the pattern or association between the variables and to identify any

potential relationships, trends, or outliers.

The normality assumption in regression analysis states that the residuals (the differences between the observed

and predicted values) should follow a normal distribution. Shapiro-Wilk test was used to test for normality.

The Shapiro-Wilk test is a statistical test that evaluates whether a sample comes from a normally distributed

population It calculates a test statistic and provides a p-value. If the p-value is greater than the chosen

significance level, the null hypothesis of normality fails to be rejected.

The multicollinearity assumption in regression analysis refers to the absence or minimal presence of strong

correlations among the predictor variables). It assumes that the predictor variables are not highly linearly

dependent on each other, as high multicollinearity can lead to issues in the estimation and interpretation of

regression coefficients. The study tested multicollinearity using Variance Inflation Factor (VIF). It assesses

how much the variance of the estimated regression coefficients is inflated due to the presence of correlations

among the predictor variables. VIF > 10 indicates the existence of multicollinearity in the sample (Hall, 2020).

Heteroscedasticity is an assumption related to the variability of errors or residuals in a statistical model. It

refers to the condition in which the variance of the errors is constant across all levels of the independent

variables Breusch-Pagan was used to test for heteroskedasticity. Heteroscedasticity occurs when the variance

of the errors (residuals) is not constant across all levels of the independent variables, violating the assumption

of homoscedasticity. The Breusch-Pagan test is a diagnostic tool that helps researchers assess the presence of

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heteroscedasticity and decide whether adjustments to the model or estimation method are necessary In the

context of the Breusch-Pagan test for heteroscedasticity, the null hypothesis is formulated to assert that there is

homoscedasticity, meaning that the variance of the errors (residuals) is constant across all levels of the

independent variable

Data Analysis And Presentation

Of the total 244 issued questionnaires, 227 were duly filled and collected on time. A response rate of 93% was

hence obtained..

Table 4.1: Response rate

Responses

Frequency

Percent

Returned questionnaires

227

Unreturned questionnaires

Gender

Female

106

46.7

Male

121

53.3

Source: Research data, (2024)

The largest number of responders (53.3%) were men, while 46.7% were women, according to the results.

Based on the aforementioned results, it is clear that all parties participated in the research equitably suggesting

that sexual orientation bias did not affect the study's conclusions

Reliability Analysis

The reliability of the research was measured using Cronbach’s Alpha which measures internal consistency.

The acceptable reliability that was considered for this study was 0.70 and above. The results are as shown in

Table 4.2.

Table 4.2: Reliability Statistics

Cronbach's Alpha

No. of Items

0.905

As shown in Table 4.2, the overall Cronbach alpha value was 0.905 indicated high degrees of reliability as

well as internal consistency therefore considered appropriate for the study.

Diagnostic Tests

The study carried out a variety of diagnostic tests which included tests of Normality, Autocorrelation,

Multicollinearity, and Heteroscedasticity.

Normality Test

Normality was assessed using the Kolmogorov-Smirnov and Shapiro Wilk tests of residuals. A significance

value greater than 0.05 indicated that the data was normally distributed. The results were depicted as follows in

Table 4.11.

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Table 4.3 : Normality Test

Kolmogorov-Smirnov

Shapiro-Wilk

Statistic

Sig.

Statistic

Sig.

Monetary rewards

.097

227

.000

.948

227

.000

Employee development

.082

227

.001

.965

227

.000

Recognition

.075

227

.004

.989

227

.074

Skill based reward

.081

227

.001

.972

227

.000

a. Lilliefors Significance Correction

The Kolmogorov-Smirnova (K-S) test results are shown in Table the results demonstrate that all the

independent variables (monetary rewards, employee development, skill based reward) except recognition were

statistically significant (sig=0.000<0.005). All the variables under study, except recognition, were not regularly

distributed.

Autocorrelation Test

To evaluate for autocorrelations, the Durbin Watson statistic was cast off. The results were as follows:

Table 4.4 : Autocorrelation

Model

Durbin-Watson

1.781

The result on table 4.4 indicates that Durbin Watson statistic is 1.781 which lies between the recommended

threshold of 1.5 and 2.5. The results therefore indicate the absences of autocorrelation.

Multicollinearity

Multicollinearity happens when the correlation between the independent variables is greater than 0.8. The

Variance Inflation Factor (VIF) technique was used to test for multicollinearity, with VIF values less than 10

measured acceptable.

Table 4.5 Multicollinearity

Model

Collinearity Statistics

Tolerance

VIF

(Constant)

Monetary rewards

0.270

3.699

Employee development

0.667

1.500

Recognition

0.846

1.182

Skill based reward

0.235

4.251

The table 4.5 display the VIF results. according to the findings of the study, monetary rewards has a VIF Value

of 3.699, employee development has a VIF Value of 1.500, recognition has a VIF Value of 1.182, and skill-

based reward has a VIF Value of 4.251. The values are less than 10, suggesting that they do not meet the

requirement for lack of multicollinearity. The fact that the tolerance values and variance inflation factor (VIF)

values for all of the independent variables are less than 1 and less than 10, respectively, reveals the result of the

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multicollinearity issue, showing that the independent variables in this study are within the normal range. As a

result, it is assumed that the contemporary study’s design and execution are free of multicollinearity.

Heteroskedasticity Test

Violation of homoscedasticity tends to constrain critical assessment of forecast errors of standard deviation,

which frequently leads to confidence intervals that are extremely narrow or extremely comprehensive.

Heteroscedasticity in this study was evaluated using the Breusch-Pagan test. The null hypothesis for this test

was that the error variances remained equal and were a numerous function of variables. Homoscedasticity

normally occurs when the p-value is greater than the significance level (0.05). The results were as presented in

Table 4.14.

Table 4.6 :Breusch-Pagan test for Heteroscedasticity

Breusch-Pagan Test for Heteroskedasticity

Chi-Square

Sig.

31.270

0.000

a. Dependent variable: Knowledge retention

b. Tests the null hypothesis that the variance of the errors does not depend on the values of the

independent variables.

c. Predicted values from design: Intercept + Monetary rewards + Recognition + Employee development

+ skill-based reward

As indicated in Table 4.6, the p-value was 0.000, which was less than the significance level of 0.05. This

implies that there was Heteroskedasticity in the regression model.

Correlation

To determine the relationship between the study variables, the study used Karl Pearson’s correlation

coefficient. According to Kumar (2011), correlation analysis indicates the direction and degree of the link

between variables and ranges from -1 to +1. Correlation is perceived as significant if the probability value is

below 0.05(p-value less than 0.05). A correlation value ( r ) close to zero indicates a weak relationship while a

r close to one indicates a strong correlation. Table 4.15 below shows the results of the correlation analysis

Table 4.7:Correlation Analysis

Knowledge

Retention

Monetary

Rewards

Employee

Development

Recognition

Skill

based

reward

Knowledge

Retention

Pearson Correlation

Sig. (2-tailed)

227

Monetary

Rewards

Pearson Correlation

.385

Sig. (2-tailed)

.000

227

Employee

Pearson Correlation

.902

.484*

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Development

Sig. (2-tailed)

.000

227

Recognition

Pearson Correlation

.417

.315

.320

Sig. (2-tailed)

.000

227

Skill based

reward

Pearson Correlation

.501

.854

.565

.369

Sig. (2-tailed)

.000

227

* Correlation is significant at the 0.05 level (2-tailed).

** Correlation is significant at the 0.01 level (2-tailed).

According to the findings in table above, the study found that there was a positive significant correlation

between monetary rewards and knowledge retention in NGOs in Nairobi County, Kenya, which was shown by

a correlation factor of 0.385.This positive relationship was found to be statistically significant since the

significance value was 0.000, which was less than 0.005. This relationship was fully supported by the study

findings by Sitati and Miringu (2019), compensation has a major and favorable impact on staff retention in

Kenya's hotel sector.

The findings also revealed a strong positive and significant relationship between employee development and

employee retention in NGOs in Nairobi County, Kenya (r=0.902, p= 0.000). These findings were in line with

Shibu (2019) who studied the impact of training and development on employee retention and found a

connection between employee retention and training and development.

Recognition was also found to have a positive and significant impact on employee retention in NGOs in

Nairobi County, Kenya (r=0.417, p=0.000).

Lastly, the study found skill-based reward to have a strong positive relationship with employee retention in

NGOs in Nairobi County, Kenya (r=501, p=0.000). These findings concurred with those by Heng and Lau

(2022) who found a significant relationship between skill-based reward and job satisfaction, which

consequently leads to employee retention. These findings are supported by those by Yap and Ng (2019) who

found

Regression Analysis

Regression analysis was used to study the relationship between monetary rewards, employee development,

recognition, and skill-based reward and employee retention. The research used Statistical Package for Social

Sciences (SPSS V21.0) to code, enter, and compute the measurements of the multiple regression. The model

summary is presented in Table 4.16:

Table 4.8:Model Summary

Model Summary

Model

Square

Adjusted R Square

Std. Error of the Estimate

.917

.841

.838

.30029

Table 4.8 shows that the R squared (coefficient of determination) value is 0.841, which indicates that 84.1% of

the variation in employee retention in NGOs is explained by the independent variables (monetary rewards,

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employee development, recognition, and skill-based reward). Therefore, 15.9% is accounted for by the error

term and other factors not considered in this study. The correlation coefficient (r=0.917) value indicates a

strong correlation among the variables.

The study further tested the significance of the model by use of ANOVA technique

Table 4.9:ANOVA

Model

Sum of Squares

Mean Square

Sig.

Regression

106.121

26.530

294.215

.000

Residual

20.018

222

.090

Total

126.139

226

From the ANOVA statistics, the study recognized the regression model had a significance level of 0.00%

which is an indication that the data was supreme for making a conclusion on the population parameters as the

value of significance (p-value) was less than 0.005.

The study also used the coefficient table to determine the study model and the findings were as presented in

Table 4.18 below.

Table 4.10: Coefficients

Model

Unstandardized Coefficients

Standardized Coefficients

Sig.

Std. Error

Beta

(Constant)

.083

.161

.515

.607

Monetary rewards

-.169

.053

-.165

-3.204

.002

Employee development

.835

.031

.884

26.983

.000

Recognition

.263

.049

.155

5.346

.000

Skill based reward

.097

.063

.085

1.550

.123

a. Dependent Variable: Knowledge retention

From the results on table 4.18 The following regression equation (Y = β 0 +β 1 X 1 + β 2 X 2 + + ε) becomes:

Y= 0.083 - 0.169X1 -0.835X 2 +0.263X

Where;

Y= Knowledge retention

X1= Monetary rewards

X2= Employee development

X3= Recognition

The results interpretation based on the equation indicates that if monetary rewards, employee development,

recognition, and skill based reward remain constant, or have a value of 0, employee retention in NGOs in

Nairobi County, Kenya will increase by 0.083. In addition, if monetary rewards increase by 1 unit, while

holding employee development, recognition, and skill based reward constant, the employee retention in NGOs

in Nairobi County, Kenya will significantly decrease by 0.169. There is a negative (B= -0.169) and significant

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(P Value= 0.002) relationship between monetary rewards and employee retention in NGOs in Nairobi County,

Kenya.

Secondly, if employee development is increased by 1 unit and monetary rewards, recognition, and skill based

reward remain unchanged, the employee retention in NGOs in Nairobi County, Kenya will increase by 0.835.

This indicates that employee development has a positive (B= 0.835) and significant (P Value= 0.000)

relationship with employee retention in NGOs in Nairobi County, Kenya. Similar findings were documented

by Tesfaye (2019), effective employee development programs contribute to employee satisfaction and the

ability to retain valuable human capital.

If recognition is increased by 1 unit while holding monetary rewards, employee development, and skill based

reward constant, employee retention in NGOs in Nairobi County, Kenya will increase by 0.263. These findings

indicate that there is a positive (B= 0.263) and significant (P Value= 0.000) relationship between recognition

and employee retention in NGOs in Nairobi County, Kenya. These findings were fully supported by the

findings by Esinyen (2023), recognition has a positive and statistically significant effect on staff retention in

NGOs in Turkana Central Sub-County.

Lastly, if skill based reward is increased by 1 unit while holding constant monetary rewards, employee

development, and recognition, employee retention in NGOs in Nairobi County, Kenya will increase by 0.097.

This indicates that there is a positive (B= 0.097) and insignificant (P Value = 0.123) relationship between skill

based reward and employee retention in NGOs in Nairobi County, Kenya. These findings concur with those

by Njeri (2019), employee productivity is significantly impacted by Skill-based reward, performance-based

pay, and training.

CONCLUSION, AND RECOMMENDATIONS

Monetary Rewards on Knowledge Retention in NGOs in Nairobi County Kenya

In line with the first objective, the study found a positive correlation between monetary rewards and

knowledge retention in NGOs in Nairobi County Kenya. These findings supported the study by Rotich (2020),

who found a positive significant relationship between monetary rewards and employee retention in

telecommunication firms in Kenya.

Descriptive statistics showed that the criteria for receiving performance bonuses are clear and achievable,

employees are adequately compensated for overtime, the salary structure at the NGOs are transparent and

understandable, overtime opportunities are available and allow increase of income if needed, and salaries allow

employees to comfortably meet their basic needs and some additional expenses. The descriptive statistics also

showed that policies for overtime allowances are clear and consistently applied, performance bonuses are a fair

and motivating way to recognize achievements, salaries at the NGOs are comparable to similar positions in

other NGOs in Kenya , and employees have confidence that they will receive a performance bonus if they meet

their targets.

The findings of the study agreed with those by Mbugua, Oyore, and Mwitari (2018) whose study on the effect

of financial incentives on the motivation and retention of Community Health Workers (CHWs) concluded that

the provision of monetary incentives has a significant influence on the attrition of CHWs.

Employee Development on Knowledge Retention in NGOs in Nairobi County Kenya

This objective sought to establish the effect of employee development on knowledge retention in NGOs in

objective sought to establish the effect of employee development on knowledge retention in NGOs in Nairobi

County Kenya. The results obtained revealed that employee development has a strong positive and significant

effect on the knowledge retention in NGOs in Nairobi County Kenya. This suggests that more employee

development programs will boost knowledge retention in NGOs in Nairobi County Kenya. Similar findings

were by Nguyen (2020), who studied the impact of job performance and training and development on young

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employee retention in Vietnam and discovered that the retention of young employees was positively correlated

with training and development.

Descriptive statistics showed that NGOs provide access to mentorship programs or informal mentorship

opportunities, mentors are knowledgeable, experienced, and invested in professional development, NGOs offer

scholarship opportunities for further education or professional development, and NGOs provide enough

opportunities for on-the-job training to develop skills. Further, the descriptive statistics also revealed that

respondents feel confident and supported in applying what they learn through on-the-job training to their work,

on-the-job training received is relevant to current roles and career aspirations, the financial support provided

by the scholarship is sufficient to cover the cost of education or training, and the scholarship eligibility criteria

are clear and achievable.

The study thus agreed with Abb (2018), that employee retention in the examined institutions is positively

correlated with training and development.

Recognition on Knowledge Retention in NGOs in Nairobi County Kenya

Descriptive statistics showed that NGOs actively promote and celebrate the achievements of their employees

through public channels, NGOs regularly recognize and reward outstanding achievements through awards,

public acknowledgment has boosted morale and motivation to contribute further, and the process of obtaining

certificates is clear and accessible.

The descriptive statistics also revealed that the types of awards offered are meaningful and reflect the values of

the organization, the criteria for receiving awards are transparent and objective, the certificates offered are

relevant and valuable for career development, and NGOs provide opportunities to earn certificates or

qualifications through training programs or projects.

These findings were in line with those of Mule (2020) who studied the connection between employee retention

and recognition prizes in Meru County and found correlation results that indicated a positive and significant

relationship between employee recognition and employee retention.

Skill-based Reward on Knowledge Retention in NGOs in Nairobi County Kenya

Descriptive statistics showed that NGOs offer opportunities to assess and improve skills and proficiency

levels, the skill development opportunities offered are aligned with the organization’s strategic goals and

priorities, leaders assign challenging tasks and encourage the use of a full range of skills, NGOs provide

adequate opportunities for acquiring new skills and knowledge relevant to work, feedback on skill proficiency

levels is constructive and actionable, and the skill assessment process is fair and transparent.

These study findings agree with Yap and Ng (2019), competency-based pay is designed to reward employees

for the skills they bring to their roles and their contributions to the organization, potentially leading to a greater

sense of fairness and satisfaction, hence knowledge retention.

CONCLUSIONS

Monetary rewards are vital and significantly contribute to increased knowledge retention in NGOs in Nairobi

County Kenya. If employees receive monetary rewards in the form of bonuses, compensation for overtime, and

good salary, then knowledge retention will be maintained.

Employee development programs such as mentorship and training are key to knowledge retention in NPOs. In

other words, the study concludes that employee development contributes positively to knowledge retention.

The study concluded that it is the responsibility of NPOs to recognize the efforts of their employees since

recognition has a positive and significant effect on knowledge retention.

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Lastly, the study concluded that skill-based reward is key to ensuring knowledge retention in NPOs since the

two are positively correlated.

RECOMMENDATIONS

Considering the positive and significant influence monetary rewards has on knowledge retention in NGOs in

Nairobi County Kenya, NPOs should give their employees monetary rewards in order to ensure knowledge

retention.

The study’s conclusions highlight how important employee development is on knowledge retention in NGOs

in Nairobi County Kenya. NPOs should therefore invest in training and development programs which ensure

continuous learning and skill development for their employees in order to encourage knowledge retention.

The study also recommends NPOs to ensure they recognize, acknowledge, and award the achievements of their

employees to enhance knowledge retention.

The study lastly recommends that NPOs should provide their employees with opportunities for skill

development and ensure skill-based pay.

Areas of Further Research

The study sought to examine the effect of employee reward systems on knowledge retention in NGOs in

Nairobi County Kenya. Further research can consider other factors affecting knowledge retention in NGOs in

other counties in the country. Further research can be done on the impact of employee reward systems on job

satisfaction in NGOs in Nairobi County Kenya.

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