Meng Kheang Sorn, Liang Cao, Guanghui Fu

DOI: 10.26480//bedc.01.2025.13.22

ABSTRACT
This research seeks to explore how current compensation practices in Phnom Penh’s private companies affect employee retention. It aims to identify the main compensation-related reasons for employees leaving their jobs and proposes recommendations for improving employee retention through enhanced compensation practices. Using quantitative and qualitative research designs used, a mixed-methods approach was employed to collect and analyze data from the employees of private companies in Phnom Penh Capital City, Cambodia. In this cross-section of research design, data were collected at one time and for a duration of two months from a total of 335 respondents, selected through convenience sampling. The data was collected through an online survey questionnaire sent across various social media and individual and group messaging platforms to employees. Multiple response analysis and descriptive statistics were used in the data analysis to summarize and interpret the data. Inferential statistics, including Chi-square test, were used to determine if there is a significant relationship between two categorical variables. Regression analysis was also used in this study to estimate the relationships among selected variables. Narrative summaries were also written to provide an overview of the main patterns and trends in the data and to highlight the key findings. The study finds that 92.24% of the sample have considered leaving their current company due to compensation-related reasons such as low salary, lack of health and welfare benefits, no retirement benefits, inadequate seniority pay, lack of paid time off, inadequate overtime pay, lack of performance-based incentives and insufficient National Social Security Funds (NSSF). Based on the employee feedback, high and competitive salary, comprehensive health and welfare benefits, secure and solid retirement benefits, flexible and ample paid time off, fair overtime pay, fair performance-based incentives, rewarding seniority pay and safe and reliable NSSF are the key drivers of employee retention in private companies in Phnom Penh, the capital city of Cambodia. The study also suggests that the length of service at a company significantly influences employees’ perceptions of the competitiveness of their compensation packages. The study further found that employee retention is positively affected by the compensation package, fairness of the compensation system, level of compensation, and compensation enhancement. Employees prefer frequent review and update of their compensation packages. It was observed that when companies make significant improvements to their compensation packages, employees stay longer with the company. The study recommends that companies should have clear compensation policies, follow government policies by providing all mandated benefits, understand employee needs through regular feedback, design balanced packages, ensure fair compensation structure, and make improvements based on feedback. Government should enforce regulations for company compliance with compensation policies, conduct audits and provide platform for employee reports. Employees should know compensation details, raise issues if there’s discrepancy and actively negotiate compensation.

KEYWORDS
Compensation, Employee retention, Private companies, Cambodia, Phnom Penh