Rethinking employee retention: Mediating effect of organizational support and moderating effect of transformational leadership

Employee retention remains a major challenge for labor-intensive industries, particularly Bangladesh's Ready-Made Garment (RMG) sector. Where high workforce turnover disrupts organizational performance. Previous studies have examined compensation fairness, supervisor support, perceived organizational support, and transformational leadership separately. Limited research has integrated these factors within a single framework. This study examines the relationships between compensation and fairness, perceived supervisor support, perceived organizational support, transformational leadership, and employee retention in Bangladesh's RMG sector. Data were collected from 207 managerial and non-managerial employees working in eight Export Processing Zone in Bangladesh using a structured questionnaire. PLS-SEM was employed to test the direct, mediating, and moderating relationships. The results indicate that compensation and fairness and perceived supervisor support are positively associated with employee retention. Perceived organizational support significantly mediates the relationships between compensation and fairness, perceived supervisor support, and employee retention. Contrary to the proposed hypothesis, transformational leadership exhibits a significant negative moderating effect on the relationship between perceived organizational support and employee retention, suggesting that the positive association between perceived organizational support and employee retention becomes weaker at higher levels of transformational leadership. This study extends Social Exchange Theory and Organizational Support Theory by integrating compensation fairness, perceived supervisor support, perceived organizational support, and transformational leadership within a single employee retention framework. It also provides context-specific evidence from Bangladesh's labor-intensive RMG sector. It offers new insights into the unexpected boundary role of transformational leadership in employee retention.