The effect of talent and knowledge management on employee retention: The mediating role of employee engagement

Type of the article: Research ArticleAbstractAmid rising labor mobility and competition for skilled employees, this study aims to examine how talent and knowledge management relates to employee engagement and retention, with employee engagement as a mediator, among private-sector employees in Indonesia’s manufacturing, banking, retail, service, and logistics sectors. Using a combination of purposive and snowball sampling, 543 valid responses (from 964 distributed questionnaires across 97 companies) were analyzed using partial least squares structural equation modeling (PLS-SEM). Talent management (β = 0.554) and knowledge management (β = 0.379) were positively associated with employee engagement (R² = 0.721), and both were also directly associated with employee retention (β = 0.275 and β = 0.315, respectively; R² = 0.632). Employee engagement was positively associated with employee retention (β = 0.290), and its indirect effects for talent management (β = 0.161) and knowledge management (β = 0.110) were statistically significant (p < 0.001), confirming employee engagement as a significant partial mediator (VAF = 36.93% and 25.88%, respectively). Direct effects of talent and knowledge management on retention remained somewhat larger than their indirect effects through engagement, but the substantial VAF values indicate that employee engagement is a meaningful complementary pathway, alongside direct organizational investment in talent development and knowledge management, through which these practices are associated with employee retention. The study extends social exchange theory and the resource-based view and offers practical implications for strengthening retention in the sampled Indonesian private companies.AcknowledgmentsThanks to the lecturers of the Faculty of Economics and Business, Universitas Muhammadiyah Jember, for their support of this research.