How Can the Retention of Indonesian Digital Industry Employees Be Improved? The Mediating Role of Perceived Organizational Support

¹ Management Department, BINUS Business School Undergraduate Program, Bina Nusantara University, Jakarta, Indonesia 11480
² BINUS Entrepreneurship Center, Management Department, Bina Nusantara University, Jakarta, Indonesia 11480
³ Faculty of Business, Sampoerna University, Jakarta, Indonesia 12780

^* Corresponding author: okta_bayuputra@binus.edu

Abstract

Wages and benefits in the digital sector have historically been low, and employers are often unable to raise wages due to small profit margins. Employee welfare, on the other hand, must be ensured if employees are to remain loyal to the company and contribute more. This can also be generated with compensation. Existing research has demonstrated that low compensation is a significant factor for a high rate of turnover in the digital industry. Therefore, the present study aimed to investigate two factors: compensation practices and turnover intention. The impact of perceived organizational support in mediating the relationship between compensation practices and turnover intention is also investigated in this study. The questionnaire was gathered from 106 respondents from digital industry employees. This study used non-probability sampling with the simple random sampling technique. Hypothesis were tested using SPSS and Sobel test. The result shows that compensation has no significant impact on turnover intention. However, the researchers found that perceived organizational support could mediate the impact of compensation on turnover intention. The findings of this study serve as a caution to businesses to address these difficulties to improve their overall performance. Companies should engage more in the employees’ welfare to reduce turnover and to retain them, rather than focusing on compensation alone.