Quality education is absolutely essential for the overall development of the human resource base of a country. This requires imparting of appropriate knowledge, skills and values to the students. To achieve this faculty is the main source and instrument. In the present scenario where engineering and management institutes have increased manifold in last two decades, an imbalance between demand for qualified and trained faculty and its supply has emerged. In this situation, the recruitment and retention of talented faculty becomes crucial. However, due to demand exceeding the supply, heavy faculty turnovers is being observed in recent years. The present study examines the major factors on which the retention of faculty depends. To identify the factors on which faculty retention depends, the existing literature has been thoroughly examined and the important factors have been identified. Based on these factors, a questionnaire has been developed, whose reliability and validity has been tested. The developed questionnaire has been administered on management and engineering institutes operating in U.P. and N.C.R. Delhi. Exploratory Factor Analysis (EFC) technique has been used to identify the most significant factors affecting faculty retention. The results of the study could be used by management and engineering institutes to devise strategies for effective use of faculty and their retention.