Motivation Model for Employee Retention: Applicability to HRM Practices in Malaysian SME Sector

In the Vision 2020, Malaysian government aims at achieving a developed nation status by the year 2020. To realize the vision, the country needed the support and motivation from all Malaysians. Hence, human resource management (HRM) plays an important role for the said vision since it is a significant capital in the operation of an organization. For Malaysian entrepreneurial firms, it is crucial to retain their employees in order to achieve their ultimate goal i.e. maximizing profits. Such small, growthoriented firms are considered vulnerable to lose even one key employee because it may aggravate extensive consequences and, at the extreme, may imperil exertions to attain organizational objectives. Employee retention becomes a vital human capital objective for entrepreneurial companies which are seeking to grow and capture market share. Motivation is essential in leading the employees towards achieving organizational goals besides fostering the organizational commitment. Such organizational attachment and motivation has implications for whether an employee will opt for remaining with the organization or not. With HRM, the human resource (HR) model would regard humans as being inspired by an intricate collection of interconnected aspects, such as recognition, interpersonal relation, and desire for meaningful work. HR managers must endeavour to redesign the job to be more varied and decentralized in order to encourage sovereignty among employees. Therefore, motivation model is relevant to be employed in HRM practices for employee retention. This paper is primarily based on literature review. Extensive literature study is used to identify relevant information and references. This paper intends to elucidate one particular issue with regards to Malaysian SMEs which is employee retention and in more specifically, this study will aim to produce a model for employee retention conjoining it with organizational strategies, organizational culture and benefits factors. To attain this aim, the two-factor, or motivation-hygiene theory (Herzberg, 1968) was taken as the basic foundation.Key words: Motivation-hygiene; Vital human capital; Sovereignity; JEL Codes: C11, J1