Business ManagementLevel: Intermediate

Strategic HRM Case Study: Keeping Your Best People

Prepared by the Assignment Achievers business team.

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Problem Statement / Assignment Scope

A fast-growing software company loses 28% of its developers each year, mostly within two years of joining. Exit interviews mention limited progression and feeling overlooked. Recommend an evidence-based retention strategy.

Prerequisites: Basic organisational behaviour, motivation theories and reward management.

Step-by-Step Worked Solution

1. Diagnosis: Herzberg's two-factor theory

Pay is a hygiene factor: if it's too low people become dissatisfied, but raising it doesn't by itself make them want to stay. Lasting commitment comes from motivators such as interesting work, responsibility, recognition and growth. The exit interviews point to missing motivators, not a pay problem.

2. The psychological contract

Developers joined expecting to learn and progress quickly. When that didn't happen, they felt the unwritten deal had been broken, a common trigger for resignation.

3. Recommendations

Two career paths: let senior developers move up in pay and status as technical experts, without having to become managers.
Total reward: combine fair pay with a training budget, flexible working and recognition for good work, not salary rises alone.
Regular career conversations: managers hold a development discussion with each developer every quarter and agree clear next steps.
Measure it: track turnover in the first two years and run short engagement surveys to see whether the changes work.

Key Takeaways & Core Principles

Replacing an employee is expensive once recruitment, training and lost productivity are counted; estimates commonly range from half to twice annual salary.
Herzberg helps explain why pay rises alone rarely fix turnover.
Breaking the psychological contract is a frequent reason people leave.
Link every recommendation to the evidence in the case.

Frequently Asked Questions

What's the difference between transactional and relational psychological contracts?

A transactional contract is a short-term exchange of work for pay. A relational contract involves longer-term loyalty, development and trust on both sides. Professionals such as developers usually expect a relational one.

Academic References & Standards

[1]Dessler, G. (2020). Human Resource Management. Pearson. Source Link

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