The Influence of Total Reward Strategies and Job Satisfaction on the Retention of Generation Z Engineers in the Manufacturing Sector of Bayan Lepas, Penang: An Empirical Study

Nor Farliyana Mohd Razalee; Noorashela Shafizi

doi:10.32890/ssmj2025.2.2.3

Authors

Nor Farliyana Mohd Razalee Universiti Utara Malaysia, Malaysia
Noorashela Shafizi Universiti Utara Malaysia, Malaysia

DOI:

https://doi.org/10.32890/ssmj2025.2.2.3

Keywords:

employee retention, job satisfaction, manufacturing sector, social exchange theory, total reward strategies

Abstract

The high turnover associated with motivation among the engineers of Generation Z is a major issue to the manufacturing industry in Malaysia especially in Bayan Lepas, Penang. In spite of Total Reward Strategies (TRS) being in place, the rate of employee retention is low. In this study, the influence of TRS and Job Satisfaction on the retention of Generation Z engineers have been addressed, with a focus on whether Job Satisfaction mediates the relationship between TRS and Retention. A quantitative research design was utilized with questionnaires developed in a structured manner and distributed to 100 engineers aged between 21-28 years, working in manufacturing companies in Bayan Lepas. Data were analysed using correlation, multiple regression, and mediation analysis using the SPSS. The results revealed that both Job Satisfaction and TRS are significant predictors of Employee Retention, with Job Satisfaction being the stronger and effective predictor. The Mediation analysis goes further and demonstrates that Job Satisfaction partially mediates the relationship between TRS and Retention. These findings are in support of Social Exchange Theory, which emphasizes that organizations must provide both financial and psychological rewards in order to increase retention. The study contributes to the theory of HRM and provides practical implications for improving retention strategies in manufacturing sector in Malaysia.

References

Asria, K. A., Juniwati, J., Ramadhan, R., Rosnani, T., & Mayasari, E. (2025). Retention of Gen Z employees: The impact of rewards, career development, and job satisfaction. ECo-Buss, 7(3), 1623–1637. https://doi.org/10.32877/eb.v7i3.1796

Blau, P. M. (1964). Exchange and power in social life. Wiley.

Creswell, J. W., & Poth, C. N. (2018). Qualitative inquiry and research design: Choosing among five approaches (4th ed.). Sage.

Creswell, J. W. (2014). Research design: Qualitative, quantitative, and mixed methods approaches (4th ed.). Sage.

Deloitte. (2023). 2023 Gen Z and millennial survey. Deloitte Insights. Evelyn Hendriana, Albert Christoper, Handika Oemardi Adhitama Zain, & Natasha Pricilia. (2023). The role of employer branding in work-life balance and retention among Gen Z: Mediation or moderation? Jurnal Manajemen Teori dan Terapan, 16(1),124-143. https://doi.org/10.20473/jmtt.v16i1.41703

Hom, P. W., & Griffeth, R. W. (1991). Structural equations modeling test of a turnover theory: Cross-sectional and longitudinal analyses. Journal of Applied Psychology, 76(3), 350–366.

Lincoln, Y. S., & Guba, E. G. (1985). Naturalistic inquiry. Sage.

Park, S., & Johnson, R. (2022). Understanding Gen Z work values in South Korea: A psychological needs perspective. Asia Pacific Journal of Human Resources, 60(3), 335–350.

Schroth, H. (2019). Are you ready for Gen Z in the workplace? California Management Review, 61(3), 5–18.

Spector, P. E. (1997). Job satisfaction: Application, assessment, causes, and consequences. Sage.

Sekaran, U.& Bougie, R. (2019). Research methods for business: A Skill-Building Approach (8th ed.). Wiley.

Syal, R., Kumar, R., & Fernando, L. (2024). The influence of reward and work life balance on Gen Z employee retention: The mediating effect of job satisfaction. Journal of Management Science (JMAS), 7(1), 270–279

Tarigan, J., Cahya, J., Valentine, A., Hatane, S., & Jie, F. (2022). Total reward system, job satisfaction and employee productivity: Evidence from Indonesian Generation Z workers. Journal of Asia Business Studies, 16(6), 824–840.