Factors Explaining Employee Retention Challenges in European SMEs

The purpose of this study is to identify the characteristics at the enterprise level associated with a higher probability of challenges in retaining skilled employees among European SMEs. This topic has been approached by numerous researchers, who have revealed the significant impact that training has on workforce retention. The data used is based on Flash Eurobarometer 529, and was collected in 2023, containing information about SMEs in the European Union. Data processing and analysis were performed in R Studio, with the final dataset including 7.924 responses. To achieve the study’s objective, descriptive statistics, the Chi-Square test, and Binomial Logistic Regression with 10-fold cross-validation were applied. The study includes SMEs in the European Union from different sectors, and the results showed that organizational characteristics such as region, size, and turnover, skill-related factors, and training-related challenges are good predictors of companies likely to face retention difficulties, regardless of whether the company operates in manufacturing, industry, services or retail. To evaluate the model obtained, specific metrics such as AUC (0.73), F1 score (0.71), and accuracy (0.67) were considered, and their values indicate moderate predictive performance, although the main objective of the research is to identify the factors that explain retention challenges, rather than to create a classifier that makes a perfect distinction between classes.