Influence of HRM Practices on Employee Retention: The Mediating Role of Employee Engagement in Non-Managerial Roles within Colombo District's Private Banking Sector

Employee engagement and retention are critical to organizational success, as engaged employees are more productive, innovative, and committed, fostering a positive culture and improved customer satisfaction, while retention ensures workforce stability by reducing turnover costs and preserving institutional knowledge. Together, these factors enhance performance, morale, and organizational resilience. Accordingly, this study examines the impact of Human Resource Management (HRM) practices on the retention of non-managerial employees in a selected private bank, with a particular focus on the mediating role of employee engagement. The study seeks to identify the HRM practices that most significantly influence employee engagement and retention and to provide practical insights into organizational decision-making. The research was conducted in a private banking network in the Colombo South branches of Sri Lanka among non-managerial employees. Data was collected through an online questionnaire distributed to a convenience sample of 140 employees, of which 116 responses were received. Data analysis was performed using SPSS version 25.0, applying multiple regression analysis and the Hayes SPSS Process Macro to test mediation effects. The findings indicate that rewards and compensation are the most influential HRM practices affecting employee retention. In addition, HRM practices positively influence employee engagement, which mediates the relationship between rewards and compensation and employee retention.