Effect of Managerial Competency Development on Job Satisfaction and Retention of Employees in Small and Medium Enterprises (SMEs)

Abstract

This study investigates the effect of managerial competency development on employee job satisfaction and employee retention in Small and Medium Enterprises (SMEs) of Sindh province, Pakistan. Managerial competency, including leadership, communication, decision making and mentoring skills, plays a pivotal role in shaping employee attitudes and organizational outcomes. The study further examines the mediating role of job satisfaction in the relationship between managerial competency development and employee retention. A quantitative research approach was employed and data were collected through structured questionnaires from 300 employees and managers across diverse SME sectors in Sindh. The reliability and validity of the instrument were confirmed through Cronbach’s alpha and factor analyses.

Descriptive statistics revealed a balanced demographic distribution, with 60% male and 40% female respondents and the majority aged between 31-40 years. Correlation analysis showed significant positive relationships among managerial competency development, job satisfaction and employee retention. Regression analysis indicated that managerial competency development significantly predicts job satisfaction (β = 0.652, t = 10.45, p < 0.001) and employee retention (β = 0.412, t = 6.78, p < 0.001). Job satisfaction also significantly influences employee retention (β = 0.518, t = 8.23, p < 0.001). Mediation analysis revealed that job satisfaction partially mediates the relationship between managerial competency development and retention (indirect effect β = 0.338, t = 5.90, p < 0.001), indicating that competent managerial practices improve retention both directly and indirectly through enhanced job satisfaction.

The findings highlight the critical importance of structured managerial development programs in SMEs, which often lack formal HR systems. By investing in managerial competencies, SMEs can create a supportive work environment, increase employee satisfaction, reduce turnover and achieve sustainable growth. This study contributes theoretically by integrating managerial competency, job satisfaction and retention into a single empirical framework and provides practical implications for SME managers and policymakers seeking to strengthen workforce stability and performance.