Impact of Compensation Structures on Employee Retention in Sustainability-Oriented Workplaces

Abstract

Employee retention, defined as an organization’s ability to retain its workforce over time, has emerged as a critical driver of sustainability and institutional resilience. As enterprises increasingly align with environmental and social values, the role of compensation structures in influencing workforce stability warrants deeper exploration. This study investigates the relationship between different compensation models (fixed, performance-based, and hybrid) and employee retention within sustainability-oriented organizations. Using a mixed-methods approach based on quantitative data from 312 professionals across sectors such as renewable energy, green manufacturing, and environmental consultancy, the study analyzes the impact of compensation satisfaction and pay type on retention intent. Descriptive analysis showed high scores of satisfaction with hybrid compensation systems and correlation and regression analysis results proved that satisfaction with compensation (beta = 0.54) and hybrid pay models (beta = 0.32) are significant predictors of retention outcomes (R 2 = 0.41). The results indicate that fair and flexible pay systems that are in line with the sustainability objectives are not only effective in increasing satisfaction but also increase employee commitment. The study has a contribution to make to the literature of strategic human resource management and green HRM because it shows the need of having customized compensation plans as a way of ensuring long-term organizational sustainability and talent retention.