Certified Hospitality Manager (CHM) Practice Exam

Why is employee retention linked to organizational culture?

1. Strong culture results in higher salaries for employees

2. Positive culture encourages employees to stay longer with the company

3. Culture has no impact on retention

4. Only financial incentives affect retention rates

The correct answer is: Positive culture encourages employees to stay longer with the company

Employee retention is closely tied to organizational culture because a positive culture fosters a supportive and engaging work environment, which in turn encourages employees to remain with the company longer. When employees feel valued, respected, and part of a cohesive team, they are more likely to develop a sense of loyalty toward the organization. A strong culture promotes shared values and goals, creating an atmosphere where employees feel connected to the mission of the company and motivated to contribute their best efforts. Furthermore, a positive organizational culture often encompasses recognition, open communication, and opportunities for growth, all of which enhance job satisfaction. When employees find their work environment rewarding and aligned with their personal values, they are less likely to seek employment elsewhere, effectively improving retention rates. In contrast, aspects such as salary or financial incentives may contribute to retention but are not the sole determinants. A negative culture can lead to high turnover rates, even if compensation is attractive. Therefore, while financial aspects are important, they do not outweigh the significant impact that a positive organizational culture has on employee retention.