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| Illustration by Ai |
KEDIRI — Employee retention in informal micro, small, and medium enterprises (MSMEs) is influenced by more than wages. A 2026 study by Sri Hariyanti from UIN Syekh Wasil Kediri and Eni Susilowati from UIN Sayyid Ali Rahmatullah Tulungagung examines how compensation, work flexibility, work environment, and employees’ transferable skills can help informal MSMEs maintain their workforce. The findings highlight the importance of combining adaptive payment systems with flexible working arrangements, supportive work conditions, and continuous skill transfer.
The article, published in International
Journal of Applied and Advanced Multidisciplinary Research (IJAAMR), Volume 4,
Number 8, 2026, focuses on broiler chicken traders and slaughter workers in
Sumber Bendo Hamlet, Pule Village, Kandat Subdistrict, Kediri Regency. Rather
than collecting new primary data, the authors conducted a descriptive
qualitative reanalysis of data from a previous study, shifting the focus toward
employee retention.
Compensation Must Adapt to
Workload
One of the main findings concerns
the relationship between compensation and workload. Workers in the informal
broiler chicken business are generally paid using a piece-rate system of
approximately Rp1,200 per chicken.
Under this system, workers’
earnings increase when the number of chickens processed rises. Conversely,
income decreases when market demand and workloads are lower. The article notes
that this arrangement can provide workers with a direct relationship between
productivity and income.
However, workers receive limited
additional compensation beyond basic refreshments such as coffee or tea. The
authors discuss bonuses during periods of increased orders as a possible
adaptive strategy for recognizing additional workloads and maintaining employee
motivation.
This approach is particularly
relevant to informal MSMEs, where business activity can fluctuate according to
market demand. A compensation system that can adjust to workload may help
businesses respond to changing conditions while giving workers opportunities to
increase their earnings.
Night Work Provides
Flexibility but Can Cause Fatigue
Work flexibility is another
important factor in employee retention. Broiler chicken slaughtering in the
study area generally takes place at night, around 00:00 to 03:00 WIB,
while trading activities take place in the morning.
For some workers, particularly
those who have other daytime responsibilities, night work provides an
opportunity to use the daytime for other activities. This arrangement can make
informal employment attractive to workers who need greater control over their
daily schedules.
However, working at night also
presents challenges. Reduced stamina and fatigue may affect workers’ ability to
maintain their performance over time. Consequently, flexibility cannot be
considered separately from workload and workers’ physical condition.
The authors suggest that informal
MSMEs should maintain useful flexibility while paying greater attention to
workers’ stamina, workload, and working hours.
A Supportive Work Environment
Can Strengthen Retention
The study also identifies the
work environment as an important component of employee retention. Informal
MSMEs often operate without formal recruitment procedures, structured job
descriptions, or specialized training systems.
In the broiler chicken businesses
examined, new workers may be accepted when they are willing to work and can
immediately participate in operational activities. This informal arrangement
allows businesses to recruit workers easily, but it can also result in
differences in work quality between new and experienced employees.
The authors therefore suggest
clearer division of tasks and mentoring for new workers. Experienced employees
can help newcomers understand operational procedures and maintain work quality.
Attention to the conditions of
night workers is also important. The article suggests that appropriate
technological support could make production processes faster and reduce the
physical burden on workers.
Multitasking Skills Are an
Important Business Asset
Another finding concerns the wide
range of skills possessed by informal MSME workers. Employees may perform
several tasks, including slaughtering chickens, removing feathers, cleaning
internal organs, and cutting chicken according to customer requests.
These multitasking abilities are
valuable because a single worker can perform several stages of the production
process. However, the departure of experienced workers can create a risk of
losing practical knowledge that is not formally documented.
For this reason, the authors
emphasize the importance of skill transfer between experienced and new workers.
Mentoring can help ensure that operational knowledge remains within the
business even when employee turnover occurs.
Four-Part Strategy for
Employee Retention
Based on the findings, the
article presents employee retention in informal MSMEs as a combination of four
interconnected elements:
- Adaptive compensation that reflects workload
and can include additional rewards when demand increases.
- Work flexibility that accommodates workers’
other activities while managing fatigue and workload.
- A supportive work environment with clearer
task division and mentoring for new employees.
- Skill development and transfer to preserve
employees’ operational knowledge and multitasking abilities.
Together, these factors can
support employee retention and the operational sustainability of informal
MSMEs. The authors also identify technology as a factor that can strengthen
this strategy by helping make work processes more efficient and less physically
demanding.
Implications for Informal
MSMEs
The findings suggest that
employee retention does not necessarily depend on formal human-resource systems
alone. Informal businesses can strengthen workforce stability through
relatively practical measures.
Maintaining a piece-rate
compensation system while providing bonuses during periods of high demand can
help align earnings with workload. Flexible schedules can remain beneficial
when accompanied by appropriate attention to workers’ stamina.
At the same time, clearer job
responsibilities, mentoring, and knowledge transfer can reduce the operational
risks associated with employee turnover. These measures may be particularly
important in businesses where workers acquire practical skills directly through
experience rather than formal training.
The authors conclude that an
effective retention strategy for informal MSMEs should integrate compensation,
work flexibility, a supportive work environment, and sustainable workforce
skills.
Study Limitations
The authors note that the
analysis has limitations because the underlying data were originally collected
for research concerning wages and turnover rather than specifically for
employee retention. As a result, the analysis cannot fully explain individual
workers’ perspectives or the detailed reasons why workers decide to stay or
leave.
Future research is recommended to
collect new empirical data directly from workers, examine more locations and
types of informal businesses, and compare MSMEs with different levels of
employee retention and turnover.
Article Source
Title: Employee Retention
Strategies in Informal MSMEs: The Role of Compensation, Work Flexibility, and
the Work Environment
Authors: Sri Hariyanti and Eni Susilowati
Journal: International Journal of Applied and Advanced Multidisciplinary
Research (IJAAMR)
Volume/Issue: Vol. 4, No. 8, 2026
Pages: 765–778
DOI: 10.59890/ijaamr.v4i8.303
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