Motivational Environments, Organizational Commitment, and Generation Z Retention in Service-Sector Firms: A Mediated Partial Least Squares Structural Equation Modelling Framework

Abstract

Retaining Generation Z (born 1995–2010) workers represents one of the most pressing human resource management challenges of the current decade, yet the motivational and psychological mechanisms that explain their propensity to remain in service-sector organizations remain undertheorized. Grounded in the integration of Herzberg's Two-Factor Theory, Meyer and Allen's Three-Component Model of organizational commitment, and Mitchell et al.'s Job Embeddedness Theory, this study tests a mediated structural model in which motivational factors (recognition, training and development, working conditions) predict employee retention both directly and through the mediating role of organizational commitment. A cross-sectional, quantitative survey was administered to 384 Generation Z workers employed in service-sector firms in Chimbote, Peru—a high-informality urban economy that constitutes a critical but underexplored research context. Data were analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM) via SmartPLS. Results confirm that motivational factors exert significant positive effects on both organizational commitment (β = 0.355, p < .001) and employee retention (β = 0.282, p < .001), while organizational commitment significantly predicts retention (β = 0.211, p = .011). Critically, organizational commitment partially mediates the motivational factors–retention relationship (indirect β = 0.075, p = .023), revealing a dual-pathway mechanism not previously documented for Generation Z in emerging economy service contexts. These findings extend established theories to a new generational boundary condition, provide validated psychometric instruments for the target population, and offer evidence-based guidance for human resource practitioners operating under conditions of labour informality.