Many organizations do not consider the factors determining employee retention as a strategy in managing competition and are likely to become victims of industry competition. The purpose of the study was to find out the factors affecting employee retention in an organization in University of Eldoret. Specific objectives were to determine effects of compensation on employee retention. The study will be guided by Maslow's-Hierarchy of needs theory, Equity theory and Herzberg's theory; the study

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... pted a descriptive research design. The research was carried out in University of Eldoret which is in Uasin Gishu County. The target population for this study was 1500 respondents drawn from different levels of management in University of Eldoret. The researchers used purposive sampling method to sample top and middle level managers. Simple random method was used to determine sample size of other employees. Questionnaires will be used as data collection instruments. In this study, the validity of the instruments was tested through pilot testing conducted prior to the study and reliability was tested through test-retest technique by use of Cronbachs' Alpha. The data was analyzed using Chi square and presented in tables. The study findings indicated that compensation, had significant relationship with employee retention. Based on the findings of this study, the following recommendations were made: University of Eldoret should ensure that the policy governing the level of compensation should be improved to enhance a higher rate of employee retention; they should ensure availability of comprehensive range of training, skill and career development which is a key factor of employee attraction and retention, a training program should be established as a regular practice for provision of training and retraining especially refreshment courses opportunities for their employees. This would not only satisfy employees' growth need but also enhance employee retention. lastly, the study suggested that there is a need for further research geared toward establishing the factors affecting employee retention in other industries like banking sector, manufacturing industries, as well as other educational institutions so that the area of study is equipped with more information and allow for generalization of results. www.iosrjournals.org 110 | Page From the findings on table 4.1 above, the calculated chi square value of Highly competitive wage system was (0.309), Compensation satisfaction among employees (9.603), Communicated policies and its compensation policies (2.052), Human resource practices (0.167), and Clear understanding of their objectives and use compensation (0.492).The overall chi-square value for compensation was (12.623) at 5% level of significance. The Chi-square tests for compensation was significantly above the critical values determined at different degrees of freedom. Hence, the study confirms that compensation is factor in that ensures employee commitment in organizations. These results indicate that compensation is likely to enhance employee retention because there was no significant difference between observed and expected frequencies. These findings are