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The influence of compensation on agent retention in the Zambian life insurance industry
Sidney Kawimbe
Abstract
This study examined the influence of compensation on agent retention in the Zambian life insurance industry. The study was grounded on Job Embeddedness (JE), the Herzberg’s Two-Factor theory and Maslow’s Hierarchy of Need. Theory. Using a mixed-methods explanatory research design, quantitative data were collected from 173 insurance sales agents through structured questionnaires, while qualitative data were gathered from 11 human resource managers via semi-structured interviews. The compensation scale demonstrated excellent internal consistency, with a Cronbach's alpha of 0.918. Descriptive findings revealed that compensation was the lowest-rated construct among all organizational factors examined, with a mean score of 2.86 on a five-point scale, where 55.49 percent of agents expressed dissatisfaction with their basic salary and 60.69 percent expressed dissatisfaction with non-monetary incentives. Despite these negative perceptions, correlation analysis showed a strong, positive, and statistically significant relationship between compensation and agent retention, with a correlation coefficient of 0.685 at a significance level of p less than 0.001. Unadjusted regression analysis confirmed compensation as a significant predictor, with a coefficient of 0.665, an F-statistic of 150.96, and an R-squared value of 0.469, indicating that compensation alone explained approximately 47 percent of the variance in agent retention. This effect remained robust after controlling for socio-demographic variables including gender, age, education level, and industry tenure, with an adjusted coefficient of 0.662. In the integrated model containing all organisational predictors, compensation remained statistically significant with a coefficient of 0.204, a p-value of 0.008, and a standardized beta of 0.210, ranking as the third most important predictor after management support and training and career development. The study concludes that in commission-based life insurance agency systems, compensation functions simultaneously as a hygiene condition and a survival determinant, and that improving compensation transparency, timeliness, and early-stage income stability represents a critical lever for enhancing agent retention in Zambia.
