Margret N Mukabalisa2023-09-072023-09-072023-08-19https://hdl.handle.net/20.500.12311/990This is a dissertation.Employee retention is a critical concern for organizations across various industries, as turnover can result in increased costs and disruptions to operations. The rate at which employees leave the company is becoming more disturbing and this could be as a result of compensation systems used to pay employees and retain competent employees. This study explored the impact of compensation systems on employee retention. The major objectives of this study were to examine the types of compensation systems used by Kiddawalime bakery, to examine the relationship between Compensation systems and employee retention and to identify the challenges involved while compensating employees. The population under the study was 60 employees. Primary data was collected using questionnaires. Hypotheses were formulated to test the relationships between the independent variable and the dependent variables. Result of the study revealed that the compensation systems used are performance based pay and seniority based pay, financial and non-financial there is a significant relationship exist between compensation systems and employee retention, the more an employee is rewarded or compensated, the longer they remain in an organization and there are challenges faced in compensation.Dissertation