THE INFLUENCE OF ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) AND EMPLOYER BRANDING ON EMPLOYEE RETENTION, WITH PSYCHOLOGICAL SAFETY AS A MEDIATING VARIABLE

Abstract

Research on Environmental, Social, and Governance (ESG), employer branding, psychological safety, and employee retention has grown rapidly; however, most studies still examine the relationships among these variables separately. Consequently, the mechanisms explaining how ESG and employer branding influence employee retention have not been extensively explored, particularly in the construction industry in Indonesia. This study aims to analyze the influence of ESG and Employer Branding on employee retention, both directly and through Psychological Safety as a mediating variable. The study employs a quantitative approach with an explanatory research design and a cross- sectional survey. Data was collected from 159 project employees of PT Wijaya Karya (Persero) Tbk. in Subang Regency using a Likert-scale questionnaire and were analyzed using the Partial Least Squares Structural Equation Modeling (PLS-SEM) approach with Smart-PLS 4. The results indicate that ESG, employer branding, and psychological safety have a positive effect on employee retention. Employer Branding also has a positive effect on Psychological Safety, whereas the effect of ESG on Psychological Safety was not found to be significant. Furthermore, Psychological Safety was found to mediate the relationship between ESG and Employer Branding on employee retention. These findings suggest that strengthening Employer Branding and fostering Psychological Safety are more effective strategies for improving employee retention than relying solely on the implementation of ESG. This study provides an empirical contribution to the development of the literature on sustainable human resource management and offers insights for construction companies in designing more comprehensive employee retention strategies.