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The study investigates the effect of human capital (HC) on organizational performance (OP) of potential employees. Further, an attempt has been made to develop the fundamental psychological mechanism of the aforementioned relationship by proposing retention (RE) as mediator.

For this study, the required population on both private and public sector professionals of middle and senior-level management from service and manufacturing organizations functioning in various parts of India has been considered. For data collection, a complete set of questionnaires has been prepared and collected from 238 professionals. To study and test the hypotheses, structural equation modeling has also been used.

a complete study on the data collected, it has been found that HC is significantly related with OP of the prospective professionals and RE has subsequently mediated the aforementioned linkage partially.

The present study can suggest practically that the appropriate RE strategies retain HC with their respective organizations and provides in finding the evidence on the psychological processes during the employer procurement process.

paper bridges the disciplines of strategic human resource management and human capital management and brings in RE as an additional mediator into organizational performance.