Low operational efficiency caused by a lack of environmentally friendly human resources can reduce effective management practices and employee initiative (Mosadeghrad, 2013). Therefore, the Green Quality of Work Life (GQWL) concept is essential for fostering employee satisfaction across various job aspects, including job satisfaction, working conditions, fair compensation, career development opportunities, task discretion, participation in decision-making, and work-life balance (Adhikari & Gautam, 2010). A high GQWL enables companies to benefit from enhanced employee efficiency, productivity, and sustainable profitability, while also increasing motivation and reducing workforce turnover (Saputra et al., 2024).

GQWL not only contributes to a company's ability to recruit talented employees but also promotes a more flexible, loyal, and engaged workforce (Nurhayati et al., 2022; Selvaraj, 2014). Consequently, GQWL positively influences employee retention by providing a better quality of life, leading to higher levels of employee retention (Puspitasari et al., 2024). The relationship between GQWL and employee retention is significant, as GQWL impacts overall retention (Saepuddin & Saputra, 2023).

An effective employee retention program can create and maintain an environment that encourages employees to remain with the organization. GQWL significantly impacts employee productivity and is proven to create positive physical and psychological effects, resulting in better employee satisfaction (Mamedu, 2017; Patil & Arpitha, 2023).

H1: Green Quality of Work Life has a positive and significant effect on Green Employee Retention.

Green Employee Engagement (GEE) refers to the level of involvement and commitment of employees who are actively engaged, enthusiastic, and interested in their work (Shuck & Wollard, 2010). Employees in environmentally friendly companies are twice as likely to remain with the company (Patrice, 2011). Companies can design best practices based on findings to retain their best employees (Balakrishnan et al., 2013), indicating that while engagement alone may not suffice, it plays a crucial role in retaining top talent (Lindholm, 2013).

GEE has become an essential tool for facing competition and increasing growth opportunities, serving as an indicator of company goodwill (Agarwal, 2017). Engaged employees are less likely to change jobs frequently, consistently produce results, and serve as ambassadors for the company (Chandani et al., 2016). Therefore, companies must understand the importance of employee involvement to ensure satisfaction (Ashraf & Siddiqui, 2020). Engaged employees often express positive emotions such as happiness, joy, and enthusiasm, which indicate better health, self-generated work, and personal resources, ultimately enhancing their competence (Ngozi & Edwinah, 2022). This increased competence influences employee engagement, task identity, and enhances retention (Ibrahim et al., 2023).

H2: Green Employee Engagement has a positive and significant effect on Green Employee Retention.

Green Rewards (GR) for performance are undeniably a powerful tool for motivating employees (Saputra & Renata, 2023). Proper GR management involves strategies, policies, and processes that recognize and appreciate employee contributions toward achieving company goals (Armstrong, 2010). This approach treats employees fairly, equally, and consistently based on their value to the company's business (Fatehi et al., 2015). Implementing strategies that meet diverse employee needs encourages them to stay with the company for longer periods (Sandhya, 2011) and helps address employee stress and problems (Hussain & Saleem, 2014).

To retain employees, companies primarily use their resources to provide attractive extrinsic rewards (Alhmoud & Rjoub, 2020). GR acknowledges the value of employees' time, energy, and skills, which means that a company's reward system can significantly influence employee performance and productivity, as well as their desire to remain with the organization (Khan, 2021). This GR approach plays a crucial role in realizing company commitments (Ng & Kadi, 2023) and can enhance employee retention.

H3: Green Rewards have a positive and significant effect on Green Employee Retention.

The population for this research consists of SME sector data from the Central Statistics Agency in 2023, totalling 296,075 individuals. Using the Slovin formula with a 7% margin of error, a sample size of 204 respondents was determined. Quota sampling was employed, and data was collected via a questionnaire distributed through Google Forms. Responses were measured on a 5-point Likert scale.

The analysis was conducted using Structural Equation Modelling (SEM) with SmartPLS version 4 software. The first step involved testing validity and reliability, requiring Cronbach's Alpha and Composite Reliability values to be greater than 0.70, Average Variance Extracted (AVE) values to be greater than 0.50, and Heterotrait-Monotrait Ratio (HTMT) values to be less than 0.90 (Hair et al., 2021).

The first finding of this research is that respondents are not satisfied with the salaries they receive and that employee rewards are not optimal. This is confirmed by the lowest means for GQWL7: “I am satisfied with the payment I receive for my work” and GQWL10: “I feel appreciated when working at my company”. This indicates that the GQWL variable has not significantly impacted employee development or progress.

The impact of these issues is substantial, leading to employee discomfort and dissatisfaction, which results in intentions to leave the workplace (Abdien, 2019). Efforts to retain and empower employees can produce better work standards (Afkhami et al., 2020) by providing appropriate incentives and a healthy work environment (Karthick & Ramachandran, 2018). Therefore, it is crucial to create a Green Quality of Work Life based on employee perceptions (Harikrishnan & Kumari, 2019). This should begin with periodically increasing welfare as motivation, providing appropriate incentives, and conducting employee assessments to achieve the best performance aligned with organizational goals (Leitão et al., 2019), thereby reducing the intention to leave the company.

The second finding of this research is the passion and persistence in completing work, highlighted by the highest mean for GEE4: “I persist in my work until it is finished”. This indicator proves that the employee's relationship with their work is very strong, and that they have a high level of responsibility.

When employees feel involved and motivated by attractive green environmental practices from their employer, their performance improves (Easa & Bazzi, 2020). This motivation is directly linked to work and increases their commitment and performance (Tsareva & Boldyhanova, 2020). Creating employee commitment aims to increase the company's success (Susanto, 2022) through various innovations and strategic plans. Additionally, engagement and productivity increase as employees understand the value of the company's goals (Bhakuni & Saxena, 2023) and work in a positive, collaborative environment. This fosters a sense of responsibility at work and helps employees balance their professional and personal lives (Wood et al., 2020).

Mutual respect among employees is the highest form of reward, which is the third finding of this research. This is reflected in the highest mean for GR2: “I am respected and appreciated by my colleagues”. This finding highlights the importance of mutual respect and fair treatment among employees, which encourages active contributions to business sustainability and job satisfaction (Mosquera et al., 2020).

While Green Rewards are not the only important influencing factor, they can significantly increase employee retention (Khalid & Nawab, 2018) and indirectly enhance employee commitment (Puni et al., 2021) through fair reward practices and mutual respect for task contributions (Kollmann et al., 2020). Additionally, performance-based rewards positively influence job satisfaction (Froese et al., 2019), as receiving rewards is highly valued for the meaningfulness of work (Akgunduz et al., 2020). Green Rewards also foster positive creativity among employees with high performance goal orientation (Malik et al., 2019). Focusing on collaborative training, effective performance evaluations, and aligned reward policies can sustain better results (Mihardjo et al., 2020).

An interesting finding of this research is that the salaries and rewards received by employees are not satisfactory. This indicates that Green Quality of Work Life should be linked to financial motivation theory. This contribution is significant as it suggests that Green Quality of Work Life should not only focus on improving the quality of work for a better life but also ensure adequate salaries and rewards as benchmarks for Quality of Work Life.

To enhance Green Quality of Work Life, this research provides practical contributions, such as increasing knowledge, conducting workshops, and offering training as forms of additional expertise to improve salaries and rewards. The expectation is that these efforts will enhance the Green Quality of Work Life.

Future research models can be developed by incorporating financial motivation as a new variable or indicator to bridge the gap between reality and theory. This theory would be effective as a moderator in further research models, as the insignificant results of this study suggest the need for stronger variables or indicators to address the problem more effectively.