Abstract
<jats:p>Employee stability constitutes a strategically important concern for small and medium-sized enterprises (SMEs), particularly considering persistent labor shortages and high rates of employee turnover. The purpose of this study is to examine how psychological factors, such as work–life balance and empowerment, affect employees' psychological well-being and work satisfaction, and how these, through organizational commitment, ultimately affect employee retention. Data were collected via questionnaires from employees of small and medium-sized enterprises, and the direct and indirect effects among the variables were examined using partial least squares structural equation modeling (PLS-SEM). The results of the study indicate that work–life balance and employee job autonomy have a statistically significant positive effect on employee psychological well-being (R² =0.660) and job satisfaction (R² = 0.723). Moreover, these psychological states were found to have a strong mediating effect on employee retention through organizational commitment (R² = 0.556). The study's findings demonstrate that organizational commitment is a key mediating variable between psychological factors and employee retention, with theoretical and practical implications for the behavior of small and medium-sized business and for human resource management.</jats:p>