This study examines factors affecting employee retention focusing on private commercial banksrnin Ethiopia. The banking sector runs huge finance and employs thousands of work force. Thernliterature review and the primary data analysis indicated that employee stability challenges arernhighly affecting the banking industry. With increase in the number of new banks, bank branches,rnfinancial institutions and the dynamic changes in the business environment; a fierce competitionrnfor labor is continue to challenge employee retention capacity of the banks. In situations likernthis, retaining existing employees is very crucial. As the primary purpose of the study isrnidentifying and analyzing the major factors that affect employee retention ability; therncontributions, associations and significance of compensation, training, career development,rnwork-life balance and work environment were studied. The study adopted a mixed researchrnapproach and explanatory research design. A total of 283 employees from Awash, Wegagenrnand Lion Bank have participated in the study. A self-administered questionnaire & interviewrnwere used to collect primary data and it is analyzed using descriptive and inferential statistics.rnAccording to the statistical analysis findings, compensation & work-life balance highly determinernemployee retention ability of the banks under study and this factors demonstrated higherrnsignificance, contribution, positive relationship. Hence, hypothesis in relation to this factors werernalso accepted. On top of this, career development, work-life balance & work environmentrnrevealed significant positive relationship with employee retention and the tested hypothesises inrnrelation to these factors were accepted too. The major findings of the descriptive analysis hasrnestablished that majority of respondents do not have an intention to stay with the banks. Thisrnindicated the banks employee turnover will continue to increase, whereas, the banks did notrnrealized or prepared to mitigate this challenges. Therefore, it is recommended that, in order forrnthe banks to respond the deteriorating employee intention to stay, they need to reconsider theirrnunderstanding, practice and develop comprehensive employee retention policy. Reviews of thernbanks compensation package (salary, pay and benefit), improvements on the work-life balancernprograms, fairness of career development practices and enhanced work environment are alsornrecommended.