Unit 1 – Chap 7: Introduction: Psychology of personnel retention
Exam question (May/June 2013)
As manager you need to understand the psychological principles and factors pertaining to the retention of employees for the purpose of recommending strategies for retaining talented people with scarce and critical skills in the organisational context
Discuss the various factors that influence employees’ turnover intentions, job and occupational embeddedness. Also explain how employees’ job and work satisfaction, commitment and work engagement influence their turnover intentions, job and occupational embeddedness (25)
EMPLOYEE TURNOVER INTENTIONS
One of the schools of thought dominating research and practice on turnover is the psychological school of thought
Focuses on individuals and their decisions to quit or stay This relates personnel or labour turnover to factors such as: job satisfaction,
organisational commitment and employee engagement
Forms of turnover
Categorised into the following:
Involuntary turnover
Occurs when an employee is fired as a result of poor performance or laid off owing to company downsizing
Considered inevitable and possibly beneficialFunctional turnover
Includes all resignations which are welcomed by the employer Those which stem from an individual’s poor work performance
or failure to fit in comfortably with an organisational or departmental culture
Still regarded are lost opportunities and unnecessary costVoluntary turnover
When a competent and capable employee leaves to work elsewhere and is generally costly to the organisation
It means reduced productivity and increased expenses associated with recruiting and training a replacement
Measuring employee turnover
The following measures can be used:o Exit interviewso Anonymous questionnaireso Word of moutho Attitude surveyso Salary surveys
People leave jobs for a variety of reasons, many of which are outside the power of the organisation to influence
Factors that influence employee turnover
Outside factors
These factors relate to situations in which someone leaves for reasons largely unrelated to work
For example: People moving away when a spouse is relocated or when finding difficulty in satisfying needs of both work and family
In a way this turnover is unavoidable, but can be overcome through providing more flexible working hours, childcare facilities or even a job offer in the location where the spouse is being transferred to
Pull and push factors
Pull factors can include a change in career, career mobility opportunities, maternity leave, children and job transfer
Push factors can include level of pay, lack of career development, unmet needs, lack of superior support, working conditions and stress
Push factors show dissatisfaction with work or the organisation and pull factors show reasons for leaving are to improve living standards or better career development opportunities
Factors influencing job and occupational embeddedness
Job and occupational embeddedness refers to the totality of forces that keep people in their jobs and occupations
These forces are threefold: fit (extent to which individuals job complements other areas of their life), links (extent to which individuals ties with other people and activities at work) and sacrifice (ease with which these links can be broken).
The greater the fit, the number of links and the degree of sacrifice, the greater the forces toward job embeddedness will be.
Some push and pull factors that have the strongest influence on employees’ embeddedness:
Macroeconomic conditions
Poor economic conditions have the following impact on the employee:
o Lack of financial resources to invest in occupational training
o Decrease in the number of new positions and number of new firms created
o Increase in job insecurity, so individuals less likely to give up security and benefits in current occupation
Employment equity and affirmative action
Changes to the social and legal policy have increased educational and employment opportunities from designated groups
For instance, reducing barriers to entry (AA legislation) or providing resources for entry (skills development legislation)
Permeability of occupational mobility structures and industry growth
These factors reduce barrier to entry and increase worker expectations into a new career path
Human capital investment is a strong factor that embeds individuals in their current occupations
Employees are reluctant to give up on “sunk costs”, which is amongst others, the investment organisations put into giving employees occupationally-specific skills training
Compensation policies
Pension and insurance benefits have the strongest effect on embedding employees in their current organisations
They are not the strongest factors when choosing an organisation, but are important when deciding to leave an organisation, again employees not willing to give up on these “sunk costs”
Work/life conflict
Employees who like their job responsibilities, but cannot function adequately in a particular organisational context are more likely to seek external job mobility opportunities
Unmet expectations
Unmet expectations are also push factors and closely related to the psychological contract between employer and employee
Employees come to an organisation with certain expectations such as pay, working conditions, opportunity and organisational culture
The state of the psychological contract depends on the degree to which these expectations are met, perceived to be fair and equitable and whether there is trust that they will continue to be met
When reality does not match employee expectations, they become less satisfied and as a result are more likely to leave the organisation
Psychological contracts are unwritten; therefore employees may have unrealistic expectations of the organisation and feel unfairly treated as a result of organisational decisions and practices
Psychological contract
A broad explanatory framework for understanding employee-organisation linkages
Can be categorised into: Relational contracts and Transactional contracts Relational contracts are broad, open-ended exchanges of intangible things such
as employee loyalty and commitment in return for longer-term job security Transactional contracts are more specific and involve the exchange of tangible
factors such as the amount of pay for a specified level of performance The state of the psychological contract depends on the degree to which these
expectations are met, perceived to be fair and equitable and whether there is trust that they will continue to be met
There is a perception of distributive justice and procedural justice Distributive justice concerns the perceived fairness of the allocation of rewards to
employees – people compare what they get to what they expect to get Procedural justice is the process by which rewards are distributed and whether
they are perceived as fair and reasonable If individuals see a fair balance between in exchange of services, they tend to
honour their part of the contract with commitment and loyalty If individuals see their expectations as unfair the contract becomes damaged and
the employee is demotivated and look elsewhere Balancing individual and organisational needs are essential in the retention of
employees
Career mobility
Career mobility refers to the intra-organisational and inter-organisational career movements of people and includes everything from changing jobs to changing organisations to changing occupations
Intra-organisational mobility
Occurs along three basic dimensions:
Hierarchical dimension
Vertical as employees move from entry level to middle to senior
Accompanied by pay increases and status, increased autonomy and variety
Functional/technical dimension
Can enter a functional speciality and continue that speciality throughout his career, developing technical expertise within the area
Can move across functional specialitiesRadial dimension Individuals that become more trusted and valued by the
organisation get given greater access to its inner core
Inter-organisational mobility
Focuses on globalisation and its influence on employees careers, as well as the boundaryless career
Global careers refer to the crossing of national and regional boundaries in the course of work or life
Globalisation refers to the compression of the world and the intensification of people’s consciousness of the world as a whole
An individual’s career typically includes more than one company Self-initiated cross-border career moves are part of the changes associated with
the boundaryless career
JOB SATISFACTION AND ORGANISATIONAL COMMITMENT
Job satisfaction and organisational commitment are closely related, but distinct Satisfied employees tend to be more committed to an organisation Employees who are satisfied and committed are more likely to attend work, stay
with the organisation, arrive at work on time, perform well and engage in behaviours helpful to the organisation
Job satisfaction
Job satisfaction is how an employee feels about their job and what they think about their job
Job satisfaction is a result of employees’ perception of how well their jobs provide those qualities they perceive as important
Employees with a high job satisfaction experience positive feelings and employees with low job satisfaction experience negative feelings about their duties
Facets of job satisfaction
Pay satisfaction
Employees’ feelings about their pay – what they deserve, secure and adequate Based on comparison of the pay that employees want and the pay they receive
Promotion satisfaction
Employees’ feelings about company promotion policies and their execution – frequent, fair and based on ability
Many employees value promotion because they provide opportunities for personal growth, better salary and more prestige
Supervision satisfaction
Employees’ feelings about their superior – whether they are competent, supportive, caring, respectful and a good communicator
Co-worker satisfaction
Employees’ feelings about their fellow employees – whether they are competent, responsible, helpful, supportive, fun and interesting as opposed to lazy, incompetent, gossipy, unpleasant and boring
Work satisfaction
Employees’ feelings about their actual work tasks – whether they are challenging, interesting, meaningful, respected and make use of key skills rather than being dull, repetitive and uncomfortable
Employees who perceive a good fit with their organisation, job, co-workers and supervisor tend to be satisfied with their jobs, identify with the organisation and perform better and engage in organisation citizenship behaviours
OCB refers to tasks employees perform that are not formally required
Individual differences and job satisfaction
An individual’s mood – positive or negative can affect all aspects of work Positive affect relates to lower absenteeism and negative affect relates to higher
absenteeism and higher turnover The variability in job satisfaction is due to individuals’ personal tendency across
situations to enjoy what they do Certain types of people are just generally satisfied and motivated, regardless of
the type of job they hold
Four personality variables are related to people’s predisposition to be satisfied with life and with their jobs:
o Emotional stabilityo Self-esteemo Self-efficacy (perceived ability to master their environment)o External locus of control (perceived ability to control their environment)
However, no matter how strong an individual’s positive emotions or disposition, if they are not fairly treated – job satisfaction and positive work behaviours will decline
Organisational commitment
Defined as the desire on the part of an employee to remain a member of the organisation
Organisational commitment influences whether an employee stays a member of the organisation or leaves to pursue another job and become a turnover statistic
Employees who are not committed to the organisation engage in withdrawal behaviour.
Two types of withdrawal behaviour:o Work withdrawal – lateness and absenteeism – withdraw from work, but
still maintain ties with the organisationo Job withdrawal – intentions to quit, retire and willingness to sever ties with
the organisation
Forms of commitment
Organisational commitment consists of three elements:o Attitude – acceptance and belief in organisation’s valueso Behaviour – willingness to exert effort on behalf of the organisationo Motivation – strong desire to remain in the organisation
There are also different forms of organisational commitment:o Affective commitment – preference to stay arising from a sense of
emotional attachment (staying because you want to) Develops when occupation proved to be a satisfying experience
o Continuance commitment – sense of economic necessity or the perceived cost of leaving (staying because you need to)
Develops when the individuals has made investments that would be lost
o Normative commitment – moral obligation (staying because you ought to) Develops as a result of the internalisation of normative pressures to
pursue a course of action
Three types of organisational commitment combine to create an overall sense of psychological attachment to the company and people prioritise these differently
Overall organisational commitmentWhat makes someone want to stay with their current organisation?
Affective commitment Continuance commitment Normative commitmentStaying because you want to Staying because you need to Staying because you ought
to Some of my best friends
work in my office and I’d miss them if I left
My current job is rewarding. I enjoy coming to work each morning. Also, I really like the atmosphere…it’s fun and relaxed
I’m due for a promotion soon. Will I advance as quickly at the new company?
My salary and benefits get us a nice house in our town and my spouse has a good job here
The cost of living is higher in this area and will my spouse be able to find a job?
My supervisor has invested so much time in me, mentoring me, training me and showing me the ropes and has helped me out of a jam on a number of occasions. How could I leave now?
My organisation gave me a start. They hired me when others thought I wasn’t qualified
Emotion-based reasons Cost-based reasons Obligation-based reasons
Individual variables and commitment
Age and organisational commitment have a relation – older employees become more attitudinally committed
Individuals that accumulate more years with the company are likely to acquire greater investments and develop greater continuance commitment
Males are committed to an organisation that provides them with more autonomy Females are committed to an organisation that respects personal and family
concerns
EMPLOYEE ENGAGEMENT
Engaged employees have a significant impact on the performance of an organisation and generally most committed
Work engagement is distinct from constructs such as organisational commitment, job satisfaction or job involvement
Organisational commitment refers to an employee’s allegiance to the organisation that provides employment – the focus is on the organisation
Engagement focuses on the work itself – a psychological state that employees can be in when they are performing their work roles
Levels of engagement can fluctuate Job satisfaction is the extent to which work is a source of need fulfilment and
contentment
Dimensions of work engagement
Employee engagement consists of various dimensions, depending on which theory is studied
Engagement can be defined as a positive, fulfilling, work-related state of mind that is characterised by:
Vigour Characterised by high levels if energy and mental resilience while workingWillingness to invest effort in one’s work and persistence to face difficulties
Dedication Characterised by a sense of significance, efficacy, enthusiasm, inspiration, pride and challengeEmotional side of work engagement – willingness to expend time and effort in doing something meaningful
Absorption Cognitive aspect where individuals are fully focused on something and experience a high level of concentration while performing a task
Another four facets together also describe employee engagement:
Absorption Extent to which employees become engrossed in their work that time seems to stand still
Alignment Employees’ beliefs about where the organisation should be going and what goals and aspirations should be
Identification How important characteristics of an organisation are to an employee in defining who they are – sense of belonging
Energy Physical energy and motivational resources that employees direct towards their work, rather than other activities
Engaged employees become physically involved in their tasks, cognitively alert and emotionally connected when performing their job
Disengaged employees become disconnected from their jobs and hide their true identity, thoughts and feelings during role performances
Engaged employees are typically characterised by:o The willingness to take initiative and self-direct their liveso They generate their own positive feedback and encourage themselveso Engaged outside of their employmento Their values and norms are in agreement with those of the organisation
Causes of work engagement
Engagement is predicted by the work environment in which the employee spends their time
Features of the work environment can either drive the employees towards becoming engaged, or push them toward disengagement
Work engagement is closely related to the work environment, job resources, social support and the characteristics of the job
Job resources are those aspects of the job that have the capacity to reduce job demands, functional in achieving work goals and stimulate growth, learning and development
Social support from co-workers, superiors, performance feedback, coaching, job control etc. is also positively related
The more job resources available – the more engaged the employee Job characteristics such as skill, variety, autonomy and feedback contribute to
intrinsic motivation
RETENTION FACTORS IN THE SOUTH AFRICAN CONTEXT
The factors that influence employee retention in South Africa are as follows:
Remuneration
Money is still the primary incentive to lure managers and professionals High salaries not essential, but ‘fair’ salaries show strong correlation with
intention to stay Employees want to understand how the pay system works and how they can
earn pay increases Once the pay level is reached, intangibles such as career, supervisor support,
work and family balance become important Compensation has a strong relationship to organisational commitment, affective
commitment and normative commitment Pay satisfaction on retaining technology professionals confirms that these
employees want competitive salaries Elaborate benefit packages are becoming increasingly common in high
technology firms, i.e. indirect financial rewards received in terms of time off for example
In the end, some want money, some want security, recognition and career pathways and some want improved self-worth and importance
Job characteristics
Most employees want to do interesting work that challenges their skills and talents
Unchallenging and narrow tasks hamper growth and employees become less engaged
Organisational citizenship behaviours diminish when employees are given repetitive tasks to complete
Job characteristics such as variety and autonomy are determinants of organisational commitment
Professionally-qualified employees will leave the organisation if their skills are underutilised
Skill variety relates to feelings of belonging and a sense of attachment to the organisation
Training and development opportunities
Sustaining employability has given importance to further training and development for the survival of any worker
Organisations need to keep their employees well trained in latest technologies Employees stay at companies that promote career opportunities through learning
and the ability to apply their learnt skills Employees who are aware of the expense of training and appreciate the skills
they have acquired develop a sense of obligation If employees receive irrelevant training not based on their needs, they tend to
lose interest
Supervisor support
Supervisory behaviours that sustain the employee’s innovation Employees value the feedback from their co-workers and supervisors Sufficient performance feedback helps bolster positive attitudes toward the
organisation and helps prevent early intentions to leave Supervisors must be competent, accessible, accountable and visible to the
employee Supervisors should provide guidance where they need most assistance and to
consult with employees on decisions that affect them
Career mobility opportunities
Labour market trends present increased career mobility opportunities for employees
People tend to become concerned with their own future; they want progress and growth and tend to become frustrated if their path is blocked
Work/life policies
This includes flexible work scheduling, family leave policies and childcare assistance
Employees who have access to work/life policies show significantly greater organisational commitment and express a lower intention to quit their jobs
For people to commit to an organisation, they need to know they are cared about
RETENTION STRATEGIES
Assessment and evaluation of employees
Having the right person in the right job Optimal fit must exist between values and goals A psychological contract reflects an optimal fit between employee and
organisation The focus should be on personal goals and the necessary resources to achieve
these goals Wellness audits focusing on the positive and negative aspects of work-related
wellbeing should be implemented
Job re-design and work changes
Job enrichment involves raising the level of responsibility associated with a particular job
Job enlargement allows employees to take on additional, varied tasks so they can feel more valuable
Roles change and so should jobs Environments change, jobs should also change
Leadership
Has a significant influence on high trust employment relationship Employees tend to leave managers, not companies Good leaders enhance motivation and engagement Managers must pay attention to the selection and development of their personnel
and achieve a good fit between talent and work Managers must provide regular feedback and recognition for work well done
Training and development
Training programmes promote employee health and wellbeing and should also be directed at personal growth and development
Work training is a learning process across the entire lifespan and ultimately related to job performance and also increases employees’ efficacy beliefs
Career development and mobility
Employees need to rely on their own initiative to develop themselves continuously in order to remain employable
Planning one’s career by selecting jobs that provide opportunities for development increases level of engagement and degree of embeddedness
Managing work/home inter-role conflict
Staff turnover is affected by conflicting demands of work and family responsibilities
An employer of choice has the ability to recruit in a competitive labour market and issues such as work/life balance, reduced employee turnover and absence levels influence the employer of choice
Organisations need to assist in creating a work/life balance for their employees, like providing flexibility
Reward and remuneration
Perception of fairness in pay is associated with greater job satisfaction Employees who are compensated well are less likely to search for jobs
elsewhere Companies need to decrease their dependency of cash compensation and find
creative ways to recognise and reward employees