Posted by: Lena B. | December 11, 2010

Retention of Employees

By Lucia Moser & Jovana Pavlovic

In a world of today, we are constantly directed towards future. A highly competitive labour market of new age causes that organizations and companies, of no matter what type, are facing retention challenges. Employees are not anymore likely to spend their working life in one company. But if it is about top performers (top managers, knowledge workers), a head of a company or organization should really be bothered by this fact. If a company intends to stay competitive and successful, there is a huge need for it to keep skilled employees. And this question of retention has been researched a lot in previous years and the research is not yet over. As the world and workforce are developing and changing in all ways, examining these kinds of questions is becoming of more and more importance. When we speak about retention of workers, we should think about topics like job satisfaction, organizational learning, motivation of employees, knowledge management and reasons for turnover.

Firstly, in this essay we will give a short theoretical overview about key terms regarding question of retention (organizational learning, knowledge management and motivation). The next part will consist of review of three relevant studies when it comes to retention and motivation of employees to stay in a company or organization. Finally, the conclusion will give a summary about the previous discussion.

THEORETICAL BACKROUND

Rodrigez (2008) reminds us that the question today is not if an employee will leave, but when. Employers have to face that fact – workforce of today is extremely mobile. The question we are trying to find an answer to here is: What makes someone stay in (or leave) the company? According to Rodrigez (2008), employees no longer feeling like they have to stick it out with a company when they are not growing, now they find it easier to leave for better job opportunities. Growth is a key word here. If one feels that s/he is growing (becoming more skillful, more experienced, more knowledgeable), one will be motivated to work harder and to stay where s/he is. Therefore, it is important that employers give employees the opportunity to develop and learn (Arnold 2005; Bernsen et al. 2009; Herman 2005, as cited in E. Kyndt et al. 2009).

The magical circle which is of interest for both employer and employee is the one from working in a company (organization), acquiring and using knowledge, being motivated by knowledge growth and back to working (staying) in a company. Having and retaining skilled employees is very important because employees’ knowledge and skills have become the key for companies to be economically competitive (Hiltrop 1999, as cited in E. Kyndt et al. 2009). In order to try to answer the abovementioned question, we will present a few theories concerning organizational learning, knowledge management and motivation of employees.

Organizational Learning

The term organizational learning (OL) may refer to individual learning within the organization, the entire organization learning as a collective body, or anywhere in between these extremes (Bennet & Bennet, 2004). The important thing about organizational learning is that it is a process; a process happening in a person or between persons inside organization. Learning as a process inside of a person is cognitive and behavioral process depended on structures that a person already had had. Learning inside an organization or a team is much more complicated and involves relationships and interactions between people (Bennet & Bennet, 2004) and also personal characteristics of persons within an organization or a team.

The first important theoretical model on OL was given in 1987 by Argyris & Schön. Most of the researchers of today are relying on their work. In their theory learning is seen as finding and correcting mistakes (today, we use concept of learning from errors). Namely, one will try to solve some problem, and if it fails, one will try to find distinction between expected and obtained. Once that relation is realized, a person will look for another strategy for solving a problem. This is called single-loop learning. If a person later starts questioning the reasons for its previous actions, we describe that as double-loop learning. Argyris (1990) argues that double-loop learning is necessary if practitioners and organizations are to make informed decisions in rapidly changing and often uncertain contexts.

In one of the newest studies on OL, Bontis & Serenko (2009) see it as one of the most significant characteristics of successful organizations in the long-term, and they connect OL with formal training and development (T&D) programs. They also emphasize role of managing learning and knowledge within a company or organization.

Knowledge Management

According to Bennet & Bennet (2004) knowledge management (KM) is the systematic process of creating, maintaining and nurturing an organization to make the best use of its individual and collective knowledge to achieve the corporate mission. These authors also claim that from a knowledge management perspective, all levels of learning are important and all must be nurtured and made a natural part of culture – an organizational learning culture, we would add.

Turnover is the rotation of employees around the labour market; among jobs, companies and professions; and between states of employment and unemployment (Abassi & Hollman, 2000 as cited in Bontis & Serenko, 2009).

Terms ‘knowledge management’ and ‘turnover’ are very closely related, in sense that if one company has good knowledge management, so if employees in that company acquire a certain knowledge, than a rate of turnover in that company should be as low as possible considering economical and human capital factors[1]. For one organization it is of great importance to keep knowledge workers. As defined in Wikipedia, a knowledge worker is a person which is valued for its ability to act and communicate with knowledge within a specific subject area[2].

Knowledge management is a term that goes hand to hand with organizational learning in sense that OL is a process of acquiring knowledge and KM refers to sharing that knowledge within a company. It is hard to approach theoretically to KM in general, because there are many specific areas in which KM has been investigated. According to Spender & Scherer (2007), there are some core components of KM: people, processes, technology, culture, structure. But all of these can be observed from the point of view of constructivism, intellectual capital, community of practice, etc.

Motivation

When we talk about motivation of an employee to work and stay in one company, we can talk about motivation that employee has for itself (intrinsic motivation), or motivational factors within a company that have an influence on its workers (extrinsic motivation). Definition of motivation by Robbins (1993, as cited in Ramall, 2004, p. 53) is the “[…] willingness to exert high levels of effort toward organizational goals, conditioned by the effort’s ability to satisfy some individual need”. Because of a huge number of theories of motivation (and almost all of them can be used as a model for employee motivation theory), here we will just briefly describe a few groups of theories:

  • Drive/drive reduction theory comes from Freud (1961) and it interprets motivation as tendency to move organism from state of negative tension (because of some human needs are not satisfied) to a state of homeostasis – no tension. This is a circular process, so once the organism is in a homeostasis, it is just a matter of time when the balance is going to be impaired.
  • Theories of needs have their basis in Maslow’s (1943) theory of hierarchy of human needs. Maslow claimed, and many agreed, that a person has five basic groups of needs and that they have this order: physiological needs, safety needs, love and belonging needs, needs of esteem and self-actualization need. Very popular Self-determination theory (further reading: Deci & Ryan, 2002) belongs to this group too.
  • Job design theories are based on the idea that a task itself has a motivational role for employee. Variety, autonomy and decision authority are three ways of adding challenge to a job. Adding variety and challenge can be achieved by job enrichment and job rotation (Ramall, 2004).

In the following section we are going to present three previous studies regarding the question how organizational learning, motivation and retention are associated and what are the latest results in research.

PREVIOUS STUDIES

The Effects of Organizational Learning Culture and Job Satisfaction on Motivation to Transfer Learning and Turnover Intention

Egan et al. (2004) published a study concerning the relations between organizational learning culture and workers learning and performance results. Regarding to the researchers, the focus on developing knowledge in general, but especially in the job through a constant learning process, receives increasing attention in our time. Because of the rapid-changing economy it is imperative to advance skills to keep the job. Therefore also motivation and the willing to transfer knowledge are crucial factors. Concerning the authors the surroundings and culture of an organization affect “[…] the types and numbers of learning-related events and employee job satisfaction as well as employee motivation to transmit newly acquired knowledge to the workplace context” (Egan et al., 2004, p. 20). Consequently, they focused on the following questions to find out if their research verifies their presumptions:

  1. Does organizational learning culture have a positive impact on employees’ job satisfaction?
  2. What are the influences of organizational learning culture and job satisfaction on employees’ motivation to transfer learning?
  3. What are the influences of organizational learning culture and job satisfaction on employees’ turnover intention?

In their study they used a survey research method to ask employees in the informational technology (IT) sector regarding to the supposed interactions. A questionnaire was used to get the required information about their attitude to 1) organizational learning culture, 2) job satisfaction, 3) motivation to transfer learning, 4) turnover intention. The research findings could confirm primary assumptions. Organizational learning culture showed a positive significant influence to the job satisfaction and motivation to transfer learning. Besides, there was also found a negative correlation between organizational learning culture and satisfaction regarding turnover intention. That means that organizational learning culture can be seen as a predictor for turnover intention. If the employee is learning and developing knowledge in the company, s/he is apparently more satisfied because s/he is challenged and therefore there is no reason to turnover to another company. Even if there have to be done more research on that field, there is already confirmation that organisational learning culture influences a worker positively (Watkins & Marsick, 2003)

An Exploration of the Relationship Between Learning Organisations and the Retention of Knowledge Workers

Lee-Kelley et al. (2007) carried out a research that analyses the correlation between learning organisation theory and the opportunity to keep knowledge employees.

It was assumed that learning is related with job satisfaction and turnover. In accordance with Egan et al. (2004), they also claim that the significance of knowledge in our society increases especially in domains where knowledge is essential. It is important to retain skilled and well trained workers to make sure to preserve high quality within the company. Employees, who are motivated to learn at their workplace, get challenged and are able to see the benefits of their existing knowledge which is of great value.

A survey was made to get the needed information. Workers from the informational technology department had to answer an anonymous questionnaire. In order to find out about the relationship between learning organisation and retention five disciplines model, regarding Senge (1990), were used: 1) personal mastery, 2) shared vision, 3) shared mental models, 4) team learning and 5) systems thinking. They were put in context with six job satisfaction facets: 1) comfort, 2) challenge, 3) reward, 4) relations with co-workers, 5) resource adequacy and 6) promotion.

Analyzing result of the questionnaire showed that there are significant (p<0.05) relationships between learning organisation disciplines and facets of job satisfaction which can lead to turnover. These outcomes resembled the results of Egan et al. (2004). A very interesting finding was that challenge was the most important factor for staying in the company (mean=3.47 of 4). Especially the positive relationship between personal mastery[3] and challenge[4] seems very interesting. The results demonstrate that companies need to maintain the employee’s development of skills and also provide challenging tasks so that they can grow with the problems and utilize new ideas. Thus, workers are able to practise and learn at the workplace and may deepen their knowledge.

Employee Retention: Organisational and Personal Perspectives

Kyndt et al. (2009) implemented a study in which they wanted to analyse the reasons why employees stay in a company or what causes them to look for other job-opportunities. In their research they put special focus on workers’ learning because they assume that learning plays a very crucial role concerning retention. In contrast to the aforementioned studies (Egan et al., 2004; Lee-Kelley et al., 2009) they also focused on organisational and personal factors which might affect retention.

The following three research questions were formulated:

  1. What is the relationship between the perception of the learning and working climate, and employee retention?
  2. What is the relationship between having a high potential and employee retention?
  3. What is the relationship of the personal characteristics of level of education, number of children, seniority, age, and gender to employee retention?

The participants of this study were employees from companies in the private sector. The first part of the study was a survey method containing a questionnaire. In addition to that there was also a qualitative, second part consisting an interview with a few full-time workers.

The investigation showed that (Kyndt et al. 2009, p. 207) “[…] the perception of the importance of learning to employees and the quality of work climate is a strong predictor of employee intentions to remain with their current employer.” Further they found out that appraisal and also stimulation influence workers positive regarding to turnover to another company. The researchers suggest that human resource management should future put more attendance to that in order not to lose their workers with specific knowledge and let them go to another company where they can apply it.

Studies summary

Finally, taking all shown results of the presented studies into account, in each research we can find fundamental links between learning, motivation, job satisfaction and retention. The findings demonstrate that workplaces where no learning processes take place are jobs with unsatisfied employees, compared to those who feel challenged and develop their knowledge. It was exposed that the learning organisation has to be exciting and motivating so as to investigate effort not just for the company but also for personal contentment. In order to keep high qualified and skilled workers in the company, the workplace has to provide attractive, challenging and appreciative working conditions.

PERSONAL STATEMENT

In times where competition on the market increases and the employee market is characterized by displacement, we have to think about effective tools to win workers loyalty. Dissatisfied employees who are not motivated to stay in their company anymore, often quit their jobs and look for a better one. In doing so, with them the company loses not just their knowledge, but also their experience and ideas.

In this essay we tried to find answers to the question why employees turnover to other companies, because we wanted to find out if there is a significant relation between learning at the workplace and employees’ wish to change the workplace.

According to recent studies, learning organization, motivation to develop further knowledge, as well as knowledge transfer, play a very important role in job satisfaction, which mostly leads to retention. As described, workers who feel necessity for their work, because they get appreciated and are allowed to show their skills by solving problems, prefer to stay and are more loyal with their company. Therefore, companies should be more sensitive for the needs of their workers because retention is an art and it requires serious work and efforts.

FURTHER LITERATURE

Further empirical studies

Here we listed further studies concerning the topic of this essay:

Hausknecht, J., Rodda, J. & Horward, M. (2009). Targeted Employee Retention: Performance-Based and Job-Related Differences in Reported Reasons for Staying. Human Resource Management, vol. 48, no. 2, 269 – 288.

Price, O., Scheeres, H. & Boud D. (2009). Re-making Jobs: Enacting and Learning Work Practices. Vocations and Learning, vol. 2, no. 3, 217-234.

Agho, A. O., Mueller, C. W. & Price J. L. (1993). Determinants of employee job satisfaction: An empirical test of a causal model. Human Relations, vol. 46, no. 8, 1007-1020.

Further articles

Here we also listed further articles dealing with this essay topic:

Hirschfeld, K. (2006). Retention und Fluktuation: Mitarbeiterbindung – Mitarbeiterverlust.

From: [http://www.uniglobalunion.org/UNIsite/Groups/PMS/publications/Retention-DE.pdf]

Further books

Deci, E., & Ryan, R., (2002). Handbook of self-determination research. Rochester, New York: University of Rochester Press.

Arthur, D. (2001). The employee recruitment and retention handbook. New York: AMACON Books.

Phillips, J.J., Conell, A.O. (2003) Managing employee retention: a strategic accountability approach. Burlington: Elsevier.

REFERENCES

  1. Argyris, C. (1990). Integrating the individual and the organization. New Brunswick: Transaction Publishers.
  2. Argyris, C. & Schön, D. (1978). Organisational learning: A theory of action perspective.  Addison Wesley: Reading, Mass.
  3. Bennet, A. & Bennet, D. (2004). The Partnership Between Organizational Learning and Knowledge Management. In: C.W. Holsapple, Handbook on Knowledge Management: Knowledge Matters. Heidelberg: Springer.
  4. Bontis, N. & Serenko, A. (2009). Longitudinal Knowledge Strategizing in a Long-term Healthcare Organization. International Journal of Technology Management, vol.47, no. 1/2/3, 276–297.
  5. Egan, T.M., Yang, B. & Bartlett, K.R. (2004). The Effects of Organizational Learning Culture and Job Satisfaction on Motivation to Transfer Learning and Turnover Intention. Human Resource Development Quarterly, vol. 15, no. 3, 279-301.
  6. Freud, S. (1961). Civilization and its discontents. J. Strachey, transl. New York: W. W. Norton.
  7. Kyndt, E., Dochy, F., Michielsen, M. & Moeyaert, B. (2009). Employee Retention: Organisational and Personal Perspectives. Vocations and Learning, vol. 2, no. 3, 195-215.
  8. Lee-Kelley, L., Blackman, D.A. & Hurst, J.P. (2007). An exploration of the relationship between learning organisations and the retention of knowledge workers. The Learning Organization, vol. 14, no. 3, 204-221.
  9. Maslow, A.H., (1943). A Theory of Human Motivation, Psychological Review, vol. 50, no. 4, 370-396.
  10. Ramall, S. (2004). A Review of Employee Motivation Theories and their Implications for Employee Retention within Organization. Journal of American academy of Business, vol.5, no. 1-2, 52-63.
  11. Rodriguez, R. (2008). Learning’s Impact on Talent Flow. Chief Learning Officer, vol. 7, no. 4, 50-54.
  12. Senge, P. (1990). The Fifth Discipline: The art and practice of the learning organization. New York: Doubleday Currency.
  13. Spender, J. C. & Scherer, A. G. (2007). The Philosophical Foundations of Knowledge Management: Editors’ Introduction. Organization vol. 14, no. 1, 5-28.
  14. Watkins, K. E. & Marsick, V. J. (2003). Making learning count! Diagnosing the learning culture in organizations. Advances in Developing Human Resources, vol.5, no.2, 205-214.

[1] In further literature there are some papers dealing with calculating exact money loss that a company has when loosing an employee.

[3] Personal mastery defined in the study: This is the process by which employees continually clarify and deepen their personal vision, focus their energies, develop patience and develop an objective view of reality. Employees clarify what is being held as important, seek to be creative not reactive, understand their part in the whole organisation and draw motivation from identified gaps in their areas of knowledge.

[4] Challenge defined in the study: This covers employee’s satisfaction with the nature of the work undertaken.

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