Abstract
A review of the literature on employee retention was conducted to determine within which theoretical frameworks it is relevant to discuss the issue of employee retention; what factors can influence the employees’ decision to stay with the organization in the public sector; what factors can affect the employees’ decision to shift to the semi-private sector; and what HRM practices can influence employee retention positively. Examination of the recent researches is important to assess how HRM policies implemented in Qatar in 2009 can affect employee retention in the public sector. Starting with discussing study methodologies and strategies, tendencies in researching the problems were identified. The literature review continues with defining the concept of employee retention and determining its importance for organizations in both the public and private sectors. Much attention is paid to discussing such theories of employee retention as Human Capital Theory, Social Exchange Theory, Resource-Based View, and Price-Mueller Causal Model of Turnover. The next section provides a review of the literature discussing differences in employee retention in public and private sectors. Researchers state that the implementation of successful HRM practices in the public sector is often more challenging than in the private sector. The review of literature on employee retention management demonstrates that retention can be influenced by effective HRM practices in the sphere of training and development, performance appraisals, recognition, and promotion opportunities. Literature on the linkage between engagement, commitment, and retention is organized in a separate section to state the role of focusing on employees’ satisfaction and commitment to promoting retention. The discussion of issues of turnover and challenges related to employee retention is also identified in the literature to present the gap in HRM that needs to be addressed with effective HRM practices. The final section of the review provides directions for further research in the field.
Keywords: Employee Retention, HRM, Turnover, Theories of employee retention, Turnover intention, Retention management, Job satisfaction.
Introduction
This literature review explores and synthesizes the literature on human resource practices and employee retention, with the view to facilitating a broader understanding of the key theories, issues, strategies, and challenges related to employee retention. The review of employee retention scholarship is important since the proposed study attempts to discover how the HR policy introduced in Qatar in 2009 has influenced the rate of employee migration from the public sector to the semi-private sector. The subsequent sections of this review are arranged according to these themes: Study methodologies and Strategies; definition and importance of employee retention; theories of employee retention; employee retention in public and private sectors; employee retention management; engagement, commitment, and retention; turnover; and challenges related to employee retention.
Study Methodologies & Strategies
Of the 96 studies consulted, 56 (58.4 percent) used a quantitative research methodology, 13 (13.5 percent) used a mixed-methods research methodology, and only 7 (7.3 percent) used a qualitative research methodology. The remaining 20 studies (20.8 percent) are either literature reviews exploring various HRM concepts and theories, or general reviews written by experts in the HR field. These statistics demonstrate a clear deficit of qualitative studies addressing the issues, strategies, and challenges related to employee retention in the HRM domain. Nearly all of the quantitative studies reviewed used the survey approach in data collection, while most qualitative studies used in-depth interviews for the same purpose. Survey questionnaires and in-depth interviews have been used in most mixed-methods studies, while most general reviews and literature reviews relied on secondary research and existing datasets.
Definition and Importance of Employee Retention
The concept of employee retention has been defined variedly in the literature. While ALDamoe, Yazam, and Bin Ahmid (2012) and James and Mathew (2012) define the concept as a voluntary process by any organization to avail an environment that encourages and motivates people to remain with the entity for the maximum period of time, Cascio (2003) cited in Mahal (2012, p. 38) defines it “as initiatives taken by management to keep employees from leaving the organization, such as rewarding employees for performing their jobs effectively, ensuring harmonious working relations between employees and managers, and maintaining a safe, healthy work environment.”
The importance of employee retention is well documented in the literature, particularly in terms of turnover-related costs. For example, Huang, Lin, and Chuang (2006) note that turnover is costly in that employers find replacement cost and hidden organization cost high, while employees find the monetary and psychological costs extremely challenging. In their study, Chhabra and Mishra (2008) note that “the corresponding costs to the firm with regard to employees’ quitting the organization and the subsequent hiring or replacement of employees can be quite significant in terms of personal, work-unit, and organizational readjustments.” Allen, Bryant, and Vardaman (2010) acknowledge that the costs associated with recruiting, selecting, and training new employees often exceed 100 percent of the yearly salary for the position being filled and that the direct costs, work disruptions, and losses of organizational memory and seasoned mentors associated with turnover are significant issues that underscore the importance of employee retention. Following this, Kim (2012) argues that the high cost associated with the loss of talented employees has reinforced the need for contemporary organizations to identify and implement HRM practices that support employee retention.
Theories of Employee Retention
There are many theoretical frameworks and models that have so far been used by scholars and practitioners to explain employee retention. Owing to the limitation of space, this section discusses four such theories, namely human capital theory, social exchange theory, resource-based view, and Price-Mueller causal model of turnover.
Human Capital Theory (HCT)
According to Huang et al (2006), this theory “considers voluntary turnover an investment in which costs are borne in an earlier period in order to obtain returns over a long period of time.” Consequently, the decision to stay or leave involves assessing costs and benefits; that is, if the current value of the returns associated with turnover surpasses both monetary and psychological costs of leaving, employees will be motivated to shift jobs. In the same vein, the theory proposes that employees will resist shifting jobs if the discounted stream of benefits does not surpass monetary and psychological costs. HCT also proposes that the explicit and inherent advantages “associated with staying/retaining a job will be reduced if a worker is unhappy in the current job if the immediate cost of leaving is low, if the utility from the new job is great, or if the new job offers a comparable package” (Huang et al 2006, p. 492-493).
Social Exchange Theory
Although the social exchange theory is grounded on two main writings by Homan (1961) and Blau (1964), it has become a popular theoretical basis in organizational studies concerned with assessing social behavior and interactions (Jepsen & Rodwell 2010; Allen & Shanock 2013). The major premise of the theory is that “person “A’s” behavior reinforces “B’s” behavior and vice versa, thereby maintaining the relationship” (Gentry et al 2007, p. 1007). Tzafrir et al (2004) acknowledge that social exchange is based on the norm of exchange namely “we help those who help us”, thus it has been successful in establishing the managerial expectations that recognition, empowerment, investment in people assets, and other favors will be reciprocated. This view is reinforced by Paille (2012, p. 769), who acknowledges that “the literature on social exchange theory provides findings, which indicate that employees exchange desirable outcomes in return for fair treatment, support or care.” Consequently, this theory has found wide usage in explaining employees’ intention to stay or leave an organization (Tekleab, Takeuchi, & Taylor 2005; Suutari, Tornikoski, & Makela 2012; Allen et al 2013).
A number of retention-related studies (e.g., Allen et al 2013; Mignonac & Richebe 2013) acknowledge that the employee and employer could be deemed as two “actors” in a social exchange relationship and that the actions of the employer in availing the needed retention practices reinforce the employee’s decision to stay or leave. Similarly, the employee’s competence and performance indicators may reinforce the employer’s decision to increase or decrease the incentives that are critical in retaining the employee. Consequently, many employee retention strategies (e.g., management involvement, training, and career development) can be considered as social exchange concepts, as workers remain with their respective organizations if management is seen to value and implement these strategies (Gentry et al 2007). However, this theory has continued to receive criticism for projecting a consequentialist orientation (Suutari et al 2012), and for failing to account for how the same ‘gesture’ or retention strategy on the part of the organization usually triggers diverse employee responses (Mignonac & Richebe 2013).
Resource-Based View (RBV)
Tzafrir et al (2004, p. 631) notes that “the resource-based perspective encourages a shift in emphasis toward the inherent characteristics of employee skills and their relative contribution to value creation.” According to these authors, RBV presupposes that the core employability skills that are critical to the organization’s competitiveness and productivity should be developed and maintained through internal processes, strategies, and practices, while skills of minimal value or tangential value should be outsourced. Haar and White (2013) assert that RBV underlines the need for organizations to invest in the development of internal firm resources or heterogeneous resources that are difficult for competitors to imitate or copy, hence serving as sources for competitive advantage. These resources, according to Ortlieb & Sieben (2012), may consist of tangible and intangible assets that demonstrate the capacity to bring high returns over extended periods of time, such as work-life programs, HRM systems, employee career development programs, job enrichment initiatives, and promotion opportunities. The theory suggests that such resources may provide greater gains for an organization (e.g., employee retention), as it is difficult for competitors to imitate them (Holtbrugge, Friedmann, & Puck 2010; Haar & White 2013).
Price-Mueller Causal Model of Turnover
J.L. Price and C.W. Mueller (1981, 1986) developed a comprehensive causal model of turnover, which not only identified the backgrounds of job satisfaction and intention to leave (e.g., opportunity, kinship responsibility, general training, job involvement, positive/negative affectivity, distributive justice, job stress, pay, promotion chances, routinization, social support) but also added organizational commitment as a mediator between job satisfaction and intention to leave (Holtom et al 2008). Specifically, the theorists acknowledged that distal antecedents of turnover include the nature of the job (e.g., routinization), participation, opportunity, distributive justice, and family ties (e.g., kinship responsibility), while job satisfaction predictors include job involvement, autonomy, distributive justice, pay, promotional opportunities, and social support (Price 2001; Holtom et al 2008). Overall, this model is useful in retention and turnover studies due to its basic assumptions that (1) increased job opportunity produces more turnover intentions, (2) kinship obligations produce fewer turnover intentions, (3) job involvement positively impacts satisfaction and hence reduces turnover, (4) high positive affectivity increases job satisfaction and hence reduces turnover, and (5) job stress reduces turnover by its negative impact on job satisfaction (Price 2001).
Employee Retention in Public and Private Sectors
Public Sector
Much of employee retention research has focussed on the private sector, though several scholars are increasingly taking a keen interest in public sector organizations since the survival of these organizations at the national level is predicated upon the caliber, organization, and motivation of human resources (Watty-Benjamin & Udechukwu 2014). Rose and Gordon (2010) note that the public sector faces unique challenges competing for scarce human resources, in large part due to limitations in remuneration flexibility and incapacity to provide high-performing employees with incentives such as job security, task variety, and training opportunities. As suggested by Rowland (2011) and Mignonac and Richebe (2013), public sector organizations should adopt and implement effective HR practices not only to deal with concerns about observed public sector inefficiencies but also to ensure desirable outcomes for citizens.
Other scholars have advocated for a different view of employee retention in the public sector. For example, Kim (2012, p. 259) notes that, within the public sector, governments are increasing improving employee retention through the employment of various HRM practices, including “salary increases, bonus programs, enhanced benefit programs, employee development programs, alternative schedules/flex time, telecommunicating, and enhanced IT training programs.” This author also acknowledges that an ongoing concern for HR practitioners within the public sector revolves around the implementation of strategies geared toward the balancing of employees’ work and family responsibilities, since changing demographic trends continue to exert a substantial impact on modern family life and work. Ibrahim and Al-Falasi (2014) note that the rapid shift in the scope, management, and organization of the public sector in most countries has resulted in restructuring the classical public administration and adopting HR practices that are mostly used in the private sector, with the view to delivering high-quality and customer-oriented services.
Private Sector
Within the private sector, available scholarship demonstrates that the implementation of effective HRM practices is instrumental in empowering the organization to secure a competitive advantage (Osman, Ho, & Galang 2011; Kim 2012; Watty-Benjamin & Udechukwu 2014), meet the expectations of stakeholders (Subramony 2009), as well as hire, engage, and retain the right talent (Haar & White 2013). Scholars are in agreement that employee retention in the private sector is a critical component to enhanced organizational performance, competitiveness, and productivity (Bhatnager 2007; ALDamoe et al 2012). Although some studies have suggested a lack of consensus amongst academics on how HR practices influence organizational performance (e.g., Ansari 2011; Singh et al 2012; Hunt 2014), others have introduced tangible evidence to document this relationship. For example, the study by ALDamoe et al (2012) found that to improve organizational performance, organizations must develop and implement employee retention approaches such as rewards, independence, reputation, incentives, compensation, and fair and competitive wages.
Literature on Employee Retention Management
It is a widely held view that hiring knowledgeable employees for the job is critical for an employer; however, retention is even more critical than hiring, hence the need for organizations to develop and implement effective retention management practices (Yamamoto 2011; Ratna & Chawla 2012). De Vos and Meganck (2009) cite other documentary evidence to relate retention management to the portfolio of HR practices that organizations develop to reduce voluntary turnover rates and hence hold onto those employees they may want to keep, for longer than their competitors. These authors feel that the topic of retention management is yet to be fully understood as most empirical studies “only address one or a subset of retention factors, which makes it impossible to assess their relative embeddedness in the retention practices put in place by HR managers.” (p. 47). Yamamoto (2011, p. 3550) offers a different yet related view by postulating that, in the retention concept, organizations are the main players and retention management can be identified “as the entire human resource management policies for retaining the current or expected high-performing employees within organizations for long periods of time, enabling them to exercise or develop their capabilities.” Subramony (2009) acknowledges that such practices should be offered in bundles, as studies have found that individual practices involved in making up these bundles can support each other in facilitating particular workforce characteristics, thus developing synergistic and performance-enhancing effects that are significantly superior to those of individual retention best practices.
Various research studies conducted over time have come up with a wealth of strategies that could be employed in retention management. These strategies include effective hiring/selection of new employees; favorable working environment; top-management support; humane treatment of employees through words of encouragement; establishing partnerships with employees; training and career development; financial incentives and benefits; job enrichment initiatives; promotion opportunities; flexi work; performance appraisals and job evaluations; equal opportunities training; opportunities for sideways job move; and family-friendly benefits (Clarke & Herrmann 2007; Taplin & Winterton 2007; De Vos & Meganck 2009; Dey 2009; Gberevbie 2010; Gilmore & Turner 2010; Khan 2010; Rose & Gordon 2010; Ananthan & Sundheendra 2011; Bartram 2012; James & Mathew 2012; Kim 2012; Pritchard 2014). De Vos and Meganck’s (2009) study further found that, while HR managers give precedence to retention factors such as training, career perspective, financial rewards, performance management, and communication, employees are more concerned with factors such as career development opportunities, social atmosphere, job content, financial rewards, and work-life balance.
Many other retention studies reveal fragmented findings on the best practices that could be used by organizations to guarantee retention. For example, while Chapman (2009) underscored the need for organizations to develop a comprehensive plan of new employee orientation and socialization to help reduce the stress associated with the first days on the job, Ghosh et al (2013) found that the development of a positive organizational culture is instrumental in retaining key staff. Yamamoto’s (2011) study found that effective employee benefit management practices (e.g., housing, medical care, childcare support) positively influence employee retention, while Huang et al (2006) found that marriage, gender, honored employee status predict turnover and turnover intentions.
Other studies in progressive retention practices demonstrate the following: employees who are selected according to job requirement have more organizational commitment and career motivation, eventually helping in employee retention (Larsson et al 2007; Mahal 2012); salary plays a critical role in employees’ commitment and retention (Tracey 2014); a good working environment and opportunities for learning reinforce high organizational commitment and ultimately bring stability among the employees, leading to retention (Ananthan & Sudheendra 2011; Govaerts et al 2011); and intrinsic motivation, employee involvement, age, level of education are the primary determinants of retention (Sengupta & Dev 2013). Public and private-sector organizations, according to Bartram (2012) and Parry and Wilson (2009), can retain key talent by using effective recruitment practices to hire the right people, running an effective orientation process, integrating new employees quickly, meeting staff expectations, appointing exceptional managers, promoting staff development, having a clear policy on pay, and promoting a good work-life balance.
A significant number of empirical research studies have focussed attention on investigating the relationship between job satisfaction and other variables related to retention. Most of these studies have found that job satisfaction is an important factor in the planning and implementation of HRM retention strategies. For example, Hasin and Omar (2007) found that job satisfaction and job-related stress are significantly associated with the intention to leave the job, and demographic factors such as pay or salary, job position, and highest education level achieved to have an effect on job satisfaction. These authors define job satisfaction as “the extent to which a person derives pleasure from a job” (p. 23). In their study, Bockerman and Ilmakunnas (2012) found that job satisfaction is positively associated with organizational productivity, commitment, and fewer accidents in the workplace, while negatively associated with employee quit intentions and absenteeism. A recent study conducted on 15 public sector organizations in Pakistan found that job satisfaction is not only a principal psychological factor in deciding whether the public sector is the employer of choice but also influences recruitment and retention policies within the sector (Rehman 2012). This study revealed that employees either express a desire to leave the organization or are reluctant to get a job there if they view such an organization as offering fewer opportunities for the achievement of job satisfaction through available HR practices, such as career development and good governance systems.
A study by Hausknecht, Rodda, & Howard (2009) found that job satisfaction, extrinsic rewards, component attachments, organizational commitment, as well as organizational reputation were the most recurrently mentioned reasons for not leaving; however, career development opportunities and organizational reputation were more common justifications for not leaving among high performing employees and non-hourly employees, while extrinsic rewards such as pay and benefits were more widespread among low performers and non-permanent staff. These findings reinforce the fact that high-performing employees are more interested in intrinsic rewards (e.g., career opportunities, prestige) than extrinsic rewards (e.g., pay and benefits).
Some researchers have underscored the importance of employer/organizational branding in effectively managing employee retention. Chhabra and Mishra (2008) note that a reputable organizational brand is fundamental to the firm’s ability to not only attract, motivate and retain the best and the sharpest employees, but also achieve competitive advantage in the business arena. Their study found that “talent management and employer branding contribute to retention and acquisition of the desired workforce” (p. 50). Ito, Brotheridge, and McFarland (2013, p. 733) cite other literature in demonstrating how HRM has adopted the marketing notion “of brand management using such terminology as employer branding to better recognize what has long been understood: the attractiveness of an organization is an important factor in recruiting and retaining employees.” These authors argue that a favorable employer image (e.g., winning the best employer award) not only assists in expanding the applicants’ pool but also in facilitating selectivity in meeting workforce requirements and distinguishing the organization from its competitors.
Other studies have found that, for organisations to effectively manage employee retention and achieve competitive advantage, they must take a proactive approach in the following: re-recruiting top performers before they get a better offer from competitors; implementing a comprehensive mentoring program and knowledge transfer for employees; offering superior career visibility for growth opportunities; exploring various work options for retirement-age employees to retain knowledge and expertise; using explicit ranking systems tied to incentives to enhance job satisfaction and retention; using employee surveys to attract and retain best talent; considering shifts in management style to accommodate younger but talented employees; valuing employees by listening to their concerns; planning for succession and acceleration pool by identifying, tracking, and developing key employees so that they may ultimately assume top-level positions; as well as differentiating your organisation using strategies such as talent management and employer branding (Edgar & Geare 2005; Bhatnager 2007; Chhabra & Mishra 2008; Okpara & Wynn 2008; Ananthan & Sudheendra 2011; Govaerts et al 2011; Ratna & Chawla 2012).
Studies by Ansari (2011) and Mahal (2012) found that employees’ decisions to stay or leave an organization are to a large extent influenced by their own evaluations and perceptions of the HR practices implemented by the organization, with the most important being training and career development, promotion opportunities, remuneration and recognition, and work-life balance. The literature on these practices is briefly reviewed below, with a focus on employee retention.
Training & Career Development
While training concerns any procedure commenced by the organization to advance learning amongst organizational members, career development relates to how such members grow individually alongside the organization itself upon exposure to the training opportunities (Taplin & Winterton 2007; Ansari 2011; Bhatti et al 2013; Sengupta & Dev 2013). A study by Lin and Chang (2005, p. 331) found that employees “who quit for what they perceive as upwardly mobile career moves and those who enjoy in-house promotions both demonstrate a greater degree of positive learning goal orientation than their colleagues who remain stationary in long-term positions with the same firm.” Glen (2006) provides a different view by suggesting that the retention of key staff goes beyond the provision of formal, educational training and development opportunities, to providing skilled, high-potential employees with the prospect of achieving experience-based career leverage opportunities not only to swiftly develop their careers but also to improve their individual marketability.
Promotion Opportunities
Campbell (2008) acknowledges that promotion in organizations serves two fundamental roles, namely matching (e.g., sorting employees into the jobs for which their skills and capabilities are best suited) and the provision of incentives (e.g., rewarding past performance with enhanced pay and rank in the organization).
Remuneration and Recognition
Chew and Chan (2008, p. 507) acknowledge that “remuneration and recognition are important contractual and implied agreements between an employer and an employee.” These authors are of the view that, although compensation is largely viewed as the most important factor when it comes to attracting and retaining talents, hence forcing some organizations to provide remuneration packages that are well above the market rates, it is insufficient in influencing an employee’s decision to apply greater commitment or remain with the employer. In their assessment of a recent Towers Watson survey, Cianni and Guddy (2012) note that employee retention is not just about money, as other retention tactics such as personal outreach by leaders and managers, equity grants, promotions, and lateral moves to new roles are equally important.
Work-Life Balance
Hausknecht et al (2009, p. 276) acknowledge that work-life initiatives typically “involve alternative work hours and/or compressed scheduling and are often established with the goal of reducing tensions between competing work and non-work demands.” Findings from a number of studies demonstrate that work-life balance is directly associated with employee retention and turnover intentions; for example, Cegarra-Leiva, Sanchez-Vidal, and Cegarra-Navarro (2012) found that the existence of a work-life balance culture, rather than the availability of work-life balance initiatives, is the major determinant of job satisfaction, which in turn influences turnover intentions. Studies by Anderson and Kelliher (2009), Moore (2007), and Deery (2008) are uniform in their findings that flexible working options (e.g., flexi-time, remote working, reduced hours, or compressed working time) provide workers with a degree of choice over when, where and how much they work, resulting in increased employee engagement and job satisfaction, which in turn enhance retention. In their study, Kroon and Freese (2013, p. 899) found that “HR practices (like training, supervisory support, career development support, information sharing, and employee participation) proved to be related to lower turnover intentions of flex workers with a career development motivation.” Other studies (e.g., Hyman & Summers 2007; Richman et al 2008; De Cieri & Bardoel 2009) have also found similar results, that work-life balance initiatives are critical not only in achieving job satisfaction, job commitment, engagement, and low turnover but also in successfully addressing business concerns related to the recruitment and retention of scarce labor.
Overall, researchers in the retention field are divided on what needs to be done by organizations for retention management to be effective. For example, De Vos and Mieganck (2009) argue that retention management has to be intrinsically tied to the construct of psychological (employees’ subjective interpretations and assessments of their employment deal) to achieve effectiveness. On the contrary, Hausknecht et al (2009) argue that an effective strategy to retention management should entail attempting to understand why workers stay or leave the organization, in addition to assessing variations in the reasons noted based on what the organization is attempting to achieve from a talent management orientation. This view finds support in James and Mathew (2012, p. 80), who argue that “effective retention management requires the ongoing diagnosis of the nature and causes of turnover, a strategic approach to determining in what human capital markets retention has the largest impact on organizational success, and the development of an appropriately targeted and organized buddle of retention initiatives.”
Engagement, Commitment & Retention
Anitha (2014, p. 308) defines employee engagement “as the level of commitment and involvement an employee has towards their organization and its values.” Saks (2006) notes that engagement differs from commitment since the former refers to the degree to which an employee is attentive and absorbed in the performance of their roles, while the latter refers to an employee’s attitude and attachment towards the organization. The nine engagement predictors developed by Glen (2006) to provide an effective framework for managing employee commitment, team engagement, and key skills retention include organizational process, role challenges, values, work-life balance, information, stake/leverage/reward/recognition, management, work environment, and product or service.
In their study, Chew and Chan (2008) found that organizational commitment was positively influenced by person-organization fit, reward and compensation practices, employee recognition, as well as an occasion for the employee to be allocated crucial job-related assignments. This study also found that the intention by employees to stay in their current jobs was substantially associated with the person-organization fit, reward system, employee recognition, as well as training and career development; however, training and career development were not substantially associated with organizational commitment and the challenging assignment was not substantially associated with employee intention to stay. A study by Ghosh et al (2013) found that affective commitment (relative strength of an individual’s identification with and involvement in a particular organization), normative commitment (perceived obligation by employees to pursue a course of action), and goal clarity (clear and coherent understanding of organization’s goals) were the best predictors of employees’ intention to stay or leave.
Available literature demonstrates that both engagement and commitment are influenced by factors such as work environment, trust and integrity, leadership development, available communication channels, employee recognition, team and co-worker relationship, training and career development, compensation, organizational development and policies, internal communication, and workplace wellbeing (Pegg 2009; Tomlinson 2010; Ansari 2011; Choo, Mat, & Al Omari 2013; Anitha 2014), and are associated with a reduction in employee turnover and reinforcement of organizational stability (Doherty 2010; Paille, Fournier, & Lamontagne 2011), improvement in an organization’s competitive advantage over others as people cannot be duplicated or imitated by competitors (Choo et al 2013; Anitha 2014), and an increase in job satisfaction, organizational commitment, retention levels, and organizational citizenship behavior (Saks 2006; Ibrahim & Al-Falasi 2014). Other studies (e.g., Gaiduk, Gaiduk, & Fields 2009; Ansari 2011; Mahal 2012; Linz, Good, & Busch 2013) have found a critical link between employee engagement and commitment, which in turn influences an employee’s decision to stay or leave.
Drawing from the above exploration, it is evident that both employee engagement and commitment influence retention of key talent. Consequently, there is a need for organizations to place much focus on guaranteeing that procedures and strategies are put in place to enable employees to become directly involved in decision-making processes (Baird & Wang 2010), ensure employees become aware of their responsibilities in the achievement of the set business goals (Anitha 2014), facilitate an effective branding campaign to ensure they become employers of choice to attract and retain the best talent (Doherty 2010; Tomlinson 2010), and ensure that employees are being listened to, respected and valued to substantially reduce turnover intention (Tanova & Holtom 2008; Rowland 2011).
Turnover
Available scholarship demonstrates that people leave organizations due to a broad range of reasons, such as general shortage of experienced candidates and aggressive recruitment strategies by others in the highly competitive era (Mahal 2012), poor future job prospects, leaving abusive management, going back to school, following a relocating partner, and getting fired (Chapman 2009; Allen et al 2010), as well as job-related stress (job stress), lack of commitment in the organization, and job dissatisfaction (James & Mathew 2012). A stream of research demonstrates that such turnover can be minimized by factors such as pay satisfaction and promotion opportunities (Reiche 2009; Tymon, Stumpf, & Smith 2011), and employment of high-involvement human resource practices, such as internal-based promotion, effective employee orientation, performance-oriented promotions, employee participatory programs, cross-training or cross-utilization, and training focussed on future skill requirements (Luna-Arocas & Camps 2008; Chapman 2009; Moncarz, Zhao, & Kay 2009; Rahman & Nas 2013).
Allen et al (2010) discuss three different types of turnover: voluntary versus involuntary; dysfunctional versus functional; and avoidable versus unavoidable. These researchers acknowledge that:
- voluntary turnover is instigated by the employee, while involuntary turnover is instigated by the organization, often as a result of sub-optimal job performance or organizational restructuring,
- dysfunctional turnover is destructive to the organization as it entails the departure of high performers or of employees who have difficult-to-replace skill sets, while functional turnover, though disruptive, may not be destructive to the organization as it affects employees who are easy to replace, and may even be advantageous as it forces poor performers to depart the organization,
- avoidable turnover occurs for reasons that the organization may be able to influence, such as job satisfaction, poor supervision or higher pay elsewhere, while unavoidable turnover occurs for reasons that the organization may have little or no control over, such as health or dual-career issues.
Kim (2012, p. 258) cites other research studies to demonstrate that “voluntary turnover is a function of the level of human resource management practices, individual characteristics, unemployment, geographical region, organizational size, unionization, and occupational characteristics.” Following the above exploration, a number of turnover studies (e.g. Clarke & Herrmann 2007; De Vos, Dewettinck, & Buyens 2008; Dysvik & Kuvaas 2010; Ananthan & Sudheendra 2011) argue that retention management in both public and private sectors should typically focus on voluntary turnover, dysfunctional turnover, as well as avoidable turnover. Dysvik & Kuvaas (2010) study found that intrinsic motivation, talent management, and mastery-approach goals are strong predictors of turnover intention, while Berthelsen et al (2011) found that victims of bullying considered leaving their work more often than individuals who were not bullied. Lack of intrinsic motivation, ineffective talent management, and workplace bullying are predominant in public sector organizations (Najera 2008; Kim 2012; Rana, Goel, & Rastogi 2013), hence the need to consider them as potential predictors of turnover in government offices across the world. Other studies reveal that attitudes toward employee pay and benefits (Carraher 2011), managerial support (Tymon et al 2011), employee career development perceptions (Rahman & Nas 2013), organizational structure and practices (Reiche 2009), job embeddedness, compensation, and growth opportunities (Tanova & Holtom 2008; Bergiel et al 2009; Yang, Ma, & Hu 2011), as well as person-organization fit and job dissatisfaction (Wheeler et al 2007), are significant predictors of turnover and turnover intentions.
Challenges to Employee Retention
Some researchers assert that the lack of effective HR practices is to blame for the challenges facing public and private organizations in their attempt to retain their key staff. For example, Chew and Chan (2008) underscore the importance of effective HR practices in employee retention, arguing that ineffective HR practices are often associated with poor employee retention, high cost of recruitment and selection, productivity loss associated with the integration phase, likely loss of scarce business opportunities, costs related to training of new staff, poor customer relationship, as well as other hidden costs related to loss of productivity. In his study, Kim (2012) cites previous research studies to demonstrate that budgetary constraints, expanded services, constraints of civil service systems (e.g., a civil service system putting much focus on rules and regulations, control systems, political context, and limited independence and flexibility) and traditional public personnel management strategies have continued to serve as potential barriers in the creation and implementation of outcome-oriented HRM within the public sector.
A synthesis of employee retention literature demonstrates that some of the critical retention challenges faced by organizations today include: lack of skilled and professional employees; predicted labor shortage as a result of nearing retirement age of baby boomers; incapacity by organizations to shift from more general retention programs (e.g., employment ladders and seniority initiatives) to more targeted initiatives; shifting expectations of the new workforce; lack of stability in switching from one organization to another among Generation X and Generation Y; workforce diversity; as well as enhanced competition resulting from an expanding economy and globalization (Chhabra & Mishra 2008; Ananthan & Sudheendra 2011; Brock & Buckley 2013; Samson 2013).
Directions for Future Research
In spite of completing the review of extensive scholarly literature on the issue of employee retention in public and private sectors, there are still opportunities for further research in the field. A range of studies that address the issue of employee retention, job satisfaction, and commitment in the context of the impact of different HRM practices is available. These studies often discuss the best HRM practices that can be implemented in public and private sectors in order to affect employee retention. However, many studies discussed in the literature review are not directly related to analyzing the idea of the ‘win-win’ situation in the organization when the implementation of HRM practices guarantees the employees’ retention and the development of their commitment to the organization that affects the organization’s progress (Rehman 2012, p. 77). In this context, it is necessary to pay more attention to researching what ‘win-win’ returns can be received by both employees and leaders if effective HRM practices are implemented (Rehman 2012, p. 77). If the focus on decreased turnover, cost-efficiency, high productivity, and employee engagement are actively discussed in the literature, many other factors associated with employees’ intrinsic motivation should be discussed in more detail. Therefore, it is necessary to review researches that are based on employees’ self-reports in which individuals assess how different HRM practices can influence their job satisfaction, commitment, and intentions regarding staying in the company or leaving a job (Edgar & Geare 2005, p. 537). While paying more attention to exploring the employees’ perspective regarding the issue of retention, it is possible to find out more factors that can influence employees’ attitudes that are associated with such HRM practices as training, promotion, and performance management, but not covered in the discussed studies.
In addition, many researchers are inclined to focus on assessing HRM practices used to promote employee retention from both employee’s and managers’ perspectives. Still, the literature selected for the review does not allow comparing visions of managers and employees regarding the effectiveness of certain HRM practices, and it is necessary to explore more researches in order to identify any differences and gaps in managers and employees’ perceptions of the concept of employee retention and associated HRM practices that can be discussed as barriers to promoting job satisfaction and commitment in organizations (Edgar & Geare 2005, p. 538). From this point, the other direction for the research in the field is the focus on finding possible differences in managers’ and employees’ visions of the effectiveness of HRM practices that are noted by researchers in the scholarly literature. In spite of the fact that these issues are often mentioned in studies in those sections where the challenges in management are discussed, it is necessary to examine more sources that discuss how differences in assessment of HRM practices can influence the issue of employee retention (ALDamoe, Yazam & Bin Ahmid 2012, p. 77; Ansari 2011, p. 125). The determining directions for the future research allow focusing on the detailed examination of the topic in order to state how employee retention depends on the different managerial practices; how visions of managers and employees can be different; how employees can report their attitudes to proposed practices; what conclusions can be made by managers; and how the focus on the employees’ expectations can improve the outcomes associated with implementing certain HRM practices.
Conclusion
This review has critically explored and synthesized the available literature on employee retention and related concepts, with results demonstrating that retention is a well-documented topic in HRM though many of the findings in the literature appear fragmented across various thematic areas. Despite this setback, the findings of the review are important in assisting the researcher to evaluate how the HR policy introduced in Qatar has influenced the rate of employee migration from the public sector to the semi-private sector. Issues of turnover, employee engagement and commitment, retention management, and challenges to effective retention management, have been well illuminated in the current literature review, with the assumption that findings will assist the researcher in evaluating how Qatar’s HR policy has helped organizations in both public and semi-private sectors to deal with employees’ level of satisfaction, as well as addressing limitations of labor markets, implementation challenges, and the policy’s impact on employee retention.
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Appendix – A: Analysing Literature based on the used methodology and strategy
- Quantitative = 1,
- Qualitative= 2,
- Mixed Methods = 3,
- General/Literature Reviews=4