What HR managers do versus what employees value. Exploring both parties' views on retention management from a psychological contract perspective
| Published date | 26 December 2008 |
| Pages | 45-60 |
| DOI | https://doi.org/10.1108/00483480910920705 |
| Date | 26 December 2008 |
| Author | Ans De Vos,Annelies Meganck |
| Subject Matter | HR & organizational behaviour |
What HR managers do versus
what employees value
Exploring both parties’ views on retention
management from a psychological contract
perspective
Ans De Vos and Annelies Meganck
HRM Centre, Vlerick Leuven Gent Management School, Gent, Belgium
Abstract
Purpose – The purpose of this paper is to explore HR managers’ and employees’ views on the factors
affecting employee retention using the perspective of the psychological contract.
Design/methodology/approach – Two studies were conducted. First, a sample of HR managers
gave their view on the factors affecting employee retention and turnover and described their retention
practices. Second, a large sample of employees reported on the importance attached to five types of
employer inducements commonly regarded as retention factors, on their evaluation of these
inducements and on their loyalty. Regression analysis was used to examine the impact of the delivery
of employer inducements on retention.
Findings – The HR managers survey indicates that retention practices focus more on the factors
believed to cause employee turnover (career opportunities and financial rewards) than on those
believed to affect employee retention (social atmosphere, job content, work-life balance). The focus on
career opportunities is supported by the employee survey. The delivery of career opportunities had the
strongest impact on employee loyalty while the impact of the delivery of financial rewards was much
smaller.
Research limitations/implications – It is useful to distinguish between different content
dimensions of the psychological contract when studying its impact on employee outcomes. The
psychological contract provides a relevant framework for studying employee retention.
Practical implications – This paper offers HR professionals’ insights into the effectiveness of
retention practices.
Originality/value – The paper shows how the psychological contract can be applied in retention
management and examines impact of different content dimensions of the psychological contract on
employee outcomes.
Keywords Human resourcemanagement, Employee attitudes,Job satisfaction, Retention,
Psychologicalcontracts
Paper type Research paper
The employment relationship is undergoing fundamental changes that have
implications for the attraction, motivation and retention of talented employees
(Horwitz et al., 2003; Roehling et al., 2000; Turnley and Feldman, 2000). Growing
international competition, deregularization and globalization of markets require
organizations to become more flexible in order to increase their productivity. This has
reduced the job security of employees at all levels in the organization (King, 2000). At
the same time HR managers are pressed to attract and retain talented employees who
have competencies that are critical for organizational survival (Horwitz et al., 2003;
Mitchell et al., 2001; Roehling et al., 2000; Steel et al., 2002). Often, however, those
The current issue and full text archive of this journal is available at
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What HR
managers do
45
Received 1 March 2007
Revised May 2007
Accepted 11 November 2007
Personnel Review
Vol. 38 No. 1, 2009
pp. 45-60
qEmerald Group Publishing Limited
0048-3486
DOI 10.1108/00483480910920705
employees are difficult to retain because they attach more importance to marking out
their own career path than to organizational loyalty; a tendency which results in
increased rates of voluntary turnover (Cappelli, 2001).
Not surprisingly, then, retention management has become a popular concept within
the HRM literature. It refers to the portfolio of HR practices that organizations develop
to reduce voluntary turnover rates (e.g. Cappelli, 2001; Mitchell et al., 2001; Steel et al.,
2002). Another concept that has gained interest as a construct relevant for
understanding and managing contemporary employment relationships is the
psychological contract, which refers to employees’ subjective interpretations and
evaluations of their employment deal (Rousseau, 1996, 2001; Turnley and Feldman,
1998). Researchers in this field argue that for retention management to be effective, it is
not only important to create an optimal portfolio of HR practices, but also to manage
employees’ perceptions regarding what their organization has promised them in return
for their loyalty and commitment. So, while retention management addresses the type
of organizational inducements and HR strategies that are effective in reducing
voluntary employee turnover, the psychological contract focuses on employees’
subjective interpretations of those promised inducements and the relationship with
employee outcomes including intentions to stay.
This implies that retention practices might only be successful if they are consistent
with what employees’ value. Since the effectiveness of retention practices is likely to be
affected by employees’ subjective interpretations, bringing both themes together could
advance our understanding of the factors affecting employee retention. It is therefore
the central objective of this study to examine the extent to which the initiatives taken
by HR managers for enhancing employee retention are in line with what employees’
value in their employment deal and to explore their importance as drivers of employee
loyalty. This is done by conducting two consecutive studies – the first with a sample of
HR managers, and the second with a sample of employees. The results of both studies
will provide insight into the effectiveness of retention practices and will allow us to
formulate suggestions for implementing retention practices that are valued by
employees.
HR factors affecting employee retention
In view of the large costs associated with employee turnover HR managers need to
work out HR policies that enable them to retain their talented employees (Horwitz et al.,
2003; Steel et al., 2002). These policies are often bundled under the term “retention
management”. Retention management is defined as “the ability to hold onto those
employees you want to keep, for longer than your competitors” (Johnson, 2000). Over
the past decades numerous publications have addressed the issue of employee
retention. Academic research has proposed turnover models in which the key
mechanisms of the turnover process are defined, including affective factors, behavioral
intentions and job search mechanisms (Bluedorn, 1982; Steel, 2002). Other studies have
addressed the relationship between specific types of HR practices such as career
development or work-family initiatives and employee retention (e.g. Horwitz et al.,
2003; Hsu et al., 2003). In addition to this academic work, many practitioner-oriented
books outline strategies for effective employee retention. Widely discussed retention
factors include the provision of an attractive package of financial rewards and
employee benefits, job enrichment initiatives, career perspective, training and
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