Influence of employee satisfaction on employee turnover

Month: December 2014

Influence of employee satisfaction on employee turnover

It was assumed that the combination between dissatisfaction with the work (employee satisfaction) and available alternatives leads to leaving an organisation (Mobley, 1977). There are a number of issues that have not been sufficiently addressed until then. One important one is that most theories have not paid attention to interrelationships, social pressure and commitment.

In addition, mechanisms of motivations are not described while this is of great importance (Maertz & Griffeth, 2004). In this paper, therefore, the role of employee satisfaction at staff turnover discussed.

Shocks to complement employee satisfaction

Knowledge of these shocks can be used to address dysfunctional staff turnover and gain long-term competitive advantages in human and social capital.

The extent of employee satisfaction is a factor but insufficient and too limited for it to be the dominant cause for staff turnover (Holtom et al., 2005). The Hom-Griffeth model (Hom & Griffeth, 1991) was one of the first models to observe that there are 'shocks'. Shocks are based on the external environment that can eventually lead to staff turnover. The eventual exit from the organisation takes place based on employee initiative. Due to this human-based approach, the organisation and stakeholders are external players that can cause both positive and negative shocks in employees (Holtom et al., 2005). Within this theory by Hom and Griffeth (1991), a negative or positive experience takes centre stage. Knowledge of these shocks can be used to identify dysfunctional staff turnover and gain long-term competitive advantages in terms of human and social capital (Becker, Huselid, & Ulrich, 2001; Pfeffer, 1995).

Knowledge-intensive organisations that pay attention to this are able to create competitive advantages, according to Becker et al. (2001). This makes it important for knowledge-intensive organisations to create an understanding of both employee satisfaction as shocks experienced by employees. The following page explains the principle of shocks.

Shocks and employee satisfaction

The shocks are divided into four standard patterns. These patterns play out in 90 per cent of staff turnover play a role and can therefore be classified in this model (Holtom, et al., 2005).

Pattern 1

An employee leaves the organisation without considering his current connections to the organisation and alternative positions. The degree of employee satisfaction is not relevant within this movement. An example is that the employee's partner for an interesting job abroad has found (shock) and the employee wants to move with him. The question is therefore whether the organisation could influence this.

Pattern 2

Staff turnover within this group is caused by shock. The shock leads to the revaluation of social connections within the organisation. This is explained by the impairment of an employee's value image. The employee then leaves the organisation without an alternative position. An example is when an employee is barred from promotion after which, after consideration, the employee decides to leave the organisation. Importantly, employee satisfaction about the work for shock can be high and, as a result, this is not a representative picture.

Pattern 3

A shock within this pattern leads to image damage between the employee and the organisation. The employee compares his current position with alternative positions outside the organisation. This may include an offered position. Despite employee satisfaction about the work, the employee may choose to leave the organisation.

Pattern 4 a/b

Lower employee satisfaction about work is within this group the cause of voluntary staff turnover. The employee becomes aware of job dissatisfaction and decides to leave the organisation.

Pattern one is, within the study, the pattern that occurs relatively frequently and predictably.

Within pattern three, 91 per cent of employees leave the organisation unexpectedly Holtom et al. (2005). This pattern is particularly prevalent within similar knowledge-intensive organisations such as accountancy firms. Within the study, pattern one is the pattern that occurs relatively frequently and predictably.

Eight forces model

To supplement missing factors in the literature alongside these shocks, a framework was used by Maertz and Griffeth (2004) within which explanation is given of what forces lead to conservation or staff turnover. In the framework, there are eight applicable forces that influence whether or not an employee leaves:

(1) Affective forces: this involves emotional state within the organisation. Poor emotional state leads to outflow or loss of commitment.

(2) Calculated forces: this is a rational force where the employee thinks rationally about the chances of achieving his important values and goals. Here, a negative outcome leads to staff turnover.

(3) Contractual forces: these forces focus on the assumed obligations in relation to the psychological contract. This depends on the assumed norm of reciprocity.

(4) Behavioural forces: This involves the will to reduce psychological costs by investing in participation within the organisation. Higher costs motivate investing in participation and lower costs do not. Thus, with lower costs, the employee is more likely to leave the organisation.

(5) Alternative forces: this is the extent and strength of its own effectiveness regarding obtaining alternative positions outside the organisation. High efficiency and effectiveness lead to staff turnover.

(6) Normative forces: meeting shared expectations outside the organisation. Assuming there is motivation to meet these external expectations affects staff turnover.

(7) Moral forces: these forces are based on the link between behaviour and values regarding staff turnover. This ranges from 'changing jobs often is good' to 'being loyal to an organisation is a virtue'.

(8) Binding forces: motivation to stay or leave an organisation depends on connectedness with immediate colleagues and other groups within the organisation. Connectedness with colleagues and other groups runs parallel to connectedness with the organisation.

Low employee satisfaction involves work, according to Maertz and Griffeth (2005), need not directly lead to staff turnover. Emotions are not in employee satisfaction included but play an important role, according to Maertz and Griffieth (2005). The aforementioned factors provide indicators for this to staff turnover estimate. An employee compares and values all strengths between the current and alternative organisation. Alternative positions (5) is a crucial factor in the process of leaving a knowledge-intensive organisation. When an employee does not have a good alternative, the binding forces (8) weigh more heavily against leaving the organisation (Lee & Mitchell, 1994). When there is an alternative, the employee will handle the consideration more rationally.

Embedding in function

Apart from the idea of shocks and the force model mentioned above, it staff turnover according to Mitchell, Holtom, Lee and Erez (2001), influenced by the degree of job embeddedness. This includes (1) connections with other employees, teams and groups, (2) perceptions of suitability for job, organisation and environment and (3) what an employee would give up when leaving the organisation (Mitchell et al., 2001). In this study, it was shown that job embeddedness is an important mediating variable among factors that influence the employee's eventual leaving. The three dimensions; connections, suitability and sacrifice have both an organisational and communal component.

Psychological contract

According to Guest (1998), the state of a psychological contract determines whether an employee eventually leaves the organisation. According to Rousseau (1989), a psychological contract is an individual's belief regarding the terms and conditions of an exchange agreement between the employee and the organisation. Organisational culture, HR policies, experience, expectations and alternatives are underlying factors, according to this theory. These factors determine the level of employee satisfaction, commitment, sense of security, relationships, motivation, et cetera. Due to the number of factors involved in the psychological contract, it is impossible to make it measurable (Freese, Schalk & Croon, 2008). In addition to this theory by Guest (1998), according to Khilji and Wang's (2006) research employee satisfaction about HR policies plays an important role. According to Ongori (2007), the probability of voluntary employee turnover is significantly higher among organisations with low satisfaction with HR services than those with better rated HR policies. Among younger employees, this effect is stronger than among older employees. Ongori (2007) summarises this in his literature review as poor implementation of HR policies, recruitment policies, management and lack of motivation.

Conclusion

There are several insights that explain the decision-making process of a departing employee. In thinking of shocks, there are four patterns an employee may go through before leaving. One pattern has the variable employee satisfaction as the main cause for leaving an organisation. The remaining three patterns assume one or more shocks. These can be either positive or negative and are categorised into factors such as alternative job(s), predetermined outflow, etc. An important fact, in the case of a shock, is that the pattern the employee follows is determined by the external environment.

Besides shocks, there are also forces that play a role in an employee's exit process. These are a total of eight forces; (1) Affective forces, (2) calculated forces, (3) contractual forces, (4) behavioural forces, (5) alternative forces, (6) normative forces, (7) moral forces and (8) binding forces. These forces are constantly assessed and compared with other organisations. If the other organisation then offers the (5) alternative forces a better future, the (8) binding forces will eventually lose out to the alternative forces.

Mitchell et al (2001) argues that employee turnover is explained by the degree of embeddedness within the job. Variables that explain this theory are (1) attachment to environment, (2) perception of job suitability and (3) what is given up when the employee leaves the organisation. Besides embeddedness, Guest (1998) mentions the psychological contract as an all-embracing basis. Here, organisational culture, HR policies, experience, expectations and alternatives are central as causes. The last explanation for leaving the organisation is that of Khilji and Wang (2006). They showed in their study that employee satisfaction with HR policies largely predicts voluntary employee turnover within organisations. Among younger employees, this effect is stronger.

Knowledge-intensive organisations: What are they and what role does knowledge management play?

This article focuses on knowledge-intensive organisations. To create substantive consensus on knowledge-intensive organisations, a definition of the associated terms was first formulated. According to Sun (2010), an organisation can be defined as a movement that creates and maintains a social entity to achieve a certain goal. It is a structured, coordinated and purposeful social entity created and maintained by people.

Daft (2008) describes that these social entities are consciously designed as structured and coordinated systems connected to the external environment.

Introduction

This article is based on the thesis Unwanted voluntary staff turnover within knowledge-intensive organisations. This article answers the first sub-question of this thesis.

According to Tsoukas and Vladimirou (2001), knowledge is the individual capacity to make distinctions within work based on theory or context. Within organisations, this individual knowledge can be divided into tacit (intangible) and explicit (tangible) knowledge. Tacit knowledge refers to intangible knowledge, often held by individuals, while tangible knowledge, known as explicit knowledge, is mainly based on documented-and therefore easily transferable-knowledge (Choo & Bontis, 2002). As formulated in the problem statement, knowledge-intensive organisations are resource-based such that knowledge is a key resource.

Besides knowledge, employees contain skills and abilities that, together with knowledge, are categorised under human resources. These resources, including knowledge, are important for competitive advantage (Wright et al., 1994). Resource-based knowledge is therefore necessary to resell services or products of organisations (Sarvay, 1999).

Knowledge for competitive advantage

As shown, within knowledge-intensive organisations, human resources are the most important strategic asset and knowledge is an important part of such an organisation's business model (Choo & Bontis, 2002). This makes knowledge the most important part of the key resources of knowledge-intensive organisations. Priem and Butler (2001) call these key resources a prerequisite for competitive advantage within such organisations. Preservation of knowledge-based resources is therefore important to maintain competitive advantage.

Such organisations can respond to this through 'resource-based strategies' that focus on both retention and expansion of knowledge (Chaharbaghi & Lynch, 1999). According to Chaharbaghi and Lynch (1999), constant competitive advantage is based on both resource advantage and strategy advantage. This constant competitive advantage is known as sustainable competitive advantage.

The height of barriers determines how sustainable a competitive advantage is.

Sustainable competitive advantage, according to Oliver (1997), can be defined as the implementation of a value-creating strategy that is not susceptible to imitation and has not yet been applied by competitors. Porter (1985) states that sustainable competitive advantage depends on the height of barriers against imitation of key resources. The height of barriers determines how sustainable a competitive advantage is. An organisation with competitive knowledge advantage is able to extend competitive advantage (Oliver, 1997). This makes it important for knowledge-intensive organisations to maintain this knowledge advantage so that the competitive edge can be maintained and expanded.

Disadvantages of knowledge management

Many knowledge-intensive organisations, in order to maintain sustainable competitive advantage, use knowledge management at a strategic level. If it is assumed that knowledge contains data and information, knowledge management can be defined as management aimed at individuals to retrieve potentially useful information (Alavi & Leidner, 2001). According to Choo and Bontis (2002), the main context in which knowledge management finds itself is an organisation's strategy. When knowledge management involves knowledge that is so deeply rooted in routines and experience, it is likely to be unique and difficult to reproduce (Choo & Bontis, 2002).

Coding knowledge within these systems makes it less easy for competitors to imitate knowledge.

Within organisations such as McKinsey, IBM or HP, knowledge management, within the culture of the respective organisation, has developed organically (Sarvay, 2002). Coding knowledge within these systems makes it less easy for competitors to imitate knowledge. In contrast, this leads to poorer performance within the organisation. Performance is suppressed by procedures and systems and the amount of extra information that is not relevant to the work will further increase. Only when knowledge offers such an advantage that it cancels out costs due to coding does it make sense to apply knowledge coding (Schulz & Jobe, 2001).

Power shift to employees

Shifting from lifetime employment to lifetime employability, through social acceptance, bonding is a less certain factor (Forrier & Sels, 2003). They argue that lifetime employment is the ability by which an individual is able to perform various functions within the current labour market. The power in the labour market, due to unique skills, abilities and knowledge available to employees, shifts more strongly to the employee (Dibble, 1999). Employees within knowledge-intensive organisation are more likely to voluntarily leave (Forrier & Sels, 2003). This makes it important for organisations to avoid such impact as much as possible. To gain insight into motivations of these employees, the motivations of these employees were explained within sub-question two.

Conclusion

In conclusion, knowledge-intensive organisations rely on tacit knowledge held by highly skilled individuals. Coding this knowledge, and managing it through strategic knowledge management, are intensive and costly investments that do not necessarily offer positive results. Undesirable staff turnover with resource-based knowledge directly causes a worse competitive position in knowledge-intensive organisations.