The Influence of Human Resource Management Practices on the Retention of Core Employees of

Australian Organisations: An Empirical Study

Janet Cheng Lian Chew B.Com. (Hons) (Murdoch University)

Submitted for the degree of Doctor of Philosophy, Murdoch University

July, 2004

I declare that this thesis is my own account of my research and contains, as its main content work which has not previously been submitted for a degree at any tertiary education institution.

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Janet Cheng Lian Chew July 2004 © Copyright All rights reserved

ABSTRACT Employee retention is one of the challenges facing many business

organisations today. For many organisations, strategic staffing has

become a concern because the ability to hold on to highly talented

core employees can be crucial to future survival. This empirical study

examined the current human resource management (HRM) practices

of Australian organisations in the retention of their core employees.

In particular, the research identified the core elements of HRM

practices, which strongly influence the decision for core employees to

stay.

The study comprise three phases: (1) a preliminary

investigation, utilising the Delphi Technique to obtain the opinions of

an expert panel of thirteen, (2) in-depth interviews, involving twelve

human resource managers of Australian organisations and (3) a

quantitative survey of 800 employees from nine Australian

organisations.

The findings revealed greater insights into the HRM-retention

relationship and provided empirical validation of the relationship.

More specifically, the research identified eight retention factors that

influence the decision of core employees to stay. These specific

factors consisted of two bundles of practices: HR factors (e.g., person

organisational fit, remuneration, reward and recognition, training and

career development, challenging job opportunities) and

Organisational factors (e.g., leadership behaviour, company culture

and policies, teamwork relationship and satisfactory work

environment). The outcome of the HRM-retention relationship was

examined through organisational commitment and turnover intention

using multiple regression analysis.

The findings of this study revealed positive significant co-

relationships between the eight factors and organisational

commitment. Moreover, it was highlighted that commitment acted as

a partial mediator of remuneration, recognition and reward, training

and career development and work environment on intent to stay.

Commitment fully mediated the relationship person organisational fit,

teamwork relationship, culture and policies and intention to stay.

The study produced a model suitable for use by human

resource practitioners as a guide in determining what initiatives an

organisation should adopt to retain their critical employees.

This research has also made a contribution by illuminating the

current employment relationships in Australian organisations and

providing relevant empirical evidence to support the theoretical model

of Human Resource Architecture, developed by Lepak and Snell

(1999) and, as a result, creating a configuration for an Australian

Human Resource Architecture model.

CONTENTS

List of Figures vi List of Tables vii List of Appendices vii Acknowledgements viii

CHAPTER ONE: INTRODUCTION

The Influence of Human Resource Practices on the Retention of Core Employees

Introduction 1 Changes in the workforce 3 The influence of HRM on retention 6 Retention management – a strategic tool 10 Purpose of the study 16 Significance of the study 17 Research focus 19 Conclusion 20 Thesis overview 20

CHAPTER TWO: LITERATURE REVIEW

To examine the relationship between Human Resource Management and Retention

Introduction 23 The Human Resource architecture models 24 Applying Holistic or Differential HR Practices? 30 Needs of core employees 35 Human Resource management practices 37 Human resource management factors 43 Human Resource Factors influencing retention 45 Organisational commitment 65 Turnover intention 73 Turnover predictors 76 Conceptual schema 79 Conclusion 80

CHAPTER THREE: RESEARCH METHODOLOGY

A Three-Phased Study: The Delphi method, In-depth Interview and Quantitative survey

Justification of three-phased approach 82 Sample population (Phase 1 Delphi Study) 84 Methodology (Phase 1) 87 Application of the Delphi Technique 89 Instrument (Delphi) 90 Delphi data collection and analysis 92 Sample population (Phase 2 and Phase 3) 95 Methodology (Phase 2) 96 Interview format 97 Interview data collection and analysis 98 Phase 3 Employee survey 99 Phase 3 Data collection and analysis 100 Conclusion 101

CHAPTER FOUR: THE DELPHI STUDY

Identifying the Human Resource Management Factors that influence the Retention of Core Employees

Demographics of panel members 105 What is a core employee? 106 Do core employees have different needs to other non core employees? 107 What are the factors affecting an Australian Human Resource architecture

model 109 Which HR factors most influence the decision of employees to stay? 112 Human Resource factors 114 Organisational factors 115 Discussion and implications 117

CHAPTER FIVE: INTERVIEW RESULTS

The Retention Management Practices of Australian Organisations

Introduction 124 Respondents’ profile 126 Interview outcome 127 Descriptions of core employees 127 HRM factors influencing retention 130 Interviewees’ comments on HR Practices 133 Is the importance placed on HRM factors linked to retention? 134 How are these influential HR factors managed in organisations? 139 How do these differ from non-core employees? 142 Discussion and Implications 143

CHAPTER SIX: QUANTITATIVE SURVEY (Phase 3)

Investigating the relationship between HRM factors, organisational commitment and intention to stay

Introduction 149 Theoretical background and hypotheses 150 Instrument

Research Questions 151 Hypotheses 151

Sample population 156 Data collection process 156

Measurement of construct: independent variables 158 Independent Variables

Person organisation fit 158 Remuneration, reward and recognition 159 Training and career development 160 Challenging job opportunities 160

Organisational factors Leadership behaviour 160 Teamwork relationship 161 Organisational culture and policies 161 Communication and consultation 162 Satisfactory work environment 162

Dependent variables Organisational commitment 163 Intent to stay (turnover intention) 165

Data analysis 165 Missing data 166 Exploratory factor analysis 166 Means, and standard deviations and correlations 166

Multiple regression analysis 167 Results 168

Demographic profile 168 Construct validity of all variables used in the study

Exploratory factor analysis 170 Measures of reliability 173 Means, standard deviations and correlations 173 Multiple regressions 176 Discussion: Findings of the study 183

Conclusion 189

CHAPTER SEVEN: DISCUSSION AND IMPLICATIONS

Validating the HRM Retention Mode

Introduction 190 Review of Findings

Phase One Study 190 Phase Two Study 193 Phase Three Study 194

Contributions 198 What’s New? 199 So What? 201 Why So? 202

Well Done? 204 Done Well? 205 Why Now? 206 Who Cares? 207

Limitations 208 Future Research 211 Conclusion 213 Appendix 1 214

Appendix 2 215

Appendix 3 216

Appendix 4 222

Appendix 5 229

Appendix 6 231

Appendix 7 232

Appendix 8 239

Appendix 9 248

List of References 251

LIST OF FIGURES

Figure 1.1: A three-phased study to determine key HR factors that

influence retention of core employees 21

Figure 2.1: Human resource management factors that influence retention of core employees 81

Figure 3.1: The Delphi Procedure 91

Figure 6.1: Conceptual Schema: Human Resource Management Factors that Affect Retention of Core Employees of Australian Organisations 153

Figure 7.1: Final Model: Human Resource Management Factors that Affect Retention of Core Employees of Australian Organisations 213

LIST OF TABLES

Table 2.1 Employment modes of Human Resource Architecture 27

Table 3.1 Summary of the Delphi Process 94

Table 3.2 Phase measurement scales 102

Table 4.1: Demographic characteristics of the Delphi Panel members 106

Table 4.2: Top five descriptions of a core employee 107

Table 4.3: Needs of core employees 108

Table 4.4: Factors affecting the Australian Human Resource architecture model 110

Table 4.5: Top five human resource factors influencing retention 113

Table 4.6: Top five organisational factors influencing retention 116

Table 5.1: Demographic characteristics of participating organisations 127

Table 5.2: Interviewees selection of top five HR factors influencing retention 130

Table 5.3: Phase 2 Interviewees selection of top five organisational factors influencing retention 132

Table 5.4: Level of importance of Identified Human Resource and organisational factors in relation to voluntary turnover rate 135

Table 6.1: Demographic data of respondents (Age, Gender, Industry and Occupation) 169

Table 6.2: Factor analysis of HRM factors. 171

Table 6.3: Means, Standard Deviations and Correlations for all Variables 174

Table 6.4: Regression Results (Un-standardised Coefficients) for Organisational Commitment as Dependent Variable 178

Table 6.5: Regression Results (Un-standardised Coefficients) for Organisational Commitment as Dependent Variable 179

Table 6.6: Regression Results (Un-standardised Coefficients) for Turnover Intention as Dependent Variable 181

Table 6.7: Regression Results (Un-standardised Coefficients) for Turnover Intention as Dependent Variable 182

ACKNOWLEDGEMENTS

The process I have taken to create and complete this thesis has

provided me with a platform to better understand my capabilities and

skills both personally and academically. This journey of self

actualisation would not have been fulfilled without the guidance and

support of several individuals.

I would like to take this opportunity to thank several people

who have assisted me directly or indirectly in successfully completing

this momentous task.

To my two greatest achievements, my lovely daughters, Sofia

and Anjuli, I am fortunate to have had your love and emotional

support throughout the whole process.

My deep appreciation is extended to my supervisor Lanny

Entrekin for his wisdom and guidance.

To my friend and statistical supervisor, Tonia Girardi, my

sincere thanks for her encouragement and guidance.

I am grateful to Shelda Debowski, for her guidance and

encouragement during the initial process.

To my good friend, Eve, I am deeply thankful for her constant

TLC in times of stress.

Finally, to my Mum, thank you for your love and devotion.

CHAPTER ONE

INTRODUCTION

The Influence of Human Resource Practices on the Retention of Core

Employees

Introduction Organisations today constantly wrestle with revolutionary trends:

accelerating product and technological changes, global competition,

deregulation, demographic changes, and at the same time, they must

strive to implement trends towards a service and information age

society (Kane 2000). Due to this tumultuous business environment,

one of the challenges facing many business organisations is the

retention of critical (core) employees. Society has now become

knowledge-based where clearly human capital is considered a key

resource and indispensable to the survival of businesses.

Increasingly, organisations are competing for the best talent

employees (Porter 2001). New paradigm companies recognise that an

important element in business management practices is the need to

successfully motivate and retain high talent employees who survive

organisational restructuring, downsizing, consolidation, reorganising

or re-engineering initiatives (Clark 2001).

Janet Chew

2

For many organisations, strategic staffing has become an

important issue because the ability to hold on to highly talented core

employees can be crucial to future survival (Ettorre 1997; Whitner

2001). The loss of needed talent is costly because of the resultant

bidding up of market salaries for experienced hires to replace them;

the costs of recruiting and assimilating new talent; the lost

investment in talent development; and the hidden costs of lost

productivity; lost sales opportunities; and strained customer

relationships (Eskildsen and Nussler 2000). Statistics show that

while the annual turnover rate at established organisations is only 6

percent, the cost of replacing an employee usually amounts to a

quarter of an individual's annual salary. A company with 50,000

employees incurs replacement costs approaching $18 million a year

(Davies 2001; Ettorre 1997).

According to a study released by Accenture (2001), 80 percent

of global business leaders believe that ‘people issues’ are more

important today than they were three years ago, and 68 percent

believe that retaining talent is more important than acquiring ‘new

blood’. That recognition and the extraordinary efforts some

companies are making to attract and retain top talent represent

fundamental shifts in employer-employee relationships. Essentially

more organisations are now realising that retention is a strategic

issue and represents a competitive advantage (Walker 2001).

As the retention of talent with critical skill sets is acknowledged

by organisations as vital for the achievement of business growth and

Introduction

3

the building of organisational competencies, some organisations

strive to be the ‘employer of choice’ by creating a positive environment

and offering challenging assignments that foster continued personal

growth. An ‘employer of choice’ (EOC) is an organisation that

outperforms its competition in the attraction, development and

retention of people with business-required aptitude, often through

innovative and compelling human resource programs (Clarke 2001;

Dessler 1999).

By adopting an effective total retention strategy with the

support of relevant HR programs, businesses may successfully keep

critical employees. This research examines the current human

resource practices on the retention of core employees in twelve

Australian organisations. It explores the relationship between human

resource (HR) practices and retention and further identifies the

elements of HR practices which strongly influence the decision for

core employees to stay. This is a three phase study and the results

from this study may assist in the development of an effective HRM

retention program for organisations.

Changes in the workforce Over the last fifteen years, the workforce has changed dramatically in

terms of age, gender, ethnic and racial composition, family structure,

and job expectations. Consequently, such social developments have

had significant impacts on the nature and operations of organisations

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(Ferris Hochwater, Buckley, Harrell-Cook and Frink 1999; Kemske

1998) especially in the management of human resources (e.g.

recruitment and selection, training and development and

performance management programs). According to the Australian

Bureau of Statistics Report (2001), future work trends indicate

reductions in the growth of the Australian permanent workforce, a

continued aging population, a significant decline in the numbers of

trades-persons and related workers, and an increase in associate

professionals and professionals. These trends also predict shorter

term careers, as professionals have the capacity to move between jobs

to optimise their salary packages and to seek more challenging work

tasks and the imperative for continual change in particular jobs,

organisational directions or work structures (Beck 2001; Kitay and

Lansbury 1997). The whole structure of employment has changed

from mainly full time permanent employees to organisations with

small stable cores of permanent employees, supplemented as desired

with contractors, either semi or highly skilled (Hamel and Prahalad

1990; Lepak and Snell 1999).

A number of researchers have assessed the many changes to

organisations both in terms of organisation structure and employer

and employee relationships (Allan and Sienko 1997; Fierman 1994;

Kitay and Lansbury 1997; Kraut and Korman 1999). During this

period, changes in the economic environment have impacted on both

the formal and informal contracts of employment. This, in turn, has

affected employee motivation and organisational commitment.

Introduction

5

Adjusting successfully to this relationship change, “have enormous

implications in terms of sustained competitive advantage based on

the ability to access and retain a committed skilled workforce”

(Kissler 1994, p. 335).

In today’s business environment employees appear to be less

committed to their respective organisations. An employer cannot

guarantee the stability and longevity of corporate career paths or the

security of employees' jobs. The old contract of employee loyalty in

exchange for job security and fair work has broken down (Overman

1998). The trend, these days, seems to be geared towards having a

‘career portfolio’ (Handy 1995). It is important to note that employees

today realise that they have to take the initiative in job resiliency,

developing the skills and flexibility needed to quickly respond to

shifting employer requirements (Beck 2001). Loyalty to one’s

professional growth has replaced organisation loyalty (Levin 1995).

Employees recognise that the traditional psychological contract that

existed between employer and employee is now dissolved (Hays and

Kearney 2001).

Overall, powerful and unstable market forces have

overwhelmed non-market institutional structures, resulting in

decreased employee commitment and increased flexibility of

employment. However, this increased flexibility for employers

coincides with decreasing tenure and job instability for workers. The

use of these non-standard employment arrangements may have long-

term consequences. Flexibility may be good business for the

Janet Chew

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employer, but in many cases it may be devastating for the worker.

Employment instability is contributing to the growing inequality in

income, status, and economic security in Australia.

As workers face a pace of change unprecedented in history, and

as “empowerment” and the need for risk taking, coupled with longer

hours and less leisure time, have increased their risk of ‘burnout’

tenfold, employees’ values have shifted discernibly (Withers 2001).

High talent personnel see the greatest opportunities by moving from

one company to another. Increasingly, organisations will have to

compete for the best talent (Porter 2001). Consequently, this will have

a significant impact on the nature of recruitment and selection,

training and development, performance management and

retrenchment programs.

The Influence of Human Resource Management on Retention

Organisations develop human resource policies that genuinely reflect

their beliefs and principles and the relationship between management

and employees, or they may merely devise policies that deal with

current problems or requirements. These practices include

recruitment and selection, training and development, performance

management, remuneration systems, occupational health and safety,

industrial relations, Human Resource Information System, impact of

recent legislation (EEO/AA/OHS/FOI etc., Delery and Doty 1996;

Jackson and Schuler 1995; Oakland and Oakland 2001).

Introduction

7

Several theoreticians have argued that the human resources of

the company are potentially the only source of sustainable

competitive edge for organisations (Becker and Gerhart 1996; Ferris,

Hochwarter, Buckley, Harrell-Cook and Fink 1999; Pfeffer 1994;

Wright and McMahan 1992). Pfeffer (1998) advocates that a human

resource system helps create a workforce whose contributions are

valuable, unique, and difficult for competitors to imitate. A plethora

of academic research conducted at the organisational level also

suggests that human resource practices affect organisational

outcomes by shaping employee behaviours and attitudes (Arthur

1994; Huselid 1995; Tsui, Pearce, Porter and Tripoli 1997).

Whitener (2001) indicates that employees interpret

organisational actions such as human resource practices (Delery

1998; Settoon, Bennett and Linden 1996; Ostroff and Bowen 2000;

Wayne, Shaw and Linden 1997), and the trustworthiness of

management (Eisenberger, Huntington, Hutchison and Sowa 1986;

Settoon et al. 1996) as indicative of the personified organisation's

commitment to them. They reciprocate their perceptions accordingly

in their own commitment to the organisation. A well-established

stream of research rooted in social exchange theory has revealed that

employees' commitment to the organisation derives from their

perceptions of the employers' commitment to and support of them

(Eisenberger et al. 1986; Hutchison and Garstka, 1996; Settoon et al.

1996, Shore and Tetrick 1994; Shore and Wayne 1993; Wayne et al.

1997). In this regard, a useful framework in which to visualise

Janet Chew

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commitment behaviour is to view them as components of fair

exchange between a company and its employees. This approach to

motivation postulates that employees and the organisations are

involved in an exchange relationship (Pinder 1984).

Employee attitudes and behaviours (including performance)

reflect their perceptions and expectations, reciprocating the treatment

that they receive from the organisation. In their multilevel model

linking human resource practices and employee reactions, Ostroff

and Bowen (2000) depicted relationships suggesting that human

resource practices are significantly associated with employee

perceptions and employee attitudes. Studies by Tsui, Pearce, Porter

and Tripoli (1997), found that employee attitudes (specifically

employee commitment) were associated with the interaction of

human resource practices and perceptions.

Numerous studies suggest that high-involvement work

practices will enhance employee retention (Arthur 1994; Huselid

1995; Koch and McGrath 1996). Most efforts on retention and

commitment are considered from the employer's point of view. As a

result, new and refined programs are continuously introduced which

are expected to have a positive impact. Too often, these initiatives are

blanket programs offered as a ‘cafeteria’ of options to all employees.

Flexible work schedules and childcare assistance was offered, but

only a small share of the workforce takes advantage of them (Perry-

Smith and Blum 2000). However, if the value proposition is viewed

from the individual's perspective, different factors assume different

Introduction

9

weights. Baby boomers are more interested in job security and

benefits; young employees are more interested in pay, advancement

opportunities and time off. Such differences may reflect stages in the

career cycle or deeper generation differences. Additionally, there are

often gender differences within demographic groups; e.g., young

women may want different things from what young men want (Beck

2001).

Over recent years, there has been a widespread assertion that

HRM has become more strategic in its focus and operation (Beer

1997; Hays and Kearney 2001). HRM is purportedly being viewed as

a strategic staff enterprise aligned with organisational values, mission

and vision. As a consequence, there is now much greater attention to

measuring and enhancing employee and organisational performance;

equal employment opportunity and affirmative action policies

designed and implemented by personnel offices have contributed

greatly to the diversity of the workforce; staffing techniques have

become much more sophisticated; employee benefit systems have

expanded; and job designs and processes have become more creative

(Hays and Kearney 2001;Oakland and Oakland 2001).

Although most current organisations opt for policy formulation

strategies that reflect their own cultures and priorities, the crucial

issue is whether the employees have been consulted, and whether the

resultant policy reflects a compromise between management and

employee interests, acceptable to both, or is it simply a management

or HR directive?

Janet Chew

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As change has remained a constant in the practice of HRM,

many of the assumptions on which HRM operates have been severely

challenged in the last two decades due to a series of inexorable

reforms (Lesperance 2001). In contemplating the future prospects of

HRM, it is worthwhile to examine the developments and directions of

HR policies in terms of their relevance to the contemporary workforce

especially in the area of attraction and retention of employees.

Retention Management – A Strategic Tool Researchers on retention have defined retention management as a

strategic, coherent process that starts with an examination of the

reasons that employees join an organisation (Davies 2001; Fitz-enz

1990; Solomon 1999). Studies have indicated that it is driven by

several key factors, which should be managed congruently:

organisational culture and structure, recruitment strategy, pay and

benefits philosophy, employee support programs, and career

development systems (Fitz-enz 1990). Careful career development and

planning, as well as the more typical rewards and incentives, can be

powerful retention tools. These should be effectively addressed as a

corporate-wide initiative. Studies of progressive HRM practices in

training, compensation and reward sharing have revealed that these

can lead to reduced turnover and absenteeism, better quality work,

and better financial performance (Arthur 1994; Delaney and Huselid

1996; Huselid 1995; Ichniowski, Shaw and Prennushi 1997; Snell

Introduction

11

and Youndt 1995; MacDuffie 1995; Meyer and Allan 1991; Solomon

1992; Snell and Dean 1992).

An employee's decision to resign from a company is rarely due

to a single event, such as being passed over for a promotion, a plum

assignment or for monetary reasons. One such event may however

serve as a catalyst, but most employees leave because of multiple

factors - the turnover drivers such as diminished job satisfaction, a

tense work environment and better advancement opportunities

elsewhere (Davies 2001; Oh 1996; Walker 2001). Isolating these

factors requires a disciplined research effort.

A 1999 Gallup Poll cited the lack of opportunities to learn and

grow as a top reason for employee dissatisfaction. Kimko

Incorporated, took this information to heart and implemented a

training program that gave employees a training path and career

direction. Turnover tumbled from 75 percent to 50 percent (Withers

2001).

As turnover is a symptom of a larger systemic problem such as

ineffective retention management, companies’ ought to understand

what causes people to commit themselves to being productive and

loyal. Then they must design jobs, systems and organisations that

support rather than inhibit it. Fostering commitment means an

understanding that people need to have a stake in their work, and

that employees respond when employers pay attention to their needs

and involve them (Benkhoff 1997; Dobbs 2001). Such were the

findings of the Hawthorne experiments, which were conducted at

Janet Chew

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Western Electric sixty years ago (Parson 1992). The results of these

tests were responsible, in part, for the movement toward participative

management in the late 1970s. The principles of employee

participation are currently reflected in many current productivity and

quality programs (Fitz-enz 1990).

Therefore, to achieve quality retention programs, organisations

ought to determine the retention factors relevant to each of their

employee groups and then focus strategies on these factors. For each

employee group, information can be gathered from current and

former employees on their perceptions of why people stay or leave.

The more focused the analysis, the more focused the prescriptive

actions may be (Cavouras 2000). Employee surveys are designed to

focus on commitment and retention factors. Exit interviews and

follow-up surveys with former employees are being adapted to yield

more accurate, useful information. Interviews, focus groups, and

surveys among current employees provide perceptions of the relevant

factors and their importance. Finally, it is advocated that there may

be a distinctive edge in simply doing all of the key things well. By

providing a reasonably high level of attention to the factors important

to employees, a strong organisational culture is built and maintained.

Universum, a Stockholm, Sweden-based competence relations

firm, surveyed 1,945 first and second-year MBA students in twenty-

three U.S. business schools and 5,105 business, engineering and

science students in sixty-five European universities and technology

schools separately. The study found that students were positioning

Introduction

13

themselves as picky buyers in today's tight labour market,

demanding everything from a challenging and lucrative career to a

balanced lifestyle. There are however some differences in what

American students and their European counterparts expect from a

first employer. U.S. respondents cited competitive compensation,

inspiring colleagues and a variety of assignments as the top

characteristics of their employer of choice. For the European

students, the most attractive characteristics are international career

opportunities and inspiring colleagues (Universum 1999).

Several studies also suggest that high-involvement work

practices will enhance employee retention (Arthur 1994; Huselid

1995; Koch and McGrath 1996). Various frameworks or models are

used by organisations to address retention and commitment and

some of the key factors are increasingly adopted and they include the

following (Beck 2001; Clarke 2001; Parker and Wright 2001; Stein

2000):

Compensation: Companies often provide pay packages superior to the

market for critical talent. These include special pay premiums, stock

options or bonuses. Base pay reflects fair pay; supplemental

programs reflect individual, team or organisational performance and

success (Parker and Wright 2001; Stein 2000; Williams 1999).

Challenging work: High talent individuals want work that is

interesting, challenging and that has an impact. They also expect

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work to be appropriately designed, with adequate resources available

and with effective management. Increasingly, companies are

redesigning work, relationships, workflows, and teams to create more

exciting and challenging work (Beck 2001; Clarke 2001; Guest 1999;

Messmer 2000; Stein 2000).

Work relationships: Employees stay when they have strong

relationships with others with whom they work (Clarke 2001).

Companies encourage team building, project assignments involving

work with peers and opportunities for social interaction both on and

off the job (Johns,Sanchez,Parmeswaran,Phelps, Shoptaugh &

Willaims 2001). One value of team-based organisations is the bond

that they establish among members. Effective relationships with

immediate managers are also important. Companies are also using

survey measures and management feedback to identify ways to

improve relationships and the context of work.

Recognition: Employees tend to stay when they feel that their

capabilities, efforts, and performance contributions are recognised

and appreciated by others. They want a sense of accomplishment.

Compensation provides recognition, but other forms of non-monetary

recognition are also important, for example from managers, team

members and peers, customers, and others. Particularly important

are opportunities to participate and to influence actions and

decisions (Boyd and Salamin 2001; Davies 2001).

Introduction

15

Work/life balance: For some employees, personal priorities or

circumstances make the difference between leaving and staying.

Individuals will stay with a company that clearly considers and cares

for their career priorities (life stage needs), health, location, family,

dual-career and other personal needs (Gonyea and Googins 1992;

Kamerman and Kahn 1987). For example, many companies are

providing flexible schedules and work arrangements and are

experimenting with other ways to help individuals manage their work

and personal life issues (Perry-Smith and Blum 2000; Solomon

1999).

Communication: Effective communications strengthen employee

identification with the company and build trust. Increasingly,

companies provide information on values, mission, strategies,

competitive performance, and changes that may affect employees

(Gopinath and Becker 2000; Levine 1995). Many companies are

working to provide information that employees want and need,

through the most credible sources (e.g., CEO for strategies, first-line

managers for work issues) on a timely and consistent basis.

Through such practices, companies are striving to improve

employee retention. Why then, do employees continue to leave? What

is missing from today's retention strategies?

Janet Chew

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Despite the substantial literature on HRM “best practices and

high performance practices,” there is however, little consensus among

researchers with regard to precisely which HRM practices should be

included as the "ideal type" of HRM system that is universally

effective to combat attrition. Given these different approaches to

HRM, it is evident that a more consolidated field of investigation

would be beneficial to the development of knowledge in this area.

Essentially, it is the need to address this situation that has led to the

purpose of this study.

Purpose of the Study The aim of this study is to investigate and determine the current

human resource practices on the retention of core employees in

Australian organisations. It will examine the relationship between HR

practices and retention and further identify the elements of HR

practices, which strongly influence the decision for core employees to

stay. Results from this study will assist in the development of an

effective HRM retention program for organisations. Employee

retention is a highly important strategic tool for corporations. It may

improve employers’ chances of selecting employees who will become

committed to their organisation and also improve their ability to

retain highly skilled and motivated employees.

Introduction

17

Significance of the Study With the attention paid to downsizing in recent years, few companies

have invested time and money in retaining employees. The focus has

been on separating employees from the company, not reinforcing the

bonds. The high attrition rate of core employees is costly to

corporations. Loss of key talent results in the stripping of valuable

human capital, critical skills and institutional memory (Entrekin

2001). Organisations not only suffer from lost productivity but also

lose the knowledge that these critical employees possess that can be

beneficial to the company. High-performing employees know the

industry, competitive strengths and weaknesses, products, customers

and processes. The information in their heads is a significant part of

corporate equity (Gutherie 2001; Hom and Griffeth 1995; Huselid

1995; Oh 1997). There has also been considerable interest in the

management literature concerning the development of core

competences in order to enhance corporate competitiveness and

performance (Prahalad and Hamel 1990). Retaining these valued core

employees is therefore a strategic issue and a competitive business

advantage.

Management scholars argue that how employees are managed

is becoming a more important source of competitive advantage

because traditional sources (product and process technology,

protected or regulated markets, access to financial resources and

Janet Chew

18

economies of scale) are less powerful than they once were (Lawler

1996; Pfeffer 1994).

Reviewing the current HRM literature, there is to date no

empirical study of large Australian organisations with regard to their

HR practices on retention. This raises unexplored issues such as: are

these organisational HRM systems “best practices fit all” or

“differential HR practices for different types of employees” (core,

contractors, alliance, and acquisitions)? How do these practitioners

perceive their effectiveness? These questions call for theory

refinement and the development of a more comprehensive theoretical

model of the HRM-retention relationship especially in the Australian

business environment. These unexplored issues will be the focus of

this study. Moreover, this research will advance the HRM literature

on the emerging trends of the twenty-first century. Essentially, this

study will seek to illuminate the current employment relationships in

Australian organisations and to provide relevant empirical evidence to

support the theoretical model of HR Architecture, developed by

American researchers, Lepak and Snell (1999), or pioneer an

Australian HR architecture model.

In order to gain better insights into the process and practices

that companies utilise to retain their employees, key research

questions were formulated to guide this research.

Introduction

19

Research Focus What are the most influential HRM factors in encouraging core

employees to remain with their organisation?

Research Questions Phase 1:Delphi Study

1. Is there a relationship between retention and HR practices?

2. Which HR factors most influence the decision of employees to

stay?

3. What is a core employee?

4. Do core employees have different needs to other types of

employees?

5. What are the factors affecting an Australian Human Resource

Architecture Model?

These results (Phase 1) will form the basis for an interview schedule for

HR managers and a questionnaire for core employees.

Phase 2: In Depth Interview with HR Managers 6. Is the importance placed on HRM factors linked to retention?

7. How are these influential HR factors managed in organisations?

8. How do these differ from non-core employees?

These results (Phase 2) will assist in the development of a

questionnaire to conduct a survey on core employees.

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20

Phase 3: Survey of Core Employees 9. What HRM factors influence core employees’ decisions to stay?

10. Do these correspond to those perceived by employers as being

influential?

11. How could core employees be encouraged to remain?

Conclusion This is a three phased study comprising (1) a three round Delphi

survey of expert opinions, (2) an in-depth interview of HR Managers

and (3) a quantitative survey of employees (Figure 1). This empirical

research examined the effect of HR practices on the retention of core

employees.

This chapter described the importance of retention in the

context of HRM. It explained the objectives and significance of the

research and identified the research questions.

Thesis Overview

This thesis is comprised of seven chapters. Chapter Two

provides an overview of the literature relating to retention and the HR

factors that might impact on the retention of employees. It illustrates

a range of variables that should be considered when evaluating the

influence of HR practices on retention. It also offers the conceptual

schema and discusses the Human Resource Architecture models

adopted in this study. Chapter Three provides the research methods

employed in Phase 1 (Delphi Study), Phase 2 (Interview) and Phase 3

Introduction

21

Figure 1.1. A Three-Phased Study to determine key HR Factors that Influence Retention of Core Employees

Delphi Study Three Rounds

Literature Review

PHASE 2

PHASE 1

Identified Human Resource Factors

Affecting Retention

Interview Human

Resource Managers

Interview Schedule

Endorsed HR Factors Affecting Retention

Questionnaire for

Quantitative Survey Employee Survey

PHASE 3

RESULTS OF THE STUDY

Qualitative Analysis

Quantitative Analysis

Qualitative Analysis

Janet Chew

22

(Employee Survey) of the study and describes the constructs and

their operationalisation. Chapter Four reports the qualitative results

of the findings of Phase One. In Chapter Five, the qualitative results

and findings of Phase Two are explained and discussed. In Chapter

Six the quantitative results and findings of Phase Three are reported

and discussed. Finally, Chapter Seven discusses the overall findings

of the three phase study, provides the implications, identifies the

recommendations, reports the limitations of the study, indicates

areas of further research and offers the final conclusion.

CHAPTER TWO

THE LITERATURE REVIEW

Examination of the Relationship between Human Resource Management Practices

and Retention

Introduction Over the past decade, the way in which people are managed and

developed at work has come to be recognised as one of the primary

factors in achieving improvement in organisational performance (BQF

1998; Marchington and Wilkinson 1997; Phillips 1997). This is

reflected by popular idioms such as ‘people are our most important

asset’ (Accenture 2001).

From the review of the extant literature, it is acknowledged that

successful organisations share a fundamental philosophy of valuing

and investing in their employees (Anand 1997; Maguire 1995). In fact

several research studies have described human resource

management as a means of achieving competitive advantage (Delery

1998; Huselid 1995; Pfeffer 1994; Walker 2001). Consistent with this

perspective, is an equally important issue for organisations, the

retention of their critical (core) employees.

With the average attrition rate in the Australian workplace

currently approaching 40 percent and more than 50 percent of

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24

individuals planning to leave the workplace within two years,

retention and re-recruiting is essential (Accenture 2001). Most

organisations today continue to struggle with retention because they

are relying on salary increases and bonuses to prevent turnover

(Accenture 2001; Gumbus and Johnson 2003). Essentially, more

organisations are now realising that retention is a strategic issue and

represents a competitive advantage (Walker 2001; Youndt, Snell,

Dean and Lepak 1996).

This chapter describes the relationship between human

resource practices and the retention of core employees in the context

of the Human Resource Architecture. It examines the causes of poor

employee commitment and specifically explores relevant literature to

identify elements of HR practices that influence employee retention.

The related literature is presented in this chapter to provide an

overview of the areas covered in the study.

Human Resource Architecture Models A model of human resource architecture is a framework by which to

distinguish employees in order to design human resource support

processes. Between the 1980s and 1990s, massive downsizing was

undertaken by companies to improve productivity and reduce costs.

However, the endless round of restructuring and re-engineering by

corporations had transformed the new employment relationship

(Wright 1995). The evolving model for this employment relationship

took several forms.

Chapter 2

25

The Atkinson’s labour flexibility model (1985), suggests that

organisations can design their workforce proactively to meet their

business needs using flexible staff arrangements. Atkinson identified

three types of flexibility employment modes: (1) numerical

flexibility (2) functional flexibility and (3) financial flexibility. This

model recognises “core” and “peripheral” employees. Peripheral

employees consist of temporary, part time or contractual workers.

Traditionally these workers have been referred to as atypical workers

in Europe, while the term ‘contingent labour’ is often used in the

American literature. However, in Australia, these employees would be

referred as non permanent or casual staff. This group of the labour

force is utilised when organisations adopt numerical flexibility which

involves the expansion and contraction of their employees based on

market fluctuations and competitive pressures (Lesperance 2001).

Core or fulltime employees provide organisations with

functional flexibility and their skills can be moved within the

organisation due to changes in product market and technology. This

group of the labour force is multi-skilled and cross trained to

facilitate a quick and smooth deployment of employees between

activities and tasks. Finally, financial flexibility is defined as a

situation where the amount an employee is paid depends on the job

done, hours worked, or the amount the organisation can afford

(Atkinson 1984; Nollen 1996). It may involve a shift to remuneration

systems such as performance related pay (PRP) to facilitate either

Janet Chew

26

numerical or functional flexibility. Profit sharing and employee share

ownership plans (ESOPS) are other examples of financial flexibility.

Similarly, the Shamrock Model envisioned by Handy (1995)

provides an organisation with the flexibility it needs to meet its

operational, production and environmental demands. This model

consists of three employment components, each part representing an

essential human resource base for the organisation. The first

employment sector contains the organisation's core professional

permanent employees. The second sector consists of the flexible

workforce, or peripheral employees, and this included temporary

contract holders and part time workers. The final component

contains individuals or organisations that provide a complete non-

essential work that could be done better and more cost effectively

than using core and peripheral employees.

In 1999, American researchers, Lepak and Snell developed the

foundation of a human resource ‘architecture’ that aligns different

employment modes and employment relationships. This theoretical

model segmented employees into four quadrants according to the

value and uniqueness of their skills in relation to the “core processes”

of the organisation. The four employment modes are (1) internal

development (core), (2) acquisition, (3) contracting and (4) alliance.

The characteristics of these four types of employees are outlined in

Table 2.1.

Chapter 2

27

Quadrant 1: Internal Development Quadrant 3: Contracting

High value, high uniqueness employees are ‘core’ employees and a source of competitive value. Their value and uniqueness may be based on ‘tacit knowledge’ that would be valuable to a competitor. These employees would be developed internally and the organisation would invest in their training and development.

Low value, low uniqueness employees are those with low-level skills that are widely available in the market. In this case labour is treated as a commodity to be acquired when needed. There is no long term relationship, rather a short-term economic exchange. No investment in training and development.

Quadrant 2: Acquisitions Quadrant 4: Alliance

High value, low uniqueness employees are those whose skills are valued but are widely available in the market, for example, accountants. These employees are likely to be career-focused and have a conditional loyalty to a specific organisation. HR strategy is to buy from the market, emphasising recruitment and immediate deployment of skills. Little investment in training and development.

Low value, high uniqueness employees are those who are not essential to creating value and are therefore not ‘core’ but who have skills that the organisation needs from time to time, such as lawyers. This is an alliance relationship for example, a law firm who looks after a company’s legal affairs. There would be little or no training and development.

Table 2.1: Four Different Employment Modes of HR Architecture. Adapted from Entrekin and Court 2001, “The human resource architecture: toward a theory of human capital allocation and development,” Academy of Management Review, vol. 24(1), Jan 1999, p. 31 (1), Lepak and Snell, 1999.

Quadrant 1 represents core employees that a company will invest in,

in terms of training and development, remuneration and benefits and

other self enhancement HR programs that will protect their

investment (Entrekin and Court 2001; Lepak and Snell 1999).

Quadrant 2 represents to a considerable extent, autonomous

professionals such as accountants, lawyers, academics, software

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engineers. These people have valuable skills that are not unique to a

specific organisation and are fairly widely distributed in the labour

market. These employees have a conditional loyalty at best and are

committed to their profession (Entrekin and Court 2001; Lepak and

Snell 1999).

Quadrant 3 represents employees whose skills are low in value and

uniqueness and essentially represent labour as a commodity which is

widely available and can be purchased and disposed of as required.

Staffs are usually contractual and out-sourced. Temporary relief staff

in clerical and secretarial areas, call centre staff, cleaning and

maintenance are jobs that fall into this category (Entrekin and Court

2001; Lepak and Snell 1999).

Quadrant 4 represents low value high uniqueness staff that the

company need not directly employ. They are low in value and fail to

add value to the core processes or contribute to a competitive

advantage. The skills are unique in that a company does not need

them often enough to justify their full time employment. An example

could be an alliance between a company and a university to provide

certain types of research inputs on a continuing basis where the

synergistic value of the relationship exceeds the value each

institution can generate on its own. (Entrekin and Court 2001;

Lepak and Snell 1999).

Chapter 2

29

The human resource architecture discloses two view points: the

first view is that each employment mode carries with it an inherently

different form of employment relationship. Rousseau (1995) describes

employment relationships as the "psychological contract [of]

individual beliefs, shaped by the organisation, regarding terms of an

exchange agreement between individuals and their organisations"

(see p.9). As employment modes differ, so too does the nature of the

psychological contracts.

Researchers have categorised psychological contracts into two

forms: transactional and relational contracts (Rousseau and McLean

Parks 1993; Robinson, Kraatz and Rousseau 1994; Shore and Tetrick

1994). Transactional contracts relate to specific monetary exchanges

over a limited period of time and they included rapid advancement,

high pay, and merit pay (Robinson, Kraatz and Rousseau 1994).

Relational obligations, in contrast, included long-term job security,

career development, training and development opportunities, and

support with personal problems (Robinson, Kraatz and Rousseau

1994).

Rousseau (1990) proposes that transactional and relational

components denote opposite ends of a continuum that correspond to

economic and social exchange. However, the factor analytic evidence

suggests that the contract terms cannot be consistently categorised

as either transactional or relational (Rousseau and Tijoriwala 1998)

and that employment relationships may contain elements of both

(Arnold 1996).

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30

The second view of the human resource architecture considers

the patterns of HR practices or HR configurations to help define the

employment mode, maintain the employment relationship and

ultimately support the strategic characteristics of human capital.

Applying Holistic or Differential HR Practices? The HR architecture indicated that there may be different HR

configurations within a single organisation’s architecture. The HR

architecture models (Atkinson 1985; Handy 1995; Lepak and Snell

1999) clearly advocated a differential investment strategy for different

categories of employees. Essentially, these different human resource

models indicated that certain forms of human capital are more

valuable to organisations and more available in the open labour

market than others (Wright and Snell 1998). For example, firms will

logically realise greater benefits by simply out-sourcing generic work

than by relying upon internal development. As a consequence,

organisations engaging in multiple sourcing modes are likely to

require distinct configurations of human resource practices that

facilitate the utilisation and deployment of human capital for each

separate employment mode.

With the emergence of this new organisational structure of

employment, it raises the questions of Australian organisations’ HRM

systems? Do they apply “best practices fit all “or differential HR

practices for different types of employees (e.g., core, contractors,

alliance and acquisitions)? How do these practitioners perceive their

Chapter 2

31

effectiveness? It may be the case that some firms manage all

employees the same way, regardless of their value and uniqueness.

We anticipate that most firms make significant distinctions in the

methods they use for different skill sets and that these are important

determinants of firm performance (Delery and Doty 1996; Jackson

and Schuler 1995). Thus, just as there may be no universally best set

of HR practices for every firm, it is therefore argued that there may

actually be no one best set of practices for every employee within a

firm.

Since the 1980s, employers have made employment

relationships more contingent and flexible. Continued cost pressures

and the need for fast-market responses have forced employers to

build work forces that are extremely flexible and cost-effective. A key

result for workers during this structural change was decreasing job

tenure and employment uncertainty (Abraham 1998; Gordon 1996).

Increasingly, employees are told that it is unrealistic to expect a

guarantee of long-term job security (Allan and Sienko 1997; Cappelli

1995; Fierman 1994; Kitay and Lansbury 1997). Rather, contingent

and market-mediated employment such as part-time, temporary, and

subcontracting-out have replaced the traditional, long-term

relationships (Cappelli 1999a).

Traditionally, employers viewed employees as a permanent part

of the organisational architecture and have assumed that they must

add personnel in direct proportion to business growth. The economic

instability of the last ten years has forced employers to reassess this

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32

assumption and begin to view employees as a variable, rather than a

fixed, business cost (Allan and Sienko 1997; Caudron 1994; Gomez-

Meija, Balkin and Cardy 1995). Studies by several researchers ( Allan

and Sienko 1997; Gramm and Schnell 2001; Hall 2000; Hipple and

Stewart 1996; Wiens-Tuers 2001) have revealed that the traditional

organisational structure, with its dependence on a large, permanent

employee base, has now been replaced with a more adaptable

structure consisting of three groups.

1. Core employees

Critical job functions will be retained by a small, relatively

permanent "core" of employees with broad skills allowing them

to tackle a variety of jobs.

2. Supplemental employees or contingents

A larger group will consist of just-in-time employees, who can

be added or eliminated quickly as needed. These workers will

be retained through contract or temporary services to meet

shifting demand.

3. Out-sourced work function

Organisations will use out-sourcing more and use it more

strategically. Companies currently use out-sourcing as a

hands-off process for farming out whole product and service

Chapter 2

33

functions; in the future, companies will view out-sourcing

agencies as an integrated part of the organisational team.

The changes in the organisational structure and the decline in

job security have changed the psychological contract between

employer and employee (Holm and Hovland 1999; Schmidt 1999).

The essence of attachment between employer and employee has

changed. Nowadays employers emphasise "employability" rather than

long-term loyalty in a specific job (Cappelli 1999; Ko 2003). This new

form of psychological contract is more evident because businesses

are increasingly using non-core and part-time workers to gain

flexibility at lower cost. The increased use of non-core employees and

lack of commitment to a firm is cited as a reason for decreased levels

of employee loyalty and lower levels of employee productivity (even

though costs may decrease in the short run) (Allan 2002;

Sengenberger 1992). Other concerns related to the use of non-core

labour and decreased employee attachment include the social costs

due to lack of job security and pension, health, and other non-wage

benefits (Belous 1989; Gordon 1996; Ferber and Waldfogel 1998). The

decline in job security is perhaps the most radical change

accompanying the restructuring of employment relationships

(Cappelli 1999b; Jacoby 1999).

McLean, Kidder, and Gallagher (1998) provide a theoretical

framework for understanding how perceptions of the psychological

contract may differ according to employment relationships. They

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34

suggest that part-time employees who have a more tenuous

relationship with the organisation will focus less on relational

elements than their permanent counterparts. These researchers also

posit that part-time employees plan on working for a given

organisation for a shorter, more finite time frame, whereas, full-time

core employees expect to have a longer, more indefinite relationship

with the organisation. The formalisation of employment practices is

another way employers guarantee core employees a secure job future

(Osterman 1999). The extent of formalisation can thus affect an

employer's attitude toward employees: the higher the level of

formalisation, the stronger the employer's intention to protect core

employees. Therefore, the attainment of employees' commitment and

cooperation can be linked to the implementation of internalisation

practices which usually represent the employers' intention to

guarantee job security and to train core employees (Abraham 1990;

Kochan and Osterman 1994; Morishima 1998; Osterman 1999).

Core employees American researchers, Lepak and Snell (1999) describe core

employees of today’s organisations as high value, high uniqueness

employees whose skills and knowledge are a source of competitive

value to the organisation. Their value and uniqueness may be based

on ‘tacit knowledge’ that would be valuable to the competitor and

these skills and knowledge are related to core processes developed

internally and built up overtime (Entrekin and Court 2001; Lepak

Chapter 2

35

and Snell 1999). These researchers advocate the theoretical model of

HR architecture that segmented employees into four quadrants

according to the value and uniqueness of their skills in relation to the

“core processes” of the organisation.

Generally, core employees are regarded as permanent workers

(Segal and Sullivan 1997). As the primary labour market, core

employees become the glue that holds an organisation together, and

their knowledge, experience and commitment become critical to its

success. However, a review of prior literature revealed that a number

of researchers (Allan and Sienko 1997; Gramm and Schnell 2001;

Segal and Sullivan 1997) have defined core employees abstractedly

This paucity emphasises the need to determine the key attributes and

characteristics of core employees, especially in the Australian

context. So what are organisations looking for when they select their

core employees? This study will identify these characteristics and

further examine the needs of core employees.

Needs of core employees Managing core employees effectively means identifying their needs.

Employees bring their needs, aspirations and hopes to their jobs, and

expect to find a work environment where they can utilise their

abilities and satisfy many of their basic needs. When the organisation

provides such a vehicle, the likelihood of increasing commitment

seems to be enhanced. When the organisation is not dependable,

however, or where it fails to provide employees with challenging and

Janet Chew

36

meaningful tasks, commitment levels tend to diminish. Individuals

become committed to employers that take concrete steps to help

them to develop their abilities and to achieve their potential. For

example, young graduates or new recruits often start their jobs

expecting challenging assignments to help them test and prove their

abilities (Dessller 1999). Employee attitudes and behaviours

(including performance) reflect their perceptions and expectations,

reciprocating the treatment they receive from the organisation (Tsui,

Pearce, Porter and Tripoli 1997).

Today, employee commitment has become a casualty of the

transition from an industrial age to an information society.

Employees used to exchange their loyalty and hard work for the

promise of job security. Instead of job security, employees now seek

job resiliency; developing the skills and flexibility needed to quickly

respond to shifting employer requirements (Barner 1994).

Commitment to one’s professional growth has replaced organisational

commitment (Bozeman and Perrewe 2001; Powers 2000). Today,

employees seem to take responsibility for their own professional

growth to increase their career marketability. Kraut and Korman

(1999) advocated the self-enhancement model of HR practice, which

relates to an employee’s need for personal achievement and

development.

Replacing the old employment deal, the new contract indicates

that the employer and the employee meet each other's needs for the

moment but are not making long-term commitments (Finegan 2000).

Chapter 2

37

The absence of any commitment can be counter productive to both

parties, and it is the responsibility of human resources managers to

find ways to engage workers for the duration of their employment.

Employee commitment to the organisation remains a critical issue for

many organisations, the primary factor in attracting and retaining

their core employees so necessary for corporate success (Kaman,

McCarthy, Gulbro and Tucker 2001; Powers 2000). As a

consequence, there is a need to examine the human resource

systems that support this primary labour force. It may be that

organisations may have to redesign their HR systems to meet the

changing needs of core employees.

Human Resource Management Practices Basically, core employees perform the essential tasks within the

organisation, and organisational human resource systems are

designed to support and manage this human capital (Gramm and

Schnell 2001).Current HRM thinking emphasises the benefits of

meeting employee needs and enabling workers to have control over

their work lives. Many firms recognise the necessity to provide the

information, flexibility and voice that employees require to contribute

to organisational success (Becker and Huselid 1998; Capelli 2000).

Academic research conducted at the organisational level

supports that human resource practices affect organisational

outcomes by shaping employee behaviours and attitudes (Arthur

1994; Huselid 1995). Ostroff and Bowen (2000) found that human

Janet Chew

38

resource practices shape work force attitudes by moulding employees'

perceptions of what the organisation is like and influencing their

expectations of the nature and depth of their relationship with the

organisation. There is also a general notion that human resource

practices interact with perceptions of organisational support to affect

employee commitment.

More specifically, systems of "high commitment" human

resource practices increase organisational effectiveness by creating

conditions where employees become highly involved in the

organisation and work hard to accomplish the organisation's goals

(Arthur 1994; Bishop 1998). Many managers today recognise the

benefits of "high commitment" human resource management

practices that respond to employees' needs, encourage employees to

take responsibility for their work lives, and motivate employees to

behave in ways that benefit the organisation (Baron and Kreps 1999;

Becker and Gerhart 1996). Information sharing, open channels of

communication, extensive training, and incentive compensation are

some of the practices consistently found in this "high commitment"

category.

Baron and Kreps (1999) describe high commitment HRM as "an

ensemble of HR practices that aim at getting more from workers by

giving more to them" (p. 189). "High commitment" practices are those

that make it easier for employees to take responsibility for their own

work lives as they contribute to organisational goals. Employees are

more pivotal in a high-involvement organisation because such a firm

Chapter 2

39

is employee-centered by design; information and decision-making

power are dispersed throughout the organisation, with employees at

all levels taking on greater responsibility for its operation and

success. To facilitate this approach, high-involvement organisations

use human resource practices that develop and support a workforce

that is self-programming and self-managing (Lawler 1992). A number

of texts has appeared in recent years promoting the advantages of

using high-involvement or high-commitment human resource

practices, a system of human resources practices thought to enhance

employees' levels of skill, motivation, information, and empowerment

(Kochan and Osterman 1994; Lawler 1992; Levine 1995; Pfeffer

1998).

The extensive use of high-involvement work practices

represents a significant investment in human capital. Basic

microeconomics suggests that investments in human capital

(employees) are justified when such investments are more than offset

by future returns in the form of increased productivity. Thus, firms

will make greater use of such practices when employees are viewed as

particularly vital to firm success (MacDuffie 1995).

With respect to retaining these critical human assets, greater

use of high-involvement work practices is likely to have two broad

implications. First, previous work (Arthur 1994; Becker and Gerhart

1996; Huselid 1995; Shaw, Delery, Jenkins and Gupta 1998)

indicated that high-involvement work practices will enhance

employee retention. At the same time, there is also the argument that

Janet Chew

40

the greater use of high-involvement work practices will increase the

cost of employee departures. This is consistent with the resource-

based view of the firm. From this perspective, firms can achieve

sustainable competitive advantage by creating value in a rare and

inimitable manner (Barney 1991). However, because the use of these

practices increases the uniqueness and value of employees, it will

also increase the costs associated with the loss of these employees.

Summaries of HRM research on "best practices" (Becker and

Gerhart 1996; Pfeffer 1998), which are similar to "high commitment

practices," indicate that in large firms such practices have a

measurable, positive impact on firm performance. Huselid (1995)

contends that there are certain "best" HRM practices that will

contribute to increased financial performance, regardless of the

strategic goals of the firm. Whereas other scholars have concurred

with this assumption (e.g. Osterman 1994; Pfeffer 1994), there has

been little work that provides a definitive prescription as to which

HRM practices should be included in a “best” practices system.

However, there are some human resource practices that are

more likely than others to have significant relationships (Delery

1998). They can either provide direct and substantial harm or benefit

to employees (Mayer and Davis 1999). Motivation-oriented human

resource activities are more likely to be associated with perceived

organisational support and commitment than skill-oriented activities.

In a study of over 900 organisations in the United States,

Huselid (1995) suggested that human resource practice be grouped

Chapter 2

41

into two categories: those practices that improve employee skills and

those that enhance employee motivation. This study found that skill-

enhancing human resource activities included selection and training

activities and were associated with turnover and financial

performance, and that motivation-enhancing activities included

performance appraisal and compensation activities and were

associated with measures of productivity. The common theme is

utilising a system of management practices giving employees skills,

information, motivation and latitude, resulting in a workforce that is

a source of competitive advantage.

Most strategic HRM researchers have tended to take a holistic

view of employment and human capital, focusing on the extent to

which a set of practices is used across all employees of a firm as well

as the consistency of these practices across all employees (eg. Kochan

and Osterman 1994; Pfeffer 1994) They suggest that there is an

identifiable set of best practices for managing employees that has

universal, additive, positive effects on organisational performance

(universalistic approach).

The contingency approach differs from the universalistic

perspective in that the studies have attempted to link HRM systems

and the complementarity of variations of HRM practices to specific

organisational strategies (e.g., Arthur 1994; Youndt, Snell, Dean and

Lepak 1996).

Similar to the contingency approach, the configurational

approach argues that fit of HRM practices with organisational

Janet Chew

42

strategy is a vital factor in the HRM-firm performance relationship

(Becker and Gerhart 1996). However, the configurational approach

takes this argument a step further in asserting that there are specific

"ideal types" of HRM systems that provide both horizontal and

vertical fit of HRM practices to organisational structure and strategic

goals. Delery and Doty (1996) identified seven practices consistently

considered to be "strategic" in nature. Practices identified were

internal career opportunities, formal training systems, appraisal

measures, profit sharing, employment security, voice mechanisms

and job definition. Pfeffer (1994), however, advocated the use of

sixteen management practices to achieve higher productivity and

profits.

The practices that represent a high commitment strategy

include sets of organisation-wide human resource policies and

procedures that affect employee commitment and motivation. Arthur

(1994) found very strong correlations between employee retention and

productivity in high-commitment HR systems. The identified HR

practices included selective staffing, developmental appraisal,

competitive and equitable compensation, and comprehensive training

and development activities (Ichniowski, Shaw and Prennushi 1997;

MacDuffie 1995; Snell and Dean 1992; Youndt, Snell, Dean and

Lepak 1996). These human resource practices can be classified as

"control" or "commitment" practices (Arthur 1994; Walton 1985;

Wood and de Menezes 1998). Control approaches aim to increase

efficiency and reduce direct labour costs and rely on strict work rules

Chapter 2

43

and procedures and base rewards on outputs (Arthur 1994). Rules,

sanctions, rewards and monitoring regulate employee behaviour

(Wood and de Menezes 1998).

The preceding arguments of set of practices also support the concept

of "bundles" of HR practices. A bundle of interrelated, overlapping HR

practices provides several ways for workers to acquire skills (for

example, off-the-job and on-the-job training, job rotation, problem-

solving groups) and multiple incentives to boost motivation (for

example, extrinsic rewards such as performance-based pay and

intrinsic rewards from participating in decision-making and good job

design) (Lawson & Hepp 2001). Therefore, innovative human resource

practices affect performance not individually but as interrelated

elements in an internally consistent HR "bundle" or system

(MacDuffie 1995). There is now ample empirical support for the

bundling or systems view (MacDuffie 1995; Pfeffer 1998; Wright

1998).

Human Resource Management Factors influencing retention There is growing evidence that human resource management can

play an important role in retaining a high-quality workforce. Studies

of progressive HRM practices in training, compensation and reward

sharing have revealed that these can lead to reduced turnover and

absenteeism, better quality work, and better financial performance

(Arthur 1994; Delaney and Huselid 1996; Ichniowski, Shaw and

Janet Chew

44

Prennushi 1997; Snell and Youndt 1995; MacDuffie 1995; Meyer and

Allen 1991; Solomon 1992; Snell and Dean 1992). Furthermore, an

extensive study (Accenture 2001) on high performance issues

identified the retention strategies of organisations primarily from US,

Europe, Asia and Australia. These strategies included the following:

offering comprehensive training and development—to all staff,

be it permanent, part-time or contract,

allowing staff to work on project-based assignments,

broadening their skills whist keeping them challenged and

interested in their work,

empowering and entrusting staff with responsibility,

ensuring that a balance exists between work and lifestyle, and

that the culture is such that it supports this philosophy,

providing flexible work arrangements,

connecting staff by means of mentors or coaches,

ensuring staff know where they stand with regular performance

appraisals, skills development programs and clear career paths

embracing emerging technologies,

ensuring an effective management style, ensuring good

relationships are formed and nurtured with "the boss"

aligning people strategies with business strategies

providing employee benefits such a social clubs, financial

services,

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providing free career advice, life insurance, fitness and health

options

rewarding staff well

offering competitive salaries

According to Fitz-enz (1990), retention management of employees is

influenced by several key factors, which should be managed

congruently: organisational culture and structure, recruitment

strategy, pay and benefits philosophy, employee support programs,

and a training and career development system.

Consequently, organisations utilise a wide range of these HRM

factors driving retention and commitment (Beck 2001; Clarke 2001;

Parker and Wright 2001; Stein 2000). For the purpose of this study,

these factors are reviewed and categorised into HR factors (person

organisation fit, remuneration, training and career development,

challenging opportunities) and organisational factors (leadership

behaviour, teamwork relationship, company culture and policies and

satisfactory work environment).

Human Resource Factors influencing retention

Person Organisation Fit (Selection) The concept of person-job (P-J) fit emphasises matching people and

jobs in terms of qualifications based on knowledge, skill, or ability,

and overlooking other personal characteristics of applicants that

might be more suitable for the assessment of "fit." (Edwards 1991;

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Hall 1931; Lofquist and Dawis 1969). However, as the complexity of

work increases, organisations now use more selection methods that

capture the applicant's capability to do the work. Research on

person-job fit has found that workers gravitate to jobs with

complexity levels commensurate with their ability (Wilk, Desmarais,

and Sackett 1995; Wilk and Sackett 1996). However, selection should

also improve fit between the applicant and other aspects of the work

such as e.g. personality fit and organisation fit (Smith 1994).

Person-organisation fit is considered in the context of personnel

selection and can be based on the congruity between personal and

organisation beliefs (Netemeyer, Boles, Mckee and McMurian 1997;

O'Reilly, Chatman and Caldwell 1991) or individual and company

goals (Kristof 1996). The concept of organisational fit (Brown 1969;

Kidron 1978; Steers 1977) identifies convergent goals and values

between the individual and the organisation as an important element

to affective commitment. Barnard (1938) defined organisation fit as an

individual's willingness to cooperate in an organisation as cohesion

and proposed that “its immediate cause is the disposition necessary

to ‘sticking together” (p, 84). Selection should therefore consider

improving fit between an applicant's values and the organisation

culture (Cable and Judge 1997).

Lauver and Kristof-Brown (2000) found that both person-job fit

and person-organisation fit predicted job satisfaction; however,

person-organisation fit was a better predictor of intention to quit.

Thus, people who are not well suited for the job and/or organisation

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are more likely to leave than those who have a good person-job or

person-organisation fit. The organisation should not only match the

job requirements with the person's knowledge, skills and abilities,

but should also carefully match the person's personality and values

with the organisation’s values and culture. Lee, Ashwood, Walsh and

Mowday (1992) espoused the theory that states an employee's

satisfaction with a job, as well as propensity to leave that job,

depends on the degree to which the individual's personality matches

his or her occupational environment.

Many person organisation fit studies emphasised the match

between people's values and the values of the organisation, because

values are conceived of as fundamental and relatively enduring

(Kristof 1996; Van Vianen 2000). In this study, value congruence and

person-culture fit are treated as equivalent terms.

Remuneration, reward and recognition of employee value Compensation "is the most critical issue when it comes to attracting

and keeping talent" (Willis 2000, p. 20). A fair wage is the cornerstone

of the contractual and implied agreements between employees and

employers, the underlying assumption being that money can

influence behaviour (Parker and Wright 2001). Companies often

provide pay packages superior to the market for critical talent. These

include special pay premiums, stock options, or bonuses. Base pay

reflects fair pay; supplemental programs reflect individual, team or

organisational performance and success.

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Bassi and Van Buren (1999) found that "leading edge" firms,

defined as firms that use high performance work practices such as

total quality management and training, provide innovative

compensation such as profit sharing and group-based incentive pay.

Organisations in most industries are implementing innovative

compensation approaches to differentiate themselves (Parker and

Wright 2001). Innovative practices reflect the individual player

contract model, focusing on "what it will take" to attract and retain

each individual, regardless of the pay of others (Boyd and Salamin

2001). This "let's make a deal" approach is a radical departure from

traditional pay equity approaches, but seems to work in a highly

competitive, individualised talent market. Others act more broadly,

ensuring that all "players" are paid near the top of the market,

whether through base salary or bonuses (Stein 2000; Williams 1999).

This raises overall compensation costs but may reduce the risk, and

therefore the cost, of attrition.

Wages influence the recruitment and retention of workers

(Highhouse, Stierwalk, Bachiochi, Elder and Fisher 1999; Parker and

Wright 2001; Rynes and Barber 1990; Williams and Dreher 1992)

and therefore play a role in the staffing process. However, these

studies recognise that pay, by itself, will not be enough to retain

people. Low pay will often drive employees out the door, but high pay

will not necessarily keep them. Ultimately, they stay because they

like their co-workers and are engaged and challenged by work that

makes them better at what they do.

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Pay continues to be important in determining motivation to

perform (McCallum 1998). Past motivational theories such as

expectancy and equity theories have predicted variations in

motivation as a result of varying valences of outcomes as pay (Das

2002). However, in practice, pay is treated as just one of the

outcomes and often measured with little precision (Mitchell and

Mickel 1999). Although an association exists between compensation

satisfaction and commitment and is one of the drivers of organisation

commitment, nevertheless, it has to be considered as one of the

pieces in a complex picture (Boyd and Salamin 2001; Parker and

Wright 2001). Just as important is the organisation’s need to

communicate its total compensation package to its employees. It

must emphasise not only the salary, bonuses and benefits, but other

highly valued aspects of employment such as supporting life style

balance initiatives and flexible work arrangements. These are non-

monetary benefits known as intrinsic rewards and they have a

significant role in compensation satisfaction (Mitchell and Mickel

1999; Parker and Wright 2001).

According to a study by Mercer (2003), employees will stay if

they are rewarded. Employees are usually rewarded based on quality

based performance. A sense of accomplishment is recognised as

important and a strong motivator. Employees tend to remain with the

organisation when they feel their capabilities, efforts and performance

contributions are recognised and appreciated (Davies 2001).

Employers are increasing their commitment to the use of rewards as

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essential elements of talent management programs. It is increasingly

important for companies to use their reward budget effectively to

differentiate the rewards of the top performers, thus driving an

increase in the return on investment (ROI) on human capital

investments. The alternatives are decreased employee performance or

the attrition of key performers to competitors in an increasingly

competitive environment.

Thus companies that are committed to their employees

typically invest more than similar firms in progressive HRM practices

such as training and education, and in the total package of

compensation (Arthur 1994; Huselid 1995). They also distribute

rewards more equitably and generously. Compensation provides

recognition, but other forms of non-monetary recognition are also

important. Recognition from managers, team members, peers and

customers enhance commitment (Walker 2001). Particularly

important to the employees are opportunities to participate and to

influence actions and decisions (Davies 2001; Gold 2001).

There are three recent studies that have highlighted the

rewards-retention link (Mercer 2003; Tower Perrin 2003; Watson

Wyatt 1999) and provided insights into what employers are doing,

how they feel, and what employees have to say on the rewards issue.

These recent studies give further support to the belief that a broad

and well-implemented rewards program assists in talent

management.

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Mercer’s Human Resource study measured the return on

reward investments of 302 companies. The research assessed the

effectiveness of specific reward and identified the reward program

issues and challenges confronting US companies. Mercer’s findings

indicate that most companies are increasing their focus on attracting

and retaining top talent.

The Watson Wyatt annual survey of employees' attitudes

toward their workplace and their employers, Work USA, 2002,

reflected the views of 12,750 workers at all job levels and in all major

industries on a number of workplace issues, including rewards. The

findings of the study revealed that recognition matters to employees

and they need to hear that they are appreciated.

The Towers Perrin study examined twenty-two large US

employers and their talent attraction and retention practices.

Participants in the year-long study ranged from companies with

2,500 employees to those with more than 364,000; their revenues

ranged from $1.6 billion to $58 billion. This research identified a

strong correlation between incentive pay and retention.

Training and career development Training is considered a form of human capital investment whether

that investment is made by the individual or by the firm (Goldstein

1991; Wetland 2003). Once employees are hired, training programs

enhance employee job skills. Employees are expected to acquire new

skills and knowledge, apply them on the job, and share them with

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52

other employees (Noe 1999). Lauri, Benson and Cheney (1996) found

that firms often delay training to determine whether workers are good

matches and therefore have a lower probability of leaving the firm.

Training provides employees with specific skills or helps to

correct deficiencies in their performances; while development is an

effort to provide employees with abilities the organisation will need in

the future (Gomez-Mejia, Balkin and Cardy 1995; Wilk and Cappelli

2003). Skill development could include improving basic literacy,

technological know-how, interpersonal communication, or problem

solving abilities.

Employees want good training opportunities to increase their

marketability. The conventional wisdom used to be that if the

company makes them marketable, employees will leave at the first

opportunity. But today, companies are finding that the more training

employees get, the more likely they are to stay. Indeed, when the

training ends, the turnover tends to begin (Jamrog 2002; Wien-Tuers

and Hill 2002).

A firm has the incentive to invest in the human capital of its

workers only if there is an expectation of a return on its investment.

Increasingly, companies are strengthening development for talent,

thorough competency analysis, input on individual interests, multi-

source assessment of capabilities and development needs, and the

formulation of action plans (Clarke 2001; Messmer 2000).

A survey of the literature on training by Bishop (1998) revealed

that larger, established, unionised, manufacturing firms tended to

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provide training as did multi-establishment firms with high

performance or flexible production systems. Findings of Black and

Lynch (1996) indicated that larger employers, establishments with

high performance systems and those which use more physical capital

were more likely to train their employees. Firms in industries with

rapid technical progress and output growth trained more as well as

those which had experienced no competitive crisis in the last decade.

Frazis, Gittleman, Horrigan and Joyce (1998) found that firms that

provide more benefits and have innovative work practices train their

employees more than other firms.

According to Storey and Sisson (1993) training is a symbol of

the employer’s commitment to staff. It is also reflective of an

organisational strategy based on adding value rather then lowering

cost. Leading companies have acknowledged that providing

employees with a comprehensive range of career and skills-

development opportunities is the key to attracting and retaining the

kind of flexible, technologically-sophisticated workforce that

companies need to succeed in the digital economy (Accenture 2001;

Bassi and Van Buren 1999).

The training and development of people at work has

increasingly come to be recognised as an important part of HRM

(Oakland and Oakland 2001). An analysis of employee commitment

among hospital administrators, nurses, service workers and clerical

employees as well as among scientists and engineers from a research

lab concluded that the employer's ability to fulfill the employee's

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personal career aspirations had a marked effect on employee

commitment (DeToro and MCabe 1997; Marchington and Wilkinhson

1997). Consistent with this work is a study of employees of a

manufacturing plant where it was similarly found that internal

mobility and promotion from within, company sponsored training and

development and job security were all correlated with employee

commitment (Bassi and Van Buren 1999). Training plays an

important role in the success of many organisations (Bassi and Van

Buren 1999).

Level of employee turnover and training are expected to be

inversely related: the higher the level of turnover, the lower the

amount of training. This expectation is based on the reasoning that

the longer an employee stays with an employer, the higher will be the

return to training. A recent study by Frazis et al. (1998) indicated

that employees working in low-turnover establishments spent about

59 percent of their total training time in formal training, compared

with 18 percent for employees in high-turnover establishments. From

the employee's view, if the training involves skills specific to the

establishment, it is likely to contribute to an increase in productivity

at that establishment. Greater productivity at the establishment, in

turn, will tend to raise a worker's wage above what he or she would

earn elsewhere, thus providing an incentive to stay. In other words,

training can serve to lower turnover (Frazis et al. 1998; Wetland

2003).

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Challenging employment assignment and opportunities Employees need to be stimulated with creative challenges or they will

go where the excitement is, be it another department, industry or

company. Companies are countering this by allowing employees to

choose what projects they want to work on and allowing cross-

departmental and cross-disciplinary migration (Accenture 2001;

Jamrog 2002). Providing employees with challenging assignments

with well-defined performance measures and feedback is important

for a high performance environment in which employees can achieve

their personal objectives (Furnham 2002). The necessity of mastering

new skills keeps employees satisfied and creative (Ferguson 1990;

Walker 2001). Employees want a job with broad duties and a lot of

task variety. In part, it is because they want to have more job skills

on their resume when they are forced to get another job (Jamrog

2002; Jardine and Amig 2001).

A further extension of these efforts to provide job challenges is

cross-functional career development. This technique allows the long-

term employees which the organisation views as having overall

leadership potential to move from one area of the company where

they have succeeded (e.g., management) to another area where they

have no experience (e.g., acquisitions). Moving high-calibre employees

in this manner not only assures that they will be challenged, but

begins to build employees with enough breadth of experience to

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56

assume senior leadership roles with the organisation. General

Electric and IBM have been doing this for years (Ferguson 1990).

Employees who felt that the organisation failed to give them

challenging and interesting work, freedom to be creative,

opportunities to develop new skills, and autonomy and control were

more likely to express negativity and lack of loyalty toward their

employer. More specifically, when the promises related to autonomy

and growth and rewards and opportunities were breached, an

employee was more likely to report negative feelings and attitudes

toward the organisation, lower levels of commitment, and greater

intentions to leave the organisation (Phillips 1997).

Organisational Factors influencing retention Leadership Leadership is defined as the behaviour of an individual that results in

non-coercive influence when that person is directing and coordinating

the activities of a group toward the accomplishment of a shared goal

(Bryman 1992). Leadership is conceptualised in terms of four tasks

that need to be accomplished in any organisation: providing

direction, assuring alignment, building commitment and facing

adaptive challenges (Risher and Stopper 2002). Leaders are central to

the process of creating cultures, systems and structures that foster

knowledge creation, sharing and cultivation (Bryant 2003).

Research findings suggested that leadership enhanced

organisational commitment (Alimo-Metcalfe and Alban Metcalfe 2001;

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Allen 1996; Ferres, Travaglione and Connell 2002; Podsekoff,

Mackenzie and Bommer 1996). Though there are differences between

the transformational and charismatic leadership theories, scholars

are now viewing them as sharing much in common and referring to

this body of work as the "new leadership" theory (Gumbus and

Johnson 2003) or "neo-charismatic" leadership theory (Nanus 1992).

Transformational leaders are regarded as active leaders that have

four distinguishing characteristics: charisma, inspiration, intellectual

stimulation and individualised consideration (Kouzes and Posner

1995; Yammarino and Bass 1990).

Numerous leadership studies in a wide variety of organisations

have examined the impact of transformational and charismatic

leaders, and findings indicate that transformational and charismatic

leadership styles "result in a high-level of follower motivation and

commitment as well as well-above-average organisational

performance (Bryman 1992; Elby, Freeman, Rush and Lance 1999;

Nanus 1992; Podsakoff, McKenzie and Bommer 1996; Steyrer 1998).

Furthermore, several studies have identified high levels of peak

performance under transformational leadership (Stoner-Zemel 1988),

high correlation between charismatic leadership and effectiveness

(Bass and Avolio 1995; Conger and Kanungo 1988; Seltzer and Bass

1990). Yammarino and Bass (1990) found transformational

leadership more highly related to employees’ perceived satisfaction

and effectiveness than transactional leadership.

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Several researchers have highlighted the positive influence of

transformational leaders in organisational outcomes which resulted

in lowered intention to leave and increased organisational behaviour

(Alimo-Metcalfe and Alban-Metcalfe 2001; Pillai, Shreissheim and

Williams 1999; Yammariono and Bass 1990) and lead to stronger

organisational commitment (Alimo-Metcalfe and Alban-Metcalfe 2001;

Podsokoff et al. 1996).

Therefore, based on the literature review, it appears that

leadership behaviour has a positive influence on organisational

commitment and turnover intention.

Company culture and structure (policies) Corporate culture is described as the invisible forces that shape life

in a business organisation (Fitz-enz 1990; Sheriden 1992).

Management philosophy and style, communications protocol and

policies, rituals and taboos interact to create the uniqueness of each

company (Furnham 2002; Guzzo and Noonan 1994; Schein 1990).

People often join a company or seek employment within a particular

industry because they find its culture appealing. However, in the past

decade the cultural characteristics of some industries and, therefore,

the companies within them have changed markedly. And when the

culture changes, whether through growth, new management or

economic and regulatory interventions, some people become

uncomfortable and leave to find a culture that fits them better (Stum

1998).

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The complement of culture is structure, which is shaped by

culture and technology. Structure starts with job design and

workflow patterns, and includes policies and procedures, spans of

control, reporting relationships and other factors that dictate how

work is to be done and business conducted. Both IBM and Apple

Computer Inc., for example, make and sell computing equipment.

Yet, it would be difficult to find two companies with more disparate

cultures or structures (Koene, Boone and Soeters 1997).

Since people join organisations partly because they are

attracted to the culture and structure, this is where retention

management begins. Managers who want to examine how effective

their corporate culture and structure are at retaining employees need

to do so from the ground up (Judge and Cable 1997; Sheriden 1992).

From an organisational development standpoint, the concept of

organisational culture suggests an avenue for fostering changes in

behaviour and attitudes in order to bring about desired results. But

to do this successfully, organisational development experts must find

out whether they can predict certain behaviours and attitudes based

on patterns of organisational culture.

Advocates of strategic cultural change typically make a number

of implicit assumptions. First, organisations possess discernible

cultures, which affect quality and performance. Second, although

cultures may be resistant to change, they are to some extent

malleable and manageable. Third, it is possible to identify particular

cultural attributes that facilitate or inhibit good performance, and it

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60

should therefore be feasible for managers to design strategies for

cultural change. Finally, it is assumed that any benefits accruing

from the change will outweigh any dysfunctional consequences.

Employee commitment may be fostered by employer-employee

relationships that allow the accomplishment of corporate financial

goals as well as cater to employee needs (Allen 1996). Research has

shown that employees' commitment to an organisation affects how

well the organisation performs in various ways. If it turns out that

employee commitment varies in certain predictable ways from one

cultural pattern to another, organisational development specialists

could try to strengthen employee commitment and, therefore,

organisational effectiveness by changing the organisational culture.

These studies and anecdotal evidence suggest a positive link between

strong organisational cultures and employee commitment (Koene et al

1997).

Communication and consultation Effective communication has emerged from the comprehensive

literature review as an essential facet of people management be it

communication of the organisation’s goals, vision, strategies and

business policies or the communication of facts, and information and

data communication structure (Hart, Miller and Johnson 2003;

Larkin and Larkin 1994; Purser and Cabana 1997; Yingling 1997).

Effective communications strengthen employee identification with the

company and build trust (Clarke 2001; Levine 1995).

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For business success, a regular two-way communication,

particularly face to face with employees, was identified as an

important factor in establishing trust and a feeling of being valued

(Fourtou 1997; Mumford and Hendricks 1996). Essentially, a two way

communication is regarded as a core management competency and

as a key management responsibility. For example, the management

responsibilities for effective communication include (1) ensuring

people are briefed on key issues, (2) communicating honestly and as

fully as possible on all issues affecting the people, (3) encouraging

team members to discuss company issues and give upward feedback

and (4) ensuring issues from team members are fed back to senior

management and timely replies given (Fourtou 1997; Mumford and

Hendricks 1996).

Research conducted by TNT (1998) revealed that successful

organisations place great emphasis on communication channels that

enable people at all levels (TNT 1998). Many formal and informal

communication mechanisms exist; all designed to foster an

environment of open dialogue, shared knowledge and information as

well as a trust in an effective upward, downward, lateral and cross

functional structure. Regular employee meetings and other updates

allow employees to adjust their efforts to support company objectives.

Opportunities for feedback give employees an avenue to influence

their work and company policies. Grievance procedures provide a

more formalised mechanism by which workers can be heard when

they are dissatisfied with a decision or outcome (Gopinath and

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62

Becker 2000). Supervisors and co-workers are therefore principally

responsible for communicating role expectations and feedback about

role performance (Miller and Jangwoo 2001).

Hence, organisations that carry out effective communications

ensure that their internal communications help their employees

make the connection between positive aspects of their workplace and

effective management policies (Walker 2001).

Team working relationships Employees stay when they have strong relationships with their work

colleagues (Clarke 2001). Organisations today encourage team

building, project assignments involving work with peers, and

opportunities for social interaction both on and off the job

(Marchington 2000). One value of team-based organisation is the

bond they establish among members. As Ray (1987) observed,

"Talking about stress may provide workers with a sense of

camaraderie and esprit de corps that adds value to the meaning of

their work environment" (pp. 188-89).

Co-worker supportiveness refers to the friendliness of and the

extent to which co-workers pay attention to employee comments and

concerns (Campion, Medsker and Higgs 1993; Hart, Miller and

Johnson 2003). Interactions with co-workers may serve "an affective-

psychological function by providing emotional support against the

stresses of the organisation's socialisation initiatives and

uncertainties of the work setting" (Jablin 1987, p.702). In addition,

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newcomers and incumbents who have co-worker support while

experiencing socialisation tactics and learning new roles are also less

likely to feel a mismatch in their fit to the organisation, attenuating

their intention to voluntarily leave the organisation (Kristoff 1996).

Today, the focus on teamwork, empowerment, and flatter

organisations puts a premium on organisational citizenship

behaviour that supports a membership that employees act

instinctively to benefit both the organisation and one's team.

Fundamentally, employees who work as a team are more likely to feel

an increased commitment to the work unit's efforts and the

organisation as a whole (Cohen and Bailey 1997; Meyer and Allen

1997). Consequently, employees tend to remain in organisations due

to the strong teamwork relationship they have established at the

workplace (Clark 2001; Marchington 2000).

Satisfactory working environment The factor most significantly affecting workforce commitment is

management's recognition of the importance of personal and family

life (Stum 1998). For some employees, personal priorities or

circumstances make the difference between leaving and staying.

Individuals will stay with a company that clearly considers and cares

for their career priorities (life stage needs), health, location, family,

dual-career and other personal needs (Gonyea and Googins 1992;

Kamerman and Kahn 1987). For example, many companies are

providing flexible schedules and work arrangements and are

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64

experimenting with other ways to help individuals manage their work

and personal life issues (Perry-Smith and Blum 2000; Solomon

1999).

Gumbus and Johnson (2003) attribute the improvement to

many work-life initiatives aimed at a corporate culture based on

performance and employee commitment. She says, "We believe in a

healthy, well-balanced workplace that treats the employee as an

individual, a family member, and a member of the community."

Therefore, many companies have successfully created an employee-

friendly environment by integrating specialised work arrangements

such as flexible hours, telecommuting, and family-leave assistance to

support employees in creating a work/life balance.

Some researchers suggest that for positive work experiences to

increase commitment significantly, employees must believe that such

work experiences are a result of effective management policies (Parker

and Wright 2001). So parlaying a constructive culture into increased

commitment might depend on how well managers succeed at getting

employees to credit good management for their positive experiences.

Prior research in organisational behaviour and human resource

management has shown that an organisation's commitment to its

employees (OCE) tends, in turn, to create a more committed and

responsible workforce (Eisenberger et al. 1990; Organ 1990;

Moorman, Blakely and Niehoff 1998; Mowday, Porter and Steers

1984; Shore and Wayne 1993; Steers and Porter 1987, pp. 575-83).

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Therefore, it appears that the person/environment-fit

hypothesis assumes that, as employees amass positive work

experiences, affective commitment rises accordingly (Lahiry 1994).

Organisational Commitment The concept of commitment The reason for the prevalent interest in the commitment concept in

the field of organisational behaviour has been its assumed connection

with turnover behaviour and performance (Benkhoff 1997b). Over the

years, it has emerged as the most recognised and investigated

construct of employee attachment or loyalty to organisations

(Sommer, Bae and Luthans 1996). In research, the term commitment

is broadly used to refer to antecedents and consequences, as well as

to the process of becoming committed or attached (O'Reilly and

Chatman 1986).

The author identified variations in the definitions of

commitment among the studies. The mere number of different

definitions sheds light on the fact that no real consensus exists

regarding the very construct of commitment. Hence, commitment can

be considered a multidimensional concept that has been interpreted

in a variety of different ways (Meyer and Allen 1997). The main

contenders appear to be affective or attitudinal (Buchanan 1974;

Mowday et al. 1982; Porter et al. 1974), normative (Allen and Meyer

1990), behavioural (Staw 1980) and calculative (Becker 1960; Ritzer

and Trice 1969). Fundamentally, the definition of commitment relies

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66

on the notion that committed employees have a desire to remain

employed with their organisation (Meyer and Allen 1997).

With regards to commitment, researchers differ on the basis of

attachment. Meyer and Allen (1991) suggest that “commitment

develops as a result of experiences of satisfying employees’ needs

motivational and/or are compatible with their values” (p.70). They

add that if organisation better manage the experience of the

employees than they may be able to foster the development of the

desired “commitment profile” (p.15).

According to Porter, Steers, Mowday and Boulian (1974),

commitment is a “strong belief in and acceptance of the

organisation's goals and values, a willingness to exert considerable

effort on behalf of the organisation, and a definite desire to maintain

organisational membership” (p. 604). Given that values play such an

important role in the definition of commitment, it stands to reason

that a person whose personal values matched the operating values of

the organisation would be more committed to the organisation than a

person whose personal values differed from the organisation.

The most popular method of examining this concept is through

an individual's attitudes and feelings towards his or her employing

organisation. Legge (1995, p.182) states that "virtually all the

research conducted on organisational commitment, per se, has used

the attitudinal conceptualization." This conceptualisation suggests

that committed employees have a strong belief in and acceptance of

the organisation's goals and values, show a willingness to exert

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considerable effort on behalf of the organisation and have a strong

desire to maintain membership with the organisation (Cook and Wall

1980; Lambert, Barton and Hogan 1999; Mowday, Steers and Porter

1979).

Aspects of commitment examined in this study include

identification (Banai and Reisel 1993) and reciprocity (Roehling 1996)

with the organisation, as well as intentions to remain with the

organisation (Black and Stephens 1989; Feldman and Thomas 1992;

Stephens and Black 1991).

The basic tenet of the reciprocity thesis is that the need to

reciprocate is universal yet contingent upon the receipt of benefits.

The psychological contract focuses on the employee-employer

exchange relationships. In the context of exchange relationships,

individuals may reciprocate employer treatment by enhancing their

attitudes, engaging in organisationally supportive behaviours, or both

(Roehling 1996). Researchers have suggested that reciprocity is a

mechanism underlying commitment (Angle and Perry 1983; Powers

2000) and that employees will offer their commitment to the

organisation in reciprocation for the perceived organisational support

(POS).

The term perceived organisational support (POS) is used to

describe the extent to which employees believe that the organisation

values their contribution and cares about their well-being

(Eisenberger, Huntington, Hutchison and Sowa 1986). In this regard,

a useful framework in which to visualise commitment behaviour is to

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68

view them as components of fair exchange between a company and

its employees. This approach to motivation postulates that employees

and the organisations are involved in an exchange relationship

(Pinder 1984). In order to make people loyal, the organisation must

be able to satisfy them (Cohen 1993; McLean and Andrew 2000;

Stroh and Reilly 1997).

Essentially, the development of organisational commitment is

related to the notion of a psychological contract. This term is used to

describe an employee's belief regarding the terms and conditions of a

reciprocal exchange agreement between that employee and the

employer (Robinson and Rousseau 1994). Psychological contracts

recognise that most people seek to balance their contributions (what

they put into an organisation) and their inducements (what they get

from the organisation in return). Therefore, "within the boundaries of

the psychological contract, employees will agree to do many things for

the organisation because they think they should" (Schermerhorn,

Hunt and Osborn 1982, p.480). Eisenberger et al. (1986), on the

other hand point out that the concept of commitment also

encompasses the notion that employees may perceive the degree to

which their employing organisation is committed to them.

An organisation can therefore exhibit commitment to its

employees in many ways. A firm may be solicitous of workers'

physical and emotional well-being, devote itself to a high level of job

satisfaction and employee development, provide fair and ample

compensation and share its profits (Eisenberger et al.1990; Huselid

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1995; Mowday et al. 1984; Organ 1990; Williams and Anderson

1991).

Conversely, there are some specific behaviours that may

indicate employee commitment to the organisations including a

willingness to remain with the organisation (Solomon 1992; Meyer

and Allan 1991); productivity that exceeds normal expectations,

(Mowday, Porters and Steers 1982); altruistic behaviour (Laabs 1996)

and reciprocity, that is the employee’s commitment to the

organisation must be matched by the organisation’s commitment to

the employee (Solomon 1992).

According to Meyer and Allen (1991), "Employees with strong

affective commitment remain [with the organisation] because they

want to, those with strong continuance commitment because they

need to, and those with strong normative commitment because they

feel they ought to do so" (Roberts et al. 1999, p.3). The following

definitions are ascribed to each of the three forms of commitment by

Meyer and Allen (1991):

1. Affective commitment refers to employees' emotional

attachment to the organisation. As employees amass positive

work experiences, affective commitment rises accordingly.

Some researchers suggest that for positive work experiences to

increase commitment significantly, employees must believe that

such work experiences are a result of effective management

policies.

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2. Continuance commitment is based on the costs that employees

associate with leaving the organisation. A high level of

continuance commitment may well keep an employee tied to an

organisation, but it is unlikely to produce a high level of

performance. According to Meyer and Allen, employees who

showed a high degree of continuance commitment were more

likely to earn poor marks from their supervisors on

performance and potential.

3. Normative commitment is employees' feelings of obligation to

remain with the organisation. A feeling of obligation to remain

with an organisation develops from familial and societal norms,

before an individual ever enters an organisation. Development

of normative commitment also might result from organisational

socialisation, especially in organisations that value loyalty and

that systematically and consistently communicates that value

to employees.

Alternatively, Mowday et al. (1979), define organisational

commitment as the relative strength of an individual's identification

with and involvement in a particular organisation that is

characterised by three factors: (1) a strong belief in and acceptance of

the organisation's goals and values, (2) a willingness to exert

considerable effort on behalf of the organisation, and (3) a strong

desire to maintain membership in the organisation. This most widely

used organisation instrument: Organisational Commitment

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Questionnaire (OCQ) measures three dimensions: moral commitment,

calculative commitment and alienative commitment (Gainey 2002 ). A

morally committed employee has accepted and can identify with an

organisation's goals and values. A calculatively committed employee

exchanges his/her contributions for inducements provided by an

organisation. An alienatively committed employee perceives a lack of

control over his/her internal organisational environment and

perceives an absence of alternatives for organisational commitment.

The combinations of commitment types that an employee may

encounter in an organisation depend on the organisation's culture,

the leadership style of its managers, and the preferred personalities

through the organisation's philosophy and criteria for hiring

(Commeiras and Fornier 2001).

Additionally, Becker's (1960) ‘side bet’ theory led to the

development of propensity to leave/stay: employees are inclined not

to quit (calculative commitment) because they do not want to lose the

non-transferable advantages acquired. Some researchers have

suggested that the propensity to commit accounts for the variations

in these interactions, and suggest it is an important factor, perhaps

the most important factor, in sustained organisational commitment

(Angle and Lawson 1993; Finegan 2000; Pierce and Dunham 1987;

Somers 1995; Steers 1977). Current research suggests that the key to

propensity lies within groups of values pre-existing within the

individual, but researchers have had limited success in determining

which groups of values matter (Finegan 2000).

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Among the various types of commitment examined, affective

commitment (or loyalty) is considered the most desirable and

beneficial (Meyer and Allen, 1997). Reviews by Mathieu and Zajac

(1990) and Meyer and Allen (1997) indicate that antecedents to

affective commitment typically are categorised as personal

characteristics, job (work experiences), and organisational

characteristics. Personal characteristics pertain to age, gender,

education, marital status, job level and tenure. Job characteristics

focus on skill variety, task autonomy, job challenge and job scope.

Organisational characteristics include organisational policies,

supportiveness, communication and recognition. Over the years,

research results have shown that, among these categories,

organisational characteristics are strongest in predicting affective

commitment (Nyhan 1999; Steers 1977; Wallace 1997; Zangaro

2001).

In their comprehensive review, Meyer and Allen (1997) reported

a positive relationship between affective commitment and employee

retention. Both affective and continuance (calculative) commitment

are expected to increase the likelihood that an individual will remain

with an organisation (Meyer, Bobocel and Allen 1991). However, the

reasons for remaining differ between affective and continuance

(calculative) commitment. Employees with high levels of affective

commitment remain “because they want to”, whereas those who have

a strong continuance remain because they “have to.” On the other

hand, Wiener and Vardi (1980) found a negative relationship between

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normative commitment and intention to turnover. A study by Meyer,

Allen and Smith (1993) found that affective and normative were

negatively related to intention to quit.

Some researchers (Mathieu and Zajac 1990; Wiener and Vardi

1980) however, found a weak direct relationship between

organisational commitment and intention to turnover. Their studies

support organisational commitment as mediating and moderating

turnover intention.

In précis, employee commitment to an organisation is viewed as

a critical success factor in today's corporate environment (Pfeffer

1998; Somers 1995). The focus directed at employees by an

organisation is demonstrated by the monetary and non-monetary

benefits they receive (Williams 1999) and the service that is devoted

to them (Payne 2000). If employees believe the organisation is less

committed to them then they may respond by feeling less committed

to the organisation. This lack of employee commitment to the

organisation will be reflected in their intention to stay or leave (Meyer

and Allen 1997).

Turnover intention Intention to stay/Intention to leave Turnover intention is defined as a conscious and deliberate wilfulness

to leave the organisation (Tett and Meyer 1993, p. 262). According to

Fishbein and Ajzen (1975, p. 369), "The best single predictor of an

individual's behavior will be a measure of his intention to perform

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that behavior." It is therefore legitimate to use it as an outcome

variable in turnover studies (Gutherie 2001; Gutmann, DeWald and

Nunn 2001). Employers also consider intention to quit a more

important measure then the actual act of turnover. (Lambert et al

2001). Empirical evidence strongly supports the position that intent

to stay or leave is strongly and consistently related to voluntary

turnover (Dalessio, Silverman and Schuck 1986; Gutmann, DeWald

and Nunn 2001; Mathieu and Zajac 1990).

Employees leave for many reasons, some of which

organisations have no control over, such as retirement, a family

member being transferred or the desire to stay home to start a family.

Some of the most common reasons employee leave include:

employees perception of poor leadership or supervision,

unchallenging positions, limited opportunity for advancement, no

recognition for good performance, limited control over the work and

customer, salary benefits are not commensurate with job

requirements; and the opportunity for a better compensation package

elsewhere (Accenture 2001; Jardine and Amig 2001).

Wagar (2003) examined the relationship between an

individual's intention to quit his job and the human resource

management activities of the organisation. The study revealed that

employees of organisations with more sophisticated human resource

systems were significantly less likely to indicate they intended to quit

over the next two years.

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Furthermore, this study identified that it was not the presence

or absence of any one HR practice which was considered the

determining factor, but rather the "bundle" or system of practices

that will affect the decision to quit. This research also provided

evidence that older employees and individuals with more seniority

within the organisation were less likely to report they planned to

resign.

According to Wager (2003), employees who did not intent to

quit were more likely to be employed in organisations that adopted a

certain set of HR practices such as employee voice procedures,

programs that recognise employee contributions (e.g. merit-based

promotion, individual merit pay and a formal employee recognition

program), mechanisms for sharing information with employees, use

of problem-solving groups and training in employee involvement. In

addition, the results of this study showed that employee perceptions

regarding the organisation's retention strategy were significant. For

instance, employees who indicated they were not planning to quit

also were more likely to report their organisation was committed to

retaining the best employees; saw the retention of top employees as

very important; and has established programs designed to retain

quality employees (Boyd 2000; Dobbs 2001; Eskildesn and Nussler

2000).

For this study, organisational commitment and intention to

stay (turnover intention) were selected as the focal dependent

variables for the following reasons. First, there is evidence that before

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actually leaving the job, employees typically make a conscious

decision to do so. These two events are usually separated in time.

Second, it is more practical to ask employees of their intention to quit

in a cross-sectional study than actually to track them down via a

longitudinal study to see if they have left or to conduct a retrospective

study and risk hindsight biases.

Turnover Intention Predictors Organisational commitment Organisational commitment is also examined in several studies as a

predictor of both the intention to quit and turnover. According to

Mowday, Steers, and Porter (1979), an employee who is committed to

the organisation has values and beliefs that match those of the

organisation, a willingness to exert effort for the organisation, and a

desire to stay with the organisation. Employees with lower levels of

commitment are less satisfied with their jobs and more likely to plan

to leave the organisation (Bennett, Blume, Long and Roman 1993;

Schnake and Dumler 2000; Zangaro 2001).

Availability of employment Availability of employment has a significant positive effect on

turnover intent (Tett and Meyer 1993). Employees are more likely to

express turnover intentions when they perceive that there are other

acceptable employment opportunities. Many researchers argue that

most people will not leave their current job without reasonable

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probability of finding other employment (e.g., Bame 1993; Hom and

Griffeth 1995). Some studies have used the local unemployment rate

as a measure of alternative employment opportunities (e.g., Mueller

and Wallace 1992; Vorhies and Harke 2000; ). However, this may not

adequately measure an individual person's availability of alternative

employment opportunities.

Demographic Factors Demographic factors were among the most common and most

conclusive predictors in the turnover literature. A number of studies

found age, education, job level, gender and tenure with the

organisation to be significant predictors of turnover (Jinnett and

Alexander 1999; Miller and Wheeler 1992). It was generally accepted

that younger and better educated (as well as less trained) employees

are more likely to leave than are their counterparts (Manlove and

Guzell 1997). The higher the job level one has within the

organisation, the lower is one's likelihood of quitting (Bedian, Ferris

and Kacmar 1992). Level of education was related to turnover only for

employees holding mid-level jobs (Galang, Elsik and Russ 1999). This

means that those who have highly specialised skills, as well as those

with limited education, tend to remain on the job for longer periods of

time than those who have a moderate degree of educational

attainment.

Gender and marital status generally do not appear to be related

to turnover (Bendian et al 1992; Koeske and Kirk 1995; Jinnett and

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Alexander 1999), though having children at home is a fairly strong

correlate of turnover, especially for women (McKee, Markham, and

Scott 1992; Miller and Wheeler 1992). McKee, Markham and Dow

Scott (1992) find marital status to be indirectly related to intention to

leaves in that employees who are married are more satisfied with

their jobs and feel more support and less stress than their unmarried

colleagues.

There is considerable evidence of an inverse relationship

between tenure and turnover. Turnover rates are significantly higher

among employees with a shorter length of service than among those

who are employed longer (Pfeiffer 1995; Somers 1996; Whitfield and

Poole 1997). This may be because longer tenured employees have

more investment in the company and are less likely to leave. Becker

(1960) theorised that, over time, an employee invests in an

organisation (e.g. retirement, pensions, pay raises, benefits, stock,

position, etc.), and these investments bond the individual to the

organisation. Since these investments, or what Becker calls "sunken

costs," increase with age and tenure, an employee tends to become

more committed to the employing organisation, and the bond reduces

the likelihood that the employee will quit (Meyer and Allen 1984;

Wallace 1997).

In this study, age, gender, occupation and industry were the

four demographic factors that were considered as predictors for the

HRM-retention link model. Tenure was excluded because the

surveyed employees were all core or permanent employees and

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therefore the relevance of tenure as a predictor held little significance.

Therefore age was considered a better predictor for this study. Mathieu

and Zajac (1990) found a positive correlation between age and

commitment.

However, it is also important to note that the links between

demographic characteristics and commitment are indirect and disappear

when other factors such as work rewards and work values are controlled

(Mottaz 1988). Mottaz (1988) commented that “while demographic

characteristics such as age, tenure, gender, education, marital status and

the like may correlate to commitment, they are not determinants” (p. 471).

Conceptual Schema This research seeks to identify the factors of human resource

management practices (HR factors and organisational factors) that

will influence the retention of core employees of Australian

organisations. It aims to examine the relationships between the

following variables: intent to stay (turnover intention) (outcome) and

organisation commitment (dependent) to: Independent variables:

person organisation fit (selection), remuneration, recognition and

reward, training and career development, challenging opportunities,

leadership behaviour, company culture and policies, team work

relationship and work environment. Figure 2.1 illustrates the

relationships and influences, which have been claimed to impact on

retention. This study investigates these linkages and impacts in three

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phases: Phase 1, Delphi Method; Phase 2, Interview (qualitative) and

Phase 3, Survey (quantitative).

Conclusion The common theme in this literature review is an emphasis on the

utilisation of human resource management factors that influence

retention of core employees. First, it presented different types of

human resource architecture models of employment, describing the

employment modes and the employers-employees psychological

employment relationships. Second, it discussed empirical evidence of

the relationships between the human resource practices and

organisational commitment and intent to stay (turnover intention).

Third, the identified HR factors which included person organisation

fit (selection), remuneration, recognition and reward, training and

career development, challenging opportunities, leadership behaviour,

company culture and policies, and satisfactory work environment

were discussed to establish relationships to organisation commitment

and intent to stay. Finally, turnover predicators such as age, gender,

occupation and industry were highlighted in relation to its influence

on organisation commitment and intent to stay.

The following chapter, Chapter three will present the overall

research methods employed in this study. The methods of research

involve three phases and they include Delphi Technique, interview

(qualitative) and survey (quantitative).

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81

CHAPTER THREE

RESEARCH METHODOLOGY

A Three-Phased Study: The Delphi Method, In-depth Interview and

Quantitative Survey This chapter explains the overall methodology used to collect the data

to address the research issues of this three phased study. It starts

with the selection and justification of the three phased approach of

the study: (1) the Delphi technique, (2) the In-depth interview and (3)

the Employee Survey. It provides information about the sample

population of each of the phases. It further describes the

instruments, the data collection processes and the type of analysis

carried out on each phase of the study.

Justification of three phased approach The objective of this study was to investigate and determine the

current human resource practices on the retention of core employees

in Australian organisations. In order to successfully achieve this aim,

this study was divided into three phases:

Phase One involved a Delphi procedure, with participants on

the expert panel responding to a series of questionnaires (3 rounds)

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to achieve a consensus in defining the functions and knowledge

domains of human resource practices on retention. This method was

selected as a preliminary investigation to obtain the current HRM-

retention practices adopted by Australian organisations via experts

experienced in the field of HRM in the Australian business

environment. The initial data collected from the Delphi method

combined with a comprehensive literature review provided a more

robust interview schedule for the next phase-the in depth interview

with HR practitioners.

Phase Two involved an in-depth interview with HR practitioners

from Australian organisations. This qualitative approach was

employed with the objective to acquire richer data from the

Australian HR policy makers. The acquisition of this set of data

enabled the researcher to construct a more effective instrument for

Phase Three.

Phase Three involved a survey of core (critical) employees of

Australian organisations.

The three stages of the study were deemed necessary to best

address the eleven (11) research questions. Each phase of the study

extracted essential data to assist and contribute to the development

of the instrument of the subsequent phase.

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This study aimed to rectify the gap in the extant literature and

provide valuable insights that may explain the differences in human

resource management practices that affect the retention of core

employees of Australian organisations. It is therefore pertinent that

the research captures the essential information more amenable to

evaluation and discussion. As a result, the three-phase approach was

considered the most efficient research design to effectively explore the

broad objectives of the study.

Sample population (Phase One – The Delphi study) Panel selection The success of a Delphi study is largely dependent on the quality of

the participants (Dalkey and Helmer 1963; Delbecq and Van de Ven

1971). Dalkey and Helmer (1963) reported specific criteria for the

selection of panel experts. The first is that the experts exhibit a high

degree of knowledge of experience in the subject matter. Another is

that they exhibit “representativeness” of the profession so that their

suggestions may be adaptable or transferable to the population.

In choosing panellists for this study, the following criteria were

considered: HR policy makers, extensive theoretical knowledge,

experience in the field of human resource management both in the

industry and academia and an advanced degree in management or a

closely related field. To identify potential participants, the researcher

enlisted the assistance of Associate Professor Lanny Entrekin and

Professor Shelda Debowski.

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85

Potential participants for this study were identified through

their expertise in the area of human resource management in the

Australian environment. They included academics, human resource

practitioners and industrial psychologists. The latter were included

because of their role in the workplace. Industrial psychologists work

consistently with management to re-organise the work setting to

improve productivity or quality of life in the workplace. In addition,

they conduct applicant screening, training and development,

organisational development and analysis and counselling.

The nomination of people, who would be appropriate “experts”

for this study, was based on the following general criteria:

Academics

a. Participants must have a minimum of five years teaching experience

in management at an Australian university.

b. Evidence of fairly extensive publications in management (specifically

with regards to the Australian business sector).

c. Research interest in areas of human resource management.

Human Resource Practitioners

a. Currently working as a HR practitioner in an Australian

organisation.

b. Minimum five years working experience in human resource

management.

Industrial Psychologists

a. Minimum of three years working experience as an industrial

psychologist in Australia.

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86

b. Minimum five years teaching experience in psychology in

Australia.

From the initial pool of nominations, twenty (20) respondents were

formally invited to participate, and of these, thirteen (13) agreed to

complete the required three rounds of the survey.

Panel size Delphi procedures tend to depend on the questions being asked,

sample size and degree of consensus being reached (Rowe and Wright

1999). As this study is a preliminary investigation, the small number

of participants was deemed by the researcher to be acceptable for

determining a meaningful outcome. The panel size of thirteen fits

within the guidelines recommended for Delphi studies. Helmer and

Dalkey used a panel of seven experts in their original Delphi

experiment in 1953 (Helmer 1983). Linstone and Turoff (1975)

suggests a panel size of anywhere from ten to fifty participants (p.

86).

The panel nominees were asked to express their expert

opinions and judgements on the current development of retention

management in Australia and to identify the key HR factors

influencing retention in the work place. These experts consisted of

senior academics, human resource managers and industrial

psychologists. Initially a personal letter was sent to each of the

nominees (See Appendix 1). The letter invited them to participate in a

three-round Delphi study. In addition, the letter included an

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87

explanation of the study and provided an estimate of the time

commitment for participation. In the introductory letter, nominees

were informed that participation was voluntary and confidential and

that three rounds of responses would be required.

Follow-up telephone calls were made and letters were sent to

non-respondents after two weeks. Nominees were advised that each

round of the study would require approximately twenty minutes and

that data collection would occur over a two-month time period.

Return of a signed consent form served as the panel member’s

agreement to participate in the study (Appendix 2).

Methodology (Phase One- Delphi Study) For this research, the Delphi Technique was chosen as a suitable

preliminary research method because the results will offer a better-

informed look at the current and potential status of retention

management carried out by Australian organisations. Based on the

attitudes and beliefs of a carefully selected group of expert

respondents, the expected prospects for reform in the areas of

retention management and human resource practices will also be

captured. A substantial literature review has identified some key HR

practices that influence retention. However, there is little consensus

among researchers with regard to precisely which HRM practices

should be included (Becker and Gerhart 1996; Cappelli 1999). Due to

these glaring discrepancies in the prescriptions made by different

scholars in this area, the results of this Delphi study will be relevant

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and provide clarification as well as substantially enhance the

literature review on retention. In addition, it will expose the current

retention management practices adopted by Australian organisations.

Previous studies using such an approach have typically used

thirty experts based on the finding that larger groups create few

additional ideas and limit the in-depth exploration of the ones

generated (Rowe and Wright 1999; Van De Ven and Delbecq 1974).

However, for this study, a smaller number of participants were

selected (20). The small sample size was deemed acceptable due to

the preliminary exploratory role of the Delphi technique in the first

stage of this research. It was, however, critical to secure the

participation of the right kinds of experts, who understand the

issues, have a vision and represent a substantial variety of

viewpoints.

The Delphi technique uses problem solving and expert

consultation methods in a structured manner. First, the problem was

identified and divided into its component parts. Relevant data was

analysed and different perspective of problem sought from interested

parties. Second, specialists were consulted to address each section of

the problem, using a structured and weighted questionnaire. The first

round of the procedure was unstructured (Martino 1983), allowing

the individual experts relatively free scope to identify and elaborate

on those issues they see as important. These individual factors were

then consolidated into a single set. After each of these rounds,

responses were analysed and summarised, which were then

Chapter 3

89

presented to the panellists for further consideration. Hence, from the

second round onwards, panellists were given the opportunity to alter

prior estimates on the basis of the provided feedback. This procedure

continued until consensus in the panellist responses was achieved.

Application of the Delphi Technique The Delphi procedure used in this study consisted of three mailed

survey rounds completed over a two-month period (Figure 3.1).

Results of each round were analysed and fed back to the respondents

who were asked to re-examine their opinions in light of the overall

results. The first round survey consisted of open-ended questions

designed to elicit expert opinions on HR factors that influence

retention of core employees.

In the second round, the responses suggested in the first round

were presented to each respondent in the form of survey statements

and accompanying response selections, each selection serving to

complete the initial statement. The respondents were asked to

indicate the degree to which they agreed with each completed

statement on a scale of 1 to 5, with 1 indicating strongly agree and 5,

strongly disagree (Likert Scale). The responses that received the

greatest support for each of the questions were fed back to the

experts during Round Three.

In the third and final round, the respondents were asked to

rank the responses that accompanied each statement according to

their perceived importance with 1 being the most important and 5 the

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least. This was done to help the respondents further refine their

opinions and assist in achieving consensus.

Instrument (Delphi) This preliminary questionnaire was generated from a review of

retention management literature (eg Cappelli 2000; Huselid 1995;

Kraut and Korman 1999; Lepak and Snell 1999). Subsequent

questionnaires (Rounds 2 and 3) were modified and focused, based

upon responses to the first questionnaire. The iterative process

stopped when consensus had been reached among participants.

Analysis of the questionnaires was used to prioritise research areas

and to rank specific research issues within these areas.

Round I The preliminary instrument (Round 1) was developed following an

extensive review of the literature of the relationship between retention

and human resource policies (Appendix 3). The questionnaire was

designed and formulated based on the four key research questions

(Q1-4). The questionnaire consisted of two sections (A and B). In

Section B of the instrument, participants were asked to provide

demographic data (gender, age, experience and professional status).

In Section A, the style of questions chosen was open-ended in order

to enable the respondents to express their responses in any way they

choose. This open-ended style was considered suitable as it provided

minimum direction to respondents.

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91

Figure 3.1: The Delphi Procedure

This type of question removes the need for the researcher to

pre-judge appropriate categories for response, allowing groupings of

Literature Review 1st Round Questionnaire

Senior Academics

HR Managers Industrial Psychologist

Panel

2nd Round Questionnaire

Senior Academics

HR Managers Industrial Psychologist

3rd Round Questionnaire

HR Managers Industrial Psychologist

Senior Academics

Panel Consensus

Final Panel Consensus

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similar responses to be constructed if necessary after the data have

been collected.

Round 2 Two major changes were made to the Round 2 instrument (Appendix

4). First, the general demographics and open-ended questions were

omitted. Second, responses contributed by participants during Round

I were incorporated verbatim under the appropriate categories on the

instrument. In Round 2, participants were instructed to review the

comments from Round 1 and to rate each comment (1-5), bearing in

mind that the researcher sought validation based on the items most

critical to the retention process.

Round 3 In the third and final round survey, the experts were asked to agree

or disagree with the final wording of an item as well as provide

additional comment under the specified concept areas. This

procedure stopped at three questionnaires or rounds which seems

fairly typical of many studies. Consensus or trends towards

consensus were documented at the conclusion of Round 3.

Delphi data collection and analysis Table 3.1 provides the summary of the Delphi process. It outlines the

detailed action plans of the three rounds.

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93

Data collection and analysis were based on Schmidt’s method

(1997), in which the Delphi survey process is divided into three

rounds, as shown in Table 3.1. Participants answered general, open-

ended questions on the first round survey. Responses to the open-

ended question in the first round were analysed qualitatively and

categorised or grouped by frequency or similarity of response in order

to reduce the number to a manageable level yet keeping the essential

meaning of the responses. The results were then grouped together

under a limited number of headings and statements (eg. Definitions

of core employees; Needs of core employees) and this was then

drafted for circulation to all participants in a second questionnaire.

The second round used questions developed from responses to

the first questionnaire. The participants were asked to rank each

statement on a 1 to 5 scale (1 being the most important) and to

optionally comment on each question. Responses to the second round

were analysed to determine the ranking of the items. Ranking votes

(1-5) assigned to items by participants in Questionnaire 2 were

tallied. In the final round, participants re-ranked their agreement

with each statement in the questionnaire, with the opportunity to

change their scores in view of the group’s responses. The re-rankings

were summarised and assessed for the degree of consensus. This

resulted in the selection of a) five key characteristics of core

employees, b) nine core employee needs and c) five major factors that

impact on the Australian human resource architecture.

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ROUND ONE ROUND TWO ROUND THREE

Date Mailed Out:

Date Due back:

9 September 2002

27 September 2002

28 October 2002

8 November 2002

26 November 2002

5th December 2002

Instrument Questionnaire 1

Section A: 8 Questions

Section B: Background

Questionnaire 2

5 Questions

Questionnaire 3

Results of Q1-4

Question 5

Data Collected

Demographic information.

Identification of key characteristics of core employees

Identification of key HR factors that influence retention of employees

Identification of key features of the Australian HR Architecture Model

Ranking the order of importance of each of the features (1-5) for Questions 1-4

Identification of the barriers/factors affecting the implementation and influence of HR practices (Q5)

Assessment of relative importance of the identified features by using frequency and means

Data Analysis

Compile lists of features Prepare Questionnaire 2 using compiled lists

Compute frequency of responses and range of responses of the degree of importance for each item (Q1-4) Tally number of points received for each item. Draw conclusions based on results. Prepare Questionnaire 3 using only items receiving highest rating

Categorised or ranked by frequency or similarity of response in order to reduce the number to a manageable level. Draw conclusions based on results

Table 3.1. Summary of the Delphi Process

A content analysis (Denzin and Lincoln 1998) was conducted to

examine panellists’ responses to open-ended questions regarding HR

factors that influence retention; HR Architecture; core employees. The

researcher sorted themes. Information from the content analysis

provided additional insights into the perceptions and attitudes of the

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panel towards the HR Architecture Model, core employees and the HR

factors that contributed to retention effectiveness. Descriptive

statistics were used to describe demographic information and

summarised panellists’ ratings of items (Wright, Lawrence and

Collopy 1996). Means and standard deviations were obtained for each

item and each category following Rounds 1 and 2.

Sample population (Phase 2 and Phase 3) Large Australian organisations from various industry sectors were

targeted as the sample population for Phase 2 (in-depth interview)

and Phase 3 (employee survey) of this research. The researcher

approached organisations that met the following criteria: (1)

Australian organisation (2) number of employees > 500 signifying a

large organisation and (3) must be established > 10 years.

The criteria for the sample was set on the basis that the size of

the organisation and the years of establishment attest to more

developed human resource systems (Jackson and Schuler 1995). This

is relevant due to the nature of this study. Industry sectors

represented by these organisations were mining, energy, oil, gas,

engineering, construction, electronics, financial, education, health,

food, retail and manufacturing. This ensured a broad spectrum of

industries.

A letter (Appendix 5) and consent agreement form (Appendix 6)

were sent to each selected company requesting an opportunity to

conduct an interview with their human resource manager and a

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survey of their core employees. Subsequently, follow up calls were

carried out to contact non-responsive firms and to confirm interview

times with respondents who had agreed to participate.

Twelve organisations responded and agreed to participate in

Phase 2 (interview). However, only nine organisations agreed to

commit to both the interview and employee survey. Organisations

that participated in the interview process consisted of industries such

as engineering, diversified, health care, education, manufacturing

and public sector. Participating firms for Phase 3 included industries

such as health care, education, manufacturing and public sector.

Methodology (Phase 2- Interview) The research method involved in Phase 2 was the interviewing of

human resource managers or representatives of twelve Australian

companies, using a structured interview schedule, which

incorporated a list of HRM best practices on retention. These

questions were based on the best practices identified through Phase

1, Delphi study and the literature reviewed. The objective of Phase 2

is to identify other HR elements not captured by the Delphi study but

considered to be important by practitioners. This final set of HR

practices was identified during the interview process and utilised for

the Phase 3, employee survey instrument.

Phase 2 of this research was conducted via face to face

interviews, lasting between 30-45 minutes with the use of the semi

structured interview schedule (Appendix 7). The interview schedule

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was developed in order to provide some standardisation across

interviews.

Although somewhat limiting the extent for spontaneous

questioning, this interview schedule reduced the possibility of

interview inclination and the problem of obtaining different levels of

information from interviewees (Patton 1987). All interviews were

recorded using a tape recorder with the permission of the

participants and descriptive notes were taken during the interviews.

Interview Format The first section of the interview schedule sought information on the

characteristics of their core employee (using the results obtained from

the Delphi), the distinguishing needs of their core employees and non

core employees, their application of standardised or differential HRM

for different types of employees and the importance of the role of HR

in the organisation (strategic or limited to administrative). The second

section of the schedule explored the importance of the human

resource factors identified from the Delphi study in relation to its

influence on retention in the organisations and the effectiveness of its

implementation. The final section covered (1) contextual issues that

affect the industry and the retention management of core employees

(2) effective management of such as hiring practices, performance

appraisal practices, training and career development practices,

succession planning program, pay practices and leadership practices

and finally (3) the turnover rate (Appendix 7).

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Additional prompts, which included asking interviewees to

explain some of their constraints to achieve effectiveness in their HR

practices and the scope for implementation of good practices, were

scattered throughout the interview format in order to elicit further

information from the participants (Maykut and Morehouse 1994).

Interview Data Collection and Analysis The data from the interviews were content analysed. Content analysis

is a research technique which systematically examines the content of

communications—in this instance, the interview data. The

transcribed data were coded based on the key factors and issues

identified in the literature review and the Delphi study. The responses

were analysed thematically and emergent themes ranked by their

frequency and subsequently categorised. The constant comparison

method was used to identify major themes (Glaser and Strauss 1967;

Lincoln and Guba 1985). This qualitative research process is known

as the Grounded Approach, introduced by Glasser and Strauss

(1967). Data obtained through the interview were qualitatively and

quantitatively analysed. Qualitative data in the form of comments

and descriptions were used to provide the basic research evidence,

while quantitative data in the form of frequencies and percentages

were used to support the qualitative data.

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Methodology (Phase 3 Employee Survey) This final phase tested the identified HR practices (results from

Phases 1 and 2) on employees, and obtained the employees’

perspective of the effectiveness of the identified factors in relation to

their retention in their organisation.

The research method employed for Phase 3, involved a survey

of core employees of organisations. All employees who participated

were identified as core employees by their organisations. The

questionnaire was developed based on literature studies, results from

the Delphi study as well as the interviews with human resource

managers. Simple random sampling was then carried out in each

organisation, with about 60-100 core employees from each

organisation randomly selected to survey. The questionnaire was

distributed to 800 employees, with 457 returned. This 57 percent

returned rate was deemed acceptable (Comrey and Lee 1992).

Employees of participating organisations were administered

with the survey and a self-addressed envelope. Some organisations

opted for electronic survey. They were given two weeks to complete

the survey. For some organisations with poor response, a second

survey was initiated with a request that it be completed within a

week. Further follow-ups were undertaken as necessary.

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Phase 3 Instrument The Phase 3 survey explored the employees’ perspective of their

organisation’s human resource practices in relation to their decision

to stay with their employer. The employee questionnaire (Appendix 8)

explored eleven (11) areas including the following demographic

details: organisational fit, reward and recognition, training and career

development, challenging assignments and job opportunities,

leadership, organisational policies, communication and work

environment/relationships, commitment and turnover intention. The

demographic details requested basic information regarding age, level

of education, occupation, number of years in current job and number

of years in the organisation.

Measurement and Construct Table 3.2 provides the summary of the measurement and construct of

the employee survey.

Phase 3 Data collection and analysis The statistical package for the social sciences was used to analyse the

quantitative data (SPSS for Windows version 11.05). Initially, all

items were reversed coded from “1” to “7”, “2” to “6” and so on.

Thereafter, summaries of the data were undertaken, including

frequency percentage distribution, mean and mode. The statistical

analyses used included correlation, reliabilities, exploratory factor

analysis and multiple regression.

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For this study, the primary goal of the regression analysis is to

investigate the relationship between the dependent variable (DV) and

several independent variables (IVs) and to further estimate population

parameters and test the hypothesis of the study. The regression

model selected for this study is the stepwise regression used to

develop a group of independent variables that is useful in predicting

the dependent variables and to eliminate those independent variables

that do not provide any additional prediction to the independent

variables already in the equation (Tabachnick and Fidell 2001).

Conclusion This chapter provided an overall explanation of the research

methodologies used for this study. The three phases: the Delphi

technique, the Interview and the Quantitative survey were described

sequentially. The development of the instruments for each phase was

described and the qualitative and quantitative techniques employed

in analysing the data were presented.

Subsequent Chapters, 4, 5 and 6 will report the results and

findings of Phases 1, 2 and 3.

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Table 3.2. Phase 3 Measurement Scales

Researchers Measurement Scale No of items

Judge,T.A.,& Cable, D.M. (1997), Lauver, K.I.J., & Kristof-Brown, A. (2001), Netemeyer, R. G., Boles, J.S., McKee, D.O., & McMurrian, R. (1997), O’Reilly, C. A., Chatman, J., & Caldwell, D. F, (1991)

Selection: Person organisation fit

4 items

Broadfoot, L. E., & Ashkanasy, N.M. (1994), Cammann, C., Fichman, M., Jenkins, D., & Klesh, J. (1979), Hackman, R. J., & Oldham, G. R. (1975), Idaszak, J. R., & Drasgow, F. (1987), Rhoades, L., Eisenberger, R., & Armeli, S. ( 2001), Seashore, S.E., Lawler, E.E, Mirvis, P., & Cammann, C. (1982), Warr, P. B., Cook, J., & Wall, T. D. (1979).

Remuneration & Reward: Job characteristics

Intrinsic and extrinsic rewards

5 items

Blau, G. J. (1989), Cammann, C., Fichman, M., Jenkins, D., & Klesh, J. (1979), Hausknecht, J., Trevor, C., & Farr, J. (2002), Jones, R., Sanchez, J., Parmeswaran, G., Phelp, J., Shoptaugh, C., Williams, M,. & White, S. (2001), Warr, P. B., Cook, J., & Wall, T. D. (1979).

Training and Career development:

Training adequacy Job design Job control

5 items

Broadfoot, L. E., & Ashkanasy, N.M. (1994), Hackman, R. J., & Oldham, G. R. (1975), Idaszak, J. R., & Drasgow, F. (1987), Jackson, P. R., Wall, T. D., Martin, R., & Davids, K. (1993), Warr, P. B., Cook, J., & Wall, T. D. 1979.

Challenging work and opportunities:

Job Diagnostic survey Skill variety

Task significance Task identity Autonomy

Higher order needs

5 items

Alimo-Metcalfe,B., & Alban Metcalfe, R.J. (2001), Bass, B.M., & Avolio, B.J. (1995), Podsakoff, P.M., MacKenzie, S.B., & Bommer, W.H. (1996), Singh, D.A., & Schwab, R.C. (2000), Yammariono, F.J., & Bass, B.M. (1990).

Leadership

MLQ5 Transformational leadership Effectiveness, performance

and satisfaction

4 items

Bass, B.M., & Avolio, B.J. (1995), Bishop, K. J.W., & Scott, D. 2000 Cohen, S. G., & Bailey, D. E. (1997).

Team leadership

Peer leadership Group goal clarity

4 items

Broadfoot, L. E., & Ashkanasy, N.M. (1994), Kabanoff, B. (2000), O’Reilly, Chatmen & Caldwell (1991), Morita, J.G., Lee, T.W., & Mowday, R.T. (1989), Sheridan, J.E. 1992.

Organisational Policies

Measures the degree the organisational structure

limits the action of employees.

Testing the focus on the influence of policies and procedures. Testing the

5 items

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organisational goal clarity and planning.

Cammann, C., Fichman, M., Jenkins, D., & Klesh, J. (1979), Griffeth, R.W., Hom, P.W., & Gaertner, S. (2000), Sims, H.P., Szilagyi, A.D., & Keller, R.T. (1976), Broadfoot, L. E., & Ashkanasy, N.M. (1994).

Communication and Consultation

Feedback

5 items

Bateman, T. S., & Strasser, S. (1984), Lee, T. W., Ashford, S. J., Walsh, J. P., & Mowday, R. T. (1992). Mathieu, J., & Zajac, D. 1990). Mottaz, C.J. (1988), Meyer, J. P., & Allen, N.J. (1997); Mowday, R., Steers, R., & Porter, L. (1979); Commeirus, N., & Fornier, C. (2001).

Work Environment

Humanistic and socialisation Physical working conditions

Organisation climate

7 items

Meyer and Allen 1997; Porter, Steers,Mowday and Boulain 1974

Organisational

Commitment

Affective Caculative

5 items

Cammann, C., Fichman, M., Jenkins, D., & Klesh, J. (1979); Dalessio, A., Silverman, W.H., & Schuck, J.R. (1986), Griffeth, R.W., Hom, P.W., & Gaertner, S. (2000), Lambert, E. G, Hogan, N.L & Barton, S.N, 2001; Mathieu, J., & Zajac, D. (1990), McCloskey and McCain 1987; Mueller & Wallace 1992, Seashore, S.E., Lawler, E.E., Mirvis, P., & Cammann, C. (1982).

Turnover Intention

Intent to stay Intent to quit

4 items

CHAPTER FOUR

THE DELPHI STUDY RESULTS (PHASE ONE)

Identifying the Human Resource

Management Factors that influence the Retention of Core Employees

A human resource system helps create a workforce whose contributions are valuable, unique, and difficult for competitors to imitate (Pfeffer 1998, p. 55).

This chapter reports the results of Phase 1 of the research which

examines the human resource factors influencing retention of core

employees of Australian organisations. As a preliminary research

method, this first stage used the Delphi technique, which consisted of

three rounds of questionnaires integrating the judgments and

comments of a panel of thirteen selected experts (academics,

practitioners and industrial psychologists) to achieve consensus

among the diverse groups of participants. The thirteen experts were

asked to identify key characteristics of core employees, key HR

factors that influence retention of core employees and the key factors

that affect the Australian HR Architecture model.

Final responses of the Delphi procedure were recorded,

analysed and statistically summarised. Descriptive statistics were

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used to describe demographic information and the panel rating of

identified items.

This chapter provides descriptive summaries of the panel

responses and explores the outcomes through the use of expert

statements.

Demographic characteristics of Delphi Panellists The panellists' knowledge of the subject matter at hand is the most

significant assurance of a quality outcome, and so participants were

chosen because of their expertise related to the subject (Stone-Fish

and Busby 1996).

A total of twenty professional experts were invited to participate

in the Delphi Study and thirteen accepted. The panel members

consisted of six (6) academics, four (4) HR practitioners and three (3)

psychologists. Ten of the panel members were male and three female.

The majority (9) held a Ph.D. and advanced masters degrees. Table

4.1 reports the demographic data of the Delphi panel.

The results of the three round Delphi study were reported in

two ways. First the categorical responses provided by the panel

members were presented in Table 4.2, Table 4.3, Table 4.4, Table 4.5

and Table 4.6 to enable an understanding of the key trends evident.

This information was then further explored using comments provided

by participants to highlight key issues on human resource retention.

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Characteristic Number Percentage Invited Participants 20 100 Accepted Participants 13 66 Age 30-40 2 15.38 41-50 4 30.77 51-60 4 30.77 61-70 3 23.08 Gender Male 10 76.92 Female 3 23.08 Highest Qualifications PhD 9 69.23 DBA 1 7.69 MBA 1 7.69 MHRM 1 7.69 M.Psych. 1 7.69 Occupation Senior Academics 6 46.15 HR Practitioners 4 30.77 Industrial Psychologists 3 23.08

Table 4.1. Demographic Characteristics of the Delphi Panel Members

Research Question: What is a core employee? Descriptions of a core employee Table 4.2 reports the panel’s top five descriptions of a core employee.

The core employee descriptions included key characteristics such as

(1) possesses knowledge, skills and attributes (KSA) aligned with

business operation and direction, (2) is central to the productivity

and wellbeing of the organisation (3) provides a competitive edge to

the organisation, (4) supports the organisational culture and vision

and (5) possesses skills, knowledge and abilities that are relatively

rare or irreplaceable to ensure the success of the organisation. The

results indicated that all the descriptions seem to focus on KSA that

are of strategic value to the organisation. Basically, a core employee

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is someone whose knowledge and performance contributes

significantly to what his/her organisation does and what his/her

organisation does better than its competitors (Panellist 7).

In terms of core competencies, one of the respondents (Panellist

8) highlighted a detailed classification of his company’s core

competencies:

A core employee of our organisation core competencies included Action Oriented, Adaptability, Communication, Customer Focus / Quality, Interpersonal Skills and Teamwork, Integrity, Time and Task Management. This would also reflect our cultural characteristics that focus on caring, developing, being multi-cultural, achieving through teamwork, being innovative and customer focussed (Panellist 8).

Rank Panel Selection of Top Five Core Employee descriptions

1. Possesses knowledge, skills and attributes that are closely aligned with the existing or possible future operational direction of the business.

2. Is central to an organisation’s productivity and wellbeing.

3. Provides a competitive edge to the organisation.

4. Supports the organisational culture and vision.

5. Possesses skills, knowledge and abilities that are relatively rare or irreplaceable to ensure the success of the organisation.

Table 4 2. Top Five Descriptions of a Core Employee

Expert Comments on the characteristics of core employees

The definition should include both individuals who would fit the traditional “line” and those in “support” roles who have responsibilities for sustaining the effective operation of the organisation (Panellist 3). The person should also be a key motivator, mentor role model to other staff and extremely difficult to replace (Panellist 10).

They fit the organisational culture closely and they are on the succession plan and therefore of importance to the organisation (Panellist 5, 12).

Core employees are full time or permanent employees that aligned with organisational fit and culture and working on essential tasks (Panellists 1, 9, 11, 13).

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Research Question: Do core employees have different needs to other non core employees? Needs of Core employees Table 4.3 shows the panel’s selection of core employee needs.

According to the panel, core employees needs consisted of a satisfying

working environment, training and career development opportunities,

reward and recognition, good pay and conditions, good working

relationships, good resources – state of the art equipment, status,

challenging job and autonomy. For this section the panel was not

asked to rank each item in order of importance.

Non Ranking

Panel’s Selection: Needs of Core Employees

1 Satisfying working environment 2 Training and career development opportunities 3 Reward and recognition 4 Good pay and conditions 5 Good working relationships 6 Good resources – state of the art equipment 7 Status 8 Challenging job 9 Autonomy

Table 4.3: Needs of Core Employees

Expert comments on Core employees needs One of the respondents noted that:

pay was critical but felt that the level of responsibility and ability to utilise and develop skills were key features that attracted individuals to jobs. Different factors such as gender, age and social status would also influence the decisions of core employees to remain with the organisation (Panellist 6).

Several respondents commented that:

Younger employees’ needs are focused on remuneration, training and development, career advancement, challenging job, growth opportunities and recognition of their capabilities and acquisition of new skills. For older employees, salary and career advancement is not

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so important. However, they require autonomy, liberty from mundane things, and opportunities to mentor so that they can make greater contribution to the organisation. Job challenge is preferred to repetitive, boring jobs (Panellists 2, 3, 13).

According to one of the respondents:

Core employees will be singled out by management for special treatment in terms of training and career development. They will be subject therefore to more efforts at retention and such efforts would be closely related to their needs for compensation, training, promotion and recognition (Panellist 4).

A number of panellists agreed that:

All the care and maintenance factors are needed i.e. offer opportunities for development of talents, offer cross functional assignments to test against each other and grow skills (Panellists 10, 12, 13).

Panellist 1 commented that:

The fine balance between relative security and opportunities for flexibility (of task, projects, competencies, work teams, career options, reward systems) and a degree of job excitement (Panellist 1).

In summary, the experts highlighted several salient needs of

core employees and they included satisfactory work environment,

training and career development opportunities, challenging

assignments and pay, reward and recognition. However, these needs

vary based on age and gender.

Research Question: What are the factors affecting the Australian Human Resource Architecture Model? Factors affecting the Australian Human Resource Architecture model Table 4.4 outlines the main factors affecting the Australian Human

Resource Architecture Model. The five key factors selected by the

panel in order of importance included strategic focus of the

organisation, organisational structure, competitiveness of the

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industry, type of industry and the type of worker included in the

organisation.

Rank Factors of the Australian HR Architecture

1 Strategic focus of the organisation (eg. Project, Growth and Maintenance).

2 Organisational Structure (eg. international, local franchisee).

3 Competitiveness of the industry.

4 Type of industry (eg. mining, manufacturing, and service).

5 Types of worker included in the organisation (eg. managerial, technical, trade).

Table 4.4. Factors affecting the Australian Human Resource Architecture Model

The majority of the panel members considered strategic focus,

organisational structure, competitiveness and type of the industry as

critical in shaping the human resource architecture in the Australian

business environment. However, the levels of work (worker to CEO),

type of worker (managerial, technical, trade), functional expertise of

worker (e.g. marketing, finance, computing, HR, production) have

lesser impact but are still relevant to the structure of the model.

Expert comments on Lepak and Snell Model (1999) Several respondents noted that:

The Human Resource Architecture Model is only applicable for large organisations and not small businesses. In smaller businesses one person may take on several of this role (Panellists 3, 5,).

One of the respondents commented that:

I am cautious of a model which places so much emphasis on competitiveness and exclusivity in an increasingly networked environment. The limitation of the model is its assumption that

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innovation and development can be engineered as opposed to grown (Panellist 12).

Some panellists argued that:

This model has some validity in Australia however it is a US model developed in the US industrial context (Panellists 7, 9).

A few of the respondents stated:

Yes, it very much reflects the Atkinson’s Flexibility Model and a practice of lot of Australian organisations, especially government organisations. It is an emerging trend in Europe and UK” (Panellists 1, 2, 10, 13). However, one of the respondents acknowledged that “this model has limitation; it is grafted on to industrial era structures and practices. The employment modes are not linked to anything- not to performance, not to customers, not to building human and intellectual capital and not to vision (Panellist 11).

One of the respondents agreed that:

It is a rational model of organisation and in this sense perhaps appropriate to the Australian business mindset (Panellist 8).

The general theme derived from the experts’ comments indicated

support for the Lepak and Snell (1999) Human Resource Architecture

Model but it was suggested that for the model to fit into the

Australian environment several factors should be considered. These

factors included strategic focus, organisational structure, the

competitiveness and type of the industry, the levels of work, type of

worker and functional expertise of worker.

Expert comments on factors affecting Australian Human

Resource Architecture not considered in the Lepak and Snell

Model

One of the respondents pointed out that:

people should be linked to environment with a business model that is systematic, holistic and developmental with the dominant discipline being organisational ecology (Panellist 13).

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Panellist (9) stated that:

I think organisations tend to see HR as a number of processes or systems, not as a strategic contributor. Therefore they are unlikely to be as sophisticated in their thinking as required by the model (Panellist 9).

Several respondents suggested that:

Other models could use different criteria and still provide conceptual insights into the HR Architecture. For example, levels of work (worker to CEO), type of worker (managerial, technical, trade) and functional expertise of worker (marketing, finance, computing, HR) (Panellists 4, 6, 8).

Overall, the panel assessment of the Lepak and Snell HR architecture

model highlighted several missing factors. These factors were

recognised as critical for the model to be successful in the Australian

business environment. The identified factors included level of work,

type of worker, the occupation and type of industry.

Interestingly, some panel members commented that HRM in

Australia is still regarded as fragmented functional processes and

struggling to be a strategic contributor. Consequently, the desire to

create a more strategic and sophisticated model would be

problematical.

Research Question: Which HRM factors most influence the decision of employees to stay? Human resource factors influencing retention Table 4.5 reports the panel’s selection of the top five human resource

management factors influencing retention. In order of importance,

they included effective selection, reward and recognition, training and

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career development, challenging employment structures and

opportunities and equity of compensation and benefits.

Rank Panel Selection of Top Five Human Resource Factors

1. Effective Selection.

2. Reward and recognition of employee value

3. Training and Career Development.

4. Challenging Employment Structures and Opportunities

5. Equity of compensation and benefits.

Table 4.5. Top Five Human Resource factors influencing Retention

How the Experts view the Influence of Human Resource Practices on Retention Some of the expert's comments were particularly revealing, as

indicated in the following comments:

Importance of HRM on retention Panellist (5) commented that:

This is a generalised perception but I believe that in many respects human resources have been undervalued in the Australian context and that shifts in this situation are only now beginning to occur. The reasons for this lie in a strong regulatory (as opposed to participatory) ethic and perhaps in the tradition of oppositional labour relations (Panellist 5).

Other respondents agreed that:

The award system and industrial environment is very restrictive. That is awards are job specific and do not facilitate multi-skilling through different award coverage, developed within a confrontational, negative, litigious framework. As such, they do not facilitate flexible arrangements that assist in skill and knowledge development (Panellists 7, 9).

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A respondent admitted that:

HR staff does not get closely involved in the high level strategic discussions that could result in implementing retention practices (Panellist 4).

According to Panellists (1 and 3):

Acquisition, retention and development should be integrated within a holistic business model, otherwise they mean little in practice, and in terms of performance (Panellists 1, 3).

Others commented that:

Pay strategies seek to not only attract but retain core personnel, particularly there is a clear link between intellectual capital of the individual and the firm’s competitiveness (Panellists 2, 11, 12).

A number of respondents agreed that:

HR practices have nothing to do with retention because they remain fragmented activities” (Panellists 3,4).

Several believed that: HR practices are focussed more on the acquisition of employees and their performance appraisal rather than on ways to retain people (Panellists 2, 6, 7, 10, 13).

Overall, the experts’ comments revealed some mixed concerns about

the influence of HRM on retention in the Australian context. Some

did not believe HRM had any influence on retention. However, the

general consensus seems to be the limitations placed on HRM. The

constraints highlighted included the lack of importance placed on the

role of HRM, the impact of industrial relations regulations and the

application of fragmented functions diminished its impact.

The influence of HR factors on retention Panellists (1, 3, 5) noted that:

pay is critical for employees. I also think however that the level of responsibility and ability to utilise and develop skills are key features that attract individuals to jobs (Panellists 1, 3, 5).

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Another panellist stated that:

in terms of influencing retention positively his organisation focusses on strategic human resources – ensuring there is a link between our functional responsibilities and our business strategy. The aim is to demonstrate a commitment for employees ensuring we enhance our employee’s capabilities and receive a benefit through employment (Panellist 10).

Several respondents commented that:

reward and recognition, training and development influence retention (Panellists 2, 6, 8, 9, 10).

Some respondents agreed that:

Security in tenure is particularly important for older workers, as they are less likely to move to a new organisation and risk redundancy (Panellist 4, 5).

However, one of the panellist’s (2) highlighted that:

Younger people are linked to remuneration, training and development, challenging job, growth opportunities, trying new things, fitting the job properties to their educational training, recognition of their capabilities and acquisition of new skills (Panellist 2).

The analyses of the panel members’ responses highlighted some

common issues. Firstly, older workers are more interested in job

security and benefits; young employees are more interested in pay

and advancement opportunities. Secondly, the panel identified

recruitment, pay, recognition and reward, training and career

development and challenging job opportunities as key HR factors that

will influence retention.

Organisational factors influencing retention Table 4.6 lists the panel’s selection of the top five organisational

factors that influence retention. In order of importance they include

influential and sensitive leadership style, company policies and

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culture, communication and consultation, effective integration of

working relationships and satisfactory working environment.

Rank Panel Selection of Top Five Organisational Factors

1. Influential and sensitive leadership style.

2. Company policies and culture.

3. Communication and consultation.

4. Effective integration: working relationships.

5. Satisfactory working environment.

Table 4.6: Top Five Organisational Factors influencing retention

Expert Comments on organisational factors influencing retention of core employees Several panellists (4, 7, 8) commented that:

employees would remain in an organisation due to a satisfying working environment: suitable work conditions and good workmates provide comfort and security needed to support work activity. A quality of working life that allows sufficient monetary reward to meet individuals’ needs, challenging work and a workload that allows balance for individuals’ lifestyle needs to be met (Panellists 4, 7, 8).

According to a large number of panellists (3, 4, 5, 6, 10, 13):

Leadership management relates to sound supervision and direction: clear work standards, good instructions on how to do the job, objective performance assessment and an influential and sensitive leadership style from supervisor/manager provides an understandable and acceptable context in which to get jobs done as required (Panellists 3, 4, 5, 6, 10, 13).

With regards to communication and consultation, some of the

respondents stated that:

Quality and timeliness of feedback to employees is the hallmark of an effective organisation (Panellists 8, 10, 13).

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Several respondents stated that:

Focus would obviously be on a positive working environment, leadership style, terms and conditions of employment, availability and allocation of resources, communication and consultation (Panellists 7, 9, 11).

Two other panellists (8, 10) echoed similar ideas. They felt that clearly

defined company policies and culture play an essential role in

allowing employees to know that they fit in.

In précis, the expert responses disclosed some common

themes. Leadership style, positive work environment, company

culture and policies, communication and consultation and work

relationships were identified by the panel as the organisational

factors that would influence retention of core employees. These broad

themes were identified as organisational factors not HR factors. As a

result of these reflections from the panel, the researcher separated

the HRM factors into two bundles: HR factors and organisational

factors.

Discussion and Implications How would a core employee be defined and supported in Australia? There is recognition that the nature of work is changing in Australia,

as is the nature of workers themselves. While there is recognition of

the need to clarify the types of workers to be found in organisations,

there has been little agreement on what constitutes a core employee.

A review of prior literature revealed that most researchers (Allan and

Sienko 1997; Gramm and Schnell 2001; Segal and Sullivan 1997)

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have provided limited or broad definitions of core employees. Findings

from this study will offer a more current and extensive description.

By defining the characteristics of a core employee, it also discloses

the organisational perception of their primary workforce. This

perception is translated into the selection process adopted by

organisations.

As core employees are identified as a key resource and of

strategic value to organisations, it highlights the importance of

managing and retaining this valued human capital. The findings of

the study identified the following five characteristics of core

employees (1) possess knowledge, skills and attributes (KSA) aligned

with business operation and direction, (2) is central to the

productivity and wellbeing of the organisation (3) provide a

competitive edge to the organisation, (4) support the organisational

culture and vision and 5) possess skills, knowledge and abilities that

are relatively rare or irreplaceable to ensure the success of the

organisation. The results indicated that all the descriptions seem to

have a focus on knowledge, skills and attributes (KSA) that are of

strategic value to the organisation.

Effectively managing core employees means identifying their

needs. The results from the Delphi study indicate that the needs of

core employees have changed and greater emphasis is now placed on

(a) training and development, (b) career advancement and growth

opportunities, (c) recognition of capabilities and acquisition of new

skills and (d) challenging work. Instead of job security, employees

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now will seek job resiliency - developing the skills and flexibility

needed to quickly respond to shifting employer requirements (Barner

1994).

Findings from the Delphi study revealed that the needs of core

employees differ with age. Younger employees’ needs are focused on

remuneration, training and development, career advancement,

challenging job, growth opportunities and recognition of their

capabilities and acquisition of new skills. For older employees, salary

and career advancement is not so important. However, they require

autonomy, liberty from mundane things and opportunities to mentor

so that they can make a greater contribution to the organisation. Job

challenge is preferred to repetitive jobs.

These initial findings further supports Becker and Gerhart’s

(1996) theories that over time an employee invests in an organisation

(e.g. pensions, pay raises, benefits, stock, position, etc.), and these

investments bond the individual to the organisation. Since these

investments increase with age and tenure, an employee tends to

become more committed to the employing organisation, and the bond

reduces the likelihood that the employee will quit (Meyer and Allen

1993; Wallace 1997).

As a consequence of the changes in the relationship between

employers and core employees there is a need to examine the human

resource systems that support this primary labour force. Are they

relevant and effective? Do they need to be redesigned to meet the

changing needs of core employees? The next two phases (2 and 3) of

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the research will confirm as well as clarify some of these unanswered

issues.

Factors that impact on the theoretical Human Resource Architecture in an Australian business environment? The HR architecture models (Handy 1995; Lepak and Snell 1999)

advocated a differential investment strategy for different categories of

employees.

The findings of this study indicate that the shaping of these

employment modes is dependent on the influence of several factors in

the Australian business environment. These factors include the

strategic focus of the organisation, organisational structure,

competitiveness of the industry, type of industry and the type of

worker included in the organisation. The Delphi panel suggested that

these factors were not considered in the theoretical model developed

by Lepak and Snell in1999 for the American business environment. It

is suggested that the impact of these factors may therefore be the

determinants of the type of HRM systems adopted by various

Australian organisations (holistic or differential).

With the emergence of the new organisational structure of

employment, it raises the questions of Australian organisations HRM

systems? Do they apply “best practices fit all or differential HR

practices for different types of employees” (e.g. core, contractors,

alliance, and acquisitions)? How do these practitioners perceive their

effectiveness? Although it may be the case that some firms manage

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all employees the same way regardless of their value and uniqueness,

it is anticipated that most firms make significant distinctions in the

methods they use for different skill sets and that these are important

determinants of firm performance. These unexplored questions will

be examined in Phase 2 of the study.

HRM factors that influence the decision of employees to stay The findings from the Delphi study imply a relationship between

retention and human resource management factors. The panel

identified some key HR and organisational factors influencing

retention. The factors identified by the panel included selection,

reward and recognition, training and career development, challenging

job opportunities, equity of compensation, leadership style, company

culture and culture, communication and consultation, effective

working relationships and satisfactory work environment. This belief

is supported by studies of progressive HRM practices in training,

compensation and reward sharing. These studies have revealed that

these can lead to reduced turnover and absenteeism, better quality

work, and better financial performance (Arthur 1994; Delaney and

Huselid 1996; Huselid 1995; Ichniowski, Shaw and Prennushi 1997;

Snell and Youndt 1995; MacDuffie 1995; Meyer and Allen 1991;

Solomon 1992; Snell and Dean 1992).

However, it is important to note that a few of the experts in the

panel indicated that perhaps there is no relationship between HR

practices and retention. They argued that HRM is undervalued in the

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Australian environment and relegated to fragmented functional

activities and not a strategic contributor. Hence this view contradicts

the considerable debate in the HRM literature about the importance

of aligning HRM practices with company strategy. According to Ulrich

(1996) HRM is often assigned the role of steward of the corporate

culture, expected to contribute to its development through programs

and policies that enhance it.

This alignment of HRM with company strategy raises an

interesting inquiry of whether Australian organisations do consider

retaining their valued core employees as a strategic issue and a

competitive advantage. This compelling argument is subsequently

investigated in Phase 2 of this research. Phase 2 examines retention

management practices of twelve Australian organisations.

Conclusion This chapter reported the results of the Delphi study (Phase 1]. The

results presented addressed the five research questions for this initial

phase:

1. Is there a relationship between retention and HR practices?

2. Which HR factors most influence the decision of employees to

stay?

3. What is a core employee?

4. Do core employees have different needs from other types of

employees?

5. What are the factors affecting the Australian Human Resource

Architecture Model?

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The findings of the Delphi study were discussed and the

implications outlined. The purpose of the Delphi study was to obtain

information from a carefully selected group of expert respondents,

with regards to the HRM retention relationship (e.g. the key HRM

factors that influence retention of core employees). The findings

would assist in the development of a suitable instrument for the next

phase of the study (Phase 2). Phase 2 involved using a semi-

structured questionnaire to conduct an in-depth interview with

human resource managers of twelve Australian organisations.

Results of Phase 2 are reported on in the next chapter (5).

CHAPTER FIVE

The Retention Management Practices of Australian Organisations

Retention management is driven by the following factors, which should be managed congruently: organisational culture and structure, recruitment strategy, pay and benefits philosophy, employee support programs, and career development system (Fitz-enz 1990, p. 1).

Introduction This chapter provides the results of Phase 2 of the study. A semi-

structured schedule designed from the results of Phase 1 was used to

conduct in-depth interviews with human resource managers of twelve

Australian organisations. The questionnaire was designed to address

three research questions:

1. Is the importance placed on HRM factors linked to

retention?

2. How are these influential HR factors managed in

organisations?

3. How do these differ for non-core employees?

Demographic information of participating organisations was

summarised and reported (Table 5.1). The results of the interviews of

the twelve respondents are reported in two ways. First the categorical

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responses provided by the interviewees are presented in Table 5.2,

Table 5.3 and Table 5.4 to enable an understanding of the key trends

evident. This information is then further explored using interview

comments provided by the participants.

Respondents were asked to rate the ten identified factors from

Phase 1, using the scale, 0= not important, 1=somewhat important,

2=important and 3=very important. The scores from each factor were

aggregated and the identified elements ranked accordingly (highest to

the lowest).

Based on the results obtained from the Delphi study, the ten

identified HRM factors were classified into two bundles or sets of HR

practices: (1) Human Resource Factors (effective selection,

challenging employment assignments and opportunities, training and

career development, reward recognition of employee value, equity of

compensation) and Organisational factors (leadership, company

policies and culture, communication and consultation, effective

integration: working relationships and satisfying working

environment). The reason for separating the HRM factors into two

distinct bundles of practices was to distinguish the human resource

management related practices from organisational management

related practices thereby providing greater clarity. Several studies

(Lawson and Hepp 2001; MacDuffie 1995) also support the concept of

bundling of HR practices.

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Respondents’ Profile Table 5.1 provides a profile of the twelve organisations that

participated in this study. The participating organisations were from

various industry sectors and they included three health-care, three

higher education, three public sector, two diversified industries and

one manufacturing. The interviewed organisations were deemed to be

large, with the number of employees over 3000. Three out of five of

these organisations had employees less than 3000.

It is important to note that two-thirds (7) of the participating

organisations had in their employment more than 50 percent of core

(critical) employees and the remaining one third (5) acknowledged

their core employees were less than 50 percent. The reason for

obtaining the percentage of core employees of these participating

organisations was to determine the importance these organisations

placed on keeping a reasonable level of core employees within their

organisations. These organisations did however admit that cost

constraints and the nature of the industries were the determining

factors for their smaller intake of core employees.

Twelve human resource managers were interviewed. They

consisted of six females and six males. In terms of their length of

service with their organisation, six of the HR managers worked with

their organisation more than five years, three interviewees less than

two years and the remaining three between three and four years

working with their organisations.

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Additionally, these interviewees were asked what HRM factors

would motivate them to remain in their organisation and the majority

(80 percent) identified good leadership and challenging job

opportunities as key influencing factors.

Type of industry

Number of organisations

Size of organisation (No of employees)

Number of core employees

Health care 1 1 1

>10,000 >10,000 >10000

Less 50% Greater 50% Greater 50%

Higher Education

1 1 1

<3000 <3000

>10000

Less 50% Less 50%

Greater 50% Public Sector 1

1 1

<3000 >10000 >10,000

Less 50% Greater 50% Greater 50%

Diversified Industries

1 1

<1000 >10,000

Less 50% 50%

Manufacturer 1 >10,000 Less 50%

Table 5.1. Demographic characteristics of Participating Organisations

Interview Outcome Descriptions of core employees Initially, the respondents were asked to indicate the definition of their

core employees based on the list of characteristics identified in the

Delphi study (Phase 1). In order of importance the interviewees

selected the following characteristics:

1. Possesses knowledge, skills and attributes that are closely

aligned with the existing or possible future operational

direction of the business.

2. Supports the organisational culture and vision.

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3. Provides skills/or knowledge to ensure the success of the

organisation.

The interviewees were asked to identify additional

characteristics not acknowledged in the results of Phase 1. They

included: 1) Possesses personal attributes and attitude towards

commitment and 2) Possesses values and ethical behaviour to

support organisational culture.

It is noteworthy that the participating organisations did not

consider the following two definitions from the results of Phase 1

equally important i.e. 1) core employees are central to an

organisation’s productivity and wellbeing and 2) core employees

provide a competitive edge to the organisation. The respondents

however identified personal attributes, attitude towards commitment

and values and ethical behaviour to support organisational culture

as more significant. These additional descriptions provided a clearer

picture of how organisations define their core employees and this is

obviously translated in the selection of their employees. Interestingly,

several (45 percent) of the respondents highlighted the importance of

hiring employees with strong ethical values to match the

organisational values. This emphasis on ethical behaviour was not

considered by the panel of experts in the Delphi study.

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Interviewees’ comments on their core employees

Our core employees relate to our core business and support staff (Interviewees 5, 10). Our core employees are critical, high value (Interviewees 8, 12). Our core employees are key, critical and high talent (Interviewees 3, 4). Core employees are permanent staff…Our core employees are in technology and maintenance (Interviewee 1).

Interviewees’ comments on their non-core employees

Our non-core are casua1 (Interviewee 6). There is a casual pool of nurses (Interviewee 2), they are teaching staff (Interviewees 4, 6). Our non-core are contractual—project management (Interviewees 1, 9). Our non-core are contractual 12 months and they include engineers, IT and technicians (Interviewee 3). Non essential staff are regarded as non-core (Interviewees 7, 8,). A review of the interviewees’ comments on the differences

between their core and non-core employees disclosed some key

attributes. Core employees were regarded as permanent, critical, high

talent, valued and contribute to the core of the business. Whilst non-

core employees were considered contractual, casual, non-essential

and project management related. Occupations that lean towards a

greater number of non-core employees were engineers, IT, nurses,

project managers and technicians.

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HRM Factors influencing retention In the next section of the interview schedule, respondents were asked

to rate the ten identified HRM factors (HR factors and Organisational

factors) from Phase 1, using the scale, 0=not important, 1=somewhat

important, 2=important and 3=very important. The scores from each

factor were aggregated and the identified elements ranked

accordingly (highest to the lowest). The results are tabulated in Table

5.2 and Table 5.3.

Rank Interviewees Selection of Top Five Human Resource Factors

1. Effective Selection.

2. Challenging employment structures and opportunities

3. Training and career development.

4. Reward and recognition of employee value.

5. Equity of compensation and benefits.

Table 5.2: Phase 2 Interviewees selection of top five HR factors influencing retention

Results depicted in Table 5.2 indicate the order of importance

interviewees placed on the identified human resource factors in

relation to retention of their core employees. The human resource

factors ranked by the interviewees, in order of importance included

the following: (1) effective selection, (2) challenging employment

assignments and opportunities and (3) training and career

development, (4) reward recognition of employee value and (5) equity

compensation.

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Effective selection had the highest aggregated score and ranked

most important by the majority of the respondents (83%).

Challenging employment structures and opportunities had the

second highest aggregated score and was regarded by seventy five

percent (75%) of respondents as very important. Training and career

development was acknowledged by sixty seven percent (67%) of the

respondents as very important. Evidently, equity of compensation

had the lowest aggregated score and ranked as the least important.

Several respondents (50%) indicated that equity of compensation and

benefits were not such an important concern for employees because

most organisations pay comparable wages especially in the public

sector. Apparently, fifty seven percent (57%) of the respondents felt

that reward and recognition was a greater influence on retention than

equity of compensation.

Results depicted in Table 5.3 indicate the order of importance

interviewees placed on the identified organisational factors in relation

to retention of their core employees respectively. The organisational

factors ranked by the interviewees, in order of importance included

the following: (1) leader-ship (2) company policies and culture, (3)

communication and consultation, (4) effective integration: working

relationships, (5) satisfying working environment

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Rank Interviewees Selection of Top Five Organisational Factors

1. Leadership

2. Company policies and culture

3. Communication and consultation

4. Effective integration: working relationships

5. Satisfying work environment

Table 5.3. Phase 2 Interviewees selection of top five organisational factors influencing retention

Good leadership behaviour ranked the most important because

it had the highest aggregated score. The majority of the respondents

(92%) indicated that good leadership was a crucial factor as it flowed

down to better company policies, culture and effective

communication and consultation. Company culture and policies was

regarded by 75% of the respondents as important and

communication and consultation was viewed by 67% of the

respondents as very important. Work Relationships was identified by

50% of the respondents as very important. Satisfactory environment

(lowest aggregated score) was considered the least important of the

list of organisational factors. Only 33% of the respondents considered

satisfactory work environment as very important.

Based on what has been identified, it is important to highlight

a significant difference between the results of Phase 1 and the results

of Phase 2. With regards to the level of importance of organisational

factors influencing retention, the interviewees’ (Phase 2) preferences

matched those of the panellists’ ranking in Phase 1 (Table 4.6).

However, in terms of the level of importance of the human resource

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management factors, there is a slight difference in order of

preference. The panellists (Phase 1) considered reward and

recognition as the second most important factor after effective

selection but the interviewees (Phase 2) ranked it as the fourth most

important. The interviewees selected challenging assignments and

opportunities as the second most important factor ahead of training

and career development whilst the panellists ranked training and

career development as more important than challenging assignments

and opportunities.

In summary, the results presented in Tables 5.2 and 5.3 reflect

the current retention management practices of organisations.

Interviewees’ comments on HR practices It was commented by several of the interviewees (8, 9, 11and 12):

In the public sector, pay is not an issue more the motivation and deployment. Training, job challenges and work environment especially work relationships, team work and shared camaraderie is important.

Interviewee 10 noted that with regards to career changes and

challenging jobs:

People are seeing more career changes, Generation Xs are starting to impact – career changes- we are seeing people interested in moving laterally rather than upward. We see society generally putting greater emphasis on work life balance (Interviewees 4, 5, 6, 9, and 10). This organisation won awards from government for being the friendliest workplace. We go to great lengths to promote the culture (Interviewee 9).

Several interviewees commented that:

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Good leadership was crucial factor as it flowed down to better company policies, culture and effective communication and consultation (Interviewees 1, 3, 7, 11). Overall comments of the interviewees indicate recognition of

work-life balance, teamwork relationships and satisfactory work

environment as important issues that are changing the nature of

work. Challenging job opportunities and training and career

development were also highlighted as key concerns for Generation X.

Many of the respondents regarded good leadership as a vital factor

for the retention of core employees.

Is the importance placed on HRM factors linked to retention? The twelve organisations that participated in the interview process

were asked to rate the ten identified HRM factors using the scale,

0=not important, 1=somewhat important, 2=important and 3=very

important. An assumption is also made that the higher importance

an organisation placed on the HRM factors will be reflected in the

application of these factors. The HRM factors consisted of HR factors

(effective selection, challenging employment assignments and

opportunities, training and career development, reward recognition of

employee value, equity of compensation) and Organisational factors

(leadership, company policies and culture, communication and

consultation, effective integration: working relationships and

satisfying working environment). The total score for the ten factors

was calculated for each participating organisation to assess the level

of importance placed on the identified HRM factors. These scores

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were aggregated and presented in Table 5.4 which shows the

association between the level of importance of HR practices and the

retention rate of the participating organisations.

Each of the twelve respondents was asked to identify their

turnover rate. The turnover rates were classified into four categories:

less than 10 percent, 10 percent-15 percent, 16 percent-20 percent

and 21 percent and above. Results show that five organisations

admitted their voluntary turnover rate was approximately less than

10 percent, five acknowledged 10 percent-15 percent, one owned up

to between 16 percent and 20 percent and one reluctantly revealed a

turnover rate of more than 21 percent.

Voluntary Turnover Rate

Organisations Less 10% 10% -15% 16% -20% 21%above Level of importance of HR practices

(Aggregated score) 1 a 10

2 a 16 3 a 20 4 a 16 5 a 15 6 a 17 7 a 12 8 a 13 9 a 15 10 a 11 11 a 7 12 a 8

Scale:0=not important,1=somewhat important,2=important,3=very important Table 5.4. Level of importance of Identified Human Resource and Organisational factors in relation to voluntary turnover rate

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Voluntary turnover rate of less than 10 percent The five organisations with less than 10 percent turnover rate

consisted of two higher education institutions, one manufacturing

firm, one public sector establishment and one diversified firm. Data

showed that each of these five companies had revealed that their

organisation placed a high level of importance on all the identified

HRM factors (i.e., high aggregated score: 20, 17, 16, 16, 15).

These five organisations revealed that their HR systems were

sophisticated and they acknowledged the need to constantly improve

the quality of the management of their employees. They also

recognised the need to hold on to their core employees. The

responses from these respondents indicated that the identified HRM

factors were rigorously applied within the organisations.

It is interesting to note that all the five respondents

acknowledged that their organisations had good leadership which led

to effective communication and consultation process and strong

company culture and policies. Three out of five of these respondents

also emphasised on the important role HRM played in the strategic

planning process in their organisations.

Voluntary turnover rate of 10 percent-15 percent There were five participating organisations with a moderate voluntary

turnover rate of 10 percent-15 percent. They comprised two health

care institutions, one higher education institution, and two public

sector establishments. These five respondents placed moderate

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emphasis of importance on the HRM factors (moderate aggregated

score: 15, 13, 12, 11, 8).

These five respondents were selective in their recognition of the

importance of some of the HRM factors. The health care institutions

highlighted the importance of work like balance and flexible work

schedules but placed little emphasis on recognition and reward and

career development. On the other hand, the public sector

establishments placed moderate importance on most factors (work

environment, work relationships, reward and recognition), but

greater emphasis on leadership and company culture and policies.

Three of these respondents cited that leadership issues were a

concern within their organisations. This has led to poor

communication and lack of direction.

Voluntary turnover rate of 16 percent to 20 percent One of participating organisations reported a high turnover rate

(16%-21%). This health care institution indicated less emphasis on

the HRM factors. This is reflected with a low aggregated score (7).

The respondent stated that there were several external forces

impacting on the health care sector such as government regulation

changes, changes in the business environment and shortages of

specific labour force (e.g., doctors and nurses) and the outcome is

uncertainty for employees and management.

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Voluntary turnover rate of 21 percent and above One of the participating organisations acknowledged a high turnover

rate of 21 percent. This respondent placed little importance on some

of the identified HRM factors (aggregated score: 10). The respondent

indicated that the company did not give strong recognition to career

development and recognition and reward. The company was also

undergoing restructuring with major changes in leadership,

corporate culture and policies.

In summary, the overall results implied an association between

retention and the level of importance placed on the ten identified

HRM factors. Clearly, the sample size is too small to verify this link

and this relationship should be examined further with a larger

sample size. However, this qualitative approach provided a

preliminary examination of the association between retention rates

and the application of the identified HRM factors (i.e., HR factors and

Organisational factors).These HRM factors were identified as

retention factors in Phase 1 as well as Phase 2.

In addition, the results of this qualitative study also

highlighted several external constraints that may affect the retention

of core employees. These constraints include market competition,

government regulations, changes in the business environment,

technological changes and labour shortages. These external forces

could act as moderators and therefore be included during the

examination of the relationship between retention rates and the ten

HRM factors identified.

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How are these influential HR factors managed in organisations? The twelve respondents were asked to rate the effective management

of the ten identified human resource factors and organisational

factors in their organisation. The responses were categorised as good

or poor.

The data from the interview revealed that organisations that

placed high importance on the ten identified HRM factors also

provided responses of positive management of these HRM factors. A

further examination of these results attempts to marry the effective

practices carried out by participating organisations and the perceived

level of importance declared by the said organisations.

Assessment of the data revealed that five organisations (2, 3, 4,

6, 9) with a high aggregated score (15-20) of the level of importance

displayed effective management of these practices and consequently

had low voluntary turnover. Conversely, two organisations (1, 11)

exhibiting low aggregated score (7-10) of level of importance exhibited

low effective management of the identified practices and consequently

high voluntary turnover. Furthermore, five organisations (5, 7, 8, 10,

12) that indicated moderate emphasis on the importance of the

identified HR practices demonstrated moderate effective management

of these practices. As a result, these organisations exhibited

reasonable turnover rates.

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In summary, these results imply that effective retention

management practices (using the ten identified HRM factors) will

result in better retention rates.

Comments from interviewees regarding the reasons their core employees leave their organisations One of the respondents reported that:

The company does not believe that managing human resource is a competitive advantage because they treat people as tools – poor management. We need to treat our core employees better. It is costing us money (Interviewee 1).

Concerns expressed by the respondents:

Succession planning in this company is still in the infancy stage (Interviewee 11). Training and career development practices are problems for this company (Interviewee 7). We do not have an attraction problem but we do have a retention problem (Interviewee 1). It is not the pay but the management style—poor leadership. It creates uncertainty (Interviewee 12). Skilled development and family relocation are the two reasons employees leave (Interviewee10).

One of the respondents commented that:

Compensation is the reason the employee leave (Interviewee 3). Comments from interviewees in support of effective retention management

Effective management is a competitive advantage—key indicators of success of this approach adopted by the organisation, is the reduction of turnover from 26 percent to 13 percent (Interviewee 10).

It was pointed out by one of the respondents (Interviewee 9) that HR

department in this organisation is still viewed as a process

department rather than being involved in planning the strategic

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effort. Interviewee (1) stated quite categorically that her organisation

does not have a problem attracting employees,

but we have a retention problem. We do not believe that managing human resource is a competitive advantage and therefore treat our people as tools. We need to treat our core employees better. It is costing us money.

According to interviewee (10) her:

organisation’s succession planning—mixed feelings—like to use the word contingency planning and multi-skilled. Succession planning in theory is fantastic but not an ideal model. Not just identifying key people but provide more training to allow people to step into that role. We like to test the market at that level. It does not mean that we do not train people but I think if these people are so valuable to the organisation we owe it to our shareholders to adopt strategy to rope these people in. For our employees at a lower level but key people significant to the organisation we address it through multi-skill. The Government idea of HR is linked to industrial relations (Interviewee 9.) HR department in this organisation is still viewed as a process department rather than being involved in the strategic effort (Interviewee 11).

With regard to performance appraisal, several interviewees (4, 8, and

10) noted that it was time consuming; very few organisations do it

well.

We do have a performance appraisal system here that is linked to our training needs- the timing of it can be improved (Interviewee 10). Our organisation focuses on career development and succession planning, performance development (Interviewee 2). We focus on culture and innovation (Interviewee 12). We are effective in performance appraisal and succession planning (Interviewee 3). Performance appraisal and training is effectively managed in our organisation (Interviewee 4).

In precis, these results highlighted some key factors for effective

retention of employees. They include effective leadership, effective

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succession planning, effective performance appraisal, effective

training and career development programs and good remuneration.

Further, it acknowledged some key difficulties confronting the

management of HR.The importance of the role of HR still lack

strategic importance. Focus is still functional. Moreover, the

government’s view of HR is linked to industrial relations. These

difficulties are regarded as barriers for HR managers to carry out

effective management practices.

How do these differ for non-core employees? Respondents were asked whether their company adopted one

standardised human resource practice for every employee (holistic

approach) or whether they applied differential HR practices for

different types of employees.

Six of the participating organisations (1, 3, 7, 8, 9, 12)

acknowledged that they adopted a differential approach and the six

others (2, 4, 5, 6, 10, 11) used a holistic approach. Several

respondents acknowledged that, although their company adopted a

holistic approach, there is a distinction made between different sets

of employees (core, contractual and casual).

Interviewees’ comments

All employees are regarded as valuable. We use a holistic approach (Interviewees 4, 5). Not differential. A holistic approach—from medical to administrative staff (Interviewee 11). We use a differential approach for our core and non-core employees (Interviewees 1, 3, 7, 8, 9, 12).

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Discussion and Implications There is growing recognition that successful organisations share a

fundamental philosophy to value and invest in their employees (e.g.

Benchley 2001; Maguire 1995). There has also been considerable

debate in the HRM literature about the importance of aligning HRM

practices with company strategy (Ulrich 1996). Given the findings of

this qualitative study, clearly Australian organisations do

acknowledge that retaining their valued core employees is considered

a strategic issue and a competitive business advantage (Clarke 2001;

Hom and Griffeth 1995; Huselid 1995). However, the results also

revealed that not all organisations apply this philosophy efficiently.

The reasons for poor implementation were attributed to several

external constraints identified in this study such as market

competition, government regulations, changes in the business

environment, technological changes and labour shortages.

Moreover, the findings also revealed that there are obstacles

confronting the management of HR. The obstacles highlighted by the

respondents included the lack of strategic importance placed on the

role of HR, and unfortunately it is stilled perceived as functional.

Additionally, the government often view HR as just related to

industrial relations. These issues are considered by respondents to

hinder the ability of HR to be recognised as a competitive advantage.

In this qualitative study, there were several findings that are

noteworthy. Firstly, the study provided a comprehensive description

of core employees. The descriptions depicted five essential attributes:

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Possesses knowledge, skills and attributes that are closely

aligned with the existing or possible future operational direction of

the business, (2) supports the organisational culture and vision, (3)

provides skills/or knowledge to ensure the success of the

organisation, (4) possesses personal attributes and attitude towards

commitment and (5) possesses values and ethical behaviour to

support organisational culture.

Further review of the interviewees’ comments on the differences

between their core and non-core employees disclosed some key

attributes. Core employees were regarded as permanent, critical, high

talent, valued and contribute to the core of the business. Whilst non-

core employees were considered contractual, casual, non-essential

and project management related. Occupations that lean towards a

greater number of non-core employees were engineers, IT, nurses,

project managers and technicians.

In 1995, Huselid reported from a sample of 968 firms that

those using comprehensive employee recruitment and selection

procedures, extensive employee involvement and training, and formal

performance appraisal linked to incentive compensation were likely to

have lower employee turnover, higher productivity, and enhanced

corporate financial performance. Huselid referred to these HR

practices as ‘high performance work practices’ (p. 635). Other studies

seem to support this perspective (Delaney and Huselid 1996; Delery

and Doty 1996; Huselid and Becker 1996; Kalleberg 2000; MacDuffie

1995).

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Results of this qualitative study suggest that organisations that

managed their human resource effectively may have higher retention

of their employees. More specifically, the findings provide relatively

strong supports for the existence of a positive relationship between

HRM practices and its influence on the retention of core employees.

The study supports findings of American studies conducted by Fitz-

enz in 1990, which advocate retention management as driven by the

following factors, which should be managed congruently:

organisational culture and structure, recruitment strategy, pay and

benefits philosophy, employee support programs, and career

development system.

Phase Two study verified the retention management practices

of the participating Australian organisations. It also reaffirmed that

the HR factors and Organisational factors identified in Phase One

were adopted by participating organisations as factors of retention of

their core employees. These retention factors consisted of two sets of

bundles and included the following: HR Factors (effective selection,

challenging employment assignments and opportunities, training and

career development, reward recognition of employee value, equity

compensation) and Organisational factors (leadership, company

policies and culture, communication and consultation, effective

integration of working relationships and satisfying working

environment).

Thus, the findings of Phase Two imply an association between

retention and the level of importance placed on the ten identified

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HRM factors. Clearly, the sample size is too small to verify this link

and this relationship should be further examined with a larger

sample size. However, this qualitative approach provided a

preliminary examination of the association between retention rates

and the application of the identified HRM factors (i.e., HR factors and

Organisational factors).

Moreover, this qualitative study was also able to illuminate the

current retention management practices of large Australian

organisations. It revealed the current HRM—retention issues in the

Australian business environment and consequently provided greater

insights into the decision making process of HR practitioners.

From a theoretical viewpoint, it could be argued that these

findings about current human management practices in these

Australian organisations are hardly surprising, since the

management literature is strewn with examples of the benefits of

continuous improvement in HRM. None the less, from a practical

viewpoint, the real value of the findings reported here is twofold.

Firstly, the findings encourage the spread of good practice by

revealing, in some detail, the retention management activities that

are currently being used to good effect in Australian organisations.

Secondly, the research findings described in this study present a

compelling argument for the real value of putting management theory

into practice.

Phase Two of this study also examined the theoretical HR

architecture model developed by Lepak and Snell 1999 which

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advocated a differential investment strategy for different categories of

employees. The findings revealed that Australian organisations as a

whole adopted both holistic and differential approaches when

managing their employees. However, although it may be the case that

some firms manage all employees the same way, regardless of their

value and uniqueness, results of this study verify that most firms do

make significant distinctions in the methods they use for different

skill sets and that these are important determinants of firm

performance. Several comments from respondents supported this

view.

In summary, the findings of this phase of the research has

provided the researcher sufficient data to develop an HRM-retention

model. The dynamics of this HRM-retention model is further tested

empirically in the next phase (3) of the research.

Phase 3 of the study will examine the employees’ perspectives

and provide a more definitive empirical validation of the "HRM-

retention relationship.

Conclusion This chapter presented the results of the in-depth interviews with

twelve human resource managers. The interviews explored the

relationship between the identified HRM factors and the retention

rates of the participating organisations. Furthermore, it examined the

effective management of these HRM factors by the participating

organisations. Phase 2 results are invaluable as it provides a

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comprehensive account of the current HRM practices of Australian

organisations in relation to the retention of their core employees. This

information would be utilised to create the employee survey for the

third and final phase. The next chapter provides the results and

findings of Phase 3 of the study—the employee survey.

149

CHAPTER SIX

Quantitative Study – Phase Three

Investigating the Relationship between HRM factors, Organisational

Commitment and Intention to Stay

Commitment to a particular entity is a distinct phenomenon, albeit a complex one that may differ depending upon how certain factors, pertinent to all commitments, are perceived and evaluated by an individual (Brown 1996, p. 232).

Introduction The preceding chapters (4 and 5) reported the results and findings of

Phase 1 (Delphi Study) and Phase 2 (interview) of the study. The

purpose of this chapter is to introduce the quantitative results of

Phase 3 (employee survey). It describes the research questions, the

HRM – retention theoretical model and the hypotheses of Phase 3 of

this study. The model is operationalised through the use of

established scales of measurement for each of the eleven components

in the model. Reliability and validity of the research instruments are

reported. The chapter further describes and reports the results of the

statistical analyses, which sought to identify which factors influence

commitment of core employees and intentions to stay.

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Theoretical Background and Hypotheses

A continuing organisational issue for management and human

resource personnel has been the retention of high performance

employees. Researchers have suggested that reciprocity is a mechanism

underlying commitment (Angle and Perry 1983; Scholl 1981) and that

employees will offer their commitment to the organisation in

reciprocation for the organisation having fulfilled its psychological

contract (Angle and Perry 1983; Robinson, Kraatz and Rousseau 1994).

By fulfilling obligations relating to, for example, pay, job security, and

career development, employers are creating a need for employees to

reciprocate, and this can take the form of attitudinal reciprocity through

enhanced commitment.

In this study, organisational commitment and turnover intention

behaviour (intent to stay) were selected as the focal dependent variables

for the following reasons. First, employees purportedly view

organisational commitment and turnover intention as acceptable

commodities for exchange (Settoon, Bennett and Liden 1996). Second,

these variables have been demonstrated as salient with regard to a

variety of exchange relationships (Eisenberger, Fasolo and Davis-

LaMastro 1990; Moorman 1991; Organ and Konovsky 1989; Shore and

Wayne 1993).

Studies of the concept of commitment (Mowday, Porter and Steers

1982; Meyer and Allen 1991) have established that employee

commitment to the organisation has a positive influence on job

performance and a negative influence on intention to leave or employee

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turnover. Empirical evidence strongly supports the position that intent to

stay or leave is strongly and consistently related to voluntary turnover

(Dalessio, Silverman and Schuck 1986; Fishbein and Ajzen 1975;

Griffeth and Hom, 1988; Lambert, Hogan and Barton 2001; Mathieu and

Zajac 1990).

Research Questions Phase three of this study addresses the research question, “What

HRM factors influence core employees’ decisions to stay? The

following model provides a graphical representation of the key

components and relationships tested in this study (Figure 6.1). The

nature of the research question and the resultant theoretical model

requires the examination of a number of relationships. The model

suggests that several HR factors (selection, recognition and reward,

training and development, challenging assignments) and

organisational factors (leadership, team work relationship, policies and

work environment) exert a positive influence on organisational

commitment.

Hypothesis

The hypotheses formulated for the theoretical HRM-retention

model of this study (Fig 6.1), conceptually considered the independent

variables as "bundles" of HR practices (Marchington and Grugulis 2000,

MacDuffie 1995). The independent variables consisted of eight factors

grouped into two sets or bundles (i.e. HR factors and organisational

factors). The decision to group them into bundles was initially

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highlighted by the panel of experts from the Delphi procedure (Phase

One) and further reinforced during the interview with HR managers in

Phase Two. Consequently, the notion of bundling of HR practices was

adopted and tested in the final phase of this study.

Previous studies (MacDuffie 1995, Wright, Dunford and Snell,

2001) support the notion that practices within bundles are interrelated

and the combined impact of practices in a bundle could be specified in

two simple alternatives: an additive approach and a multiplicative

approach.

Statistically, the additive combination of practices has the

desirable property that the sum of normally distributed variable scores is

still normally distributed, which is not true for the multiplicative product.

Conceptually, a multiplicative relationship implies that if any single

organisational practice is not present, the "bundle" score (and effect)

should be zero. However, Osterman (1994) argues that, “although

practices in a bundle are expected to be interrelated, the absence of a

particular practice will not eradicate the effect of all other practices, but

will weaken the net effect of the bundle” (p. 176.).

Given the preceding arguments, this study has adopted the

bundles of HR factors and organisational factors as complementary.

Drawing on the conceptual bundling of HR practices, the following

hypotheses were developed for this study. The HRM retention model

posits that:

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154

Human Resource Factors Bundle

H1: Person–organisation fit (Selection) positively influences

organisational commitment.

H2: Remuneration, recognition and reward positively influence

organisational commitment.

H3: Opportunities for training and career development positively

influence organisational commitment.

H4: Challenging employment assignments and opportunities

positively influence organisational commitment.

Organisational Factors Bundle

H5: Strong leadership direction and coordination positively

influence organisational commitment.

H6: Company culture (goals, vision and values) and policies

(structure, rituals, and protocol) positively influence

organisational commitment.

H7: Teamwork relationship positively influences organisational

commitment.

H8: Satisfactory work environments positively influence

organisational commitment.

Organisational Commitment as a conditional variable

H9: Organisational commitment positively influences intention to

stay.

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155

H10: Organisational commitment impacts upon the relationships

between the:

(a) HR factor bundle and intent to stay, and

(b) Organisational factor bundle and intent to stay.

Conceptually, the organisational commitment construct can be

characterised by at least three factors: (a) a strong belief in and

acceptance of the organisation's goals and values; (b) a willingness to

exert considerable effort on behalf of the organisation; and (c) a strong

desire to maintain membership in the organisation (Mowday, Porter and

Steers 1982). Previous research has indicated that commitment is linked

to lower turnover rates (Mowday, Porter and Steers 1982; Steers 1977),

and increased intention to stay with the firm (Singh and Schwab 2000).

Further, Hom and Griffeth (1995) found that organisational commitment

enters into a motivational and decision-making process that produces an

intention to leave.

In their comprehensive review, Meyer and Allen (1997) reported a

positive relationship between affective commitment and employee

retention. Both affective and continuance (calculative) commitment are

expected to increase the likelihood that an individual will remain with an

organisation (Meyer, Bobocel and Allen 1991).

Some researchers (Mathieu and Zajac 1990; Travaglione 1998;

Wiener and Vardi 1980) however, found a weak direct relationship

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between organisational commitment and intention to turnover. Their

studies support organisational commitment as conditional variable.

Thus, implicit in this HRM-retention model is that organisational

commitment moderates the relationship between the study’s

independent variables and intention to stay, is conditional upon

organisational commitment.

The Sample Population

The sample population used in this study consisted of core

employees of nine large Australian organisations. The participating

organisations were from various industry sectors and they included

health-care, higher education, public sector, diversified industries and

manufacturing.

Data Collection Process

An employee self-completion questionnaire was the instrument

employed in Phase three of this study. Results from Phase 1 and Phase 2

of this study identified nine factors that influence retention of core

employees. These were person-organisation fit (selection), remuneration

and recognition, training and career development, challenging

assignment, leadership behaviour, team relationship, communication

and consultation, company culture (i.e. vision, mission, objectives and

values) and policies (i.e. structure, rituals, protocol), work environment.

Organisational commitment and turnover intention were the outcomes

examined.

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The questionnaire was designed to allow the researcher to collect

the relevant information to test the proposed model. Sixty questions were

incorporated into the questionnaire for the purpose of this study. A copy

of the original questionnaire is provided in Appendix 8. Five questions

were used to obtain demographic information on age, gender, industry,

and occupation. The remaining fifty-five questions measured the

following variables:

• Organisational Commitment (7 questions)

• Turnover Intention (4 questions)

• Person Organisation Fit (Selection) ( 4 questions)

• Remuneration and recognition (5 questions)

• Training and Career Development (4 questions)

• Challenging assignments (5 questions)

• Leadership behaviour (4 questions)

• Team relationship (4 questions)

• Organisational culture and policies (4 questions)

• Communication and consultation (5 questions)

• Work environment (7 questions)

The nine organisations that participated in this study selected

their core employees and these employees were surveyed via two

methods: 1. mail via reply paid envelope and 2. electronic mail. A total of

800 surveys were distributed with 457 returned, indicating a response

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rate of 57 per cent. This was deemed a good sample size (Comrey and Lee

1992). According to Green (1991), the required sample size depends on

the number of issues, the desired power of relationship, alpha level,

number of predictors and expected effect sizes. The simplest rules of

thumb are N≥50+8m (m is the number of independent variables) for

testing multiple correlation and N≥104+m for testing individual

predictors. Hence, the sample size of the study was deemed suitable.

Measurement of Constructs

The Employee Questionnaire was designed to examine the

dependent variables organisation commitment and turnover intention. The

independent variables were based on eight variables previously identified

and validated in Phase 1 and Phase 2 of the study. Each independent

variable was assessed using a minimum of three items to a maximum of

eight items (Table 6.1). All items were scored along a seven point scale

ranging from (1) strongly disagree to (7) strongly agree (Likert 1961).

Scales used in previous research were employed to measure the

independent and dependent variables of the study.

Independent Variables Person- organisation fit (Selection)

Person organisation fit is considered a key part of organisational

selection and is generally defined as "the compatibility between

individuals and organisations" (Kristof 1996, p. 3).

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Person organisation fit was measured with a four items scale

developed by Netemeyer et al. (1997). The measure reflects the fit

between personal values and organisational values (Cable and Judge

1997), for example “I feel that my personal values are a good fit with the

organisational values.” According to Jose and Thibodeaux (1999),

employees prefer an ethical organisational environment. The fit between

a company and its employees is strengthened when principled conduct is

encouraged in organisations (Sims and Kroeck 1994) and this

component of organisational value is also included in this measurement

scale.

Remuneration and recognition Employees tend to remain with the organisation when they feel their

capabilities, efforts, and performance contributions are recognised

and appreciated (Davies 2001).

Remuneration and recognition was measured with a five item scale

focused on intrinsic and extrinsic rewards (Cammann, Fichman, Jenkins

and Klesh 1979; Broadfoot and Ashkanasy 1994; Seashore, Lawler,

Mirvis and Lawler, Cammann 1982). Extrinsic reward measures were

designed to measure the employee’s view of the economic rewards from

his/her job. It includes pay, benefits, and job security. The scale also

measured the degree to which intrinsic rewards such as recognition are

present in the organisation.

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Training and Career Development Training provides employees with specific skills or helps to correct

deficiencies in their performance; while development is an effort to

provide employees with abilities the organisation will need in the

future (Gomez-Mejia, Balkin and Cardy 1995; Wilk and Cappelli

2003).

A four item scale developed by Broadfoot and Ashkanasy (1994)

focused on whether the organisation expends sufficient effort in

providing opportunities for people to develop their skills, and the

adequacy of the training (Seashore, Lawler, Mirvis, Lawler and

Cammann 1982).

Challenging assignments Providing employees with challenging assignments with well-defined

performance measures and feedback is important for a high

performance environment in which employees can achieve their

personal objectives (Boyer 1994).

A five item scale was derived from the Job Diagnostic Survey to

measure challenging assignments (Hackman and Oldham 1975;

Jackson, Wall, Martin and Davids 1993). The scale explored job elements

of skill variety, task significance, task identity, autonomy, high order

needs and feedback.

Leadership Behaviour Research findings suggest that leadership enhances organisational

commitment (Allen 1995; Bykio, Hacket and Peterson 1994; Ferres,

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Travaglione and Connell 2002; Podsekoff, Mackenzie and Bommer

1996). Studies by Yammariono and Bass (1990) revealed a positive

influence of transformation leaders on organisational outcomes,

resulting in lowered intention to leave, and increased organisational

citizenship behaviour.

A four items scale measured leadership behaviour. The scale

consisted of items adapted from two validated scales: (1) the Multifactor

Leadership Questionnaire devised by Bass and Avolio (1990), which

measured transformational leadership and (2) the eight-item scale by

Hartog, Van Muiijen and Koopmen (1997) which measured inspirational

leadership. The adapted scale used in this study measured leadership

behaviour in terms of leadership effectiveness, extra effort and leadership

satisfaction.

Teamwork relationship Employees stay when they have strong relationships with others they

work with (Clarke 2001). Team building, assignments involving work

with peers, and opportunities for social interaction both on and off

the job encourage these relationships (Johns et al. 2001).

A four item scale developed by Bass and Avolio (1990) measured

the team leadership and relationship of employees and peer leadership,

in this study.

Organisational culture and policies Corporate culture is described as the invisible forces that shape life

in a business organisation (Fitz-enz 1990; Sheriden 1992).

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Management philosophy and style, communications protocol and

policies, rituals and taboos all interact to create the uniqueness of

each company culture.

A five item scale modified from The Organisation Profile

Questionnaire (Kerr and Slocum 1987; Kopelmen et al. 1990; O’Reilly,

Chatmen and Caldwell 1991; Morita, Lee and Mowdey 1989; Peters and

Sheriden 1988) and developed by Broadfoot and Ashkanasy (1994) was

used to measure organisational culture. The profile is a descriptive

instrument, one that paints a picture of respondents’ views of their

organisation’s culture. The scale measures the degree the organisational

structure limits the action of employees, the focus on the influence of

policies and procedures, and tests organisational goal clarity and

planning.

Communication and consultation Effective communications strengthens employee identification with

the company and builds trust (Clarke, 2001; Levine, 1995).

A five item scale validated by Sims, Szilagyi and Keller (1976) and

Broadfoot and Ashkanasy (1994) was used to measure the

communication, consultation and feedback processes of participating

organisations in the study. Three items examined the communication

process, and two items explored the consultation and feedback process.

Work environment Many companies are providing flexible schedules and work

arrangements and are experimenting with other ways to help

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individuals manage their work and personal life issues (Perry-Smith

and Blum 2000; Solomon 1999).

Individuals will stay with a company that clearly considers and

cares for their career priorities (life stage needs), health, location, family,

dual-career, and other personal needs (Gonyea and Googins 1992;

Kamerman and Kahn 1987).

A seven-item scale derived from several scales (Broadfoot and

Ashkanasy 1994; Cammann, Fichman, Jenkins and Klesh, 1979; Smith,

1976) was designed to measure humanistic and socialisation, physical

work conditions and organisational climate. Three items measured the

extent to which the individual is respected and cared for by the

organisation. Three items measured perceptions about the organisational

climate in the workplace. One item measured the physical conditions

experienced in the workplace.

Dependent Variables

Organisational Commitment

Organisational commitment consists of three components: ‘(1)

identification, pride in the organisation and the internalisation of its

goals and values; (2) involvement – psychological absorption in the

activities of one's role for the good of the employing organisation; and

(3) loyalty – affection for, and attachment to the organisation’

(Shepherd and Mathews 2000, p. 557).

Organisational commitment was measured using nine items from

the fifteen item Organisational Commitment Questionnaire (OCQ) scale

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developed by Mowday, Steers and Porter (1979). O'Reilly and Chatman

(1986) and Reichers (1985) criticised the original fifteen-item version

because of the overlap of some items with the concept they are supposed

to predict, turnover. This criticism has led some researchers to use a

shorter version of the OCQ that omits the problematic items (for example

see Banai and Reisel 1995, Shepherd and Mathews 2000). Meyer and

Allen (1991), Morrow (1993), and McElroy et al. (1995), recommended

using the short version of the OCQ to measure organisational

commitment. Compared to other measures of employee commitment, the

OCQ has received the most thorough and generally positive evaluation

(Meyer and Allen 1997). Research has consistently shown that the

instrument yields satisfactory internal and temporal stability, and

discriminant, convergent and predictive validity (Mowday et al. 1982;

Mathieu and Zajac, 1990; Ketchand and Stawser 2001), with the shorter

(nine-item) version being superior to the original (fifteen-item) version

(Commeiras and Fornier 2001).

The scale draws, upon Angle and Perry’s (1981) classification of

commitment into two components: 1) affective commitment (and

calculative commitment. Affective commitment refers to employees'

emotional attachment to the organisation and a calculatively committed

employee exchanges his/her contributions for inducements provided by

an organisation (Gainey 2002).

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165

Intent to Stay (Turnover Intention) According to Fishbein and Ajzen, "the best single predictor of an

individual's behavior will be a measure of the intention to perform

that behaviour" (1975, p. 369). Empirical evidence strongly supports

the position that intent to stay or leave is strongly and consistently

related to voluntary turnover (Dalessio, Silverman and Schuck 1986;

Griffeth and Hom 1988; Mathieu and Zajac 1990).

Intent to stay (Turnover intention) was measured with a four-item

scale consisting of items adapted from the Michigan Organisational

Assessment Questionnaire (Camman, Fichman, Jenkins and Klesh

1979; Seashore, Lawler, Mirvis and Camman 1982) and the Lyons'

Propensity to Leave scale (Cook, Hepworth, Wall and Warr 1981). Using a

seven-point scale, respondents rated the likelihood of staying at the job

for two to three years; whether they thought about quitting; their degree

of loyalty and the likelihood of looking for a new job in the near future.

Data Analysis All data were initially analysed via SPSS (Statistical Package for the

Social Sciences). No outliers of concern were present as the majority

of the scores were within range (Tabachnick and Fidell 2001). The

eleven variables were screened for normality by examining kurtosis

and skewness value. Most often, variables rarely conform to a classic

normal distribution. The distributions are usually skewed (positive or

negative) and display varying degrees of kurtosis (positive or

negative). The decision to transform variables depends on the severity

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of the departure from normality (Neter, Kutner, Nachtdsheim and

Wasserman 1996).

Missing data The data collected in this study had missing data scattered randomly

throughout the data matrix. When there are only a few data points

missing in a random pattern from a large data set, the problems are

less serious and almost any procedure for handling missing values

yield similar results to no real value (Cohen and Chen 1983). All

missing data were treated with list wise deletion.

Factor analysis is best suited to identifying the interrelationships

among a set of items in a scale, all designed to measure the same

construct.

Exploratory factor analysis was carried out in this study for two

reasons. The first reason leads to a relatively mechanistic use, that is the

factors become inputs into another analysis (regression). The second

reason for using factor analysis is to run a reliability test to determine

whether items being measured were coded as the same construct

(Churchill 1994). Reliability analysis evaluated the inter-correlations

among variables.

Means, and standard deviations and correlations Correlation coefficients were calculated for initial exploration of the

relationships between variables. Correlation is used to measure the

size and direction of the relationship between two variables

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(Tabachnick and Fidell 2001). In this study, a correlation analysis

was carried out to measure the inter-relationship between

independent variables (person organisation fit, remuneration and

recognition, training and career development, challenging

assignments, leadership behaviour, teamwork relationship, company

culture and policies, work environment), dependent variables

(organisational commitment and intention to stay) and the

demographic information (age, gender and occupation).

On completion of the correlation analysis, a regression analysis

was conducted in order to further evaluate and understand the

relationships between the dependent and independent variables of the

study, and to test the hypotheses of interest.

Multiple Regression Analysis The regression model selected for this study is stepwise regression

and the dependent variables examined were organisational

commitment and intent to stay (Turnover intention). The purpose of

stepwise regression analysis was to develop a group of independent

variables that are useful in predicting the dependent variables and to

eliminate those independent variables that do not provide any

additional prediction to the independent variables already in the

equation (Tabachnick and Fidell 2000).

In this study, the stepwise regression analysis was conducted to

test the relationship between the eight independent variables of the

study: person organisation fit, remuneration and recognition, training

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and career development, challenging assignments, leadership, teamwork,

policies, and work environment and the dependent variables:

Commitment and Intent to stay (Turnover Intention). Age and gender

were the demographic factors included as control variables. Occupation

and industry were excluded because the correlation matrix indicated

insignificant relationships. Residuals were examined for magnitude,

normality, homoscedasticity, and linearity after each step (Cohen and

Cohen 1983; Tabachnick and Fidell 2000). No violations of these

assumptions were identified.

Results This section reports the results of the study and they include the

following: demographic profiles, means, standard deviations

construct validity and reliability, the results of the factor analysis

and correlation analysis, and the outcomes of the regression tests.

For this study, the sample was not severely skewed and therefore no

data transformation occurred.

Demographic Profile Table 6.1 presents the demographic data of the respondents,

depicting the proportion of gender and age of the participants, the

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Table 6.1. Demographic data of respondents (Age, Gender, Industry and Occupation

different types of industry segments and the different occupations of

the participants. A total of eight hundred employees were surveyed.

Fifty seven percent (n=457) of these employees responded, of which

fifty five percent were male and forty five percent were female. The

age of the respondents, were identified in three specific categories; 21

percent were aged between twenty and twenty-nine; 21 percent

between thirty and thirty-nine; 26 percent between forty and forty-

nine and 31 percent between fifty and sixty-five.

Gender Frequency (n=457)

Percent (%)

Male 250 55 Female 204 45

Age

20-29 97 21 30-39 98 21 40-49 117 26 50-59 142 31

Industry

Tertiary Education 205 45 Healthcare 66 15 Public Sector 156 34 Private Sector 29 6

Occupation

Administrator 67 15 I T Technician 22 5 Manager 70 15 Librarian 9 2 Lecturer 74 16 Accountant 14 3 Engineer 49 11 HR Personnel 5 1 Physician 5 1 Researcher 6 1 Nurse 54 12 Veterinary personnel 14 3

Navy officer 53 12 Navy personnel 12 3

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The respondents of this study consisted of core employees from

nine large organisations of different industries. Forty five percent of these

respondents were from tertiary education, 15 percent from health-care,

34 percent from public sector and 6 per cent from the private sector.

As shown in Table 6.1, the occupations of the respondents consisted

of 15 administrators, 5 percent information technology technicians,

15 percent managers, 2 per cent librarians, 16 percent lecturers, 3

percent accountants, 11 percent engineers, 1 percent HR personnel,

1 percent physicians, 1 percent researchers, 12 percent nurses, 3

percent veterinary personnel, 12 percent navy officers and 3 percent

personnel. This study surveyed a good range of employment services

and therefore provided a much broader scope for generating the

research.

Exploratory Factor Analysis Outcome The nine independent variables (1) person organisation fit, 2)

remuneration and recognition, 3) training and career development, 4)

challenging assignments, 5) leadership behaviour, 6) communication

and consultation, 7) teamwork relationship, 8) company culture and

policies, and 9) work environment were factor analysed (principal

components with varimax rotation). The goal of varimax rotation is to

simplify factors by maximising the variance of the loadings within

factors, across variables. The spread in loadings is maximised,

loadings that are high after extraction become higher after rotation

and loadings that are low become lower. Consequently, interpreting a

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Items Variables 1 2 3 4 5 6 7 8 9 10 11

Person organisation Fit 1 -.464 Person organisation Fit 2 .866 Person organisation Fit 3 -.402 Person organisation Fit 4 -.327 Reward and recognition 1 -.408 Reward and recognition 2 -.899 Reward and recognition 3 -.839 Reward and recognition 4 -.513 Reward and recognition 5 -.333 Training and Development 1 -.674 Training and Development 2 -.649 Training and Development 3 -.463 Challenging opportunities 1 .656 Challenging opportunities 2 .635 Challenging opportunities 3 .680 Challenging opportunities 4 .708 Challenging opportunities 5 .739 Leadership 1 .616 Leadership 2 .641 Leadership 3 .644 Leadership 4 .617 Leadership 5 .548 Leadership 6 .639 Leadership 7 .679 Leadership 8 .647 Teamwork relationship 1 .523 Teamwork relationship 2 .864 Teamwork relationship 4 .874 Teamwork relationship 5 .438 .474 Teamwork relationship 6 .308 Teamwork relationship 7 .486 Company culture and Policies 1

.565

Company culture and Policies 2

.485

Company culture and Policies 3

.541

Company culture and Policies 4

.531

Work environment 1 .809 Work environment 2 .439 Work environment 3 .388 Work environment 4 .523 Organisation commitment 1 -.472 Organisation commitment 2 .777 Organisation commitment 3 .715 Organisation commitment 6 .599 Organisation commitment 7 -.796 Organisation commitment 8 -.516 Organisation commitment 9 -.758 Intention to stay 1 .726 Intention to stay 2 .592 Intention to stay 3 .675 Intention to stay 4 .484

Extraction Method: Principal Component Analysis. Rotation Method: Oblimin with Kaiser Normalisation. Rotation converged in 17 iterations

Table 6.2 Factor analysis of HRM factors.

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factor becomes easier because it is obvious which variables

correlate(Neter, Kutner, Nachtsheim and Wasserman 1996).

The correlation of the factors is ascertained from the pattern

matrix displayed in Table 6.2. The results support the factorial

independence of eight of the nine constructs. The two dependent

variables, organisational commitment and intention to stay (turnover

intention), were also factor analysed (varimax rotation) in a separate

analysis.

As a result of the exploratory factor analysis several items were

deleted, due to cross loadings. Cross loading score of <0.30 were deleted,

as they were not considered to be adding to the measure, reducing the

dependent and independent variables to ten factors. The resultant ten

factors included person organisation fit, remuneration and recognition,

training and career development, challenging assignments, leadership

behaviour, teamwork relationship, company culture and policies, work

environment, organisational commitment and intention to stay.

For greater clarity of the process, Appendix 9 depicts the changes

in the items for each of the factors as a result of the exploratory factor

analysis. The four items of communication and consultation construct

clustered onto the leadership behaviour scale. The clusters of items

under teamwork relationship formed a new construct. As shown in

Appendix 9, several items were deleted.

The results of the factor analysis meant H7 had to be revised. The

revised hypothesis summarised that teamwork relationship in the

workplace positively influences organisational commitment. Once the

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factor structures were determined, the next procedure involved testing

the reliability of the measures.

Measures of Reliability Reliability refers to the degree to which measures are free from

random error and therefore yield consistent results (Zikmund 1997).

The scales of the ten factorised variables were checked for reliability

using Cronbach’s Alpha (Zikmund 1997). The results of the tests for

each scale (10) are shown in Table 6.3.

An alpha of 0.70 or above is considered to be reliable as suggested

by many researchers (Davis 1996; Nunnally 1978). Apart from the

person organisation fit scale (ά =0.54), the Cronbach's alphas for all other

scales in the study were judged to be reliable (ά =>0.7) (Hair et al. 1992).

The items of measurement for person organisation fit (selection) and the

items of measurement for organisational commitment were shown to have

common characteristics (indication of overlapping in factor analysis). This

may have affected the reliability of the person organisation fit scale because

it lacked discriminating power.

Means, standard deviations and correlations Table 6.3 presents the means, standard deviations, inter-

correlations, and reliabilities of the scales. The standard deviations of

the main study variables ranged from 1.06 to 1.58, suggesting that

none of the measures were marked by excessive restrictions in range.

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175

At this juncture, it is important to note that the communication

and consultation variable does not appear in Table 6.3 because this

variable was removed from further analyses. Descriptive statistics and

correlations are displayed in Table 6.3. As can be seen from this table the

correlations between the independent variables are as expected,

providing further evidence of construct reliability.

The correlation matrix presented in Table 6.3 revealed that all the

eight variables (person organisation fit, remuneration and recognition,

training and career development, challenging assignments, leadership

behaviour, teamwork relationship, culture and policies and work

environment) have significant positive correlations with a) organisational

commitment and b) intention to stay. The direction of the association

ranged from r= 0.42 to r=0.66. These results indicate no multi-

collinearity and singularity problems.

The correlation results meant that H1, H2, H3, H4, H5, H6, H7,

H8, H9 were supported. However, the demographic variables showed

only weak associations with the commitment dimension and intention to

stay. Both age (r= .17, p<0.001) and gender (r =.18, p<0.001) were

positively correlated to organisational commitment but occupation and

industry had no significant relationship. Therefore occupation and

industry were removed from further analyses in the interests of

parsimony.

The association between organisational commitment and intention

to stay (r =.66, p<0.001) was strong, positive, and significant. Thus, as

the correlation analysis indicated significant relationships between the

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identified HRM factors and organisational commitment and intent to

stay.

Multiple regressions In this study, a stepwise multiple regression process was used to

examine the relationships between eight HRM factors, organisational

commitment and intent to stay. In addition, age and gender were

used as control variables in the regression analysis.

The regression analyses ran with two separate sets of independent

variables (HR factors and organisational factors). The reason for this is

conceptually based. In this study, the choices about bundling HR

practices began with the design of the theoretical model. The

independent variables were divided into two bundles (HR factors and

Organisational factors) identified from Phase 1 and Phase 2. The

participants of both phases suggested the separation of these HRM

factors.

Each of these bundles is made up of interrelated, internally

consistent and even overlapping practices. The two bundles are

complementary. It is the combination of practices in a bundle, rather

than individual practices that shapes the pattern of interactions between

the employers and employees (Cutcher-Gershenfeld 1991).

Statistically it also makes sense to separate out these bundles to

show the true effect. Regression is best when each IV is strongly related

to the DV but uncorrelated to other variables (Tabachnik and Fidell

2001). Thus the regression solution is extremely sensitive to the

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combination of variables that is included in it. Whether or not

independent variables (IVs) appear particularly important in a solution

depends upon the other IVs in the set. Clearly, there were strong

correlations between the HRM factors.

As such, four separate regression equations were developed and

tested in this study. The regression equations tested were of the following

form:

Equation 1: HR Factors bundle + constant = Organisational

commitment,

Equation 2: Organisational Factors bundle + constant =

Organisational commitment,

Equation 3: HR Factors bundle + commitment + constant =

Turnover intention (intent to stay) and

Equation 4: Organisational Factors + commitment + constant =

Turnover intention (intent to stay).

Age and gender were the control variables included in all the

regression analyses.

The results of these four regression runs are reported in Table 6.4,

Table 6.5, Table 6.6 and Table 6.7.

Table 6.4 shows that the demographic features and four HR

factors all have a positive and significant impact on commitment as

predicted. Of interest is the weak effect of training and career

development on commitment in comparison to the other HR

factors.Thus, the study hypotheses (H1, H2, H3 and H4) that predicted

person organisation fit, remuneration, recognition and reward and

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challenging opportunities positively influence organisational commitment

are supported by the data.

_________________________________________________________________________________ Organisational Commitment Human Resource Practices _____________________________________________ Variables Step 1 Step 2 Control Variables (demographics) Age 0.14** 0.16*** Gender 0.37*** 0.21** Response Variables Person Organisation Fit 0.23*** Remuneration/recognition 0.31*** Training/Career development 0.10* Challenging opportunities 0.22*** _________________________________________________________________________________ R2 0.05*** 0.52*** Adjusted R2 0.04 0.52 F 10.62*** 77.49*** △R2 0.05 0.47 F for △R2 10.62 105.76

*p< 0.05 **p< 0.01 ***p<0.001 _________________________________________________________________________________

Table 6.4: Regression Results (Unstandardised Coefficients) for Organisational Commitment as Dependent Variable

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_________________________________________________________________________________ Organisational Commitment Organisational Factors _________________________________________________________________________________ Step 1 Step 2 Variables Control Variables (demographics) Age 0.14** 0.14*** Gender 0.37*** 0.24** Response Variables Leadership 0.13** Teamwork relationship 0.26*** Company culture and Policies 0.16*** Work environment 0.13*** _________________________________________________________________________________ R2 0.05*** 0.51*** Adjusted R2 0.04 0.50 F 10.56*** 74.74*** △R2 0.50 0.47 F for △R2 10.56 101.88 *p< 0.05 **p< 0.01 ***p<0.001 ____________________________________________________________________

Table 6.5: Regression Results (Unstandardised Coefficients) for Organisational

Commitment as Dependent Variable

Table 6.5 presents the results of organisational commitment as

dependent variable with independent variable as organisational factors.

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The results supports earlier findings that organisational factors of

leadership, teamwork relationship, company culture and policies and

work environment, have a strong and positive influence on commitment,

accounting for 47% of the variance in commitment.

Thus, the four hypotheses (H5, H6, H7, H8) that predicted

leadership, teamwork relationship, company culture and policies and

work environment positively influence organisational commitment are

supported by the data.

Table 6.6 reports the results of Equation (3) regression analysis

testing for the indirect effect of commitment on intention to stay when

the independent variables are the HR bundle. The results from table 6.6

suggest that commitment plays a differential role in affecting the

relationship between HR factors and intent to stay. The standardised

coefficients were reported.

For instance, the results suggest that commitment completely

mediates1 the relationship between the factors of personal organisational

fit and challenging opportunity and intention to stay; whilst only partially

mediating the relationship between remuneration, recognition and

reward and training and career development and intent to stay.

A mixed result is also evident when the organisational factors are

used as independent variables.

1 Baron and Kenny (1986) highlight that a variable is considered mediator if: (a) the predictor variable are significantly correlated with the hypothesis mediator,( b) the predictor and mediator variables are all significantly correlated with the dependent variable, and (c) a previously significant effect for the predictor variables when the dependent variable is regressed into them, becomes non-significant or significantly reduced in predicting power when the hypothesised mediator is added to the analysis.

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_________________________________________________________________________________ Turnover Intention Human Resource Practices (Intent to stay) ______________________________________ Step 1 Step 2 Step 3 Variables Control Variables (demographics) Age 0.38*** 0.40*** 0.28*** Gender 0.33* 0.21 0.04 Response Variables Person Organisation fit 0.17* 0.01 Remuneration/recognition 0.42*** 0.21*** Training/Career development 0.16** 0.12* Challenging opportunities 0.12* 0.03 Commitment 0.70*** _________________________________________________________________________________ R2 0.09*** 0.39*** 0.51*** Adjusted R2 0.08 0.38 0.50 F 19.90*** 44.11*** 62.00*** △R2 0.09 0.30 0.12 F for △ R2 19.90 51.50 104.87 *p< 0.05 **p< 0.01 ***p<0.001 _________________________________________________________________________________ Table 6.6: Regression Results (Unstandardised Coefficients) for Turnover Intention

as Dependent Variable

Table 6.7 specifically reveals that commitment mediates the

relationship between teamwork, culture and intent to stay and acts as a

possible partial mediator of the relationship between work environment

and intent to stay.

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_________________________________________________________________________________ Organisational Factors Turnover Intention (Intent to stay) _______________________________________________________________________ Step 1 Step 2 Step 3 Variables Control Variables (demographics) Age 0.37*** 0.35*** 0.25*** Gender 0.31* 0.15 0.10 Response Variables Leadership 0.11 0.01 Teamwork relationship 0.17* -0.01 Company culture and Policies 0.15* 0.03 Work environment 0.28*** 0.19*** Commitment 0.74*** _________________________________________________________________________________ R2 0.08*** 0.35*** 0.49*** Adjusted R2 0.08 0.35 0.48 F 18.96*** 38.51*** 58.26*** + R2 0.08 0.27 0.14 F for + R2 18.96 44.41 114.48 *p< 0.05 **p< 0.01 ***p<0.001 _________________________________________________________________________________

Table 6.7: Regression Results (Unstandardised Coefficients) for Turnover Intention as Dependent Variable

Of interest is that leadership has no direct effect on intent to stay,

despite the earlier identified relationship in Table 6.3. In all, it

appears that the relationship between HR factors, organisational

factors and intention to stay is conditional upon commitment.

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Discussion and Findings of the Study The regression results revealed that commitment mediated the

relationship between person organisation fit and intent to stay and was a

partial mediator of remuneration, recognition and reward and training

and career development.

People who are well suited for the job and/or organisation are

more likely to stay. The concept of organisational fit (Weiner 1982; Brown

1969; Kidron 1978; Steers 1977) identifies convergent goals and values

between the individual and the organisation as an important element of

affective commitment.

Results revealed that organisational commitment mediates

teamwork relationships and organisational culture and policies and act

as a partial mediator of work environment. Commitment however, did

not have an impact on the relationship between leadership and intent to

stay.

The finding that employees who have close friends at work are less

likely to leave is widely supported (Kristoff 1996; O'Reilly, Caldwell, and

Barnett, 1989). Implicit in work group cohesion is the notion of "co-

worker support", whereby having many close friends enhances the

support of employees. Meyer and Allen (1997), after observing that

“stayers” were higher on work group cohesion than “leavers”, reported

that the decision to leave was directly influenced by both the job

challenge and the amount of social support available. Prior research by

Granovetter (1986) focused on the social networks of employees and the

degree of social integration, identified the role of "strong ties" and "weak

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ties" between employees in explaining the process by which employees

decide to leave or stay in organisations.

Research has shown that employees' commitment to an

organisation affects how well the organisation performs in various ways.

If it turns out that employee commitment varies in certain predictable

ways from one cultural pattern to another, organisational development

specialists could try to strengthen employee commitment and, therefore,

organisational effectiveness by changing the organisational culture.

These studies and anecdotal evidence suggest a positive link between

strong organisational cultures and employee commitment (Lahiry 2000;

Sheriden 1992; Stum 1998).

These relationships are supported by the extant literature, which

reports direct relationships between the eight variables and

organisational commitment. This supports H1-H8.

One of the purposes of this study however was to build on these

findings by testing the proposal that the relationships between the HR

bundle, Organisation bundle and the outcome, intention to stay, is

conditional upon commitment. Prior research reports mixed results with

respect to the relationship between organisational commitment and

turnover intention (Mathieu and Zajac 1990).

The purpose of this final phase of the study was to test the HRM-

retention model that examined the relationships among, HR factor

bundle, organisational factor bundle organisational commitment, and

turnover intention (intent to stay). Specifically, the study attempts to

postulate HRM management processes in the development of employees'

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commitment to the organisation, and the conditional nature of the

commitment-intention to stay relationship.

For this study, organisational commitment and intention to stay

(turnover intention) were selected as the focal dependent variables for the

following reasons. First, there is evidence that before actually leaving the

job, employees typically make a conscious decision to do so. These two

events are usually separated in time (Frazis et al. 1998; Larwood, Wright

Desrochers and Dahir 1998). Second, it is more practical to ask

employees of their intention to stay in a cross-sectional study than

actually to track them down via a longitudinal study to see if they have

left or to conduct a retrospective study and risk hindsight biases.

The findings of this study revealed positive significant co-

relationships between the eight HRM factors and organisational

commitment. These specific HRM factors consisted of two bundles of

practices: HR factors (e.g., person organisational fit, remuneration,

reward and recognition, training and career development, challenging job

opportunities) and Organisational factors (e.g. leadership behaviour,

company culture and policies, teamwork relationship and satisfactory

work environment)

The findings of the study also confirmed a significant relationship

between organisational commitment and intent to stay. In their

comprehensive review, Meyer and Allen (1997) reported a positive

relationship between affective commitment and employee retention. Both

affective and continuance (calculative) commitment are expected to

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increase the likelihood that an individual will remain with an

organisation (Meyer, Bobocel and Allen 1991).

There are however, studies by Mathieu and Zajac (1990) and

Randall (1990) that have also demonstrated that the relationships

between organisational commitment and turnover have produced few

large correlations. One explanation for the low commitment-turnover

correlations is that other variables probably moderate this relationship

(Mathieu and Zajac 1990).

The results of this research highlight the conditional role of

commitment. Implicit in HRM-retention model is that organisational

commitment mediates the relationships between person organisation fit,

teamwork relationship, culture and policies and the outcome variable

intention to stay. Additionally, the study also revealed that commitment

has a partially mediating effect on remuneration, recognition and reward,

training and career development and work environment. However, the

results revealed that organisational commitment does not have any

significant impact on the relationship between challenging opportunities,

leadership behaviour and intent to stay.

Wagar (2001) examined the relationship between an individual's

intention to quit his job and the human resource management activities

of the organisation. The study revealed that employees of organisations

with more sophisticated human resource systems were significantly less

likely to indicate they intended to quit over the next two years. According

to Wager (2001), employees who did not intend to quit were more likely to

be employed in organisations that adopted a certain set of HR practices

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such as employee voice procedures, programs that recognise employee

contributions (e.g. merit-based promotion, individual merit pay and a

formal employee recognition program), mechanisms for sharing

information with employees, use of problem-solving groups and training

in employee involvement. Several of the factors investigated by Wagar

were further re-examined in this study (i.e., training, pay, recognition,

communication and consultation).

The results of this study supported Wager’s findings. The study

identified eight factors that influence the core employees’ decision to stay.

These factors are bundled into two set of practices: HR factors bundle

(person organisation fit, remuneration, recognition and reward, training

and career development and challenging opportunities) and

organisational factor bundle (leadership, organisational culture and

policies, teamwork relationship and work environment ). Thus this study

focused on the impact of these two bundles of practices on the retention

of core employees rather than individual HR practice.

Another key finding of this study is a strong correlation between

gender and organisational commitment. This is supported by studies

conducted by Angle and Perry (1981) and Miller and Wheeler (1992) who

noted that women are more committed to organisations than male.

The results of this study also postulated a significant and positive

relationship between age and organisational commitment. This research

provided evidence that older employees and individuals with more

seniority within the organisation were less likely to report they planned to

resign. This finding is consistent with previous research (Alutto,

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Hrebiniak and Alonso 1973; Cohen and Lowenberg 1990). Mathieu and

Zajac (1990) found that age is significantly more related to affective

commitment than to continuance (calculative) commitment. Tenure was

excluded from this study because studies by Meyer and Allen (1997)

supported that employees’ age may be the link between tenure and

affective commitment.

A prior study by Werbel and Gould (1984) revealed an inverse

relationship between organisational commitment and turnover for nurses

employed more than one year, but Cohen (1991) indicated that this

relationship was stronger for employees in their early career stages (i.e.

up to thirty years old) than those in later career stages.

Past studies revealed that employees interpret human resource

practices as indicative of the personified organisation's commitment to

them (Eisenberger et al. 1990; Settoon et al. 1996). They reciprocate their

perceptions accordingly in their own commitment to the organisation.

Some researchers suggest that for positive work experiences to increase

commitment significantly, employees must believe that such work

experiences are a result of effective management policies (Parker and

Wright 2001). The findings of this study (i.e. mediating role of

commitment) have therefore provided further empirical evidence to

support these studies.

In summary, the findings of the empirical tests of the model put

forward in this thesis demonstrates that commitment can be influenced

by bundles of HR factors (i.e. selection (person organisation fit),

remuneration, reward and recognition, training and career development,

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189

challenging assignments) and Organisational factors (i.e. leadership

behaviour, organisational culture and policies, teamwork relationship

and satisfactory work environment.) Moreover, commitment acts as a

partial mediator of the relationship between remuneration, recognition

and reward, training and career development and work environment on

intent to stay. Commitment fully mediates the relationship between

person organisation fit, teamwork relationship, culture and policies and

intention to stay.

Conclusion

This chapter provided a comprehensive account of the results of

Phase 3 of the study (The Employee Survey). It described the sample

population, the instrument, measurements of construct and the

construct validity of all the variables used in the study. Factor analysis,

correlations and multiple regressions and were discussed and reported.

Final discussion and findings of the study will be discussed in Chapter

Seven.

CHAPTER SEVEN

DISCUSSION AND CONCLUSION

Validating the HRM- Retention Model

The best single predictor of an individual's behaviour will be a measure of his/her intention to perform that behaviour (Fishbein and Ajzen 1975, p. 369).

The main purpose of this chapter is to synthesise the qualitative and

empirical results from chapters’ four to six to provide an answer to

the primary research question of this thesis namely, whether HRM

practices can actually influence the retention of core employees. The

other objectives are to highlight the contributions of the research to

the development of knowledge in the field, as well as to acknowledge

its limitations and to set future directions for research.

A Review of the Findings on the Influence of HRM factors on the Retention of Core employees of Australian Organisations. The influence of HRM factors on retention of core employees was

examined in three phases.

Phase One Study The results of Phase One provided a significant contribution to the

study. It identified five characteristics of core employees of Australian

organisations. They included 1) possessing knowledge, skills and

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191

attributes (KSA) aligned with business operation and direction, 2) is

central to the productivity and wellbeing of the organisation 3)

provide a competitive edge to the organisation, 4) support the

organisational culture and vision and 5) possess skills, knowledge

and abilities that are relatively rare or irreplaceable to ensure the

success of the organisation. The descriptions of core employees seem

to have a focus on knowledge, skills and attributes (KSA) that are of

strategic value to the organisation. This comprehensive description of

a core employee was used as a template in the phase two, to further

determine the characteristics of core employees of the participating

organisations.

With regards to the needs of core employees, the Delphi results

indicated that instead of job security as identified in literature,

employees now placed greater emphasis on a) training and

development, b) career advancement and growth opportunities, c)

recognition of capabilities and acquisition of new skills and d)

challenging work. The findings also suggested that the needs of core

employees also differ with age.

Younger employee needs are focused on remuneration, training

and development, career advancement, challenging job, growth

opportunities and recognition of their capabilities and acquisition of

new skills. For older employees, salary and career advancement are

not so important. However, autonomy, liberty from mundane things,

and opportunities to mentor so that they can make greater

contribution to the organisation is of great importance. Job challenge

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is preferred to repetitive jobs. Findings by Dessller (1999) and

Finegan (2000) support these outcomes.

The HR architecture models (Handy 1995; Lepak and Snell

1999) advocated a differential investment strategy for different

categories of employees. The findings of this study indicate that the

shaping of these employment modes is dependent on the influence of

several factors in the Australian business environment. These factors

included the strategic focus of the organisation, organisational

structure, competitiveness of the industry, type of industry and the

type of worker included in the organisation. According to the Delphi

panel of experts these factors were excluded in the theoretical model

developed by Lepak and Snell in 1999 for the American business

environment. It is suggested that the impact of these factors may

therefore be the determinants of the type of HRM systems adopted by

various Australian organisations (holistic or differential). This finding

is another key contribution of this research.

The preliminary results of Phase One (the Delphi study)

identified eight factors that may affect retention. The identified factors

were classified into two bundles: HR factors and Organisational

factors. The HR factors reflected the human resource

policies/practices of firms and consisted of four elements: (1)

selection (person organisation fit), (2) remuneration, recognition and

reward, (3) training and career development and (4) challenging

opportunities and assignments. Whilst the organisational factors

focused on organisational characteristics, philosophies and structure

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such as (1) leadership behaviour, (2) organisational culture and

policies, (3) teamwork relationship and (4) work environment. These

findings also provided credence to the notion of bundling of HR

practices to achieve an organisational outcome.

This concept of “bundles” of HR practices to achieve an

organisational outcome is supported by several studies (MacDuffie

1995; Pfeffer 1998). In 1993, Ichniowski, Shaw, and Prennushi,

found that the combination of practices in a bundle, rather than

individual practices, shapes the pattern of interactions between

employers and employees. Thus any research that focuses on the

impact of individual HR practice on an outcome may produce

misleading results (Cutcher-Gershenfeld 1991).

Phase Two Study The second phase of the study (Interview) set out to confirm the

findings from Phase One by examining the current retention

management practices of Australian organisations. Thus, this

qualitative approach provided greater insights to the views of the HR

policy makers on the retention of their employees.

Firstly, the findings of the second phase confirmed the validity

of the HRM-retention factors identified in Phase One. More

specifically, the findings provide evidence that these retention HRM

factors were current practices adopted by participating organisations

to combat attrition.

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194

Secondly, results from this qualitative study highlighted that

organisations that managed their human resource effectively may

have higher retention of their employees. Huselid (1995) reported

from a sample of 968 firms that those using comprehensive employee

recruitment and selection procedures, extensive employee involvement

and training, and formal performance appraisal linked to incentive

compensation were likely to have lower employee turnover, higher

productivity, and enhanced corporate financial performance. Other

studies seem to support this perspective (Delaney and Huselid 1996;

Delery and Doty 1996; Huselid and Becker 1996; MacDuffie 1995).

Thirdly, the findings of Phase Two indicate that holistic and

differential HR practices were equally adopted by participating

organisations. However, although it may be the case that some firms

manage all employees the same way, regardless of their value and

uniqueness, results of this study verify that most firms make

significant distinctions in the methods they use for different skill sets

and that these are important determinants of firm performance. This

result further supports the Lepak and Snell (1999) theoretical HR

architecture model which advocates a differential investment strategy

for different categories of employees.

Phase Three Study The final phase of the study, tested the HRM retention model,

developed from the results of Phase 1 and Phase 2. The quantitative

study examined the relationships between the HR factor bundle,

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195

organisational factor bundle, organisational commitment and

intention to stay.

The findings of this study revealed positive significant co-

relationships between the eight factors and organisational

commitment. These specific factors consisted of two bundles of

practices: HR factors (e.g. person organisational fit, remuneration,

reward and recognition, training and career development, challenging

job opportunities) and Organisational factors (e.g. leadership

behaviour, company culture and policies, teamwork relationship and

satisfactory work environment).

Research on social exchange theory has shown that employees'

commitment to the organisation is derived from their perceptions of

the employers' commitment to and support of them. Past studies also

revealed that employees interpret human resource practices as

indicative of the personified organisation's commitment to them

(Eisenberger et al. 1990; Settoon et al. 1996). They reciprocate their

perceptions accordingly in their own commitment to the organisation.

Some researchers suggest that for positive work experiences to

increase commitment significantly, employees must believe that such

work experiences are a result of effective management policies (Parker

and Wright 2001).

The findings of the study also confirmed a significant

relationship between organisational commitment and intent to stay.

In their comprehensive review, Meyer and Allen (1997) reported a

positive relationship between affective commitment and employee

Janet Chew

196

retention. Both affective and continuance (calculative) commitment

are expected to increase the likelihood that an individual will remain

with an organisation (Meyer, Bobocel and Allen 1991).

There are however, studies by Mathieu and Zajac (1990) and

Randall (1990) that have also demonstrated that the relationships

between organisational commitment and turnover have produced few

large correlations. One explanation for the low commitment-turnover

correlations is that other variables probably moderate this

relationship (Mathieu and Zajac 1990).

It is therefore important to acknowledge that other antecedents

of commitment not measured in this study were the lack of available

alternative employment opportunities (Meyer and Allen 1991) and

magnitude or number of investment lost in leaving the organisation

(Rusbult and Farrell 1983). The reason for the exclusion was based

on the desire to limit the number of measures to achieve parsimony

of the model. More specifically, this was not one of the objectives of

this research.

The results also draw attention to the mediating role of

commitment. Implicit in the model is that organisational commitment

mediated the relationships between person organisation fit, teamwork

relationship, culture and policies and the outcome variable (intention

to stay). It was found that commitment does have a partially

mediating effect on some of the independent variables and intent to

stay. The results revealed that it moderates remuneration,

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197

recognition and reward, training and career development and work

environment, and intent to stay.

The results of the study also postulated a significant and

positive relationship between age and organisational commitment.

This finding is consistent with previous research (Alutto, Hrebiniak

and Alonso 1973; Cohen and Lowenberg 1990). Mathieu and Zajac

(1990) found that age was significantly more related to affective

commitment than to continuance (calculative) commitment. Tenure

was excluded from this study because studies by Meyer and Allen

(1997) supported that employees’ age may be the link between tenure

and affective commitment.

Werbel and Gould (1984) revealed an inverse relationship

between organisational commitment and turnover for nurses

employed more than one year, but Cohen (1991) indicated that this

relationship was stronger for employees in their early career stages

(i.e. up to thirty years old) than those in later career stages.

Another finding of this study was a strong correlation between

gender and organisational commitment. This is supported by studies

conducted by Angle and Perry (1981) and Beutell and Brenner (1986)

who noted that women are more committed to organisations than

male.

In summary, the findings of the empirical tests of the model

put forward in this thesis demonstrated that commitment can be

influenced by selection (person organisation fit), remuneration,

reward and recognition, training and career development, challenging

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assignments, leadership behaviour, organisational culture and

policies, teamwork relationship and satisfactory work environment.

Moreover, commitment acts as a moderator of remuneration,

recognition and reward, training and career development and work

environment on intent to stay. Commitment also mediates person

organisation fit, teamwork relationship, culture and policies on

intention to stay.

Of particular interest however is that commitment acts as a

mediator between the factors identified and intent to stay.

Contributions Whetten (1989) put forward seven simple questions, which determine

the value of a theoretical contribution. These questions provide a

useful framework within which to discuss the theoretical and

methodological contributions of this thesis. The questions are:

1. What’s new

2. So what?

3. Why so?

4. Well done?

5. Done well?

6. Why now? and

7. Who cares?

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Each question is dealt with next, followed by a discussion of

the limitations of the research and future directions.

What’s new?

Bacharach (1989) stated that the field of organisational theory is in

danger of sinking under its own weight because of the sheer number

of different theoretical perspectives applied to a given phenomenon.

There is a need for amalgamation and assimilation of the theories

into universally accepted frameworks that will guide further

developments in theory and practice. Mitchell (1997) has stated that

very little work is done to integrate motivational theories and

principles. This thesis sought to do this by attempting to integrate

three significant bodies of knowledge relevant to human resource

management: HR practices, organisational commitment and turnover

intention.

A legitimate value added contribution needs to go beyond

simply adding or deleting factors from an existing model and offering

alternate explanations of relationships between variables (Whetten

1989). The present research extends the knowledge of human

resource management by developing an HRM-retention model which

examined the relationships between HR factors, organisational

factors, organisational commitment and intention to stay in the

Australian business environment.

From a management perspective, this model maybe used by

human resource practitioners as a guide or template in designing a

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strategic retention tool that an organisation may adopt so that a

productive form of employee commitment is generated.

Furthermore, the qualitative part of the study was able to flesh

out the current retention management practices of large Australian

organisations. It gave greater clarification to the current HRM –

retention issues in the Australian business environment and provides

greater insights into the decision making process of HR practitioners.

The present research was also able to test the theoretical HR

architecture model developed by Lepak and Snell (1999) in the

Australian business environment. These American researchers

proposed that within organisations, considerable variance exists with

regard to both the uniqueness and value of skills. Juxtaposing these

two dimensions, they built a (2 x 2) matrix describing different

combinations with their corresponding employment relationships and

HR systems. This study identified several factors in the Australian

business environment that was not present in the American model.

These factors form the framework for an Australian HR architecture

model.

One of the original contributions to the field is the

operationalisation of new measures of employee retention

management efficacy. The HRM-retention model developed from this

study informs both the content and process of generating employee

commitment to the organisation and the influence on employee

intention to remain in the organisation.

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The findings have also classified HR practices into “bundles” to

combat attrition. The identification of sets of “best practices” to

reduce turnover supports the universal superior approach to

managed people, which is utilising the best practices in human

resource management (Huselid 1995; Pfeffer 1998).

Finally, this study contributed to the literature on perceived

organisational support, commitment, and voluntary turnover

intention in several ways. It extends recent research on commitment

to the organisation by considering multiple factors of HRM support.

Of particular importance was the demonstration that the relationship

between selection (person organisation fit), teamwork relationship,

organisational culture and policies to intention to stay is mediated by

commitment acts as a partial mediator of the relationship between

work environment, remuneration, recognition and reward, training

and career development and intention to stay.

So What?

Lewin’s (1935) proposition that “nothing is as practical as a good

theory” suggests that the criteria of a good theory go beyond the mere

advancement of knowledge. A good theory must therefore inform

research and practice in addition to contributing to knowledge in

particular discipline (Poole and Van de Ven 1989).

Wright (1998) has suggested that the basic theory behind "fit"

is that the effectiveness of any HR practice or set of practices for

impacting firm performance depends upon the firm's strategy (or

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conversely, the effectiveness of any strategy depends upon having the

right HR practices). In 1995 Dyer and Reeves reviewed four studies of

the effects of "bundling" HR practices on firm performance and stated

that there was "no convincing evidence that more effective HRM

practices are those that fit the business strategy." Gerhart, Trevor,

and Graham (1996) argued that there was little empirical evidence

supporting the value of achieving synergy between strategy and HR

practices. Thus, from a practical perspective, the thesis offers a HRM

retention strategic solution for organisations. If properly

implemented, the “bundles” of HR practices identified in this

empirical study will ensure an alignment between HR and strategy to

gain competitive advantage.

Why so?

Evidence of a positive relationship between certain HR practices and

firm retention may constitute the kind of data needed to encourage

HR managers to adopt effective HR management approaches

In summary, this section highlights the contributions that this

study has made towards extending the knowledge base of the HRM

with regards to retention. It provided practical implications for

Human resource practices and most significantly from an

organisational development perspective offers a strategic retention

tool for progressive organisations.

The findings support American studies conducted by Fitz-enz

in 1990, which advocated retention management as driven by the

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following factors, which should be managed congruently:

organisational culture and structure, recruitment strategy, pay and

benefits philosophy, employee support programs, and career

development system.

This study has attempted to understand the process through

which employees attach themselves to an organisation. It has

concentrated on the immediate precursor of turnover, behavioral

commitment. Behavioral commitment is defined as the degree of an

employee's intention to stay in an organisation. It is the process by

which employees are able to link themselves to an organisation.

Becker (1960), in examining behavioral commitment, concentrated on

what he termed the "side-bet theory", where employees attach

themselves to organisations through investments such as time, effort,

and rewards which become too costly to give up. Whitener(1991)

argue that continuance commitment is conceptually very similar to

behavioral intentions.

The advantages of studying behavioral commitment over

turnover have been noted by Thompson and Terpening (1983). First,

the reasons given for leaving may not be true and accurate; second,

the use of archival data may not adequately distinguish between

voluntary and involuntary turnover; and third, other factors may be

prevalent which are not related to the decision to quit.

Martin and Hunt (1980) also claim that behavioral

commitment has a preventative role, whereby managers can, after

determining the effect of certain variables on an employee's intention

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204

to leave, make changes to these variables so that employees may

reassess their current situation and decide to stay. If changes cannot

be made, then intention to leave has important consequences in

predicting recruitment and human resource planning needs in

organisations. Likewise, Dalessio, Silverman, and Schuck (1986),

asserted that more attention should be directed towards behavioral

commitment rather than turnover, as once an employee has quit

there is little an organisation can do except incur the expense of

hiring or training another employee.

Well done?

A number of points can be made in response to the question of

whether the research was well done. A lot of care has been taken to

address measurement issues such as the use of valid and reliable

measures of model constructs in testing the theoretical model.

The HRM–retention model was obtained and tested using a

three phased process. Both quantitative and qualitative

methodologies have been used in this HRM research and as a result

provided considerable strength to the study.

The findings of the present study have shown that the

qualitative method has allowed a closer analysis of retention

management issues from company’s perspective. An important

advantage of the in-depth interview, is the opportunity to probe

complex answers, resulting in greater extraction of information from

the participant and greater transfer of knowledge as compared to a

Chapter 7

205

mailed out survey (Hayes 1998). Thus, this qualitative approach

achieved the generation of richer data for the development of the

HRM-retention model. The integration of a qualitative component into

an otherwise quantitative research methodology is important for the

full understanding of the effects of HRM factors on employee

retention. A single quantitative approach would not have offered a

robust understanding of current employee retention practices.

Therefore it would not have been comprehensive enough to formulate

the model.

Done well?

It is also important to establish that the theoretical model has done

well in the process of empirical testing. The empirical results placed

great credence in Bandura’s (1986) notion that human behaviour

cannot be fully understood solely in terms of social structures or

psychological factors. He proposed instead that it is necessary to

adopt an integrated perspective in which social influences operate

through self processes that produce behavioural intentions and

actions. By examining the influence of several incorporated factors

such as teamwork relationship, work environment, leadership

behaviour and corporate culture on employees’ commitment and their

intentions to stay or leave their organisations, this study therefore

adopted an integrated perspective.

The two qualitative phases of the research identified the HRM

factors that are most likely to influence retention. The Delphi process

Janet Chew

206

of obtaining this crucial information was rigorous and the researcher

enlisted the assistance of senior academics, experienced HR

practitioners and industrial psychologists to initially identify these

factors. To further confirm the accuracy of the identified HRM factors,

HR managers of twelve organisations were interviewed to assess the

current retention management practices of the Australian business

environment.

Why now?

It was argued in Chapter One that many changes to organisations

have occurred both in terms of organisational structure and employer

and employee relationships (Allan and Sienko 1997; Fierman 1994;

Kitay and Lansbury 1997; Kraut and Korman 1999). Changes in the

economic environment have impacted on both the formal and

informal contracts of employment. This in turn has affected employee

motivation and organisational commitment.

Decreased employee commitment and increased flexibility of

employment coincided with decreasing tenure and job instability for

workers. The use of these non-standard employment arrangements

have long-term consequences. Flexibility may be good business for

the employer, but in many cases it may be devastating for the worker.

Employment instability is contributing to the growing inequality in

income, status, and economic security in Australia (ABS 2001).

Moreover, Pfeffer (1998), in his critical examination of the

people management practices of organisations, has suggested that

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207

there is a disturbing disconnect in today’s organisational

management of people. He has marshalled impressive evidence to

prove a direct, unassailable correlation between good people

management and profits. Despite this mounting evidence, he argues

that smart organisations still fall into harmful patterns when

managing people and this is destructive to employment relationships

and organisational performance.

Who cares?

In response to this question, it can be argued that both organisations

and employees should care about the influence of HRM factors on

organisational commitment and intention to stay.

With the average attrition rate in the Australian workplace

currently 6 percent and the cost of replacing an employee usually

amounts to a quarter of an individual's annual salary. Consequently,

a company with 50,000 employees incurs replacement costs

approaching $18 million a year (Davies 2001; Ettorre 1997).

Furthermore, in a time and age when total quality and supreme

customer service are germane to success in the world of keen and

relentless competition, workers' dedication has never been as

valuable as now to organisations. Barney and Wright (1998) indicated

that in order for human resources to contribute to sustained

competitive advantage, they must remain hard to imitate, create

value, and co-align, uniquely, to the organisation's business strategy.

For progressive organisations pursuing such competitive advantage,

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208

the HRM–retention model developed in this study will assist in their

objective to retain critical employees.

From an employee’s perspective, organisational actions such as

HRM practices are indicative of the organisation's commitment to

them (Whitener 2001). Employees who have their expectations met on

the job (Tsui, Porter, and Tripoli 1997) and who perceive they are

treated fairly (Huselid 1995) are more likely to stay in the

organisation. A plethora of academic research conducted at the

organisational level also suggests that human resource practices

affect organisational outcomes by shaping employee behaviours and

attitudes (Arthur 1994; Tsui, Pearce, Porter and Tripoli 1997).

Dick Kovacevich, CEO of Wells Fargo recently said, "The way I

see it is, when you take care of your employees, they take care of your

customers and your shareholders wind up winning" (Kover 2000, p. 1).

Limitations Poole and Van de Ven (1989) stated that a good theory is by

definition, a limited, fairly precise picture. There is always tension

between internal consistency and the scope of theoretical models. The

criteria for parsimony, rigour and coherence have driven this thesis

to express a small but internally consistent framework. The other

side of the coin is the criticism of the model for being an incomplete

representation of complex phenomena. A number of extraneous,

uncontrolled factors could influence the model variables. However,

this has to be balanced with the fact that the thesis was primarily

Chapter 7

209

concerned with retention management of core employees in large

organisations.

This study, like all field research, has limitations. As with all

studies of this type, common method variance, or mono-method bias,

is a concern. However, due to the nature of the dependent variables,

it is unlikely that common method variance would be a serious

problem in this study. For example, intention to stay can be assessed

only by asking the individual his or her thoughts on the matter.

Although common method variance is an issue with this type of

research methodology, this design can be quite useful in providing a

picture of how people feel about and view their jobs (Spector and

Brannick 1995). Spector concludes that "properly developed

instruments are resistant to the method variance problem" (Spector

1984: 438). To enhance this resistance, efforts were carried out to

follow the recommendation of Podsakoff and Organ (1986) to

eliminate obvious overlap in items across measures.

One of the limitations of this study is that the model, which

was developed and tested in this study, stopped at the level of

intention (Ajzen 1988) to demonstrate motivated behaviour in terms

of desire to remain in the organisation. Hence, the data collected were

cross-sectional, so causality cannot be definitively determined.

In addition, the study is limited to specific categories of

industries such as higher education, health care and public sector

industries. Hence, the generalisability of the study may be restricted

due to the small number of companies.

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210

There are some shortcomings of the three phased approach

methodology used in this study that should be acknowledged.

In the Delphi study, bias may have occurred from poorly worded or

leading questions or selective interpretation of the results. However

in this study, this limitation was addressed via the use of a focus

group consisting of a couple of senior academics in the field of HRM.

Participant dropout can also be a problem in the Delphi study

(Linstone and Turoff 1975). Initially, seventeen experts agreed to

participate but only thirteen responded therefore affecting the sample

size.

In Phase two, it was an important advantage to use the in depth

interview to probe complex answers, obtaining an expansion of

answers of the standardized questions, and resulting in greater

extraction of information from the participants (Hayes 1998;

Zikmund 1997). However, the extraction of this kind of highly

sensitive and confidential information (especially the turnover rates)

from policy makers can be less accurate due to the reluctance to

divulge. To overcome this problem and also reduce the chance of

misinterpretation of questions, the semi structured interview style

was selected as the appropriate approach to elicit rational and

complete responses.

In Phase three, the response rate of each group (health care, higher

education and public sector) was different and may cause

Chapter 7

211

inconsistency in the results. To conquer this problem, the sample

size of the two diversified industries and the one manufacturer were

considered too small and did not have sufficient statistical power.

They were removed due to non significance. In addition, there were

also weaknesses intrinsic in comparing the data from diverse

perspectives. The researcher had considered limiting this research to

specific sectors (either private or public sector), to obtain good

consistency of the results. However, if this approach was undertaken

a high response rate could not have been guaranteed and therefore

the research overall may have been compromised.

Future Directions and Research

An obvious complement to this study is to conduct longitudinal

research. Some of the arguments and findings of this study may well

be a good starting point for such research. Longitudinal studies are

needed to establish causal direction among the relationships

investigated in this study. For example, in a longitudinal study, it

may be possible to observe over time if turnover intention measured

at one point is associated with negative beliefs and outcomes at a

later point. It would provide more robust data. In addition, a

longitudinal study would be able to further examine the changing

nature of organisational commitment throughout an employee's

tenure, with emphasis on management's policies and reactions to

maintain equity and fairness in the exchange agreement.

Janet Chew

212

This research has highlighted the mediating role of

organisational commitment on person organisational fit, teamwork

relationship and organisational culture and policies and the partially

mediating role on remuneration, recognition and reward, training and

career development and work environment. Clearly, there is a need

for greater analysis of the factors identified. For example, other

aspects of the work environment than those that were measured in

this study, such as formalisation, role ambiguity, and instrumental

communication should be examined. Hence a better understanding of

the interrelationships among these variables would serve to

illuminate and provide further insights for academics and

practitioners.

Further, testing of the model in other industries, and over

longer periods of time would also be beneficial. This study only

examined the education, health care and public sector industries,

future research will need to confirm to what degree the link between

commitment and retention does also exist for other industries.

Given the empirical confirmation for many of this study's

predictions, it seems timely and prudent for theorists and researchers

to move toward "finer-grained" studies. Future empirical studies

should include measures of the psychological linkages and extend the

examination to distinguish the dimensions of turnover intention and

organisational commitment.

This research precluded other antecedents of commitment such

as perceived alternative employment and magnitude or number of

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213

investment lost in leaving the organisation the commitment-turnover

relationship. Future work should include these variables to study

their impact on the relationship between the independent and

dependent variables of the HRM – retention model.

Commitment was selected as a useful construct on which to

base this study because it can be correlated with subjects' social

identity characteristics and perceptions, and it is organisationally

important. Research has shown that organisational commitment is a

salient antecedent of turnover intent (Singh and Schwab 2000;

Somers 1995). However, job satisfaction is also an important

antecedent of commitment (Coyle-Shapiro and Kessler 2000; Mayer

and Schoorman 1992). Therefore future studies may explore

relationships involving job satisfaction and other commitment foci

(e.g. professional commitment, supervisor commitment, commitment

propensity). This extended examination may determine if similar

patterns emerge.

In conclusion, this study has gone a substantial way towards

meeting its main objective, which was to determine the HRM factors

that influence the retention of core employees in Australian

organisations. The study was able to produce a new model (Figure

7.1) suitable for future use by human resource practitioners as a

guide in determining what initiatives an organisation should adopt to

retain their critical employees.

Janet Chew

214

APPENDIX 1

215

Janet Chew School of Commerce Murdoch University South Street Murdoch Western Australia 6150 Tel: 93602443 E-mail Address: jchew@central.murdoch.edu.au Name and address Dear ________________ Re: A Request to Participate in Research I am a PhD candidate from Murdoch University, Western Australia, specialising in International Business. I am currently, conducting a research study on retention management. This research is fully endorsed by the School of Business at Murdoch University and my supervisors, Associate Professor Lanny Entrekin and Dr Shelda Debowski. Employee retention is a highly important strategic tool for corporations. The aim of this study is to examine the influence of human resource practices on the retention of core employees of Australian organisations. The findings would benefit both the organisations and employees in the area of HRM. Results from this study will assist in the development of an effective HRM retention program for organisations. Your participation will form a critical part of the research. To assist in my research, I would like to invite you to participate in a three round Delphi Study. Each round of the study would require approximately 20 minutes and the data collection would occur over a two-month time period commencing on 26 August 2002. This is an intermediate methodology that will be used to develop a measurement instrument for a later stage of the study. The sharing of your knowledge and experience as you answer the three e-mailed surveys will be valuable to me and as such will be treated with the strictest confidence. No reference will be made to any individual and the information will be reported in an aggregated form. A summary of my findings will be provided upon request. I can be contacted via phone or e-mail at the above address. If you have any queries, please do not hesitate to contact me. I thank you in advance for your assistance and consideration. Yours sincerely Janet Chew MIR (London) B Com (Hons) (Murdoch) Associate Lecturer Murdoch Business School

APPENDIX 2

216

Murdoch Business School

RESEARCH PROJECT: THE INFLUENCE OF HUMAN RESOURCE PRACTICES ON THE

RETENTION OF CORE EMPLOYEES

CONSENT AGREEMENT

I am a PhD student at Murdoch University investigating the management of retention in Australian organisations. The aim of this study is to examine the influence of human resource practices on the retention of core employees of Australian organisations. You can help in this study by consenting to complete three rounds of an electronic email survey. As a participant you will be asked to express your expert opinion and judgement on the current development of retention management in Australia and to identify the key HR factors influencing retention in the work place. Appendix 1 describes the procedure. Each survey will require approximately 20-30 minutes and the data collection would occur over a two-month period, commencing on 23rd August 2002. If you are willing to participate in this study, could you please complete the details below. If you have any questions about this project please feel free to contact either myself, Janet Chew on 93602443 or my supervisor, Associate Professor Lanny Entrekin, on 93602528. Alternatively, you can contact Murdoch University’s Human Research Ethics Committee on 93606677. I understand that I am free to withdraw my consent and discontinue my participation at any time without prejudice. I also understand that all materials in this study are confidential. I agree that the research data gathered for this study may be published, provided that neither my company nor myself are identified. Name of Participant: ______________________________________________________ Signed: ___________________________________ Date: ______________________ Researcher: Janet Chew Signed: ______________

APPENDIX 3

217

Murdoch Business School

DELPHI STUDY

Intermediate Methodology

THE INFLUENCE OF HR PRACTICES ON THE

RETENTION OF CORE EMPLOYEES IN AUSTRALIAN ORGANISATIONS

First Round Questionnaire

PhD Researcher: Janet Chew

Supervisors: Associate Professor Lanny Entrekin Dr Shelda Debowski

MURDOCH

UNIVERSITY PERTH, WESTERN AUSTRALIA

APPENDIX 3

218

Delphi Study First Round Questionnaire

Dear Thank you for agreeing to participate in this study. The procedure for

this Delphi study will consist of three electronic mailed survey

rounds completed over a two-month period. The results of each

round will be analysed and fed back to the respondents, who will

then be asked to re-examine their opinions in light of the overall

results. The first round survey will commence on 26 August 2002

and consists of open-ended questions designed to elicit expert

opinions regarding HR factors that influence the retention of core

employees of Australian organisations.

Please answer as fully as possible. Once the questionnaire is

completed kindly return via electronic mail to

jchew@central.murdoch.edu.au or through the postal system before

the 9th September 2002.

The second round of questions will be mailed out 2-3 weeks after the

returned date of the first survey and participants will once again be

allocated 2 weeks to complete the questionnaire. The final round will

follow suit.

If you have any queries at any time during the surveys, please do not

hesitate to contact Janet Chew on 9360-2443 or at her e-mail

address mentioned above.

Please complete both Section A - 8 questions and Section B – Background information

APPENDIX 3

219

SECTION A

THE INFLUENCE OF HR PRACTICES ON THE RETENTION OF CORE EMPLOYEES OF

AUSTRALIAN ORGANISATIONS 1. How would you distinguish a core employee from other types of

employees?

2. How would you define a core employee?

3. How do you think Human Resource practices of Australian

organisations influence the retention of employees? (core and non

core) Please explain your views.

4. Kindly identify the human resource factors/elements that

influence the decision of employees to stay with an organisation in

Australia. Please explain why you believe that each factor

influences retention.

5. Researchers, Lepak & Snell (1999) developed a theoretical model

of HR architecture that describes different employment modes,

employment relationships and HR configurations. The model

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220

takes into account four employment modes. These are core staff,

acquisition, alliance and contracting:

A. Core

High value, high uniqueness employees are ‘core’ employees

and a source of competitive value. Their value and uniqueness

may be based on ‘tacit knowledge’ that would be valuable to a

competitor.

B. Acquisitions

High value, low uniqueness employees are those whose skills

are valued but are widely available in the market, for example,

accountants.

C. Alliance

Low value, high uniqueness employees are those who are not

essential to creating value and are therefore not ‘core’ but who

have skills that the organisation needs from time to time, such

as lawyers.

D. Contracting

Low value, low uniqueness employees are those with lower-

level skills that are widely available in the market. In this case

labour is treated as a commodity to be acquired when needed.

Do you agree with this model? If your answer is yes, please

elaborate. If No, please indicate your alternate views.

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221

6. Do you think that the model outlined in Question 5 is

representative of what is broadly taking place in Australia? If

your answer is No, could you please provide a detailed explanation

of your contrasting view?

7. How do core employee needs differ from other types of employees?

(acquisitions, alliance and contracting).

8. With regards to current human resource management practice, do

you think Australian organisations adopt one standardised

practice for every employee within the firm (a holistic approach) or

apply differential HR practices for different types of employees?

(core, acquisitions, alliance, and contracting). Can you give

examples to illustrate your answer?

End of Section A

APPENDIX 3

222

SECTION B: BACKGROUND INFORMATION

1. Current Position: 2. Type of Institute/Industry:

3. Highest Qualifications: 4. Age: 5. Gender: Male

End of Section B

Thank you for your kind participation

APPENDIX 4

223

Murdoch Business School

DELPHI STUDY

Intermediate Methodology

THE INFLUENCE OF HR PRACTICES ON THE RETENTION OF

CORE EMPLOYEES IN AUSTRALIAN ORGANISATIONS

Second Round Questionnaire

PhD Researcher: Janet Chew

Supervisors: Associate Professor Lanny Entrekin Dr Shelda Debowski

MURDOCH UNIVERSITY

PERTH, WESTERN AUSTRALIA

APPENDIX 4

224

Dear Dr Smith

Thank you very much for responding to the Delphi Questionnaire

(Round One) which has now been analysed. Your comments were

very useful and your responses to the questions have enabled me to

move to the next round of the study.

This is the second round questionnaire of the Delphi study on the

influence of HR practices on the retention of core employees in

Australia. It is estimated that this questionnaire will take

approximately 15 minutes to complete depending on the depth of

your response.

I wish to assure you again that all information provided through this

survey would be handled with strict confidentiality and reported in a

way so as to preserve the anonymity of the respondents.

Survey Instructions Please complete all of the questions (1-5). Responses can be written

or typed. The completed questionnaire can be returned by postal mail

or electronic mail to the following addresses:

E-mail address: jchew@central.murdoch.edu.au

Postal Address: Janet Chew

Associate Lecturer

Murdoch Business School

Murdoch University

South Street, MURDOCH WA 6150

Kindly, return your questionnaire by Friday, 8th November 2002.

Your responses will be analysed and synthesised in the coming

weeks and you will be contacted for the final round (3) in due course.

Once again thank you for your co-operation and support of this study.

APPENDIX 4

225

SECTION A Please note any additional comments about your responses or any suggestions or observations you may have concerning the questionnaire in the space below each question. QUESTION 1: Defining a Core Employee

Following is a list of descriptions of a core employee provided by The

Panel (Round One). Please rank a minimum of five of the statements

in order of importance, with 1 being the most important.

Core employees: Characteristics of a core employee Rank A Support the organisational culture and vision.

B Carry out essential tasks.

C Possess competencies that are unique.

D Provide a competitive edge to the organisation.

E Contribute to the organisational memory – their departure would drain the organisation’s knowledge and skill bank.

F Possess skills, knowledge and abilities that are relatively rare or irreplaceable.

G Are recognised and included on a succession plan.

H Are central to an organisation’s productivity and wellbeing.

I Provide skills and/or knowledge to ensure the success of the organisation.

J Act as key motivators, mentors or role models to other staff.

K Are innovative and customer focussed.

L Possess knowledge, skills and attributes that are closely aligned with the existing or possible future operational direction of the business.

M Display an identification with, and commitment, to the organisation.

APPENDIX 4

226

Q1 Comments:

QUESTION 2: Human Resource Factors Influencing Retention

The collective responses identified the following human resource

factors/elements, which influence the retention of core employees.

Please rank the top five factors (1-5) in order of their importance,

with 1 being the most important.

Human Resource Factors Rank A Equity of compensation and benefits.

B Effective Selection.

C Provision of effective training.

D Career Development.

E Challenging Employment Structures and Opportunities.

F Fair and equitable Performance management.

G Employee assistance Programs.

H Security of tenure.

I Reward and recognition of employee value.

J Employee Behaviour education (eg OHS, EEO).

Q2 Comments:

APPENDIX 4

227

QUESTION 3: Organisational Impacts on Human Resource Management According to the panel, the following is a list of organisational factors

that influence human resource management. Kindly rank the top five

factors (1-5) in order of their importance, with 1 being the most

important.

Organisational Factors Rank A Company policies and culture.

B Communication and consultation.

C Satisfactory working environment.

D Provision of state-of-the-art equipment.

E Influential and sensitive leadership style.

F Effective integration: working relationships.

G Effective dispute resolution.

H Organisational loyalty and pride.

I The quality and timeliness of feedback to the employee.

Q3 Comments:

APPENDIX 4

228

QUESTION 4: Human Resource Architecture: An Australian

Model

A model of human resource architecture is a means by which to

distinguish employees in order to design human resource support

systems. In Round One, you were asked if you agreed or disagreed

with the theoretical model of Lepak and Snell (1999). Results

indicate that 62% agreed, 30% disagreed and 8% were not sure.

Based on your collective comments, we were able to deduce that a

theoretical model of human resource architecture in the Australian

business environment should also take into consideration the

following additional factors. Please rank in order of importance, a

minimum of 5, with 1 being the most important. Factors of HR Architecture Rank

A Number of levels in the organisational hierarchy.

B Types of worker included in the organisation

(eg. managerial, technical, trade).

C Type of industry (eg. mining, manufacturing, and service).

D Size of the organisation (large, medium, and small).

E Competitiveness of the industry.

F Predominant Occupational group (eg. engineers,

marketeers).

G Strategic focus of the organisation (eg. Project, Growth and

Maintenance).

H Organisational Structure (eg. international, local

franchisee).

Q4 Comments:

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229

QUESTION 5

In the Australian context, what do you see are the barriers/factors

that reduce the influence of human resource practices?

This concludes Round 2 of the Delphi Study

Thank you for your participation. You will be notified when Round 3

begins.

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230

Janet Chew Murdoch Business School Murdoch University South Street Murdoch Western Australia 6150 Tel: 93602443 E-mail Address: jchew@central.murdoch.edu.au Name and address of Participant Dear Participant

Re: A Request to Participate in Research

Strategic staffing has become an important concern for many companies because

their ability to hold on to their high potential core employees and to minimise

turnover among new hires is critical to their future survival. It is now recognized

that companies with the best people practices lead in financial success and generate

the best returns for shareholders (Watson Wyatt’s 2002). However, increasingly,

organisations are competing for the best talent. With the average attrition rate in the

Australian workforce approaching 40% and more than 50% of individuals planning

to leave the workplace, the focus on retention is therefore critical.

I am a PhD candidate from Murdoch University, Western Australia, specializing in

human resource management. I am currently, conducting a research study on the

retention management of Australian organizations. This research is fully endorsed

by the School of Business at Murdoch University and my supervisors, Associate

Professor Lanny Entrekin (Murdoch) and Professor Shelda Debowski (UWA)

An employee retention program is a highly important strategic tool for corporations.

The purpose of this study is to examine the influence of human resource practices on

the retention of core employees of Australian organizations. The resulting findings

would contribute to, and benefit, both the organizations and employees in the area of

HRM. Results from this study will assist in the development of an effective HRM

retention program for an organization like yours. My research is designed to

APPENDIX 5

231

determine key HR factors that influence the retention of core employees of

Australian organizations. I recently completed Phase 1 of my study, in which a

panel of experts comprising of HR managers/representatives, senior management

academics and industrial psychologists were asked to respond to a series of

questionnaires, relating to human resource practices and retention. The results of

this Delphi study have been the basis for a questionnaire, which I will be using, in

the next stage of my research.

I would like to invite you to be part of this next stage. This would involve a) an

interview of the HR manager or a HR representative of your firm and b) the

conducting of a mail survey of 60 of your core employees. I wish to assure you that

all information provided through this two part process would be handled with strict

confidentiality. All information given will remain confidential and no names or

other information that might identify you or your organization will be used in any

publication arising from the research. No reference will be made to any organization

and the information will be reported in an aggregated form. Feedback on the study

will be provided to participants. Your company’s participation will form a critical

part of this research.

I will contact you directly in the next few days to discuss your willingness to

participate and the interview arrangements, at your convenience. In the meantime, I

can be contacted via phone or e-mail at the above address. If you have any queries,

please do not hesitate to contact me. I thank you in advance for your assistance and

consideration.

Yours sincerely

Janet Chew

MIR (London) B Com (Hons) (Murdoch) Lecturer Murdoch Business School Murdoch University

APPENDIX 6

232

RESEARCH PROJECT: THE INFLUENCE OF HUMAN RESOURCE PRACTICES ON THE

RETENTION OF CORE EMPLOYEES

CONSENT AGREEMENT

I am a PhD candidate at Murdoch University investigating the management of retention in Australian organisations. The aim of this study is to examine the influence of human resource practices on the retention of core employees of Australian organisations. You and your organisation can help in this study by consenting to participate in a) a half an hour interview and b) employee survey of 60 of your core employees. As a participant of the in-depth interview you will be asked to express your expert opinion and judgement on the current development of retention management in Australia and to identify the key HR factors influencing retention in your work place. If you and your organization are willing to participate in this study, could you please complete the details below. If you have any questions about this project please feel free to contact either myself, Janet Chew on 93602443 or my supervisor, Associate Professor Lanny Entrekin, on 93602528. Alternatively, you can contact Murdoch University’s Human Research Ethics Committee on 93606677. ********************************************************************************* I have read the information above. Any questions I have asked have been answered to my satisfaction. I agree to take part in this activity, however, I know that I may change my mind and stop at any time. I understand that all information provided is treated as confidential and will not be released by the investigator unless required to do so by law. I agree that research data gathered for this study may be published provided my name or other information which might identify me is not used. Name of Participant: ______________________________________________________ Signed: ___________________________________ Date: ______________________ Researcher: Janet Chew Signed: ______________

APPENDIX 7

233

Murdoch Business School

PHASE 2

THE INFLUENCE OF HR PRACTICES ON THE RETENTION OF CORE EMPLOYEES IN AUSTRALIAN ORGANISATIONS

INTERVIEW QUESTIONNAIRE

PHD Researcher: Janet Chew

Supervisors: Associate Professor Lanny Entrekin Professor Shelda Debowski

MURDOCH UNIVERSITY PERTH, WESTERN AUSTRALIA

APPENDIX 7

234

SECTION A: Employees (Core and Non Core)

1. Which of the following statement/s best describes your company’s core employees?

Core Employees:

a. Possess knowledge, skills and attributes that are closely aligned with the existing or possible future operational direction of the business.

b. Are central to an organisation’s productivity and wellbeing.

c. Provide a competitive edge to the organisation.

d. Support the organisational culture and vision.

e. Provide skills /or knowledge to ensure the success of the organisation.

f. Possess tacit knowledge not in the public domain.

2. How do you distinguish between your core employees and the non-core

employees? _____________________________________________________________ 3. Do your core employees have different needs to non-core employees? _____________________________________________________________ 4. Approximately how many employees are there in your company?

__________________________________________________________ 5. What portion of your employees are ‘core employees’?

--------------Less than half --------------About half ------------More than half

APPENDIX 7

235

6. Does your company adopt one standardised human resource practice for every employee within the firm (a holistic approach) or apply differential HR practices for different types of employees? (e.g. core vs. non core)

_____________________________________________________________ 7. Does you company consider effective management of human resources

to be a source of competitive advantage? How is this evident in your organizational practices?

_____________________________________________________________ 8. As the senior HR person who do you report to? 9. Does HR play an important role in the strategic business planning of

your organization? How do you contribute to this area? ______________________________________________________________ 10. Does your company have a separate Human Resource department? 11. Which of the following are controlled centrally by the HR department?

• personnel records, • training programs, • salary • performance appraisal guidelines

12. Do you outsource any HR function? 13. How many employees do you have in the HR department? _____________________________________________________________

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236

SECTION B: Human Resource Practices /Factors that Influence Retention

14. The following factors have been suggested as important to human

resource management. Could you identify the top three and explain how

you believe this impact on the retention of core employees?

a. attrition b. hiring c. promotions d. demotions e. transfers f. changes in workers' skill sets

15. The following list has been identified by research as the top five human

resource factors that influence retention. Please indicate the extent of

their importance to you company with regards to the retention of your

employees. (e.g. Very important, Important, Somewhat important)

1. Effective Selection

2. Reward and recognition of employee value

3. Career Development

4. Challenging employment assignments and opportunities

5. Equity of Compensation and benefits

_____________________________________________________________

16. How are the HR factors in Question 12 managed?

(a) Could they be done better?

(b). What impact do they have on staff retention?

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237

17. The following list was identified by research as the top five organisational

factors that influence retention.

1. Influential and sensitive leadership style

2. Company policies and culture

3. Communication and consultation

4. Effective integration: working relationships

5. Satisfactory working environment ___________________________________________________________________ (a) Please indicate the extent of their importance in your company. (b) How is it managed? (c) What could be improved in the management of these factors? (d) What impact does it have on staff retention?

SECTION C: RETENTION MANAGEMENT

18. Are any of the following evident in your work context? A. Marketplace competition has increased dramatically

B. Conditions in our business environment are rapidly changing.

C. Government regulations are rapidly changing.

D. The technology in our product/services is complex.

E. Short supply of skilled people in the labour market.

(a) Can you give examples of how they are impacting on the employee?

activities and work environment?

____________________________________________________________

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238

19. Please indicate to what extent your company’s hiring practices

influence the retention of employees. State the type of performance

measure/s used to test the effectiveness of the hiring practices.

20. Please indicate to what extent your company’s performance appraisal practices influence the retention of your employees.

21. Please indicate to what extent your company’s training and career development practices influence the retention of your employees.

22. Please indicate to what extent your company’s succession planning program influence the retention of your employees.

_____________________________________________________________

23. Please indicate to what extent your company’s pay practices influence

the retention of your employees

24. Please indicate to what extent your company’s leadership practices influence the retention of your employees.

_____________________________________________________________ 25. What voluntary turnover rate has your company had in the last year?

None 11% to 20% 31% to 40%

Up to 10% 21% to 30% 41% to 50% and

above

APPENDIX 7

239

26. Does your company monitor the turnover rate and the reasons for the

turnover? Please state the reasons

_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 27. How long have you been in this current job? _____________________________________________________________ 28. Would your company like to have a copy of the summarised research

findings?

Yes No

End of survey

Thank you very much for your participation.

APPENDIX 8

240

Murdoch Business School

PHASE 3

THE INFLUENCE OF HR PRACTICES ON THE RETENTION OF CORE EMPLOYEES IN AUSTRALIAN ORGANISATIONS

EMPLOYEE SURVEY

PHD Researcher: Janet Chew

Supervisors: Associate Professor Lanny Entrekin Professor Shelda Debowski

MURDOCH UNIVERSITY PERTH, WESTERN AUSTRALIA

APPENDIX 8

241

Project Title: The influence of Human Resource Factors on the Retention of Core

Employees

Dear Employee, I am a PHD candidate at Murdoch University investigating the influence of human

resource practices on the retention of core employees. Retention of key personnel is

a major Human Resource Management challenge facing most Australian

organisations. This survey will help to identify many issues, which could affect an

individual’s decision to stay with an employer. This study will help shape future

human resource policies and assist in the development of an effective retention tool

for your organisation, as well as contribute to my PhD.

Your company has kindly agreed to participate in this study. I would like to request

your cooperation in completing the attached questionnaire. The questions seek your

opinions regarding your company’s human resource management practices in

relation to retention issues. There are no right or wrong answers; we simply want

your honest opinions. The survey will take approximately 15-20 minutes.

If you have any questions regarding this project please feel free to contact myself,

Janet Chew (on 93602443), my supervisor, Associate Professor Lanny Entrekin (on

93602528) or the Murdoch University Human Research Ethics Committee (on

93606677).

This questionnaire does not require you to personally identify yourself. Your

information will remain anonymous and confidential and the data will only be

reported in an aggregated form.

Thank you for your participation in this study. Your contribution is greatly

appreciated.

Janet Chew M.I.R (London), B.Com (Hon) (Murdoch) PhD Candidate

Lecturer

Murdoch Business School

Murdoch University

APPENDIX 8

242

SECTION A: HUMAN RESOURCE FACTORS

The following statements relate to the way in which you perceive the human resource practices within your organisation. For each statement, you are asked to mark an X in the box that best describes your response. How accurately do the following statements best describe your personal fit with your company’s culture and values? 1 2 3 4 5 6 7 Strongly Disagree Neither Agree nor Disagree Strongly Agree

ORGANISATIONAL FIT 1 2 3 4 5 6 7

1. This organisation has the same values as I do with regard to concern for others.

2. This organisation does not have the same value as I do with regard to fairness.

3. This organisation has the same values as I do with regard to honesty.

4. I feel that my personal values are a good fit with this organizational culture.

How accurately do the following statements describe your company’s remuneration and recognition system? 1 2 3 4 5 6 7 Strongly Disagree Neither Agree nor D isagree Strongly Agree

REMUNERATION AND RECOGNITION 1 2 3 4 5 6 7

5. Employees are given positive recognition when they produce high quality work.

6. This organisation pays well.

7. This organisation offers a good benefits package compared to other organisations.

8. This organisation values individual excellence over teamwork.

9. This organisation offers good opportunities for promotion.

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243

How accurately do the following statements describe your company’s training and career development practices? 1 2 3 4 5 6 7 Strongly Disagree Neither Agree nor Disagree Strongly Agree

TRAINING AND CAREER DEVELOPMENT 1 2 3 4 5 6 7

10.

People are properly orientated and trained upon joining this organisation.

11. This organisation does provide regular opportunities for personal and career development.

12. Innovation and creativity are encouraged here.

13. The organisation has career development activities to help an employee identify/ improve abilities, goals, strengths & weaknesses.

How accurately do the following statements describe attributes that are currently present in your job? 1 2 3 4 5 6 7 Strongly Disagree Neither Agree nor Disagree Strongly Agree CHALLENGING EMPLOYMENT ASSIGNMENTS AND OPPORTUNITIES

1 2 3 4 5 6 7 14.

Employees are offered more challenging work within the organisation.

15. Employees can work autonomously on their work assignments.

16. Employees are skilled to do a number of different jobs, not just one particular job.

17. Employees are given opportunities to learn new things.

18. Employees are offered a good amount of variety in their job.

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SECTION B: ORGANISATIONAL FACTORS How accurately do the following statements describe the effectiveness of your company’s leadership practices at the organisational and the team level? Please respond using the same scale. 1 2 3 4 5 6 7 Strongly Disagree Neither Agree nor Disagree Strongly Agree

ORGANISATIONAL LEADERSHIP 1 2 3 4 5 6 7

19. The leadership practices in this organisation help me to become a high performing employee.

20. The leadership practices in this organisation enhance my satisfaction with my job.

21. The organisational leadership practices are consistent with my personal values.

22. The organisational leadership practices make a positive contribution to the overall effectiveness of the organisation.

TEAM RELATIONSHIP 23. Team working is valued in this organisation.

24. Members of my team expect and maintain high standards of performance.

25. Team leaders are recognised for promotion and development.

26. Each member of my team has a clear idea of the group’s goals.

APPENDIX 8

245

How accurately do the following statements best describe your company’s culture and policies? 1 2 3 4 5 6 7 Strongly Disagree Neither Agree nor Disagree Strongly Agree

ORGANISATIONAL POLICIES 1 2 3 4 5 6 7

27. Organisational policies and procedures are helpful, well understood and up to date.

28. Progress towards meeting planned objectives is periodically reviewed.

29. The organisational structure facilitates the way we do things.

30. This organisation has a defined vision/mission to meet its goals.

How accurately do the following statements describe your company’s communication and consultation process? 1 2 3 4 5 6 7 Strongly Disagree Neither Agree nor Disagree Strongly Agree

COMMUNICATION 1 2 3 4 5 6 7

31. This organisation keeps employees well- informed on matters important to them.

32. Sufficient effort is made to determine the thoughts and responses of people who work here.

33. Communications across all levels in this organisation tend to be good.

34. Organisational structure encourages horizontal and vertical communication.

35. There is trust between employees and their supervisors/team leaders.

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How accurately do the following statements best describe your working environment? 1 2 3 4 5 6 7 Strongly Disagree Neither Agree nor Disagree Strongly Agree

WORKING ENVIRONMENT 1 2 3 4 5 6 7

36. My working life balances with my family life.

37. Overall this organisation is a harmonious place to work.

38. This organisation regards welfare of its employees as its first priority.

39. Workers and management get along in this organisation.

40. For the work I do, the physical working conditions are very pleasant.

41. This organisation offers a lot of security.

42. A spirit of cooperation and teamwork exists.

How accurately do the following statements describe your commitment to your organisation? 1 2 3 4 5 6 7 Strongly Disagree Neither Agree nor Disagree Strongly Agree

ORGANISATIONAL COMMITMENT 1 2 3 4 5 6 7

43. I feel a strong sense of belonging to this organisation.

44. I could just as well be working for a different organisation if the type of work was similar.

45. Often I find it difficult to agree with this organisation’s policies on important matters relating to its employees.

APPENDIX 8

247

46. This organisation really inspires the very best in me in the way of job performance.

47. I find that my values and this organisation’s values are very similar

48. There is little to be gained by sticking with this organisation indefinitely.

49. I am willing to put in a great deal more effort than normally expected to help this organisation be successful.

50. I am proud to tell others that I am part of this organisation.

51. I really care about the fate of this organisation.

What are your plans for staying with this organisation? 1 2 3 4 5 6 7 Strongly Disagree Neither Agree nor Disagree Strongly Agree

TURNOVER INTENTION 1 2 3 4 5 6 7

52. I plan to work at my present job for as long as possible.

53. I will most certainly look for a new job in the near future.

54.

I plan to stay in this job for at least two to three years.

55. I would hate to quit this job.

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SECTION C: BACKGROUND INFORMATION

PLEASE COMPLETE THIS SECTION. THE FOLLOWING QUESTIONS REQUIRE A WRITTEN RESPONSE.

56) Your Age: 20-29 30-39 40-49 50-65 57) Gender: Male Female 58) Industry: ___________________________________________________ 59) What is your occupation? ______________________________________

End of survey

Thank you very much for your participation.

Please return the survey to (jchew@central.murdoch.edu.au)

APPENDIX 9

249

Factorised Variables of the study Note: R = reversed scored items. Items were deleted or retained

No Item Text Retained/Deleted

1 Person Organisation Fit Has the same values as I do with regard to concern for others

Retained

2 Person Organisation Fit Does not have the same values as I do with regard to fairness (R)

Retained

3 Person Organisation Fit Has the values as I do with regard to honesty Retained

4 Person Organisation Fit My personal values are a good fit with this organisational culture

Deleted

1 Remuneration and Recognition Recognition is given when produce high quality work

Retained

2 Remuneration and Recognition Pays well Retained

3 Remuneration and Recognition Offers a good benefits package compared to other organisations

Retained

4 Remuneration and Recognition Values individual excellence over teamwork Deleted

5 Remuneration and Recognition Offers good opportunities for promotion Retained

1 Training and career development

People are properly orientated and trained Retained

2 Training and career development

This organisation does provide regular opportunities and career development

Retained

3 Training and career development

Innovation and creativity are encouraged Deleted

4 Training and career development

This organisation has career development activities Retained

1 Challenging assignments Offered challenging work Retained

2 Challenging assignments Work autonomously on their work assignments Retained

3 Challenging assignments Skilled to do different jobs Retained

4 Challenging assignments Given opportunities of learning new things Retained

5 Challenging assignments Offered a good amount of variety in their job Retained

1 Leadership Behaviour Help me to become a high performing employee Retained

APPENDIX 9

250

2 Leadership Behaviour Enhance my satisfaction with my job Retained

3 Leadership Behaviour Consistent with my personal values Retained

4 Leadership Behaviour Make a positive contribution to the overall effectiveness of the organisation

Retained

1 Teamwork relationship Team working is valued in this organization Retained

2 Teamwork relationship Members of my team expect and maintain high standards of performance

Retained

3 Teamwork relationship Team leaders are recognised for promotion and development

Deleted

4 Teamwork relationship Each member of my team has a clear idea of the group's goal

Retained

1 Organisational Culture and Policies

Policies and procedures are helpful, well understood and up to date

Retained

2 Organisational Culture and Policies

Progress towards meeting planned objectives is periodically reviewed

Retained

3 Organisational Culture and Policies

Structure facilitates the way to do things Retained

4 Organisational Culture and Policies

Has a defined vision/ mission to meet its goals Retained

1 Communication and Consultation

Keeps employees well-informed on matters important to them

Retained for Leadership scale

2 Communication and Consultation

Sufficient effort is made to determine the thought and responses of people who work here

Retained for Leadership scale

3 Communication and Consultation

Communications across all levels in this organisation tend to be good

Retained for Leadership scale

4 Communication and Consultation

Organisational structure encourages horizonal and vertical communication

Retained for Leadership scale

5 Communication and consultation

There is trust between employees and their supervisors/ team leaders

Deleted

1 Work environment My working life balances with my family life Retained

2 Work environment This organisation is a harmonious place to work Retained

3 Work environment This organisation regards welfare of its employees as its first priority

Retained

4 Work environment Workers and management get along in this organisation

Retained for teamwork scale

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251

5 Work environment The physical working conditions are very pleasant Retained

6 Work environment This organisation offers a lot of security Retained for remuneration scale

7 Work environment A spirit of cooperation and teamwork exists Retained for Teamwork scale

1 Commitment I feel a strong sense of belonging to this organisation

Retained

2 Commitment I could just as well working for a different organisation if the type of work was similar (negative)

Retained

3 Commitment I find it difficult to agree with this organisation's policies (R)

Retained

4 Commitment This organisation really inspires the very best in me in the way of job performance

Deleted

5 Commitment My values and this organisation's values are very similar

Retained for Person Organisation fit scale

6 Commitment There is little to be gained by sticking with this organization indefinitely (R)

Retained

7 Commitment I am willing to put in a great deal more effort than normally expected

Retained

8 Commitment I am proud to tell others that I am part of this organisation

Retained

9 Commitment I really care about the future of this organisation Retained

1 Intention to stay Plan to work at my present job for as long as possible

Retained

2 Intention to stay Most certainly look for a new job in the near future (R)

Retained

3 Intention to stay Plan to work in my current job as long as possible Retained

4 Intention to stay Would hate to quit this job Retained

252

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