The Theoretical Frameworks For Employee Retention

The influence factors contributing to employee retention are usually divided into organisational and individual. Such parameters as wage and non-wage benefits, working conditions, employees’ demographics and company’s size are discussed among the organisational factors affecting retention rates (Morell, 2016, p. 30). The comparative studies show that employee turnover tends to be higher in larger organisations, among low-skilled workers and in the labour-intensive industries. It was also found that employee turnover is higher in the companies employing young and female workers. Organisations cannot control the demographic and institutional factors of employee turnover, but their understanding helps to form adequate expectations and strategies for employee retention.

Another retention factor, which is recognised by many researchers, is job security and safety. In particular, Özbilgin et al. (2014) noticed that the skilled employees working in knowledge-based industries valued a permanent employment contract higher than the size of salary. Skilled professionals working in the dangerous conditions also estimated job safety and insurance compensations as more important factors than a high salary.

Nevertheless, job stability no longer gives such a great advantage for employee retention as it did in the past decades. The value or career mobility and a growing competition among employees in knowledge-based industries lead to the situation when skilled professionals and managerial staff change their jobs more often than 20 years ago (Bamberger et al., 2014, p. 276). The researchers associated the growing demand for managers in the post-2000 with booming developing economies and the expansion of MNCs.

As it comes to the individual factors of employee retention, they are often related to work-life balance, job recognition and the desire to make a social contribution (Gitterman, 2014, p. 1). Walker and Miller (2009) recommended that managers in the hospitality industry retain the outstanding employees by using immediate, appropriate and personalised rewards, which may even be chosen by the workers themselves. The role of reward and recognition programmes for employee retention is acknowledged by several experts in organisational psychology. In the same time, fringe bonuses are not necessarily the best way to motivate employees. For example, McDonald’s successfully used individual appraisal through the ‘Worker of the Months’ award, which helped employees to feel the importance of their work.

The last example adjoins the soft approach in HR management, which links employee’s loyalty with the organisational culture. Those employees who embraced organisational culture and values, are expected to be committed to their jobs and interested in long-term work. However, these assumptions are largely theoretical since there are not many empirical studies proving a positive relation between organisational culture and employee turnover. The ambiguityconcept is explained by the fact that is it difficult to isolate a ‘cultural’ influence on employee retention from other factors and measure its value. Nevertheless, employees’ commitment to the shared values and a mission is likely to improve organisational performance and lower employee turnover (Jex and Britt, 2014, p. 517).

The reasons for high employee turnover are associated with the inability to provide the above listed conditions and advantages, but also with ineffective management and inappropriate leadership style. Bence (2013) argued that a significant number of dismissals is provoked by conflicts with supervisors even in the cases when other reasons (e.g. payment, career goals, etc.) were formally stated. The productive and pleasant relationships with supervisors can contribute to job satisfaction, although it is difficult to directly correlate them to employee retention or turnover. A leadership style can play a mediating role in building the loyalty and retaining employees. According to King and Lawley (2013), the task-centered leadership can lead to absenteeism, increased grievances and turnover. Supervisors should also modify a leadership style when their subordinates become more experienced (King and Lawley, 2013, p. 384).

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