More Not Always Better for Employee Retention
Study offers new insights regarding impact of HR practices on organizational commitment
With baby boomers starting to retire en masse, companies are more concerned than ever about the strength and viability of their talent pipelines. They are asking whether they have the right hiring and training programs to ensure the future success of their businesses. According to conventional wisdom, the more human resource (HR) practices you use to develop people – particularly at the managerial level – the better the results.
However, a comprehensive study by Timothy Gardner, associate professor at the Vanderbilt Owen Graduate School of Management, found that the “more is better” theory doesn’t always hold water, and that some HR systems – like skill enhancing practices and programs – can actually lead to greater voluntary turnover. The study, entitled “The Influence of Human Resource Practices and Collective Affective Organizational Commitment on Aggregate Voluntary Turnover,” suggests that a more sophisticated, balanced approach to human capital management, focused on achieving collective commitment, is required to tackle the turnover challenge.
According to conventional wisdom, the more human resource (HR) practices you use to develop people—particularly at the managerial level—the better the results. However, a comprehensive study by Timothy Gardner, associate professor of organization studies, found that the “more is better” theory doesn’t always hold water, and that some HR systems—like skill enhancing practices and programs—can actually lead to greater voluntary turnover.
RIGHT: Timothy M. Gardner, Associate Professor of Management
“Companies certainly need to hire good people and train them, but it’s simplistic to think that talent alone will provide the key to organizational success,” explains Gardner. “To optimize the return on their investment, companies must also manage their people effectively by ensuring they have the right balance of programs in place to both empower and motivate them.”
Commitment Linked To Turnover
Unlike the vast majority of studies conducted in the past which examined the question of why individuals voluntarily quit organizations, the study by Gardner (along with Lisa Moynihan of the London Business School and Patrick Wright of Cornell University) approached the subject as a “collective phenomenon understood and explained by the shared context, interactions, cognitions and attributes of the collective members… [a] line of research much more consistent with the way managers think about retaining employees in their organizations.”
Drawing on 30 years of studies and literature into mostly individual employee turnover, the researchers attempted to ascertain what the predictors of turnover might be from an aggregate standpoint by focusing on the area of commitment. “We were able to document that work groups have a common feeling of commitment among members, and that the level of shared commitment predicted whether the work group would have high or low turnover in the subsequent 12 months,” reports Gardner.
Citing past research, the Gardner study explains that “collective commitment shapes the patterns of interaction among group members. Individuals with more defined and specific levels of commitment transmit these feelings to individuals with less defined commitment levels…. Thus, employees working in a group with strong (positive or negative) affective commitment will, after a series of interactions with other group members, adjust their feelings and behaviors (such as turnover) to match that of their coworkers.”
Empowerment Key to Commitment
Going deeper, Gardner sought to determine which factors fuel that collective commitment. The researchers highlighted three types of human resource systems – well known to scholars and practitioners in the field – by which companies manage “the pools and flows of human capital.” They include skill enhancing practices, which include recruiting, training, selection and socialization; motivation enhancing practices, such as incentive pay plans, performance bonuses and performance management systems; and empowerment enhancing practices, which give employees the opportunity to participate in substantive decision-making regarding work and organizational outcomes through mechanisms like quality circles, granting discretion and authority on the job, and sharing information with employees and managers in other work groups.
To explore the impact of these human resource systems, Gardner enlisted a leading U.S. food service distributor with an infrastructure consisting of five core organizations: sales employees, warehouse workers, delivery drivers, front-line supervisors and merchandising employees. Surveys were conducted of HR managers in each of these organizations, and data was collected from 93 work groups encompassing 1,748 employees.
The findings from this research were dramatic. Motivation enhancing practices had minimal impact on collective employee commitment or turnover, and skill enhancing practices actually increased voluntary turnover at the aggregate level. According to Gardner, this finding should not have been all that surprising. “When you hire better people and train them,” he notes, “they’re more likely to turn over as their value and marketability outside the company increases.”
As for empowerment enhancing practices, the study found they actually tended to reduce aggregate turnover. More specifically, HR practices that give employees some level of autonomy and the ability to actively participate in the work group and decision-making dynamic proved to enhance the overall level of commitment and link HR practice to organizational outcome, making turnover less likely.
The Takeaway Message for Managers
What, then, are the practical implications for managers from this groundbreaking research?
“Managers who work to improve the overall collective commitment of their work groups will be rewarded with lower voluntary turnover,” the study asserts. And to accomplish that goal, it suggests that managers focus on and implement such empowerment enhancing practices as grievance procedures, information sharing and employee input into decision-making. The study also advises that while the data suggests skill-enhancing practices increase voluntary turnover, there