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Communication and Employee Retention

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Abstract

Retaining high-performing employees is no longer simply the concern of human resources (HR) directors; rather, attracting and retaining employees are consistently listed as one of the top concerns of global chief executive officers (CEOs), alongside growing the business and becoming more profitable. Retention of employees encompasses a wide spectrum of topics, and the literatures of the following six areas of study are briefly reviewed: organizational commitment, turnover intentions and voluntary turnover, psychological contracts and their violations, trust, perceived organizational support, and perceived supervisor support. Four communication applications that increase employee retention are considered: (1) meeting regularly with employees, (2) providing regular performance management feedback, (3) committing to ongoing learning and professional development, and (4) conducting periodic stay interviews.
The International Encyclopedia of Interpersonal Communication, First Edition.
Edited by Charles R. Berger and Michael E. Roloff.
© 2016 John Wiley & Sons, Inc. Published 2016 by John Wiley & Sons, Inc.
DOI:10.1002/9781118540190.wbeic0239
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Communication and Employee Retention
Robin AdAiR ERickson
Bersin by Deloitte Consulting LLP, USA
In its simplest form, employee retention relates to the strategic efforts employed by
organizations in an attempt to keep employees within their workforces. Once only the
concern of human resources (HR) directors and recruiting managers, attracting and
retaining employees have risen to the top of the list of chief executive officer (CEO)
concerns as the global economy slowly moves out of recession. Deloitte Consulting
LLP’s 2014 Global Human Capital Trends survey (Schwartz, Bersin, & Pelster, 2014)
found that retention and engagement was the number two talent‐related priority, and
talent acquisition and access was the number four talent‐related priority of 2,532
leaders in 94 countries. Similarly, according to PricewaterhouseCooper’s 2014 annual
global survey of 1,344 CEOs in 68 countries, 63% of CEOs are concerned about the
availability of employees with key skills. In addition, 93% of CEOs say that they need to
change their talent strategies, but 61% have not yet taken the first step.
CEOs are correct to be concerned because employees are more likely to look for new
jobs when unemployment goes down and consumer confidence goes up. Using p ublicly
available economic data from the Bureau of Labor Statistics, the St. Louis Federal
Reserve, and the Conference Board Consumer Confidence Index, during the time
period January 2001 to January 2015, Pearsons correlation analyses show a strong
n egative correlation between quits (voluntary turnover) and unemployment (r = –.96,
p < .001) and a strong positive correlation between the quits and the consumer
confidence index (r = .85, p < .001).
As the unemployment level continues to decrease, the national quits rate will likely
continue to rise, and many companies will struggle to fill job vacancies. According to
the Bureau of Labor Statistics, there were over 4.7 million unfilled jobs in the United
States as of June 2014. Worse, these shortages often occur in critical, skilled roles that
have high barriers to entry and are crucial to a company’s success. This situation points
to a talent paradox: While there is a surplus of job seekers, many companies often face
shortages in the critical areas where they need to attract and keep highly skilled talent
(Erickson, Schwartz, & Ensell, 2012).
Retention of employees encompasses a wide spectrum of topics. Consequently,
this entry provides a brief review of the literatures and draws linkages between the
f ollowing six areas of study: organizational commitment, turnover intentions and
voluntary turnover, psychological contracts and their violations, trust, and the different
types of support that organizations can offer employees, i.e., perceived organizational
2
support (POS) and perceived supervisor support (PSS). Each of these related areas has
its own extensive body of literature, therefore, observations will be restricted to those
most r elevant to the overarching objective of trying to find ways that organizations can
retain employees by increasing their organizational commitment. The discussion
concludes with four specific areas in which communication plays a significant role in
improving employee retention.
Organizational commitment
Organizational commitment has been defined as a strong belief in and acceptance
of an organizations goals and values, a willingness to exert considerable effort on
behalf of the organization’s goals and values, and a strong desire to maintain
membership in the organization (Porter, Steers, Mowday, & Boulian, 1974).
Organizations want their employees to be committed since committed employees
will exert more effort when motivational conditions are not ideal, for example,
after a layoff when employees are asked to work harder and/or for longer hours. In
addition, organizational commitment improves performance, reduces absenteeism,
and reduces turnover.
In a meta‐analysis, Meyer, Stanley, Herscovitch, and Topolnytsky (2002) found
that the three forms of commitment (affective, continuance, and normative) are
negatively related to turnover and turnover intentions, with affective commitment
influencing employee behavior most beneficial to the organization, for example,
perfor mance, attendance, and remaining in the organization. Organizational com-
mitment is also positively related to job, seniority and mobility, organizational
adaptability and tardiness, personal financial requirements, and organizational
citizenship behavior.
Turnover intentions and voluntary turnover
Turnover intentions have been defined as conscious thoughts and deliberate willfulness
by employees to leave their organization (Tett & Meyer, 1993). Turnover intentions
are the immediate precursors of voluntary turnover and occur when employees are
dissatisfied. Then, once they are able to find alternatives they judge to be better than
their current jobs, they choose of their own accord to leave their employers. Intention
to quit has been shown to lead to turnover (as its immediate precursor) and that the
primary determinants of turnover intentions are o rganizational commitment and job
satisfaction.
In a meta‐analysis of employee turnover, Cotton and Tuttle (1986) found that
o rganizational commitment, overall job satisfaction, satisfaction with the work itself,
pay satisfaction, and satisfaction with supervision are highly negatively related to
t urnover. Cotton and Tuttle found smaller, yet still significant, relationships between
turnover and job performance, satisfaction with coworkers, satisfaction with promotion,
and role clarity.
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Not surprisingly, since the 1990s, scholars have been studying turnover intentions
and voluntary turnover as a result of downsizings. After a downsizing, employees with
higher levels of organizational commitment are less likely to leave their organizations.
Research has shown that downsizing survivors who engage in control coping (i.e.,mak-
ing plans and setting goals) or who feel empowered have ahigher level of o rganizational
commitment and a lower level of turnover intentions.
Psychological contracts and their violations
To address the significant impact of organizational changes, such as downsizings,
mergers, and acquisitions, on employees, Rousseau (1995) posited the theory of
psychological contracts (i.e., the individual beliefs, shaped by the organization,
regarding the terms of an implicit exchange agreement between employees and their
organization). Rousseau found that psychological contracts are comprised of two types
of reciprocal obligations: (1) transactional obligations of high pay and career advance-
ment in exchange for hard work, and (2) relational obligations exchanging job security
for loyalty and a minimum length of stay. Psychological contracts are embodied in
employees’ unwritten expectations that the organization will fulfill its promises of job
security, high pay, merit pay, training, and development. In return, the organization
expects its employees to be loyal, willing to work overtime, stay a minimum length of
time, and give sufficient notice if they quit. When employees do not feel that their
organizations are honoring their psychological contracts, they adjust their organiza-
tional commitment and contributions accordingly.
Unfortunately, these unwritten psychological contracts between employees and their
employers are usually violated when downsizings or other organizational changes
occur, since they impose new employment arrangements not chosen by the employees
and because all organizational changes jeopardize job security to some degree
(Rousseau, 1995). As a result of the violations of the relational aspects of the psychological
contracts, the employees’ organizational commitment, trust of leadership, job satisfac-
tion, and willingness to perform organizational citizenship behaviors plummet. In
addition, high turnover intentions and low morale typically occur and, if the employees
stay instead of leaving, they feel the company owes them more as payback for having
fulfilled their end of the deal. Not surprisingly, these negative a ttitudes can lead to a
high level of voluntary attrition by employees.
Once organizations have violated psychological contracts, remediation becomes the
primary means by which to diminish the negative effects of the violations, with such
r emedies substituting one outcome for another. Rousseau (1995) claimed that the primary
way to remediate violated psychological contracts is through additional r emuneration.
However, because providing additional financial incentives to employees is not always an
option for cash‐strapped companies struggling to survive in an u ncertain economy, other
strategies for rebuilding employees’ psychological contracts should be investigated. One
of the strategies that should be enlisted is helping o rganizations restore the trust of
employees, in part, by rebuilding the psychological contracts that are violated as a
consequence of the organizational changes. As such, trust is the next area considered.
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Trust
While there are many definitions of trust, our working definition of trust is the will-
ingness of one party to be vulnerable to the actions of another party based on the
expectation that the other will carry out a specific task important to the trustor,
i rrespective of the ability to monitor or control the other party (Mayer, Davis, &
Schoorman, 1995). Many theories of trust are founded on social exchange theory,
which assumes that, over time, trust is established through the repeated exchange of
benefits between two parties. Some might ask, “Why study trust?” Quite simply,
working together involves interdependence, and employees must depend on others to
accomplish personal and organizational goals (Mayer et al., 1995). Trust should matter
to organizations because it is an essential success factor of most business, professional,
and employment relationships. Trust in leadership affects a broad spectrum of
employee work behaviors and outcomes. Specifically, in their meta‐analysis of trust,
Dirks and Ferrin (2002) found that employee trust in organizations is positively
related to organizational commitment, turnover intentions, job satisfaction, organiza-
tional citizenship behavior, job performance, belief in information provided by
management, commitment to decisions, satisfaction with leadership, and leader–
member exchange.
Trust is easier to destroy than it is to create, and it can be destroyed in an instant.
Accordingly, wherever trust exists, so does the possibility of violating that trust. In the
modern global marketplace, there is growing concern about distrust and the violation
of trust in organizations. Trust clearly matters to employees, because, as organizational
trust decreases, they become cynical, less motivated, less committed, increasingly
unwilling to take risks, more likely to demand greater protections against the p ossibility
of betrayal, and increasingly insistent on costly sanctioning mechanisms to defend
their interests.
In general, people are more motivated to understand the causes of outcomes that
are relatively unfavorable and unexpected. Accordingly, employees seek to under-
stand the causes of unfavorable and unexpected outcomes—e.g., downsizings,
mergers and acquisitions, organizational restructuring—so that they can ascertain
how they should expect to be treated in the future. Needless to say, trust becomes an
important concern under such circumstances. If management is perceived as trust-
worthy, employees will support them and the organization; however, if they perceive
management as untrustworthy, they will decrease their support (Brockner, Siegel,
Daly, Tyler, & Martin, 1997). Above all, after a significant organizational change
(such as a downsizing, acquisition, or merger), employees want leaders who are
trustworthy and credible.
Given the central role played by trust in organizational changes, consistent
information from credible sources is essential, and high trust is likely to be related to
the acceptance of information provided by management regarding the change. For
example, when management provides a relatively clear explanation of the reasons for
a downsizing, employees are less threatened because uncertainty is reduced, and they
show greater organizational commitment. In addition, honest and adequate explana-
tions reduce employees’ feelings of anger and betrayal. To build credibility,
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management needs to be visible and set expectations regarding corporate performance
goals and employee roles. Credibility will be conveyed through the messages sent
by management, especially global support‐related messages, since they are strongly
correlated with the next area of inquiry, perceived organizational support, or POS
(Allen, 1995).
Perceived organizational support (POS)
Grounded in social exchange theory and the norm of reciprocity, the POS perspec-
tive is guided by the principle that most employees need to feel that their organiza-
tion respects and will support them in order to be committed and loyal to the
organization, satisfied with their jobs, and willing to work hard. In order to deter-
mine the anthro pomorphized organizations readiness to reward increased work
effort and to meet needs for praise and approval, employees develop global beliefs
concerning the extent to which the organization values their contributions and cares
about their well‐being.
Eisenberger, Armeli, Rexwinkel, Lynch, and Rhoades (2001) found that (1) POS
is positively related to employees’ felt obligation to care about the organizations
welfare and to help the organization reach its goals; (2) felt obligation mediates the
relationships between POS and affective commitment, organizational spontaneity,
and in‐role performance; and (3) the relationship between POS and felt obligation
increases with employees’ acceptance of the reciprocity norm as applied to organi-
zations. Not surprisingly, when organizations are perceived to fulfill psychological
contracts, employees experience higher levels of POS. POS is also an indication
thathelp will be provided by the organization when it is needed to carry out ones
job effectively and to deal with stressful situations. The POS perspective suggests
that the more supported employees feel, the harder they will work and the more orga-
nizational citizenship they will p erform. Employees who perceive higher levels of
POS will typically have higher levels of trust in their organizations. In addition,
employees who perceive their organization to be highly supportive more often interpret
organizational gains and losses as their own, develop evaluation biases in assessing
organizational characteristics and actions, and adopt organizational values and
norms as their own.
Perceived supervisor support (PSS)
Just as employees develop global beliefs concerning the extent to which the person-
ified organization values their contributions and cares about their well‐being
through POS, employees develop impressions of the extent to which their supervi-
sors value their contributions and care about their well‐being through PSS. Research
has found two relationships between POS and PSS: (1) that PSS leads to POS, and
(2) that POS c ompletely mediates a negative relationship between PSS and employee
turnover (Eisenberger, Stinglhamber, Vandenberghe, Sucharski, & Rhoades, 2002).
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Scholars have shown that supervisor support can significantly impact employees’
feelings about their jobs and their commitment to their organizations. Employees
trust in supervisors is predicted by POS, procedural justice, and transformational
leadership. The outcomes of high levels of trust in supervisors are decreased turnover
intentions and increased organizational commitment. During times of significant
organizational change—such as downsizings, mergers, or acquisitions—supervisors
play critical roles as decision‐makers and as sources of influence. Similarly, when
supervisors develop close working relationships with employees, the employees
o rganizational commitment is less likely to decline. Supervisors positively influence
levels of organizational commitment by trusting their employees and giving them
authority to do their jobs. In addition, PSS has a positive impact on job satisfaction
and a negative impact on voluntary turnover (Cotton & Tuttle, 1986). Similarly, inter-
personal conflict with supervisors is predictive of job dissatisfaction and decreased
organizational commitment.
Communication applications
Effective retention strategies are not one‐shot efforts. Lewis and Seibold (1998) found
that communication is critical to the effective implementation of any organizational
change. Sharing critical information breeds trust, so when employees’ need for
information is high or when they attach considerable significance to unfavorable
resource allocations, they are greatly affected by the presence or absence of commu-
nications from management (Brockner et al., 1997). And if the organization does not
provide the information, employees are compelled to obtain information discreetly
through observations, indirect behaviors, and secondary sources.
Accordingly, organizations should proactively create communication strategies
t argeted to employees that take into consideration effective organizational communi-
cation best practices. For example, management should explain why the organizational
change was required, repeat messages through multiple communication channels,
r ecognize that employees prefer face‐to‐face communication, check to make sure that
the messages sent were actually the messages received, and realize that not communi-
cating has negative instead of neutral effects. In addition, Allen (1995) found that
c onversations with supervisors regarding the organization’s support is strongly corre-
lated with POS, so supervisors should make an effort to talk to their employees about
the organization’s support. In order to better retain their employees, supervisors should
intentionally utilize the following four strategies: (1) meeting r egularly with employees,
(2) providing regular performance management feedback, (3) committing to ongoing
learning and professional development, and (4) conducting periodic stay interviews.
Meeting regularly with employees
Supervisors can effectively communicate support to employees by holding regular one‐
on‐one meetings. Since conversations with supervisors regarding the organization’s
support is strongly correlated with POS (Allen, 1995), organizations should require
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supervisors to meet regularly with their employees to talk to them about the organiza-
tions support of their roles, make sure they are not working too many hours, and make
sure that they have what they need in order to be successful. Through these one‐on‐one
meetings, supervisors should also communicate that they care about the well‐being of
the employees as individuals.
Providing regular performance management feedback
Research has shown that performance feedback from managers increases organiza-
tional commitment (Hutchison, 1997). Organizations can use performance
management systems to drive new behaviors and renegotiate violated psychological
contracts. Accordingly, management should review their organizational performance
management processes to ensure that they rigorously identify talent, periodically
review and evaluate behavioral and professional competency development progress,
and recognize achievements. In addition, organizations should require supervisors to
provide individualized, formal feedback to employees. Supervisors should also view
the performance management process as a priority, investing time and energy in
m entoring and developmental feedback discussions.
Committing to ongoing learning and professional development
Not surprisingly, research has shown that employee learning and development are posi-
tively related to POS, organizational commitment, trust, psychological contract
fulfillment, and organizational performance, and are negatively related to voluntary
turnover and turnover intentions. Training that is clearly linked to job performance shows
that organizations value their employees and want to help them improve their job‐
related skills (Hutchison, 1997). Continuous learning and development are especially
important to the millennial generation, with employees who value e ntrepreneurship,
innovation, and the ability to move into leadership roles at earlier stages in their careers.
Conducting periodic stay interviews
According to de Vos and Meganck (2007), in order to improve our understanding of
the effectiveness of retention factors, it is important to relate them to employees’ views
on their importance. The extent to which retention factors lead to the desired result, i.e.
making employees stay, depends on their impact on “motivational forces.” Different
types of motivational forces can be discerned, including affective, normative, calcula-
tive, and contractual forces. The latter refers to employees’ perceptions of what they
owe the organization and what the organization owes them in return, i.e., their
psychological contract.
For many years, companies have used exit interviews to understand the “real r easons”
why employees leave. However, it seems logical to assess what would make an employee
stay before they develop turnover intentions. To this end, a stay interview is a periodic
one‐on‐one structured interview between a supervisor and an “at‐risk‐of‐leaving
8
employee.” These interviews help identify and decrease the factors causing employees
to consider quitting. Stay interviews indicate to employees that the organization is
concerned about their future and that their manager took the time to consult with
them. Stay interviews are customized to a single identifiable individual and their wants
as opposed to engagement surveys and many other retention tools. Stay interviews are
more proactive than exit interviews because they include actions, unlike exit i nterviews,
which only identify problems. Stay interviews also encourage the parties to identify
actions that can improve the employee experience and actions that can help eliminate
major frustrators or turnover triggers.
Conclusion
The 20th-century employee–employer relationship is broken. The old trade‐off of job
security for employee loyalty no longer exists. Battle weary from several economic
downturns, both sides have realized that the relationship between employers and
employees is now just a transactional one, and each side is in the process of regrouping.
In addition, the Internet has revolutionized employees’ abilities to easily search for and
apply for different jobs. Current and potential employees can learn about an organiza-
tion via a quick Internet search, as well as find open positions located anywhere in the
world. Even more, the advent of social networking has enabled passive job hunting—
even when happily employed—by simply posting one’s employment experience on a
social or professional networking site; employees can receive inquiries from motivated
recruiters reaching out with potential opportunities.
In light of this new employee–employer relationship, organizations should continu-
ously evaluate and modify their retention strategies to meet the individual circum-
stances of employees. One of the popular theories that has emerged recently is the
concept of idiosyncratic deals (I‐Deals; Rousseau, Ho, & Greenberg, 2006). Simply
defined, I‐Deals are special terms of employment negotiated between individual
workers and their employers (present or prospective) that satisfy both parties’ needs.
While a step in the desired direction, this concept has numerous implications to the
psychological contract, organizational commitment, and employee perceptions of
favoritism by those who are deemed unworthy of such an arrangement.
What if this concept was not limited to one employee? Namely, a version of the
I‐Deal could be struck with each employee, emphasizing the need both for employee
and employer to add value to each other: the employee contributes to the company’s
adaptability and the employer to the employee’s employability (Hoffman, Casnocha,
& Yeh, 2014). Employees could be hired for explicit assignments for two to four
years called “tours of duty,” with the concept that the employee would learn as much
as he or she can, as well as build networks and expertise outside of the organization
so that once the employee decides to leave, the organization could maintain career‐
long relationships through the establishment of an alumni network. Instead of
entering into constricting bonds of long‐term loyalty, the 21st-century employee–
employer relationship should seek to build trust and investment through the mutual
benefits of alliance.
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sEE ALso: Communication among Coworkers; Communication and Psychological
Contracts; Communication and Telework; Communication in Workplace Teams;
Perceived Organizational Support; Performance Feedback; Supervisor–Subordinate
Communication; Uncertainty and Communication in Organizations; Workplace
Friendships
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710860147
Robin Adair Erickson is the vice president of talent acquisition, engagement, and
r etention research at Bersin by Deloitte, part of Deloitte Consulting LLP, USA. She
advises Bersin members, conducts industry surveys, researches leading practices,
c reates reports, and develops frameworks and tools. Recognized as a corporate
thought leader, she draws on over 20 years of consulting experiences focused on
talent strategies and her academic organizational communication research. In
addition to her Bersin publications, she has been published in the Deloitte Review,
Forbes.com, Business Finance, Works p an, and the International Journal of
Organizational Analysis.
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Purpose – The purpose of this research is to focus on organizational support factors that facilitate organizational commitment among downsizing survivors. High attrition by employees who “survive” layoffs is common and costly. Design/methodology/approach – Using a sample of 2,751 employees, a secondary analysis of employee survey data examined the effects of perceived organizational support (POS), perceived supervisor support (PSS), and gender on downsizing survivors' organizational commitment. Findings – Findings indicate that organizational commitment is positively related to both POS and PSS, with POS accounting for a greater increment of variance. When predicting organizational commitment subsequent to a downsizing, POS and PSS compensate for each other in that: POS moderates the association between PSS and organizational commitment, such that the relationship becomes stronger as the level of POS decreases; and PSS moderates the association between POS and organizational commitment, such that the relationship becomes weaker as the level of PSS increases. Gender moderates the two-way interaction between POS and PSS when predicting organizational commitment such that the interaction is stronger among men than for women. Research limitations/implications – The effect sizes associated with the interactions are small and because this was a secondary analysis, we could not use established scales for some constructs. Also, the sample was drawn from one USA organization and may not generalize to other organizational settings. Practical implications – The items contained in our scales suggest multiple ways that organizations can make their employees feel more supported in terms of both POS and PSS. Originality/value – This study found a previously unknown interaction among POS and PSS that was moderated by gender.
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Introduction Contracting A Modern Dilemma Contract Making The Contract Makers Contemporary Contracts Violating the Contract Changing the Contract Business Strategy and Contracts Trends in the New Social Contract