Looking to retain management staff?

Here’s how HR makes a difference
By Terry Wagar
|Canadian HR Reporter|Last Updated: 02/11/2003

What effects do human resource management practices have on managerial retention? Although the 1990s were characterized by downsizing and restructuring, many organizations are now preoccupied with the challenge of holding onto managers rather than shedding them.

Using data that was recently collected from almost 1,000 business school graduates at both the undergraduate and MBA level, I examined the relationship between an individual’s intention to quit his job and the human resource management activities of the organization.

Intention to quit

Survey respondents were asked to indicate whether they intended to quit their job over the next two years. This question was measured on a six-point scale, with a score of 1 indicating that the individual was definitely not intending to quit and a score of 6 indicating that the participant was definitely going to resign (see chart).

About 72 per cent of respondents reported they did not intend to quit their jobs (score of 3 or less) while just under 10 per cent indicated they were very likely to quit (a score of 6). There was some evidence older employees and individuals with more seniority within the organization were less likely to report they planned to resign.

HR practices

Information was collected about the presence of 36 HR management practices within the participant’s organization. On average, people working for employers with more sophisticated human resource systems were significantly less likely to indicate they intended to quit over the next two years.

It is unlikely the presence or absence of any one HR practice will be a determining factor in such a decision. Rather, it is likely that the “bundle” or system of practices will affect the quit decision.

While recognizing the importance of HR systems or bundles, I examined the pattern of results to see if any sub-bundles emerged. It seems certain sets of HR practices were associated with the intention to quit decision. By way of example, employees indicating they did not intend to quit were more likely to be employed in organizations with the following characteristics:

•employee voice procedures, such as a grievance procedure for non-unionized staff and employee suggestion or input mechanisms;

•programs that recognize employee contributions. Examples include merit-based promotion, individual merit pay and a formal employee recognition program;

•mechanisms for sharing information with employees. These include such programs as orientation for new hires and the sharing of business information with workers; and

•the use of problem-solving groups and training in employee involvement.

What drives staff away

Employers going through a downsizing are confronted with a difficult dilemma. On one hand, the organization may see the need to reduce the size of the workforce as critical to the survival or success of the organization. On the other hand, downsizing may encourage the best employees to leave as these individuals are often very attractive to other organizations.

Over the years, I have given several workshops on downsizing and a question that almost always comes up is, “How do we downsize and still retain the best people?”

The survey results show strong links between the intention to quit and the downsizing and restructuring strategy of the respondent’s organization. Individuals who intend to quit over the next two years were more likely to report that their current employer had recently downsized the workforce, contracted out work, cut planned capital investment, used across-the-board cutbacks to reduce the workforce (rather than strategically deciding on where cuts, if any, should be made) and/or increased the use of contingent workers.

While downsizing and change will drive staff from an organization, HR can address the situation by showing employees it is committed to keeping top staff. HR climate is thus the key.

Human resource climate

Although the adoption of more sophisticated HR systems is important, the survey also tried to get at the “climate” of the organization. Although this information comes from the perceptions of each participant, perceptions are important as they affect behaviour.

One set of questions asked about the importance of human resources in the organization. The results were very clear — respondents who perceived the organization values human resources and sees its people as its most important asset were considerably less likely to report they intended to quit job over the next few years.

Do employer retention efforts make a difference? The results showed that employee perceptions regarding the organization’s retention strategy were significant. For instance, employees who indicated they were not planning to quit also were more likely to report their organization:

•was committed to retaining the best employees;

•sees the retention of top employees as very important; and

•has established programs designed to retain quality employees.

Keeping the best and brightest employees is critical to success. An employee’s decision to leave a job may depend on a wide range of factors, some of which are clearly beyond the control of the organization. Nevertheless, there is growing evidence human resource management can play an important role in retaining a high-quality workforce.

Terry H. Wagar is a professor of industrial relations at Saint Mary’s University in Halifax. He can be reached by e-mail at terry.wagar@stmarys.ca.

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