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Advanced Human Resource Studies Report:
Why Good Employees Stay
(October 22, 2008) Retention strategies for top talent is an area of ongoing interest for human resource professionals. An earlier issue of hrSpectrum featured a study by Cornell's John Hausknecht and colleagues into why good employees leave their organizations. In this issue, we look at the flip side of his research: why g o od employees stay. The differences are surprising.
Hausknecht's most recent study, published as a working paper this year entitled "Targeted Employee Retention: Performance-Based and Job-Related Differences in Reported Reasons for Staying" and forthcoming in the journal Human Resource Management, used a data set ten times larger than in his earlier work-25,000 employees as opposed to 2,500- and was also conducted in the hospitality industry.
New reasons for staying emerged as more important than before: salary/wages was not as important for upper-level and high-performing employees as it was in the earlier study. Perhaps as a sign of the economic times, pay and benefits remained among the most important reasons for staying only among hourly workers. Flexible hours were also ranked high for this group-again, not surprisingly, given the high non-work demands on workers with limited spending and transportation options, child care responsibilities, and so forth.
For those at higher levels in the organization or performing at a higher level of achievement, opportunities for career advancement were more important than monetary rewards. (By contrast, advancement opportunities were cited least by hourly employees as a reason for staying, perhaps because of a real or perceived lack of such opportunities.) Given the disproportionate increase in executive pay relative to the average hourly worker in the U.S. in recent years, it may be that salary has "topped out" as a variable of importance for retention of upper management.
Most surprising, perhaps, was that for all groups, job satisfaction (enjoyment derived from the nature of the work itself, such as serving customers) ranked first as the reason employees stay. Whether this was unique to the nature of the work in the hospitality industry and the strong service orientation of the people it attracts, or could be extrapolated to other fields, remains an open question.
Another surprise was that lack of alternative employment opportunities was not cited by low achievers as a reason for staying at any greater frequency than it was cited by high achievers.
Employees were sorted into groups according to their rank in the organization (supervisory, managerial, professional, or hourly) and performance rating based on their latest performance review (on a scale of 1 to 5). Twelve retention reasons were identified based on survey responses using the employees' own words that were later analyzed and coded into the categories.
Reasons for staying on the job were most similar for workers of low rank and low achievement. Differences were most discernible between these groups and the higher rank and higher achieving employees. In addition to job satisfaction, organizational prestige (reputation) was cited as a top reason by high rank/performance employees for staying with the firm.
The practical implications from these findings is that retention strategies should target factors identified as highly valued by high achievers, or adopt policies that encourage employees to become high achievers (by showing a clear path for advancement, for example). Communicating positive messages about the reputation of the firm is important not only for recruitment but for retention. Finally, the study demonstrates that external inducements to leave-which have received the most attention in the academic research-will threaten retention only when they are compelling enough to overcome inducements to stay.
For more information regarding this research please contact John Hausknecht via email: firstname.lastname@example.org, or Tel: +1.607.254.8805.
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