Employee Retention

Employee retention refers to an organization's ability to keep its employees over time and is influenced by a variety of factors. Key elements affecting retention include leadership style, individual motivation, workplace morale, family dynamics, compensation, and job location desirability. Employees are more likely to stay with companies that they perceive as ethically sound, and leadership styles such as transformative and servant leadership are gaining attention for their positive impact on employee engagement and commitment. Effective leaders foster a supportive work environment that prioritizes intrinsic motivation—where employees find purpose and joy in their work—as opposed to relying solely on extrinsic factors like financial incentives. Additionally, personal circumstances such as family commitments and neighborhood conditions can play significant roles in an employee's decision to remain with or leave an organization. In the evolving workplace landscape, especially post-COVID-19, factors like flexible scheduling and comprehensive wellness programs are increasingly important for retaining talent. Ultimately, understanding and addressing both organizational and personal factors can enhance employee satisfaction and retention.

Published in: 2023

By: Froiland, John Mark

Subject Terms

Employee Retention

Abstract

Employee retention is influenced by myriad factors, such as the leadership style of management, individual employees' intrinsic motivation and engagement, burnout, collective morale of staff, the influence of the family, salary, and the desirability of the job's location. Employees who view their corporation or organization as ethically sound are also more likely to be committed to staying there. Transformative leadership and servant leadership are both receiving increasing research attention worldwide as ways of promoting employee engagement, commitment, and retention.

Overview

Leadership style is increasingly becoming recognized as one of the key, alterable factors that influences employee engagement and retention. Leaders are crucial because they influence the motivation and morale of employees. Good leaders can also help prevent burnout by creating a healthy and happy work environment while making sure not to overwork employees. According to self-determination theory, rich engagement (actively participating in meetings, deeply concentrating at work, and putting forth one's best effort much of the time) is a manifestation of one's motivation for work and learning at work (Froiland, Smith, Peterson, & Hircert, 2012; Ryan & Deci, 2000). Intrinsic motivation (seeing the purpose, joy, and value in one's work) is especially likely to lead to long-term deep engagement, whereas extrinsic motivation (working primarily to gain money or recognition) is more likely to lead to shorter-term or superficial levels of engagement (Froiland et al., 2012; Ryan & Deci, 2000).

The extrinsic motivation of employees is usually much better for a company than no motivation at all, but purely extrinsically motivated workers (focused primarily on financial success) are more likely to have lower levels of psychological health and make selfish decisions that may be harmful to coworkers or clients (McHoskey, 1999; Ryan & Deci, 2000). Thus, when leaders focus on elevating engagement and retention by focusing exclusively or heavily on financial incentives (e.g., bonuses for high sales) and consequences (e.g., the imminent threat of being fired for not meeting sales goals), they are risking orienting employees toward lower-quality engagement, more anxiety, and potential Machiavellianism (use of power in a way that benefits the one wielding the power while harming others). In order to promote long-term, high-quality engagement and retention, it is important for leaders of companies, schools, and hospitals to promote intrinsic motivation for work, which will, in turn, make it more likely that employees will adopt the vision and values of the company, enjoy working there, and intend to stay with the company for a long time (Eyal & Roth, 2011).

Further Insights

Leadership Styles. There are three leadership styles, all somewhat interconnected, that show promise for increasing intrinsic motivation for work, engagement, and retention. The first is autonomy-supportive leadership. Autonomy-supportive leaders practice numerous high-quality communication techniques, such as the following: acknowledging the feelings of employees, taking time to listen to employee perspectives, helping employees to see the underlying purpose in company policies and new initiatives, expressing warmth, focusing on the personal growth of each employee rather than comparing them to peers, and conveying a strong appreciation for intrinsic life goals such as helping others rather than aiming exclusively for financial gain (Froiland, 2014; Graves, & Luciano, 2013; Kasser, & Ahuvia, 2002). Autonomy-supportive leaders also refrain from using controlling techniques, such as focusing exclusively on financial rewards or recognition to motivate employees, excessive use of pressure, and using unnecessary imperatives such as "You should have," "You'd better," or controlling questions, such as "Don't you think you should start making more sales?" (Froiland, 2014). Autonomy-supportive leaders promote intrinsic motivation for work by preparing for fruitful and respectful exchanges with employees, which in turn promotes employees' job satisfaction, sense of vitality, and emotional attachment to the organization (Graves & Luciano, 2013).

Servant leaders are also likely to inspire employees toward long-term engagement and retention. Servant leaders model the very characteristics they want employees to internalize, such as a strong desire to help clients, a passion for the organization's vision, deep levels of engagement in pursuing the organization's mission, and a genuine desire to see employees thrive. This palpable desire to help employees and clients thrive sets servant leaders apart from other leaders and is positively associated with employees perceiving that their organizations are ethically sound (Jaramillo, Grisaffe, Chonko, & Roberts, 2009).

Servant leadership is both directly and indirectly (via employees perceiving that their companies are ethical) positively related to organizational commitment, which predicts less turnover intention (Jaramillo et al., 2009). Servant leaders generally promote excellent engagement and retention outcomes, but servant leaders are not always easy to find because many people attracted to leadership positions in organizations have a stronger desire for financial success than for helping others.

Transformative leaders aim to inspire their employees to catch the vision for their company's mission. Transformative leadership is contrasted with transactional leadership, which focuses on the careful use of rewards and consequences to motivate hard work (Ruggieri, 2009). Transactional leadership may be perceived of as controlling by employees and thereby cause decreased intrinsic motivation and inspiration for work, which eventually leads to reduced retention. However, a notable strength of the transactional style is leadership's ability to make expectations and roles very clear, which can actually support autonomous motivation (Graves & Luciano, 2013). However, one can convey clear expectations along with an autonomy-supportive, servant, or transformative leadership style.

Transformative leaders have the following key qualities: charisma; a reliance on inspirational motivation; a focus on stimulating the intellect of employees; and willingness to take time to individually consider each employee's development (Ruggieri, 2009). The latter three transformative leadership keys are in accordance with the tenets of autonomy supportive leadership. People perceive transformative leaders as being creative, nurturing, embracing change, and full of endurance, whereas transactional leaders are perceived of as having a high need for order, seeking to establish dominance, and lower on originality. People also find tasks more satisfying when working for transformative leaders (Ruggieri, 2009).

Personal Employee Considerations. Although leadership style and the individual motivation of employees are crucial factors affecting engagement and retention, there are some factors that are often beyond the control of the company. For instance, mothers in the United States often leave the workforce or quit their full-time job for a few years after having a baby; these decisions to leave the workforce are often exacerbated by family-unfriendly policies, such as the lack of paid parental leave, flex time, and affordable, high-quality child care. Furthermore, 16 percent of parents with young children in the United States report that they work excessively and allow their children to watch more television than other parents (Froiland & Davison, 2014). Studies found that even with both parents working from home during the COVD-19 pandemic, mothers still performed the majority of childcare and household duties (The Economist, 2020).

This excessive work and lack of time for supporting their children's development can put them at risk for burnout and affect job turnover. Autonomy-supportive and transformational leaders would be wise to recognize how much time and effort needs to go into parent involvement and parent-child communication (Froiland, 2014; Powell, Son, File, & Froiland, 2012) and convey understanding about their employees' perspectives on balancing work and home life. Companies can adopt family-friendly policies such as flexible scheduling and providing free or subsidized childcare, but these types of adaptations do not guarantee the prevention of work-family conflict. Work-family conflict occurs when a person feels that his or her motives for meeting family needs and work needs are clashing.

Neighborhood conditions, such as socioeconomic well-being (safety, percentage of occupied homes, and percentage of neighbors with a college education) and neighborhood social networks can also influence whether workers and their families experience stress at night or support and revitalization (Froiland, Powell, Diamond, & Son, 2013; Froiland, Powell, & Diamond, 2014). Furthermore, for social service workers and other employees who work in low-socioeconomic-status neighborhoods, the safety of the neighborhoods in which they work affects job satisfaction and, thereby, retention (e.g., Bell, Mock, & Slutkin, 2002). Companies that are in low-socioeconomic-status neighborhoods or know that their employees often live in less affluent neighborhoods would be wise to consider collaborating with community leaders and residents in order to increase safety and social support. In fact, many cities and cutting-edge companies are quite aware that in order to attract and retain highly educated and talented employees, the cities must have safe and aesthetically pleasant neighborhoods, vibrant arts, beautiful urban green space or access to nearby nature, very good publication education, and well-planned places for recreation (Clifton, 2010).

In the 2020s, methods of employee retention and factors for employers to take into consideration evolved with the ever-changing workplace environment. Allowing employees to work from home and have access to flexible scheduling became important factors in employee retention in the post-Covid-19 work era. These considerations were important to employees trying to balance their work and home lives. Other factors important to employee retention in the twenty-first century included company culture, accessibility of wellness programs, the importance of teamwork, and the company’s commitment to reducing burnout (Crail, 2023).

Viewpoints

Program evaluators and organizational consultants for companies often focus on either individual or collective job satisfaction when examining risk for non-retention. However, job satisfaction can differ significantly by occupation within a company or unit. For instance, psychiatrists, psychologists, and social workers are more likely than nurses and administrative staff to view their work as a calling, whereas nurses and administrative staff are more likely to view work as a means to obtaining financial resources that help with other areas of life (Baruch, Swartz, Sirkis, Mirecki, & Barak, 2013).

The case in which many obstetricians who are often fairly altruistic have been pressured by hospital administrators to perform unnecessary cesarean sections (Gibbons, Belizán, Lauer, Betrán, Merialdi, & Althabe, 2010) is another example in which the motivation of the employees may be stronger or more salubrious than that of the leaders. This poses an interesting challenge for companies that wish to inspire their employees to catch a passionate vision for serving patients or customers because certain positions within companies are more likely to attract employees with a greater passion for their work.

Furthermore, there is the possibility that leading administrators are more motivated than the employees for financial gain rather than actually serving or helping others, which may be discouraging to altruistic employees and hinder responsiveness to leadership interventions aimed at developing transformative or servant leaders. If organizational consultants and CEOs are aware of this possibility, they may be better equipped to recruit leaders who are inspirational or invest in the rigorous training it would take to help controlling leaders truly become servant, autonomy-supportive, or transformational leaders.

Terms & Concepts

Autonomy-supportive communication: A way of speaking to others that involves acknowledging their perspective, helping them to see the purpose in what they are doing, and avoiding controlling language.

Burnout: A combination of exhaustion and indifference toward work that employees may experience after long periods of overexertion without enough time, psychological resources, or social support to revitalize.

Incentive: Reward for good behavior, visible engagement, or productivity.

Intrinsic Motivation: Doing something because one enjoys it, sees it as purposeful, or finds that it otherwise meets core psychological needs.

Organizational commitment: An employee's attachment and dedication toward their company, university, hospital, or school.

Servant leadership: A style of leadership marked by beneficence, in which leaders make it clear that they are serving both employees and consumers in order to make their lives better. As with transformational leadership, there is a focus on empowering employees to become more effective.

Transactional leadership: A common leadership style in which employees are seen as lacking internal motivation, thereby requiring the careful use of rewards and consequences to motivate hard work. Transactional leaders are often skilled in creating clear expectations and roles.

Transformative leadership: A leadership style that focuses on inspiring and empowering employees to reach their potential. It may also focus more on partnering with employees rather than making them feel bossed around.

Turnover intention: An employee's plan to leave a job.

Bibliography

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Employee Retention

On this Page

Subject Terms

Employee Retention

Abstract

Overview

Further Insights

Viewpoints

Terms & Concepts

Bibliography

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