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The influence of human resource management

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The Influence of Human Resource Management

Practices on the Retention of Core Employees of
Australian Organisations:
An Empirical Study

Janet Cheng Lian Chew

B.Com. (Hons) (Murdoch University)

Submitted for the degree of Doctor of Philosophy,

Murdoch University
July, 2004

I declare that this thesis is my own account of my research and

contains, as its main content work which has not previously been
submitted for a degree at any tertiary education institution.

..........................
Janet Cheng Lian Chew
July 2004
Copyright
All rights reserved

ABSTRACT
Employee retention is one of the challenges facing many business
organisations today. For many organisations, strategic staffing has
become a concern because the ability to hold on to highly talented
core employees can be crucial to future survival. This empirical study
examined the current human resource management (HRM) practices
of Australian organisations in the retention of their core employees.
In particular, the research identified the core elements of HRM
practices, which strongly influence the decision for core employees to
stay.
The

study

comprise

three

phases:

(1)

preliminary

investigation, utilising the Delphi Technique to obtain the opinions of

an expert panel of thirteen, (2) in-depth interviews, involving twelve
human resource managers of Australian organisations and (3) a
quantitative

survey

of

800

employees

from

nine

Australian

organisations.
The findings revealed greater insights into the HRM-retention
relationship and provided empirical validation of the relationship.
More specifically, the research identified eight retention factors that
influence the decision of core employees to stay. These specific
factors consisted of two bundles of practices: HR factors (e.g., person
organisational fit, remuneration, reward and recognition, training and

career

development,

challenging

job

opportunities)

and

Organisational factors (e.g., leadership behaviour, company culture

and

policies,

teamwork

relationship

and

satisfactory

work

environment). The outcome of the HRM-retention relationship was

examined through organisational commitment and turnover intention
using multiple regression analysis.
The findings of this study revealed positive significant corelationships

between

the

eight

factors

and

organisational

commitment. Moreover, it was highlighted that commitment acted as

a partial mediator of remuneration, recognition and reward, training
and career development and work environment on intent to stay.
Commitment fully mediated the relationship person organisational fit,
teamwork relationship, culture and policies and intention to stay.
The study produced a model suitable for use by human
resource practitioners as a guide in determining what initiatives an
organisation should adopt to retain their critical employees.
This research has also made a contribution by illuminating the
current employment relationships in Australian organisations and
providing relevant empirical evidence to support the theoretical model
of Human Resource Architecture, developed by Lepak and Snell
(1999) and, as a result, creating a configuration for an Australian
Human Resource Architecture model.

CONTENTS
List of Figures
List of Tables
List of Appendices
Acknowledgements

vi
vii
vii
viii

CHAPTER ONE: INTRODUCTION

The Influence of Human Resource Practices on the Retention of Core
Employees
Introduction
Changes in the workforce
The influence of HRM on retention
Retention management a strategic tool
Purpose of the study
Significance of the study
Research focus
Conclusion
Thesis overview

1
3
6
10
16
17
19
20
20

CHAPTER TWO: LITERATURE REVIEW

To examine the relationship between Human Resource Management
and Retention
Introduction
The Human Resource architecture models
Applying Holistic or Differential HR Practices?
Needs of core employees
Human Resource management practices
Human resource management factors
Human Resource Factors influencing retention
Organisational commitment
Turnover intention
Turnover predictors
Conceptual schema
Conclusion

23
24
30
35
37
43
45
65
73
76
79
80

CHAPTER THREE: RESEARCH METHODOLOGY

A Three-Phased Study: The Delphi method, In-depth Interview and
Quantitative survey
Justification of three-phased approach
Sample population (Phase 1 Delphi Study)
Methodology (Phase 1)
Application of the Delphi Technique
Instrument (Delphi)
Delphi data collection and analysis
Sample population (Phase 2 and Phase 3)
Methodology (Phase 2)
Interview format
Interview data collection and analysis
Phase 3 Employee survey
Phase 3 Data collection and analysis
Conclusion

82
84
87
89
90
92
95
96
97
98
99
100
101

CHAPTER FOUR: THE DELPHI STUDY

Identifying the Human Resource Management Factors that influence
the Retention of Core Employees
Demographics of panel members
What is a core employee?
Do core employees have different needs to other non core employees?
What are the factors affecting an Australian Human Resource architecture
model
Which HR factors most influence the decision of employees to stay?
Human Resource factors
Organisational factors
Discussion and implications

105
106
107
109
112
114
115
117

CHAPTER FIVE: INTERVIEW RESULTS

The Retention Management Practices of Australian Organisations
Introduction
Respondents profile
Interview outcome
Descriptions of core employees
HRM factors influencing retention
Interviewees comments on HR Practices
Is the importance placed on HRM factors linked to retention?
How are these influential HR factors managed in organisations?
How do these differ from non-core employees?
Discussion and Implications

124
126
127
127
130
133
134
139
142
143

CHAPTER SIX: QUANTITATIVE SURVEY (Phase 3)

Investigating the relationship between HRM factors, organisational
commitment and intention to stay
Introduction
Theoretical background and hypotheses
Instrument
Research Questions
Hypotheses
Sample population
Data collection process
Measurement of construct: independent variables
Independent Variables
Person organisation fit
Remuneration, reward and recognition
Training and career development
Challenging job opportunities
Organisational factors
Leadership behaviour
Teamwork relationship
Organisational culture and policies
Communication and consultation
Satisfactory work environment
Dependent variables
Organisational commitment
Intent to stay (turnover intention)
Data analysis
Missing data
Exploratory factor analysis
Means, and standard deviations and correlations
Multiple regression analysis
Results
Demographic profile
Construct validity of all variables used in the study
Exploratory factor analysis
Measures of reliability
Means, standard deviations and correlations
Multiple regressions
Discussion: Findings of the study
Conclusion

149
150
151
151
156
156
158
158
159
160
160
160
161
161
162
162
163
165
165
166
166
166
167
168
168
170
173
173
176
183
189

CHAPTER SEVEN: DISCUSSION AND IMPLICATIONS

Validating the HRM Retention Mode
Introduction
Review of Findings
Phase One Study
Phase Two Study
Phase Three Study
Contributions
Whats New?
So What?
Why So?

190
190
193
194
198
199
201
202

 Well Done?
Done Well?
Why Now?
Who Cares?
Limitations
Future Research
Conclusion

204
205
206
207
208
211
213

Appendix 1

214

Appendix 2

215

Appendix 3

216

Appendix 4

222

Appendix 5

229

Appendix 6

231

Appendix 7

232

Appendix 8

239

Appendix 9

248

List of References

251

LIST OF FIGURES
Figure 1.1: A three-phased study to determine key HR factors that
influence retention of core employees

21

Figure 2.1: Human resource management factors that influence

retention of core employees

81

Figure 3.1: The Delphi Procedure

91

Figure 6.1: Conceptual Schema: Human Resource Management Factors

that Affect Retention of Core Employees of Australian
Organisations

153

Figure 7.1: Final Model: Human Resource Management Factors that

Affect Retention of Core Employees of Australian Organisations

213

LIST OF TABLES
Table 2.1 Employment modes of Human Resource Architecture

27

Table 3.1 Summary of the Delphi Process

94

Table 3.2 Phase measurement scales

102

Table 4.1: Demographic characteristics of the Delphi Panel members

106

Table 4.2: Top five descriptions of a core employee

107

Table 4.3: Needs of core employees

108

Table 4.4: Factors affecting the Australian Human Resource architecture

model

110

Table 4.5: Top five human resource factors influencing retention

113

Table 4.6: Top five organisational factors influencing retention

116

Table 5.1: Demographic characteristics of participating organisations

127

Table 5.2: Interviewees selection of top five HR factors influencing

retention

130

Table 5.3: Phase 2 Interviewees selection of top five organisational factors

influencing retention

132

Table 5.4: Level of importance of Identified Human Resource and

organisational factors in relation to voluntary turnover rate

135

Table 6.1: Demographic data of respondents (Age, Gender, Industry and

Occupation)

169

Table 6.2: Factor analysis of HRM factors.

171

Table 6.3: Means, Standard Deviations and Correlations for all Variables

174

Table 6.4: Regression Results (Un-standardised Coefficients) for

Organisational Commitment as Dependent Variable

178

Table 6.5: Regression Results (Un-standardised Coefficients) for

Organisational Commitment as Dependent Variable

179

Table 6.6: Regression Results (Un-standardised Coefficients) for Turnover

Intention as Dependent Variable

181

Table 6.7: Regression Results (Un-standardised Coefficients) for Turnover

Intention as Dependent Variable

182

ACKNOWLEDGEMENTS

The process I have taken to create and complete this thesis has
provided me with a platform to better understand my capabilities and
skills both personally and academically. This journey of self
actualisation would not have been fulfilled without the guidance and
support of several individuals.
I would like to take this opportunity to thank several people
who have assisted me directly or indirectly in successfully completing
this momentous task.
To my two greatest achievements, my lovely daughters, Sofia
and Anjuli, I am fortunate to have had your love and emotional
support throughout the whole process.
My deep appreciation is extended to my supervisor Lanny
Entrekin for his wisdom and guidance.
To my friend and statistical supervisor, Tonia Girardi, my
sincere thanks for her encouragement and guidance.
I am grateful to Shelda Debowski, for her guidance and
encouragement during the initial process.
To my good friend, Eve, I am deeply thankful for her constant
TLC in times of stress.
Finally, to my Mum, thank you for your love and devotion.

CHAPTER ONE

INTRODUCTION
The Influence of Human Resource
Practices on the Retention of Core
Employees

Introduction
Organisations today constantly wrestle with revolutionary trends:
accelerating product and technological changes, global competition,
deregulation, demographic changes, and at the same time, they must
strive to implement trends towards a service and information age
society (Kane 2000). Due to this tumultuous business environment,
one of the challenges facing many business organisations is the
retention of critical (core) employees. Society has now become
knowledge-based where clearly human capital is considered a key
resource

and

Increasingly,

indispensable

organisations

are

to

the

survival

competing

for

of
the

businesses.
best

talent

employees (Porter 2001). New paradigm companies recognise that an

important element in business management practices is the need to
successfully motivate and retain high talent employees who survive
organisational restructuring, downsizing, consolidation, reorganising
or re-engineering initiatives (Clark 2001).

Janet Chew

For many organisations, strategic staffing has become an

important issue because the ability to hold on to highly talented core
employees can be crucial to future survival (Ettorre 1997; Whitner
2001). The loss of needed talent is costly because of the resultant
bidding up of market salaries for experienced hires to replace them;
the costs of recruiting and assimilating new talent; the lost
investment in talent development; and the hidden costs of lost
productivity;

lost

sales

opportunities;

and

strained

customer

relationships (Eskildsen and Nussler 2000). Statistics show that

while the annual turnover rate at established organisations is only 6
percent, the cost of replacing an employee usually amounts to a
quarter of an individual's annual salary. A company with 50,000
employees incurs replacement costs approaching $18 million a year
(Davies 2001; Ettorre 1997).
According to a study released by Accenture (2001), 80 percent
of global business leaders believe that people issues are more
important today than they were three years ago, and 68 percent
believe that retaining talent is more important than acquiring new
blood.

That

recognition

and

the

extraordinary

efforts

some

companies are making to attract and retain top talent represent

fundamental shifts in employer-employee relationships. Essentially
more organisations are now realising that retention is a strategic
issue and represents a competitive advantage (Walker 2001).
As the retention of talent with critical skill sets is acknowledged
by organisations as vital for the achievement of business growth and

Introduction

the building of organisational competencies, some organisations

strive to be the employer of choice by creating a positive environment
and offering challenging assignments that foster continued personal
growth. An employer of choice (EOC) is an organisation that
outperforms its competition in the attraction, development and
retention of people with business-required aptitude, often through
innovative and compelling human resource programs (Clarke 2001;
Dessler 1999).
By adopting an effective total retention strategy with the
support of relevant HR programs, businesses may successfully keep
critical employees. This research examines the current human
resource practices on the retention of core employees in twelve
Australian organisations. It explores the relationship between human
resource (HR) practices and retention and further identifies the
elements of HR practices which strongly influence the decision for
core employees to stay. This is a three phase study and the results
from this study may assist in the development of an effective HRM
retention program for organisations.

Changes in the workforce

Over the last fifteen years, the workforce has changed dramatically in
terms of age, gender, ethnic and racial composition, family structure,
and job expectations. Consequently, such social developments have
had significant impacts on the nature and operations of organisations

Janet Chew

(Ferris Hochwater, Buckley, Harrell-Cook and Frink 1999; Kemske

1998) especially in the management of human resources (e.g.
recruitment

and

selection,

training

and

development

and

performance management programs). According to the Australian

Bureau of Statistics Report (2001), future work trends indicate
reductions in the growth of the Australian permanent workforce, a
continued aging population, a significant decline in the numbers of
trades-persons and related workers, and an increase in associate
professionals and professionals. These trends also predict shorter
term careers, as professionals have the capacity to move between jobs
to optimise their salary packages and to seek more challenging work
tasks and the imperative for continual change in particular jobs,
organisational directions or work structures (Beck 2001; Kitay and
Lansbury 1997). The whole structure of employment has changed
from mainly full time permanent employees to organisations with
small stable cores of permanent employees, supplemented as desired
with contractors, either semi or highly skilled (Hamel and Prahalad
1990; Lepak and Snell 1999).
A number of researchers have assessed the many changes to
organisations both in terms of organisation structure and employer
and employee relationships (Allan and Sienko 1997; Fierman 1994;
Kitay and Lansbury 1997; Kraut and Korman 1999). During this
period, changes in the economic environment have impacted on both
the formal and informal contracts of employment. This, in turn, has
affected

employee

motivation

and

organisational

commitment.

Introduction

Adjusting successfully to this relationship change, have enormous

implications in terms of sustained competitive advantage based on
the ability to access and retain a committed skilled workforce
(Kissler 1994, p. 335).
In todays business environment employees appear to be less
committed to their respective organisations. An employer cannot
guarantee the stability and longevity of corporate career paths or the
security of employees' jobs. The old contract of employee loyalty in
exchange for job security and fair work has broken down (Overman
1998). The trend, these days, seems to be geared towards having a
career portfolio (Handy 1995). It is important to note that employees
today realise that they have to take the initiative in job resiliency,
developing the skills and flexibility needed to quickly respond to
shifting employer requirements (Beck 2001). Loyalty to ones
professional growth has replaced organisation loyalty (Levin 1995).
Employees recognise that the traditional psychological contract that
existed between employer and employee is now dissolved (Hays and
Kearney 2001).
Overall,
overwhelmed
decreased

powerful
non-market

employee

employment.

and

unstable

institutional

commitment

However,

this

and

increased

market

forces

have

structures,

resulting

in

increased

flexibility

of

flexibility

for

employers

coincides with decreasing tenure and job instability for workers. The
use of these non-standard employment arrangements may have longterm consequences. Flexibility may be good business for the

Janet Chew

employer, but in many cases it may be devastating for the worker.

Employment instability is contributing to the growing inequality in
income, status, and economic security in Australia.
As workers face a pace of change unprecedented in history, and
as empowerment and the need for risk taking, coupled with longer
hours and less leisure time, have increased their risk of burnout
tenfold, employees values have shifted discernibly (Withers 2001).
High talent personnel see the greatest opportunities by moving from
one company to another. Increasingly, organisations will have to
compete for the best talent (Porter 2001). Consequently, this will have
a significant impact on the nature of recruitment and selection,
training

and

development,

performance

management

and

retrenchment programs.

The Influence of Human Resource Management on Retention

Organisations develop human resource policies that genuinely reflect
their beliefs and principles and the relationship between management
and employees, or they may merely devise policies that deal with
current

problems

or

requirements.

These

practices

include

recruitment and selection, training and development, performance

management, remuneration systems, occupational health and safety,
industrial relations, Human Resource Information System, impact of
recent legislation (EEO/AA/OHS/FOI etc., Delery and Doty 1996;
Jackson and Schuler 1995; Oakland and Oakland 2001).

Introduction

Several theoreticians have argued that the human resources of

the

company

are

potentially

the

only

source

of

sustainable

competitive edge for organisations (Becker and Gerhart 1996; Ferris,

Hochwarter, Buckley, Harrell-Cook and Fink 1999; Pfeffer 1994;
Wright and McMahan 1992). Pfeffer (1998) advocates that a human
resource system helps create a workforce whose contributions are
valuable, unique, and difficult for competitors to imitate. A plethora
of academic research conducted at the organisational level also
suggests

that

human

resource

practices

affect

organisational

outcomes by shaping employee behaviours and attitudes (Arthur

1994; Huselid 1995; Tsui, Pearce, Porter and Tripoli 1997).
Whitener

(2001)

indicates

that

employees

interpret

organisational actions such as human resource practices (Delery

1998; Settoon, Bennett and Linden 1996; Ostroff and Bowen 2000;
Wayne, Shaw and Linden 1997), and the trustworthiness of
management (Eisenberger, Huntington, Hutchison and Sowa 1986;
Settoon et al. 1996) as indicative of the personified organisation's
commitment to them. They reciprocate their perceptions accordingly
in their own commitment to the organisation. A well-established
stream of research rooted in social exchange theory has revealed that
employees' commitment to the organisation derives from their
perceptions of the employers' commitment to and support of them
(Eisenberger et al. 1986; Hutchison and Garstka, 1996; Settoon et al.
1996, Shore and Tetrick 1994; Shore and Wayne 1993; Wayne et al.
1997). In this regard, a useful framework in which to visualise

Janet Chew

commitment behaviour is to view them as components of fair

exchange between a company and its employees. This approach to
motivation postulates that employees and the organisations are
involved in an exchange relationship (Pinder 1984).
Employee attitudes and behaviours (including performance)
reflect their perceptions and expectations, reciprocating the treatment
that they receive from the organisation. In their multilevel model
linking human resource practices and employee reactions, Ostroff
and Bowen (2000) depicted relationships suggesting that human
resource

practices

are

significantly

associated

with

employee

perceptions and employee attitudes. Studies by Tsui, Pearce, Porter

and Tripoli (1997), found that employee attitudes (specifically
employee commitment) were associated with the interaction of
human resource practices and perceptions.
Numerous

studies

suggest

that

high-involvement

work

practices will enhance employee retention (Arthur 1994; Huselid

1995; Koch and McGrath 1996). Most efforts on retention and
commitment are considered from the employer's point of view. As a
result, new and refined programs are continuously introduced which
are expected to have a positive impact. Too often, these initiatives are
blanket programs offered as a cafeteria of options to all employees.
Flexible work schedules and childcare assistance was offered, but
only a small share of the workforce takes advantage of them (PerrySmith and Blum 2000). However, if the value proposition is viewed
from the individual's perspective, different factors assume different

Introduction

weights. Baby boomers are more interested in job security and

benefits; young employees are more interested in pay, advancement
opportunities and time off. Such differences may reflect stages in the
career cycle or deeper generation differences. Additionally, there are
often gender differences within demographic groups; e.g., young
women may want different things from what young men want (Beck
2001).
Over recent years, there has been a widespread assertion that
HRM has become more strategic in its focus and operation (Beer
1997; Hays and Kearney 2001). HRM is purportedly being viewed as
a strategic staff enterprise aligned with organisational values, mission
and vision. As a consequence, there is now much greater attention to
measuring and enhancing employee and organisational performance;
equal

employment

opportunity

and

affirmative

action

policies

designed and implemented by personnel offices have contributed

greatly to the diversity of the workforce; staffing techniques have
become much more sophisticated; employee benefit systems have
expanded; and job designs and processes have become more creative
(Hays and Kearney 2001;Oakland and Oakland 2001).
Although most current organisations opt for policy formulation
strategies that reflect their own cultures and priorities, the crucial
issue is whether the employees have been consulted, and whether the
resultant policy reflects a compromise between management and
employee interests, acceptable to both, or is it simply a management
or HR directive?

Janet Chew

As change has remained a constant in the practice of HRM,

many of the assumptions on which HRM operates have been severely
challenged in the last two decades due to a series of inexorable
reforms (Lesperance 2001). In contemplating the future prospects of
HRM, it is worthwhile to examine the developments and directions of
HR policies in terms of their relevance to the contemporary workforce
especially in the area of attraction and retention of employees.

Retention Management A Strategic Tool

Researchers on retention have defined retention management as a
strategic, coherent process that starts with an examination of the
reasons that employees join an organisation (Davies 2001; Fitz-enz
1990; Solomon 1999). Studies have indicated that it is driven by
several

key

factors,

which

should

be

managed

congruently:

organisational culture and structure, recruitment strategy, pay and

benefits

philosophy,

employee

support

programs,

and

career

development systems (Fitz-enz 1990). Careful career development and

planning, as well as the more typical rewards and incentives, can be
powerful retention tools. These should be effectively addressed as a
corporate-wide initiative. Studies of progressive HRM practices in
training, compensation and reward sharing have revealed that these
can lead to reduced turnover and absenteeism, better quality work,
and better financial performance (Arthur 1994; Delaney and Huselid
1996; Huselid 1995; Ichniowski, Shaw and Prennushi 1997; Snell

10

Introduction

and Youndt 1995; MacDuffie 1995; Meyer and Allan 1991; Solomon
1992; Snell and Dean 1992).
An employee's decision to resign from a company is rarely due
to a single event, such as being passed over for a promotion, a plum
assignment or for monetary reasons. One such event may however
serve as a catalyst, but most employees leave because of multiple
factors - the turnover drivers such as diminished job satisfaction, a
tense work environment and better advancement opportunities
elsewhere (Davies 2001; Oh 1996; Walker 2001). Isolating these
factors requires a disciplined research effort.
A 1999 Gallup Poll cited the lack of opportunities to learn and
grow

as

top

reason

for

employee

dissatisfaction.

Kimko

Incorporated, took this information to heart and implemented a

training program that gave employees a training path and career
direction. Turnover tumbled from 75 percent to 50 percent (Withers
2001).
As turnover is a symptom of a larger systemic problem such as
ineffective retention management, companies ought to understand
what causes people to commit themselves to being productive and
loyal. Then they must design jobs, systems and organisations that
support rather than inhibit it. Fostering commitment means an
understanding that people need to have a stake in their work, and
that employees respond when employers pay attention to their needs
and involve them (Benkhoff 1997; Dobbs 2001). Such were the
findings of the Hawthorne experiments, which were conducted at

11

Janet Chew

Western Electric sixty years ago (Parson 1992). The results of these
tests were responsible, in part, for the movement toward participative
management

in

the

late

1970s.

The

principles

of

employee

participation are currently reflected in many current productivity and

quality programs (Fitz-enz 1990).
Therefore, to achieve quality retention programs, organisations
ought to determine the retention factors relevant to each of their
employee groups and then focus strategies on these factors. For each
employee group, information can be gathered from current and
former employees on their perceptions of why people stay or leave.
The more focused the analysis, the more focused the prescriptive
actions may be (Cavouras 2000). Employee surveys are designed to
focus on commitment and retention factors. Exit interviews and
follow-up surveys with former employees are being adapted to yield
more accurate, useful information. Interviews, focus groups, and
surveys among current employees provide perceptions of the relevant
factors and their importance. Finally, it is advocated that there may
be a distinctive edge in simply doing all of the key things well. By
providing a reasonably high level of attention to the factors important
to employees, a strong organisational culture is built and maintained.
Universum, a Stockholm, Sweden-based competence relations
firm, surveyed 1,945 first and second-year MBA students in twentythree U.S. business schools and 5,105 business, engineering and
science students in sixty-five European universities and technology
schools separately. The study found that students were positioning

12

Introduction

themselves

as

picky

buyers

in

today's

tight

labour

market,

demanding everything from a challenging and lucrative career to a

balanced lifestyle. There are however some differences in what
American students and their European counterparts expect from a
first employer. U.S. respondents cited competitive compensation,
inspiring colleagues and a variety of assignments as the top
characteristics of their employer of choice. For the European
students, the most attractive characteristics are international career
opportunities and inspiring colleagues (Universum 1999).
Several studies also suggest that high-involvement work
practices will enhance employee retention (Arthur 1994; Huselid
1995; Koch and McGrath 1996). Various frameworks or models are
used by organisations to address retention and commitment and
some of the key factors are increasingly adopted and they include the
following (Beck 2001; Clarke 2001; Parker and Wright 2001; Stein
2000):

Compensation: Companies often provide pay packages superior to the

market for critical talent. These include special pay premiums, stock
options or bonuses. Base pay reflects fair pay; supplemental
programs reflect individual, team or organisational performance and
success (Parker and Wright 2001; Stein 2000; Williams 1999).

Challenging work: High talent individuals want work that is

interesting, challenging and that has an impact. They also expect

13

Janet Chew

work to be appropriately designed, with adequate resources available

and

with

effective

management.

Increasingly,

companies

are

redesigning work, relationships, workflows, and teams to create more

exciting and challenging work (Beck 2001; Clarke 2001; Guest 1999;
Messmer 2000; Stein 2000).

Work

relationships:

Employees

stay

when

they

have

strong

relationships with others with whom they work (Clarke 2001).

Companies encourage team building, project assignments involving
work with peers and opportunities for social interaction both on and
off

the

job

(Johns,Sanchez,Parmeswaran,Phelps,

Shoptaugh

&

Willaims 2001). One value of team-based organisations is the bond

that they establish among members. Effective relationships with
immediate managers are also important. Companies are also using
survey measures and management feedback to identify ways to
improve relationships and the context of work.

Recognition: Employees tend to stay when they feel that their

capabilities, efforts, and performance contributions are recognised
and appreciated by others. They want a sense of accomplishment.
Compensation provides recognition, but other forms of non-monetary
recognition are also important, for example from managers, team
members and peers, customers, and others. Particularly important
are opportunities to participate and to influence actions and
decisions (Boyd and Salamin 2001; Davies 2001).

14

Introduction

Work/life balance: For some employees, personal priorities or

circumstances make the difference between leaving and staying.
Individuals will stay with a company that clearly considers and cares
for their career priorities (life stage needs), health, location, family,
dual-career and other personal needs (Gonyea and Googins 1992;
Kamerman and Kahn 1987). For example, many companies are
providing flexible schedules and work arrangements and are
experimenting with other ways to help individuals manage their work
and personal life issues (Perry-Smith and Blum 2000; Solomon
1999).
Communication:

Effective

communications

strengthen

employee

identification with the company and build trust. Increasingly,

companies provide information on values, mission, strategies,
competitive performance, and changes that may affect employees
(Gopinath and Becker 2000; Levine 1995). Many companies are
working to provide information that employees want and need,
through the most credible sources (e.g., CEO for strategies, first-line
managers for work issues) on a timely and consistent basis.

Through such practices, companies are striving to improve

employee retention. Why then, do employees continue to leave? What
is missing from today's retention strategies?

15

Janet Chew

Despite the substantial literature on HRM best practices and

high performance practices, there is however, little consensus among
researchers with regard to precisely which HRM practices should be
included as the "ideal type" of HRM system that is universally
effective to combat attrition. Given these different approaches to
HRM, it is evident that a more consolidated field of investigation
would be beneficial to the development of knowledge in this area.
Essentially, it is the need to address this situation that has led to the
purpose of this study.

Purpose of the Study

The aim of this study is to investigate and determine the current
human resource practices on the retention of core employees in
Australian organisations. It will examine the relationship between HR
practices and retention and further identify the elements of HR
practices, which strongly influence the decision for core employees to
stay. Results from this study will assist in the development of an
effective

HRM

retention

program

for

organisations.

Employee

retention is a highly important strategic tool for corporations. It may

improve employers chances of selecting employees who will become
committed to their organisation and also improve their ability to
retain highly skilled and motivated employees.

16

Introduction

Significance of the Study

With the attention paid to downsizing in recent years, few companies
have invested time and money in retaining employees. The focus has
been on separating employees from the company, not reinforcing the
bonds. The high attrition rate of core employees is costly to
corporations. Loss of key talent results in the stripping of valuable
human capital, critical skills and institutional memory (Entrekin
2001). Organisations not only suffer from lost productivity but also
lose the knowledge that these critical employees possess that can be
beneficial to the company. High-performing employees know the
industry, competitive strengths and weaknesses, products, customers
and processes. The information in their heads is a significant part of
corporate equity (Gutherie 2001; Hom and Griffeth 1995; Huselid
1995; Oh 1997). There has also been considerable interest in the
management

literature

concerning

the

development

of

core

competences in order to enhance corporate competitiveness and

performance (Prahalad and Hamel 1990). Retaining these valued core
employees is therefore a strategic issue and a competitive business
advantage.
Management scholars argue that how employees are managed
is becoming a more important source of competitive advantage
because

traditional

sources

(product

and

process

technology,

protected or regulated markets, access to financial resources and

17

Janet Chew

economies of scale) are less powerful than they once were (Lawler
1996; Pfeffer 1994).
Reviewing the current HRM literature, there is to date no
empirical study of large Australian organisations with regard to their
HR practices on retention. This raises unexplored issues such as: are
these organisational HRM systems best practices fit all or
differential HR practices for different types of employees (core,
contractors, alliance, and acquisitions)? How do these practitioners
perceive

their

effectiveness?

These

questions

call

for

theory

refinement and the development of a more comprehensive theoretical

model of the HRM-retention relationship especially in the Australian
business environment. These unexplored issues will be the focus of
this study. Moreover, this research will advance the HRM literature
on the emerging trends of the twenty-first century. Essentially, this
study will seek to illuminate the current employment relationships in
Australian organisations and to provide relevant empirical evidence to
support the theoretical model of HR Architecture, developed by
American researchers, Lepak and Snell (1999), or pioneer an
Australian HR architecture model.
In order to gain better insights into the process and practices
that companies utilise to retain their employees, key research
questions were formulated to guide this research.

18

Introduction

Research Focus
What are the most influential HRM factors in encouraging core
employees to remain with their organisation?

Research Questions
Phase 1:Delphi Study
1. Is there a relationship between retention and HR practices?
2. Which HR factors most influence the decision of employees to
stay?
3. What is a core employee?
4. Do core employees have different needs to other types of
employees?
5. What are the factors affecting an Australian Human Resource
Architecture Model?

These results (Phase 1) will form the basis for an interview schedule for
HR managers and a questionnaire for core employees.

Phase 2: In Depth Interview with HR Managers

6. Is the importance placed on HRM factors linked to retention?
7. How are these influential HR factors managed in organisations?
8. How do these differ from non-core employees?
These results (Phase 2) will assist in the development of a
questionnaire to conduct a survey on core employees.

19

Janet Chew

Phase 3: Survey of Core Employees

9. What HRM factors influence core employees decisions to stay?
10. Do these correspond to those perceived by employers as being
influential?
11. How could core employees be encouraged to remain?

Conclusion
This is a three phased study comprising (1) a three round Delphi
survey of expert opinions, (2) an in-depth interview of HR Managers
and (3) a quantitative survey of employees (Figure 1). This empirical
research examined the effect of HR practices on the retention of core
employees.
This chapter described the importance of retention in the
context of HRM. It explained the objectives and significance of the
research and identified the research questions.

Thesis Overview
This thesis is comprised of seven chapters. Chapter Two
provides an overview of the literature relating to retention and the HR
factors that might impact on the retention of employees. It illustrates
a range of variables that should be considered when evaluating the
influence of HR practices on retention. It also offers the conceptual
schema and discusses the Human Resource Architecture models
adopted in this study. Chapter Three provides the research methods
employed in Phase 1 (Delphi Study), Phase 2 (Interview) and Phase 3

20

Introduction

PHASE 1
Delphi Study
Three Rounds

Qualitative Analysis

Literature
Review

Identified
Human Resource Factors
Affecting Retention

PHASE 2
Interview
Human
Resource
Managers

Qualitative Analysis
Interview
Schedule

PHASE 3

Endorsed
HR Factors
Affecting
Retention

Questionnaire
for
Quantitative
Survey

Quantitative Analysis
Employee Survey

RESULTS OF THE
STUDY

Figure 1.1. A Three-Phased Study to determine key HR Factors that Influence

Retention of Core Employees

21

Janet Chew

(Employee Survey) of the study and describes the constructs and

their operationalisation. Chapter Four reports the qualitative results
of the findings of Phase One. In Chapter Five, the qualitative results
and findings of Phase Two are explained and discussed. In Chapter
Six the quantitative results and findings of Phase Three are reported
and discussed. Finally, Chapter Seven discusses the overall findings
of the three phase study, provides the implications, identifies the
recommendations, reports the limitations of the study, indicates
areas of further research and offers the final conclusion.

22

CHAPTER TWO

THE LITERATURE REVIEW

Examination of the Relationship between
Human Resource Management Practices
and Retention

Introduction
Over the past decade, the way in which people are managed and
developed at work has come to be recognised as one of the primary
factors in achieving improvement in organisational performance (BQF
1998; Marchington and Wilkinson 1997; Phillips 1997). This is
reflected by popular idioms such as people are our most important
asset (Accenture 2001).
From the review of the extant literature, it is acknowledged that
successful organisations share a fundamental philosophy of valuing
and investing in their employees (Anand 1997; Maguire 1995). In fact
several

research

studies

have

described

human

resource

management as a means of achieving competitive advantage (Delery

1998; Huselid 1995; Pfeffer 1994; Walker 2001). Consistent with this
perspective, is an equally important issue for organisations, the
retention of their critical (core) employees.
With the average attrition rate in the Australian workplace
currently approaching 40 percent and more than 50 percent of

Janet Chew

individuals planning to leave the workplace within two years,

retention and re-recruiting is essential (Accenture 2001). Most
organisations today continue to struggle with retention because they
are relying on salary increases and bonuses to prevent turnover
(Accenture 2001; Gumbus and Johnson 2003). Essentially, more
organisations are now realising that retention is a strategic issue and
represents a competitive advantage (Walker 2001; Youndt, Snell,
Dean and Lepak 1996).
This chapter describes the relationship between human
resource practices and the retention of core employees in the context
of the Human Resource Architecture. It examines the causes of poor
employee commitment and specifically explores relevant literature to
identify elements of HR practices that influence employee retention.
The related literature is presented in this chapter to provide an
overview of the areas covered in the study.

Human Resource Architecture Models

A model of human resource architecture is a framework by which to
distinguish employees in order to design human resource support
processes. Between the 1980s and 1990s, massive downsizing was
undertaken by companies to improve productivity and reduce costs.
However, the endless round of restructuring and re-engineering by
corporations had transformed the new employment relationship
(Wright 1995). The evolving model for this employment relationship
took several forms.

24

Chapter 2

The Atkinsons labour flexibility model (1985), suggests that

organisations can design their workforce proactively to meet their
business needs using flexible staff arrangements. Atkinson identified
three

types

of

flexibility

employment

modes:

(1)

numerical

flexibility (2) functional flexibility and (3) financial flexibility. This

model recognises core and peripheral employees. Peripheral
employees consist of temporary, part time or contractual workers.
Traditionally these workers have been referred to as atypical workers
in Europe, while the term contingent labour is often used in the
American literature. However, in Australia, these employees would be
referred as non permanent or casual staff. This group of the labour
force is utilised when organisations adopt numerical flexibility which
involves the expansion and contraction of their employees based on
market fluctuations and competitive pressures (Lesperance 2001).
Core

or

fulltime

employees

provide

organisations

with

functional flexibility and their skills can be moved within the

organisation due to changes in product market and technology. This
group of the labour force is multi-skilled and cross trained to
facilitate a quick and smooth deployment of employees between
activities and tasks. Finally, financial flexibility is defined as a
situation where the amount an employee is paid depends on the job
done, hours worked, or the amount the organisation can afford
(Atkinson 1984; Nollen 1996). It may involve a shift to remuneration
systems such as performance related pay (PRP) to facilitate either

25

Janet Chew

numerical or functional flexibility. Profit sharing and employee share

ownership plans (ESOPS) are other examples of financial flexibility.
Similarly, the Shamrock Model envisioned by Handy (1995)
provides an organisation with the flexibility it needs to meet its
operational, production and environmental demands. This model
consists of three employment components, each part representing an
essential human resource base for the organisation. The first
employment sector contains the organisation's core professional
permanent employees. The second sector consists of the flexible
workforce, or peripheral employees, and this included temporary
contract holders and part time workers. The final component
contains individuals or organisations that provide a complete nonessential work that could be done better and more cost effectively
than using core and peripheral employees.
In 1999, American researchers, Lepak and Snell developed the
foundation of a human resource architecture that aligns different
employment modes and employment relationships. This theoretical
model segmented employees into four quadrants according to the
value and uniqueness of their skills in relation to the core processes
of the organisation. The four employment modes are (1) internal
development (core), (2) acquisition, (3) contracting and (4) alliance.
The characteristics of these four types of employees are outlined in
Table 2.1.

26

Chapter 2

Quadrant 1: Internal Development

Quadrant 3: Contracting

High value, high uniqueness employees

are core employees and a source of
competitive value. Their value and
uniqueness may be based on tacit
knowledge that would be valuable to a
competitor.

Low value, low uniqueness employees

are those with low-level skills that are
widely available in the market. In this
case labour is treated as a commodity
to be acquired when needed. There is
no long term relationship, rather a
short-term economic exchange.

These employees would be developed

internally and the organisation would
invest
in
their
training
and
development.

No
investment
development.

in

training

and

Quadrant 2: Acquisitions

Quadrant 4: Alliance

High value, low uniqueness employees

are those whose skills are valued but
are widely available in the market, for
example, accountants. These employees
are likely to be career-focused and have
a conditional loyalty to a specific
organisation.

Low value, high uniqueness employees

are those who are not essential to
creating value and are therefore not
core but who have skills that the
organisation needs from time to time,
such as lawyers.

HR strategy is to buy from the market,

emphasising recruitment and immediate
deployment of skills. Little investment in
training and development.

This is an alliance relationship for

example, a law firm who looks after a
companys legal affairs. There would be
little or no training and development.

Table 2.1: Four Different Employment Modes of HR Architecture. Adapted from

Entrekin and Court 2001, The human resource architecture: toward a theory of
human capital allocation and development, Academy of Management Review, vol.
24(1), Jan 1999, p. 31 (1), Lepak and Snell, 1999.

Quadrant 1 represents core employees that a company will invest in,

in terms of training and development, remuneration and benefits and
other self enhancement HR programs that will protect their
investment (Entrekin and Court 2001; Lepak and Snell 1999).

Quadrant 2 represents to a considerable extent, autonomous

professionals such as accountants, lawyers, academics, software
27

Janet Chew

engineers. These people have valuable skills that are not unique to a
specific organisation and are fairly widely distributed in the labour
market. These employees have a conditional loyalty at best and are
committed to their profession (Entrekin and Court 2001; Lepak and
Snell 1999).

Quadrant 3 represents employees whose skills are low in value and

uniqueness and essentially represent labour as a commodity which is
widely available and can be purchased and disposed of as required.
Staffs are usually contractual and out-sourced. Temporary relief staff
in clerical and secretarial areas, call centre staff, cleaning and
maintenance are jobs that fall into this category (Entrekin and Court
2001; Lepak and Snell 1999).

Quadrant 4 represents low value high uniqueness staff that the

company need not directly employ. They are low in value and fail to
add value to the core processes or contribute to a competitive
advantage. The skills are unique in that a company does not need
them often enough to justify their full time employment. An example
could be an alliance between a company and a university to provide
certain types of research inputs on a continuing basis where the
synergistic value of the relationship exceeds the value each
institution can generate on its own. (Entrekin and Court 2001;
Lepak and Snell 1999).

28

Chapter 2

The human resource architecture discloses two view points: the

first view is that each employment mode carries with it an inherently
different form of employment relationship. Rousseau (1995) describes
employment

relationships

as

the

"psychological

contract

[of]

individual beliefs, shaped by the organisation, regarding terms of an

exchange agreement between individuals and their organisations"
(see p.9). As employment modes differ, so too does the nature of the
psychological contracts.
Researchers have categorised psychological contracts into two
forms: transactional and relational contracts (Rousseau and McLean
Parks 1993; Robinson, Kraatz and Rousseau 1994; Shore and Tetrick
1994). Transactional contracts relate to specific monetary exchanges
over a limited period of time and they included rapid advancement,
high pay, and merit pay (Robinson, Kraatz and Rousseau 1994).
Relational obligations, in contrast, included long-term job security,
career development, training and development opportunities, and
support with personal problems (Robinson, Kraatz and Rousseau
1994).
Rousseau (1990) proposes that transactional and relational
components denote opposite ends of a continuum that correspond to
economic and social exchange. However, the factor analytic evidence
suggests that the contract terms cannot be consistently categorised
as either transactional or relational (Rousseau and Tijoriwala 1998)
and that employment relationships may contain elements of both
(Arnold 1996).

29

Janet Chew

The second view of the human resource architecture considers

the patterns of HR practices or HR configurations to help define the
employment mode, maintain the employment relationship and
ultimately support the strategic characteristics of human capital.

Applying Holistic or Differential HR Practices?

The HR architecture indicated that there may be different HR
configurations within a single organisations architecture. The HR
architecture models (Atkinson 1985; Handy 1995; Lepak and Snell
1999) clearly advocated a differential investment strategy for different
categories of employees. Essentially, these different human resource
models indicated that certain forms of human capital are more
valuable to organisations and more available in the open labour
market than others (Wright and Snell 1998). For example, firms will
logically realise greater benefits by simply out-sourcing generic work
than by relying upon internal development. As a consequence,
organisations engaging in multiple sourcing modes are likely to
require distinct configurations of human resource practices that
facilitate the utilisation and deployment of human capital for each
separate employment mode.
With the emergence of this new organisational structure of
employment, it raises the questions of Australian organisations HRM
systems? Do they apply best practices fit all or differential HR
practices for different types of employees (e.g., core, contractors,
alliance and acquisitions)? How do these practitioners perceive their

30

Chapter 2

effectiveness? It may be the case that some firms manage all

employees the same way, regardless of their value and uniqueness.
We anticipate that most firms make significant distinctions in the
methods they use for different skill sets and that these are important
determinants of firm performance (Delery and Doty 1996; Jackson
and Schuler 1995). Thus, just as there may be no universally best set
of HR practices for every firm, it is therefore argued that there may
actually be no one best set of practices for every employee within a
firm.
Since

the

1980s,

employers

have

made

employment

relationships more contingent and flexible. Continued cost pressures

and the need for fast-market responses have forced employers to
build work forces that are extremely flexible and cost-effective. A key
result for workers during this structural change was decreasing job
tenure and employment uncertainty (Abraham 1998; Gordon 1996).
Increasingly, employees are told that it is unrealistic to expect a
guarantee of long-term job security (Allan and Sienko 1997; Cappelli
1995; Fierman 1994; Kitay and Lansbury 1997). Rather, contingent
and market-mediated employment such as part-time, temporary, and
subcontracting-out

have

replaced

the

traditional,

long-term

relationships (Cappelli 1999a).

Traditionally, employers viewed employees as a permanent part
of the organisational architecture and have assumed that they must
add personnel in direct proportion to business growth. The economic
instability of the last ten years has forced employers to reassess this

31

Janet Chew

assumption and begin to view employees as a variable, rather than a

fixed, business cost (Allan and Sienko 1997; Caudron 1994; GomezMeija, Balkin and Cardy 1995). Studies by several researchers ( Allan
and Sienko 1997; Gramm and Schnell 2001; Hall 2000; Hipple and
Stewart 1996; Wiens-Tuers 2001) have revealed that the traditional
organisational structure, with its dependence on a large, permanent
employee base, has now been replaced with a more adaptable
structure consisting of three groups.

1.

Core employees
Critical job functions will be retained by a small, relatively
permanent "core" of employees with broad skills allowing them
to tackle a variety of jobs.

2.

Supplemental employees or contingents

A larger group will consist of just-in-time employees, who can
be added or eliminated quickly as needed. These workers will
be retained through contract or temporary services to meet
shifting demand.

3.

Out-sourced work function

Organisations will use out-sourcing more and use it more
strategically. Companies currently use out-sourcing as a
hands-off process for farming out whole product and service

32

Chapter 2

functions; in the future, companies will view out-sourcing

agencies as an integrated part of the organisational team.

The changes in the organisational structure and the decline in

job security have changed the psychological contract between
employer and employee (Holm and Hovland 1999; Schmidt 1999).
The essence of attachment between employer and employee has
changed. Nowadays employers emphasise "employability" rather than
long-term loyalty in a specific job (Cappelli 1999; Ko 2003). This new
form of psychological contract is more evident because businesses
are increasingly using non-core and part-time workers to gain
flexibility at lower cost. The increased use of non-core employees and
lack of commitment to a firm is cited as a reason for decreased levels
of employee loyalty and lower levels of employee productivity (even
though

costs

may

decrease

in

the

short

run)

(Allan

2002;

Sengenberger 1992). Other concerns related to the use of non-core

labour and decreased employee attachment include the social costs
due to lack of job security and pension, health, and other non-wage
benefits (Belous 1989; Gordon 1996; Ferber and Waldfogel 1998). The
decline in job security is perhaps the most radical change
accompanying

the

restructuring

of

employment

relationships

(Cappelli 1999b; Jacoby 1999).

McLean, Kidder, and Gallagher (1998) provide a theoretical
framework for understanding how perceptions of the psychological
contract may differ according to employment relationships. They

33

Janet Chew

suggest that part-time employees who have a more tenuous

relationship with the organisation will focus less on relational
elements than their permanent counterparts. These researchers also
posit that part-time employees plan on working for a given
organisation for a shorter, more finite time frame, whereas, full-time
core employees expect to have a longer, more indefinite relationship
with the organisation. The formalisation of employment practices is
another way employers guarantee core employees a secure job future
(Osterman 1999). The extent of formalisation can thus affect an
employer's attitude toward employees: the higher the level of
formalisation, the stronger the employer's intention to protect core
employees. Therefore, the attainment of employees' commitment and
cooperation can be linked to the implementation of internalisation
practices which usually represent the employers' intention to
guarantee job security and to train core employees (Abraham 1990;
Kochan and Osterman 1994; Morishima 1998; Osterman 1999).

Core employees
American

researchers,

Lepak

and

Snell

(1999)

describe

core

employees of todays organisations as high value, high uniqueness

employees whose skills and knowledge are a source of competitive
value to the organisation. Their value and uniqueness may be based
on tacit knowledge that would be valuable to the competitor and
these skills and knowledge are related to core processes developed
internally and built up overtime (Entrekin and Court 2001; Lepak

34

Chapter 2

and Snell 1999). These researchers advocate the theoretical model of

HR architecture that segmented employees into four quadrants
according to the value and uniqueness of their skills in relation to the
core processes of the organisation.
Generally, core employees are regarded as permanent workers
(Segal and Sullivan 1997). As the primary labour market, core
employees become the glue that holds an organisation together, and
their knowledge, experience and commitment become critical to its
success. However, a review of prior literature revealed that a number
of researchers (Allan and Sienko 1997; Gramm and Schnell 2001;
Segal and Sullivan 1997) have defined core employees abstractedly
This paucity emphasises the need to determine the key attributes and
characteristics of core employees, especially in the Australian
context. So what are organisations looking for when they select their
core employees? This study will identify these characteristics and
further examine the needs of core employees.

Needs of core employees

Managing core employees effectively means identifying their needs.
Employees bring their needs, aspirations and hopes to their jobs, and
expect to find a work environment where they can utilise their
abilities and satisfy many of their basic needs. When the organisation
provides such a vehicle, the likelihood of increasing commitment
seems to be enhanced. When the organisation is not dependable,
however, or where it fails to provide employees with challenging and

35

Janet Chew

meaningful tasks, commitment levels tend to diminish. Individuals

become committed to employers that take concrete steps to help
them to develop their abilities and to achieve their potential. For
example, young graduates or new recruits often start their jobs
expecting challenging assignments to help them test and prove their
abilities

(Dessller

1999).

Employee

attitudes

and

behaviours

(including performance) reflect their perceptions and expectations,

reciprocating the treatment they receive from the organisation (Tsui,
Pearce, Porter and Tripoli 1997).
Today, employee commitment has become a casualty of the
transition

from an

industrial age to an

information society.

Employees used to exchange their loyalty and hard work for the
promise of job security. Instead of job security, employees now seek
job resiliency; developing the skills and flexibility needed to quickly
respond

to

shifting

employer

requirements

(Barner

1994).

Commitment to ones professional growth has replaced organisational

commitment (Bozeman and Perrewe 2001; Powers 2000). Today,
employees seem to take responsibility for their own professional
growth to increase their career marketability. Kraut and Korman
(1999) advocated the self-enhancement model of HR practice, which
relates to an employees need for personal achievement and
development.
Replacing the old employment deal, the new contract indicates
that the employer and the employee meet each other's needs for the
moment but are not making long-term commitments (Finegan 2000).

36

Chapter 2

The absence of any commitment can be counter productive to both

parties, and it is the responsibility of human resources managers to
find ways to engage workers for the duration of their employment.
Employee commitment to the organisation remains a critical issue for
many organisations, the primary factor in attracting and retaining
their core employees so necessary for corporate success (Kaman,
McCarthy,

Gulbro

and

Tucker

2001;

Powers

2000).

As

consequence, there is a need to examine the human resource

systems that support this primary labour force. It may be that
organisations may have to redesign their HR systems to meet the
changing needs of core employees.

Human Resource Management Practices

Basically, core employees perform the essential tasks within the
organisation, and organisational human resource systems are
designed to support and manage this human capital (Gramm and
Schnell 2001).Current HRM thinking emphasises the benefits of
meeting employee needs and enabling workers to have control over
their work lives. Many firms recognise the necessity to provide the
information, flexibility and voice that employees require to contribute
to organisational success (Becker and Huselid 1998; Capelli 2000).
Academic research conducted at the organisational level
supports

that

human

resource

practices

affect

organisational

outcomes by shaping employee behaviours and attitudes (Arthur

1994; Huselid 1995). Ostroff and Bowen (2000) found that human

37

Janet Chew

resource practices shape work force attitudes by moulding employees'

perceptions of what the organisation is like and influencing their
expectations of the nature and depth of their relationship with the
organisation. There is also a general notion that human resource
practices interact with perceptions of organisational support to affect
employee commitment.
More specifically, systems of "high commitment" human
resource practices increase organisational effectiveness by creating
conditions

where

employees

become

highly

involved

in

the

organisation and work hard to accomplish the organisation's goals

(Arthur 1994; Bishop 1998). Many managers today recognise the
benefits

of

"high

commitment"

human

resource

management

practices that respond to employees' needs, encourage employees to

take responsibility for their work lives, and motivate employees to
behave in ways that benefit the organisation (Baron and Kreps 1999;
Becker and Gerhart 1996). Information sharing, open channels of
communication, extensive training, and incentive compensation are
some of the practices consistently found in this "high commitment"
category.
Baron and Kreps (1999) describe high commitment HRM as "an
ensemble of HR practices that aim at getting more from workers by
giving more to them" (p. 189). "High commitment" practices are those
that make it easier for employees to take responsibility for their own
work lives as they contribute to organisational goals. Employees are
more pivotal in a high-involvement organisation because such a firm

38

Chapter 2

is employee-centered by design; information and decision-making

power are dispersed throughout the organisation, with employees at
all levels taking on greater responsibility for its operation and
success. To facilitate this approach, high-involvement organisations
use human resource practices that develop and support a workforce
that is self-programming and self-managing (Lawler 1992). A number
of texts has appeared in recent years promoting the advantages of
using

high-involvement

or

high-commitment

human

resource

practices, a system of human resources practices thought to enhance

employees' levels of skill, motivation, information, and empowerment
(Kochan and Osterman 1994; Lawler 1992; Levine 1995; Pfeffer
1998).
The
represents

extensive
a

use

significant

microeconomics

suggests

of

high-involvement

investment
that

in

human

investments

in

work

practices

capital.
human

Basic
capital

(employees) are justified when such investments are more than offset
by future returns in the form of increased productivity. Thus, firms
will make greater use of such practices when employees are viewed as
particularly vital to firm success (MacDuffie 1995).
With respect to retaining these critical human assets, greater
use of high-involvement work practices is likely to have two broad
implications. First, previous work (Arthur 1994; Becker and Gerhart
1996; Huselid 1995; Shaw, Delery, Jenkins and Gupta 1998)
indicated

that

high-involvement

work

practices

will

enhance

employee retention. At the same time, there is also the argument that

39

Janet Chew

the greater use of high-involvement work practices will increase the

cost of employee departures. This is consistent with the resourcebased view of the firm. From this perspective, firms can achieve
sustainable competitive advantage by creating value in a rare and
inimitable manner (Barney 1991). However, because the use of these
practices increases the uniqueness and value of employees, it will
also increase the costs associated with the loss of these employees.
Summaries of HRM research on "best practices" (Becker and
Gerhart 1996; Pfeffer 1998), which are similar to "high commitment
practices," indicate that in large firms such practices have a
measurable, positive impact on firm performance. Huselid (1995)
contends that there are certain "best" HRM practices that will
contribute to increased financial performance, regardless of the
strategic goals of the firm. Whereas other scholars have concurred
with this assumption (e.g. Osterman 1994; Pfeffer 1994), there has
been little work that provides a definitive prescription as to which
HRM practices should be included in a best practices system.
However, there are some human resource practices that are
more likely than others to have significant relationships (Delery
1998). They can either provide direct and substantial harm or benefit
to employees (Mayer and Davis 1999). Motivation-oriented human
resource activities are more likely to be associated with perceived
organisational support and commitment than skill-oriented activities.
In a study of over 900 organisations in the United States,
Huselid (1995) suggested that human resource practice be grouped

40

Chapter 2

into two categories: those practices that improve employee skills and
those that enhance employee motivation. This study found that skillenhancing human resource activities included selection and training
activities

and

were

associated

with

turnover

and

financial

performance, and that motivation-enhancing activities included

performance

appraisal

and

compensation

activities

and

were

associated with measures of productivity. The common theme is

utilising a system of management practices giving employees skills,
information, motivation and latitude, resulting in a workforce that is
a source of competitive advantage.
Most strategic HRM researchers have tended to take a holistic
view of employment and human capital, focusing on the extent to
which a set of practices is used across all employees of a firm as well
as the consistency of these practices across all employees (eg. Kochan
and Osterman 1994; Pfeffer 1994) They suggest that there is an
identifiable set of best practices for managing employees that has
universal, additive, positive effects on organisational performance
(universalistic approach).
The contingency approach differs from the universalistic
perspective in that the studies have attempted to link HRM systems
and the complementarity of variations of HRM practices to specific
organisational strategies (e.g., Arthur 1994; Youndt, Snell, Dean and
Lepak 1996).
Similar to the contingency approach, the configurational
approach argues that fit of HRM practices with organisational

41

Janet Chew

strategy is a vital factor in the HRM-firm performance relationship

(Becker and Gerhart 1996). However, the configurational approach
takes this argument a step further in asserting that there are specific
"ideal types" of HRM systems that provide both horizontal and
vertical fit of HRM practices to organisational structure and strategic
goals. Delery and Doty (1996) identified seven practices consistently
considered to be "strategic" in nature. Practices identified were
internal career opportunities, formal training systems, appraisal
measures, profit sharing, employment security, voice mechanisms
and job definition. Pfeffer (1994), however, advocated the use of
sixteen management practices to achieve higher productivity and
profits.
The practices that represent a high commitment strategy
include sets of organisation-wide human resource policies and
procedures that affect employee commitment and motivation. Arthur
(1994) found very strong correlations between employee retention and
productivity in high-commitment HR systems. The identified HR
practices

included

selective

staffing,

developmental

appraisal,

competitive and equitable compensation, and comprehensive training

and development activities (Ichniowski, Shaw and Prennushi 1997;
MacDuffie 1995; Snell and Dean 1992; Youndt, Snell, Dean and
Lepak 1996). These human resource practices can be classified as
"control" or "commitment" practices (Arthur 1994; Walton 1985;
Wood and de Menezes 1998). Control approaches aim to increase
efficiency and reduce direct labour costs and rely on strict work rules

42

Chapter 2

and procedures and base rewards on outputs (Arthur 1994). Rules,

sanctions, rewards and monitoring regulate employee behaviour
(Wood and de Menezes 1998).
The preceding arguments of set of practices also support the concept
of "bundles" of HR practices. A bundle of interrelated, overlapping HR
practices provides several ways for workers to acquire skills (for
example, off-the-job and on-the-job training, job rotation, problemsolving groups) and multiple incentives to boost motivation (for
example, extrinsic rewards such as performance-based pay and
intrinsic rewards from participating in decision-making and good job
design) (Lawson & Hepp 2001). Therefore, innovative human resource
practices affect performance not individually but as interrelated
elements in an internally consistent HR "bundle" or system
(MacDuffie 1995). There is now ample empirical support for the
bundling or systems view (MacDuffie 1995; Pfeffer 1998; Wright
1998).

Human Resource Management Factors influencing retention

There is growing evidence that human resource management can
play an important role in retaining a high-quality workforce. Studies
of progressive HRM practices in training, compensation and reward
sharing have revealed that these can lead to reduced turnover and
absenteeism, better quality work, and better financial performance
(Arthur 1994; Delaney and Huselid 1996; Ichniowski, Shaw and

43

Janet Chew

Prennushi 1997; Snell and Youndt 1995; MacDuffie 1995; Meyer and
Allen 1991; Solomon 1992; Snell and Dean 1992). Furthermore, an
extensive study (Accenture 2001) on high performance issues
identified the retention strategies of organisations primarily from US,
Europe, Asia and Australia. These strategies included the following:

offering comprehensive training and developmentto all staff,

be it permanent, part-time or contract,

allowing staff to work on project-based assignments,

broadening their skills whist keeping them challenged and
interested in their work,

empowering and entrusting staff with responsibility,

ensuring that a balance exists between work and lifestyle, and

that the culture is such that it supports this philosophy,

providing flexible work arrangements,

connecting staff by means of mentors or coaches,

ensuring staff know where they stand with regular performance

appraisals, skills development programs and clear career paths

embracing emerging technologies,

ensuring an effective management style, ensuring good

relationships are formed and nurtured with "the boss"

aligning people strategies with business strategies

providing employee benefits such a social clubs, financial

services,

44

Chapter 2

providing free career advice, life insurance, fitness and health

options

rewarding staff well

offering competitive salaries

According to Fitz-enz (1990), retention management of employees is

influenced by several key factors, which should be managed
congruently:

organisational

culture

and

structure,

recruitment

strategy, pay and benefits philosophy, employee support programs,

and a training and career development system.
Consequently, organisations utilise a wide range of these HRM
factors driving retention and commitment (Beck 2001; Clarke 2001;
Parker and Wright 2001; Stein 2000). For the purpose of this study,
these factors are reviewed and categorised into HR factors (person
organisation fit, remuneration, training and career development,
challenging opportunities) and organisational factors (leadership
behaviour, teamwork relationship, company culture and policies and
satisfactory work environment).

Human Resource Factors influencing retention

Person Organisation Fit (Selection)
The concept of person-job (P-J) fit emphasises matching people and
jobs in terms of qualifications based on knowledge, skill, or ability,
and overlooking other personal characteristics of applicants that
might be more suitable for the assessment of "fit." (Edwards 1991;

45

Janet Chew

Hall 1931; Lofquist and Dawis 1969). However, as the complexity of

work increases, organisations now use more selection methods that
capture the applicant's capability to do the work. Research on
person-job fit has found that workers gravitate to jobs with
complexity levels commensurate with their ability (Wilk, Desmarais,
and Sackett 1995; Wilk and Sackett 1996). However, selection should
also improve fit between the applicant and other aspects of the work
such as e.g. personality fit and organisation fit (Smith 1994).
Person-organisation fit is considered in the context of personnel
selection and can be based on the congruity between personal and
organisation beliefs (Netemeyer, Boles, Mckee and McMurian 1997;
O'Reilly, Chatman and Caldwell 1991) or individual and company
goals (Kristof 1996). The concept of organisational fit (Brown 1969;
Kidron 1978; Steers 1977) identifies convergent goals and values
between the individual and the organisation as an important element
to affective commitment. Barnard (1938) defined organisation fit as an
individual's willingness to cooperate in an organisation as cohesion
and proposed that its immediate cause is the disposition necessary
to sticking together (p, 84). Selection should therefore consider
improving fit between an applicant's values and the organisation
culture (Cable and Judge 1997).
Lauver and Kristof-Brown (2000) found that both person-job fit
and person-organisation fit predicted job satisfaction; however,
person-organisation fit was a better predictor of intention to quit.
Thus, people who are not well suited for the job and/or organisation

46

Chapter 2

are more likely to leave than those who have a good person-job or
person-organisation fit. The organisation should not only match the
job requirements with the person's knowledge, skills and abilities,
but should also carefully match the person's personality and values
with the organisations values and culture. Lee, Ashwood, Walsh and
Mowday (1992) espoused the theory that states an employee's
satisfaction with a job, as well as propensity to leave that job,
depends on the degree to which the individual's personality matches
his or her occupational environment.
Many person organisation fit studies emphasised the match
between people's values and the values of the organisation, because
values are conceived of as fundamental and relatively enduring
(Kristof 1996; Van Vianen 2000). In this study, value congruence and
person-culture fit are treated as equivalent terms.

Remuneration, reward and recognition of employee value

Compensation "is the most critical issue when it comes to attracting
and keeping talent" (Willis 2000, p. 20). A fair wage is the cornerstone
of the contractual and implied agreements between employees and
employers, the underlying assumption being that money can
influence behaviour (Parker and Wright 2001). Companies often
provide pay packages superior to the market for critical talent. These
include special pay premiums, stock options, or bonuses. Base pay
reflects fair pay; supplemental programs reflect individual, team or
organisational performance and success.

47

Janet Chew

Bassi and Van Buren (1999) found that "leading edge" firms,
defined as firms that use high performance work practices such as
total

quality

management

and

training,

provide

innovative

compensation such as profit sharing and group-based incentive pay.

Organisations in most industries are implementing innovative
compensation approaches to differentiate themselves (Parker and
Wright 2001). Innovative practices reflect the individual player
contract model, focusing on "what it will take" to attract and retain
each individual, regardless of the pay of others (Boyd and Salamin
2001). This "let's make a deal" approach is a radical departure from
traditional pay equity approaches, but seems to work in a highly
competitive, individualised talent market. Others act more broadly,
ensuring that all "players" are paid near the top of the market,
whether through base salary or bonuses (Stein 2000; Williams 1999).
This raises overall compensation costs but may reduce the risk, and
therefore the cost, of attrition.
Wages influence the recruitment and retention of workers
(Highhouse, Stierwalk, Bachiochi, Elder and Fisher 1999; Parker and
Wright 2001; Rynes and Barber 1990; Williams and Dreher 1992)
and therefore play a role in the staffing process. However, these
studies recognise that pay, by itself, will not be enough to retain
people. Low pay will often drive employees out the door, but high pay
will not necessarily keep them. Ultimately, they stay because they
like their co-workers and are engaged and challenged by work that
makes them better at what they do.

48

Chapter 2

Pay continues to be important in determining motivation to

perform (McCallum 1998). Past motivational theories such as
expectancy

and

equity

theories

have

predicted

variations

in

motivation as a result of varying valences of outcomes as pay (Das

2002). However, in practice, pay is treated as just one of the
outcomes and often measured with little precision (Mitchell and
Mickel 1999). Although an association exists between compensation
satisfaction and commitment and is one of the drivers of organisation
commitment, nevertheless, it has to be considered as one of the
pieces in a complex picture (Boyd and Salamin 2001; Parker and
Wright 2001). Just as important is the organisations need to
communicate its total compensation package to its employees. It
must emphasise not only the salary, bonuses and benefits, but other
highly valued aspects of employment such as supporting life style
balance initiatives and flexible work arrangements. These are nonmonetary benefits known as intrinsic rewards and they have a
significant role in compensation satisfaction (Mitchell and Mickel
1999; Parker and Wright 2001).
According to a study by Mercer (2003), employees will stay if
they are rewarded. Employees are usually rewarded based on quality
based performance. A sense of accomplishment is recognised as
important and a strong motivator. Employees tend to remain with the
organisation when they feel their capabilities, efforts and performance
contributions

are

recognised

and

appreciated

(Davies

2001).

Employers are increasing their commitment to the use of rewards as

49

Janet Chew

essential elements of talent management programs. It is increasingly

important for companies to use their reward budget effectively to
differentiate the rewards of the top performers, thus driving an
increase in the return on investment (ROI) on human capital
investments. The alternatives are decreased employee performance or
the attrition of key performers to competitors in an increasingly
competitive environment.
Thus companies that are committed to their employees
typically invest more than similar firms in progressive HRM practices
such as training and education, and in the total package of
compensation (Arthur 1994; Huselid 1995). They also distribute
rewards more equitably and generously. Compensation provides
recognition, but other forms of non-monetary recognition are also
important. Recognition from managers, team members, peers and
customers

enhance

commitment

(Walker

2001).

Particularly

important to the employees are opportunities to participate and to

influence actions and decisions (Davies 2001; Gold 2001).
There are three recent studies that have highlighted the
rewards-retention link (Mercer 2003; Tower Perrin 2003; Watson
Wyatt 1999) and provided insights into what employers are doing,
how they feel, and what employees have to say on the rewards issue.
These recent studies give further support to the belief that a broad
and

well-implemented

rewards

management.

50

program

assists

in

talent

Chapter 2

Mercers Human Resource study measured the return on

reward investments of 302 companies. The research assessed the
effectiveness of specific reward and identified the reward program
issues and challenges confronting US companies. Mercers findings
indicate that most companies are increasing their focus on attracting
and retaining top talent.
The Watson Wyatt annual survey of employees' attitudes
toward their workplace and their employers, Work USA, 2002,
reflected the views of 12,750 workers at all job levels and in all major
industries on a number of workplace issues, including rewards. The
findings of the study revealed that recognition matters to employees
and they need to hear that they are appreciated.
The Towers Perrin study examined twenty-two large US
employers and their talent attraction and retention practices.
Participants in the year-long study ranged from companies with
2,500 employees to those with more than 364,000; their revenues
ranged from $1.6 billion to $58 billion. This research identified a
strong correlation between incentive pay and retention.

Training and career development

Training is considered a form of human capital investment whether
that investment is made by the individual or by the firm (Goldstein
1991; Wetland 2003). Once employees are hired, training programs
enhance employee job skills. Employees are expected to acquire new
skills and knowledge, apply them on the job, and share them with

51

Janet Chew

other employees (Noe 1999). Lauri, Benson and Cheney (1996) found
that firms often delay training to determine whether workers are good
matches and therefore have a lower probability of leaving the firm.
Training provides employees with specific skills or helps to
correct deficiencies in their performances; while development is an
effort to provide employees with abilities the organisation will need in
the future (Gomez-Mejia, Balkin and Cardy 1995; Wilk and Cappelli
2003). Skill development could include improving basic literacy,
technological know-how, interpersonal communication, or problem
solving abilities.
Employees want good training opportunities to increase their
marketability. The conventional wisdom used to be that if the
company makes them marketable, employees will leave at the first
opportunity. But today, companies are finding that the more training
employees get, the more likely they are to stay. Indeed, when the
training ends, the turnover tends to begin (Jamrog 2002; Wien-Tuers
and Hill 2002).
A firm has the incentive to invest in the human capital of its
workers only if there is an expectation of a return on its investment.
Increasingly, companies are strengthening development for talent,
thorough competency analysis, input on individual interests, multisource assessment of capabilities and development needs, and the
formulation of action plans (Clarke 2001; Messmer 2000).
A survey of the literature on training by Bishop (1998) revealed
that larger, established, unionised, manufacturing firms tended to

52

Chapter 2

provide

training

as

did

multi-establishment

firms

with

high

performance or flexible production systems. Findings of Black and

Lynch (1996) indicated that larger employers, establishments with
high performance systems and those which use more physical capital
were more likely to train their employees. Firms in industries with
rapid technical progress and output growth trained more as well as
those which had experienced no competitive crisis in the last decade.
Frazis, Gittleman, Horrigan and Joyce (1998) found that firms that
provide more benefits and have innovative work practices train their
employees more than other firms.
According to Storey and Sisson (1993) training is a symbol of
the employers commitment to staff. It is also reflective of an
organisational strategy based on adding value rather then lowering
cost.

Leading

companies

have

acknowledged

that

providing

employees with a comprehensive range of career and skillsdevelopment opportunities is the key to attracting and retaining the
kind

of

flexible,

technologically-sophisticated

workforce

that

companies need to succeed in the digital economy (Accenture 2001;

Bassi and Van Buren 1999).
The

training

and

development

of

people

at

work

has

increasingly come to be recognised as an important part of HRM

(Oakland and Oakland 2001). An analysis of employee commitment
among hospital administrators, nurses, service workers and clerical
employees as well as among scientists and engineers from a research
lab concluded that the employer's ability to fulfill the employee's

53

Janet Chew

personal career aspirations had a marked effect on employee

commitment (DeToro and MCabe 1997; Marchington and Wilkinhson
1997). Consistent with this work is a study of employees of a
manufacturing plant where it was similarly found that internal
mobility and promotion from within, company sponsored training and
development and job security were all correlated with employee
commitment (Bassi and Van Buren 1999). Training plays an
important role in the success of many organisations (Bassi and Van
Buren 1999).
Level of employee turnover and training are expected to be
inversely related: the higher the level of turnover, the lower the
amount of training. This expectation is based on the reasoning that
the longer an employee stays with an employer, the higher will be the
return to training. A recent study by Frazis et al. (1998) indicated
that employees working in low-turnover establishments spent about
59 percent of their total training time in formal training, compared
with 18 percent for employees in high-turnover establishments. From
the employee's view, if the training involves skills specific to the
establishment, it is likely to contribute to an increase in productivity
at that establishment. Greater productivity at the establishment, in
turn, will tend to raise a worker's wage above what he or she would
earn elsewhere, thus providing an incentive to stay. In other words,
training can serve to lower turnover (Frazis et al. 1998; Wetland
2003).

54

Chapter 2

Challenging employment assignment and opportunities

Employees need to be stimulated with creative challenges or they will
go where the excitement is, be it another department, industry or
company. Companies are countering this by allowing employees to
choose what projects they want to work on and allowing crossdepartmental and cross-disciplinary migration (Accenture 2001;
Jamrog 2002). Providing employees with challenging assignments
with well-defined performance measures and feedback is important
for a high performance environment in which employees can achieve
their personal objectives (Furnham 2002). The necessity of mastering
new skills keeps employees satisfied and creative (Ferguson 1990;
Walker 2001). Employees want a job with broad duties and a lot of
task variety. In part, it is because they want to have more job skills
on their resume when they are forced to get another job (Jamrog
2002; Jardine and Amig 2001).
A further extension of these efforts to provide job challenges is
cross-functional career development. This technique allows the longterm employees which the organisation views as having overall
leadership potential to move from one area of the company where
they have succeeded (e.g., management) to another area where they
have no experience (e.g., acquisitions). Moving high-calibre employees
in this manner not only assures that they will be challenged, but
begins to build employees with enough breadth of experience to

55

Janet Chew

assume senior leadership roles with the organisation. General

Electric and IBM have been doing this for years (Ferguson 1990).
Employees who felt that the organisation failed to give them
challenging

and

interesting

work,

freedom

to

be

creative,

opportunities to develop new skills, and autonomy and control were

more likely to express negativity and lack of loyalty toward their
employer. More specifically, when the promises related to autonomy
and growth and rewards and opportunities were breached, an
employee was more likely to report negative feelings and attitudes
toward the organisation, lower levels of commitment, and greater
intentions to leave the organisation (Phillips 1997).

Organisational Factors influencing retention

Leadership
Leadership is defined as the behaviour of an individual that results in
non-coercive influence when that person is directing and coordinating
the activities of a group toward the accomplishment of a shared goal
(Bryman 1992). Leadership is conceptualised in terms of four tasks
that need to be accomplished in any organisation: providing
direction, assuring alignment, building commitment and facing
adaptive challenges (Risher and Stopper 2002). Leaders are central to
the process of creating cultures, systems and structures that foster
knowledge creation, sharing and cultivation (Bryant 2003).
Research

findings

suggested

that

leadership

enhanced

organisational commitment (Alimo-Metcalfe and Alban Metcalfe 2001;

56

Chapter 2

Allen 1996; Ferres, Travaglione and Connell 2002; Podsekoff,

Mackenzie and Bommer 1996). Though there are differences between
the transformational and charismatic leadership theories, scholars
are now viewing them as sharing much in common and referring to
this body of work as the "new leadership" theory (Gumbus and
Johnson 2003) or "neo-charismatic" leadership theory (Nanus 1992).
Transformational leaders are regarded as active leaders that have
four distinguishing characteristics: charisma, inspiration, intellectual
stimulation and individualised consideration (Kouzes and Posner
1995; Yammarino and Bass 1990).
Numerous leadership studies in a wide variety of organisations
have examined the impact of transformational and charismatic
leaders, and findings indicate that transformational and charismatic
leadership styles "result in a high-level of follower motivation and
commitment

as

well

as

well-above-average

organisational

performance (Bryman 1992; Elby, Freeman, Rush and Lance 1999;

Nanus 1992; Podsakoff, McKenzie and Bommer 1996; Steyrer 1998).
Furthermore, several studies have identified high levels of peak
performance under transformational leadership (Stoner-Zemel 1988),
high correlation between charismatic leadership and effectiveness
(Bass and Avolio 1995; Conger and Kanungo 1988; Seltzer and Bass
1990).

Yammarino

and

Bass

(1990)

found

transformational

leadership more highly related to employees perceived satisfaction

and effectiveness than transactional leadership.

57

Janet Chew

Several researchers have highlighted the positive influence of

transformational leaders in organisational outcomes which resulted
in lowered intention to leave and increased organisational behaviour
(Alimo-Metcalfe and Alban-Metcalfe 2001; Pillai, Shreissheim and
Williams 1999; Yammariono and Bass 1990) and lead to stronger
organisational commitment (Alimo-Metcalfe and Alban-Metcalfe 2001;
Podsokoff et al. 1996).
Therefore, based on the literature review, it appears that
leadership behaviour has a positive influence on organisational
commitment and turnover intention.

Company culture and structure (policies)

Corporate culture is described as the invisible forces that shape life
in

business

organisation

(Fitz-enz

1990;

Sheriden

1992).

Management philosophy and style, communications protocol and

policies, rituals and taboos interact to create the uniqueness of each
company (Furnham 2002; Guzzo and Noonan 1994; Schein 1990).
People often join a company or seek employment within a particular
industry because they find its culture appealing. However, in the past
decade the cultural characteristics of some industries and, therefore,
the companies within them have changed markedly. And when the
culture changes, whether through growth, new management or
economic

and

regulatory

interventions,

some

people

become

uncomfortable and leave to find a culture that fits them better (Stum
1998).

58

Chapter 2

The complement of culture is structure, which is shaped by

culture and technology. Structure starts with job design and
workflow patterns, and includes policies and procedures, spans of
control, reporting relationships and other factors that dictate how
work is to be done and business conducted. Both IBM and Apple
Computer Inc., for example, make and sell computing equipment.
Yet, it would be difficult to find two companies with more disparate
cultures or structures (Koene, Boone and Soeters 1997).
Since people join organisations partly because they are
attracted to the culture and structure, this is where retention
management begins. Managers who want to examine how effective
their corporate culture and structure are at retaining employees need
to do so from the ground up (Judge and Cable 1997; Sheriden 1992).
From an organisational development standpoint, the concept of
organisational culture suggests an avenue for fostering changes in
behaviour and attitudes in order to bring about desired results. But
to do this successfully, organisational development experts must find
out whether they can predict certain behaviours and attitudes based
on patterns of organisational culture.
Advocates of strategic cultural change typically make a number
of implicit assumptions. First, organisations possess discernible
cultures, which affect quality and performance. Second, although
cultures may be resistant to change, they are to some extent
malleable and manageable. Third, it is possible to identify particular
cultural attributes that facilitate or inhibit good performance, and it

59

Janet Chew

should therefore be feasible for managers to design strategies for

cultural change. Finally, it is assumed that any benefits accruing
from the change will outweigh any dysfunctional consequences.
Employee commitment may be fostered by employer-employee
relationships that allow the accomplishment of corporate financial
goals as well as cater to employee needs (Allen 1996). Research has
shown that employees' commitment to an organisation affects how
well the organisation performs in various ways. If it turns out that
employee commitment varies in certain predictable ways from one
cultural pattern to another, organisational development specialists
could try to strengthen employee commitment and, therefore,
organisational effectiveness by changing the organisational culture.
These studies and anecdotal evidence suggest a positive link between
strong organisational cultures and employee commitment (Koene et al
1997).

Communication and consultation

Effective communication has emerged from the comprehensive
literature review as an essential facet of people management be it
communication of the organisations goals, vision, strategies and
business policies or the communication of facts, and information and
data communication structure (Hart, Miller and Johnson 2003;
Larkin and Larkin 1994; Purser and Cabana 1997; Yingling 1997).
Effective communications strengthen employee identification with the
company and build trust (Clarke 2001; Levine 1995).

60

Chapter 2

For business success, a regular two-way communication,

particularly face to face with employees, was identified as an
important factor in establishing trust and a feeling of being valued
(Fourtou 1997; Mumford and Hendricks 1996). Essentially, a two way
communication is regarded as a core management competency and
as a key management responsibility. For example, the management
responsibilities for effective communication include (1) ensuring
people are briefed on key issues, (2) communicating honestly and as
fully as possible on all issues affecting the people, (3) encouraging
team members to discuss company issues and give upward feedback
and (4) ensuring issues from team members are fed back to senior
management and timely replies given (Fourtou 1997; Mumford and
Hendricks 1996).
Research conducted by TNT (1998) revealed that successful
organisations place great emphasis on communication channels that
enable people at all levels (TNT 1998). Many formal and informal
communication

mechanisms

exist;

all

designed

to

foster

an

environment of open dialogue, shared knowledge and information as

well as a trust in an effective upward, downward, lateral and cross
functional structure. Regular employee meetings and other updates
allow employees to adjust their efforts to support company objectives.
Opportunities for feedback give employees an avenue to influence
their work and company policies. Grievance procedures provide a
more formalised mechanism by which workers can be heard when
they are dissatisfied with a decision or outcome (Gopinath and

61

Janet Chew

Becker 2000). Supervisors and co-workers are therefore principally

responsible for communicating role expectations and feedback about
role performance (Miller and Jangwoo 2001).
Hence, organisations that carry out effective communications
ensure that their internal communications help their employees
make the connection between positive aspects of their workplace and
effective management policies (Walker 2001).

Team working relationships

Employees stay when they have strong relationships with their work
colleagues (Clarke 2001). Organisations today encourage team
building, project assignments involving work with peers, and
opportunities for social interaction both on and off the job
(Marchington 2000). One value of team-based organisation is the
bond they establish among members. As Ray (1987) observed,
"Talking about stress may provide workers with a sense of
camaraderie and esprit de corps that adds value to the meaning of
their work environment" (pp. 188-89).
Co-worker supportiveness refers to the friendliness of and the
extent to which co-workers pay attention to employee comments and
concerns (Campion, Medsker and Higgs 1993; Hart, Miller and
Johnson 2003). Interactions with co-workers may serve "an affectivepsychological function by providing emotional support against the
stresses

of

the

organisation's

socialisation

initiatives

and

uncertainties of the work setting" (Jablin 1987, p.702). In addition,

62

Chapter 2

newcomers and incumbents who have co-worker support while

experiencing socialisation tactics and learning new roles are also less
likely to feel a mismatch in their fit to the organisation, attenuating
their intention to voluntarily leave the organisation (Kristoff 1996).
Today, the focus on teamwork, empowerment, and flatter
organisations
behaviour

puts

that

premium

supports

on

organisational

membership

that

citizenship

employees

act

instinctively to benefit both the organisation and one's team.

Fundamentally, employees who work as a team are more likely to feel
an increased commitment to the work unit's efforts and the
organisation as a whole (Cohen and Bailey 1997; Meyer and Allen
1997). Consequently, employees tend to remain in organisations due
to the strong teamwork relationship they have established at the
workplace (Clark 2001; Marchington 2000).

Satisfactory working environment

The factor most significantly affecting workforce commitment is
management's recognition of the importance of personal and family
life (Stum 1998). For some employees, personal priorities or
circumstances make the difference between leaving and staying.
Individuals will stay with a company that clearly considers and cares
for their career priorities (life stage needs), health, location, family,
dual-career and other personal needs (Gonyea and Googins 1992;
Kamerman and Kahn 1987). For example, many companies are
providing flexible schedules and work arrangements and are

63

Janet Chew

experimenting with other ways to help individuals manage their work

and personal life issues (Perry-Smith and Blum 2000; Solomon
1999).
Gumbus and Johnson (2003) attribute the improvement to
many work-life initiatives aimed at a corporate culture based on
performance and employee commitment. She says, "We believe in a
healthy, well-balanced workplace that treats the employee as an
individual, a family member, and a member of the community."
Therefore, many companies have successfully created an employeefriendly environment by integrating specialised work arrangements
such as flexible hours, telecommuting, and family-leave assistance to
support employees in creating a work/life balance.
Some researchers suggest that for positive work experiences to
increase commitment significantly, employees must believe that such
work experiences are a result of effective management policies (Parker
and Wright 2001). So parlaying a constructive culture into increased
commitment might depend on how well managers succeed at getting
employees to credit good management for their positive experiences.
Prior research in organisational behaviour and human resource
management has shown that an organisation's commitment to its
employees (OCE) tends, in turn, to create a more committed and
responsible

workforce

(Eisenberger

et

al.

1990;

Organ

1990;

Moorman, Blakely and Niehoff 1998; Mowday, Porter and Steers

1984; Shore and Wayne 1993; Steers and Porter 1987, pp. 575-83).

64

Chapter 2

Therefore,

it

appears

that

the

person/environment-fit

hypothesis assumes that, as employees amass positive

work

experiences, affective commitment rises accordingly (Lahiry 1994).

Organisational Commitment
The concept of commitment
The reason for the prevalent interest in the commitment concept in
the field of organisational behaviour has been its assumed connection
with turnover behaviour and performance (Benkhoff 1997b). Over the
years, it has emerged as the most recognised and investigated
construct of employee attachment or loyalty to organisations
(Sommer, Bae and Luthans 1996). In research, the term commitment
is broadly used to refer to antecedents and consequences, as well as
to the process of becoming committed or attached (O'Reilly and
Chatman 1986).
The

author

identified

variations

in

the

definitions

of

commitment among the studies. The mere number of different

definitions sheds light on the fact that no real consensus exists
regarding the very construct of commitment. Hence, commitment can
be considered a multidimensional concept that has been interpreted
in a variety of different ways (Meyer and Allen 1997). The main
contenders appear to be affective or attitudinal (Buchanan 1974;
Mowday et al. 1982; Porter et al. 1974), normative (Allen and Meyer
1990), behavioural (Staw 1980) and calculative (Becker 1960; Ritzer
and Trice 1969). Fundamentally, the definition of commitment relies

65

Janet Chew

on the notion that committed employees have a desire to remain

employed with their organisation (Meyer and Allen 1997).
With regards to commitment, researchers differ on the basis of
attachment. Meyer and Allen (1991) suggest that commitment
develops as a result of experiences of satisfying employees needs
motivational and/or are compatible with their values (p.70). They
add that if organisation better manage the experience of the
employees than they may be able to foster the development of the
desired commitment profile (p.15).
According to Porter, Steers, Mowday and Boulian (1974),
commitment

is

strong

belief

in

and

acceptance

of

the

organisation's goals and values, a willingness to exert considerable

effort on behalf of the organisation, and a definite desire to maintain
organisational membership (p. 604). Given that values play such an
important role in the definition of commitment, it stands to reason
that a person whose personal values matched the operating values of
the organisation would be more committed to the organisation than a
person whose personal values differed from the organisation.
The most popular method of examining this concept is through
an individual's attitudes and feelings towards his or her employing
organisation. Legge (1995, p.182) states that "virtually all the
research conducted on organisational commitment, per se, has used
the attitudinal conceptualization." This conceptualisation suggests
that committed employees have a strong belief in and acceptance of
the organisation's goals and values, show a willingness to exert

66

Chapter 2

considerable effort on behalf of the organisation and have a strong

desire to maintain membership with the organisation (Cook and Wall
1980; Lambert, Barton and Hogan 1999; Mowday, Steers and Porter
1979).
Aspects of commitment examined in this study include
identification (Banai and Reisel 1993) and reciprocity (Roehling 1996)
with the organisation, as well as intentions to remain with the
organisation (Black and Stephens 1989; Feldman and Thomas 1992;
Stephens and Black 1991).
The basic tenet of the reciprocity thesis is that the need to
reciprocate is universal yet contingent upon the receipt of benefits.
The

psychological

contract

focuses

on

the

employee-employer

exchange relationships. In the context of exchange relationships,

individuals may reciprocate employer treatment by enhancing their
attitudes, engaging in organisationally supportive behaviours, or both
(Roehling 1996). Researchers have suggested that reciprocity is a
mechanism underlying commitment (Angle and Perry 1983; Powers
2000) and that employees will offer their commitment to the
organisation in reciprocation for the perceived organisational support
(POS).
The term perceived organisational support (POS) is used to
describe the extent to which employees believe that the organisation
values

their

contribution

and

cares

about

their

well-being

(Eisenberger, Huntington, Hutchison and Sowa 1986). In this regard,

a useful framework in which to visualise commitment behaviour is to

67

Janet Chew

view them as components of fair exchange between a company and

its employees. This approach to motivation postulates that employees
and the organisations are involved in an exchange relationship
(Pinder 1984). In order to make people loyal, the organisation must
be able to satisfy them (Cohen 1993; McLean and Andrew 2000;
Stroh and Reilly 1997).
Essentially, the development of organisational commitment is
related to the notion of a psychological contract. This term is used to
describe an employee's belief regarding the terms and conditions of a
reciprocal exchange agreement between that employee and the
employer (Robinson and Rousseau 1994). Psychological contracts
recognise that most people seek to balance their contributions (what
they put into an organisation) and their inducements (what they get
from the organisation in return). Therefore, "within the boundaries of
the psychological contract, employees will agree to do many things for
the organisation because they think they should" (Schermerhorn,
Hunt and Osborn 1982, p.480). Eisenberger et al. (1986), on the
other hand point out that the concept of commitment also
encompasses the notion that employees may perceive the degree to
which their employing organisation is committed to them.
An organisation can therefore exhibit commitment to its
employees in many ways. A firm may be solicitous of workers'
physical and emotional well-being, devote itself to a high level of job
satisfaction and employee development, provide fair and ample
compensation and share its profits (Eisenberger et al.1990; Huselid

68

Chapter 2

1995; Mowday et al. 1984; Organ 1990; Williams and Anderson

1991).
Conversely, there are some specific behaviours that may
indicate employee commitment to the organisations including a
willingness to remain with the organisation (Solomon 1992; Meyer
and Allan 1991); productivity that exceeds normal expectations,
(Mowday, Porters and Steers 1982); altruistic behaviour (Laabs 1996)
and

reciprocity,

that

is

the

employees

commitment

to

the

organisation must be matched by the organisations commitment to

the employee (Solomon 1992).
According to Meyer and Allen (1991), "Employees with strong
affective commitment remain [with the organisation] because they
want to, those with strong continuance commitment because they
need to, and those with strong normative commitment because they
feel they ought to do so" (Roberts et al. 1999, p.3). The following
definitions are ascribed to each of the three forms of commitment by
Meyer and Allen (1991):
1.

Affective

commitment

refers

to

employees'

emotional

attachment to the organisation. As employees amass positive

work experiences, affective commitment rises accordingly.
Some researchers suggest that for positive work experiences to
increase commitment significantly, employees must believe that
such work experiences are a
policies.

69

result of effective management

Janet Chew

2.

Continuance commitment is based on the costs that employees

associate with leaving the organisation. A high level of
continuance commitment may well keep an employee tied to an
organisation, but it is unlikely to produce a high level of
performance. According to Meyer and Allen, employees who
showed a high degree of continuance commitment were more
likely

to

earn

poor

marks

from

their

supervisors

on

performance and potential.

3.

Normative commitment is employees' feelings of obligation to

remain with the organisation. A feeling of obligation to remain
with an organisation develops from familial and societal norms,
before an individual ever enters an organisation. Development
of normative commitment also might result from organisational
socialisation, especially in organisations that value loyalty and
that systematically and consistently communicates that value
to employees.

Alternatively, Mowday et al. (1979), define organisational

commitment as the relative strength of an individual's identification
with

and

involvement

in

particular

organisation

that

is

characterised by three factors: (1) a strong belief in and acceptance of

the organisation's goals and values, (2) a willingness to exert
considerable effort on behalf of the organisation, and (3) a strong
desire to maintain membership in the organisation. This most widely
used

organisation

instrument:

70

Organisational

Commitment

Chapter 2

Questionnaire (OCQ) measures three dimensions: moral commitment,

calculative commitment and alienative commitment (Gainey 2002 ). A
morally committed employee has accepted and can identify with an
organisation's goals and values. A calculatively committed employee
exchanges his/her contributions for inducements provided by an
organisation. An alienatively committed employee perceives a lack of
control

over

his/her

internal

organisational

environment

and

perceives an absence of alternatives for organisational commitment.

The combinations of commitment types that an employee may
encounter in an organisation depend on the organisation's culture,
the leadership style of its managers, and the preferred personalities
through

the

organisation's

philosophy

and

criteria

for

hiring

(Commeiras and Fornier 2001).

Additionally, Becker's (1960) side bet theory led to the
development of propensity to leave/stay: employees are inclined not
to quit (calculative commitment) because they do not want to lose the
non-transferable

advantages

acquired.

Some

researchers

have

suggested that the propensity to commit accounts for the variations

in these interactions, and suggest it is an important factor, perhaps
the most important factor, in sustained organisational commitment
(Angle and Lawson 1993; Finegan 2000; Pierce and Dunham 1987;
Somers 1995; Steers 1977). Current research suggests that the key to
propensity lies within groups of values pre-existing within the
individual, but researchers have had limited success in determining
which groups of values matter (Finegan 2000).

71

Janet Chew

Among the various types of commitment examined, affective

commitment (or loyalty) is considered the most desirable and
beneficial (Meyer and Allen, 1997). Reviews by Mathieu and Zajac
(1990) and Meyer and Allen (1997) indicate that antecedents to
affective

commitment

characteristics,

job

typically
(work

are

categorised

experiences),

and

as

personal

organisational

characteristics. Personal characteristics pertain to age, gender,

education, marital status, job level and tenure. Job characteristics
focus on skill variety, task autonomy, job challenge and job scope.
Organisational

characteristics

include

organisational

policies,

supportiveness, communication and recognition. Over the years,

research

results

have

shown

that,

among

these

categories,

organisational characteristics are strongest in predicting affective

commitment (Nyhan 1999; Steers 1977; Wallace 1997; Zangaro
2001).
In their comprehensive review, Meyer and Allen (1997) reported
a positive relationship between affective commitment and employee
retention. Both affective and continuance (calculative) commitment
are expected to increase the likelihood that an individual will remain
with an organisation (Meyer, Bobocel and Allen 1991). However, the
reasons for remaining differ between affective and continuance
(calculative) commitment. Employees with high levels of affective
commitment remain because they want to, whereas those who have
a strong continuance remain because they have to. On the other
hand, Wiener and Vardi (1980) found a negative relationship between

72

Chapter 2

normative commitment and intention to turnover. A study by Meyer,

Allen and Smith (1993) found that affective and normative were
negatively related to intention to quit.
Some researchers (Mathieu and Zajac 1990; Wiener and Vardi
1980)

however,

found

weak

direct

relationship

between

organisational commitment and intention to turnover. Their studies

support organisational commitment as mediating and moderating
turnover intention.
In prcis, employee commitment to an organisation is viewed as
a critical success factor in today's corporate environment (Pfeffer
1998; Somers 1995). The focus directed at employees by an
organisation is demonstrated by the monetary and non-monetary
benefits they receive (Williams 1999) and the service that is devoted
to them (Payne 2000). If employees believe the organisation is less
committed to them then they may respond by feeling less committed
to the organisation. This lack of employee commitment to the
organisation will be reflected in their intention to stay or leave (Meyer
and Allen 1997).

Turnover intention
Intention to stay/Intention to leave
Turnover intention is defined as a conscious and deliberate wilfulness
to leave the organisation (Tett and Meyer 1993, p. 262). According to
Fishbein and Ajzen (1975, p. 369), "The best single predictor of an
individual's behavior will be a measure of his intention to perform

73

Janet Chew

that behavior." It is therefore legitimate to use it as an outcome

variable in turnover studies (Gutherie 2001; Gutmann, DeWald and
Nunn 2001). Employers also consider intention to quit a more
important measure then the actual act of turnover. (Lambert et al
2001). Empirical evidence strongly supports the position that intent
to stay or leave is strongly and consistently related to voluntary
turnover (Dalessio, Silverman and Schuck 1986; Gutmann, DeWald
and Nunn 2001; Mathieu and Zajac 1990).
Employees

leave

for

many

reasons,

some

of

which

organisations have no control over, such as retirement, a family

member being transferred or the desire to stay home to start a family.
Some of the most common reasons employee leave include:
employees

perception

of

poor

leadership

or

supervision,

unchallenging positions, limited opportunity for advancement, no

recognition for good performance, limited control over the work and
customer,

salary

benefits

are

not

commensurate

with

job

requirements; and the opportunity for a better compensation package

elsewhere (Accenture 2001; Jardine and Amig 2001).
Wagar

(2003)

examined

the

relationship

between

an

individual's intention to quit his job and the human resource

management activities of the organisation. The study revealed that
employees of organisations with more sophisticated human resource
systems were significantly less likely to indicate they intended to quit
over the next two years.

74

Chapter 2

Furthermore, this study identified that it was not the presence

or absence of any one HR practice which was considered the
determining factor, but rather the "bundle" or system of practices
that will affect the decision to quit. This research also provided
evidence that older employees and individuals with more seniority
within the organisation were less likely to report they planned to
resign.
According to Wager (2003), employees who did not intent to
quit were more likely to be employed in organisations that adopted a
certain set of HR practices such as employee voice procedures,
programs that recognise employee contributions (e.g. merit-based
promotion, individual merit pay and a formal employee recognition
program), mechanisms for sharing information with employees, use
of problem-solving groups and training in employee involvement. In
addition, the results of this study showed that employee perceptions
regarding the organisation's retention strategy were significant. For
instance, employees who indicated they were not planning to quit
also were more likely to report their organisation was committed to
retaining the best employees; saw the retention of top employees as
very important; and has established programs designed to retain
quality employees (Boyd 2000; Dobbs 2001; Eskildesn and Nussler
2000).
For this study, organisational commitment and intention to
stay (turnover intention) were selected as the focal dependent
variables for the following reasons. First, there is evidence that before

75

Janet Chew

actually leaving the job, employees typically make a conscious

decision to do so. These two events are usually separated in time.
Second, it is more practical to ask employees of their intention to quit
in a cross-sectional study than actually to track them down via a
longitudinal study to see if they have left or to conduct a retrospective
study and risk hindsight biases.

Turnover Intention Predictors

Organisational commitment
Organisational commitment is also examined in several studies as a
predictor of both the intention to quit and turnover. According to
Mowday, Steers, and Porter (1979), an employee who is committed to
the organisation has values and beliefs that match those of the
organisation, a willingness to exert effort for the organisation, and a
desire to stay with the organisation. Employees with lower levels of
commitment are less satisfied with their jobs and more likely to plan
to leave the organisation (Bennett, Blume, Long and Roman 1993;
Schnake and Dumler 2000; Zangaro 2001).

Availability of employment
Availability of employment has a significant positive effect on
turnover intent (Tett and Meyer 1993). Employees are more likely to
express turnover intentions when they perceive that there are other
acceptable employment opportunities. Many researchers argue that
most people will not leave their current job without reasonable

76

Chapter 2

probability of finding other employment (e.g., Bame 1993; Hom and

Griffeth 1995). Some studies have used the local unemployment rate
as a measure of alternative employment opportunities (e.g., Mueller
and Wallace 1992; Vorhies and Harke 2000; ). However, this may not
adequately measure an individual person's availability of alternative
employment opportunities.

Demographic Factors
Demographic factors were among the most common and most
conclusive predictors in the turnover literature. A number of studies
found age, education, job level, gender and tenure with the
organisation to be significant predictors of turnover (Jinnett and
Alexander 1999; Miller and Wheeler 1992). It was generally accepted
that younger and better educated (as well as less trained) employees
are more likely to leave than are their counterparts (Manlove and
Guzell 1997). The higher the job level one has within the
organisation, the lower is one's likelihood of quitting (Bedian, Ferris
and Kacmar 1992). Level of education was related to turnover only for
employees holding mid-level jobs (Galang, Elsik and Russ 1999). This
means that those who have highly specialised skills, as well as those
with limited education, tend to remain on the job for longer periods of
time than those who have a moderate degree of educational
attainment.
Gender and marital status generally do not appear to be related
to turnover (Bendian et al 1992; Koeske and Kirk 1995; Jinnett and

77

Janet Chew

Alexander 1999), though having children at home is a fairly strong

correlate of turnover, especially for women (McKee, Markham, and
Scott 1992; Miller and Wheeler 1992). McKee, Markham and Dow
Scott (1992) find marital status to be indirectly related to intention to
leaves in that employees who are married are more satisfied with
their jobs and feel more support and less stress than their unmarried
colleagues.
There is considerable evidence of an inverse relationship
between tenure and turnover. Turnover rates are significantly higher
among employees with a shorter length of service than among those
who are employed longer (Pfeiffer 1995; Somers 1996; Whitfield and
Poole 1997). This may be because longer tenured employees have
more investment in the company and are less likely to leave. Becker
(1960) theorised that, over time, an employee invests in an
organisation (e.g. retirement, pensions, pay raises, benefits, stock,
position, etc.), and these investments bond the individual to the
organisation. Since these investments, or what Becker calls "sunken
costs," increase with age and tenure, an employee tends to become
more committed to the employing organisation, and the bond reduces
the likelihood that the employee will quit (Meyer and Allen 1984;
Wallace 1997).
In this study, age, gender, occupation and industry were the
four demographic factors that were considered as predictors for the
HRM-retention link model. Tenure was excluded because the
surveyed employees were all core or permanent employees and

78

Chapter 2

therefore the relevance of tenure as a predictor held little significance.

Therefore age was considered a better predictor for this study. Mathieu
and Zajac (1990) found a positive correlation between age and
commitment.
However, it is also important to note that the links between
demographic characteristics and commitment are indirect and disappear
when other factors such as work rewards and work values are controlled
(Mottaz 1988). Mottaz (1988) commented that while demographic
characteristics such as age, tenure, gender, education, marital status and
the like may correlate to commitment, they are not determinants (p. 471).

Conceptual Schema
This research seeks to identify the factors of human resource
management practices (HR factors and organisational factors) that
will

influence

the

retention

of

core

employees

of

Australian

organisations. It aims to examine the relationships between the

following variables: intent to stay (turnover intention) (outcome) and
organisation commitment (dependent) to: Independent variables:
person organisation fit (selection), remuneration, recognition and
reward, training and career development, challenging opportunities,
leadership behaviour, company culture and policies, team work
relationship and work environment. Figure 2.1 illustrates the
relationships and influences, which have been claimed to impact on
retention. This study investigates these linkages and impacts in three

79

Janet Chew

phases: Phase 1, Delphi Method; Phase 2, Interview (qualitative) and

Phase 3, Survey (quantitative).

Conclusion
The common theme in this literature review is an emphasis on the
utilisation of human resource management factors that influence
retention of core employees. First, it presented different types of
human resource architecture models of employment, describing the
employment modes and the employers-employees psychological
employment relationships. Second, it discussed empirical evidence of
the relationships between the human resource practices and
organisational commitment and intent to stay (turnover intention).
Third, the identified HR factors which included person organisation
fit (selection), remuneration, recognition and reward, training and
career development, challenging opportunities, leadership behaviour,
company culture and policies, and satisfactory work environment
were discussed to establish relationships to organisation commitment
and intent to stay. Finally, turnover predicators such as age, gender,
occupation and industry were highlighted in relation to its influence
on organisation commitment and intent to stay.
The following chapter, Chapter three will present the overall
research methods employed in this study. The methods of research
involve three phases and they include Delphi Technique, interview
(qualitative) and survey (quantitative).

80

Chapter 2

81

CHAPTER THREE

RESEARCH METHODOLOGY
A Three-Phased Study: The Delphi
Method, In-depth Interview and
Quantitative Survey

This chapter explains the overall methodology used to collect the data
to address the research issues of this three phased study. It starts
with the selection and justification of the three phased approach of
the study: (1) the Delphi technique, (2) the In-depth interview and (3)
the Employee Survey. It provides information about the sample
population

of

each

of

the

phases.

It

further

describes

the

instruments, the data collection processes and the type of analysis

carried out on each phase of the study.

Justification of three phased approach

The objective of this study was to investigate and determine the
current human resource practices on the retention of core employees
in Australian organisations. In order to successfully achieve this aim,
this study was divided into three phases:

Phase One involved a Delphi procedure, with participants on

the expert panel responding to a series of questionnaires (3 rounds)

Chapter 3

to achieve a consensus in defining the functions and knowledge

domains of human resource practices on retention. This method was
selected as a preliminary investigation to obtain the current HRMretention practices adopted by Australian organisations via experts
experienced in the field of HRM in the Australian business
environment. The initial data collected from the Delphi method
combined with a comprehensive literature review provided a more
robust interview schedule for the next phase-the in depth interview
with HR practitioners.

Phase Two involved an in-depth interview with HR practitioners

from

Australian

organisations.

This

qualitative

approach

was

employed with the objective to acquire richer data from the

Australian HR policy makers. The acquisition of this set of data
enabled the researcher to construct a more effective instrument for
Phase Three.

Phase Three involved a survey of core (critical) employees of

Australian organisations.

The three stages of the study were deemed necessary to best

address the eleven (11) research questions. Each phase of the study
extracted essential data to assist and contribute to the development
of the instrument of the subsequent phase.

83

Janet Chew

This study aimed to rectify the gap in the extant literature and
provide valuable insights that may explain the differences in human
resource management practices that affect the retention of core
employees of Australian organisations. It is therefore pertinent that
the research captures the essential information more amenable to
evaluation and discussion. As a result, the three-phase approach was
considered the most efficient research design to effectively explore the
broad objectives of the study.

Sample population (Phase One The Delphi study)

Panel selection
The success of a Delphi study is largely dependent on the quality of
the participants (Dalkey and Helmer 1963; Delbecq and Van de Ven
1971). Dalkey and Helmer (1963) reported specific criteria for the
selection of panel experts. The first is that the experts exhibit a high
degree of knowledge of experience in the subject matter. Another is
that they exhibit representativeness of the profession so that their
suggestions may be adaptable or transferable to the population.
In choosing panellists for this study, the following criteria were
considered: HR policy makers, extensive theoretical knowledge,
experience in the field of human resource management both in the
industry and academia and an advanced degree in management or a
closely related field. To identify potential participants, the researcher
enlisted the assistance of Associate Professor Lanny Entrekin and
Professor Shelda Debowski.
84

Chapter 3

Potential participants for this study were identified through

their expertise in the area of human resource management in the
Australian environment. They included academics, human resource
practitioners and industrial psychologists. The latter were included
because of their role in the workplace. Industrial psychologists work
consistently with management to re-organise the work setting to
improve productivity or quality of life in the workplace. In addition,
they

conduct

applicant

screening,

training

and

development,

organisational development and analysis and counselling.

The nomination of people, who would be appropriate experts
for this study, was based on the following general criteria:

Academics
a. Participants must have a minimum of five years teaching experience
in management at an Australian university.
b. Evidence of fairly extensive publications in management (specifically
with regards to the Australian business sector).
c. Research interest in areas of human resource management.

Human Resource Practitioners

a. Currently working as a HR practitioner in an Australian
organisation.
b. Minimum five years working experience in human resource
management.

Industrial Psychologists
a. Minimum of three years working experience as an industrial
psychologist in Australia.

85

Janet Chew

b. Minimum five years teaching experience in psychology in

Australia.
From the initial pool of nominations, twenty (20) respondents were
formally invited to participate, and of these, thirteen (13) agreed to
complete the required three rounds of the survey.

Panel size
Delphi procedures tend to depend on the questions being asked,
sample size and degree of consensus being reached (Rowe and Wright
1999). As this study is a preliminary investigation, the small number
of participants was deemed by the researcher to be acceptable for
determining a meaningful outcome. The panel size of thirteen fits
within the guidelines recommended for Delphi studies. Helmer and
Dalkey used a panel of seven experts in their original Delphi
experiment in 1953 (Helmer 1983). Linstone and Turoff (1975)
suggests a panel size of anywhere from ten to fifty participants (p.
86).
The panel nominees were asked to express their expert
opinions and judgements on the current development of retention
management in Australia and to identify the key HR factors
influencing retention in the work place. These experts consisted of
senior

academics,

human

resource

managers

and

industrial

psychologists. Initially a personal letter was sent to each of the

nominees (See Appendix 1). The letter invited them to participate in a
three-round Delphi study. In addition, the letter included an

86

Chapter 3

explanation of the study and provided an estimate of the time

commitment for participation. In the introductory letter, nominees
were informed that participation was voluntary and confidential and
that three rounds of responses would be required.
Follow-up telephone calls were made and letters were sent to
non-respondents after two weeks. Nominees were advised that each
round of the study would require approximately twenty minutes and
that data collection would occur over a two-month time period.
Return of a signed consent form served as the panel members
agreement to participate in the study (Appendix 2).

Methodology (Phase One- Delphi Study)

For this research, the Delphi Technique was chosen as a suitable
preliminary research method because the results will offer a betterinformed look at the current and potential status of retention
management carried out by Australian organisations. Based on the
attitudes and beliefs of a carefully selected group of expert
respondents, the expected prospects for reform in the areas of
retention management and human resource practices will also be
captured. A substantial literature review has identified some key HR
practices that influence retention. However, there is little consensus
among researchers with regard to precisely which HRM practices
should be included (Becker and Gerhart 1996; Cappelli 1999). Due to
these glaring discrepancies in the prescriptions made by different
scholars in this area, the results of this Delphi study will be relevant

87

Janet Chew

and provide clarification as well as substantially enhance the

literature review on retention. In addition, it will expose the current
retention management practices adopted by Australian organisations.
Previous studies using such an approach have typically used
thirty experts based on the finding that larger groups create few
additional ideas and limit the in-depth exploration of the ones
generated (Rowe and Wright 1999; Van De Ven and Delbecq 1974).
However, for this study, a smaller number of participants were
selected (20). The small sample size was deemed acceptable due to
the preliminary exploratory role of the Delphi technique in the first
stage of this research. It was, however, critical to secure the
participation of the right kinds of experts, who understand the
issues, have a vision and represent a substantial variety of
viewpoints.
The Delphi technique uses problem solving and expert
consultation methods in a structured manner. First, the problem was
identified and divided into its component parts. Relevant data was
analysed and different perspective of problem sought from interested
parties. Second, specialists were consulted to address each section of
the problem, using a structured and weighted questionnaire. The first
round of the procedure was unstructured (Martino 1983), allowing
the individual experts relatively free scope to identify and elaborate
on those issues they see as important. These individual factors were
then consolidated into a single set. After each of these rounds,
responses

were

analysed

and

summarised,

88

which

were

then

Chapter 3

presented to the panellists for further consideration. Hence, from the

second round onwards, panellists were given the opportunity to alter
prior estimates on the basis of the provided feedback. This procedure
continued until consensus in the panellist responses was achieved.

Application of the Delphi Technique

The Delphi procedure used in this study consisted of three mailed
survey rounds completed over a two-month period (Figure 3.1).
Results of each round were analysed and fed back to the respondents
who were asked to re-examine their opinions in light of the overall
results. The first round survey consisted of open-ended questions
designed to elicit expert opinions on HR factors that influence
retention of core employees.
In the second round, the responses suggested in the first round
were presented to each respondent in the form of survey statements
and accompanying response selections, each selection serving to
complete the initial statement. The respondents were asked to
indicate the degree to which they agreed with each completed
statement on a scale of 1 to 5, with 1 indicating strongly agree and 5,
strongly disagree (Likert Scale). The responses that received the
greatest support for each of the questions were fed back to the
experts during Round Three.
In the third and final round, the respondents were asked to
rank the responses that accompanied each statement according to
their perceived importance with 1 being the most important and 5 the

89

Janet Chew

least. This was done to help the respondents further refine their
opinions and assist in achieving consensus.

Instrument (Delphi)
This preliminary questionnaire was generated from a review of
retention management literature (eg Cappelli 2000; Huselid 1995;
Kraut and Korman 1999; Lepak and Snell 1999). Subsequent
questionnaires (Rounds 2 and 3) were modified and focused, based
upon responses to the first questionnaire. The iterative process
stopped when consensus had been reached among participants.
Analysis of the questionnaires was used to prioritise research areas
and to rank specific research issues within these areas.

Round I
The preliminary instrument (Round 1) was developed following an
extensive review of the literature of the relationship between retention
and human resource policies (Appendix 3). The questionnaire was
designed and formulated based on the four key research questions
(Q1-4). The questionnaire consisted of two sections (A and B). In
Section B of the instrument, participants were asked to provide
demographic data (gender, age, experience and professional status).
In Section A, the style of questions chosen was open-ended in order
to enable the respondents to express their responses in any way they
choose. This open-ended style was considered suitable as it provided
minimum direction to respondents.
90

Chapter 3

1st Round
Questionnaire

Literature Review

Senior
Academics

HR Managers

Industrial
Psychologist

Panel

2nd Round
Questionnaire
Senior
Academics

HR Managers

Industrial
Psychologist

Panel
Consensus
3rd Round
Questionnaire

Senior
Academics

HR Managers

Industrial
Psychologist

Final Panel
Consensus

Figure 3.1: The Delphi Procedure

This type of question removes the need for the researcher to

pre-judge appropriate categories for response, allowing groupings of

91

Janet Chew

similar responses to be constructed if necessary after the data have

been collected.

Round 2
Two major changes were made to the Round 2 instrument (Appendix
4). First, the general demographics and open-ended questions were
omitted. Second, responses contributed by participants during Round
I were incorporated verbatim under the appropriate categories on the
instrument. In Round 2, participants were instructed to review the
comments from Round 1 and to rate each comment (1-5), bearing in
mind that the researcher sought validation based on the items most
critical to the retention process.

Round 3
In the third and final round survey, the experts were asked to agree
or disagree with the final wording of an item as well as provide
additional

comment

under

the

specified

concept

areas.

This

procedure stopped at three questionnaires or rounds which seems

fairly typical of many studies. Consensus or trends towards
consensus were documented at the conclusion of Round 3.

Delphi data collection and analysis

Table 3.1 provides the summary of the Delphi process. It outlines the
detailed action plans of the three rounds.

92

Chapter 3

Data collection and analysis were based on Schmidts method

(1997), in which the Delphi survey process is divided into three
rounds, as shown in Table 3.1. Participants answered general, openended questions on the first round survey. Responses to the openended question in the first round were analysed qualitatively and
categorised or grouped by frequency or similarity of response in order
to reduce the number to a manageable level yet keeping the essential
meaning of the responses. The results were then grouped together
under a limited number of headings and statements (eg. Definitions
of core employees; Needs of core employees) and this was then
drafted for circulation to all participants in a second questionnaire.
The second round used questions developed from responses to
the first questionnaire. The participants were asked to rank each
statement on a 1 to 5 scale (1 being the most important) and to
optionally comment on each question. Responses to the second round
were analysed to determine the ranking of the items. Ranking votes
(1-5) assigned to items by participants in Questionnaire 2 were
tallied. In the final round, participants re-ranked their agreement
with each statement in the questionnaire, with the opportunity to
change their scores in view of the groups responses. The re-rankings
were summarised and assessed for the degree of consensus. This
resulted in the selection of a) five key characteristics of core
employees, b) nine core employee needs and c) five major factors that
impact on the Australian human resource architecture.

93

Janet Chew

ROUND ONE

ROUND TWO

ROUND THREE

Date Mailed
Out:

9 September 2002

28 October 2002

26 November 2002

Date Due
back:

27 September 2002

8 November 2002

5th December 2002

Instrument

Questionnaire 1

Questionnaire 2

Questionnaire 3

Section A: 8 Questions

5 Questions

Results of Q1-4

Section B: Background
Data
Collected

Demographic
information.
Identification of key
characteristics of core
employees
Identification of key HR
factors that influence
retention of employees
Identification of key
features of the
Australian HR
Architecture Model

Data
Analysis

Compile lists of features

Prepare Questionnaire
2 using compiled lists

Question 5
Ranking the order of
importance of each
of the features (1-5)
for Questions 1-4
Identification of the
barriers/factors
affecting the
implementation and
influence of HR
practices (Q5)

Compute frequency
of responses and
range of responses
of the degree of
importance for each
item (Q1-4)
Tally number of
points received for
each item. Draw
conclusions based
on results.
Prepare
Questionnaire 3
using only items
receiving highest
rating

Assessment of
relative importance
of the identified
features by using
frequency and
means

Categorised or
ranked by frequency
or similarity of
response in order to
reduce the number
to a manageable
level. Draw
conclusions based
on results

Table 3.1. Summary of the Delphi Process

A content analysis (Denzin and Lincoln 1998) was conducted to

examine panellists responses to open-ended questions regarding HR
factors that influence retention; HR Architecture; core employees. The
researcher sorted themes. Information from the content analysis
provided additional insights into the perceptions and attitudes of the

94

Chapter 3

panel towards the HR Architecture Model, core employees and the HR

factors

that contributed

to

retention effectiveness. Descriptive

statistics were used to describe demographic information and

summarised panellists ratings of items (Wright, Lawrence and
Collopy 1996). Means and standard deviations were obtained for each
item and each category following Rounds 1 and 2.

Sample population (Phase 2 and Phase 3)

Large Australian organisations from various industry sectors were
targeted as the sample population for Phase 2 (in-depth interview)
and Phase 3 (employee survey) of this research. The researcher
approached

organisations

that

met

the

following

criteria:

(1)

Australian organisation (2) number of employees > 500 signifying a

large organisation and (3) must be established > 10 years.
The criteria for the sample was set on the basis that the size of
the organisation and the years of establishment attest to more
developed human resource systems (Jackson and Schuler 1995). This
is relevant due to the nature of this study. Industry sectors
represented by these organisations were mining, energy, oil, gas,
engineering, construction, electronics, financial, education, health,
food, retail and manufacturing. This ensured a broad spectrum of
industries.
A letter (Appendix 5) and consent agreement form (Appendix 6)
were sent to each selected company requesting an opportunity to
conduct an interview with their human resource manager and a

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Janet Chew

survey of their core employees. Subsequently, follow up calls were

carried out to contact non-responsive firms and to confirm interview
times with respondents who had agreed to participate.
Twelve organisations responded and agreed to participate in
Phase 2 (interview). However, only nine organisations agreed to
commit to both the interview and employee survey. Organisations
that participated in the interview process consisted of industries such
as engineering, diversified, health care, education, manufacturing
and public sector. Participating firms for Phase 3 included industries
such as health care, education, manufacturing and public sector.

Methodology (Phase 2- Interview)

The research method involved in Phase 2 was the interviewing of
human resource managers or representatives of twelve Australian
companies,

using

structured

interview

schedule,

which

incorporated a list of HRM best practices on retention. These

questions were based on the best practices identified through Phase
1, Delphi study and the literature reviewed. The objective of Phase 2
is to identify other HR elements not captured by the Delphi study but
considered to be important by practitioners. This final set of HR
practices was identified during the interview process and utilised for
the Phase 3, employee survey instrument.
Phase 2 of this research was conducted via face to face
interviews, lasting between 30-45 minutes with the use of the semi
structured interview schedule (Appendix 7). The interview schedule

96

Chapter 3

was developed in order to provide some standardisation across

interviews.
Although somewhat limiting the

extent for spontaneous

questioning, this interview schedule reduced the possibility of

interview inclination and the problem of obtaining different levels of
information from interviewees (Patton 1987). All interviews were
recorded

using

tape

recorder

with

the

permission

of

the

participants and descriptive notes were taken during the interviews.

Interview Format
The first section of the interview schedule sought information on the
characteristics of their core employee (using the results obtained from
the Delphi), the distinguishing needs of their core employees and non
core employees, their application of standardised or differential HRM
for different types of employees and the importance of the role of HR
in the organisation (strategic or limited to administrative). The second
section of the schedule explored the importance of the human
resource factors identified from the Delphi study in relation to its
influence on retention in the organisations and the effectiveness of its
implementation. The final section covered (1) contextual issues that
affect the industry and the retention management of core employees
(2) effective management of such as hiring practices, performance
appraisal practices, training and career development practices,
succession planning program, pay practices and leadership practices
and finally (3) the turnover rate (Appendix 7).

97

Janet Chew

Additional prompts, which included asking interviewees to

explain some of their constraints to achieve effectiveness in their HR
practices and the scope for implementation of good practices, were
scattered throughout the interview format in order to elicit further
information from the participants (Maykut and Morehouse 1994).

Interview Data Collection and Analysis

The data from the interviews were content analysed. Content analysis
is a research technique which systematically examines the content of
communicationsin

this

instance,

the

interview

data.

The

transcribed data were coded based on the key factors and issues
identified in the literature review and the Delphi study. The responses
were analysed thematically and emergent themes ranked by their
frequency and subsequently categorised. The constant comparison
method was used to identify major themes (Glaser and Strauss 1967;
Lincoln and Guba 1985). This qualitative research process is known
as the Grounded Approach, introduced by Glasser and Strauss
(1967). Data obtained through the interview were qualitatively and
quantitatively analysed. Qualitative data in the form of comments
and descriptions were used to provide the basic research evidence,
while quantitative data in the form of frequencies and percentages
were used to support the qualitative data.

98

Chapter 3

Methodology (Phase 3 Employee Survey)

This final phase tested the identified HR practices (results from
Phases 1 and 2) on employees, and obtained the employees
perspective of the effectiveness of the identified factors in relation to
their retention in their organisation.
The research method employed for Phase 3, involved a survey
of core employees of organisations. All employees who participated
were identified as core employees by their organisations. The
questionnaire was developed based on literature studies, results from
the Delphi study as well as the interviews with human resource
managers. Simple random sampling was then carried out in each
organisation,

with

about

60-100

core

employees

from

each

organisation randomly selected to survey. The questionnaire was

distributed to 800 employees, with 457 returned. This 57 percent
returned rate was deemed acceptable (Comrey and Lee 1992).
Employees of participating organisations were administered
with the survey and a self-addressed envelope. Some organisations
opted for electronic survey. They were given two weeks to complete
the survey. For some organisations with poor response, a second
survey was initiated with a request that it be completed within a
week. Further follow-ups were undertaken as necessary.

99

Janet Chew

Phase 3 Instrument
The Phase 3 survey explored the employees perspective of their
organisations human resource practices in relation to their decision
to stay with their employer. The employee questionnaire (Appendix 8)
explored eleven (11) areas including the following demographic
details: organisational fit, reward and recognition, training and career
development,
leadership,

challenging
organisational

assignments
policies,

and

job

opportunities,

communication

and

work

environment/relationships, commitment and turnover intention. The

demographic details requested basic information regarding age, level
of education, occupation, number of years in current job and number
of years in the organisation.

Measurement and Construct

Table 3.2 provides the summary of the measurement and construct of
the employee survey.

Phase 3 Data collection and analysis

The statistical package for the social sciences was used to analyse the
quantitative data (SPSS for Windows version 11.05). Initially, all
items were reversed coded from 1 to 7, 2 to 6 and so on.
Thereafter, summaries of the data were undertaken, including
frequency percentage distribution, mean and mode. The statistical
analyses used included correlation, reliabilities, exploratory factor
analysis and multiple regression.

100

Chapter 3

For this study, the primary goal of the regression analysis is to

investigate the relationship between the dependent variable (DV) and
several independent variables (IVs) and to further estimate population
parameters and test the hypothesis of the study. The regression
model selected for this study is the stepwise regression used to
develop a group of independent variables that is useful in predicting
the dependent variables and to eliminate those independent variables
that do not provide any additional prediction to the independent
variables already in the equation (Tabachnick and Fidell 2001).

Conclusion
This chapter provided an overall explanation of the research
methodologies used for this study. The three phases: the Delphi
technique, the Interview and the Quantitative survey were described
sequentially. The development of the instruments for each phase was
described and the qualitative and quantitative techniques employed
in analysing the data were presented.
Subsequent Chapters, 4, 5 and 6 will report the results and
findings of Phases 1, 2 and 3.

101

Janet Chew

Table 3.2. Phase 3 Measurement Scales

Researchers

Measurement

Scale
No of items

Judge,T.A.,& Cable, D.M. (1997),

Lauver, K.I.J., & Kristof-Brown, A. (2001),
Netemeyer, R. G., Boles, J.S., McKee, D.O., & McMurrian,
R. (1997),
OReilly, C. A., Chatman, J., & Caldwell, D. F, (1991)

Selection:
Person organisation fit

4 items

Broadfoot, L. E., & Ashkanasy, N.M. (1994),

Cammann, C., Fichman, M., Jenkins, D., & Klesh, J.
(1979),
Hackman, R. J., & Oldham, G. R. (1975),
Idaszak, J. R., & Drasgow, F. (1987),
Rhoades, L., Eisenberger, R., & Armeli, S. ( 2001),
Seashore, S.E., Lawler, E.E, Mirvis, P., & Cammann, C.
(1982),
Warr, P. B., Cook, J., & Wall, T. D. (1979).

Remuneration & Reward:

Job characteristics
Intrinsic and extrinsic
rewards

5 items

Training and Career

development:
Training adequacy
Job design
Job control

5 items

Challenging work and

opportunities:
Job Diagnostic survey
Skill variety
Task significance
Task identity
Autonomy
Higher order needs

5 items

Blau, G. J. (1989),
Cammann, C., Fichman, M., Jenkins, D., & Klesh, J.
(1979),
Hausknecht, J., Trevor, C., & Farr, J. (2002),
Jones, R., Sanchez, J., Parmeswaran, G., Phelp, J.,
Shoptaugh, C., Williams, M,. & White, S. (2001),
Warr, P. B., Cook, J., & Wall, T. D. (1979).
Broadfoot, L. E., & Ashkanasy, N.M. (1994),
Hackman, R. J., & Oldham, G. R. (1975),
Idaszak, J. R., & Drasgow, F. (1987),
Jackson, P. R., Wall, T. D., Martin, R., & Davids, K.
(1993),
Warr, P. B., Cook, J., & Wall, T. D. 1979.
Alimo-Metcalfe,B., & Alban Metcalfe, R.J. (2001),
Bass, B.M., & Avolio, B.J. (1995),
Podsakoff, P.M., MacKenzie, S.B., & Bommer, W.H.
(1996),
Singh, D.A., & Schwab, R.C. (2000),
Yammariono, F.J., & Bass, B.M. (1990).
Bass, B.M., & Avolio, B.J. (1995),
Bishop, K. J.W., & Scott, D. 2000
Cohen, S. G., & Bailey, D. E. (1997).

Leadership

4 items

MLQ5
Transformational leadership
Effectiveness, performance
and satisfaction
Team leadership

4 items

Peer leadership
Group goal clarity

Broadfoot, L. E., & Ashkanasy, N.M. (1994),

Kabanoff, B. (2000),
OReilly, Chatmen & Caldwell (1991),
Morita, J.G., Lee, T.W., & Mowday, R.T. (1989),
Sheridan, J.E. 1992.

102

Organisational
Policies
Measures the degree the
organisational structure
limits the action of
employees.
Testing the focus on the
influence of policies and
procedures. Testing the

5 items

Chapter 3
organisational goal
clarity and planning.
Cammann, C., Fichman, M., Jenkins, D., & Klesh, J.
(1979),
Griffeth, R.W., Hom, P.W., & Gaertner, S. (2000),
Sims, H.P., Szilagyi, A.D., & Keller, R.T. (1976),
Broadfoot, L. E., & Ashkanasy, N.M. (1994).
Bateman, T. S., & Strasser, S. (1984),
Lee, T. W., Ashford, S. J., Walsh, J. P., & Mowday, R. T.
(1992).
Mathieu, J., & Zajac, D. 1990).
Mottaz, C.J. (1988),
Meyer, J. P., & Allen, N.J. (1997);
Mowday, R., Steers, R., & Porter, L. (1979);
Commeirus, N., & Fornier, C. (2001).

Communication and
Consultation
Feedback

Work Environment

7 items

Humanistic and socialisation

Physical working conditions
Organisation climate

Organisational
Meyer and Allen 1997;
Porter, Steers,Mowday and Boulain 1974

5 items

5 items

Commitment
Affective
Caculative

Cammann, C., Fichman, M., Jenkins, D., & Klesh, J.

(1979);
Dalessio, A., Silverman, W.H., & Schuck, J.R. (1986),
Griffeth, R.W., Hom, P.W., & Gaertner, S. (2000),
Lambert, E. G, Hogan, N.L & Barton, S.N, 2001;
Mathieu, J., & Zajac, D. (1990),
McCloskey and McCain 1987;
Mueller & Wallace 1992,
Seashore, S.E., Lawler, E.E., Mirvis, P., & Cammann, C.
(1982).

103

4 items
Turnover Intention
Intent to stay
Intent to quit

CHAPTER FOUR

THE DELPHI STUDY RESULTS

(PHASE ONE)
Identifying the Human Resource
Management Factors that influence the
Retention of Core Employees

A human resource system helps create a workforce whose contributions

are valuable, unique, and difficult for competitors to imitate (Pfeffer
1998, p. 55).

This chapter reports the results of Phase 1 of the research which

examines the human resource factors influencing retention of core
employees of Australian organisations. As a preliminary research
method, this first stage used the Delphi technique, which consisted of
three rounds of questionnaires integrating the judgments and
comments of a panel of thirteen selected experts (academics,
practitioners and industrial psychologists) to achieve consensus
among the diverse groups of participants. The thirteen experts were
asked to identify key characteristics of core employees, key HR
factors that influence retention of core employees and the key factors
that affect the Australian HR Architecture model.
Final responses of the Delphi procedure were recorded,
analysed and statistically summarised. Descriptive statistics were

Chapter 4

used to describe demographic information and the panel rating of

identified items.
This chapter provides descriptive summaries of the panel
responses and explores the outcomes through the use of expert
statements.

Demographic characteristics of Delphi Panellists

The panellists' knowledge of the subject matter at hand is the most
significant assurance of a quality outcome, and so participants were
chosen because of their expertise related to the subject (Stone-Fish
and Busby 1996).
A total of twenty professional experts were invited to participate
in the Delphi Study and thirteen accepted. The panel members
consisted of six (6) academics, four (4) HR practitioners and three (3)
psychologists. Ten of the panel members were male and three female.
The majority (9) held a Ph.D. and advanced masters degrees. Table
4.1 reports the demographic data of the Delphi panel.
The results of the three round Delphi study were reported in
two ways. First the categorical responses provided by the panel
members were presented in Table 4.2, Table 4.3, Table 4.4, Table 4.5
and Table 4.6 to enable an understanding of the key trends evident.
This information was then further explored using comments provided
by participants to highlight key issues on human resource retention.

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Janet Chew

Characteristic
Invited Participants
Accepted Participants

Number
20
13

Percentage
100
66

Age
30-40
41-50
51-60
61-70

2
4
4
3

15.38
30.77
30.77
23.08

Gender
Male
Female

10
3

76.92
23.08

Highest Qualifications
PhD
DBA
MBA
MHRM
M.Psych.

9
1
1
1
1

69.23
7.69
7.69
7.69
7.69

Occupation
Senior Academics
HR Practitioners
Industrial Psychologists

6
4
3

46.15
30.77
23.08

Table 4.1. Demographic Characteristics of the Delphi

Panel Members

Research Question: What is a core employee?

Descriptions of a core employee
Table 4.2 reports the panels top five descriptions of a core employee.
The core employee descriptions included key characteristics such as
(1) possesses knowledge, skills and attributes (KSA) aligned with
business operation and direction, (2) is central to the productivity
and wellbeing of the organisation (3) provides a competitive edge to
the organisation, (4) supports the organisational culture and vision
and (5) possesses skills, knowledge and abilities that are relatively
rare or irreplaceable to ensure the success of the organisation. The
results indicated that all the descriptions seem to focus on KSA that
are of strategic value to the organisation. Basically, a core employee

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Chapter 4

is

someone

whose

knowledge

and

performance

contributes

significantly to what his/her organisation does and what his/her

organisation does better than its competitors (Panellist 7).
In terms of core competencies, one of the respondents (Panellist
8) highlighted a detailed classification of his companys core
competencies:
A core employee of our organisation core competencies included Action
Oriented, Adaptability, Communication, Customer Focus / Quality,
Interpersonal Skills and Teamwork, Integrity, Time and Task
Management. This would also reflect our cultural characteristics that
focus on caring, developing, being multi-cultural, achieving through
teamwork, being innovative and customer focussed (Panellist 8).

Rank

Panel Selection of Top Five Core Employee descriptions

1.

Possesses knowledge, skills and attributes that are closely aligned with the
existing or possible future operational direction of the business.

2.

Is central to an organisations productivity and wellbeing.

3.

Provides a competitive edge to the organisation.

4.

Supports the organisational culture and vision.

5.

Possesses skills, knowledge and abilities that are relatively rare or

irreplaceable to ensure the success of the organisation.

Table 4 2. Top Five Descriptions of a Core Employee

Expert Comments on the characteristics of core employees

The definition should include both individuals who would fit the
traditional line and those in support roles who have responsibilities
for sustaining the effective operation of the organisation (Panellist 3).
The person should also be a key motivator, mentor role model to other
staff and extremely difficult to replace (Panellist 10).
They fit the organisational culture closely and they are on the
succession plan and therefore of importance to the organisation
(Panellist 5, 12).
Core employees are full time or permanent employees that aligned with
organisational fit and culture and working on essential tasks (Panellists
1, 9, 11, 13).

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Janet Chew

Research Question: Do core employees have different needs to

other non core employees?
Needs of Core employees
Table 4.3 shows the panels selection of core employee needs.
According to the panel, core employees needs consisted of a satisfying
working environment, training and career development opportunities,
reward and recognition, good pay and conditions, good working
relationships, good resources state of the art equipment, status,
challenging job and autonomy. For this section the panel was not
asked to rank each item in order of importance.

Non
Ranking
1
2
3
4
5
6
7
8
9

Panels Selection: Needs of Core

Employees
Satisfying working environment
Training and career development opportunities
Reward and recognition
Good pay and conditions
Good working relationships
Good resources state of the art equipment
Status
Challenging job
Autonomy

Table 4.3: Needs of Core Employees

Expert comments on Core employees needs

One of the respondents noted that:
pay was critical but felt that the level of responsibility and ability to
utilise and develop skills were key features that attracted individuals to
jobs. Different factors such as gender, age and social status would also
influence the decisions of core employees to remain with the
organisation (Panellist 6).

Several respondents commented that:

Younger employees needs are focused on remuneration, training and
development,
career
advancement,
challenging
job,
growth
opportunities and recognition of their capabilities and acquisition of
new skills. For older employees, salary and career advancement is not

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Chapter 4
so important. However, they require autonomy, liberty from mundane
things, and opportunities to mentor so that they can make greater
contribution to the organisation. Job challenge is preferred to repetitive,
boring jobs (Panellists 2, 3, 13).

According to one of the respondents:

Core employees will be singled out by management for special
treatment in terms of training and career development. They will be
subject therefore to more efforts at retention and such efforts would be
closely related to their needs for compensation, training, promotion and
recognition (Panellist 4).

A number of panellists agreed that:

All the care and maintenance factors are needed i.e. offer opportunities
for development of talents, offer cross functional assignments to test
against each other and grow skills (Panellists 10, 12, 13).

Panellist 1 commented that:

The fine balance between relative security and opportunities for
flexibility (of task, projects, competencies, work teams, career options,
reward systems) and a degree of job excitement (Panellist 1).

In summary, the experts highlighted several salient needs of

core employees and they included satisfactory work environment,
training

and

career

development

opportunities,

challenging

assignments and pay, reward and recognition. However, these needs

vary based on age and gender.

Research Question: What are the factors affecting the Australian

Human Resource Architecture Model?
Factors affecting the Australian Human Resource Architecture model
Table 4.4 outlines the main factors affecting the Australian Human
Resource Architecture Model. The five key factors selected by the
panel in order of importance included strategic focus of the
organisation,

organisational

structure,

109

competitiveness

of

the

Janet Chew

industry, type of industry and the type of worker included in the

organisation.

Rank

Factors of the Australian HR Architecture

Strategic focus of the organisation (eg. Project, Growth and Maintenance).

Organisational Structure (eg. international, local franchisee).

Competitiveness of the industry.

Type of industry (eg. mining, manufacturing, and service).

Types of worker included in the organisation (eg. managerial, technical, trade).

Table 4.4. Factors affecting the Australian Human Resource Architecture Model

The majority of the panel members considered strategic focus,

organisational structure, competitiveness and type of the industry as
critical in shaping the human resource architecture in the Australian
business environment. However, the levels of work (worker to CEO),
type of worker (managerial, technical, trade), functional expertise of
worker (e.g. marketing, finance, computing, HR, production) have
lesser impact but are still relevant to the structure of the model.

Expert comments on Lepak and Snell Model (1999)

Several respondents noted that:
The Human Resource Architecture Model is only applicable for large
organisations and not small businesses. In smaller businesses one
person may take on several of this role (Panellists 3, 5,).

One of the respondents commented that:

I am cautious of a model which places so much emphasis on
competitiveness and exclusivity in an increasingly networked
environment. The limitation of the model is its assumption that

110

Chapter 4
innovation and development can be engineered as opposed to grown
(Panellist 12).

Some panellists argued that:

This model has some validity in Australia however it is a US model
developed in the US industrial context (Panellists 7, 9).

A few of the respondents stated:

Yes, it very much reflects the Atkinsons Flexibility Model and a practice
of lot of Australian organisations, especially government organisations.
It is an emerging trend in Europe and UK (Panellists 1, 2, 10, 13).
However, one of the respondents acknowledged that this model has
limitation; it is grafted on to industrial era structures and practices. The
employment modes are not linked to anything- not to performance, not
to customers, not to building human and intellectual capital and not to
vision (Panellist 11).

One of the respondents agreed that:

It is a rational model of organisation and in this sense perhaps
appropriate to the Australian business mindset (Panellist 8).

The general theme derived from the experts comments indicated

support for the Lepak and Snell (1999) Human Resource Architecture
Model but it was suggested that for the model to fit into the
Australian environment several factors should be considered. These
factors

included

strategic

focus,

organisational

structure,

the

competitiveness and type of the industry, the levels of work, type of

worker and functional expertise of worker.

Expert

comments

on

factors

affecting

Australian

Human

Resource Architecture not considered in the Lepak and Snell

Model
One of the respondents pointed out that:
people should be linked to environment with a business model that is
systematic, holistic and developmental with the dominant discipline
being organisational ecology (Panellist 13).

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Janet Chew

Panellist (9) stated that:

I think organisations tend to see HR as a number of processes or
systems, not as a strategic contributor. Therefore they are unlikely to be
as sophisticated in their thinking as required by the model (Panellist 9).

Several respondents suggested that:

Other models could use different criteria and still provide conceptual
insights into the HR Architecture. For example, levels of work (worker to
CEO), type of worker (managerial, technical, trade) and functional
expertise of worker (marketing, finance, computing, HR) (Panellists 4, 6,
8).

Overall, the panel assessment of the Lepak and Snell HR architecture

model highlighted several missing factors. These factors were
recognised as critical for the model to be successful in the Australian
business environment. The identified factors included level of work,
type of worker, the occupation and type of industry.
Interestingly, some panel members commented that HRM in
Australia is still regarded as fragmented functional processes and
struggling to be a strategic contributor. Consequently, the desire to
create

more

strategic

and

sophisticated

model

would

be

problematical.

Research Question: Which HRM factors most influence the

decision of employees to stay?
Human resource factors influencing retention
Table 4.5 reports the panels selection of the top five human resource
management factors influencing retention. In order of importance,
they included effective selection, reward and recognition, training and

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Chapter 4

career

development,

challenging

employment

structures

and

opportunities and equity of compensation and benefits.

Rank

Panel Selection of Top Five Human Resource

Factors

1.

Effective Selection.

2.

Reward and recognition of employee value

3.

Training and Career Development.

4.

Challenging Employment Structures and Opportunities

5.

Equity of compensation and benefits.

Table 4.5. Top Five Human Resource factors influencing

Retention

How the Experts view the Influence of Human Resource Practices

on Retention
Some of the expert's comments were particularly revealing, as
indicated in the following comments:

Importance of HRM on retention

Panellist (5) commented that:
This is a generalised perception but I believe that in many respects
human resources have been undervalued in the Australian context and
that shifts in this situation are only now beginning to occur. The
reasons for this lie in a strong regulatory (as opposed to participatory)
ethic and perhaps in the tradition of oppositional labour relations
(Panellist 5).

Other respondents agreed that:

The award system and industrial environment is very restrictive. That is
awards are job specific and do not facilitate multi-skilling through
different award coverage, developed within a confrontational, negative,
litigious framework. As such, they do not facilitate flexible
arrangements that assist in skill and knowledge development (Panellists
7, 9).

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Janet Chew

A respondent admitted that:

HR staff does not get closely involved in the high level strategic
discussions that could result in implementing retention practices
(Panellist 4).

According to Panellists (1 and 3):

Acquisition, retention and development should be integrated within a
holistic business model, otherwise they mean little in practice, and in
terms of performance (Panellists 1, 3).

Others commented that:

Pay strategies seek to not only attract but retain core personnel,
particularly there is a clear link between intellectual capital of the
individual and the firms competitiveness (Panellists 2, 11, 12).

A number of respondents agreed that:

HR practices have nothing to do with retention because they remain
fragmented activities (Panellists 3,4).

Several believed that:

HR practices are focussed more on the acquisition of employees and

their performance appraisal rather than on ways to retain people
(Panellists 2, 6, 7, 10, 13).

Overall, the experts comments revealed some mixed concerns about

the influence of HRM on retention in the Australian context. Some
did not believe HRM had any influence on retention. However, the
general consensus seems to be the limitations placed on HRM. The
constraints highlighted included the lack of importance placed on the
role of HRM, the impact of industrial relations regulations and the
application of fragmented functions diminished its impact.

The influence of HR factors on retention

Panellists (1, 3, 5) noted that:
pay is critical for employees. I also think however that the level of
responsibility and ability to utilise and develop skills are key features
that attract individuals to jobs (Panellists 1, 3, 5).

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Chapter 4

Another panellist stated that:

in terms of influencing retention positively his organisation focusses on
strategic human resources ensuring there is a link between our
functional responsibilities and our business strategy. The aim is to
demonstrate a commitment for employees ensuring we enhance our
employees capabilities and receive a benefit through employment
(Panellist 10).

Several respondents commented that:

reward and recognition, training and development influence retention
(Panellists 2, 6, 8, 9, 10).

Some respondents agreed that:

Security in tenure is particularly important for older workers, as they
are less likely to move to a new organisation and risk redundancy
(Panellist 4, 5).

However, one of the panellists (2) highlighted that:

Younger people are linked to remuneration, training and development,
challenging job, growth opportunities, trying new things, fitting the job
properties to their educational training, recognition of their capabilities
and acquisition of new skills (Panellist 2).

The analyses of the panel members responses highlighted some

common issues. Firstly, older workers are more interested in job
security and benefits; young employees are more interested in pay
and advancement opportunities. Secondly, the panel identified
recruitment, pay, recognition and reward, training and career
development and challenging job opportunities as key HR factors that
will influence retention.

Organisational factors influencing retention

Table 4.6 lists the panels selection of the top five organisational
factors that influence retention. In order of importance they include
influential and sensitive leadership style, company policies and

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Janet Chew

culture, communication and consultation, effective integration of

working relationships and satisfactory working environment.

Rank

Panel Selection of Top Five

Organisational Factors

1.

Influential and sensitive leadership style.

2.

Company policies and culture.

3.

Communication and consultation.

4.

Effective integration: working relationships.

5.

Satisfactory working environment.

Table 4.6: Top Five Organisational Factors influencing

retention

Expert Comments on organisational factors influencing retention

of core employees
Several panellists (4, 7, 8) commented that:
employees would remain in an organisation due to a satisfying working
environment: suitable work conditions and good workmates provide
comfort and security needed to support work activity. A quality of
working life that allows sufficient monetary reward to meet individuals
needs, challenging work and a workload that allows balance for
individuals lifestyle needs to be met (Panellists 4, 7, 8).

According to a large number of panellists (3, 4, 5, 6, 10, 13):

Leadership management relates to sound supervision and direction:
clear work standards, good instructions on how to do the job, objective
performance assessment and an influential and sensitive leadership
style from supervisor/manager provides an understandable and
acceptable context in which to get jobs done as required (Panellists 3, 4,
5, 6, 10, 13).

With regards to communication and consultation, some of the

respondents stated that:
Quality and timeliness of feedback to employees is the hallmark of an
effective organisation (Panellists 8, 10, 13).

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Chapter 4

Several respondents stated that:

Focus would obviously be on a positive working environment,
leadership style, terms and conditions of employment, availability and
allocation of resources, communication and consultation (Panellists 7,
9, 11).

Two other panellists (8, 10) echoed similar ideas. They felt that clearly
defined company policies and culture play an essential role in
allowing employees to know that they fit in.
In prcis, the expert responses disclosed some common
themes. Leadership style, positive work environment, company
culture and policies, communication and consultation and work
relationships were identified by the panel as the organisational
factors that would influence retention of core employees. These broad
themes were identified as organisational factors not HR factors. As a
result of these reflections from the panel, the researcher separated
the HRM factors into two bundles: HR factors and organisational
factors.

Discussion and Implications

How would a core employee be defined and supported in Australia?
There is recognition that the nature of work is changing in Australia,
as is the nature of workers themselves. While there is recognition of
the need to clarify the types of workers to be found in organisations,
there has been little agreement on what constitutes a core employee.
A review of prior literature revealed that most researchers (Allan and
Sienko 1997; Gramm and Schnell 2001; Segal and Sullivan 1997)

117

Janet Chew

have provided limited or broad definitions of core employees. Findings

from this study will offer a more current and extensive description.
By defining the characteristics of a core employee, it also discloses
the organisational perception of their primary workforce. This
perception is translated into the selection process adopted by
organisations.
As core employees are identified as a key resource and of
strategic value to organisations, it highlights the importance of
managing and retaining this valued human capital. The findings of
the study identified the following five characteristics of core
employees (1) possess knowledge, skills and attributes (KSA) aligned
with business operation and direction, (2) is central to the
productivity

and

wellbeing

of

the

organisation

(3)

provide

competitive edge to the organisation, (4) support the organisational

culture and vision and 5) possess skills, knowledge and abilities that
are relatively rare or irreplaceable to ensure the success of the
organisation. The results indicated that all the descriptions seem to
have a focus on knowledge, skills and attributes (KSA) that are of
strategic value to the organisation.
Effectively managing core employees means identifying their
needs. The results from the Delphi study indicate that the needs of
core employees have changed and greater emphasis is now placed on
(a) training and development, (b) career advancement and growth
opportunities, (c) recognition of capabilities and acquisition of new
skills and (d) challenging work. Instead of job security, employees

118

Chapter 4

now will seek job resiliency - developing the skills and flexibility
needed to quickly respond to shifting employer requirements (Barner
1994).
Findings from the Delphi study revealed that the needs of core
employees differ with age. Younger employees needs are focused on
remuneration,

training

and

development,

career

advancement,

challenging job, growth opportunities and recognition of their

capabilities and acquisition of new skills. For older employees, salary
and career advancement is not so important. However, they require
autonomy, liberty from mundane things and opportunities to mentor
so that they can make a greater contribution to the organisation. Job
challenge is preferred to repetitive jobs.
These initial findings further supports Becker and Gerharts
(1996) theories that over time an employee invests in an organisation
(e.g. pensions, pay raises, benefits, stock, position, etc.), and these
investments bond the individual to the organisation. Since these
investments increase with age and tenure, an employee tends to
become more committed to the employing organisation, and the bond
reduces the likelihood that the employee will quit (Meyer and Allen
1993; Wallace 1997).
As a consequence of the changes in the relationship between
employers and core employees there is a need to examine the human
resource systems that support this primary labour force. Are they
relevant and effective? Do they need to be redesigned to meet the
changing needs of core employees? The next two phases (2 and 3) of

119

Janet Chew

the research will confirm as well as clarify some of these unanswered

issues.

Factors that impact on the theoretical Human

Architecture in an Australian business environment?

Resource

The HR architecture models (Handy 1995; Lepak and Snell 1999)

advocated a differential investment strategy for different categories of
employees.
The findings of this study indicate that the shaping of these
employment modes is dependent on the influence of several factors in
the Australian business environment. These factors include the
strategic

focus

of

the

organisation,

organisational

structure,

competitiveness of the industry, type of industry and the type of

worker included in the organisation. The Delphi panel suggested that
these factors were not considered in the theoretical model developed
by Lepak and Snell in1999 for the American business environment. It
is suggested that the impact of these factors may therefore be the
determinants of the type of HRM systems adopted by various
Australian organisations (holistic or differential).
With the emergence of the new organisational structure of
employment, it raises the questions of Australian organisations HRM
systems? Do they apply best practices fit all or differential HR
practices for different types of employees (e.g. core, contractors,
alliance, and acquisitions)? How do these practitioners perceive their
effectiveness? Although it may be the case that some firms manage

120

Chapter 4

all employees the same way regardless of their value and uniqueness,
it is anticipated that most firms make significant distinctions in the
methods they use for different skill sets and that these are important
determinants of firm performance. These unexplored questions will
be examined in Phase 2 of the study.

HRM factors that influence the decision of employees to stay

The findings from the Delphi study imply a relationship between
retention and human resource management factors. The panel
identified some key HR and organisational factors influencing
retention. The factors identified by the panel included selection,
reward and recognition, training and career development, challenging
job opportunities, equity of compensation, leadership style, company
culture and culture, communication and consultation, effective
working relationships and satisfactory work environment. This belief
is supported by studies of progressive HRM practices in training,
compensation and reward sharing. These studies have revealed that
these can lead to reduced turnover and absenteeism, better quality
work, and better financial performance (Arthur 1994; Delaney and
Huselid 1996; Huselid 1995; Ichniowski, Shaw and Prennushi 1997;
Snell and Youndt 1995; MacDuffie 1995; Meyer and Allen 1991;
Solomon 1992; Snell and Dean 1992).
However, it is important to note that a few of the experts in the
panel indicated that perhaps there is no relationship between HR
practices and retention. They argued that HRM is undervalued in the

121

Janet Chew

Australian environment and relegated to fragmented functional

activities and not a strategic contributor. Hence this view contradicts
the considerable debate in the HRM literature about the importance
of aligning HRM practices with company strategy. According to Ulrich
(1996) HRM is often assigned the role of steward of the corporate
culture, expected to contribute to its development through programs
and policies that enhance it.
This alignment of HRM with company strategy raises an
interesting inquiry of whether Australian organisations do consider
retaining their valued core employees as a strategic issue and a
competitive advantage. This compelling argument is subsequently
investigated in Phase 2 of this research. Phase 2 examines retention
management practices of twelve Australian organisations.

Conclusion
This chapter reported the results of the Delphi study (Phase 1]. The
results presented addressed the five research questions for this initial
phase:
1. Is there a relationship between retention and HR practices?
2. Which HR factors most influence the decision of employees to
stay?
3. What is a core employee?
4. Do core employees have different needs from other types of
employees?
5. What are the factors affecting the Australian Human Resource
Architecture Model?

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Chapter 4

The findings of the Delphi study were discussed and the

implications outlined. The purpose of the Delphi study was to obtain
information from a carefully selected group of expert respondents,
with regards to the HRM retention relationship (e.g. the key HRM
factors that influence retention of core employees). The findings
would assist in the development of a suitable instrument for the next
phase of the study (Phase 2). Phase 2 involved using a semistructured questionnaire to conduct an in-depth interview with
human resource managers of twelve Australian organisations.
Results of Phase 2 are reported on in the next chapter (5).

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CHAPTER FIVE

The Retention Management Practices of

Australian Organisations

Retention management is driven by the following factors, which

should be managed congruently: organisational culture and
structure, recruitment strategy, pay and benefits philosophy,
employee support programs, and career development system
(Fitz-enz 1990, p. 1).

Introduction
This chapter provides the results of Phase 2 of the study. A semistructured schedule designed from the results of Phase 1 was used to
conduct in-depth interviews with human resource managers of twelve
Australian organisations. The questionnaire was designed to address
three research questions:

1. Is the importance placed on HRM factors linked to

retention?
2. How are these influential HR factors managed in
organisations?
3. How do these differ for non-core employees?

Demographic information of participating organisations was

summarised and reported (Table 5.1). The results of the interviews of
the twelve respondents are reported in two ways. First the categorical

Chapter 5

responses provided by the interviewees are presented in Table 5.2,

Table 5.3 and Table 5.4 to enable an understanding of the key trends
evident. This information is then further explored using interview
comments provided by the participants.
Respondents were asked to rate the ten identified factors from
Phase 1, using the scale, 0= not important, 1=somewhat important,
2=important and 3=very important. The scores from each factor were
aggregated and the identified elements ranked accordingly (highest to
the lowest).
Based on the results obtained from the Delphi study, the ten
identified HRM factors were classified into two bundles or sets of HR
practices:

(1)

Human

Resource

Factors

(effective

selection,

challenging employment assignments and opportunities, training and

career development, reward recognition of employee value, equity of
compensation) and Organisational factors (leadership, company
policies and culture, communication and consultation, effective
integration:

working

relationships

and

satisfying

working

environment). The reason for separating the HRM factors into two
distinct bundles of practices was to distinguish the human resource
management related practices from organisational management
related practices thereby providing greater clarity. Several studies
(Lawson and Hepp 2001; MacDuffie 1995) also support the concept of
bundling of HR practices.

125

Janet Chew

Respondents Profile
Table 5.1 provides a profile of the twelve organisations that
participated in this study. The participating organisations were from
various industry sectors and they included three health-care, three
higher education, three public sector, two diversified industries and
one manufacturing. The interviewed organisations were deemed to be
large, with the number of employees over 3000. Three out of five of
these organisations had employees less than 3000.
It is important to note that two-thirds (7) of the participating
organisations had in their employment more than 50 percent of core
(critical) employees and the remaining one third (5) acknowledged
their core employees were less than 50 percent. The reason for
obtaining the percentage of core employees of these participating
organisations was to determine the importance these organisations
placed on keeping a reasonable level of core employees within their
organisations. These organisations did however admit that cost
constraints and the nature of the industries were the determining
factors for their smaller intake of core employees.
Twelve human resource managers were interviewed. They
consisted of six females and six males. In terms of their length of
service with their organisation, six of the HR managers worked with
their organisation more than five years, three interviewees less than
two years and the remaining three between three and four years
working with their organisations.

126

Chapter 5

Additionally, these interviewees were asked what HRM factors

would motivate them to remain in their organisation and the majority
(80

percent)

identified

good

leadership

and

challenging

job

opportunities as key influencing factors.

Type of
industry
Health care
Higher
Education
Public Sector
Diversified
Industries
Manufacturer

Number of
organisations
1
1
1
1
1
1
1
1
1
1
1
1

Size of organisation
(No of employees)
>10,000
>10,000
>10000
<3000
<3000
>10000
<3000
>10000
>10,000
<1000
>10,000
>10,000

Number of core
employees
Less 50%
Greater 50%
Greater 50%
Less 50%
Less 50%
Greater 50%
Less 50%
Greater 50%
Greater 50%
Less 50%
50%
Less 50%

Table 5.1. Demographic characteristics of Participating

Organisations

Interview Outcome
Descriptions of core employees
Initially, the respondents were asked to indicate the definition of their
core employees based on the list of characteristics identified in the
Delphi study (Phase 1). In order of importance the interviewees
selected the following characteristics:

1. Possesses knowledge, skills and attributes that are closely

aligned with the existing or possible future operational
direction of the business.
2. Supports the organisational culture and vision.

127

Janet Chew

3. Provides skills/or knowledge to ensure the success of the

organisation.

The

interviewees

were

asked

to

identify

additional

characteristics not acknowledged in the results of Phase 1. They

included: 1) Possesses personal attributes and attitude towards
commitment and 2) Possesses values and ethical behaviour to
support organisational culture.
It is noteworthy that the participating organisations did not
consider the following two definitions from the results of Phase 1
equally

important

i.e.

1)

core

employees

are

central

to

an

organisations productivity and wellbeing and 2) core employees

provide a competitive edge to the organisation. The respondents
however identified personal attributes, attitude towards commitment
and values and ethical behaviour to support organisational culture
as more significant. These additional descriptions provided a clearer
picture of how organisations define their core employees and this is
obviously translated in the selection of their employees. Interestingly,
several (45 percent) of the respondents highlighted the importance of
hiring

employees

with

strong

ethical

values

to

match

the

organisational values. This emphasis on ethical behaviour was not

considered by the panel of experts in the Delphi study.

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Chapter 5

Interviewees comments on their core employees

Our core employees relate to our core business and support staff
(Interviewees 5, 10).
Our core employees are critical, high value (Interviewees 8, 12).
Our core employees are key, critical and high talent (Interviewees 3,
4).
Core employees are permanent staffOur core employees are in
technology and maintenance (Interviewee 1).

Interviewees comments on their non-core employees

Our non-core are casua1 (Interviewee 6).
There is a casual pool of nurses (Interviewee 2), they are teaching
staff (Interviewees 4, 6).
Our non-core are contractualproject management (Interviewees 1,
9).
Our non-core are contractual 12 months and they include engineers,
IT and technicians (Interviewee 3).
Non essential staff are regarded as non-core (Interviewees 7, 8,).

A review of the interviewees comments on the differences

between their core and non-core employees disclosed some key
attributes. Core employees were regarded as permanent, critical, high
talent, valued and contribute to the core of the business. Whilst noncore employees were considered contractual, casual, non-essential
and project management related. Occupations that lean towards a
greater number of non-core employees were engineers, IT, nurses,
project managers and technicians.

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Janet Chew

HRM Factors influencing retention

In the next section of the interview schedule, respondents were asked
to rate the ten identified HRM factors (HR factors and Organisational
factors) from Phase 1, using the scale, 0=not important, 1=somewhat
important, 2=important and 3=very important. The scores from each
factor

were

aggregated

and

the

identified

elements

ranked

accordingly (highest to the lowest). The results are tabulated in Table

5.2 and Table 5.3.

Rank

Interviewees Selection of Top Five Human Resource

Factors

1.

Effective Selection.

2.

Challenging employment structures and opportunities

3.

Training and career development.

4.

Reward and recognition of employee value.

5.

Equity of compensation and benefits.

Table 5.2: Phase 2 Interviewees selection of top five HR

factors influencing retention

Results depicted in Table 5.2 indicate the order of importance

interviewees placed on the identified human resource factors in
relation to retention of their core employees. The human resource
factors ranked by the interviewees, in order of importance included
the following: (1) effective selection, (2) challenging employment
assignments

and

opportunities

and

(3)

training

and

career

development, (4) reward recognition of employee value and (5) equity

compensation.

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Chapter 5

Effective selection had the highest aggregated score and ranked

most

important

by

the

majority

of

the

respondents

(83%).

Challenging employment structures and opportunities had the

second highest aggregated score and was regarded by seventy five
percent (75%) of respondents as very important. Training and career
development was acknowledged by sixty seven percent (67%) of the
respondents as very important. Evidently, equity of compensation
had the lowest aggregated score and ranked as the least important.
Several respondents (50%) indicated that equity of compensation and
benefits were not such an important concern for employees because
most organisations pay comparable wages especially in the public
sector. Apparently, fifty seven percent (57%) of the respondents felt
that reward and recognition was a greater influence on retention than
equity of compensation.
Results depicted in Table 5.3 indicate the order of importance
interviewees placed on the identified organisational factors in relation
to retention of their core employees respectively. The organisational
factors ranked by the interviewees, in order of importance included
the following: (1) leader-ship (2) company policies and culture, (3)
communication and consultation, (4) effective integration: working
relationships, (5) satisfying working environment

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Janet Chew

Rank

Interviewees Selection of Top Five Organisational

Factors

1.

Leadership

2.

Company policies and culture

3.

Communication and consultation

4.

Effective integration: working relationships

5.

Satisfying work environment

Table 5.3. Phase 2 Interviewees selection of top five

organisational factors influencing retention

Good leadership behaviour ranked the most important because

it had the highest aggregated score. The majority of the respondents
(92%) indicated that good leadership was a crucial factor as it flowed
down

to

better

company

policies,

culture

and

effective

communication and consultation. Company culture and policies was

regarded

by

75%

of

the

respondents

as

important

and

communication and consultation was viewed by 67% of the

respondents as very important. Work Relationships was identified by
50% of the respondents as very important. Satisfactory environment
(lowest aggregated score) was considered the least important of the
list of organisational factors. Only 33% of the respondents considered
satisfactory work environment as very important.
Based on what has been identified, it is important to highlight
a significant difference between the results of Phase 1 and the results
of Phase 2. With regards to the level of importance of organisational
factors influencing retention, the interviewees (Phase 2) preferences
matched those of the panellists ranking in Phase 1 (Table 4.6).
However, in terms of the level of importance of the human resource

132

Chapter 5

management factors, there is a slight difference in order of

preference.

The

panellists

(Phase

1)

considered

reward

and

recognition as the second most important factor after effective

selection but the interviewees (Phase 2) ranked it as the fourth most
important. The interviewees selected challenging assignments and
opportunities as the second most important factor ahead of training
and career development whilst the panellists ranked training and
career development as more important than challenging assignments
and opportunities.
In summary, the results presented in Tables 5.2 and 5.3 reflect
the current retention management practices of organisations.

Interviewees comments on HR practices

It was commented by several of the interviewees (8, 9, 11and 12):
In the public sector, pay is not an issue more the motivation and
deployment. Training, job challenges and work environment
especially work relationships, team work and shared camaraderie is
important.

Interviewee 10 noted that with regards to career changes and

challenging jobs:
People are seeing more career changes, Generation Xs are starting to
impact career changes- we are seeing people interested in moving
laterally rather than upward. We see society generally putting
greater emphasis on work life balance (Interviewees 4, 5, 6, 9, and
10).
This organisation won awards from government for being the
friendliest workplace. We go to great lengths to promote the culture
(Interviewee 9).

Several interviewees commented that:

133

Janet Chew
Good leadership was crucial factor as it flowed down to better
company policies, culture and effective communication and
consultation (Interviewees 1, 3, 7, 11).

Overall comments of the interviewees indicate recognition of

work-life balance, teamwork relationships and satisfactory work
environment as important issues that are changing the nature of
work.

Challenging

job

opportunities

and

training

and

career

development were also highlighted as key concerns for Generation X.

Many of the respondents regarded good leadership as a vital factor
for the retention of core employees.

Is the importance placed on HRM factors linked to retention?

The twelve organisations that participated in the interview process
were asked to rate the ten identified HRM factors using the scale,
0=not important, 1=somewhat important, 2=important and 3=very
important. An assumption is also made that the higher importance
an organisation placed on the HRM factors will be reflected in the
application of these factors. The HRM factors consisted of HR factors
(effective

selection,

challenging

employment

assignments

and

opportunities, training and career development, reward recognition of

employee value, equity of compensation) and Organisational factors
(leadership, company policies and culture, communication and
consultation,

effective

integration:

working

relationships

and

satisfying working environment). The total score for the ten factors
was calculated for each participating organisation to assess the level
of importance placed on the identified HRM factors. These scores

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Chapter 5

were aggregated and presented in Table 5.4 which shows the

association between the level of importance of HR practices and the
retention rate of the participating organisations.
Each of the twelve respondents was asked to identify their
turnover rate. The turnover rates were classified into four categories:
less than 10 percent, 10 percent-15 percent, 16 percent-20 percent
and 21 percent and above. Results show that five organisations
admitted their voluntary turnover rate was approximately less than
10 percent, five acknowledged 10 percent-15 percent, one owned up
to between 16 percent and 20 percent and one reluctantly revealed a
turnover rate of more than 21 percent.

Voluntary Turnover Rate

Organisations

Less 10%

10% -15%

16% -20%

1
2
3
4
5
6
7
8
9
10
11
12

21%above

a
a
a
a
a
a

a
a
a
a
a

Level of importance of
HR practices
(Aggregated score)
10
16
20
16
15
17
12
13
15
11
7
8

Scale:0=not important,1=somewhat important,2=important,3=very important

Table 5.4. Level of importance of Identified Human Resource and Organisational
factors in relation to voluntary turnover rate

135

Janet Chew

Voluntary turnover rate of less than 10 percent

The five organisations with less than 10 percent turnover rate
consisted of two higher education institutions, one manufacturing
firm, one public sector establishment and one diversified firm. Data
showed that each of these five companies had revealed that their
organisation placed a high level of importance on all the identified
HRM factors (i.e., high aggregated score: 20, 17, 16, 16, 15).
These five organisations revealed that their HR systems were
sophisticated and they acknowledged the need to constantly improve
the quality of the management of their employees. They also
recognised the need to hold on to their core employees. The
responses from these respondents indicated that the identified HRM
factors were rigorously applied within the organisations.
It is interesting to note

that all the five respondents

acknowledged that their organisations had good leadership which led

to effective communication and consultation process and strong
company culture and policies. Three out of five of these respondents
also emphasised on the important role HRM played in the strategic
planning process in their organisations.

Voluntary turnover rate of 10 percent-15 percent

There were five participating organisations with a moderate voluntary
turnover rate of 10 percent-15 percent. They comprised two health
care institutions, one higher education institution, and two public
sector establishments. These five respondents placed moderate

136

Chapter 5

emphasis of importance on the HRM factors (moderate aggregated

score: 15, 13, 12, 11, 8).
These five respondents were selective in their recognition of the
importance of some of the HRM factors. The health care institutions
highlighted the importance of work like balance and flexible work
schedules but placed little emphasis on recognition and reward and
career

development.

On

the

other

hand,

the

public

sector

establishments placed moderate importance on most factors (work

environment, work relationships, reward and recognition), but
greater emphasis on leadership and company culture and policies.
Three of these respondents cited that leadership issues were a
concern

within

their

organisations.

This

has

led

to

poor

communication and lack of direction.

Voluntary turnover rate of 16 percent to 20 percent

One of participating organisations reported a high turnover rate
(16%-21%). This health care institution indicated less emphasis on
the HRM factors. This is reflected with a low aggregated score (7).
The respondent stated that there were several external forces
impacting on the health care sector such as government regulation
changes, changes in the business environment and shortages of
specific labour force (e.g., doctors and nurses) and the outcome is
uncertainty for employees and management.

137

Janet Chew

Voluntary turnover rate of 21 percent and above

One of the participating organisations acknowledged a high turnover
rate of 21 percent. This respondent placed little importance on some
of the identified HRM factors (aggregated score: 10). The respondent
indicated that the company did not give strong recognition to career
development and recognition and reward. The company was also
undergoing

restructuring

with

major

changes

in

leadership,

corporate culture and policies.

In summary, the overall results implied an association between
retention and the level of importance placed on the ten identified
HRM factors. Clearly, the sample size is too small to verify this link
and this relationship should be examined further with a larger
sample

size.

However,

this

qualitative

approach

provided

preliminary examination of the association between retention rates

and the application of the identified HRM factors (i.e., HR factors and
Organisational

factors).These

HRM

factors

were

identified

as

retention factors in Phase 1 as well as Phase 2.

In

addition,

the

results

of

this

qualitative

study

also

highlighted several external constraints that may affect the retention

of core employees. These constraints include market competition,
government regulations, changes in the business environment,
technological changes and labour shortages. These external forces
could act as moderators and therefore be included during the
examination of the relationship between retention rates and the ten
HRM factors identified.

138

Chapter 5

How are these influential HR factors managed in organisations?

The twelve respondents were asked to rate the effective management
of the ten identified human resource factors and organisational
factors in their organisation. The responses were categorised as good
or poor.
The data from the interview revealed that organisations that
placed high importance on the ten identified HRM factors also
provided responses of positive management of these HRM factors. A
further examination of these results attempts to marry the effective
practices carried out by participating organisations and the perceived
level of importance declared by the said organisations.
Assessment of the data revealed that five organisations (2, 3, 4,
6, 9) with a high aggregated score (15-20) of the level of importance
displayed effective management of these practices and consequently
had low voluntary turnover. Conversely, two organisations (1, 11)
exhibiting low aggregated score (7-10) of level of importance exhibited
low effective management of the identified practices and consequently
high voluntary turnover. Furthermore, five organisations (5, 7, 8, 10,
12) that indicated moderate emphasis on the importance of the
identified HR practices demonstrated moderate effective management
of these practices. As a result, these organisations exhibited
reasonable turnover rates.

139

Janet Chew

In summary, these results imply that effective retention

management practices (using the ten identified HRM factors) will
result in better retention rates.
Comments from interviewees regarding the reasons their core
employees leave their organisations
One of the respondents reported that:
The company does not believe that managing human resource is a
competitive advantage because they treat people as tools poor
management. We need to treat our core employees better. It is
costing us money (Interviewee 1).

Concerns expressed by the respondents:

Succession planning in this company is still in the infancy stage
(Interviewee 11).
Training and career development practices are problems for this
company (Interviewee 7).
We do not have an attraction problem but we do have a retention
problem (Interviewee 1).
It is not the pay but the management stylepoor leadership. It
creates uncertainty (Interviewee 12).
Skilled development and family relocation are the two reasons
employees leave (Interviewee10).

One of the respondents commented that:

Compensation is the reason the employee leave (Interviewee 3).

Comments from interviewees in support of effective retention

management
Effective management is a competitive advantagekey indicators of
success of this approach adopted by the organisation, is the
reduction of turnover from 26 percent to 13 percent (Interviewee 10).

It was pointed out by one of the respondents (Interviewee 9) that HR

department in this organisation is still viewed as a process
department rather than being involved in planning the strategic

140

Chapter 5

effort. Interviewee (1) stated quite categorically that her organisation

does not have a problem attracting employees,
but we have a retention problem. We do not believe that managing
human resource is a competitive advantage and therefore treat our
people as tools. We need to treat our core employees better. It is
costing us money.

According to interviewee (10) her:

organisations succession planningmixed feelingslike to use the
word contingency planning and multi-skilled. Succession planning
in theory is fantastic but not an ideal model. Not just identifying key
people but provide more training to allow people to step into that
role. We like to test the market at that level. It does not mean that
we do not train people but I think if these people are so valuable to
the organisation we owe it to our shareholders to adopt strategy to
rope these people in. For our employees at a lower level but key
people significant to the organisation we address it through multiskill.
The Government idea of HR is linked to industrial relations
(Interviewee 9.)
HR department in this organisation is still viewed as a process
department rather than being involved in the strategic effort
(Interviewee 11).

With regard to performance appraisal, several interviewees (4, 8, and

10) noted that it was time consuming; very few organisations do it
well.
We do have a performance appraisal system here that is linked to
our training needs- the timing of it can be improved (Interviewee 10).
Our organisation focuses on career development and succession
planning, performance development (Interviewee 2).
We focus on culture and innovation (Interviewee 12).
We are effective in performance appraisal and succession planning
(Interviewee 3).
Performance appraisal and training is effectively managed in our
organisation (Interviewee 4).

In precis, these results highlighted some key factors for effective

retention of employees. They include effective leadership, effective
141

Janet Chew

succession

planning,

effective

performance

appraisal,

effective

training and career development programs and good remuneration.

Further, it acknowledged some key difficulties confronting the
management of HR.The importance of the role of HR still lack
strategic importance. Focus is still functional. Moreover, the
governments view of HR is linked to industrial relations. These
difficulties are regarded as barriers for HR managers to carry out
effective management practices.
How do these differ for non-core employees?
Respondents were asked whether their company adopted one
standardised human resource practice for every employee (holistic
approach) or whether they applied differential HR practices for
different types of employees.
Six of the participating organisations (1, 3, 7, 8, 9, 12)
acknowledged that they adopted a differential approach and the six
others (2, 4, 5, 6, 10, 11) used a holistic approach. Several
respondents acknowledged that, although their company adopted a
holistic approach, there is a distinction made between different sets
of employees (core, contractual and casual).
Interviewees comments
All employees are regarded as valuable. We use a holistic approach
(Interviewees 4, 5).
Not differential. A holistic approachfrom medical to administrative
staff (Interviewee 11).
We use a differential approach for our core and non-core employees
(Interviewees 1, 3, 7, 8, 9, 12).

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Chapter 5

Discussion and Implications

There is growing recognition that successful organisations share a
fundamental philosophy to value and invest in their employees (e.g.
Benchley 2001; Maguire 1995). There has also been considerable
debate in the HRM literature about the importance of aligning HRM
practices with company strategy (Ulrich 1996). Given the findings of
this

qualitative

study,

clearly

Australian

organisations

do

acknowledge that retaining their valued core employees is considered

a strategic issue and a competitive business advantage (Clarke 2001;
Hom and Griffeth 1995; Huselid 1995). However, the results also
revealed that not all organisations apply this philosophy efficiently.
The reasons for poor implementation were attributed to several
external constraints identified in this study such as market
competition, government regulations, changes in the business
environment, technological changes and labour shortages.
Moreover, the findings also revealed that there are obstacles
confronting the management of HR. The obstacles highlighted by the
respondents included the lack of strategic importance placed on the
role of HR, and unfortunately it is stilled perceived as functional.
Additionally, the government often view HR as just related to
industrial relations. These issues are considered by respondents to
hinder the ability of HR to be recognised as a competitive advantage.
In this qualitative study, there were several findings that are
noteworthy. Firstly, the study provided a comprehensive description
of core employees. The descriptions depicted five essential attributes:

143

Janet Chew

Possesses knowledge, skills and attributes that are closely

aligned with the existing or possible future operational direction of
the business, (2) supports the organisational culture and vision, (3)
provides

skills/or

knowledge

to

ensure

the

success

of

the

organisation, (4) possesses personal attributes and attitude towards

commitment and (5) possesses values and ethical behaviour to
support organisational culture.
Further review of the interviewees comments on the differences
between their core and non-core employees disclosed some key
attributes. Core employees were regarded as permanent, critical, high
talent, valued and contribute to the core of the business. Whilst noncore employees were considered contractual, casual, non-essential
and project management related. Occupations that lean towards a
greater number of non-core employees were engineers, IT, nurses,
project managers and technicians.
In 1995, Huselid reported from a sample of 968 firms that
those using comprehensive employee recruitment and selection
procedures, extensive employee involvement and training, and formal
performance appraisal linked to incentive compensation were likely to
have lower employee turnover, higher productivity, and enhanced
corporate financial performance. Huselid referred to these HR
practices as high performance work practices (p. 635). Other studies
seem to support this perspective (Delaney and Huselid 1996; Delery
and Doty 1996; Huselid and Becker 1996; Kalleberg 2000; MacDuffie
1995).

144

Chapter 5

Results of this qualitative study suggest that organisations that

managed their human resource effectively may have higher retention
of their employees. More specifically, the findings provide relatively
strong supports for the existence of a positive relationship between
HRM practices and its influence on the retention of core employees.
The study supports findings of American studies conducted by Fitzenz in 1990, which advocate retention management as driven by the
following

factors,

which

should

be

managed

congruently:

organisational culture and structure, recruitment strategy, pay and

benefits

philosophy,

employee

support

programs,

and

career

development system.
Phase Two study verified the retention management practices
of the participating Australian organisations. It also reaffirmed that
the HR factors and Organisational factors identified in Phase One
were adopted by participating organisations as factors of retention of
their core employees. These retention factors consisted of two sets of
bundles and included the following: HR Factors (effective selection,
challenging employment assignments and opportunities, training and
career development, reward recognition of employee value, equity
compensation) and Organisational factors (leadership, company
policies and culture, communication and consultation, effective
integration

of

working

relationships

and

satisfying

working

environment).
Thus, the findings of Phase Two imply an association between
retention and the level of importance placed on the ten identified

145

Janet Chew

HRM factors. Clearly, the sample size is too small to verify this link
and this relationship should be further examined with a larger
sample

size.

However,

this

qualitative

approach

provided

preliminary examination of the association between retention rates

and the application of the identified HRM factors (i.e., HR factors and
Organisational factors).
Moreover, this qualitative study was also able to illuminate the
current

retention

management

practices

of

large

Australian

organisations. It revealed the current HRMretention issues in the

Australian business environment and consequently provided greater
insights into the decision making process of HR practitioners.
From a theoretical viewpoint, it could be argued that these
findings about current human management practices in these
Australian

organisations

are

hardly

surprising,

since

the

management literature is strewn with examples of the benefits of

continuous improvement in HRM. None the less, from a practical
viewpoint, the real value of the findings reported here is twofold.
Firstly, the findings encourage the spread of good practice by
revealing, in some detail, the retention management activities that
are currently being used to good effect in Australian organisations.
Secondly, the research findings described in this study present a
compelling argument for the real value of putting management theory
into practice.
Phase Two of this study also examined the theoretical HR
architecture model developed by Lepak and Snell 1999 which

146

Chapter 5

advocated a differential investment strategy for different categories of

employees. The findings revealed that Australian organisations as a
whole adopted both holistic and differential approaches when
managing their employees. However, although it may be the case that
some firms manage all employees the same way, regardless of their
value and uniqueness, results of this study verify that most firms do
make significant distinctions in the methods they use for different
skill sets and that these are important determinants of firm
performance. Several comments from respondents supported this
view.
In summary, the findings of this phase of the research has
provided the researcher sufficient data to develop an HRM-retention
model. The dynamics of this HRM-retention model is further tested
empirically in the next phase (3) of the research.
Phase 3 of the study will examine the employees perspectives
and provide a more definitive empirical validation of the "HRMretention relationship.
Conclusion
This chapter presented the results of the in-depth interviews with
twelve human resource managers. The interviews explored the
relationship between the identified HRM factors and the retention
rates of the participating organisations. Furthermore, it examined the
effective management of these HRM factors by the participating
organisations. Phase 2 results are invaluable as it provides a

147

Janet Chew

comprehensive account of the current HRM practices of Australian

organisations in relation to the retention of their core employees. This
information would be utilised to create the employee survey for the
third and final phase. The next chapter provides the results and
findings of Phase 3 of the studythe employee survey.

148

CHAPTER SIX

Quantitative Study Phase Three

Investigating the Relationship between
HRM factors, Organisational
Commitment and Intention to Stay

Commitment to a particular entity is a distinct phenomenon, albeit a

complex one that may differ depending upon how certain factors,
pertinent to all commitments, are perceived and evaluated by an
individual (Brown 1996, p. 232).

Introduction
The preceding chapters (4 and 5) reported the results and findings of
Phase 1 (Delphi Study) and Phase 2 (interview) of the study. The
purpose of this chapter is to introduce the quantitative results of
Phase 3 (employee survey). It describes the research questions, the
HRM retention theoretical model and the hypotheses of Phase 3 of
this study. The model is operationalised through the use of
established scales of measurement for each of the eleven components
in the model. Reliability and validity of the research instruments are
reported. The chapter further describes and reports the results of the
statistical analyses, which sought to identify which factors influence
commitment of core employees and intentions to stay.

149

Janet Chew

Theoretical Background and Hypotheses

A continuing organisational issue for management and human
resource personnel has been the retention of high performance
employees. Researchers have suggested that reciprocity is a mechanism
underlying commitment (Angle and Perry 1983; Scholl 1981) and that
employees

will

offer

their

commitment

to

the

organisation

in

reciprocation for the organisation having fulfilled its psychological

contract (Angle and Perry 1983; Robinson, Kraatz and Rousseau 1994).
By fulfilling obligations relating to, for example, pay, job security, and
career development, employers are creating a need for employees to
reciprocate, and this can take the form of attitudinal reciprocity through
enhanced commitment.
In this study, organisational commitment and turnover intention
behaviour (intent to stay) were selected as the focal dependent variables
for

the

following

reasons.

First,

employees

purportedly

view

organisational commitment and turnover intention as acceptable

commodities for exchange (Settoon, Bennett and Liden 1996). Second,
these variables have been demonstrated as salient with regard to a
variety of exchange relationships (Eisenberger, Fasolo and DavisLaMastro 1990; Moorman 1991; Organ and Konovsky 1989; Shore and
Wayne 1993).
Studies of the concept of commitment (Mowday, Porter and Steers
1982;

Meyer

and

Allen

1991)

have

established

that

employee

commitment to the organisation has a positive influence on job

performance and a negative influence on intention to leave or employee

150

Chapter 6

turnover. Empirical evidence strongly supports the position that intent to

stay or leave is strongly and consistently related to voluntary turnover
(Dalessio, Silverman and Schuck 1986; Fishbein and Ajzen 1975;
Griffeth and Hom, 1988; Lambert, Hogan and Barton 2001; Mathieu and
Zajac 1990).
Research Questions
Phase three of this study addresses the research question, What
HRM factors influence core employees decisions to stay? The
following model provides a graphical representation of the key
components and relationships tested in this study (Figure 6.1). The
nature of the research question and the resultant theoretical model
requires the examination of a number of relationships. The model
suggests that several HR factors (selection, recognition and reward,
training

and

development,

challenging

assignments)

and

organisational factors (leadership, team work relationship, policies and

work

environment)

exert

positive

influence

on

organisational

commitment.
Hypothesis
The hypotheses formulated for the theoretical HRM-retention
model of this study (Fig 6.1), conceptually considered the independent
variables as "bundles" of HR practices (Marchington and Grugulis 2000,
MacDuffie 1995). The independent variables consisted of eight factors
grouped into two sets or bundles (i.e. HR factors and organisational
factors). The decision to group them into bundles was initially

151

Janet Chew

highlighted by the panel of experts from the Delphi procedure (Phase

One) and further reinforced during the interview with HR managers in
Phase Two. Consequently, the notion of bundling of HR practices was
adopted and tested in the final phase of this study.
Previous studies (MacDuffie 1995, Wright, Dunford and Snell,
2001) support the notion that practices within bundles are interrelated
and the combined impact of practices in a bundle could be specified in
two simple alternatives: an additive approach and a multiplicative
approach.
Statistically, the additive combination of practices has the
desirable property that the sum of normally distributed variable scores is
still normally distributed, which is not true for the multiplicative product.
Conceptually, a multiplicative relationship implies that if any single
organisational practice is not present, the "bundle" score (and effect)
should be zero. However, Osterman (1994) argues that, although
practices in a bundle are expected to be interrelated, the absence of a
particular practice will not eradicate the effect of all other practices, but
will weaken the net effect of the bundle (p. 176.).
Given the preceding arguments, this study has adopted the
bundles of HR factors and organisational factors as complementary.
Drawing on the conceptual bundling of HR practices, the following
hypotheses were developed for this study. The HRM retention model
posits that:

152

Chapter 6

153

Janet Chew

Human Resource Factors Bundle

H1:

Personorganisation

fit

(Selection)

positively

influences

organisational commitment.
H2:

Remuneration, recognition and reward positively influence

organisational commitment.

H3:

Opportunities for training and career development positively

influence organisational commitment.

H4:

Challenging

employment

assignments

and

opportunities

positively influence organisational commitment.

Organisational Factors Bundle
H5:

Strong

leadership

direction

and

coordination

positively

influence organisational commitment.

H6:

Company culture (goals, vision and values) and policies

(structure,

rituals,

and

protocol)

positively

influence

organisational commitment.
H7:

Teamwork relationship positively influences organisational

commitment.

H8:

Satisfactory

work

environments

positively

influence

organisational commitment.
Organisational Commitment as a conditional variable
H9:

Organisational commitment positively influences intention to

stay.

154

Chapter 6

H10: Organisational commitment impacts upon the relationships

between the:
(a) HR factor bundle and intent to stay, and
(b) Organisational factor bundle and intent to stay.

Conceptually, the organisational commitment construct can be

characterised by at least three factors: (a) a strong belief in and
acceptance of the organisation's goals and values; (b) a willingness to
exert considerable effort on behalf of the organisation; and (c) a strong
desire to maintain membership in the organisation (Mowday, Porter and
Steers 1982). Previous research has indicated that commitment is linked
to lower turnover rates (Mowday, Porter and Steers 1982; Steers 1977),
and increased intention to stay with the firm (Singh and Schwab 2000).
Further, Hom and Griffeth (1995) found that organisational commitment
enters into a motivational and decision-making process that produces an
intention to leave.
In their comprehensive review, Meyer and Allen (1997) reported a
positive relationship between affective commitment and employee
retention. Both affective and continuance (calculative) commitment are
expected to increase the likelihood that an individual will remain with an
organisation (Meyer, Bobocel and Allen 1991).
Some researchers (Mathieu and Zajac 1990; Travaglione 1998;
Wiener and Vardi 1980) however, found a weak direct relationship

155

Janet Chew

between organisational commitment and intention to turnover. Their

studies support organisational commitment as conditional variable.
Thus, implicit in this HRM-retention model is that organisational
commitment

moderates

the

relationship

between

the

studys

independent variables and intention to stay, is conditional upon

organisational commitment.
The Sample Population
The sample population used in this study consisted of core
employees of nine large Australian organisations. The participating
organisations were from various industry sectors and they included
health-care, higher education, public sector, diversified industries and
manufacturing.
Data Collection Process
An employee self-completion questionnaire was the instrument
employed in Phase three of this study. Results from Phase 1 and Phase 2
of this study identified nine factors that influence retention of core
employees. These were person-organisation fit (selection), remuneration
and

recognition,

training

and

career

development,

challenging

assignment, leadership behaviour, team relationship, communication

and consultation, company culture (i.e. vision, mission, objectives and
values) and policies (i.e. structure, rituals, protocol), work environment.
Organisational commitment and turnover intention were the outcomes
examined.

156

Chapter 6

The questionnaire was designed to allow the researcher to collect

the relevant information to test the proposed model. Sixty questions were
incorporated into the questionnaire for the purpose of this study. A copy
of the original questionnaire is provided in Appendix 8. Five questions
were used to obtain demographic information on age, gender, industry,
and occupation. The remaining fifty-five questions measured the
following variables:

Organisational Commitment (7 questions)

Turnover Intention (4 questions)

Person Organisation Fit (Selection) ( 4 questions)

Remuneration and recognition (5 questions)

Training and Career Development (4 questions)

Challenging assignments (5 questions)

Leadership behaviour (4 questions)

Team relationship (4 questions)

Organisational culture and policies (4 questions)

Communication and consultation (5 questions)

Work environment (7 questions)

The nine organisations that participated in this study selected

their core employees and these employees were surveyed via two
methods: 1. mail via reply paid envelope and 2. electronic mail. A total of
800 surveys were distributed with 457 returned, indicating a response

157

Janet Chew

rate of 57 per cent. This was deemed a good sample size (Comrey and Lee
1992). According to Green (1991), the required sample size depends on
the number of issues, the desired power of relationship, alpha level,
number of predictors and expected effect sizes. The simplest rules of
thumb are N50+8m (m is the number of independent variables) for
testing multiple correlation and N104+m for testing individual
predictors. Hence, the sample size of the study was deemed suitable.
Measurement of Constructs
The Employee Questionnaire was designed to examine the
dependent variables organisation commitment and turnover intention. The
independent variables were based on eight variables previously identified
and validated in Phase 1 and Phase 2 of the study. Each independent
variable was assessed using a minimum of three items to a maximum of
eight items (Table 6.1). All items were scored along a seven point scale
ranging from (1) strongly disagree to (7) strongly agree (Likert 1961).
Scales used in previous research were employed to measure the
independent and dependent variables of the study.
Independent Variables
Person- organisation fit (Selection)
Person organisation fit is considered a key part of organisational
selection and is generally defined as "the compatibility between
individuals and organisations" (Kristof 1996, p. 3).

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Chapter 6

Person organisation fit was measured with a four items scale

developed by Netemeyer et al. (1997). The measure reflects the fit
between personal values and organisational values (Cable and Judge
1997), for example I feel that my personal values are a good fit with the
organisational values. According to Jose and Thibodeaux (1999),
employees prefer an ethical organisational environment. The fit between
a company and its employees is strengthened when principled conduct is
encouraged in organisations (Sims and Kroeck 1994) and this
component of organisational value is also included in this measurement
scale.
Remuneration and recognition
Employees tend to remain with the organisation when they feel their
capabilities, efforts, and performance contributions are recognised
and appreciated (Davies 2001).
Remuneration and recognition was measured with a five item scale
focused on intrinsic and extrinsic rewards (Cammann, Fichman, Jenkins
and Klesh 1979; Broadfoot and Ashkanasy 1994; Seashore, Lawler,
Mirvis and Lawler, Cammann 1982). Extrinsic reward measures were
designed to measure the employees view of the economic rewards from
his/her job. It includes pay, benefits, and job security. The scale also
measured the degree to which intrinsic rewards such as recognition are
present in the organisation.

159

Janet Chew

Training and Career Development

Training provides employees with specific skills or helps to correct
deficiencies in their performance; while development is an effort to
provide employees with abilities the organisation will need in the
future (Gomez-Mejia, Balkin and Cardy 1995; Wilk and Cappelli
2003).
A four item scale developed by Broadfoot and Ashkanasy (1994)
focused on whether the organisation expends sufficient effort in
providing opportunities for people to develop their skills, and the
adequacy of the training (Seashore, Lawler, Mirvis, Lawler and
Cammann 1982).
Challenging assignments
Providing employees with challenging assignments with well-defined
performance measures and feedback is important for a high
performance environment in which employees can achieve their
personal objectives (Boyer 1994).
A five item scale was derived from the Job Diagnostic Survey to
measure challenging assignments (Hackman and Oldham 1975;
Jackson, Wall, Martin and Davids 1993). The scale explored job elements
of skill variety, task significance, task identity, autonomy, high order
needs and feedback.
Leadership Behaviour
Research findings suggest that leadership enhances organisational
commitment (Allen 1995; Bykio, Hacket and Peterson 1994; Ferres,

160

Chapter 6

Travaglione and Connell 2002; Podsekoff, Mackenzie and Bommer

1996). Studies by Yammariono and Bass (1990) revealed a positive
influence of transformation leaders on organisational outcomes,
resulting in lowered intention to leave, and increased organisational
citizenship behaviour.
A four items scale measured leadership behaviour. The scale
consisted of items adapted from two validated scales: (1) the Multifactor
Leadership Questionnaire devised by Bass and Avolio (1990), which
measured transformational leadership and (2) the eight-item scale by
Hartog, Van Muiijen and Koopmen (1997) which measured inspirational
leadership. The adapted scale used in this study measured leadership
behaviour in terms of leadership effectiveness, extra effort and leadership
satisfaction.
Teamwork relationship
Employees stay when they have strong relationships with others they
work with (Clarke 2001). Team building, assignments involving work
with peers, and opportunities for social interaction both on and off
the job encourage these relationships (Johns et al. 2001).
A four item scale developed by Bass and Avolio (1990) measured
the team leadership and relationship of employees and peer leadership,
in this study.
Organisational culture and policies
Corporate culture is described as the invisible forces that shape life
in

business

organisation

(Fitz-enz

161

1990;

Sheriden

1992).

Janet Chew

Management philosophy and style, communications protocol and

policies, rituals and taboos all interact to create the uniqueness of
each company culture.
A five item scale modified from The Organisation Profile
Questionnaire (Kerr and Slocum 1987; Kopelmen et al. 1990; OReilly,
Chatmen and Caldwell 1991; Morita, Lee and Mowdey 1989; Peters and
Sheriden 1988) and developed by Broadfoot and Ashkanasy (1994) was
used to measure organisational culture. The profile is a descriptive
instrument, one that paints a picture of respondents views of their
organisations culture. The scale measures the degree the organisational
structure limits the action of employees, the focus on the influence of
policies and procedures, and tests organisational goal clarity and
planning.
Communication and consultation
Effective communications strengthens employee identification with
the company and builds trust (Clarke, 2001; Levine, 1995).
A five item scale validated by Sims, Szilagyi and Keller (1976) and
Broadfoot

and

Ashkanasy

(1994)

was

used

to

measure

the

communication, consultation and feedback processes of participating

organisations in the study. Three items examined the communication
process, and two items explored the consultation and feedback process.
Work environment
Many

companies

are

providing

flexible

schedules

and

work

arrangements and are experimenting with other ways to help

162

Chapter 6

individuals manage their work and personal life issues (Perry-Smith

and Blum 2000; Solomon 1999).
Individuals will stay with a company that clearly considers and
cares for their career priorities (life stage needs), health, location, family,
dual-career, and other personal needs (Gonyea and Googins 1992;
Kamerman and Kahn 1987).
A seven-item scale derived from several scales (Broadfoot and
Ashkanasy 1994; Cammann, Fichman, Jenkins and Klesh, 1979; Smith,
1976) was designed to measure humanistic and socialisation, physical
work conditions and organisational climate. Three items measured the
extent to which the individual is respected and cared for by the
organisation. Three items measured perceptions about the organisational
climate in the workplace. One item measured the physical conditions
experienced in the workplace.

Dependent Variables
Organisational Commitment
Organisational commitment consists of three components: (1)
identification, pride in the organisation and the internalisation of its
goals and values; (2) involvement psychological absorption in the
activities of one's role for the good of the employing organisation; and
(3) loyalty affection for, and attachment to the organisation
(Shepherd and Mathews 2000, p. 557).
Organisational commitment was measured using nine items from
the fifteen item Organisational Commitment Questionnaire (OCQ) scale

163

Janet Chew

developed by Mowday, Steers and Porter (1979). O'Reilly and Chatman

(1986) and Reichers (1985) criticised the original fifteen-item version
because of the overlap of some items with the concept they are supposed
to predict, turnover. This criticism has led some researchers to use a
shorter version of the OCQ that omits the problematic items (for example
see Banai and Reisel 1995, Shepherd and Mathews 2000). Meyer and
Allen (1991), Morrow (1993), and McElroy et al. (1995), recommended
using the short version of the OCQ to measure organisational
commitment. Compared to other measures of employee commitment, the
OCQ has received the most thorough and generally positive evaluation
(Meyer and Allen 1997). Research has consistently shown that the
instrument yields satisfactory internal and temporal stability, and
discriminant, convergent and predictive validity (Mowday et al. 1982;
Mathieu and Zajac, 1990; Ketchand and Stawser 2001), with the shorter
(nine-item) version being superior to the original (fifteen-item) version
(Commeiras and Fornier 2001).
The scale draws, upon Angle and Perrys (1981) classification of
commitment into two components: 1) affective commitment (and
calculative commitment. Affective commitment refers to employees'
emotional attachment to the organisation and a calculatively committed
employee exchanges his/her contributions for inducements provided by
an organisation (Gainey 2002).

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Chapter 6

Intent to Stay (Turnover Intention)

According to Fishbein and Ajzen, "the best single predictor of an
individual's behavior will be a measure of the intention to perform
that behaviour" (1975, p. 369). Empirical evidence strongly supports
the position that intent to stay or leave is strongly and consistently
related to voluntary turnover (Dalessio, Silverman and Schuck 1986;
Griffeth and Hom 1988; Mathieu and Zajac 1990).
Intent to stay (Turnover intention) was measured with a four-item
scale consisting of items adapted from the Michigan Organisational
Assessment Questionnaire (Camman, Fichman, Jenkins and Klesh
1979; Seashore, Lawler, Mirvis and Camman 1982) and the Lyons'
Propensity to Leave scale (Cook, Hepworth, Wall and Warr 1981). Using a
seven-point scale, respondents rated the likelihood of staying at the job
for two to three years; whether they thought about quitting; their degree
of loyalty and the likelihood of looking for a new job in the near future.
Data Analysis
All data were initially analysed via SPSS (Statistical Package for the
Social Sciences). No outliers of concern were present as the majority
of the scores were within range (Tabachnick and Fidell 2001). The
eleven variables were screened for normality by examining kurtosis
and skewness value. Most often, variables rarely conform to a classic
normal distribution. The distributions are usually skewed (positive or
negative) and display varying degrees of kurtosis (positive or
negative). The decision to transform variables depends on the severity

165

Janet Chew

of the departure from normality (Neter, Kutner, Nachtdsheim and

Wasserman 1996).
Missing data
The data collected in this study had missing data scattered randomly
throughout the data matrix. When there are only a few data points
missing in a random pattern from a large data set, the problems are
less serious and almost any procedure for handling missing values
yield similar results to no real value (Cohen and Chen 1983). All
missing data were treated with list wise deletion.
Factor analysis is best suited to identifying the interrelationships
among a set of items in a scale, all designed to measure the same
construct.
Exploratory factor analysis was carried out in this study for two
reasons. The first reason leads to a relatively mechanistic use, that is the
factors become inputs into another analysis (regression). The second
reason for using factor analysis is to run a reliability test to determine
whether items being measured were coded as the same construct
(Churchill 1994). Reliability analysis evaluated the inter-correlations
among variables.

Means, and standard deviations and correlations

Correlation coefficients were calculated for initial exploration of the
relationships between variables. Correlation is used to measure the
size and direction of the relationship between two variables

166

Chapter 6

(Tabachnick and Fidell 2001). In this study, a correlation analysis

was

carried

out

to

measure

the

inter-relationship

between

independent variables (person organisation fit, remuneration and

recognition,

training

and

career

development,

challenging

assignments, leadership behaviour, teamwork relationship, company

culture

and

(organisational

policies,

work

commitment

environment),
and

intention

dependent
to

stay)

variables
and

the

demographic information (age, gender and occupation).

On completion of the correlation analysis, a regression analysis
was conducted in order to further evaluate and understand the
relationships between the dependent and independent variables of the
study, and to test the hypotheses of interest.
Multiple Regression Analysis
The regression model selected for this study is stepwise regression
and

the

dependent

variables

examined

were

organisational

commitment and intent to stay (Turnover intention). The purpose of

stepwise regression analysis was to develop a group of independent
variables that are useful in predicting the dependent variables and to
eliminate those independent variables that do not provide any
additional prediction to the independent variables already in the
equation (Tabachnick and Fidell 2000).
In this study, the stepwise regression analysis was conducted to
test the relationship between the eight independent variables of the
study: person organisation fit, remuneration and recognition, training

167

Janet Chew

and career development, challenging assignments, leadership, teamwork,

policies,

and

work

environment

and

the

dependent

variables:

Commitment and Intent to stay (Turnover Intention). Age and gender

were the demographic factors included as control variables. Occupation
and industry were excluded because the correlation matrix indicated
insignificant relationships. Residuals were examined for magnitude,
normality, homoscedasticity, and linearity after each step (Cohen and
Cohen 1983; Tabachnick and Fidell 2000). No violations of these
assumptions were identified.

Results
This section reports the results of the study and they include the
following:

demographic

profiles,

means,

standard

deviations

construct validity and reliability, the results of the factor analysis

and correlation analysis, and the outcomes of the regression tests.
For this study, the sample was not severely skewed and therefore no
data transformation occurred.
Demographic Profile
Table 6.1 presents the demographic data of the respondents,
depicting the proportion of gender and age of the participants, the

168

Chapter 6

Frequency
(n=457)

Percent
(%)

250
204

55
45

97
98
117
142

21
21
26
31

205
66
156
29

45
15
34
6

Administrator
I T Technician
Manager
Librarian
Lecturer
Accountant
Engineer
HR Personnel
Physician
Researcher
Nurse
Veterinary personnel

67
22
70
9
74
14
49
5
5
6
54
14

15
5
15
2
16
3
11
1
1
1
12
3

Navy officer
Navy personnel

53
12

12
3

Gender
Male
Female

Age
20-29
30-39
40-49
50-59

Industry
Tertiary Education
Healthcare
Public Sector
Private Sector

Occupation

Table 6.1. Demographic data of respondents (Age, Gender, Industry and

Occupation

different types of industry segments and the different occupations of

the participants. A total of eight hundred employees were surveyed.
Fifty seven percent (n=457) of these employees responded, of which
fifty five percent were male and forty five percent were female. The
age of the respondents, were identified in three specific categories; 21
percent were aged between twenty and twenty-nine; 21 percent
between thirty and thirty-nine; 26 percent between forty and fortynine and 31 percent between fifty and sixty-five.

169

Janet Chew

The respondents of this study consisted of core employees from

nine large organisations of different industries. Forty five percent of these
respondents were from tertiary education, 15 percent from health-care,
34 percent from public sector and 6 per cent from the private sector.
As shown in Table 6.1, the occupations of the respondents consisted
of 15 administrators, 5 percent information technology technicians,
15 percent managers, 2 per cent librarians, 16 percent lecturers, 3
percent accountants, 11 percent engineers, 1 percent HR personnel,
1 percent physicians, 1 percent researchers, 12 percent nurses, 3
percent veterinary personnel, 12 percent navy officers and 3 percent
personnel. This study surveyed a good range of employment services
and therefore provided a much broader scope for generating the
research.
Exploratory Factor Analysis Outcome
The nine independent variables (1) person organisation fit, 2)
remuneration and recognition, 3) training and career development, 4)
challenging assignments, 5) leadership behaviour, 6) communication
and consultation, 7) teamwork relationship, 8) company culture and
policies, and 9) work environment were factor analysed (principal
components with varimax rotation). The goal of varimax rotation is to
simplify factors by maximising the variance of the loadings within
factors, across variables. The spread in loadings is maximised,
loadings that are high after extraction become higher after rotation
and loadings that are low become lower. Consequently, interpreting a

170

Chapter 6

Items
1

Variables
5
6
7

10

Person organisation Fit 1

Person organisation Fit 2
Person organisation Fit 3
Person organisation Fit 4
Reward and recognition 1
Reward and recognition 2
Reward and recognition 3
Reward and recognition 4
Reward and recognition 5

-.408
-.899
-.839
-.513
-.333

Training and Development 1

Training and Development 2
Training and Development 3

-.674
-.649
-.463

Challenging opportunities 1
Challenging opportunities 2
Challenging opportunities 3
Challenging opportunities 4
Challenging opportunities 5
Leadership 1
Leadership 2
Leadership 3
Leadership 4
Leadership 5
Leadership 6
Leadership 7
Leadership 8
Teamwork relationship 1
Teamwork relationship 2
Teamwork relationship 4
Teamwork relationship 5
Teamwork relationship 6
Teamwork relationship 7

.656
.635
.680
.708
.739
.616
.641
.644
.617
.548
.639
.679
.647
.523
.864
.874
.474
.308
.486

.438

Company culture and Policies

1
Company culture and Policies
2
Company culture and Policies
3
Company culture and Policies
4
Work environment 1
Work environment 2
Work environment 3
Work environment 4

.565
.485
.541
.531
.809
.439
.388
.523

Organisation commitment 1
Organisation commitment 2
Organisation commitment 3
Organisation commitment 6
Organisation commitment 7
Organisation commitment 8
Organisation commitment 9
Intention to stay 1
Intention to stay 2
Intention to stay 3
Intention to stay 4

11
-.464
.866
-.402
-.327

-.472
.777
.715
.599
-.796
-.516
-.758
.726
.592
.675
.484

Extraction Method: Principal Component Analysis. Rotation Method: Oblimin with Kaiser
Normalisation. Rotation converged in 17 iterations

Table 6.2 Factor analysis of HRM factors.

171

Janet Chew

factor becomes easier because it is obvious which variables

correlate(Neter, Kutner, Nachtsheim and Wasserman 1996).
The correlation of the factors is ascertained from the pattern
matrix displayed in Table 6.2. The results support the factorial
independence of eight of the nine constructs. The two dependent
variables, organisational commitment and intention to stay (turnover
intention), were also factor analysed (varimax rotation) in a separate
analysis.
As a result of the exploratory factor analysis several items were
deleted, due to cross loadings. Cross loading score of <0.30 were deleted,
as they were not considered to be adding to the measure, reducing the
dependent and independent variables to ten factors. The resultant ten
factors included person organisation fit, remuneration and recognition,
training and career development, challenging assignments, leadership
behaviour, teamwork relationship, company culture and policies, work
environment, organisational commitment and intention to stay.
For greater clarity of the process, Appendix 9 depicts the changes
in the items for each of the factors as a result of the exploratory factor
analysis. The four items of communication and consultation construct
clustered onto the leadership behaviour scale. The clusters of items
under teamwork relationship formed a new construct. As shown in
Appendix 9, several items were deleted.
The results of the factor analysis meant H7 had to be revised. The
revised hypothesis summarised that teamwork relationship in the
workplace positively influences organisational commitment. Once the

172

Chapter 6

factor structures were determined, the next procedure involved testing

the reliability of the measures.
Measures of Reliability
Reliability refers to the degree to which measures are free from
random error and therefore yield consistent results (Zikmund 1997).
The scales of the ten factorised variables were checked for reliability
using Cronbachs Alpha (Zikmund 1997). The results of the tests for
each scale (10) are shown in Table 6.3.
An alpha of 0.70 or above is considered to be reliable as suggested
by many researchers (Davis 1996; Nunnally 1978). Apart from the
person organisation fit scale ( =0.54), the Cronbach's alphas for all other
scales in the study were judged to be reliable ( =>0.7) (Hair et al. 1992).
The items of measurement for person organisation fit (selection) and the
items of measurement for organisational commitment were shown to have
common characteristics (indication of overlapping in factor analysis). This
may have affected the reliability of the person organisation fit scale because
it lacked discriminating power.
Means, standard deviations and correlations
Table

6.3

presents

the

means,

standard

deviations,

inter-

correlations, and reliabilities of the scales. The standard deviations of

the main study variables ranged from 1.06 to 1.58, suggesting that
none of the measures were marked by excessive restrictions in range.

173

Janet Chew

174

Chapter 6

At this juncture, it is important to note that the communication

and consultation variable does not appear in Table 6.3 because this
variable was removed from further analyses. Descriptive statistics and
correlations are displayed in Table 6.3. As can be seen from this table the
correlations between the independent variables are as expected,
providing further evidence of construct reliability.
The correlation matrix presented in Table 6.3 revealed that all the
eight variables (person organisation fit, remuneration and recognition,
training and career development, challenging assignments, leadership
behaviour, teamwork relationship, culture and policies and work
environment) have significant positive correlations with a) organisational
commitment and b) intention to stay. The direction of the association
ranged from r= 0.42 to r=0.66. These results indicate no multicollinearity and singularity problems.
The correlation results meant that H1, H2, H3, H4, H5, H6, H7,
H8, H9 were supported. However, the demographic variables showed
only weak associations with the commitment dimension and intention to
stay. Both age (r= .17, p<0.001) and gender (r =.18, p<0.001) were
positively correlated to organisational commitment but occupation and
industry had no significant relationship. Therefore occupation and
industry were removed from further analyses in the interests of
parsimony.
The association between organisational commitment and intention
to stay (r =.66, p<0.001) was strong, positive, and significant. Thus, as
the correlation analysis indicated significant relationships between the

175

Janet Chew

identified HRM factors and organisational commitment and intent to

stay.
Multiple regressions
In this study, a stepwise multiple regression process was used to
examine the relationships between eight HRM factors, organisational
commitment and intent to stay. In addition, age and gender were
used as control variables in the regression analysis.
The regression analyses ran with two separate sets of independent
variables (HR factors and organisational factors). The reason for this is
conceptually based. In this study, the choices about bundling HR
practices began with the design of the theoretical model. The
independent variables were divided into two bundles (HR factors and
Organisational factors) identified from Phase 1 and Phase 2. The
participants of both phases suggested the separation of these HRM
factors.
Each of these bundles is made up of interrelated, internally
consistent and even overlapping practices. The two bundles are
complementary. It is the combination of practices in a bundle, rather
than individual practices that shapes the pattern of interactions between
the employers and employees (Cutcher-Gershenfeld 1991).
Statistically it also makes sense to separate out these bundles to
show the true effect. Regression is best when each IV is strongly related
to the DV but uncorrelated to other variables (Tabachnik and Fidell
2001). Thus the regression solution is extremely sensitive to the

176

Chapter 6

combination of variables that is included in it. Whether or not

independent variables (IVs) appear particularly important in a solution
depends upon the other IVs in the set. Clearly, there were strong
correlations between the HRM factors.
As such, four separate regression equations were developed and
tested in this study. The regression equations tested were of the following
form:
Equation 1: HR Factors bundle + constant = Organisational
commitment,
Equation

2:

Organisational

Factors

bundle

constant

Organisational commitment,
Equation 3: HR Factors bundle + commitment + constant =
Turnover intention (intent to stay) and
Equation 4: Organisational Factors + commitment + constant =
Turnover intention (intent to stay).
Age and gender were the control variables included in all the
regression analyses.
The results of these four regression runs are reported in Table 6.4,
Table 6.5, Table 6.6 and Table 6.7.
Table 6.4 shows that the demographic features and four HR
factors all have a positive and significant impact on commitment as
predicted. Of interest is the weak effect of training and career
development

on

commitment

in

comparison

to

the

other

HR

factors.Thus, the study hypotheses (H1, H2, H3 and H4) that predicted
person organisation fit, remuneration, recognition and reward and

177

Janet Chew

challenging opportunities positively influence organisational commitment

are supported by the data.
_________________________________________________________________________________
Organisational Commitment
Human Resource Practices
_____________________________________________
Variables

Step 1

Step 2

Age

0.14**

0.16***

Gender

0.37***

0.21**

Control Variables (demographics)

Response Variables
Person Organisation Fit

0.23***

Remuneration/recognition

0.31***

Training/Career development

0.10*

Challenging opportunities

0.22***

_________________________________________________________________________________
R2

0.05***

0.52***

Adjusted R2

0.04

0.52

10.62***

77.49***

0.05

0.47

10.62

105.76

R2
F for R2

*p< 0.05
**p< 0.01
***p<0.001
_________________________________________________________________________________
Table 6.4: Regression Results (Unstandardised Coefficients) for Organisational
Commitment as Dependent Variable

178

Chapter 6
_________________________________________________________________________________
Organisational Commitment
Organisational Factors
_________________________________________________________________________________
Step 1
Step 2
Variables
Control Variables (demographics)
Age

0.14**

0.14***

Gender

0.37***

0.24**

Response Variables
Leadership

0.13**

Teamwork relationship

0.26***

Company culture and Policies

0.16***

Work environment

0.13***

_________________________________________________________________________________
R2

0.05***

0.51***

Adjusted R2

0.04

0.50

10.56***

74.74***

R2

0.50

0.47

F for R2

10.56

101.88

*p< 0.05
**p< 0.01
***p<0.001

____________________________________________________________________
Table 6.5: Regression Results (Unstandardised Coefficients) for Organisational
Commitment as Dependent Variable

Table 6.5 presents the results of organisational commitment as

dependent variable with independent variable as organisational factors.

179

Janet Chew

The results supports earlier findings that organisational factors of

leadership, teamwork relationship, company culture and policies and
work environment, have a strong and positive influence on commitment,
accounting for 47% of the variance in commitment.
Thus, the four hypotheses (H5, H6, H7, H8) that predicted
leadership, teamwork relationship, company culture and policies and
work environment positively influence organisational commitment are
supported by the data.
Table 6.6 reports the results of Equation (3) regression analysis
testing for the indirect effect of commitment on intention to stay when
the independent variables are the HR bundle. The results from table 6.6
suggest that commitment plays a differential role in affecting the
relationship between HR factors and intent to stay. The standardised
coefficients were reported.
For instance, the results suggest that commitment completely
mediates1 the relationship between the factors of personal organisational
fit and challenging opportunity and intention to stay; whilst only partially
mediating the relationship between remuneration, recognition and
reward and training and career development and intent to stay.
A mixed result is also evident when the organisational factors are
used as independent variables.
1

Baron and Kenny (1986) highlight that a variable is considered mediator if: (a) the
predictor variable are significantly correlated with the hypothesis mediator,( b) the
predictor and mediator variables are all significantly correlated with the dependent
variable, and (c) a previously significant effect for the predictor variables when the
dependent variable is regressed into them, becomes non-significant or significantly
reduced in predicting power when the hypothesised mediator is added to the
analysis.

180

Chapter 6
_________________________________________________________________________________
Turnover Intention
Human Resource Practices
(Intent to stay)
______________________________________
Step 1
Step 2
Step 3
Variables
Control Variables (demographics)
Age

0.38***

0.40***

0.28***

Gender

0.33*

0.21

0.04

Person Organisation fit

0.17*

0.01

Remuneration/recognition

0.42***

0.21***

Training/Career development

0.16**

0.12*

Challenging opportunities

0.12*

0.03

Response Variables

Commitment

0.70***

_________________________________________________________________________________
R2

0.09***

0.39***

0.51***

Adjusted R2

0.08

0.38

0.50

19.90***

44.11***

62.00***

R2

0.09

0.30

0.12

F for R2

19.90

51.50

104.87

*p< 0.05
**p< 0.01
***p<0.001
_________________________________________________________________________________
Table 6.6: Regression Results (Unstandardised Coefficients) for Turnover Intention
as Dependent Variable

Table 6.7 specifically reveals that commitment mediates the

relationship between teamwork, culture and intent to stay and acts as a
possible partial mediator of the relationship between work environment
and intent to stay.

181

Janet Chew
_________________________________________________________________________________
Organisational Factors
Turnover Intention
(Intent to stay)
_______________________________________________________________________
Step 1
Step 2
Step 3
Variables
Control Variables (demographics)
Age

0.37***

0.35***

0.25***

Gender

0.31*

0.15

0.10

Leadership

0.11

0.01

Teamwork relationship

0.17*

-0.01

Company culture
and Policies

0.15*

0.03

Work environment

0.28***

0.19***

Response Variables

Commitment

0.74***

_________________________________________________________________________________
R2

0.08***

0.35***

0.49***

Adjusted R2

0.08

0.35

0.48

18.96***

38.51***

58.26***

+ R2

0.08

0.27

0.14

F for + R2

18.96

44.41

114.48

*p< 0.05
**p< 0.01
***p<0.001
_________________________________________________________________________________
Table 6.7: Regression Results (Unstandardised Coefficients) for Turnover Intention
as Dependent Variable

Of interest is that leadership has no direct effect on intent to stay,

despite the earlier identified relationship in Table 6.3. In all, it
appears that the relationship between HR factors, organisational
factors and intention to stay is conditional upon commitment.

182

Chapter 6

Discussion and Findings of the Study

The regression results revealed that commitment mediated the
relationship between person organisation fit and intent to stay and was a
partial mediator of remuneration, recognition and reward and training
and career development.
People who are well suited for the job and/or organisation are
more likely to stay. The concept of organisational fit (Weiner 1982; Brown
1969; Kidron 1978; Steers 1977) identifies convergent goals and values
between the individual and the organisation as an important element of
affective commitment.
Results

revealed

that

organisational

commitment

mediates

teamwork relationships and organisational culture and policies and act

as a partial mediator of work environment. Commitment however, did
not have an impact on the relationship between leadership and intent to
stay.
The finding that employees who have close friends at work are less
likely to leave is widely supported (Kristoff 1996; O'Reilly, Caldwell, and
Barnett, 1989). Implicit in work group cohesion is the notion of "coworker support", whereby having many close friends enhances the
support of employees. Meyer and Allen (1997), after observing that
stayers were higher on work group cohesion than leavers, reported
that the decision to leave was directly influenced by both the job
challenge and the amount of social support available. Prior research by
Granovetter (1986) focused on the social networks of employees and the
degree of social integration, identified the role of "strong ties" and "weak

183

Janet Chew

ties" between employees in explaining the process by which employees

decide to leave or stay in organisations.
Research

has

shown

that

employees'

commitment

to

an

organisation affects how well the organisation performs in various ways.

If it turns out that employee commitment varies in certain predictable
ways from one cultural pattern to another, organisational development
specialists could try to strengthen employee commitment and, therefore,
organisational effectiveness by changing the organisational culture.
These studies and anecdotal evidence suggest a positive link between
strong organisational cultures and employee commitment (Lahiry 2000;
Sheriden 1992; Stum 1998).
These relationships are supported by the extant literature, which
reports

direct

relationships

between

the

eight

variables

and

organisational commitment. This supports H1-H8.

One of the purposes of this study however was to build on these
findings by testing the proposal that the relationships between the HR
bundle, Organisation bundle and the outcome, intention to stay, is
conditional upon commitment. Prior research reports mixed results with
respect to the relationship between organisational commitment and
turnover intention (Mathieu and Zajac 1990).
The purpose of this final phase of the study was to test the HRMretention model that examined the relationships among, HR factor
bundle, organisational factor bundle organisational commitment, and
turnover intention (intent to stay). Specifically, the study attempts to
postulate HRM management processes in the development of employees'

184

Chapter 6

commitment to the organisation, and the conditional nature of the

commitment-intention to stay relationship.
For this study, organisational commitment and intention to stay
(turnover intention) were selected as the focal dependent variables for the
following reasons. First, there is evidence that before actually leaving the
job, employees typically make a conscious decision to do so. These two
events are usually separated in time (Frazis et al. 1998; Larwood, Wright
Desrochers and Dahir 1998). Second, it is more practical to ask
employees of their intention to stay in a cross-sectional study than
actually to track them down via a longitudinal study to see if they have
left or to conduct a retrospective study and risk hindsight biases.
The findings of this study revealed positive significant corelationships between the eight HRM factors and organisational
commitment. These specific HRM factors consisted of two bundles of
practices: HR factors (e.g., person organisational fit, remuneration,
reward and recognition, training and career development, challenging job
opportunities) and Organisational factors (e.g. leadership behaviour,
company culture and policies, teamwork relationship and satisfactory
work environment)
The findings of the study also confirmed a significant relationship
between organisational commitment and intent to stay. In their
comprehensive review, Meyer and Allen (1997) reported a positive
relationship between affective commitment and employee retention. Both
affective and continuance (calculative) commitment are expected to

185

Janet Chew

increase the likelihood that an individual will remain with an

organisation (Meyer, Bobocel and Allen 1991).
There are however, studies by Mathieu and Zajac (1990) and
Randall (1990) that have also demonstrated that the relationships
between organisational commitment and turnover have produced few
large correlations. One explanation for the low commitment-turnover
correlations is that other variables probably moderate this relationship
(Mathieu and Zajac 1990).
The results of this research highlight the conditional role of
commitment. Implicit in HRM-retention model is that organisational
commitment mediates the relationships between person organisation fit,
teamwork relationship, culture and policies and the outcome variable
intention to stay. Additionally, the study also revealed that commitment
has a partially mediating effect on remuneration, recognition and reward,
training and career development and work environment. However, the
results revealed that organisational commitment does not have any
significant impact on the relationship between challenging opportunities,
leadership behaviour and intent to stay.
Wagar (2001) examined the relationship between an individual's
intention to quit his job and the human resource management activities
of the organisation. The study revealed that employees of organisations
with more sophisticated human resource systems were significantly less
likely to indicate they intended to quit over the next two years. According
to Wager (2001), employees who did not intend to quit were more likely to
be employed in organisations that adopted a certain set of HR practices

186

Chapter 6

such as employee voice procedures, programs that recognise employee

contributions (e.g. merit-based promotion, individual merit pay and a
formal

employee

recognition

program),

mechanisms

for

sharing

information with employees, use of problem-solving groups and training

in employee involvement. Several of the factors investigated by Wagar
were further re-examined in this study (i.e., training, pay, recognition,
communication and consultation).
The results of this study supported Wagers findings. The study
identified eight factors that influence the core employees decision to stay.
These factors are bundled into two set of practices: HR factors bundle
(person organisation fit, remuneration, recognition and reward, training
and

career

development

and

challenging

opportunities)

and

organisational factor bundle (leadership, organisational culture and

policies, teamwork relationship and work environment ). Thus this study
focused on the impact of these two bundles of practices on the retention
of core employees rather than individual HR practice.
Another key finding of this study is a strong correlation between
gender and organisational commitment. This is supported by studies
conducted by Angle and Perry (1981) and Miller and Wheeler (1992) who
noted that women are more committed to organisations than male.
The results of this study also postulated a significant and positive
relationship between age and organisational commitment. This research
provided evidence that older employees and individuals with more
seniority within the organisation were less likely to report they planned to
resign. This finding is consistent with previous research (Alutto,

187

Janet Chew

Hrebiniak and Alonso 1973; Cohen and Lowenberg 1990). Mathieu and
Zajac (1990) found that age is significantly more related to affective
commitment than to continuance (calculative) commitment. Tenure was
excluded from this study because studies by Meyer and Allen (1997)
supported that employees age may be the link between tenure and
affective commitment.
A prior study by Werbel and Gould (1984) revealed an inverse
relationship between organisational commitment and turnover for nurses
employed more than one year, but Cohen (1991) indicated that this
relationship was stronger for employees in their early career stages (i.e.
up to thirty years old) than those in later career stages.
Past studies revealed that employees interpret human resource
practices as indicative of the personified organisation's commitment to
them (Eisenberger et al. 1990; Settoon et al. 1996). They reciprocate their
perceptions accordingly in their own commitment to the organisation.
Some researchers suggest that for positive work experiences to increase
commitment significantly, employees must believe that such work
experiences are a result of effective management policies (Parker and
Wright 2001). The findings of this study (i.e. mediating role of
commitment) have therefore provided further empirical evidence to
support these studies.
In summary, the findings of the empirical tests of the model put
forward in this thesis demonstrates that commitment can be influenced
by bundles of HR factors (i.e. selection (person organisation fit),
remuneration, reward and recognition, training and career development,

188

Chapter 6

challenging assignments) and Organisational factors (i.e. leadership

behaviour, organisational culture and policies, teamwork relationship
and satisfactory work environment.) Moreover, commitment acts as a
partial mediator of the relationship between remuneration, recognition
and reward, training and career development and work environment on
intent to stay. Commitment fully mediates the relationship between
person organisation fit, teamwork relationship, culture and policies and
intention to stay.
Conclusion
This chapter provided a comprehensive account of the results of
Phase 3 of the study (The Employee Survey). It described the sample
population, the instrument, measurements of construct and the
construct validity of all the variables used in the study. Factor analysis,
correlations and multiple regressions and were discussed and reported.
Final discussion and findings of the study will be discussed in Chapter
Seven.

189

CHAPTER SEVEN

DISCUSSION AND CONCLUSION

Validating the HRM- Retention Model

The best single predictor of an individual's behaviour will be a

measure of his/her intention to perform that behaviour (Fishbein
and Ajzen 1975, p. 369).

The main purpose of this chapter is to synthesise the qualitative and

empirical results from chapters four to six to provide an answer to
the primary research question of this thesis namely, whether HRM
practices can actually influence the retention of core employees. The
other objectives are to highlight the contributions of the research to
the development of knowledge in the field, as well as to acknowledge
its limitations and to set future directions for research.

A Review of the Findings on the Influence of HRM factors on the

Retention of Core employees of Australian Organisations.
The influence of HRM factors on retention of core employees was
examined in three phases.

Phase One Study

The results of Phase One provided a significant contribution to the
study. It identified five characteristics of core employees of Australian
organisations. They included 1) possessing knowledge, skills and

Chapter 7

attributes (KSA) aligned with business operation and direction, 2) is

central to the productivity and wellbeing of the organisation 3)
provide a competitive edge to the organisation, 4) support the
organisational culture and vision and 5) possess skills, knowledge
and abilities that are relatively rare or irreplaceable to ensure the
success of the organisation. The descriptions of core employees seem
to have a focus on knowledge, skills and attributes (KSA) that are of
strategic value to the organisation. This comprehensive description of
a core employee was used as a template in the phase two, to further
determine the characteristics of core employees of the participating
organisations.
With regards to the needs of core employees, the Delphi results
indicated that instead of job security as identified in literature,
employees

now

placed

greater

emphasis

on

a)

training

and

development, b) career advancement and growth opportunities, c)

recognition of capabilities and acquisition of new skills and d)
challenging work. The findings also suggested that the needs of core
employees also differ with age.
Younger employee needs are focused on remuneration, training
and development, career advancement, challenging job, growth
opportunities and recognition of their capabilities and acquisition of
new skills. For older employees, salary and career advancement are
not so important. However, autonomy, liberty from mundane things,
and opportunities to mentor so that they can make greater
contribution to the organisation is of great importance. Job challenge

191

Janet Chew

is preferred to repetitive jobs. Findings by Dessller (1999) and

Finegan (2000) support these outcomes.
The HR architecture models (Handy 1995; Lepak and Snell
1999) advocated a differential investment strategy for different
categories of employees. The findings of this study indicate that the
shaping of these employment modes is dependent on the influence of
several factors in the Australian business environment. These factors
included the strategic focus of the organisation, organisational
structure, competitiveness of the industry, type of industry and the
type of worker included in the organisation. According to the Delphi
panel of experts these factors were excluded in the theoretical model
developed by Lepak and Snell in 1999 for the American business
environment. It is suggested that the impact of these factors may
therefore be the determinants of the type of HRM systems adopted by
various Australian organisations (holistic or differential). This finding
is another key contribution of this research.
The preliminary results of Phase One (the Delphi study)
identified eight factors that may affect retention. The identified factors
were classified into two bundles: HR factors and Organisational
factors.

The

HR

factors

reflected

the

human

resource

policies/practices of firms and consisted of four elements: (1)

selection (person organisation fit), (2) remuneration, recognition and
reward, (3) training and career development and (4) challenging
opportunities and assignments. Whilst the organisational factors
focused on organisational characteristics, philosophies and structure

192

Chapter 7

such as (1) leadership behaviour, (2) organisational culture and

policies, (3) teamwork relationship and (4) work environment. These
findings also provided credence to the notion of bundling of HR
practices to achieve an organisational outcome.
This concept of bundles of HR practices to achieve an
organisational outcome is supported by several studies (MacDuffie
1995; Pfeffer 1998). In 1993, Ichniowski, Shaw, and Prennushi,
found that the combination of practices in a bundle, rather than
individual practices, shapes the pattern of interactions between
employers and employees. Thus any research that focuses on the
impact of individual HR practice on an outcome may produce
misleading results (Cutcher-Gershenfeld 1991).
Phase Two Study
The second phase of the study (Interview) set out to confirm the
findings from Phase One by examining the current retention
management practices of Australian organisations. Thus, this
qualitative approach provided greater insights to the views of the HR
policy makers on the retention of their employees.
Firstly, the findings of the second phase confirmed the validity
of

the

HRM-retention

factors

identified

in

Phase

One.

More

specifically, the findings provide evidence that these retention HRM

factors were current practices adopted by participating organisations
to combat attrition.

193

Janet Chew

Secondly, results from this qualitative study highlighted that

organisations that managed their human resource effectively may
have higher retention of their employees. Huselid (1995) reported
from a sample of 968 firms that those using comprehensive employee
recruitment and selection procedures, extensive employee involvement
and training, and formal performance appraisal linked to incentive
compensation were likely to have lower employee turnover, higher
productivity, and enhanced corporate financial performance. Other
studies seem to support this perspective (Delaney and Huselid 1996;
Delery and Doty 1996; Huselid and Becker 1996; MacDuffie 1995).
Thirdly, the findings of Phase Two indicate that holistic and
differential HR practices were equally adopted by participating
organisations. However, although it may be the case that some firms
manage all employees the same way, regardless of their value and
uniqueness, results of this study verify that most firms make
significant distinctions in the methods they use for different skill sets
and that these are important determinants of firm performance. This
result further supports the Lepak and Snell (1999) theoretical HR
architecture model which advocates a differential investment strategy
for different categories of employees.
Phase Three Study
The final phase of the study, tested the HRM retention model,
developed from the results of Phase 1 and Phase 2. The quantitative
study examined the relationships between the HR factor bundle,

194

Chapter 7

organisational

factor

bundle,

organisational

commitment

and

intention to stay.
The findings of this study revealed positive significant corelationships

between

the

eight

factors

and

organisational

commitment. These specific factors consisted of two bundles of

practices: HR factors (e.g. person organisational fit, remuneration,
reward and recognition, training and career development, challenging
job

opportunities)

and

Organisational

factors

(e.g.

leadership

behaviour, company culture and policies, teamwork relationship and

satisfactory work environment).
Research on social exchange theory has shown that employees'
commitment to the organisation is derived from their perceptions of
the employers' commitment to and support of them. Past studies also
revealed that employees interpret human resource practices as
indicative of the personified organisation's commitment to them
(Eisenberger et al. 1990; Settoon et al. 1996). They reciprocate their
perceptions accordingly in their own commitment to the organisation.
Some researchers suggest that for positive work experiences to
increase commitment significantly, employees must believe that such
work experiences are a result of effective management policies (Parker
and Wright 2001).
The findings of the study also confirmed a significant
relationship between organisational commitment and intent to stay.
In their comprehensive review, Meyer and Allen (1997) reported a
positive relationship between affective commitment and employee

195

Janet Chew

retention. Both affective and continuance (calculative) commitment

are expected to increase the likelihood that an individual will remain
with an organisation (Meyer, Bobocel and Allen 1991).
There are however, studies by Mathieu and Zajac (1990) and
Randall (1990) that have also demonstrated that the relationships
between organisational commitment and turnover have produced few
large correlations. One explanation for the low commitment-turnover
correlations

is

that

other

variables

probably

moderate

this

relationship (Mathieu and Zajac 1990).

It is therefore important to acknowledge that other antecedents
of commitment not measured in this study were the lack of available
alternative employment opportunities (Meyer and Allen 1991) and
magnitude or number of investment lost in leaving the organisation
(Rusbult and Farrell 1983). The reason for the exclusion was based
on the desire to limit the number of measures to achieve parsimony
of the model. More specifically, this was not one of the objectives of
this research.
The results also draw attention to the mediating role of
commitment. Implicit in the model is that organisational commitment
mediated the relationships between person organisation fit, teamwork
relationship, culture and policies and the outcome variable (intention
to stay). It was found that commitment does have a partially
mediating effect on some of the independent variables and intent to
stay.

The

results

revealed

that

196

it

moderates

remuneration,

Chapter 7

recognition and reward, training and career development and work

environment, and intent to stay.
The results of the study also postulated a significant and
positive relationship between age and organisational commitment.
This finding is consistent with previous research (Alutto, Hrebiniak
and Alonso 1973; Cohen and Lowenberg 1990). Mathieu and Zajac
(1990) found that age was significantly more related to affective
commitment than to continuance (calculative) commitment. Tenure
was excluded from this study because studies by Meyer and Allen
(1997) supported that employees age may be the link between tenure
and affective commitment.
Werbel and Gould (1984) revealed an inverse relationship
between

organisational

commitment

and

turnover

for

nurses

employed more than one year, but Cohen (1991) indicated that this
relationship was stronger for employees in their early career stages
(i.e. up to thirty years old) than those in later career stages.
Another finding of this study was a strong correlation between
gender and organisational commitment. This is supported by studies
conducted by Angle and Perry (1981) and Beutell and Brenner (1986)
who noted that women are more committed to organisations than
male.
In summary, the findings of the empirical tests of the model
put forward in this thesis demonstrated that commitment can be
influenced by selection (person organisation fit), remuneration,
reward and recognition, training and career development, challenging

197

Janet Chew

assignments,

leadership

behaviour,

organisational

culture

and

policies, teamwork relationship and satisfactory work environment.

Moreover, commitment acts as a moderator of remuneration,
recognition and reward, training and career development and work
environment on intent to stay. Commitment also mediates person
organisation fit, teamwork relationship, culture and policies on
intention to stay.
Of particular interest however is that commitment acts as a
mediator between the factors identified and intent to stay.

Contributions
Whetten (1989) put forward seven simple questions, which determine
the value of a theoretical contribution. These questions provide a
useful framework within which to discuss the theoretical and
methodological contributions of this thesis. The questions are:

1. Whats new
2. So what?
3. Why so?
4. Well done?
5. Done well?
6. Why now? and
7. Who cares?

198

Chapter 7

Each question is dealt with next, followed by a discussion of

the limitations of the research and future directions.
Whats new?
Bacharach (1989) stated that the field of organisational theory is in
danger of sinking under its own weight because of the sheer number
of different theoretical perspectives applied to a given phenomenon.
There is a need for amalgamation and assimilation of the theories
into

universally

accepted

frameworks

that

will

guide

further

developments in theory and practice. Mitchell (1997) has stated that

very little work is done to integrate motivational theories and
principles. This thesis sought to do this by attempting to integrate
three significant bodies of knowledge relevant to human resource
management: HR practices, organisational commitment and turnover
intention.
A legitimate value added contribution needs to go beyond
simply adding or deleting factors from an existing model and offering
alternate explanations of relationships between variables (Whetten
1989). The present research extends the knowledge of human
resource management by developing an HRM-retention model which
examined the relationships between HR factors, organisational
factors, organisational commitment and intention to stay in the
Australian business environment.
From a management perspective, this model maybe used by
human resource practitioners as a guide or template in designing a

199

Janet Chew

strategic retention tool that an organisation may adopt so that a

productive form of employee commitment is generated.
Furthermore, the qualitative part of the study was able to flesh
out the current retention management practices of large Australian
organisations. It gave greater clarification to the current HRM
retention issues in the Australian business environment and provides
greater insights into the decision making process of HR practitioners.
The present research was also able to test the theoretical HR
architecture model developed by Lepak and Snell (1999) in the
Australian

business

environment.

These

American

researchers

proposed that within organisations, considerable variance exists with

regard to both the uniqueness and value of skills. Juxtaposing these
two dimensions, they built a (2 x 2) matrix describing different
combinations with their corresponding employment relationships and
HR systems. This study identified several factors in the Australian
business environment that was not present in the American model.
These factors form the framework for an Australian HR architecture
model.
One

of

the

operationalisation

original
of

new

contributions
measures

of

to

the

field

employee

is

the

retention

management efficacy. The HRM-retention model developed from this

study informs both the content and process of generating employee
commitment to the organisation and the influence on employee
intention to remain in the organisation.

200

Chapter 7

The findings have also classified HR practices into bundles to

combat attrition. The identification of sets of best practices to
reduce turnover supports the universal superior approach to
managed people, which is utilising the best practices in human
resource management (Huselid 1995; Pfeffer 1998).
Finally, this study contributed to the literature on perceived
organisational

support,

commitment,

and

voluntary

turnover

intention in several ways. It extends recent research on commitment

to the organisation by considering multiple factors of HRM support.
Of particular importance was the demonstration that the relationship
between selection (person organisation fit), teamwork relationship,
organisational culture and policies to intention to stay is mediated by
commitment acts as a partial mediator of the relationship between
work environment, remuneration, recognition and reward, training
and career development and intention to stay.
So What?
Lewins (1935) proposition that nothing is as practical as a good
theory suggests that the criteria of a good theory go beyond the mere
advancement of knowledge. A good theory must therefore inform
research and practice in addition to contributing to knowledge in
particular discipline (Poole and Van de Ven 1989).
Wright (1998) has suggested that the basic theory behind "fit"
is that the effectiveness of any HR practice or set of practices for
impacting firm performance depends upon the firm's strategy (or

201

Janet Chew

conversely, the effectiveness of any strategy depends upon having the

right HR practices). In 1995 Dyer and Reeves reviewed four studies of
the effects of "bundling" HR practices on firm performance and stated
that there was "no convincing evidence that more effective HRM
practices are those that fit the business strategy." Gerhart, Trevor,
and Graham (1996) argued that there was little empirical evidence
supporting the value of achieving synergy between strategy and HR
practices. Thus, from a practical perspective, the thesis offers a HRM
retention

strategic

solution

for

organisations.

If

properly

implemented, the bundles of HR practices identified in this

empirical study will ensure an alignment between HR and strategy to
gain competitive advantage.
Why so?
Evidence of a positive relationship between certain HR practices and
firm retention may constitute the kind of data needed to encourage
HR managers to adopt effective HR management approaches
In summary, this section highlights the contributions that this
study has made towards extending the knowledge base of the HRM
with regards to retention. It provided practical implications for
Human

resource

practices

and

most

significantly

from

an

organisational development perspective offers a strategic retention

tool for progressive organisations.
The findings support American studies conducted by Fitz-enz
in 1990, which advocated retention management as driven by the

202

Chapter 7

following

factors,

which

should

be

managed

congruently:

organisational culture and structure, recruitment strategy, pay and

benefits

philosophy,

employee

support

programs,

and

career

development system.
This study has attempted to understand the process through
which employees attach themselves to an organisation. It has
concentrated on the immediate precursor of turnover, behavioral
commitment. Behavioral commitment is defined as the degree of an
employee's intention to stay in an organisation. It is the process by
which employees are able to link themselves to an organisation.
Becker (1960), in examining behavioral commitment, concentrated on
what he termed the "side-bet theory", where employees attach
themselves to organisations through investments such as time, effort,
and rewards which become too costly to give up. Whitener(1991)
argue that continuance commitment is conceptually very similar to
behavioral intentions.
The advantages of studying behavioral commitment over
turnover have been noted by Thompson and Terpening (1983). First,
the reasons given for leaving may not be true and accurate; second,
the use of archival data may not adequately distinguish between
voluntary and involuntary turnover; and third, other factors may be
prevalent which are not related to the decision to quit.
Martin and Hunt

(1980)

also

claim

that

behavioral

commitment has a preventative role, whereby managers can, after

determining the effect of certain variables on an employee's intention

203

Janet Chew

to leave, make changes to these variables so that employees may

reassess their current situation and decide to stay. If changes cannot
be made, then intention to leave has important consequences in
predicting recruitment and human resource planning needs in
organisations. Likewise, Dalessio, Silverman, and Schuck (1986),
asserted that more attention should be directed towards behavioral
commitment rather than turnover, as once an employee has quit
there is little an organisation can do except incur the expense of
hiring or training another employee.
Well done?
A number of points can be made in response to the question of
whether the research was well done. A lot of care has been taken to
address measurement issues such as the use of valid and reliable
measures of model constructs in testing the theoretical model.
The HRMretention model was obtained and tested using a
three

phased

process.

Both

quantitative

and

qualitative

methodologies have been used in this HRM research and as a result

provided considerable strength to the study.
The findings of the present study have shown that the
qualitative method has allowed a closer analysis of retention
management issues from companys perspective. An important
advantage of the in-depth interview, is the opportunity to probe
complex answers, resulting in greater extraction of information from
the participant and greater transfer of knowledge as compared to a

204

Chapter 7

mailed out survey (Hayes 1998). Thus, this qualitative approach

achieved the generation of richer data for the development of the
HRM-retention model. The integration of a qualitative component into
an otherwise quantitative research methodology is important for the
full understanding of the effects of HRM factors on employee
retention. A single quantitative approach would not have offered a
robust understanding of current employee retention practices.
Therefore it would not have been comprehensive enough to formulate
the model.
Done well?
It is also important to establish that the theoretical model has done
well in the process of empirical testing. The empirical results placed
great credence in Banduras (1986) notion that human behaviour
cannot be fully understood solely in terms of social structures or
psychological factors. He proposed instead that it is necessary to
adopt an integrated perspective in which social influences operate
through self processes that produce behavioural intentions and
actions. By examining the influence of several incorporated factors
such as teamwork relationship, work environment, leadership
behaviour and corporate culture on employees commitment and their
intentions to stay or leave their organisations, this study therefore
adopted an integrated perspective.
The two qualitative phases of the research identified the HRM
factors that are most likely to influence retention. The Delphi process

205

Janet Chew

of obtaining this crucial information was rigorous and the researcher

enlisted

the

assistance

of

senior

academics,

experienced

HR

practitioners and industrial psychologists to initially identify these

factors. To further confirm the accuracy of the identified HRM factors,
HR managers of twelve organisations were interviewed to assess the
current retention management practices of the Australian business
environment.
Why now?
It was argued in Chapter One that many changes to organisations
have occurred both in terms of organisational structure and employer
and employee relationships (Allan and Sienko 1997; Fierman 1994;
Kitay and Lansbury 1997; Kraut and Korman 1999). Changes in the
economic environment have impacted on both the formal and
informal contracts of employment. This in turn has affected employee
motivation and organisational commitment.
Decreased employee commitment and increased flexibility of
employment coincided with decreasing tenure and job instability for
workers. The use of these non-standard employment arrangements
have long-term consequences. Flexibility may be good business for
the employer, but in many cases it may be devastating for the worker.
Employment instability is contributing to the growing inequality in
income, status, and economic security in Australia (ABS 2001).
Moreover, Pfeffer (1998), in his critical examination of the
people management practices of organisations, has suggested that

206

Chapter 7

there

is

disturbing

disconnect

in

todays

organisational

management of people. He has marshalled impressive evidence to

prove

direct,

unassailable

correlation

between

good

people

management and profits. Despite this mounting evidence, he argues

that smart organisations still fall into harmful patterns when
managing people and this is destructive to employment relationships
and organisational performance.
Who cares?
In response to this question, it can be argued that both organisations
and employees should care about the influence of HRM factors on
organisational commitment and intention to stay.
With the average attrition rate in the Australian workplace
currently 6 percent and the cost of replacing an employee usually
amounts to a quarter of an individual's annual salary. Consequently,
a

company

with

50,000

employees

incurs

replacement

costs

approaching $18 million a year (Davies 2001; Ettorre 1997).

Furthermore, in a time and age when total quality and supreme
customer service are germane to success in the world of keen and
relentless competition, workers' dedication has never been as
valuable as now to organisations. Barney and Wright (1998) indicated
that in order for human resources to contribute to sustained
competitive advantage, they must remain hard to imitate, create
value, and co-align, uniquely, to the organisation's business strategy.
For progressive organisations pursuing such competitive advantage,

207

Janet Chew

the HRMretention model developed in this study will assist in their

objective to retain critical employees.
From an employees perspective, organisational actions such as
HRM practices are indicative of the organisation's commitment to
them (Whitener 2001). Employees who have their expectations met on
the job (Tsui, Porter, and Tripoli 1997) and who perceive they are
treated fairly (Huselid 1995) are more likely to stay in the
organisation. A plethora of academic research conducted at the
organisational level also suggests that human resource practices
affect organisational outcomes by shaping employee behaviours and
attitudes (Arthur 1994; Tsui, Pearce, Porter and Tripoli 1997).
Dick Kovacevich, CEO of Wells Fargo recently said, "The way I
see it is, when you take care of your employees, they take care of your
customers and your shareholders wind up winning" (Kover 2000, p. 1).
Limitations
Poole and Van de Ven (1989) stated that a good theory is by
definition, a limited, fairly precise picture. There is always tension
between internal consistency and the scope of theoretical models. The
criteria for parsimony, rigour and coherence have driven this thesis
to express a small but internally consistent framework. The other
side of the coin is the criticism of the model for being an incomplete
representation of complex phenomena. A number of extraneous,
uncontrolled factors could influence the model variables. However,
this has to be balanced with the fact that the thesis was primarily

208

Chapter 7

concerned with retention management of core employees in large

organisations.
This study, like all field research, has limitations. As with all
studies of this type, common method variance, or mono-method bias,
is a concern. However, due to the nature of the dependent variables,
it is unlikely that common method variance would be a serious
problem in this study. For example, intention to stay can be assessed
only by asking the individual his or her thoughts on the matter.
Although common method variance is an issue with this type of
research methodology, this design can be quite useful in providing a
picture of how people feel about and view their jobs (Spector and
Brannick

1995).

Spector

concludes

that

"properly

developed

instruments are resistant to the method variance problem" (Spector

1984: 438). To enhance this resistance, efforts were carried out to
follow the recommendation of Podsakoff and Organ (1986) to
eliminate obvious overlap in items across measures.
One of the limitations of this study is that the model, which
was developed and tested in this study, stopped at the level of
intention (Ajzen 1988) to demonstrate motivated behaviour in terms
of desire to remain in the organisation. Hence, the data collected were
cross-sectional, so causality cannot be definitively determined.
In addition, the study is limited to specific categories of
industries such as higher education, health care and public sector
industries. Hence, the generalisability of the study may be restricted
due to the small number of companies.

209

Janet Chew

There are some shortcomings of the three phased approach

methodology used in this study that should be acknowledged.
In the Delphi study, bias may have occurred from poorly worded or
leading questions or selective interpretation of the results. However
in this study, this limitation was addressed via the use of a focus
group consisting of a couple of senior academics in the field of HRM.
Participant dropout can also be a problem in the Delphi study
(Linstone and Turoff 1975).

Initially, seventeen experts agreed to

participate but only thirteen responded therefore affecting the sample

size.
In Phase two, it was an important advantage to use the in depth
interview to probe complex answers, obtaining an expansion of
answers of the standardized questions, and resulting in greater
extraction

of

information

from

the

participants

(Hayes

1998;

Zikmund 1997). However, the extraction of this kind of highly

sensitive and confidential information (especially the turnover rates)
from policy makers can be less accurate due to the reluctance to
divulge. To overcome this problem and also reduce the chance of
misinterpretation of questions, the semi structured interview style
was selected as the appropriate approach to elicit rational and
complete responses.

In Phase three, the response rate of each group (health care, higher
education

and

public

sector)

was

210

different

and

may

cause

Chapter 7

inconsistency in the results.

To conquer this problem, the sample

size of the two diversified industries and the one manufacturer were
considered too small and did not have sufficient statistical power.
They were removed due to non significance.

In addition, there were

also weaknesses intrinsic in comparing the data from diverse

perspectives. The researcher had considered limiting this research to
specific sectors (either private or public sector), to obtain good
consistency of the results. However, if this approach was undertaken
a high response rate could not have been guaranteed and therefore
the research overall may have been compromised.

Future Directions and Research

An obvious complement to this study is to conduct longitudinal
research. Some of the arguments and findings of this study may well
be a good starting point for such research. Longitudinal studies are
needed to establish causal direction among the relationships
investigated in this study. For example, in a longitudinal study, it
may be possible to observe over time if turnover intention measured
at one point is associated with negative beliefs and outcomes at a
later point. It would provide more robust data. In addition, a
longitudinal study would be able to further examine the changing
nature of organisational commitment throughout an employee's
tenure, with emphasis on management's policies and reactions to
maintain equity and fairness in the exchange agreement.

211

Janet Chew

This

research

has

highlighted

the

mediating

role

of

organisational commitment on person organisational fit, teamwork

relationship and organisational culture and policies and the partially
mediating role on remuneration, recognition and reward, training and
career development and work environment. Clearly, there is a need
for greater analysis of the factors identified. For example, other
aspects of the work environment than those that were measured in
this study, such as formalisation, role ambiguity, and instrumental
communication should be examined. Hence a better understanding of
the

interrelationships

illuminate

and

among

provide

these

further

variables

insights

for

would

serve

academics

to
and

practitioners.
Further, testing of the model in other industries, and over
longer periods of time would also be beneficial. This study only
examined the education, health care and public sector industries,
future research will need to confirm to what degree the link between
commitment and retention does also exist for other industries.
Given the empirical confirmation for many of this study's
predictions, it seems timely and prudent for theorists and researchers
to move toward "finer-grained" studies. Future empirical studies
should include measures of the psychological linkages and extend the
examination to distinguish the dimensions of turnover intention and
organisational commitment.
This research precluded other antecedents of commitment such
as perceived alternative employment and magnitude or number of

212

Chapter 7

investment lost in leaving the organisation the commitment-turnover

relationship. Future work should include these variables to study
their impact on the relationship between the independent and
dependent variables of the HRM retention model.
Commitment was selected as a useful construct on which to
base this study because it can be correlated with subjects' social
identity characteristics and perceptions, and it is organisationally
important. Research has shown that organisational commitment is a
salient antecedent of turnover intent (Singh and Schwab 2000;
Somers 1995). However, job satisfaction is also an important
antecedent of commitment (Coyle-Shapiro and Kessler 2000; Mayer
and Schoorman 1992). Therefore future

studies may explore

relationships involving job satisfaction and other commitment foci

(e.g. professional commitment, supervisor commitment, commitment
propensity).

This extended examination may determine if similar

patterns emerge.
In conclusion, this study has gone a substantial way towards
meeting its main objective, which was to determine the HRM factors
that influence the retention of core employees in Australian
organisations. The study was able to produce a new model (Figure
7.1) suitable for future use by human resource practitioners as a
guide in determining what initiatives an organisation should adopt to
retain their critical employees.

213

Janet Chew

214

APPENDIX 1
Janet Chew
School of Commerce
Murdoch University
South Street
Murdoch Western Australia 6150
Tel: 93602443
E-mail Address: jchew@central.murdoch.edu.au
Name and address
Dear ________________
Re: A Request to Participate in Research
I am a PhD candidate from Murdoch University, Western Australia, specialising in
International Business. I am currently, conducting a research study on retention
management. This research is fully endorsed by the School of Business at
Murdoch University and my supervisors, Associate Professor Lanny Entrekin and
Dr Shelda Debowski.
Employee retention is a highly important strategic tool for corporations. The aim of
this study is to examine the influence of human resource practices on the retention
of core employees of Australian organisations. The findings would benefit both the
organisations and employees in the area of HRM. Results from this study will assist
in the development of an effective HRM retention program for organisations.
Your participation will form a critical part of the research. To assist in my
research, I would like to invite you to participate in a three round Delphi Study.
Each round of the study would require approximately 20 minutes and the data
collection would occur over a two-month time period commencing on 26 August
2002. This is an intermediate methodology that will be used to develop a
measurement instrument for a later stage of the study. The sharing of your
knowledge and experience as you answer the three e-mailed surveys will be
valuable to me and as such will be treated with the strictest confidence. No
reference will be made to any individual and the information will be reported in an
aggregated form. A summary of my findings will be provided upon request.
I can be contacted via phone or e-mail at the above address. If you have any
queries, please do not hesitate to contact me. I thank you in advance for your
assistance and consideration.

Yours sincerely

Janet Chew
MIR (London) B Com (Hons) (Murdoch)
Associate Lecturer
Murdoch Business School

215

APPENDIX 2

Murdoch Business School

RESEARCH PROJECT:
THE INFLUENCE OF HUMAN RESOURCE PRACTICES ON THE
RETENTION OF CORE EMPLOYEES
CONSENT AGREEMENT
I am a PhD student at Murdoch University investigating the management of
retention in Australian organisations. The aim of this study is to examine the
influence of human resource practices on the retention of core employees of
Australian organisations.
You can help in this study by consenting to complete three rounds of an electronic
email survey. As a participant you will be asked to express your expert opinion
and judgement on the current development of retention management in Australia
and to identify the key HR factors influencing retention in the work place. Appendix
1 describes the procedure. Each survey will require approximately 20-30 minutes
and the data collection would occur over a two-month period, commencing on 23rd
August 2002.
If you are willing to participate in this study, could you please complete the details
below. If you have any questions about this project please feel free to contact
either myself, Janet Chew on 93602443 or my supervisor, Associate Professor
Lanny Entrekin, on 93602528.
Alternatively, you can contact Murdoch
Universitys Human Research Ethics Committee on 93606677.

I understand that I am free to withdraw my consent and discontinue my

participation at any time without prejudice. I also understand that all materials in
this study are confidential. I agree that the research data gathered for this study
may be published, provided that neither my company nor myself are identified.
Name of Participant: ______________________________________________________
Signed: ___________________________________ Date: ______________________

Researcher:

Janet Chew

Signed: ______________

216

APPENDIX 3

MURDOCH

UNIVERSITY
PERTH, WESTERN AUSTRALIA

Murdoch Business School

DELPHI STUDY
Intermediate Methodology

THE INFLUENCE OF HR PRACTICES ON THE

RETENTION OF CORE EMPLOYEES IN AUSTRALIAN
ORGANISATIONS

First Round Questionnaire

PhD Researcher: Janet Chew

Supervisors: Associate Professor Lanny Entrekin

Dr Shelda Debowski

217

APPENDIX 3

Delphi Study
First Round Questionnaire
Dear
Thank you for agreeing to participate in this study. The procedure for
this Delphi study will consist of three electronic mailed survey
rounds completed over a two-month period. The results of each
round will be analysed and fed back to the respondents, who will
then be asked to re-examine their opinions in light of the overall
results. The first round survey will commence on 26 August 2002
and consists of open-ended questions designed to elicit expert
opinions regarding HR factors that influence the retention of core
employees of Australian organisations.
Please answer as fully as possible.
completed

kindly

return

via

Once the questionnaire is

electronic

mail

to

jchew@central.murdoch.edu.au or through the postal system before

the 9th September 2002.
The second round of questions will be mailed out 2-3 weeks after the
returned date of the first survey and participants will once again be
allocated 2 weeks to complete the questionnaire. The final round will
follow suit.
If you have any queries at any time during the surveys, please do not
hesitate to contact Janet Chew on 9360-2443 or at her e-mail
address mentioned above.

Please complete both Section A - 8 questions and Section B

Background information

218

APPENDIX 3

SECTION A
THE INFLUENCE OF HR PRACTICES ON THE
RETENTION OF CORE EMPLOYEES OF
AUSTRALIAN ORGANISATIONS
1. How would you distinguish a core employee from other types of
employees?

2. How would you define a core employee?

3. How do you think Human Resource practices of Australian

organisations influence the retention of employees? (core and non
core) Please explain your views.

4. Kindly

identify

the

human

resource

factors/elements

that

influence the decision of employees to stay with an organisation in

Australia.

Please explain why you believe that each factor

influences retention.

5. Researchers, Lepak & Snell (1999) developed a theoretical model

of HR architecture that describes different employment modes,
employment relationships and HR configurations.
219

The model

APPENDIX 3

takes into account four employment modes. These are core staff,
acquisition, alliance and contracting:
A. Core
High value, high uniqueness employees are core employees
and a source of competitive value. Their value and uniqueness
may be based on tacit knowledge that would be valuable to a
competitor.
B. Acquisitions
High value, low uniqueness employees are those whose skills
are valued but are widely available in the market, for example,
accountants.
C. Alliance
Low value, high uniqueness employees are those who are not
essential to creating value and are therefore not core but who
have skills that the organisation needs from time to time, such
as lawyers.

D.

Contracting
Low value, low uniqueness employees are those with lowerlevel skills that are widely available in the market. In this case
labour is treated as a commodity to be acquired when needed.

Do you agree with this model?

If your answer is yes, please

elaborate. If No, please indicate your alternate views.

220

APPENDIX 3

6. Do you think that the model outlined in Question 5 is

representative of what is broadly taking place in Australia?

If

your answer is No, could you please provide a detailed explanation

of your contrasting view?

7. How do core employee needs differ from other types of employees?

(acquisitions, alliance and contracting).

8. With regards to current human resource management practice, do

you think Australian organisations adopt one standardised
practice for every employee within the firm (a holistic approach) or
apply differential HR practices for different types of employees?
(core, acquisitions, alliance, and contracting).
examples to illustrate your answer?

End of Section A

221

Can you give

APPENDIX 3

SECTION B: BACKGROUND INFORMATION

1. Current Position:

2. Type of Institute/Industry:

3. Highest Qualifications:

4. Age:

5. Gender:

Male

End of Section B
Thank you for your kind participation

222

APPENDIX 4

MURDOCH

UNIVERSITY
PERTH, WESTERN AUSTRALIA

Murdoch Business School

DELPHI STUDY
Intermediate Methodology

THE INFLUENCE OF HR PRACTICES ON THE RETENTION OF

CORE EMPLOYEES IN AUSTRALIAN ORGANISATIONS

Second Round Questionnaire

PhD Researcher: Janet Chew

Supervisors: Associate Professor Lanny Entrekin

Dr Shelda Debowski

223

APPENDIX 4
Dear Dr Smith
Thank you very much for responding to the Delphi Questionnaire
(Round One) which has now been analysed.

Your comments were

very useful and your responses to the questions have enabled me to

move to the next round of the study.
This is the second round questionnaire of the Delphi study on the
influence of HR practices on the retention of core employees in
Australia.

It

is

estimated

that

this

questionnaire

will

take

approximately 15 minutes to complete depending on the depth of

your response.
I wish to assure you again that all information provided through this
survey would be handled with strict confidentiality and reported in a
way so as to preserve the anonymity of the respondents.
Survey Instructions
Please complete all of the questions (1-5). Responses can be written
or typed. The completed questionnaire can be returned by postal mail
or electronic mail to the following addresses:
E-mail address: jchew@central.murdoch.edu.au
Postal Address: Janet Chew
Associate Lecturer
Murdoch Business School
Murdoch University
South Street, MURDOCH WA 6150
Kindly, return your questionnaire by Friday, 8th November 2002.
Your responses will be analysed and synthesised in the coming
weeks and you will be contacted for the final round (3) in due course.
Once again thank you for your co-operation and support of this
study.

224

APPENDIX 4

SECTION A
Please note any additional comments about your responses or any
suggestions or observations you may have concerning the
questionnaire in the space below each question.
QUESTION 1: Defining a Core Employee
Following is a list of descriptions of a core employee provided by The
Panel (Round One). Please rank a minimum of five of the statements
in order of importance, with 1 being the most important.
Core employees:
Characteristics of a core employee
A Support the organisational culture and vision.
B Carry out essential tasks.
C Possess competencies that are unique.
D Provide a competitive edge to the organisation.
E Contribute to the organisational memory their departure
would drain the organisations knowledge and skill bank.
F Possess skills, knowledge and abilities that are relatively
rare or irreplaceable.
G Are recognised and included on a succession plan.
H Are central to an organisations productivity and wellbeing.
I

Provide skills and/or knowledge to ensure the success of the

organisation.

Act as key motivators, mentors or role models to other staff.

K Are innovative and customer focussed.

L

Possess knowledge, skills and attributes that are closely

aligned with the existing or possible future operational
direction of the business.

M Display an identification with, and commitment, to the

organisation.

225

Rank

APPENDIX 4
Q1 Comments:

QUESTION 2: Human Resource Factors Influencing Retention

The collective responses identified the following human resource
factors/elements, which influence the retention of core employees.
Please rank the top five factors (1-5) in order of their importance,
with 1 being the most important.
Human Resource Factors
A Equity of compensation and benefits.
B Effective Selection.
C Provision of effective training.
D Career Development.
E Challenging Employment Structures and Opportunities.
F Fair and equitable Performance management.
G Employee assistance Programs.
H Security of tenure.
I

Reward and recognition of employee value.

J Employee Behaviour education (eg OHS, EEO).

Q2 Comments:

226

Rank

APPENDIX 4
QUESTION 3: Organisational Impacts on
Management

Human

Resource

According to the panel, the following is a list of organisational factors

that influence human resource management. Kindly rank the top five
factors (1-5) in order of their importance, with 1 being the most
important.

Organisational Factors
Company policies and culture.

Communication and consultation.

Satisfactory working environment.

Provision of state-of-the-art equipment.

Influential and sensitive leadership style.

Effective integration: working relationships.

Effective dispute resolution.

Organisational loyalty and pride.

The quality and timeliness of feedback to the employee.

Q3 Comments:

227

Rank

APPENDIX 4
QUESTION 4: Human Resource Architecture: An Australian
Model
A model of human resource architecture is a means by which to
distinguish employees in order to design human resource support
systems. In Round One, you were asked if you agreed or disagreed
with the theoretical model of Lepak and Snell (1999).

Results

indicate that 62% agreed, 30% disagreed and 8% were not sure.
Based on your collective comments, we were able to deduce that a
theoretical model of human resource architecture in the Australian
business environment should also take into consideration the
following additional factors.

Please rank in order of importance, a

minimum of 5, with 1 being the most important.

Factors of HR Architecture
A

Number of levels in the organisational hierarchy.

Types of worker included in the organisation

(eg. managerial, technical, trade).

Type of industry (eg. mining, manufacturing, and service).

Size of the organisation (large, medium, and small).

Competitiveness of the industry.

Predominant Occupational group (eg. engineers,

marketeers).

Strategic focus of the organisation (eg. Project, Growth and

Maintenance).

Organisational Structure (eg. international, local

franchisee).

Q4 Comments:

228

Rank

APPENDIX 4
QUESTION 5
In the Australian context, what do you see are the barriers/factors
that reduce the influence of human resource practices?

This concludes Round 2 of the Delphi Study

Thank you for your participation. You will be notified when Round 3
begins.

229

APPENDIX 5

Janet Chew
Murdoch Business School
Murdoch University
South Street
Murdoch Western Australia 6150
Tel: 93602443
E-mail Address: jchew@central.murdoch.edu.au
Name and address of Participant

Dear Participant
Re: A Request to Participate in Research
Strategic staffing has become an important concern for many companies because
their ability to hold on to their high potential core employees and to minimise
turnover among new hires is critical to their future survival. It is now recognized
that companies with the best people practices lead in financial success and generate
the best returns for shareholders (Watson Wyatts 2002). However, increasingly,
organisations are competing for the best talent. With the average attrition rate in the
Australian workforce approaching 40% and more than 50% of individuals planning
to leave the workplace, the focus on retention is therefore critical.
I am a PhD candidate from Murdoch University, Western Australia, specializing in
human resource management. I am currently, conducting a research study on the
retention management of Australian organizations. This research is fully endorsed
by the School of Business at Murdoch University and my supervisors, Associate
Professor Lanny Entrekin (Murdoch) and Professor Shelda Debowski (UWA)
An employee retention program is a highly important strategic tool for corporations.
The purpose of this study is to examine the influence of human resource practices on
the retention of core employees of Australian organizations. The resulting findings
would contribute to, and benefit, both the organizations and employees in the area of
HRM. Results from this study will assist in the development of an effective HRM
retention program for an organization like yours.

230

My research is designed to

APPENDIX 5

determine key HR factors that influence the retention of core employees of

Australian organizations. I recently completed Phase 1 of my study, in which a
panel of experts comprising of HR managers/representatives, senior management
academics and industrial psychologists were asked to respond to a series of
questionnaires, relating to human resource practices and retention. The results of
this Delphi study have been the basis for a questionnaire, which I will be using, in
the next stage of my research.
I would like to invite you to be part of this next stage.

This would involve a) an

interview of the HR manager or a HR representative of your firm and b) the

conducting of a mail survey of 60 of your core employees. I wish to assure you that
all information provided through this two part process would be handled with strict
confidentiality. All information given will remain confidential and no names or
other information that might identify you or your organization will be used in any
publication arising from the research. No reference will be made to any organization
and the information will be reported in an aggregated form. Feedback on the study
will be provided to participants. Your companys participation will form a critical
part of this research.
I will contact you directly in the next few days to discuss your willingness to
participate and the interview arrangements, at your convenience. In the meantime, I
can be contacted via phone or e-mail at the above address. If you have any queries,
please do not hesitate to contact me. I thank you in advance for your assistance and
consideration.

Yours sincerely

Janet Chew
MIR (London) B Com (Hons) (Murdoch)
Lecturer
Murdoch Business School
Murdoch University

231

APPENDIX 6

RESEARCH PROJECT:
THE INFLUENCE OF HUMAN RESOURCE PRACTICES ON THE
RETENTION OF CORE EMPLOYEES
CONSENT AGREEMENT
I am a PhD candidate at Murdoch University investigating the management of
retention in Australian organisations. The aim of this study is to examine the
influence of human resource practices on the retention of core employees of
Australian organisations.
You and your organisation can help in this study by consenting to participate in a)
a half an hour interview and b) employee survey of 60 of your core employees. As a
participant of the in-depth interview you will be asked to express your expert
opinion and judgement on the current development of retention management in
Australia and to identify the key HR factors influencing retention in your work
place.
If you and your organization are willing to participate in this study, could you
please complete the details below. If you have any questions about this project
please feel free to contact either myself, Janet Chew on 93602443 or my
supervisor, Associate Professor Lanny Entrekin, on 93602528. Alternatively, you
can contact Murdoch Universitys Human Research Ethics Committee on
93606677.
*********************************************************************************
I
have read the information above. Any questions I have asked have
been answered to my satisfaction. I agree to take part in this activity, however, I
know that I may change my mind and stop at any time.
I understand that all information provided is treated as confidential and will not be
released by the investigator unless required to do so by law.
I agree that research data gathered for this study may be published provided my
name or other information which might identify me is not used.

Name of Participant: ______________________________________________________

Signed: ___________________________________ Date: ______________________
Researcher:

Janet Chew

Signed: ______________

232

APPENDIX 7

MURDOCH

UNIVERSITY
PERTH, WESTERN AUSTRALIA

Murdoch Business School

PHASE 2
THE INFLUENCE OF HR PRACTICES ON THE RETENTION OF
CORE EMPLOYEES IN AUSTRALIAN ORGANISATIONS

INTERVIEW
QUESTIONNAIRE

PHD Researcher: Janet Chew

Supervisors: Associate Professor Lanny Entrekin

Professor Shelda Debowski

233

APPENDIX 7

SECTION A: Employees (Core and Non Core)

1. Which of the following statement/s best describes your companys core
employees?
Core Employees:
a. Possess knowledge, skills and attributes that are closely aligned with
the existing or possible future operational direction of the business.
b. Are central to an organisations productivity and wellbeing.
c. Provide a competitive edge to the organisation.
d. Support the organisational culture and vision.
e. Provide skills /or knowledge to ensure the success of the organisation.
f. Possess tacit knowledge not in the public domain.

2. How do you distinguish between your core employees and the non-core
employees?
_____________________________________________________________
3. Do your core employees have different needs to non-core employees?
_____________________________________________________________
4. Approximately how many employees are there in your company?
__________________________________________________________
5. What portion of your employees are core employees?
--------------Less than half

--------------About half ------------More than half

234

APPENDIX 7

6. Does your company adopt one standardised human resource practice for
every employee within the firm (a holistic approach) or apply differential
HR practices for different types of employees? (e.g. core vs. non core)
_____________________________________________________________
7. Does you company consider effective management of human resources
to be a source of competitive advantage? How is this evident in your
organizational practices?
_____________________________________________________________
8. As the senior HR person who do you report to?

9. Does HR play an important role in the strategic business planning of

your organization? How do you contribute to this area?
_____________________________________________________________
_
10. Does your company have a separate Human Resource department?

11. Which of the following are controlled centrally by the HR department?

personnel records,
training programs,
salary
performance appraisal guidelines

12. Do you outsource any HR function?

13. How many employees do you have in the HR department?

_____________________________________________________________

235

APPENDIX 7

SECTION B: Human Resource Practices /Factors that

Influence Retention
14. The following factors have been suggested as important to human
resource management. Could you identify the top three and explain how
you believe this impact on the retention of core employees?
a.
b.
c.
d.
e.
f.

attrition
hiring
promotions
demotions
transfers
changes in workers' skill sets

15. The following list has been identified by research as the top five human
resource factors that influence retention. Please indicate the extent of
their importance to you company with regards to the retention of your
employees. (e.g. Very important, Important, Somewhat important)
1. Effective Selection
2. Reward and recognition of employee value
3. Career Development
4. Challenging employment assignments and opportunities
5. Equity of Compensation and benefits
_____________________________________________________________
16. How are the HR factors in Question 12 managed?

(a) Could they be done better?

(b). What impact do they have on staff retention?

236

APPENDIX 7

17. The following list was identified by research as the top five organisational
factors that influence retention.
1. Influential and sensitive leadership style
2. Company policies and culture
3. Communication and consultation
4. Effective integration: working relationships
5. Satisfactory working environment
___________________________________________________________________

(a) Please indicate the extent of their importance in your company.

(b) How is it managed?
(c) What could be improved in the management of these factors?
(d) What impact does it have on staff retention?

SECTION C: RETENTION MANAGEMENT

18. Are any of the following evident in your work context?
A. Marketplace competition has increased dramatically
B. Conditions in our business environment are rapidly changing.
C. Government regulations are rapidly changing.
D. The technology in our product/services is complex.
E. Short supply of skilled people in the labour market.

(a) Can you give examples of how they are impacting on the employee?
activities and work environment?
____________________________________________________________

237

APPENDIX 7

19. Please indicate to what extent your companys hiring practices

influence the retention of employees. State the type of performance
measure/s used to test the effectiveness of the hiring practices.

20. Please indicate to what extent your companys performance appraisal

practices influence the retention of your employees.

21. Please indicate to what extent your companys training and career
development practices influence the retention of your employees.

22. Please indicate to what extent your companys succession planning

program influence the retention of your employees.
_____________________________________________________________
23. Please indicate to what extent your companys pay practices influence
the retention of your employees

24. Please indicate to what extent your companys leadership practices

influence the retention of your employees.
_____________________________________________________________

25. What voluntary turnover rate has your company had in the last year?

None

11% to 20%

31% to 40%

Up to 10%

21% to 30%

41% to 50% and

above

238

APPENDIX 7

26. Does your company monitor the turnover rate and the reasons for the
turnover? Please state the reasons
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________

27. How long have you been in this current job?

_____________________________________________________________
28. Would your company like to have a copy of the summarised research
findings?
Yes

No

End of survey
Thank you very much for your participation.

239

APPENDIX 8

MURDOCH

UNIVERSITY
PERTH, WESTERN AUSTRALIA

Murdoch Business School

PHASE 3
THE INFLUENCE OF HR PRACTICES ON THE RETENTION
OF CORE EMPLOYEES IN AUSTRALIAN ORGANISATIONS
EMPLOYEE SURVEY

PHD Researcher: Janet Chew

Supervisors: Associate Professor Lanny Entrekin

Professor Shelda Debowski

240

APPENDIX 8

Project Title: The influence of Human Resource Factors on the Retention of Core
Employees
Dear Employee,
I am a PHD candidate at Murdoch University investigating the influence of human
resource practices on the retention of core employees. Retention of key personnel is
a major Human Resource Management challenge facing most Australian
organisations. This survey will help to identify many issues, which could affect an
individuals decision to stay with an employer. This study will help shape future
human resource policies and assist in the development of an effective retention tool
for your organisation, as well as contribute to my PhD.
Your company has kindly agreed to participate in this study. I would like to request
your cooperation in completing the attached questionnaire. The questions seek your
opinions regarding your companys human resource management practices in
relation to retention issues. There are no right or wrong answers; we simply want
your honest opinions. The survey will take approximately 15-20 minutes.
If you have any questions regarding this project please feel free to contact myself,
Janet Chew (on 93602443), my supervisor, Associate Professor Lanny Entrekin (on
93602528) or the Murdoch University Human Research Ethics Committee (on
93606677).
This questionnaire does not require you to personally identify yourself. Your
information will remain anonymous and confidential and the data will only be
reported in an aggregated form.
Thank you for your participation in this study.

Your contribution is greatly

appreciated.
Janet Chew

M.I.R (London), B.Com (Hon) (Murdoch) PhD Candidate

Lecturer
Murdoch Business School
Murdoch University

241

APPENDIX 8

SECTION A: HUMAN RESOURCE FACTORS

The following statements relate to the way in which you perceive the human
resource practices within your organisation. For each statement, you are asked to
mark an X in the box that best describes your response.
How accurately do the following statements best describe your personal fit with your
companys culture and values?
1

Strongly Disagree

1.

Neither Agree nor Disagree

Strongly Agree

ORGANISATIONAL FIT
1
This organisation has the same values as I do
with regard to concern for others.

2.

This organisation does not have the same value

as I do with regard to fairness.

3.

This organisation has the same values as I do

with regard to honesty.

4.

I feel that my personal values are a good fit

with this organizational culture.

How accurately do the following statements describe your companys remuneration

and recognition system?
1
Strongly Disagree

5.

Neither Agree nor D isagree

REMUNERATION AND RECOGNITION

1 2 3
Employees are given positive recognition when
they produce high quality work.

6.

This organisation pays well.

7.

This organisation offers a good benefits

package compared to other organisations.

8.

This organisation values individual excellence

over teamwork.

9.

This organisation offers good opportunities for

promotion.

242

Strongly Agree

APPENDIX 8

How accurately do the following statements describe your companys training and
career development practices?
1

Strongly Disagree

Neither Agree nor Disagree

7
Strongly Agree

TRAINING AND CAREER DEVELOPMENT

1 2 3 4
People are properly orientated and trained upon
10. joining this organisation.

11. This organisation does provide regular

opportunities for personal and career
development.
12. Innovation and creativity are encouraged here.
13. The organisation has career development
activities to help an employee identify/
improve abilities, goals, strengths &
weaknesses.

How accurately do the following statements describe attributes that are currently
present in your job?
1
Strongly Disagree
Agree

Neither Agree nor Disagree

7
Strongly

CHALLENGING EMPLOYMENT ASSIGNMENTS AND OPPORTUNITIES

1 2 3 4 5 6 7
Employees are offered more challenging work
14. within the organisation.
15. Employees can work autonomously on their
work assignments.
16. Employees are skilled to do a number of
different jobs, not just one particular job.
17. Employees are given opportunities to learn
new things.
18. Employees are offered a good amount of
variety in their job.

243

APPENDIX 8

SECTION B: ORGANISATIONAL FACTORS

How accurately do the following statements describe the effectiveness of your
companys leadership practices at the organisational and the team level? Please
respond using the same scale.
1
Strongly Disagree
Agree

Neither Agree nor Disagree

ORGANISATIONAL LEADERSHIP
1 2 3
19. The leadership practices in this organisation
help me to become a high performing
employee.
20. The leadership practices in this organisation
enhance my satisfaction with my job.
21. The organisational leadership practices are
consistent with my personal values.
22. The organisational leadership practices make a
positive contribution to the overall
effectiveness of the organisation.

TEAM RELATIONSHIP
23. Team working is valued in this organisation.
24. Members of my team expect and maintain high
standards of performance.
25. Team leaders are recognised for promotion and
development.
26. Each member of my team has a clear idea of
the groups goals.

244

Strongly

APPENDIX 8

How accurately do the following statements best describe your companys culture
and policies?
1

Strongly Disagree
Agree

Neither Agree nor Disagree

Strongly

ORGANISATIONAL POLICIES
1 2
27. Organisational policies and procedures are
helpful, well understood and up to date.

28. Progress towards meeting planned objectives is

periodically reviewed.
29. The organisational structure facilitates the way
we do things.
30. This organisation has a defined vision/mission
to meet its goals.

How accurately do the following statements

communication and consultation process?
1
Strongly Disagree
Agree

describe

your

companys

Neither Agree nor Disagree

Strongly

COMMUNICATION
1
31. This organisation keeps employees wellinformed on matters important to them.
32. Sufficient effort is made to determine the
thoughts and responses of people who work
here.
33. Communications across all levels in this
organisation tend to be good.
34. Organisational structure encourages horizontal
and vertical communication.
35. There is trust between employees and their
supervisors/team leaders.

245

APPENDIX 8

How accurately do the following statements best describe your working

environment?
1

Strongly Disagree
Agree

Neither Agree nor Disagree

Strongly

WORKING ENVIRONMENT
1 2
36. My working life balances with my family life.

37. Overall this organisation is a harmonious place

to work.
38. This organisation regards welfare of its
employees as its first priority.
39. Workers and management get along in this
organisation.
40. For the work I do, the physical working
conditions are very pleasant.
41. This organisation offers a lot of security.
42. A spirit of cooperation and teamwork exists.

How accurately do the following statements describe your commitment to your

organisation?
1
Strongly Disagree
Agree

Neither Agree nor Disagree

ORGANISATIONAL COMMITMENT
1 2 3
43. I feel a strong sense of belonging to this
organisation.
44. I could just as well be working for a different
organisation if the type of work was similar.
45. Often I find it difficult to agree with this
organisations policies on important matters
relating to its employees.

246

Strongly

APPENDIX 8

46. This organisation really inspires the very best

in me in the way of job performance.
47. I find that my values and this organisations
values are very similar
48. There is little to be gained by sticking with this
organisation indefinitely.
49. I am willing to put in a great deal more effort
than normally expected to help this
organisation be successful.
50. I am proud to tell others that I am part of this
organisation.
51. I really care about the fate of this organisation.

What are your plans for staying with this organisation?

1
Strongly Disagree
Agree

Neither Agree nor Disagree

TURNOVER INTENTION
1
52. I plan to work at my present job for as long as
possible.
53. I will most certainly look for a new job in the
near future.
54. I plan to stay in this job for at least two to three
years.
55. I would hate to quit this job.

247

Strongly

APPENDIX 8

SECTION C: BACKGROUND INFORMATION

PLEASE COMPLETE THIS SECTION. THE FOLLOWING QUESTIONS
REQUIRE A WRITTEN RESPONSE.

56)

Your Age:

20-29

30-39

40-49

50-65

57)

Gender:

Male

58)

Industry: ___________________________________________________

59)

What is your occupation? ______________________________________

Female

End of survey
Thank you very much for your participation.
Please return the survey to (jchew@central.murdoch.edu.au)

248

APPENDIX 9

Factorised Variables of the study

Note: R = reversed scored items. Items were deleted or retained
No

Item

Text

Retained/Deleted

Person Organisation Fit

Has the same values as I do with regard to concern

for others

Retained

Person Organisation Fit

Does not have the same values as I do with regard

to fairness (R)

Retained

Person Organisation Fit

Has the values as I do with regard to honesty

Retained

Person Organisation Fit

My personal values are a good fit with this

organisational culture

Deleted

Remuneration and Recognition

Recognition is given when produce high quality

work

Retained

Remuneration and Recognition

Pays well

Retained

Remuneration and Recognition

Offers a good benefits package compared to other

organisations

Retained

Remuneration and Recognition

Values individual excellence over teamwork

Deleted

Remuneration and Recognition

Offers good opportunities for promotion

Retained

Training and career

development

People are properly orientated and trained

Retained

Training and career

development

This organisation does provide regular

opportunities and career development

Retained

Training and career

development

Innovation and creativity are encouraged

Deleted

Training and career

development

This organisation has career development activities

Retained

Challenging assignments

Offered challenging work

Retained

Challenging assignments

Work autonomously on their work assignments

Retained

Challenging assignments

Skilled to do different jobs

Retained

Challenging assignments

Given opportunities of learning new things

Retained

Challenging assignments

Offered a good amount of variety in their job

Retained

Leadership Behaviour

Help me to become a high performing employee

Retained

249

APPENDIX 9

Leadership Behaviour

Enhance my satisfaction with my job

Retained

Leadership Behaviour

Consistent with my personal values

Retained

Leadership Behaviour

Make a positive contribution to the overall

effectiveness of the organisation

Retained

Teamwork relationship

Team working is valued in this organization

Retained

Teamwork relationship

Members of my team expect and maintain high

standards of performance

Retained

Teamwork relationship

Team leaders are recognised for promotion and

development

Deleted

Teamwork relationship

Each member of my team has a clear idea of the

group's goal

Retained

Organisational Culture and

Policies

Policies and procedures are helpful, well

understood and up to date

Retained

Organisational Culture and

Policies

Progress towards meeting planned objectives is

periodically reviewed

Retained

Organisational Culture and

Policies

Structure facilitates the way to do things

Retained

Organisational Culture and

Policies

Has a defined vision/ mission to meet its goals

Retained

Communication and
Consultation

Keeps employees well-informed on matters

important to them

Retained for Leadership

scale

Communication and
Consultation

Sufficient effort is made to determine the thought

and responses of people who work here

Retained for Leadership

scale

Communication and
Consultation

Communications across all levels in this

organisation tend to be good

Retained for Leadership

scale

Communication and
Consultation

Organisational structure encourages horizonal and

vertical communication

Retained for Leadership

scale

Communication and
consultation

There is trust between employees and their

supervisors/ team leaders

Deleted

Work environment

My working life balances with my family life

Retained

Work environment

This organisation is a harmonious place to work

Retained

Work environment

This organisation regards welfare of its employees

as its first priority

Retained

Work environment

Workers and management get along in this

organisation

Retained for teamwork scale

250

APPENDIX 9

Work environment

The physical working conditions are very pleasant

Retained

Work environment

This organisation offers a lot of security

Retained for remuneration

scale

Work environment

A spirit of cooperation and teamwork exists

Retained for Teamwork scale

Commitment

I feel a strong sense of belonging to this

organisation

Retained

Commitment

I could just as well working for a different

organisation if the type of work was similar
(negative)

Retained

Commitment

I find it difficult to agree with this organisation's

policies (R)

Retained

Commitment

This organisation really inspires the very best in me

in the way of job performance

Deleted

Commitment

My values and this organisation's values are very

similar

Retained for Person

Organisation fit scale

Commitment

There is little to be gained by sticking with this

organization indefinitely (R)

Retained

Commitment

I am willing to put in a great deal more effort than

normally expected

Retained

Commitment

I am proud to tell others that I am part of this

organisation

Retained

Commitment

I really care about the future of this organisation

Retained

Intention to stay

Plan to work at my present job for as long as

possible

Retained

Intention to stay

Most certainly look for a new job in the near future

(R)

Retained

Intention to stay

Plan to work in my current job as long as possible

Retained

Intention to stay

Would hate to quit this job

Retained

251

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