RETENTION FACTORS AND EMPLOYEE COMMITMENT AS A PREDICTORS OF ORGANIZATIONAL PERFORMANCE
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CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
In the face of increased global competition, organizations are more dependent upon the positive work attitudes and behaviors that typically emanate from employee commitment (Brockner, 1994). Thus, numerous studies have been made for relationships between employee commitment and other organizational variables such as staff retention factors, job satisfaction, productivity (Brown, and Yoshioka, 2003).
Securing and retaining skilled employees play an important role in this process, because employees knowledge and skills are central to companies ability to be economically competitive. Employee retention is very important for the functioning and competitiveness of a company. Ideally, employee retention is keeping the employees that have already been hired. When you have hired good people, trained them, built them into high-performing teams, you don’t want to lose them(Herman, 1999). Companies need to keep and retain good employees, as well as motivating them. Employee retention is simple to understand, but at the same time it can be difficult to achieve. Knowing what employees want and need is a step in the right direction. Employees today are different. As soon as they feel dissatisfied with the current employer or the job, they switch over to look for another job. It is the responsibility of employers to retain their best employees. Companies continue to grow and globalization gives the opportunity for employees to find jobs elsewhere. To avoid this situation the organization needs to plan ahead and look at retention management in the long term. The concept of organizational commitment has attracted considerable interest in an attempt to understand and clarify the intensity and stability of an employee’s dedication to the organization (Brown, and Yoshioka 2003).
According to Meyer and Allen (1998) the concept of organizational commitment is a construct distinguishable from other familiar concepts such as job satisfaction, job involvement, career salience, occupational commitment, turnover intentions, work group attachment and Protestant work ethic (Cohen, 1993). Allen and Meyer (1990) describe commitment as a psychological state that binds the individual to the organization. Meyer and Herscovitch (2001) suggest that the binding force of commitment is experienced as a mindset (i.e. a frame of mind or psychological state that compels an individual toward a course of action). The mindsets reflect three distinguishable themes which Meyer and Allen (1991) label as affective commitment, continuance commitment, and normative commitment. These three distinguishable components of organisational commitment reflect a difference between a preference to stay with the present organization arising out of a sense of emotional attachment (affective commitment), compared to one rooted in a sense of economic necessity or the perceived cost of leaving (continuance commitment) or of moral obligation (normative commitment).
1.2 Statement of the Problem
Sometimes, retention strategies are not used properly and wrong retention strategies are used. As a result of this, these strategies fail to achieve the desired results.
There are costs associated with employee turnover. The impact of employee turnover on organizations is that it often engenders far-reaching consequences and may jeopardize efforts to attain organizational objectives. In addition, scholars observed that when an organization loses a critical employee, there is a negative impact on innovation, consistency in providing service may be jeopardized, and major delays in the delivery of services to customers may occur. A decline in the standard of service could also adversely affect the satisfaction of internal and external customers and consequently, the profitability of the organization. It is for these reasons that the research work seek to assess retention strategies in organizations and how they affect employees’ commitment.
1.3 Aims and Objectives of the Study
This research work examines the relationship between retention factors and employee commitment and the objectives of this study include:
- Examine the influence of retention factors on employees’ commitment.
- Measure the effect of retention factors on workers’ motivation in an organization.
- Review the strategic steps taken by an organization in enhancing employees’ commitment.
- Examine the effect of retention factors on organizational performance.
1.4 Relevant Research Questions
The study examines the following research questions:
- How does a retention factor influenced employees’ commitment?
- How can retention factors on workers’ motivation be measured in an organization?
- What are the strategic steps taken by an organization in enhancing workers’ commitment?
- What are the effects of retention factors on organizational performance?
1.5 Relevant Research Hypotheses
The following hypotheses were developed for the study:
- Ho: There is no significant relationship between retention factors and employees’ commitment.
H1: There is significant relationship between retention factors and employees’ commitment.
- Ho: There is no significant relationship between retention factors and organizational performance.
H1: There is significant relationship between retention factors and organizational performance.
1.6 Scope and Limitation of the Study
The work examines Retention Factors and Employee Commitment as a predictors of organizational performance with a view to explore Skye Bank Plc in Marina, Lagos. In addition, the study covers the components of retention factors and its implication on organizational commitment. The study also covers employee commitment and it three components viz, affective commitment, Continuance commitment Normative Commitment.
Some perceived constraints may be encounter by the researcher in the course of carrying out the research work. The limitations are as follows:
- Inadequate material: Inadequate material constituted one of the limitations of the research work. The non-availability of materials like journals, textbooks etc the research study.
- Finance: The researcher also may encounter some financial constraints which will contribute in limiting the work in the sense that fund available was not enough to carry out the research to a logical conclusion.
- Time: Time is also another factor or limitation that may affect the research work. The limited time may not give the researcher enough opportunity to do more rigorous work.
1.7 Significance of the Study
The significance of the study lies in the hope that the findings will be of benefit to: Banking Sector may use the study to understand the factors affecting retention of workers and as a result focus attention on management of staff and their stability.
Consequentially, it aids the Government, policy makers and stakeholders to properly articulate critical areas in retention of workers that needs to be improved on so as to forge a stronger workforce in an organization.
The study will serve as a guide to human resource management in an organization by helping them to realize the effects of retention factors on staff performance and motivation.
To this end it therefore serves as a benchmark for financial researchers to further evaluate the effect of employer-employee relationship, and how it ultimately impacts the performances and growth of an organization.
- Definition of Terms
Staff retention: Staff retention is a business management term referring to efforts by employers to retain current employees in their workforce.
Commitment: The state of being bound emotionally or intellectually to a course of action or to another person or persons
Organization: An organization is a social group which distributes tasks for a collective goal.
Influence: Influence is the action or process of producing effects on the actions, behavior, opinions, etc., of another or others.
Productivity: Productivity is a measure of the efficiency of production. Productivity is a ratio of production output to what is required to produce it (inputs). The measure of productivity is defined as a total output per one unit of a total input.
Workforce: This has to do with the sum-total of individuals that works in a particular organization
REFERENCE
Brockner, J. (1994), Perceived fairness and survivors reactions to layoffs, or how downsizing organizations can do well by doing good, Social Justice Research, 7: 345-363.
Brown, W. A and Yoshioka, C. F. (2003), Mission Attachment and Satisfaction in Employee Retention, Nonprofit Management and Leadership, 14 (1): 5-18.
Cascardi, M., Poythress, N.G., and Hall, A. (2000), Procedural Justice in the Context of Civil Commitment: An Analogue Study, Behavioral Sciences, Vol. 18, No. 6: 731-740.
Cohen, C.Y., and Spector, P.E. (2001), The role of justice in organizations: A meta-analysis,Organizational Behavior & Human Decision Processes, 86: 278-321.
Herman, H. (1999). Organizational justice: Evidence of a new psychosocial predictor of health, American Journal of Public Health, 92: 105-108.
Mayer, R.C., and Schoorman, F.D. (1998), Differentiating antecedents of organizational commitment: a test of march and Simon’s Model, Journal of Organizational Behavior, 19: 15-28.
Moorman, R.H. (1991), Relationship between organizational justice and organizational citizenship behaviors: do fairness perceptions influence employee citizenship?, Journal of Applied Psychology, 76: 845-855.
Meyer, J.P., Allen, N.J. & Gellatly, I.R. (1990). Affective and continuance commitment to the organization: Evaluation of measures and analysis of concurrent and time-lagged relations. Journal of Applied Psychology, 75, 710“720.
Meyer, J. P., Allen, N.J., & Smith, C.A. (1993). Commitment to organizations and occupations: Extension and test of a three-component conceptualization. Journal of Applied Psychology, 78(4), 538“551.
Herscovitch, J (2001). Personology: From individual to ecosystem.
Johannesburg: Heinemann.
Miller, D. & Lee, J. (2001). The people make the process: Commitment to employees, decision-making and performance. Journal of Management, 27, 163“189.
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