Employee's commitment and retention

1. Why is Managing Employee Commitment
& Loyalty Important?
•Firms compete for competitive advantage
through their employees. Attracting & retaining
highly committed employees is key
•Difficult task because job changes are more
frequent:
* highly skilled employees have lots of options
* dual career pressures
* corporate decisions to expand and contract
because of technological & economic changes

2. Why is Managing Employee Commitment
& Loyalty Important?
•If mobility is the “name of the game”, we must
learn to create commitment quickly (i.e., expect
shorter employee cycle times within our firms)
AND maintain commitment among “stayers"
who see people come and go
•Commitment entails feelings of loyalty, duty
and psychological involvement to various
targets: organizations, jobs, careers, unions,
teams, even the work itself

3. Why is Managing Employee Commitment
& Loyalty Important?
•Take an accountant: Loyalty could be to:
one’s employing organization (Deloitte)
one’s career (loves being a CPA)
one’s job (likes being audit manager)
the work itself (derives pleasure from
completed audit)
•Managerial focus tends to be on organizational
commitment but commitment to other targets
can also be successfully managed

4. Putting Commitment Back
in the Workplace
• Why should organizations be concerned with
employee loyalty?
• Why has commitment declined in recent years?
• What can we do to restore commitment?

5. Why should organizations be
concerned with employee loyalty?
• Loyalty has declined. In a recent survey,
only 45% said they felt strong, personal
attachment to their employer and 34%
felt any obligation to stay with current
employer
• Many undesirable consequences
associated with low commitment work
environments

6. PROBLEMS IN LOW WORK
COMMITMENT ENVIRONMENTS
↓ Organizational Performance
↑Absenteeism
↑Turnover (Customer Sat)
* Half leave < 3 years
↓Effort expenditure
* Quality initiatives
↑ Theft
↑ Job dissatisfaction
↓ Willingness to be relocated

7. Financial Outcomes of Work Commitment
Strategy to
enhance 1996 ROI
Performance
TQM
Downsizing or
Re-engineering
Employee
Involvement
(Commitment)
Used
15%
15.4%
19.1%
Did not Use
15%
13.4%
13.4%
N=216 Source: Lawler

8. REASONS FOR DECLINE IN COMMITMENT
1. Corporate America has not met its obligations to employees
a. Downturns: layoffs, hours & compensation cut
b. Mergers & Acquisitions: employees terminated
c. Experiments with two-tiered pay systems
d. Increased use of temps & contract employees
2. Societal values have changed &
organizations have failed to
accommodate these changes
a. Importance of work ethic
b. Work/family balance issues
c. Diversity issues

9. MYSTERY VALUE EXERCISE
Response options:
Strongly Strongly
disagree Disagree Neutral Agree agree
(1) (2) (3) (4) (5)
1. Hard work makes a man or woman a better person.
2. Wasting time is as bad as wasting money.
3. A good indication of a person’s worth is how well he or she does
on the job.
4. If all other things are equal, it is better to have a job with a lot
of responsibility than one with little responsibility.

10. REASONS FOR DECLINE IN COMMITMENT
3. The experience of paid employment has not met
expectations of post-boomers
a. Standard of living
b. Flatter orgs and lower rate of advancement
c. Career is not progressing according to plan
(disillusioned by practice, employer
impediments)
4. Growing numbers of jobs do not
foster commitment
a. Low challenge
b. Few opportunities for growth
c. Rising education levels
among U.S. citizenry

11. How Can Commitment be Restored? It depends
on what type(s) of commitment are “deficient”
1. Corporate America has not met its obligations to employees
People are no longer loyal to employers? (low org. commitment)
2. Societal values have changed & organizations
have failed to accommodate these changes
Self-worth is no longer derived from paid
employment? More value attached to family or leisure
time than paid employment? (low work ethic & org commitment)
3. The experience of paid employment has not met
expectations of post-boomers Disappointment with employment
or career? (low career & org commitment)
4. Job does not foster commitment? (low job involvement)

12. Affective Work
Organizational Ethic
Commitment Endorsement
Continuance
Organizational
Commitment
Job Career
Involvement Commitment
FIVE BASIC FORMS OF WORK COMMITMENT

13. CONTINUANCE AFFECTIVE
ORGANIZATIONAL ORGANIZATIONAL
COMMITMENT COMMITMENT
SIDE-BET Need to Desire to GOAL
APPROACH continue continue
CONGRUENCE
(exchange working for an working for an APPROACH
model) organization organization
(limited alternatives) (goal congruence)
Continuance Commitment vs. Affective Commitment

14. ORGANIZATIONAL COMMITMENT
I. Continuance Commitment
Definition: Loyalty to an organization based on accumulated
investments that will be lost upon leaving
Sample Too much of my life would be disrupted if I left my
Measure: present organization.
A changeable Attitude
II. Affective Commitment
Definition: The extent to which individuals identify with and have
goals consistent with the organization’s
Sample I feel like I’m part of the family at my organization.
Measure:
A changeable Attitude

15. WORK ETHIC ENDORSEMENT
Definition: Extent to which one intrinsically values
work as an end in itself
Sample The most important things that happen in
Measure: life involve work
May be a Value or Personality Trait
May vary with age or cultural group

16. CAREER/PROFESSIONAL
COMMITMENT
Definition: The importance of one’s career
Sample I like this occupation too well to give it up
Measure:
May be a Deep-Seated Attitude
Resistance to change because of
life-long dream to pursue and
educational investment

17. JOB INVOLVEMENT
Definition: The degree of absorption in work activity an
individual experiences.
Sample I live, eat, and breathe my job.
Measure:
May be a Very Changeable Attitude
Can be affected by task assignments

18. Job Involvement
Affective Organizational Commitment
Continuance Organizational Commitment
Career Commitment
Work Ethic
Endorsement
Interrelationships Among Forms of Work Commitment

19. Restoring Work Commitment
Work
Ethic
(difficult to change)
Career
Commitment
Organizational
Commitment
Job
Involvement
(easiest to change)
• Handle via selection
• Lengthy socialization to instill/reinforce
values
•Sponsoring continuing education
• Mentorship programs
•Pay-for-skill reward systems
• Development of career plans with HR staff
• Increase “side bets”
• Promote identity with firm; more “we”
• Training to improve (a) communication, team
building, etc. (b) employee skill sets
• Policies to reduce home/work conflict
• Job design, enrichment
• Use of teams, participative decision-making
• More job autonomy