A Look at Employee Retention Factors

1. Running head: AN INQUIRY IN EMPLOYEE RETENTION 1
An Inquiry in Employee Retention:
The Search for the Relationship between Employee Perception and Employee Actions
Wilfred Brown
Texas A&M University - Commerce

2. AN INQUIRY IN EMPLOYEE RETENTION 2
Contents
Chapter 1: Introduction.......................................................................................................... 4
Background ........................................................................................................................4
Problem Statement .............................................................................................................4
Purpose of the Study..........................................................................................................5
Study Hypothesis ...............................................................................................................5
Chapter 2: Literature Review................................................................................................. 6
Literary Gap .......................................................................................................................6
Chapter 3: Methodology ...................................................................................................... 10
Chapter 4: Findings.............................................................................................................. 12
Chapter 5: Summary, Conclusions, AND Recommendations ............................................. 14
References............................................................................................................................ 16
Appendix A.......................................................................................................................... 18
Appendix B .......................................................................................................................... 19

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Abstract
The purpose of this paper is to determine if employee perceived external prestige
influences employee retention. The study aims to determine the relationship, if any, between how
prestigious employees believe their company is to others and employee retention. Qualitative
data was collected from 50,000 employees working across multiple industries in both tier one
(well known) and tier two firms (not so well known). Employees were asked to complete four
open ended questions. Previously used surveys and scales were used to codify the collected data
and quantify the research. Study results revealed a positive relationship between perceived
external prestige and employee retention. This study provides valuable insights into the
significance of employee perceived external company prestige in retaining valuable human
capital. This study may have further implications on the adoption of non-conventional human
resource strategies, like a focus on enhancing external organization prestige through increase
company marketing and brand development.

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Chapter 1: Introduction
Background
Employee retention refers to the ability of a firm to keep the employees it deems as
valuable. Employee retention can be measured quantitatively by evaluating a particular point in
time and calculating the amount of employees the company retained during that period. For
example, one year ago a company hired ten new employees. In the present, exactly one year
later, the company has retained eight out of the ten employees hired. Assuming all of the
employees were an asset to the company, the retention rate for the company during the period
measured was eighty percent. For many, the idea of employee retention may seem unimportant
after experiencing the “Great Recession” and the joblessness rates rising to historic highs. But
even before the economic cataclysm that was the “Great Recession,” firms have been struggling
to retain the best human capital. The problem that has plagued firms for the last twenty years has
been the ever growing skills gap or lack of knowledgeable workers. Firms have struggled to
expand even in years of tremendous growth due to the lack of a deep pool of talented workers.
The high cost of finding, hiring, training, and replacing talented workers have made more
managers focus on the strategies needed to attract and retain the best people available.
Problem Statement
Companies are desperate to avoid the high cost of employee turnover, as well as keep their
best employees from their competitors. To accomplish this goal, employers must clearly
understand what factors truly encourage employees to stay put. In answering the question “does
employee perceived external prestige affect employee retention,” firms and business scholars

5. AN INQUIRY IN EMPLOYEE RETENTION 5
alike can take a step out of the darkness of the unknown and take a large step into the
illumination of new found knowledge.
Purpose of the Study
This study has key implications for business professionals working in the realm of human
resource development, as well as, senior firm leaders looking to ensure company stability and
improve bottom line through reduced turnover. With the acceleration of the advancement of
technology, the inability of the global education system to produce enough quality candidates
and the cutthroat level of competition that has come with a globally integrated economy,
companies are looking to understand what works in HR and how to implement it in their
organizations. This study will help further the knowledge base of managers faced with the
challenges of talent acquisition in the new knowledge economy, as well as, direct other
researchers in their quest to expand the knowledge base of human resource development and
human resource management.
Study Hypothesis
Based on a limited understanding of human nature, it would be highly plausible that
employee perceived company prestige would have a positive effect on employee retention rates
and a negative effect on employee turnover intentions. From the knowledge that people are
highly social creatures, similar to great apes, it would seem that people’s drive to impress others
would supersede other rational urges and compel a person to stay with an employer that brings
them some level of prestige, rather than leave to work for one with less prestige but maybe more
benefits or better work conditions. So much of what humans do is based on the perceptions of
others that there is little doubt that choosing a place to work would be any different.

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Chapter 2: Literature Review
Literary Gap
One of the most pressing issues of our time is employee retention. Yet with there being
over 1,000 published articles on turnover and retention (Allen 2008), in May 2015, 2.5 million
American workers still quit their jobs (Bureau of Labor Statistics, 2015). A close look at
workforce trends suggests a shortage of highly skilled labor in the workforce; leaving employers
understaffed and with a less qualified workforce, and ultimately leaving employers less
competitive (Rappaport, Bancroft, & Okum, 2003). Despite the large amount of research devoted
to why people quit, only a small amount of research on retention explores why people stay
(Hausknecht, Rodda, & Howard, 2009).
A Brief History of Employee Retention Research
March and Simon’s (1958) theory of organizational equilibrium was one of the first
theories proposed on the subject of employee retention. The theory made the argument that
desirability of movement and ease of movement were the two main reasons employees chose to
quit their jobs. March and Simon’s definition of desirability of movement as the individual’s
satisfaction with the job and ease of movement represented the employee’s perceived or actual
job alternatives on the labor market. The two researchers argued that employees would be more
likely to stay with their employer if they were satisfied with their jobs and believed that there
were few alternatives available on the open job market. After March and Simon’s theory of
equilibrium was published in 1958, later theories on turnover built upon the
satisfaction/alternatives framework. The first significant update to the satisfaction/alternatives
model came from Porter and Steers in 1973. The two researchers introduced the idea that many

7. AN INQUIRY IN EMPLOYEE RETENTION 7
more work-related and personal variables, other than the two presented by March and Simon,
were important factors of employee turnover. Extrinsic rewards such as pay, advancement
opportunities, affinity towards coworkers, treatment from superiors, and tenure were all
presented by Porter and Steers (1973) as add on to March and Simon’s (1958) model, along with
non-work influences such as family responsibilities. (Mobley et al., 1979) introduced work
attitudes, job satisfaction, and organizational commitment as further factors of employee
turnover. Price and Mueller (1981) presented a new addition to the previous models. The two
added to the model the idea of distributive justice. The researchers suggested that employee
satisfaction was directly tied to how employees felt about the outcomes they received from the
efforts and other inputs that they as employees have invested. More recently, new literature has
been published by (Baltes, Briggs, Huff, Wright, & Neuman, 1999) on company driven work
flexibility programs and how they impact employee retention. The researchers found that
competing priorities often led employees to leave but, allowing employees to have work
flexibility lessens the likelihood of conflicts of interest. This may lead to better employee
retention. One of the last retention variables to be explored through research has been employer
prestige. Muchinsky and Morrow (1980) introduced the concept of organizational prestige as a
potential retention factor. Fombrun and Shanley (1990) added the idea that employees may stay
with a company because of its status as an “employer of choice”. Branham (2005) expanded the
“employer of choice” idea by measuring how often a company communicates and emphasizes
the positive features of working for it to current and potential employees. Though Muchinsky
and Morrow introduced the concept of organizational prestige, Fombrun and Shanley expanded
the idea. No study to this point has measured if employees will mention prestige as a reason for

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staying with employers without being prompted. This study will work to bridge the gap left in
the literature by asking employees four open-ended questions related to retention, without asking
the participants about prestige directly.
The Importance of Discovering Why People Stay
Understanding why people stay is important because competent employees are the
foundation on which all corporate success is built (Nawaz, Jahanian, & Tehreem, S. 2012). Plus,
the retention of employees has been shown to be significant to the development and
accomplishment of the organization’s goals and objectives (Muhoho, 2014). Just understanding
why people leave does not give managers the effective tools to intervene and change conditions
rapidly enough to get people to stay. Perceived Employee Prestige (PEP) can be defined as the
level at which the employee believes the company he/she works for is prestigious compared to
other companies in the market place (Mignonac, Herrbach, & Guerrero, 2006). This study
proposes to collect data in an attempt to discover if, in fact, Perceived Employee Prestige does
affect employee retention. One major control will be the focus on high performing employees.
High performing employees are the gears that drive organizational success. Allen (2008) states,
“Blanket retention policies may be disadvantageous if they appeal to employees at all levels of
performance, and organizations would want to adopt particular strategies that contribute to the
retention of their most valued employees while avoiding control methods that would appeal
primarily to average or low performers (as cited in Steel et al., 2002).” Thus, this study will
focus on collecting data from high performing employees designated by their company.
To conclude, this study aims to expand on the limited amount of research that has
examined perceived employee prestige as an employee’s reason for staying, while testing

9. AN INQUIRY IN EMPLOYEE RETENTION 9
whether this factor relates to high performers. To perform the study, a theoretical framework was
constructed from a model of employee retention that has developed more than fifty years of
rigorous inquiry (March & Simon, 1958). To collect data, a sample of 50,000 high performing
employees, as designated by their employer, were asked to answer four open-ended questions
pertaining to what factors would make them stay with an employer.

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Chapter 3: Methodology
Participants
To determine if company prestige plays a factor in employee retention, a population of
50,000 employees at various levels of seniority, from four different companies (two tier one &
two tier two), were asked to answer a questionnaire of four open-ended questions via an online
link.
Each employee from the four companies was designated by their company as high performers
based on the employee’s most recent job performance rating. Four job levels were included in
the study. The four included hourly (55%), salaried/professional (25%), managers (17%) and
executives (3%). The survey was present in two linguistic options: English and Spanish. The
participants were geographically dispersed and were located in all fifty states in the United Sates.
No international participants were included.
Procedure
Employees at four companies were asked about their reasons for staying in a four
question open-ended survey. Participants were sent a link to the survey in their work email via
ATLAS. Management from each company organized the logistics, booked computer rooms, and
handled any IT related issues. The surveys were taken at all locations over a five week period.
Each survey location varied. Some locations held from 10-25 participants at a time and some
locations held up to 50 participants. Privacy screens were placed on all computers so that
participants would not see other respondents’ answers.
Measures

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To identify the reasons that influenced employees to stay, participants were asked to type
a response to the following four questions:
 “What are the top three reasons you stay with this company?”
 “What factors keep you from quitting your job here and working somewhere else?”
 “Name the aspects that would make up the ideal company for you?”
 “What characteristics must a company have in order for you to want to stay with that
company until retirement?”
The responses above were coded as either mentioning company prestige or not mentioning
company prestige. Using ATLAS, a qualitative data analysis software each participant’s
response was coded as “1” when prestige was mentioned and “0” when it was not.
To only study high performers, the human resources department of each company was asked to
make a list of employees who performed at or above expectations. The participants were
uploaded into the ATLAS database and an anonymous email went out to each participant at each
company.
Once all the data was collected it was independently analyzed by two researchers. Each
researcher was instructed to read the questionnaires and rate all the answers that mentioned
prestige with a “1” and answers that did not mention prestige with a “0”. After the questionnaires
were independently scored, the five researchers went through each question together to increase
the validity of the scores. For an added level of validity and reliability. Cohen’s Kappa was used
to measure the level of agreement between the two researchers Cohen, J. (1968). Results of
Cohen’s Kappa yielded a Kappa of .74; suggesting 74% agreement between the two raters.

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Chapter 4: Findings
On average, about 41% of the 50,000 questionnaires collected from the employees mentioned
prestige at least one time within their questionnaire. Table 1 shows the breakdown of how many
participants actually talked about the prestige of their respective company in the questionnaire.
Of the 20,396 employees who talked about prestige, not every person specifically used the word
prestige to describe the company. However, of those who did not specifically use the word
prestige, they did use supportive text that triggered “prestige” so the questionnaires will be
counted accordingly. Looking at the Frequency of Non-specified Prestige and Representative
Quotes (Table 2), it exemplifies how a participant’s response can be coded as “mentioned
prestige” without the participant actually using the word prestige.
Table 1

13. AN INQUIRY IN EMPLOYEE RETENTION 13
Table 2
Frequencyof Non-specifiedPrestige andRepresentativeQuotes
RetentionFactor Frequency % Representative Quotes
1. Organizational Prestige 20,396 40.8 The top three reasonsI’mhere is
because:1. it’s [company’sname] and
notmany peoplecan say they’veworked
for[company’sname],they pay well,and
I get to travel.
2. Organizational Prestige 20,396 40.8 It makesme proud to say I’mworking for
oneof the largestconsulting firmsin
world.Being a partof such a select group
of people is an honor,and I’mhappy to
be contributing to whatmakeus at
[company’sname] betterthan therest.
3. Organizational Prestige 20,396 40.8 An ideal company forme would bea
company thatiswell established in its
field, known acrosstheglobe,focuseson
teambuilding,and equalopportunityfor
growth and promotions.
4. Organizational Prestige 20,396 40.8 Security!I need to know thatthe
company will be around long enough for
me to build my way up and retire. It
needsto haveversatility,and be able to
withstand changeswithin theeconomy.
In addition,thecompany hasto show
they are justas concerned of my
retirement fund asI am;justlike
[company’sname] does.

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Chapter 5: Summary, Conclusions, AND Recommendations
In an environment where companies are desperate to avoid the high cost of employee
turnover and keep their best employees from their competitors, employers are searching more
than ever for ways to understand what factors truly encourage employees to stay. This research
set out to answer the question, “Does employee perceived external prestige affect employee
retention?” By doing so, we have advanced the human capital literature and we gave employers a
little more insight into protecting their most valuable resource.
Methods and Findings
In this research, employees at four companies were asked about their reasons for staying in
a four question open-ended survey. Through this survey, qualitative data was collected and then
codified in order to quantify the responses. From 50,000 participant responses, we discovered
that employee perceived external prestige does affect employee retention. In the study, we found
that not only was employer prestige consistently cited as one of the reasons people stayed but,
also it was cited 40.8% of the time.
Implications for Business and Future Research
For employers, this data opens the door for another way companies can retain their best
talent for longer and recruit the best talent in the first place. Using this data, human resource
managers can go to executives and persuade them to work harder at promoting the company’s
brand to employees, as well as to the general public. Chief executive officers may now see the
benefit of getting company research published in prestigious magazines, doing interviews during
primetime and spending advertising dollars on marketing the company to the general public; as
opposed to its products or services. As for researchers, this study had a very limited scope and

15. AN INQUIRY IN EMPLOYEE RETENTION 15
there are several ways future researchers can expand it and improve on it. First, future
researchers can make hypotheses about the way prestige is viewed by high performing
employees versus low performing employees and then test those hypotheses through research.
Next, future researchers can reproduce this study to make sure the testing constructs were both
reliable and valid. Finally, researchers may want to study how prestige works in tandem with
other retention factors to see what combination of retention factors works best or is cited most
often by respondents. As employers look to survive in the new knowledge economy, they must
learn to adapt or die. By working with researchers, business leaders can learn more about what
their employees both want and need. Researchers will also benefit from this arrangement and
will do well to look to business for problems to research.

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References
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Analyzing and Managing Employee Turnover. Retrieved from
http://www.shrm.org/about/foundation/research/Documents/Retaining%20Talent-
%20Final.pdf
Baltes, B.B., Briggs, T.E., Huff, J.W., Wright, J.A., & Neuman, G.A. (1999) Flexible and
compressed workweek schedules: A meta-analysis of their effects on work-related criteria.
Journal of Applied Psychology, 84, 496-513.
Branham, L. (2005). Planning to become an employer of choice. Journal of Organizational
Excellence, 24, 57-68.
Bureau of Labor Statistics. (2015). Job Openings and Labor Turnover Survey Highlights.
Washington, DC: U.S. Government Printing Office.
Fombrun, C. J., & Shanley, M. (1990). What’s in a name: Reputation-building and corporate
strategy. Academy of Management Journal, 33, 233-258.
Hausknecht, J., Rodda, J., & Howard, M. (2009). Targeted Employee Retention: Performance-
Based and Job-Related Differences in Reported Reasons for Staying. Human Resource
Management, 269–288. doi:10.1002/hrm.20279.
March, J.G., & Simon, H.E. (1958). Organizations. New York: John Wiley.
Mignonac, K., Herrbach, O., & Guerrero, S. (2006). The Interactive Effects of Perceived
External Prestige and Need for Organizational Identification on Turnover Intentions.
Journal of Vocational Behavior, 69 (3), 477-493.

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Mobley, W.H., Griffeth, R.W., Hand, H.H., & Meglino, B.M. (1979). Review and conceptual
analysis of the employee turnover process. Psychological Bulletin, 86, 493-522.
Muchinsky, P.M., & Morrow, P.C. (1980). A multidisciplinary model of voluntary employee
turnover. Journal of Vocational Behavior, 17, 263-290.
Muhoho, J. (2014). Assessment of Factors Influencing Employee Retention in Tanzania’s Work
Organisations. Innovative Space of Scientific Research Journals, 9 (2), 687-697.
Nawaz, N., Jahanian, A., & Tehreem, S. (2012). Determinants of Employee Retention in
Pakistan International Airlines (PIA). European Journal of Business and Management, 4
(7), 1-53.
Porter, L.W., & Steers, R.M. (1973). Organizational, work, and personal factors in employee
turnover and absenteeism. Psychological Bulletin, 80, 151-176.
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Manager. Academy of Management Executive, 16, 149-162.

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Appendix A
E-mail Letter with Survey Link
Dear <Insert Employee Name>,
Your opinion is valued in order to determine ways to improve employee / employer relations.
Your input will help us understand what factors employees value the most from employers. The
conclusions we draw from this study will help us add services to this company that will make the
lives of all of our employees better. The assessment may take 15 to 20 minutes to complete. The
link and case-sensitive password are provided below. Click the finish button only at the end of
the assessment.
www.texasa&m-commerce.edu/surveys/
Thank you for your time and commitment.
<Insert HR Representatives Name>

19. AN INQUIRY IN EMPLOYEE RETENTION 19
Appendix B
Reasons for Staying Survey
1. “What are the top three reasons you stay with this company?”
2. “What factors keep you from quitting your job here and working somewhere else?”
3. “Name the aspects that would make up the ideal company for you?”
4. “What characteristics must a company have, in order for you to want to stay with that
company until retirement?”