The relationship between employees’ perceptions of their leaders’ attitudes and employee retention

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(1)COPYRIGHT AND CITATION CONSIDERATIONS FOR THIS THESIS/ DISSERTATION. o Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use. o NonCommercial — You may not use the material for commercial purposes.. o ShareAlike — If you remix, transform, or build upon the material, you must distribute your contributions under the same license as the original.. How to cite this thesis Surname, Initial(s). (2012) Title of the thesis or dissertation. PhD. (Chemistry)/ M.Sc. (Physics)/ M.A. (Philosophy)/M.Com. (Finance) etc. [Unpublished]: University of Johannesburg. Retrieved from: https://ujdigispace.uj.ac.za (Accessed: Date)..

(2) THE RELATIONSHIP BETWEEN EMPLOYEES’ PERCEPTIONS OF THEIR LEADERS’ ATTITUDES AND EMPLOYEE RETENTION. MRS K.C. MENDES 920005387. MINOR DISSERTATION Submitted in partial fulfilment of the requirements for the degree MASTER COMMERCII in BUSINESS MANAGEMENT in the FACULTY OF MANAGEMENT at the UNIVERSITY OF JOHANNESBURG. Supervisor: Carina van Zijl. 31 August 2013.

(3) ANTI-PLAGIARISM DECLARATION UNIVERSITY OF JOHANNESBURG DEPARTMENT OF BUSINESS MANAGEMENT. 1. Plagiarism is to present someone else’s ideas as our own. 2. Where material written by other people has been used (either from a printed source or from the internet), this has been carefully acknowledged and referenced. We have used the Harvard Method for citation and referencing. Every contribution to and quotation from the work of other people in this essay has been acknowledged through citation and reference. 3. We know that plagiarism is wrong. 4. We understand what plagiarism is and are aware of the university’s policy in this regard. 5. We know that we would plagiarise if we do not give credit to our sources, or if we copy sentences and paragraphs from books, articles or internet sources without proper citation. 6. We know that even if we change the wording slightly, we still plagiarise when using someone else’s words without proper citation. 7. We declare we have written our own sentences and paragraphs through this assignment, and we have credited all ideas gained from other people’s work. 8. We declare this assignment is our original work. 9. We have not allowed, and will not allow, anyone to copy our work with the intention of passing it off as their own work.. FULL NAME. STUDENT NUMBER. Kaye Cindy Mendes. 920005387. Page 2 of 91. SIGNATURE & DATE.

(4) ABSTRACT The purpose of this quantitative study was to determine the relationship between employees’ perceptions of their leaders’ attitudes in terms of being caring, and employee retention in an insurance organisation in South Africa. The employee turnover rate in 2012 for this organisation was 24%. Non-managerial employees for the national insurance company were surveyed. The psychometric instrument used to measure the data was the Survey of Perceived Organisational Support (SPOS). Analysis of data revealed a significant difference between the employee’s perceptions of their leaders’ attitudes toward their subordinates, and employee retention. However, the age of the employees and the number of months employed by the organisation indicated a correlation. This will allow organisation leaders to be better equipped and more proactive rather than reactive in terms of employee retention actions and plans.. Page 3 of 91.

(5) DEDICATION This dissertation is dedicated to my children, Daniel Cruz Mendes and ‘The Baby-On Its-Way’. Persevering with completing this chapter in my life was made easier knowing that I am doing it with both of you in mind. The dissertation is also dedicated to my supportive parents – to my dad, Colin GeneApril, who showed support and demonstrated his pride in me throughout my studies, and my mom, Charmaine Gene-April, who taught me the importance of a further education, determination and excellence in all that I do. Thank you for pushing and encouraging me to the bitter end, through my two pregnancies and volumes of work. It has been a crazy journey.. Page 4 of 91.

(6) ACKNOWLEDGEMENTS My Lord and Saviour, who was and is my source of strength and hope, I thank Him for his grace and favour. My husband, Reza Mendes, for many sacrifices that he has made, the babysitting hours he put in, and the priceless support and love that he showed. My employer, at the time, for allowing me to conduct this research. The respondents in the study for their participation and feedback. Carina van Zijl, my supervisor, for her assistance, guidance and for sharing her specialist knowledge. She is a stickler for quality. Juliana van Staden for her time and patience with explaining statistics and terminology to me. Dr. David. A. Barraclough for the editing of my final version.. Page 5 of 91.

(7) TABLE OF CONTENTS ANTI-PLAGIARISM............................................................................................................................................ 2 DECLARATION .................................................................................................................................................... 2 ABSTRACT ........................................................................................................................................................ 3 DEDICATION .................................................................................................................................................... 4 ACKNOWLEDGEMENTS .................................................................................................................................... 5 TABLE OF CONTENTS........................................................................................................................................ 6 CHAPTER 1 ....................................................................................................................................................... 9 INTRODUCTION .................................................................................................................................................. 9 1.1. INTRODUCTION.................................................................................................................................... 9. 1.2. BACKGROUND TO THE PROBLEM ...................................................................................................... 12. 1.3. PROBLEM STATEMENT ...................................................................................................................... 16. 1.4. RESEARCH QUESTIONS ...................................................................................................................... 16. 1.5. HYPOTHESIS ....................................................................................................................................... 16. 1.6. PURPOSE OF STUDY ........................................................................................................................... 17. 1.6.1. PURPOSE AND NATURE OF THIS STUDY ................................................................................................... 17. 1.7. THEORETICAL FRAMEWORK .............................................................................................................. 18. 1.8. RESEARCH METHODOLOGY ............................................................................................................... 19. 1.8.1. NATURE OF RESEARCH ............................................................................................................................. 19. 1.8.2. RESEARCH APPROACH .............................................................................................................................. 19. 1.8.3. RESEARCH DESIGN ................................................................................................................................... 19. 1.8.4. DATA COLLECTION ................................................................................................................................... 19. 1.8.5. SAMPLING ................................................................................................................................................ 20. 1.8.6. DATA ANALYSIS ........................................................................................................................................ 20. 1.9. ASSUMPTIONS OF THE STUDY ........................................................................................................... 20. 1.10. LIMITATIONS OF STUDY ................................................................................................................ 21. 1.11. SIGNIFICANCE OF THE STUDY ....................................................................................................... 21. 1.11.1. SIGNIFICANCE FOR LEADERSHIP AND HUMAN RESOURCES..................................................................... 22. 1.12. DEFINITIONS OF TERMS ................................................................................................................ 22. 1.13. SCOPE OF THE STUDY.................................................................................................................... 23. 1.14. CONCLUSION ................................................................................................................................. 24. CHAPTER 2 ..................................................................................................................................................... 25 LITERATURE REVIEW ........................................................................................................................................ 25. Page 6 of 91.

(8) 2.1. INTRODUCTION.................................................................................................................................. 25. 2.2. THEORETICAL FRAMEWORK .............................................................................................................. 26. 2.3. HISTORICAL PERSPECTIVES ................................................................................................................ 28. 2.3.1. TAYLORISM ............................................................................................................................................... 28. 2.3.2. HAWTHORNE STUDIES ............................................................................................................................. 29. 2.3.3. HUMANISTIC RELATIONS AND THEORIES ................................................................................................. 30. 2.3.4. INTRINSIC AND EXTRINSIC MOTIVATION ................................................................................................. 31. 2.4. CURRENT FINDINGS ........................................................................................................................... 32. 2.5. ALTERNATIVE VIEWPOINTS ............................................................................................................... 34. 2.6. EMPLOYEE RETENTION STRATEGIES .................................................................................................. 39. 2.7. CONCLUSION ..................................................................................................................................... 40. CHAPTER 3 ..................................................................................................................................................... 42 RESEARCH METHODOLOGY ............................................................................................................................. 42 3.1. INTRODUCTION.................................................................................................................................. 42. 3.2. THE RESEARCH DESIGN ...................................................................................................................... 43. 3.3. RESEARCH DESIGN ............................................................................................................................. 43. 3.4. POPULATION AND SAMPLING ........................................................................................................... 44. 3.5. DATA-COLLECTION APPROACH .......................................................................................................... 44. 3.5.1. 3.6. QUESTIONNAIRE ...................................................................................................................................... 46. ANALYSIS OF DATA ............................................................................................................................ 47. 3.6.1. RESPONDENTS’ PROFILES: DEMOGRAPHICAL DATA ................................................................................ 47. 3.6.2. ANALYSIS OF RESEARCH QUESTION 1 ...................................................................................................... 47. 3.6.2.1. PERCEPTIONS ................................................................................................................................. 47. 3.6.2.2. RETENTION .................................................................................................................................... 48. 3.6.2.3. NULL HYPOTHESIS.......................................................................................................................... 49. 3.6.3. ANALYSIS OF RESEARCH QUESTION 2 ...................................................................................................... 49. 3.6.3.1. AGE ................................................................................................................................................ 49. 3.6.3.2. NUMBER OF MONTHS EMPLOYED ................................................................................................ 49. 3.6.3.3. HYPOTHESIS – AGE: NUMBER OF MONTHS ................................................................................... 49. 3.7. ETHICAL CONSIDERATIONS ................................................................................................................ 50. 3.8. CONCLUSION ..................................................................................................................................... 50. CHAPTER 4 ..................................................................................................................................................... 52 ANALYSIS OF THE DATA .................................................................................................................................... 52 4.1. INTRODUCTION.................................................................................................................................. 52. 4.2. DEMOGRAPHICAL DATA .................................................................................................................... 52. 4.3. RESEARCH QUESTION 1 – PERCEPTIONS VERSUS RETENTION........................................................... 56. 4.3.1. PERCEPTIONS ........................................................................................................................................... 56. 4.3.2. RETENTION ............................................................................................................................................... 59. Page 7 of 91.

(9) 4.3.3. 4.4. RESEARCH QUESTION 2 – AGE VERSUS NUMBER OF MONTHS ......................................................... 63. 4.4.1. 4.5. HYPOTHESIS ............................................................................................................................................. 62. HYPOTHESIS – AGE: NUMBER OF MONTHS ............................................................................................. 64. SUMMARY ......................................................................................................................................... 65. CHAPTER 5 ..................................................................................................................................................... 67 CONCLUSIONS AND RECOMMENDATIONS ...................................................................................................... 67 5.1. INTRODUCTION.................................................................................................................................. 67. 5.2. RESPONDENT PROFILE: DEMOGRAPHIC DATA .................................................................................. 68. 5.3. RESEARCH QUESTION 1: EMPLOYEES’ PERCEPTIONS VERSUS RETENTION ....................................... 69. 5.3.1. PERCEPTION ............................................................................................................................................. 69. 5.3.2. RETENTION ............................................................................................................................................... 70. 5.3.3. HYPOTHESIS ............................................................................................................................................. 71. 5.4. RESEARCH QUESTION 2: AGE VERSUS NUMBER OF MONTHS EMPLOYED ........................................ 72. 5.4.1. AGE ........................................................................................................................................................... 72. 5.4.2. NUMBER OF MONTHS EMPLOYED ........................................................................................................... 73. 5.4.3. NULL HYPOTHESIS .................................................................................................................................... 73. 5.5. RECOMMENDATIONS ........................................................................................................................ 74. 5.5.1. MANAGERS TO UNDERSTAND BEHAVIOURAL FACTORS .......................................................................... 74. 5.5.2. RETENTION STRATEGIES ........................................................................................................................... 74. 5.6. LIMITATIONS OF THE STUDY .............................................................................................................. 77. 5.7. SUGGESTIONS FOR FURTHER RESEARCH ........................................................................................... 77. 5.8. CONCLUSION ..................................................................................................................................... 77. REFERENCES................................................................................................................................................... 79 ANNEXURE A ................................................................................................................................................. 82 COVER LETTER .................................................................................................................................................. 82 ANNEXURE B .................................................................................................................................................. 84 QUESTIONNAIRE: SECTION A AND B ................................................................................................................ 84 QUESTIONNAIRE: SECTION C............................................................................................................................ 85 ANNEXURE D ................................................................................................................................................. 86 PERMISSION EMAIL .......................................................................................................................................... 86 ANNEXURE E .................................................................................................................................................. 87 EMAIL TO STAFF ............................................................................................................................................... 87 ANNEXURE F .................................................................................................................................................. 88 STATKON ANALYSIS .......................................................................................................................................... 88. 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(10) CHAPTER 1 Introduction 1.1. INTRODUCTION. Retaining top talent is the main concern of many organisations (Hausknecht, Rodda & Howard, 2009:269). The leaders of organisations understand and appreciate that talented people are their greatest assets, and that the costs of losing these assets can be extensive. Leaders will only know how to retain these talented individuals if they understand the reasons why they leave organisations in the first instance. Employee turnover is a major challenge faced by all organisations globally (James & Mathew, 2012:1). Employees are no longer just resigning and joining a competitor within the same country – they are also moving to companies across borders. As a result of globalisation, geographical boundaries between countries are no longer seen as an obstacle for transnational companies to trade with one another, trade with the consumers in those countries, or even recruit employees from different countries. According to Thompson, Strickland & Gamble (2010:493), “There is a widespread tendency to believe in an apocalyptic scenario in which globalisation erases borders or, in popular parlance, flattens the world.” Improved technology, the creation of effective working relationships, a greater understanding of the diversity of customer needs, reduced travelling costs, and skilled employees willing to emigrate, are just some of the reasons that globalisation is taking place at a faster pace. Limited and/or no boundaries between organisations and consumers opens the door to increased competition between organisations. Many organisations in South Africa today are competing for the same human capital, as a result of the landscape just explained. Factors such as lack of skills and knowledge within the labour market, the current economic climate, the brain drain, lower education levels, an aging and diverse workforce, and the inflated salary levels of talented staff, further add to this South African reality. All organisations need to retain talent in the midst of these challenges. Schreuder and Theron as cited in Birt,. Page 9 of 91.

(11) Wallis and Winternitz (2004:25) – explain that organisations are often dependant on the specialised knowledge and skills possessed by talented employees, to sustain their competitive advantage. Kerr-Phillips and Thomas (2009) agree and state that a critical component of competitiveness is having the suitable talent makeup across a range of occupations and careers, as well as the skills necessary for effective leadership. Retaining talented employees becomes a challenge as it is much easier for the talented employees to change jobs or seek better employment than those not identified as talented (Frangou & Kontoghiorghes, 2009:29). Ehlert cited in Broner (2008:1) – states that it is at exit interviews where employees explain their reason they are leaving: they were/are displeased with management. If we consider issues retrospectively, rather than just understanding the cognitive processes that an employee goes through before making a decision to stay or resign, we will be able to act more proactively. When an employee resigns, the subsequent replacement process involves diverse costs for organisations. These costs are direct costs in the form of recruitment, training and development, assessment costs, and indirect costs such as one-on-one coaching, loss of productivity and knowledge, and a dip in employee morale (Dess & Shaw as cited in James & Mathew (2012)). Those organisations who fail at the retention of talented staff, are left with a less-qualified workforce – which has negative effects on productivity and competiveness (Hausknecht et al., 2009). James and Mathew (2012:80) explain that employee turnover results in a drain in leadership, and creates pressures in terms of workforce planning. To help solve the challenge of employee turnover, many suggestions and solutions have been offered in past and present literature studies. Kerr-Phillips and Thomas (2009:88) suggest that leaders should develop a culture of transformation in terms of high. standards. being. set,. competitive. salaries. being. offered,. leadership. development, and promoting a culture in the organisation which embraces employee diversity. By understanding and delivering on what is important to an employee, as well as their expectations of the organisation, the organisation will be able to retain such an employee (James & Mathew, 2012).. Page 10 of 91.

(12) In a study by Birt, Wallis and Winternitz (2004), intrinsic variables such as good supervisors and development opportunities, are seen to be more important than the extrinsic variables of past importance – when trying to retain talented employees. Leadership empowerment behaviour such as delegation of authority, information sharing, and coaching, has lowered employee turnover (Bothma, du Toit, Rothman & van Schalkwyk, 2010). An environment where individual contribution is valued and where the organisation is supportive of employees, decreases employee turnover (Allen as cited in Birt, Wallis & Winternitz (2004:30)). Also in agreement with the issue of management influence on employee turnover, are Enzman and Schaufeli cited in Kerr-Phillips and Thomas (2009:83) – who state that employees resign after conflict arises between supervisors and employees. According to Frangou and Kontoghiorghes (2009:29), although there has been extensive research on employee turnover, research dealing exclusively with talent retention is lacking. The research that exists helps us answer the question of “why people leave organisations”; however there is limited research on why people stay with an organisation (Hausknecht et al., 2009:269). The manager’s understanding and experience of employee retention would then be limited, based on the previous statement – they would either play it by trial-and-error, or would not know how their leadership in fact affects turnover. Many other research findings focus on why managers believe employees leave. There is very little research on the relationship side of the employment contract, and on using this to influence an employee to stay in an organisation. This research study will focus on the relationship between employees’ perceptions of their leaders’ attitudes toward their subordinates, and employee retention. Employees under consideration are specifically from the personal lines insurance industry in South Africa. Friedman (2006) and Hacker (2004) (as cited in Muneer, Sohail, Tanveer & Tariq, 2011) explain that new employees typically make their decision about whether to stay or leave in the first week of their appointment. Amiot, Callan, Smith, Smith and Terry (2012:45) explain that the quality of experiences for a new employee is important, as it determines whether they will decide to stay or leave. They showed that the social validation experienced by the team and the leader, as well as fair treatment, predicted an increased investment in the organisation (2012:45).. Page 11 of 91.

(13) To assist in solving the employee turnover problem, the solutions have to start at the most senior level of management within the organisation, as the standards of how employees should be treated are established and enforced at that level (Roberts cited in Broner, 2008). According to Frangou and Kontoghiorghes (2009:32), the actions of individual managers are not the only aspect which is important for the retention of talent – it is also the significant stances and/or dimensions that an organisation as a whole adopts, as well. This seems like a logical finding, as an individual manager cannot have the individual responsibility and accountability of employee retention – without having the ‘backing’ and support of the organisation’s values and manners of operation. It is important to note that the principal working relationship is between the line manager and the employee – so concerns and problems here could have major implications. If an employee experiences consistency across management, actual policies and procedures, culture and values – this would strengthen the positive experience in all respects and decrease employee turnover. Good management skills are important, as employees will often make the decision to stay in a role or leave a company, depending on how they are treated by their manager (Gesme, Towle & Wiseman, 2010:104). This statement would need to be tested across all job levels in the South African-based company as well, in order to generalise these assumptions/findings. The basis of the thrust of Chapter 1 are the issues of the responsibility of the employer to meet certain social needs of the employee in the work environment, and how the social, emotional and psychological needs of the worker can influence turnover and morale in the workplace. Background on the problem statements and detail into the purpose of the study will be provided. The chapter will then explore the significance of the study to relevant stakeholders, and the nature of the study and the research questions. Some detail is then provided on the hypothesis, theoretical framework, definition of terms, assumptions made, scope, limitations, and finally there is a summary of the chapter. 1.2. BACKGROUND TO THE PROBLEM. Human capital plays a critical role in terms of assisting companies gain a competitive advantage in today’s global and highly competitive landscape. One of the critical components in competing globally is for organisations to have the appropriate skills. Page 12 of 91.

(14) across various occupations. South Africa has the ability to compete globally – however, the challenges around employee retention remain (Bothma et al., 2010). Since 2008 many organisations worldwide have shed hundreds, and sometimes even thousands of jobs and/or employees, as a result of the economic downturn and have had the challenge of keeping the business afloat in daunting circumstances. Employee retention therefore becomes challenging, as employers try to hold on to competent and talented employees within this uncertain context. Organisations need to find a balance between shedding jobs in order to remain profitable, cost efficient and to sustain a competitive edge, and retaining their valuable/talented/intellectual human capital. Talent retention has become a very popular topic and process within the HR department in most organisations. Employees are the greatest assets of organisations and therefore they cannot afford to lose their key performers (James & Mathew, 2012:79). Organisations invest a sizable amount of their financial resources in the recruitment, development and retention of employees, as they believe that talented employees are but one of the factors that lead to a competitive advantage. It then becomes important to quantify and qualify this investment, realise the benefits, and experience competitive advantage among their competitors as a result of employee retention strategies. However, only a few organisations are getting employee retention right, and actually integrating clear strategies for talent retention into their overall business strategies (Kerr-Phillips & Thomas, 2009:82). Treating people as your greatest asset is essential to a firm’s success (Brundage & Koziel, 2010:1). When companies lose talented employees to their competitors, it diminishes the competitive advantage that the company once had – as the employee leaves with the skill, knowledge, and expertise relating to in-depth customer relationships (Frangou & Kontoghiorghes, 2009:29). Employee turnover results in a drain on management’s time, and creates a heavy burden on workforce planning (James & Mathew, 2012:79). The costs associated with recruiting, selecting and training new employees could be more than that of retaining your ‘old’” and/or ‘existing’ talented employees. Brundage and Koziel (2010:1) explain that from a financial perspective, turnover is a serious business factor that all firms should monitor. James and Mathew (2012) explain that Page 13 of 91.

(15) a replaced employee has to be socialised, trained and developed from scratch – which incurs costs for the organisation. Thus, losing employees has a negative impact on any organisation. Various studies have shown that the cost of replacing lost talent is 70 to 200 percent of that person’s annual remuneration (Boltax, 2011:19). Understanding and overcoming the challenge of skills’ shortages and employee retention becomes important in managing the current talent resources within an organisation. Employers have multiple roles in the employment relationship: keeping staff happy from a salary and benefits perspective, considering their career development and work fulfilment, and making a profit and adding value to the core business. Many managers however underestimate the value of employee retention and rather focus on the bottom-line profit. Bancroft, Okum and Rappaport (cited in Hausknecht et al., 2009:269) state that organisations who fail to retain talented employees, will be left with an understaffed, less qualified workforce, that hinders the organisation’s competitive advantage. From these two statements, it is implied that organisations who focus on employee retention would be adding value to the bottom line by decreasing costs – in line with recruitment, training, orientation, disruption to productivity levels, and remaining competitive. Organisations are becoming more focussed on talent retention and viewing employees as assets; however, high employee turnover rates within various companies still shows that much more needs to be done. Kerr-Phillips and Thomas (2009:87) explain that two of the seven factors which employees feel are critical to retention are linked to managers’ actions and/or responsibilities. These are: being valued for skills and ability by management, and being recognised for the contribution made to the organisation by the supervisor. Porter and Steers (as cited in Hausknecht et al., 2009) show that there is a higher turnover among employees when supervisors had treated them poorly, were inconsiderate, or did not meet their needs regarding feedback and recognition. Ehlert (2000:43) explains that “employees don’t leave companies they leave bad bosses”. The direct manager has great responsibility with respective to whether an employee stays with an organisation or not. This is because employees want to be heard and to feel valued and cherished (Ehlert, 2000:43). Flaherty (2005) explains Page 14 of 91.

(16) that the top reason why employees leave a company is that they had a bad relationship with their manager. She further explains this by saying that employees in her study did not feel that their managers appreciated their output. According to Boltax (2011), studies have showed that in the top ten reasons why employees want to stay with an organisation, was “a good boss”, and “recognition for work well done”. The researcher found that in 20 confidential retention and exit interviews conducted at a South Africa financial institution during eight months in 2012, it was stated that the employee was leaving due to a poor relationship with his/her manager, or that they would leave if they were not treated right. Managers are responsible for creating the work environment that speaks to and relates to the employees’ needs and expectations (Boltax, 2011:19). Porter and Steers (as cited in Hausknecht et al., 2009:271), explain that employees would leave an organisation if they felt they were treated poorly and in an inconsiderate manner by their direct managers, as well as for not being recognised based on their expectations. When leadership exhibits empowerment behaviour towards employees – then employee intention to resign is likely to decrease (Bothma et al., 2010). An organisation that offers great salaries, benefits and development opportunities, but which falls short in terms of employing great supervisors and managers, will still suffer (Boltax, 2011). People need to know whether they are making a difference, and within a working environment their managers will need to provide this feedback. Abrashoff (2005) states that real leadership is about caring so much about your organisation and the employees that you lead, that you work towards plans of achievement whether the organisation is going through a good or a bad patch. Against this background, this study attempts to determine whether there is a relationship between employees’ perceptions of their leaders’ attitudes, and employee retention. Should the study find that there is indeed a relationship, managers should be made aware of the impact their attitudes have on the retention of valuable employees, and this should be followed by corrective strategies.. Page 15 of 91.

(17) 1.3. PROBLEM STATEMENT. The previous section demonstrated that the biggest challenge that the leaders of the organisation being studied face, is to retain talented employees and to reduce employee turnover. The problem is that, although there is strong evidence that employees’ perceptions of their managers’ attitudes as being caring are being questioned by most employees, managers appears to have no clear understanding of what impact their attitudes towards their subordinates may have on the retention rate of their subordinates. There is therefore a need for this organisation’s leaders to have a common understanding of the behavioural factors that can assist in improving retention and lowering turnover in the workplace. Once this relationship has been established, corrective strategies could be developed and implemented to increase the retention rate of employees. The purpose of this research was to determine the relationship between employees’ perceptions of their leaders’ attitudes and employee retention. 1.4. RESEARCH QUESTIONS. This quantitative research study will examine the impact of employees’ perceptions of leaders’ attitudes toward their subordinates, and employee retention in the insurance industry. Based on this, it was necessary to ask the following two research questions: . Research question 1: is there a relationship between employees’ perceptions of their leaders ‘attitudes in terms of being caring, and employee retention?. . Research Question 2: is there a relationship between the age of employees and the number of months employed at the organisation?. 1.5. HYPOTHESIS. Based on above two research questions, the following hypotheses were developed: . H1(0): No significant correlation exists between employees’ perceptions of their leaders’ attitudes in terms of being caring, measured by the SPOS, and employee retention measured by the number of months employed. Page 16 of 91.

(18) . H1(1): A significant correlation exists between employees’ perceptions of their leaders’ attitudes in terms of being caring, measured by the SPOS, and employee retention measured by the number of months employed.. . H2(0): No significant relationship exists between the age of the employees and the number of months employed with the organisation.. . H2(1): A significant relationship exists between the age of the employees and the number of months employed with the organisation.. The rationale for testing the proposed hypotheses was to ascertain if a statistically significant correlation exists between employees’ perceptions of leaders’ attitudes toward their subordinates, and employee retention. 1.6. PURPOSE OF STUDY. 1.6.1. PURPOSE AND NATURE OF THIS STUDY. The purpose of this quantitative study was to determine the extent to which employees’ perceptions of management’s attitudes toward their subordinates influences employee retention in the insurance industry in South Africa. The research method was generalised from the sample to a specific population within the insurance industry. This method is systematic and objective with regards to the investigation of the phenomena and their relationships with one another. It further ensured that the researcher was less biased, as compared to the qualitative method being used. Deductive reasoning was followed, based on previous theories on the topic at hand. These theories are discussed in Chapter 2. A cross-sectional design was used, as it provided a snap-shot and immediate results relating to an insurance organisation. Quantitative data was collected in a relatively short period of time. The independent variable was the employees’ perceptions of management’s attitudes toward their employees who report to them, while the dependent variable was employee retention. The controlled variables were gender, age, educational level, employment status, tenure and managerial status. Participants in this research were employees at an insurance company based in Gauteng and KwaZulu-Natal. Page 17 of 91.

(19) 1.7. THEORETICAL FRAMEWORK. McGregor (1960) proposed a theory in which he maintained that there are two fundamental approaches to managing people: Theory X and Theory Y. Theory X is synonymous with an authoritarian management style and assumes that people are inherently lazy and irresponsible, and that close supervision and controls are necessary to get employees to follow through on all work objectives. Managers must use coercion and threats of punishment to get the work done and to get employee buy-in. Theory X assumes that organisations experience a high turnover and low retention, and generate a set of X attitudes. Many managers gravitate towards Theory X and generally get poor results. McGregor’s Theory Y (1960) produces better results and allows people to develop and grow. It assumes that people enjoy work, are self-motivated, and can provide their own plan of action in terms of achieving objectives, and that threats and punishment are unnecessary in driving the achievement of organisational goals. This process naturally allows individuals to understand the importance of responsibility and the willingness to accept tasks allocated to them. Theory Y assumes that organisations experience low turnover and high retention, and generate a set of Y attitudes (McGregor, 1960). Although McGregor’s theory is fairly old, it is still seen as a relevant theory for explaining and understanding leadership and organisational methodologies. Theories X and Y are very different from each other, and therefore the effects on managerial strategies would be different as well. McGregor developed and used the above-mentioned two sets of assumptions to show how each construct can influence human behaviour – especially managerial personnel (Broner, 2008). McGregor postulated that Theory Y’s assumptions are energetic and require different implications for managerial strategies than those of Theory X (McGregor, 1960). This study focused only on Theory Y, and the purpose was to gather data to establish whether employees’ perceptions of their leaders’ attitudes towards their employees, influences employee retention.. Page 18 of 91.

(20) 1.8. RESEARCH METHODOLOGY. 1.8.1. NATURE OF RESEARCH. According to Babbie and Mouton (2010), there are two main aspects of research design: to establish what you want to find out and what is the best way to go about finding out. Of the three types of research, namely basic, applied and scientific research, this study followed the scientific method. A scientific investigation involves making observations, analysing them, and then making inferences based on those observations. It is critical to decide what you are going to observe and how you will do so – this makes up the research design (Babbie & Mouton, 2010).. 1.8.2. RESEARCH APPROACH. The method or approach of a study is dependent on the objectives of the study, the nature of the phenomenon being examined, the foundational theory being applied, and the existing expectations of the observer (Babbie & Mouton, 2010). The broad methodological paradigm used in this study will be the quantitative paradigm – to determine the quantity or extent of some phenomenon in the form of numbers.. 1.8.3. RESEARCH DESIGN. The research design is a blueprint for the study in terms of how the researcher intends to conduct the research (Babbie & Mouton, 2010:74). It will focus on the end product. This study will be descriptive and quantitative in nature – and the purpose is to collect, analyse and interpret the data in order to answer both empirical research questions. This in turn should allow the researcher to gain a better understanding of the management behaviours facilitating retention.. 1.8.4. DATA COLLECTION. Primary data will be collected to determine the relationship between employees’ perceptions of their leaders’ attitudes, and retention. The survey method was chosen because it is considered to be the most suitable in collecting original data – especially attitudes for describing the population that was too large to observe directly (Babbie & Mouton, 2010:230-232). A questionnaire will be sent out to all employees of an insurance company – to determine the relationship between employee’s perceptions of their leaders’ attitudes, and retention.. Page 19 of 91.

(21) 1.8.5. SAMPLING. In this study, probability sampling will be used, because all subjects in the organisation were known and accounted for, and because the researcher had access to all employees. The surveys will be given to each staff member, and it was their choice whether to complete and submit the survey thereafter.. 1.8.6. DATA ANALYSIS. After the data has been collected, the process of analysis begins (Zikmund, 2003:453). Data will be exported into an Excel spreadsheet, to enable analysis. To sort, group, filter and format the data, a STATKON statistician from the University of Johannesburg will use the Statistical Package for Social Sciences (SPSS), Version 21. Frequency analysis will be done to describe the demographics of the sample and assist in summarising the profile of respondents. To measure responses to research question one, both Eisenberger’s “Survey of Perceived Organization Support (SPOS) (Armeli, Eisenberger, & Lynch, 1999), and frequency analysis, will be used. To analyse responses to research question two, both Logistical Regression and the Odds Ratio will be used. Certain variables will then be cross tabulated to show the relationship between those variables and determine whether a significant relationship exists. The Principal Axis Factor technique will be used to analyse respondents’ perceptions of their leaders’ attitudes. This will be followed by the computation of the Cronbach Alpha Coefficient, to determine the internal consistencies and reliability of the measuring instrument (SPOS). To support the factorability of the correlation matrix, the Kaiser-Meyer-Okin value will be determined. Lastly, to confirm or reject the Null Hypothesis of both research questions, an independent sample test (Levern’s Test for Equality of Variances), and T-test for Equality of Means, will be used. 1.9. ASSUMPTIONS OF THE STUDY. The methodology of this study assumes that all participants understand the format and questions of the questionnaire, and that the survey will measure what it intends Page 20 of 91.

(22) to measure. It further assumes that all participants understand that their responses will be treated with utmost confidentiality, and that they may withdraw from the research at any time. 1.10. LIMITATIONS OF STUDY. This research study will be undertaken in a back-office processing insurance organisation, and therefore certain limitations exist. The responses to the questionnaire will be specific to the participants, and generalisations to be made will be considered with restraint. The following limitations might have an impact on the generalising of the findings: . The population and sample is from one organisation only, and therefore the findings cannot be generalised to other organisations across South Africa.. . The number of respondents will be lower than expected, and may not be representative of the population mentioned above.. . The survey will be conducted in one organisation only, with particular issues that may be unique and not necessarily applicable to other organisations.. . There may be additional reasons not included and/or identified in the questionnaire or literature review, which may have an impact on the retention of talented employees.. 1.11. SIGNIFICANCE OF THE STUDY. Employee turnover is regarded as rather high in South African companies and it is challenging for organisations to keep their key talent (Allen, Bryant & Vardaman, 2010). Abbasi and Hollman (cited in Broner, 2008:8) suggest that upper management needs to become sensitive to the psychological and social needs of its employees. This study will give management empirical data relevant to employee turnover, which may assist managers become more sensitive to employees’ perceptions of their leaders’ attitudes. High employee turnover costs the organisation time and money (Allen et al., 2010) and thus this research will be significant in providing some solutions or strategies to reduce these costs. To remain competitive in the global landscape and retain talented workers, the organisation in this study needs to understand which factors may assist in retaining employees.. Page 21 of 91.

(23) 1.11.1 SIGNIFICANCE FOR LEADERSHIP AND HUMAN RESOURCES The research will afford line managers, HR scholars, executives and HR business partners a better understanding of retention strategies that can be implemented to create a competitive advantage. The research will hopefully sensitise leaders to be more proactive in understanding employees’ attitudes before they resign, and thus understand. reasons. for. such. a. high. turnover. rate.. It. provides. some. recommendations, practical solutions and conclusions with regard to what management can do to improve employee retention. 1.12. DEFINITIONS OF TERMS. Full-time employee is any employee, excluding an independent contractor who works for another person or the state and who receives, or is entitled to receive, any remuneration. They work eight hours per day, five days a week – which is inclusive of a one-hour meal interval per day (Basic Conditions of Employment Act, 1997). Attitude is the predisposition of an individual or a tendency to respond negatively or positively. towards. a. certain. idea,. object,. person. or. situation. (http://www.businessdictionary.com/definition/attitude.html). Care is a favourable treatment received from management that shows that they value employees’ contributions (Aselage & Eisenberger, 2003). Concern is the way in which management conveys their interest in an employee’s well-being (Eisenberger, Rhoades & Vandenberghe, 2002). Smither (2003) explains that care is showing a personal interest in each individual. Employee perception is the way an employee perceives treatment received and care shown by management in relation to their expectations and contributions to the company (Eisenberger, Rhoades & Vandenberghe, 2002). Retention rate refers to the percentage of employees who were employed at the beginning of the period and remain with the company at the end of the period (http://www.shrm.org/TemplatesTools/hrqa/Pages/CalculatingRetentionandTurnover. aspx). Tenure applies to an employee who has worked more than three months for the company. Page 22 of 91.

(24) Employee turnover refers to the number of employees who left in a year divided by the average number of employees employed in that year, as a percentage value (Chawla & Ratna and Chawla, 2012:35). Employee retention is an organisation’s ability to retain its employees. It involves taking measures to encourage employees to remain in the organisation for the maximum period of time (James & Mathew, 2012). Frank, Finnegan and Taylor (cited in Frangou and Kontoghiorghes, 2009:30) define employee retention as “the effort by an employer to keep desirable workers, in order to meet business objectives”. When an employee possesses the relevant and necessary skills, knowledge, experience, abilities and attitude to fulfil their role successfully by adding value to the business in which they serve, he/she is regarded as a talented employee. Hausknecht et al. (2009:269) define talent as those highly-skilled employees who have the requisite knowledge and ability to perform at high levels. 1.13. SCOPE OF THE STUDY. Chapter 1 presents background information, the research problem, the research question and hypotheses, and the research method that will be followed. The research proposal, with some minor adaptations ,served as the basis for this chapter. Chapter 2 deals with a review of the literature. It focuses on McGregor’s Theory X and Theory Y, in addition to various other theories as contrasting views. Theory X and Theory Y deal with motivational factors that influence employee behaviour. Current findings and employee-retention strategies are explored towards the end of the chapter. Chapter 3 covers the research methodology used to gather the data and the rationale thereof. Furthermore, the research design is explained in detail, and the ethical considerations conclude the chapter. Chapter 4 presents an analysis of the results to the questionnaire – to test whether the hypotheses are accepted or rejected.. Page 23 of 91.

(25) Chapter 5 reviews the findings of Chapter 4 and provides recommendations as well as confirming or endorsing and/or invalidating certain statements that were presented in the literature review. Chapter 6 concludes with a brief summary and suggestions for further research. 1.14. CONCLUSION. Chapter 1 focussed on the competitive landscape within which management of insurance organisations find themselves in. They are challenged to understand employees’ perceptions of their leaders’ attitudes towards their subordinates. Once they understand this, they can be sensitised to reasons why the retention rate of employees can be so low. According to Ehlert (2000:43), employees of insurance companies don’t leave companies – rather, they leave bad bosses. When leadership exhibits empowerment behaviour towards employees, then employees’ intentions to resign is likely to decrease (Bothma et al., 2010). According to McGregor’s (1960) Theory X, many managers still believe in threats and punishment in order to drive productivity and a healthy relationship. However, new theories were discussed in this chapter which emphasise the employee/manager relationship – where a leader has to show care for the well-being of employees in order to have them committed to organisational goals, and to decrease turnover. Chapter one further addressed the research questions and hypotheses, the purpose of the study, the theoretical framework, the research methodology, assumptions, limitations and the significance of the study, and concluded by reviewing the scope of the study.. Page 24 of 91.

(26) CHAPTER 2 Literature Review 2.1. INTRODUCTION. The purpose of this research study was to determine the degree that employees’ perceptions of management’s attitude toward their employees affects employee retention in the insurance industry. Kerr-Phillips and Thomas (2009) explain that South Africa is experiencing a general skills crisis – especially pertaining to the retention of talented employees or “knowledge workers”; they believe that this has a negative outcome that impacts the economic and social growth of the country. For these organisations, employee talent retention then becomes of utmost importance. Lowered immigration and work-visa requirements are making our talent more mobile, which is further emphasised by phenomenal technology changes and/or uses (Boninelli & Meyer, 2011:57). The organisation’s competitive advantage frequently derives from the scarce and mostwanted skills, knowledge and attributes of the talented employees (Schreuder & Theron as cited in Birt, Wallis & Winternitz (2004:25)). It is for this reason that most organisations are attempting to retain their talented employees through the implementation of various retention programmes and/or strategies (James & Mathew, 2012:79). Effective employee retention is a systematic effort by employers to create and foster an environment that encourages current employees to remain employed – by having policies. and. practices. in. place. that. address. their. diverse. needs. (http://workforceplanning.wi.gov/category.asp?linkcatid=15&linkid=18). High employee turnover has detrimental effects on the organisation’s productivity and lifelong viability (James & Mathew, 2012). Boltax (2011) states that the challenge is recruiting highly-skilled employees into the right roles, and then retaining these employees thereafter.. Page 25 of 91.

(27) South African companies have another legislative challenge when it comes to staff retention. Prior to 1994, the apartheid laws restricted the progress of black employees within the workplace. Post-1994, empowerment policies have been legislated to address these imbalances and to grow the economy. The Employment Equity Act of 1998 was introduced to put affirmative action measures in place to ensure fair and equitable representation and advancement of previouslydisadvantaged black employees. Thus, companies are required to implement and manage the labour legislation, as well as compete at a global level while protecting their local markets from international competitors (Kerr-Phillips & Thomas, 2009:83). There are thus many things that South African companies need to keep in balance, whilst also facing the challenge of retaining their talented employees. Employees leave organisations for a number of reasons – however, only a few will be discussed here. James and Mathew (2012) state that personal dissatisfaction with an organisation is a prominent reason why employees may decide to resign. It is important, however, to note that this personal dissatisfaction can result from a number of other root causes. Flaherty (2005) states that the top two reasons in her study were a poor relationship with the supervisor, and limited potential for career development. Boltax (2011) agrees with Flaherty, and states that employees leave their organisations because of their direct managers, more than any other reason. Historically, employees have remained with organisations as a matter of loyalty, but today that is not the case. Mayo as cited in Broner (2008), explains that employees who worked in the industrial era slowed their productivity when they were dissatisfied with management, and this reduced production led to negative financial effects for the organisation. Employees would show their disapproval with management in their work output, and not by way of resigning. 2.2. THEORETICAL FRAMEWORK. As mentioned in the previous chapter, this research study was based on McGregor’s Theory Y. McGregor proposed that the attitude of managers towards their employees. lies. within. a. continuum. of. Theory. (http://discoverleadership.blogspot.com/search?q=theory+y).. X. and. Theory. Managers. who. Y are. influenced by Theory X generally get poor results (Mohamed & Nor, 2013:716).The assumptions of Theory Y are based on a participative management style, and the. Page 26 of 91.

(28) belief that effort in work is as natural as effort in play. Under this scenario, employees will apply self-control and self-direction in the pursuit of organisational objectives – without external control or the threat of punishment. With Theory Y, the attitudes of managers towards their employees usually produce better performance results, and also allow for personal growth and development (Mohamed & Nor, 2013). Given the proper conditions, theory Y managers believe that employees will learn to seek out and accept responsibility, rather than to avoid it, and will exercise selfcontrol and self-direction in accomplishing objectives to which they are committed. These employees will see their effort in the workplace as being as natural as rest or play. (http://discoverleadership.blogspot.com/search?q=theory+y).. A. Theory-Y. manager believes that – given the right conditions – most people will want to do well at work. They believe that the satisfaction of doing a good job is a strong motivation, as they enjoy the satisfaction of achievement. Many people interpret Theory Y as being a positive set of beliefs about workers. A close reading of the work of McGregor (1960) reveals that he simply argues for managers to be open to a more positive view of workers, and the possibilities that this creates. Theory Y claims that employees will become more productive when trust and responsibility is engendered (Mohamed & Nor, 2013:717). McGregor believes that Theory-Y managers are more likely than Theory-X managers to develop the climate of trust with employees that are required for human-resource development. The Theory-X manager is more distrusting and will micro-manage his or her employees (http://discoverleadership.blogspot.com/search?q=theory+y). For the Theory-Y manager, human-resource development is a crucial aspect of any organisation. This would include managers communicating openly with subordinates, minimising the difference between superior-subordinate relationships, and creating a comfortable environment in which subordinates can develop and use their abilities. This climate would include the sharing of decision making, so that subordinates have a say in decisions that influence them. The main principles of Theory Y are: people will apply self-control and self-direction in the pursuit of organisational objectives, without external control or the threat of punishment; commitment to objectives is a function of rewards associated with their achievement; people usually accept and Page 27 of 91.

(29) often seek responsibility; the capacity to use a high degree of imagination, ingenuity and creativity in solving organisational problems is widely, not narrowly, distributed in the population; and the intellectual potential of the average person is only partly utilised. Theory Y gives management no easy excuses for failure. It challenges them “to innovate, to discover new ways of organising and directing human effort, even though we recognise that the perfect organisation, like the perfect vacuum, is practically out of reach” (McGregor, 1960). McGregor urged companies to adopt Theory Y, and only this approach, he believed, could motivate human beings to the highest levels of achievement (Mohamed & Nor, 2013:717). The Theory-Y manager tends to be more relational, more engaged with his/her team, and will try to create a more collaborative workplace. They tend to see themselves as one who resources and supports the team, and takes responsibility for the emotional. safety. of. their. staff. (http://discoverleadership.blogspot.com/search?q=theory+y). 2.3. 2.3.1. HISTORICAL PERSPECTIVES. TAYLORISM. Historically, management’s actions and attitude towards employees has been based on the time and motion studies of Frederick W. Taylor – the pioneer of the time and motion studies. Taylor’s philosophy was that there was one best way to perform the task at hand, and that the time and motion study experts should train and develop their employees in this one best way, as well as the implementation of strict control and monitoring by management (Cooke, Haden, Humphreys & Penland, 2012). With Taylor’s philosophy of strict management controls, this needed managers to be attentive to each individual’s output, and to only pay them according to what was produced in relation to the strict instructions given (Cooke et al., 2012). This principle assumes that workers should work, be rewarded as individuals, and work according to tight timeframes where speed is of the utmost importance. It also assumes that because of the exact objectives or strict instructions, the output and/or productivity of the employees would be increased. Green (1986) explains that although the strict management-control principle executed in the Taylorism philosophy brought about Page 28 of 91.

(30) an increase in the production output, it is definitely not the best morally-accepted method to achieve this outcome. Cooke et al. (2012) state that the principle in this strict management intervention can, however, if necessary, be customised in such a way that the leader does need to facilitate, coach and influence employees to achieve the desired outcomes. According to Eriksson (2007) ‘Taylorism’ provided a model for discussion on retaining the favourable consequences of efficiency – without its negative effects. Taylor’s system did not take the worker’s opinion into consideration and assumed that the one best way introduced by management, was the only way to get the work done.. 2.3.2. HAWTHORNE STUDIES. The Hawthorne studies were conducted in 1927 and 1932 at Western Electric’s Hawthorne Plant near Chicago. Elton Mayo was the pioneer of these studies, which explained that relationships in the workplace are the key element for worker satisfaction and productivity. The first major experiment in the Hawthorne study analysed the effects of various levels of lighting on production. In the first experiment, the researchers manipulated the lighting environment of a number of workers in a particular room, and measured the impact that this manipulation had on their productivity (Mayo as cited in Broner (2008)). The results showed that lighting had no significant effects on productivity. In a second experiment, the researchers sought to study the relationship between productivity and individual incentives. The findings were that employees worked hard to reach the target, but stopped working when they reached the acceptable level – so. as. not. to. be. labelled. ‘rate. busters’. by. their. colleagues. (http://worldacademyonline.com/article/27/383/the_hawthorne_studies.html).. The. conclusion was that being accepted by work colleagues was more important than receiving monetary incentives. Mayo as cited in Broner (2008), showed that the social aspects of work, such as self-confidence, employee-group interaction and relational skills, are too critical to ignore. His major contribution was that the most important factor affecting productivity in the workplace was relationships.. Page 29 of 91.

(31) Like the work of Taylor, the Hawthorne studies have also been criticised in recent years – with some critics offering alternative explanations for the outcomes (http://worldacademyonline.com/article/27/383/the_hawthorne_studies.html).. 2.3.3. HUMANISTIC RELATIONS AND THEORIES. ‘Human Relations Movement’ was Mayo’s next theory. He concluded that people’s work performance is reliant on both social issues and job content. He proposed that employees are not simply robots who can meet high unrealistic targets set by management. He showed that if an organisation, or its managers displayed an interest in employees and cared for them, it had a positive consequence on their motivation. (http://businesscasestudies.co.uk/arm/motivation-within-an-innovative-. work-environment/mayo-human-relations-approach.html). From this, it is clear that managers have the responsibility of treating employees with care and showing concern in order to raise productivity and keep employees engaged. The criticism of this school of thought, however, is that Mayo had no real empirical relational evidence to support his findings. Because it had no distinctive theoretical concepts compared to Taylorism, the theory was absorbed into later theories such as humanistic psychology (Nonaka & Takeuchi as cited in Broner (2008)). After the Hawthorne studies, Abraham Maslow and Douglas McGregor proved how motivational constructs tied in with the work of human relations. Maslow’s Theory was based on five basic needs which humans are motivated by, when viewing an employee’s work values (physiological, safety, love, self-esteem and selfactualisation). He showed that employees will be motivated by the need at the top of their. priority. list. –. at. that. particular. point. in. time. (http://www.business.com/guides/human-relations-management-theory-basics23405/). Maslow termed this humanistic psychology, the third force in psychology (http://psychology.about.com/od/historyofpsychology/a/hist_humanistic.htm).. He. believed that people are inherently good and that social problems were in reaction to deviation from this tendency. Further to this, McGregor supported motivational beliefs by ascertaining that employees will contribute more to an organisation if they are valued and are given responsibilities. The biggest contribution from this theory was that organisations need to treat employees with respect and value their contributions- this will in turn lead to higher productivity and better quality outputs.. Page 30 of 91.

(32) 2.3.4. INTRINSIC AND EXTRINSIC MOTIVATION. Human beings are usually motivated by extrinsic and intrinsic factors. Intrinsic motivation is when you want to do something such as challenging and meaningful work, learning and development opportunities, recognition and achievement (Boltax, 2011:19). Extrinsic motivation is when somebody else tries to make you do something. (http://p2pfoundation.net/Intrinsic_vs._Extrinsic_Motivation).. Extrinsic. factors such as managers, policies, procedures, a salary, job security, leasing of company. vehicles,. house-bond. repayment. discounts,. vacation. allowances,. cellphones, laptops, and even dog-walking services (Ehlert, 2000), may have a significant influence on employees’ performance. Managers should get more involved in understanding what motivates employees to stay with an organisation. The best way would be to sit down and ask them face-toface (Ehlert, 2000:44). Ehlert goes on to say that when a manager is supportive, the environment in the workplace – as experienced by the employee – can be very good. The most important factor employees want from the working relationship is wanting to feel good about going to work – rather than receiving a bigger pay cheque. Employees want to feel as though their contribution is adding value to the business (James & Matthew, 2012:86). Employers have the ‘power’ to provide this motivation and self-esteem to each employee. Showing employees appreciation increases their self-esteem and their intention to stay in the job. Boltax (2011:20) explains that the most important element in retention of employees is the relationship with the first line manager. He goes on to explain that one of the key responsibilities of the manager is to motivate the employee by building on their strengths – rather than focussing on their weaknesses. When an employee sees that their manager believes in their contribution and strengths, it increases their motivational levels and self-esteem – which in turn has a positive effect on their job performance. James and Mathew (2012) suggest that the best way to retain employees is to understand their needs and expectations from the organisation, and then deliver on these. Muneer et al. (2011:903) further explain that if this is done correctly, the organisation will be able to retain their talented employees and influence organisational sustainability. If organisations do not engage with employees, it could have negative effects on the economy (Frank, Finnegan & Taylor, 2007).. Page 31 of 91.

(33) From all these above theories it is clear that employees choose to stay with an organisation based on the healthy relationships between management and employee,. or. between. colleagues.. Healthy. relationships. develop. where. management shows care and concern for the well-being of workers. 2.4. CURRENT FINDINGS. Employees develop certain perceptions regarding the degree to which an organisation appreciates and/or values their output and shows concern for their wellbeing (Eisenberger, Huntington, Hutchinson & Sowa, 1986). Eisenberger et al. (1986) go on to state that employees will form and use this perception to satisfy the higher-level Maslow needs such as approval, self-actualisation and esteem. Another way of stating this is that employees tend to personify their organisation and its actions (Levinson as cited in Armeli, Eisenberger & Lynch (1999:468)). This is defined by Eisenberger (1986) as perceived organisational support (POS). POS examines the exchanges between employer and employee. An employee will develop positive or negative behaviour from the organisation by gauging whether the organisation values the employee’s contribution/output and shows concern for their well-being (Aselage & Eisenberger, 2003). Liden, Shore & Wayne (as cited in Armeli et al. (1999)) state that POS has had a negative relationship on turnover. This study will investigate the relationship between POS and an employee’s intention to resign/quit. Eisenberger, Stinglhamber, Vandenberghe, Sucharski and Rhoades (2002) state that according to organisational-support theory, perceived supervisor support (PSS) is positively related to POS, and has a negative effect on employee turnover. The further showed that this in turn strengthened the employees’ commitment and emotional ties to the organisation. Malatesta (as cited in Eisenberger et al., (2002)) stated that if PSS was low, employees would believe that transferring to another supervisor would make the situation bearable. Eisenberger et al. (2002) found that PSS was related to withdrawal behaviours such as turnover. New employees may still identify with their previous organisation, and therefore social feedback and fair treatment from the existing in-group is critical for them to build a new identity with the new organisation (Amiot et al., 2012:47). When positive behaviour and validation are received directly from a leader, it would be a predication Page 32 of 91.

(34) of organisational identity. Social validation of this kind from a leader or a team member – indicating a newcomer is doing the job correctly – increases the selfinvestment and intention to stay (Amiot et al., 2012:48). Organisational policies and decisions executed by employer representatives are often seen by employees as being the organisation’s intent (Levinson as cited in Armeli et al., 1999:469). Management act as organisational representatives in that they have the responsibility to performance-manage employees, delegate duties, implement policies and/or process, and co-ordinate leave schedules. Egermann and Tross as cited in Frank et al. (2007) – state that employees naturally see the organisation as a mirror image of how they see their direct manager. Walker as cited in Frank et al. (2007) – found, in a survey done in 32 countries, that the reasons influencing loyalty are fairness, care, trust and concern for employees. When looking at who is responsible from an organisational point of view – it is the employee’s direct manager. Employee engagement is seen as a concept that results in employee turnover and can be described as the way in which an employee feels about their organisation and manager, the working experiences, as well as the ways they are treated (Frank et al., 2007:15). Engagement is the responsibility of the direct line manager (Gopal as cited in Frank et al., 2007). The relationship between POS and the employee’s intention to quit has frequently been researched. In Armeli, Eisenberger, Lynch, Rexwinkel and Rhoades (2001:46), the correlation score between the two variables was a negative (r =0.51, p<0.001). Golpal as cited in Frank et al. (2007) – states that “the root of employee disengagement is poor management”. As previously mentioned, according to Boltax (2011), losing employees is very costly: the cost of replacing an employee is 70 to 200 percent of that person’s annual salary. Frank et al. (2007) discuss how both direct and indirect costs of employee turnover are constantly on the rise. Organisational leadership know and understand that the retention of talented employees will result in a competitive position of the organisation among its rivals (Boltax, 2011). Ehlert (2000) mentions that retention is a serious issue and if organisations want talented employees to stay, they need to make it as top priority and have a working environment that encourages it as well. He goes on to state that retention is a responsibility of all managers. Page 33 of 91.

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