“Why are my employees leaving my organisation?”. “What can I do to make my valuable employees stay at my organisation?”. “What makes employees stay in their employment?”.
Employers have been asking these questions for a long time. Let’s be honest, hiring and firing, and continuously having to recruit, select, orient and train new employees is costly on all levels – financially and on the morale of the workforce.
Most employers know that employees are the heart of any organisation. Without them, an organisation can’t function, let alone excel and reach its goals.
Why then are organisations finding it difficult to retain their employees?
An example of high turnover is among higher education institutions in South Africa where the rate of staff turnover is alarmingly high. This is detrimental to the success of these institutions.
Previous research has shown that one of the main reasons employees leave their organisations, is because their expectations in their employment relationship aren’t met. This is referred to as a breach of their psychological contracts – the unwritten contract of perceived promises and expectations within the employment relationship.
I conducted research among all levels of employees at a large open distance university in South Africa. I found that the most important factor that leads to employees staying in their jobs is the extent to which their expectations within their employment relationship is being met, especially on an interpersonal level.
These findings highlight the significance of the psychological contract in employee retention. They also show what employees need in terms of interpersonal relationships, trust and openness with their direct supervisors, and the role this plays in retaining staff.
Employers often focus on formal agreements and labour legislation. But my research shows that the psychological contract might be an even more crucial factor employers should consider when developing and implementing retention strategies.
The psychological contract
The psychological contract is subjective in nature. It’s formed and sustained through the extent to which perceived promises and commitments made within the relationship between an employee and their employer, have been adhered to.
When employees feel that promises and commitments made to them by their employer have not been kept, their commitment drops. This leads to them being more likely to leave their organisation. This leads to higher staff turnover.
My research was conducted through a questionnaire to all levels of permanent staff at the university. The questionnaire assessed 493 employees’ perceptions of the psychological contract, organisational justice, trust and retention practices.
The goal was to establish how higher education institutions could improve their employees’ satisfaction within their employment relationship, specifically in terms of their psychological contract fulfilment. This was done with the aim of lowering staff turnover.
My study confirmed previous research which also found that the psychological contract was mainly made of mutual expectations of parties within the employment relationship. I also found that employees’ psychological contracts mostly relied on the way employees were treated on an interpersonal level by their direct supervisors or line managers.
What can be done
The solution is to create realistic expectations right from the moment employment starts by introducing thorough onboarding and orientation. Both should provide for open and honest discussions between employees and their supervisors.
Employees should be given the opportunity to clarify uncertainties and gain all the necessary information in terms of the organisational culture, their job tasks and performance requirements in a safe and supportive environment. These discussions should establish and clarify the expectations of both parties, so that they are in line with one another. Supervisors, who represent the higher education institutions, shouldn’t make promises and commitments that can’t be kept.
In addition, institutions need to develop performance management systems and practices that ensure that expectations of employees and their supervisors in terms of performance requirements and goals, are aligned.
The performance management system should be explained thoroughly to employees so that employees are clear on the expectations that the organisation has of them. Importantly, the promises and commitments the individual is prepared to make towards the organisation should also be expressed.
Vitally, any financial or other incentives linked to performance should be deliberated and deemed fair by the supervisor and the employee. Employees should also receive timely, regular, individual feedback from their supervisors to ensure that expectations remain in line with each other.
The same goes for career development goals, training and development needs, mentoring needs and work-life balance needs. These should all be discussed openly and honestly between employees and their supervisors.
Supervisors might not be able to solve all employees’ frustrations and problems. But my research found that through open and truthful relationships, employees will feel understood and appreciated. This will inevitably lead to higher commitment and higher staff retention.
Professors Melinde Coetzee and Nadia Ferreira also contributed to the research this article is based on.