Introduction
Background
Workplace relationships are never reciprocal (Denning 2013). Relative to this assertion, Deery (2008) says, while people like to believe in the concept of equality and democracy in the workplace, the reality is that some groups of employees exercise more power than others do. Broadly, this uneven power structure is a notable reality that surfaces in various forms of human interaction. This is particularly true when understanding team dynamics in an organisation (Holton 2001). The imbalanced nature of human relationships in the workplace allows employees to express their loyalty and commitment to employers, based on the severity and nature of employer-employee relationships (Denning 2013).
Managerial behaviour has only recently started to respond to organisational changes that have happened in the past few decades (Jo & Ellingson 2019). Particularly, laying off workers for purposes of maximising shareholder value has taken precedent in the last few years (Mukanzi & Senaji 2017). It is therefore unsurprising to hear business leaders saying they are minimising the number of workers to improve the value of their shareholders (Atkinson, Mallett & Wapshott 2016). Gill (2008) also posits that it is common to see firms cut back on employee benefits to adapt to worsening economic conditions and maximise shareholder value. Based on this trend, Denning (2013) says, unlike 30 years ago, employers’ attitudes towards employees have changed because managers are treating them as short-term economic resources, as opposed to an important tenet of the organisation). As affirmed by Capelli (2012), the importance of employees to an organisation largely depends on how useful the employees are to the employer.
McSweeney (2008) believes that by treating employees as economic resources, managers may experience high levels of employee dissatisfaction. The dissatisfaction may occur because the quality of relationships between employees and their employers largely influences how employees feel about their work. Relative to this argument, human nature remains the same as economic conditions change. Therefore, while managers strive to adapt to economic conditions, they fail to see how such adaptations affect the unchanging human nature (Cassidy 2003). More specifically, they fail to realise that even though human nature may have different dynamics, the need for managers and employees to remain connected is unchanged.
The need for employees to feel connected to management is not a new phenomenon in organisational behaviour studies. In fact, McSweeney (2008) says it is common to find employees making decisions that are detrimental to their careers to stay loyal to an employer. For example, sticking to one company, even though the pay is less, is a common employee behaviour that stems from employee loyalty and organisational commitment (even in the face of worsening economic conditions) (Mukanzi & Senaji 2017). Certainly, through such observations, it is difficult to deny the fact that most employees care a lot about workplace relationships, their welfare, and the welfare of other people within the organisation (Jo & Ellingson 2019). In line with this view, Jo and Ellingson (2019) say that even when employees debate on whether to leave an organisation (or not), there is always a social cost of doing so.
Based on the above assertions, managerial behaviour is a significant variable that affects manager-employee relationships. Thus, employee perceptions regarding their usefulness to organisations have a significant impact on their commitment and loyalty to their employers (Mukanzi & Senaji 2017). This is especially true because employee commitment and loyalty affect employee emotions and attitudes in the workplace. Organisations have only recently started to pay close attention to management behaviours because they can significantly affect employee conduct in the workplace (Atkinson, Mallett & Wapshott 2016; Mukanzi & Senaji 2017). The impact is more severe in the service sector because employee emotions and attitudes can also affect customer satisfaction, organisational productivity, and (by extension) organisational profitability (Atkinson, Mallett & Wapshott 2016). Therefore, it is important for managers to understand the extent that their behaviours affect employee commitment and loyalty.
Purpose of the Study
Although employee commitment and loyalty are vital for service-oriented businesses, committed and loyal employees are vital for any business. Certainly, loyal and committed employees are motivated employees (all of which help to improve a company’s productivity) (Mukanzi & Senaji 2017). From this background, the findings of this project will be useful to different companies (particularly in understanding how their managerial behaviours affect employee productivity and organisational effectiveness.
In this study, the researcher will evaluate several arguments that explain how employee productivity could be improved through job satisfaction, employee motivation and commitment by focusing on one aspect that is firmly within managerial grasp – managerial behaviour. Therefore, the focus of this study is to provide a direct approach for organisations to improve their productivity by realising the benefits of having committed and loyal employees. Besides positive organisational outcomes, the findings of this project also add to the growing body of literature surrounding employee commitment and the effects of managerial behaviours on employee loyalty. Particularly, the findings will give a contextual appeal to the research topic by evaluating the extent that managerial behaviour affects employee commitment and loyalty. Through these findings, managers would better understand the extent that their behaviours cost an organisation, through varied employee commitment and loyalty. This way, they will have a more accurate understanding of the best managerial behaviours to use and which ones they should eliminate. To gain a deeper understanding of the research topic, the researcher uses a case study approach to comprehend how managerial behaviour affects employee commitment at Palladium International Limited.
Palladium International Limited (which is also referred to as the Palladium Group) is a global advisory and management organisation that represents a merger of seven prior businesses. The company’s name denotes an international organisation that endeavours to connect social progress with commercial development (Palladium 2018). In the last five decades, the organisation has helped customers to travel the world by formulating policies, creating partnerships and executing programmes that have long-term social and monetary influence. The organisation considers its projects to have a “positive impact” (Palladium 2018). To realise its objectives, Palladium collaborates with companies, communities, civil societies and governments (Palladium 2018). The company’s core mission is to “give back” and better the livelihood of others (Palladium 2018). In line with this goal, the organisation endeavours to offer direct financial backing to innovative programmes that have a positive impact around the world.
To be a leader in the development and delivery of valuable solutions may appear as a lofty vision for the company, but Palladium has been striving to realise it for over 50 years now (Palladium 2018). Indeed, the organisation has been working with its partners to strengthen communities across the globe and realise economic development and social stability. Such endeavours have been attained by developing a comprehensive understanding of project objectives, nurturing project leadership proficiency and employing successful management tools in employee management (Palladium 2018). To uphold Palladium’s success, the company’s leadership team embodies the cultural principles of innovation, quality, diversity, teamwork, tenacity and integrity (Palladium 2018).
Currently, the organisation has about 3,000 employees working in approximately 90 nations across the globe (Palladium 2018). By the close of 2015, the Palladium Group was the fourth-largest private sector partner for the United Kingdom (UK) Government’s Department for International Development (Palladium 2018). Today, the organisation is active in the expansion of social innovation, which encompasses impact bonds, collective value and “impact” investing (Palladium 2018). Some of the firm’s initiatives encompass the Human Development Innovation Fund, Innovation Impact Framework, International Quality Care and Funding the Ghanaian Agriculture Project (just to mention a few). The organisation recently developed the commencement of the Positive Impact Research Institute, which is an organisation that strives to discover the present and future trends of the contemporary economy and the associated “Let’s Make It Possible” program, which is run as a not-for-profit organisation. As an employee of the organisation, in this paper, the researcher seeks to understand why employees are unhappy with how managers treat them, and if an alternative management style would have different results.
Research Aim
To understand the extent that managerial behaviours affect employee’s commitment and loyalty at Palladium International Limited
Research Objectives
- To establish the predominant management style at Palladium International Limited
- To investigate the extent that managerial behaviours affect job satisfaction at Palladium International Limited
- To understand the effect that managerial behaviours have on employee motivation at Palladium International Limited
- To explore if there is a link between managerial behaviours and employee turnover at Palladium International Limited
Literature Review
Introduction
This chapter of the paper highlights what other researchers have said about the study topic, which is to understand the extent that managerial behaviours affect employee commitment and loyalty. Four main research objectives guide the investigation. They strive to establish predominant management styles in organisations, investigate the extent that managerial behaviours affect job satisfaction, understand the effect that managerial behaviours have on employee motivation and find out if there is a link between managerial behaviours and employee turnover. These four key objectives will inform this literature review but before delving into the details of the analysis, it is important to understand the theoretical basis that underscores the relationship between managerial behaviours and employee loyalty.
Theoretical Background
Several theories have been advanced to explain the effects of managerial behaviour on employee performance. Most of them explain the modalities and varying characteristics of management styles, which are aimed at improving employee engagement and productivity. This section of the study presents a broad analysis of five theories outlining employer-employee relationships. They include Taylor’s Theory of Scientific Management, Human Relations Theory, Neo-Human Relation Theory, Theory X and Y and Likert Group of Theories. The theories are discussed below.
Taylor’s Theory of Scientific Management
Taylor’s scientific management theory posits that additional pay motivates most employees to work efficiently (Weisbord 2011). Based on the belief that most employees are self-centred and opportunistic, the scientific management theory suggests that managers should reward employees that finish their work and “punish” those that do not, by denying them pay (Weisbord 2011). From this idea, the theory proposes “a fair day’s pay for a fair day’s work” (Wagner-Tsukamoto 2008, p. 348). Based on this framework, the scientific management theory proposes four principles.
The first one urges managers to replace work by using the “rule of thumb” principle, which suggests that most managers should use scientific methods of determining the most efficient organisational processes, maintain them and eliminate inefficient ones (Wagner-Tsukamoto 2008). The second principle proposes that managers should assign the right people to different job tasks by using their competencies and motivations as the main basis of the proposal (Weisbord 2011). Thereafter, managers are encouraged to train their employees to be highly productive. The third principle urges organisations to be vigilant about work processes and provide guidance where necessary. For example, managers are encouraged to maintain only efficient organisational processes and stop those that do not have the same level of productivity (Weisbord 2011).
Lastly, the scientific management theory requires managers to allocate work between employees and employers to give them enough space to concentrate on planning and training, while lower-level employees work on small jobs in the organisation (Wagner-Tsukamoto 2008). This way, there would be maximum efficiency in the organisation. Broadly, Taylor developed the scientific management theory after explaining that encouraging employees to improve their productivity was not as important as optimising workflow processes (Wagner-Tsukamoto 2008). From this view, he proposed that if managers optimised and simplified workflow processes, they would have a positive effect on employee productivity (Weisbord 2011).
The greatest criticism of the scientific management theory is its oversimplification of human nature. For example, Wagner-Tsukamoto (2008) says it has serious methodological issues because it presents an “inhuman” face of employee behaviour. Portraying employees as outright self-centred and aptly opportunistic individuals also drew criticism from some sociologists who have criticised the scientific management theory for its inaccurate depiction of human nature (Simha 2010). However, Morgan (2006) says people should understand that the organisational environment characterising the development of the scientific management theory was different from today’s setting. In the past, managers had minimal interaction with their employees. They also preferred minimal contact with employees because they wanted to have enough space to do their work (Morgan 2006). Moreover, there was very little standardisation in the industry and employees had no other motivations to work, except to preserve their jobs and earn a living (Wagner-Tsukamoto 2008). A different issue that should be understood in this analysis is the fact that Taylor was a mechanical engineer and his focus was looking for better ways of making organisations (workplace processes) efficient.
Although some researchers later disapproved some of Taylor’s principles, they created the groundwork for some of the major theories we know today. Therefore, it comes as no surprise that at the time of formulating the principles, many managers adopted the scientific management theory in their work processes (Wagner-Tsukamoto 2008). For example, Weisbord (2011) says the adoption of the scientific management theory introduced systematic selections of employee training procedures. Furthermore, the principles of the theory provided some of the initial research data for understanding how managers could improve organisational efficiencies (Simha 2010). Indeed, although few managers practice or support the scientific management theory today, the theory provided the framework for the development of advanced management practices, it paved the way for the development of other theories, such as the human relations theory highlighted below.
Human Relations Theory
After undertaking a series of experiments (Hawthorne studies), Elton Mayo (as cited in Pyöriä 2005) developed the human relations theory. The American scientist suggested that if managers took the time to cater to employees’ personal and social needs, they would realise higher productivity and loyalty from their employees (Muldoon 2012). Central to Mayo’s approach was a deep understanding of individual motivational factors. In fact, his main emphasis was to shift people’s perceptions of employee input in organisations from a mechanistic view to a humanistic view. Through this emphasis, Mayo emphasised on the importance of understanding group dynamics when managing employees (Pyöriä 2005). It is from this analysis that subsequent researchers started to perceive the workplace environment, not only as an office, or a factory but also as a place where people mingle with one another. This analysis birthed the concept of “social employees” whose quality of interaction with managers and colleagues influenced their productivity (Pyöriä 2005).
A key tenet of the human relations movement was the treatment of employees as part of a group, as opposed to an individual unit (Muldoon 2012). Another tenet of the movement stemmed from the need to belong to a social group and realise additional monetary rewards. The human relations theory also posited that informal groups in the workplace had a strong influence on employee productivity (Muldoon 2012). These principles sharply contradicted the views of Fredrick Taylor, through his scientific management theory, because it disputed the fact that material factors mainly motivated people to work (Pyöriä 2005). Instead, Mayo (as cited in Muldoon 2012) proposed that emotional and safety factors greatly affected employee productivity. Other findings that emerged from the Hawthorne studies showed that most employees felt empowered and rejuvenated to work if they did so as a group (Pyöriä 2005). Similarly, the findings showed that if company managers consult with their employees (supervision), they would similarly realise improved employee commitment and loyalty (Pyöriä 2005).
Although many managers have used the human relations theory to improve organisational productivity, some analysts have criticised it for being manipulative and exploitative. For example, Bruce and Nylan (2011) say Mayo advanced this theory to manipulate employees to comply with their managers’ wishes. Some workers also believe that the adoption of the theory in modern-day organisations greatly undermines their economic interests at work (Taneja & Pryor 2011). Analysts, who hold the same view, suggest that most proponents of the theory want to advance the interests of managers and organisations only because they focus on seeking better ways of improving organisational productivity, as opposed to improving employee welfare (Bruce & Nylan 2011). Empirical criticisms have also emerged regarding the credibility of the theory because some researchers believe the model does not prove any empirical relations between employee commitment, productivity, managerial behaviour and the inclusion of employees in organisational decision-making processes (Bruce & Nylan 2011; Pyöriä 2005). Several new theories have been developed to address these weaknesses. One of them is the neo-human relation theory.
Neo-Human Relation Theory
The neo-human relations ideology emerged in the 1950s when pioneer researchers in human resource management, like Abraham Maslow and Frederick Herzberg, emphasised the importance of managers to understand the physiological and psychological needs of their employees (Muldoon 2012). Maslow proposed that most managers should heed to the needs and aspirations of their employees (Dye & Mills 2005). He outlined five clusters of these needs as described in figure 1 below.
Dye & Mills (2005) also supported Maslow’s hierarchy of needs by encouraging managers to meet the above needs in a hierarchical fashion, such that when they meet a low-level need, their focus should thereafter move to a higher-level need. Illustratively, Abraham Maslow in his paper titled, “A Theory of Human Motivation,” as described in Psychology Today (2012), proposed that most employees who need food would work for minimum wage before they think of demanding better pay to fulfil a higher-level need, such as job security. The importance of proposing Maslow’s ideologies was to encourage managers to provide incentives that meet employee needs. The underlying motivation for advancing this school of thought was to sensitise managers on the idea that similar things do not motivate all workers. Thus, it was vital for managers to respond only to those needs that appealed to a group of employees (Dye & Mills 2005). Employee segmentation has further led to the development of new theories, such as theory X and Y, that appeal to different workgroups.
Theory X and Y
In his book, titled the “Human Side of Enterprise,” McGregor (1960), suggested that human behaviours existed across a continuum of two extremes – theory X and theory Y. Theory X suggests that most employees are lazy and would avoid work if they had the freedom to do so (McGregor 1960). Consequently, theory X proposes that most employees need to work under strict organisational controls, while managers need to supervise them. Through the same principle, theory X proposes the implementation of a hierarchical structure in the organisation, where there is little room for managers to compromise with their juniors (Russ 2013). This school of thought supports managers who use threats and coercion to make their employees work. In such an environment, it is common to experience mistrust in highly restrictive environments (punitive environments are also characteristic of such workplaces) (Taneja & Pryor 2011).
Theory X managers share close ideologies with Taylor’s scientific management theory because they both believe that money motivates most employees to improve their productivity (Taneja & Pryor 2011). Such managers also believe in blaming employees (first) before they analyse any other source of conflict (for example, the organisational system). Observers say a significant flaw of this school of thought is its affinity to create diseconomies of scale in an organisation (Russ 2013).
Theory Y contradicts the principles of theory X because it has a lot of faith in people. For example, McGregor (1960) says theory Y suggests that most employees exercise self-control and self-motivation. The same theory proposes that most employees enjoy their work. Therefore, they would engage in problem-solving tasks if managers paid more attention to them (McGregor 1960). In addition, theory Y proposes that most employees would easily practice self-control and self-direction if managers provided them with the right environment to do so. Observers sum the principles of theory Y as a positive depiction of employee capabilities (Russ 2013; McGregor 1960). A close reading of this theory further shows that it proposes the adoption of a positive view about employees and the potential positive outcomes that may arise from the same process. Through this view, Russ (2013) believes that most managers who adopt theory Y are more likely to create a deeper sense of trust with their employees than managers who adopt theory X. This background further shows that theory Y managers use human resource development practices better than theory X managers because they strive to create a positive environment for employees to work (the same way as theory Y). Some of the characteristics of such environments include minimising the differences between employees and managers and the development of a climate of trust within the organisation (Russ 2013).
A comparison of theory X and theory Y would broadly suggest that the two theories are two ends of the same continuum. However, McGregor (1960) says this is untrue. Consequently, many theories have investigated this comparison. For example, the leader-member exchange theory has explored the characteristics of theory X and theory Y and suggested that a combination of both theories would easily suffice if people acknowledge the uniqueness of manager-employee relationships (Sahin, 2012). Therefore, against, the principles of McGregor (1960), the leader-member exchange theory says that most managers should treat their employees differently, depending on the quality of their relationships (Sahin, 2012). Through the combination of theory X and theory Y, Kang and Stewart (2007), say an important issue that emerges here is “affective commitment” because it helps to improve the quality of relationships between managers and employees. Stated differently, employees that receive positive treatments from their managers tend to develop an “affective” commitment to their managers and the organisation.
In sum, the leader-member exchange theory postulates that different managerial styles may vary across both theories (Sahin, 2012). For example, theory Y managers would give a lot of independence and autonomy to their workers, thereby providing them with the opportunity to recognise problems and solve them. This situation results in the development of improved loyalty and commitment of the employees to their organisations and managers. Comparatively, theory X managers would closely supervise their employees and only motivate them by providing extrinsic rewards. This situation creates an environment for the development of low-quality relationships between workers and managers (mostly for employees who feel overlooked by their managers).
Researchers who have evaluated the relationship between theory X, theory Y and Maslow’s hierarchy of needs say that the theories share a close relationship because of their reliance on human behaviour and human motivations to explain employee productivity (Kang & Stewart 2007). More so, theory Y and Maslow’s hierarchy of needs share an even closer relationship because both of them try to create a symbiotic relationship between managers and employees. This type of relationship provides that the relationship between managers and employees should be characterised by spontaneity and creativity (Kang & Stewart 2007). However, as Russ (2011) suggests, although both theories strive to maintain a positive relationship between managers and employees, people should still understand that prejudice exists here. A new set of theories that have been developed to counter this problem. The Likert management theory is one of them and is explained below.
Likert Group of Theories
Likert management theories stem from the teachings of an American scientist, Rensis Likert, whose theories have been widely used to explain the relationship between employees and their subordinates (Hall 1972). Likert proposed four management systems – exploitative authoritative, benevolent authoritative, consultative and participative systems.
Exploitative Management
The exploitative authoritative system traces its roots to the classical theory where organisational duties are highly task-oriented. Moreover, managers in this type of system usually use fear and threats to motivate their employees to complete organisational tasks (Hall 1972). This management model is also closely associated with the authoritative leadership style, as managers (standing at the top of the organisation’s hierarchy) make all organisational decisions with little regard for the plight of their juniors. Since managerial decisions are “orders” to employees, few of them have the power to question their superiors. From this background, Hall (1972) says employees who experience this type of managerial environment may become hostile to organisational goals and even ensure they do not materialise.
Benevolent Authoritative Management System
The benevolent authoritative management system differs from the above model by being less authoritative. However, like the exploitative authoritative system, it still uses punishment and partial rewards as a motive for encouraging workers to improve their productivity. Unlike the exploitative authoritative system, the benevolent authoritative framework gives low-level employees the opportunity to participate in decision-making processes. Nonetheless, this only happens within the context that upper-level managers create (Hall 1972). Thus, top-level managers make most major decisions in such organisations, although with some consideration (awareness) of the conditions facing low-level employees. Consequently, such a managerial framework creates a top-down decision-making system in the organisation where managers acquire a great sense of ownership for organisational strategies, compared to their juniors.
Rad and Yarmohammadian (2006) say the sole ownership of organisational goals may result in conflict between low-level employees and upper-level managers. In addition, Purcell and Kinnie (2003) say this situation may create a sense of competition among employees, thereby leading to conflicts and missed organisational goals. Nonetheless, the benevolent authoritative leadership style creates mixed organisational outputs, as most researchers report that it causes moderate job satisfaction among employees and fair organisational productivity standards.
Consultative Management System
The third management system of the Likert management theory is the consultative management model. Observers say it shares a very close relationship with the human relations theory because it recognises the importance of including employee input in the decision-making process (Purcell & Kinnie 2003). Although this system uses reward and occasional punishments to improve employees output, most employees share in the successes and failures of the organisation. Furthermore, compared to the benevolent and the exploitative authoritative systems, the consultative management framework allows low-level employees to consult among themselves and make the right decisions. However, managers still have the last word in formulating organisational decisions. Certainly, in this system, communication flows upwards and downwards in the organisational hierarchy. However, some analysts believe the consultative system adopted in this Likert framework limits the upward flow of information (Hall 1972).
Participative Leadership Model
The last management system of the Likert group of theories is the participative leadership model. Bartolo and Furlonger (2000) say this management style reports the highest level of efficiency in maximising employee output. A deeper analysis of this style shows that it shares key facets of the human resource theory. Unlike the consultative leadership style, that limits the upward flow of information, the participative system presents a more genuine form of communication where managers and employees share information freely (Bartolo & Furlonger 2000). In addition, unlike benevolent exploitative and the exploitative management systems that are characterised by conflicting goals, the participative framework is defined by acceptable organisational goals because all employees participate in the process of formulating them. Furthermore, all employees share a sense of responsibility for the organisation’s successes and failures. Therefore, the participative system is criticised for having the highest level of employee job satisfaction (Bartolo & Furlonger 2000).
Based on the motivational theories discussed above, analysts have used different measures of employee motivation to assess how managerial behaviours affect employee loyalty. Employee turnover has emerged as a key issue. However, as subsequent sections of this chapter show, job satisfaction and employee motivation also explain the effect of management behaviours on employee loyalty/commitment, the same way as employee turnover does. However, it is vital to understand, first, how employee turnover explains managerial behaviour and employee loyalty.
Relationship between Management Practices and Employee Commitment and Loyalty
After evaluating theories explaining employer-employee relationships discussed above, this part of the literature review investigates what other researchers have said about management behaviour and employee loyalty and commitment. This part of the investigation relates to the second research question, which investigates the extent that managerial behaviours affect job satisfaction. The assumption made in this review is that employee loyalty and commitment are indicators of job satisfaction.
Relative to the above context, most managers have never disputed the value of committed and loyal employees to their organisations (Findlay et al. 2017; (Mukanzi & Senaji 2017; Atkinson, Mallett & Wapshott 2016; Holton 2001). Particularly, they acknowledge the fact that loyal employees always go beyond basic requirements to complete small tasks that help organisations meet their goals (Atkinson, Mallett & Wapshott 2016). Although organisations desire such loyalty and commitment from their employees, many pieces of the literature suggest that unfavourable economic conditions have put managers in a precarious position, which forces them to downsize their organisations and reduce employee numbers (Gill 2008; (Mukanzi & Senaji 2017; Atkinson, Mallett & Wapshott 2016). Unfortunately, such managerial behaviours contravene the psychological contract between employees and their employers.
This contravention often creates unfavourable attitudinal and behavioural responses because employees who do not feel respected by their superiors often become disloyal and unproductive (Cullinane et al. 2017). Some researchers have narrowed down this effect to the reduction of employee motivation and performance levels (Gill 2008; McSweeney 2008). Others have provided a more practical analysis of such contraventions by saying they lead to low employee loyalty levels, increased workplace complaints, and neglect of important workplace duties (including other similar outcomes). In extreme cases, organisations witness massive employee walkouts (Mukanzi & Senaji 2017; Atkinson, Mallett & Wapshott 2016). Considering managers invest many resources to train, educate, and mould their employees to be productive, they cannot afford to be losing their employees unnecessarily. Therefore, they face a difficult task of striking a balance between meeting organisational goals and satisfying employee requirements. Those who fail to achieve such a balance are likely to suffer from high employee turnover numbers, which is often a product of dissatisfaction (Mukanzi & Senaji 2017; Atkinson, Mallett & Wapshott 2016). A deeper insight into the relationship between management behaviour and employee turnover is discussed below.
Employee Turnover
This investigation on employee turnover relates to the fourth research question, which strives to find out if there is a link between managerial behaviours and employee turnover. Relative to this assertion, national and global statistics on employee retention rates show that most managers increasingly face a problem of employee retention (Al-Ababneh 2019). For example, a study in the UK that sampled more than 800 companies, with an employee base of about 1.5 million people, reported an employee turnover rate of about 13% (Al-Ababneh 2019). The search for better terms and working conditions emerged as the main motivator for employees to seek better environments to work (Al-Ababneh 2019). From this understanding, it is unsurprising when Wagner-Tsukamoto (2008) quotes another survey in the UK that showed that about 75% of managers said employee retention was their greatest people-related issue in the organisation. More than 90% of the managers also reported that employee retention was the leading concern for organisations (Wagner-Tsukamoto 2008).
The correlation between employee turnover and employee motivation stems from the need for organisations to retain the most skilful and knowledgeable staff. Indeed, as Kotzé and Roodt (2005) purport, the “war for talent” is a global phenomenon that has attracted most organisations, as they strive to retain the most valuable employees. Three factors contribute to this phenomenon: the scarcity of skilled employees, the emigration of skilled people to look for “greener pastures” and the global push for better terms of work. From these environmental factors, employers usually have few options to explore. The first one would be to adopt sound managerial behaviours that attract employees (Kotzé & Roodt 2005). This way, they would benefit from attracting new employees. The second option would be to train and develop existing employees and support them to increase their productivity. The best strategy for doing so would be to maintain high retention rates (Atkinson, Mallett & Wapshott 2016). However, emphasis on retention requires managers to investigate factors that lead to the retention, or exit, of employees from an organisation (Mukanzi & Senaji 2017; Atkinson, Mallett & Wapshott 2016).
The importance of understanding employee retention rates has emerged across different studies because many analysts see it as a reflection of employee loyalty. In fact, most researchers have often remarked that erosion of employee loyalty has often compounded the problem of low retention rates in different organisations (Oshagbemi & Gill 2004). Some of these analyses have highlighted the findings of other researchers who have emphasised the importance of understanding employee dynamics when evaluating loyalty in the workplace (Mukanzi & Senaji 2017). For example, Wagner-Tsukamoto (2008) says generation X employees conceive their loyalty as a function of their careers, as opposed to a company’s management behaviours. Therefore, such employees would not be affected by managerial behaviours because they perceive their jobs as a stepping-stone to new career opportunities.
Since many employers realise the importance of maintaining a “reasonable” employee retention rate, some researchers suggest that such employers should understand the need to have a low turnover rate because of the associated costs of employing and training new workers (Wagner-Tsukamoto 2008). For example, Kotzé and Roodt (2005) say low retention rates attract, “leave capitalisation, recruitment costs, reference checks, security clearance, temporary worker costs, relocation costs, formal training costs, and induction expenses” (p. 49). Some unseen costs associated with the same high employee turnover include, “Missed deadlines, loss of organisational knowledge, lower morale due to overwork, clients’ impact and chain reaction turnover” (p. 49).
Veldsman (2003) developed a concrete understanding of the managerial behaviours that prompt employees to stay or leave an organisation. He presented managerial behaviours as a function of employee well-being, organisational climate, and job satisfaction. As portrayed in figure 2 below, he showed that these factors would eventually show the direction that most employees follow to get their employer of choice. His model appears below
According to the diagram above, every employee has an opinion about their employer’s behaviour, which then influences their decisions regarding if they should stay in the organisation or leave. However, Veldsman (2003) says the same decision may still be a function of other factors, like the organisational culture and job satisfaction levels (as described above). For example, many researchers have used organisational culture to link leadership styles and organisational cultures, as correlates of managerial behaviours (that affect employee commitment). Relative to this assertion, Wagner-Tsukamoto (2008) posit that the theoretical relationship between organisational culture and employee commitment stems from the fact that supportive and innovative organisational cultures lead to high levels of employee loyalty. Analysts have proven that the same relationship leads to high levels of employee performance (Wagner-Tsukamoto 2008). Thus, the above relationship shows that managerial behaviours could easily improve employee commitment through organisational cultures. To support this view, Manetje (2009) says, “Culture influences employee’s work effort and commitment, both directly through cultural values and attitudes; and indirectly through its impact on human resource practices” (p. 58).
Figure 2 above also shows that organisational environments and cultures highlight external factors that may affect an employee’s decision to leave an organisation (Veldsman 2003). Besides these external factors, intrinsic issues, such as job satisfaction, also affect employee commitment and loyalty. Both variables (intrinsic and external factors) may have a positive or negative impact on an employee’s decision to leave or stay in an organisation because they also reflect an organisation’s internal and external experiences in the workplace (Veldsman 2003).
Again, from the above diagram, researchers say an employee’s propensity to leave or stay in an organisation depends on many variables within the control of management and external to their influence as well (Veldsman 2003). In support of this claim, Kotzé and Roodt (2005) say,
“The propensity to stay or leave is moderated by an individual’s mobility (the ability to pursue and find alternative employment) and the prevailing market conditions facing the individual (such as a favourable or unfavourable supply/demand for labour or the prevailing economic climate)” (p. 49).
Based on the aforementioned analogy, say organisational commitment is a product of organisational culture, while the latter concept affects organisational commitment through supportive or retrogressive practices (Mukanzi & Senaji 2017).
Although many studies have pointed to a multivariate influence of individual and market factors on employee retention, Veldsman (2003) says the most important attribute that influences employee turnover is management’s influence on creating the right organisational climate for employees. Relative to this assertion, Veldsman (2003) says analysts should pay close attention to issues like “trust, cohesiveness, support, recognition, innovation and fairness” (p. 49) when they strive to understand how managers influence employee commitment through the creation of favourable or unfavourable organisational practices.
Relationship between Employee Turnover and Managerial Behaviour
The relationship between employee turnover and managerial behaviour relates to the fourth research question, which seeks to understand if there is a link between managerial behaviours and employee turnover. Generally, several studies have linked employee turnover to managerial behaviour and its effects on creating favourable or unfavourable climates for their employees. For example, Northouse (2004) did a study on about 330 companies (across 50 states in the US) and found out that most organisations lacking clear managerial directions are likely to experience high employee turnover. This assertion stemmed from studies that showed about 74% of employees leave their organisations because of management’s failure to provide them with a clear sense of direction (Kotzé & Roodt 2005). From this finding, Kotzé and Roodt (2005) allude to the fact that most managers are adept at achieving employee buy-in, as opposed to developing stakeholder buy-in.
In a related study, Griffin (2002) established a positive correlation between employee turnover and the level of control in the work environment, provided by managers to their employees. Here, Griffin (2002) says people should understand that control refers to the level of influence that most managers provide their employees to influence managerial activities. Another related study shows that employee commitment has a direct correlation with managerial behaviours that promote a culture of innovation within an organisation (Kotzé & Roodt 2005). Mukanzi and Senaji (2017) say this view was valid even for subcultures (departmental cultures) within organisations. Unsurprisingly, the same study affirmed a negative correlation between organisational commitment and managerial behaviours that promote extreme bureaucracy (Mukanzi & Senaji 2017). One interesting finding that appeared from the above study was the realisation that most employees attribute their commitment to a team, or a department, as opposed to a company. Therefore, Mukanzi and Senaji (2017) believe that high employee turnovers often emerge as protests against individual bosses or departments and not companies.
Another interesting finding that emerged in the above study was the effects of managers who believe in the “war for talent,” as the best strategy for improving organisational performance. Hobbs, McKechnie and Simpson (2017) found out that most managers sought external employees as the best addition to human resources. When these employees arrive at their new stations, their predecessors always feel inferior to them. Therefore, they believe that the only way their managers would value them is if they left their companies and sought new employment opportunities elsewhere. Thus, managers who believe in the “war for talent” always promote a culture of mistrust and insubordination in the organisation, which further fuels high employee turnover. Based on the intrigues of employee turnover, as discussed above, it is correct to say that employee turnover shows managerial performance. However, as discussed below, job satisfaction explains employee attitudes as well.
Job Satisfaction
This analysis of job satisfaction relates to the second research question, which is aimed at investigating the extent that managerial behaviours affect job satisfaction. Relative to this goal, Locke (1976) defines job satisfaction as “a pleasurable or positive emotional state resulting from one’s job or job experiences” (p. 1300). Other researchers, such as Lam and Baum (2001), have provided parallel definitions of job satisfaction as being the attitudes and feelings of employees towards their jobs, employers and organisations. If this definition extrapolates to assess the degree of job satisfaction among employees, Armstrong (2003) explains that most employees who have a negative attitude towards their jobs report low levels of job satisfaction, while the opposite is true for employees who exude positive attitudes at work because they report higher levels of job satisfaction.
Several antecedents of job satisfaction have a direct relation to motivational theories. For example, Herzberg’s theory analyses motivation as a function of job satisfaction (Al-Ababneh 2019). The same theory proposes that the unsatisfied needs of employees often lead to unnecessary tensions in the workplace, low levels of employee commitment and diminished loyalty (Al-Ababneh 2019). Alongside this theory, researchers have explored different issues that may contribute to employee dissatisfaction with their work, including hygienic factors, job security and managerial behaviours (among others). Herzberg’s theory postulates that when employees perceive these variables as unsatisfactory, they are likely to develop a significant level of job dissatisfaction (Al-Ababneh 2019). The theory also posits that the accepted levels of these variables fail to lead to job dissatisfaction, but it prevents such an eventuality from happening (Al-Ababneh 2019). From this understanding, Herzberg’s theory suggests that factors leading to job dissatisfaction may not necessarily lead to this outcome. Thus, both factors are distinct and separate (Lam & Baum 2001).
The relationship between managerial behaviour and job satisfaction stems has been studied for a long time (Hobbs, McKechnie & Simpson 2017). In the past, researchers such as Bass (1990) said that favourable managerial behaviours were responsible for an increased sense of job satisfaction among employees. From such findings, several researchers emerged to investigate how managers could improve their behaviours to increase job satisfaction levels among their employees (Lam & Baum 2001). Consequently, some researchers, such as Yousef (2000) and Oshagbemi (1999), proposed several ways to explain how managers could improve their leadership styles to maximise the benefits of improved job satisfaction. Such researchers affirmed the fact that managerial behaviours affected job satisfaction (Yousef 2000; Oshagbemi 1999). They also said theories that explained job satisfaction in western countries still applied to non-western countries (Yousef 2000; Oshagbemi 1999).
A closer look at the above finding singles out the autocratic leadership style as having the greatest impact on employee job satisfaction. In the same manner, Yousef (2000) and Oshagbemi (1999) say the laissez-faire leadership style cultivates a lesser job satisfaction standard than the participative or democratic leadership style. A study conducted in Western Australia affirms the above findings because it shows that when managers adopt the democratic and participative leadership styles, they cultivate a high level of job satisfaction (Bass 1990).
Although some researchers say there is no difference between western and non-western studies, after conducting independent investigations in Iranian hospitals, Al-Ababneh (2019) said the correlation between job satisfaction and managerial behaviour was indirect. Similar studies conducted in the United Arab Emirates (UAE) also showed that the laissez-faire leadership style had a negative correlation with job satisfaction (Al-Ababneh 2019). Despite the existence of such inconsistencies, Al-Ababneh (2019) says job satisfaction is an important indicator of employee commitment. Indeed, despite the few inconsistencies in research findings, several researchers have affirmed a direct correlation between job satisfaction and employee commitment (Wiß 2015).
Relationship between Job Satisfaction and Employee Commitment
This section of the review relates to the second and fourth research questions, which strive to investigate the extent that managerial behaviours affect job satisfaction and understand if there is a link between managerial behaviours and employee turnover. In line with these goals, some researchers, such as Oshagbemi (2003), show that highly satisfied employees are normally committed to their employers and organisations. From this background, Oshagbemi (2003) says the level of job satisfaction among a group of employees affect their level of commitment to organisational tasks, such as problem-solving, or the commitment/effort they attribute to their roles in a firm. Therefore, when employees have a high level of job satisfaction, they feel more satisfied with their work and no longer perceive it as “work,” but as an enjoyable activity.
Although studies affirm a direct relationship between job satisfaction and employee commitment, Al-Ababneh (2019) says this relationship stems from the foundational relationships between job satisfaction and managerial behaviours. To explain this assertion, Al-Ababneh (2019) first acknowledges that different managers adopt unique leadership styles, based on their organisational duties and tasks. He then says, past researchers have affirmed the benefits of applying the right leadership style on employees because they respond well to leadership styles that appeal to their work contexts. The same relationship has extended to exploring the correlation between management leadership styles and employee job satisfaction. Al-Ababneh (2019) says when managers treat their employees well or meet employee expectations they are likely to cultivate a sense of job satisfaction at work.
A study that evaluated the level of job satisfaction across a group of 220 respondents in several resort hotels in Jordan established that most employees were satisfied with their jobs when their managers adopted the democratic leadership style (Al-Ababneh 2019). However, the same study established that the level of employee job satisfaction varied across the demographic characteristics of the managers. This finding is consistent with other studies, which show that the demographic characteristics of managers and employees often affect employee loyalty and commitment (Oshagbemi 2003).
A broad assessment of the above analysis shows that many researchers have affirmed the correlation between organisational commitment and managerial behaviours. For example, Kavanaugh and Ninemeier (2001) say flexible and participative leadership styles have a positive correlation with employee commitment. Indeed, as Manetje (2009) argues,
“The answer to the question of employee commitment, morale, loyalty and attachment may consist not only in providing motivators but also to remove demotivators such as styles of management not suited to their context and to contemporary employee aspirations” (p. 51).
Broadly, it is correct to say supportive management behaviours are synonymous to employee empowerment and high levels of employee commitment as well (Khalid & Nawab 2018). Relative to this analysis, the influence of managerial styles on employee commitment stems from active leadership styles in an organisation (Khalid & Nawab 2018). Nonetheless, throughout the review on employee commitment and managerial behaviours, one independent issue that has emerged from some studies exploring the same matter is the role of understanding employee personal characteristics in the entire debate.
Employees’ Personal Characteristics
An investigation of employee personal characteristics and their relationship to managerial behaviours address the second, third and fourth research questions of this study, which focus on employee satisfaction, turnover and motivation. The main assumption underlying this investigation is that an employee’s personal characteristics affect the three measures of employee performance highlighted above (satisfaction, turnover and motivation). Concern regarding employee personal characteristics on managerial attitudes and employee loyalty has multiplied through the changing dynamics of the workplace environment (Hobbs, McKechnie & Simpson 2017). Certainly, as organisations become more diverse and global, Human Resource (HR) departments continue to face serious issues regarding the management of a highly diverse workforce.
Indeed, as Chen and Choi (2008) say, today’s organisations have a highly diverse and dynamic workforce, in terms of gender, ethnic affiliations and racial backgrounds. When this diversity combines with today’s fast-paced work environment, managers face a difficult task of merging employee needs with organisational goals. For example, there is a growing realisation among managers of the widening conceptual and the attitudinal divide between “old” and “young” employees in an organisation (Armstrong 2003). The generational divide in today’s organisations presents different classes in ideology and perceptions. These different representations affect how employees perceive their levels of job satisfaction and loyalty to an organisation (Hobbs, McKechnie & Simpson 2017). For example, Chen and Choi (2008) say, “Younger employees might be sceptical about the value of institutional relationships during the early stage of their employment” (p. 1). The reverse would be true for older generation employees because they have a lower sense of scepticism about institutional relationships. The differing views of different employee demographics and their varying perceptual characteristics have intrigued many researchers (Hobbs, McKechnie & Simpson 2017).
As observed from the theoretical background of employee motivations, different groups of employees have different motivations for working in an organisation. Their generational and demographic differences further compound this divide. From this background, Adeyemi-Bello (2001) emphasises the importance of understanding different sets of values that drive these employee groups. Relative to this assertion, Chen and Choi (2008) also say,
“Understanding the differences between these generations relative to organisational behavioural constructs could result in the development of more effective human resource management strategies. Among these constructs, the individual “value systems” (including work values) is an important factor that impacts individual work-related behaviours” (p. 1).
From the above assertion, Chen and Silverthorne (2005) believe the personal characteristics of an employee have a significant impact on the level of employee affective commitment to an organisation and its managers. Most researchers have explored the impact of personal characteristics on employee organisational commitment by analysing the demographic characteristics of employees and their influence on employee perceptions of managerial behaviour (Sissons, Green & Lee 2018). For example, Oshagbemi and Gill (2004) investigated the impact of employee personality on commitment levels by evaluating age, gender and years of service. He reported that unfavourable managerial behaviours are less likely to bother older employees, who have accumulated many years of work experience in an organisation. He further added that “old” employees would be committed to an organisation, even though they may not receive the best treatment from their managers. Moreover, the same study showed that most employees who had risen up the ranks of management (senior employees) were more likely to show increased organisational commitment, as opposed to those who were yet to enjoy the benefits of upper-level management.
Armstrong (2003), also made a similar attempt to categorise employees into three groups “Baby Boomers” (born between 1946 and 1964), Generation Xers (born between 1965 and 1977), and Millennials (born after 1977).” Some researchers have simply divided the employees into generation X and generation Y (Chen & Choi 2008). Adeyemi-Bello (2001) says both groups of employees have different interpretations of work-related constructs. For instance, most generation Y employees hold entry-level positions in the workplace, while most generation X employees hold senior-level positions.
Again, age differences have surfaced in studies done by Oshagbemi and Gill (2004) and Chen and Choi (2008), as an important attribute in influencing the perceptions of work values in an organisation. For example, Oshagbemi and Gill (2004) interviewed a set of hotel managers and found out that their workplace values shifted across different age brackets. After evaluating six value dimensions, the researchers also established that older managers greatly valued supervisory relationships and material rewards from the workplace (Oshagbemi & Gill 2004). Observers say employees often rank their work values differently from their managers because they are more influenced by intrinsic interpersonal variables such as, “ maturity, personal preference, values and situational variables, such as family responsibilities and career opportunities” (Chen & Choi 2008, p. 595). Oshagbemi and Gill (2004) also say life and work experiences affect varying age groups of employees. Therefore, they may perceive their levels of commitment and loyalty differently as well.
Central to the understanding of employee personal characteristics and their perceptions of managerial behaviour is work values. Indeed, as Sissons, Green and Lee (2018) say, individual sets of values often influence their beliefs and attitudes in the workplace environment. The importance of employee values has also mirrored the development of employee perceptions regarding career development. Donald Super (as cited in Oshagbemi and Gill 2004) is among the first groups of researchers who introduced the concept of work values in occupational theories introduced in the early 1950s. Past researchers have evaluated work values by analysing them in three categories, as described by Chen and Choi (2008) – “structure (components of the work values domain), correlates (personal, social, or organisational variables that relate with work values), and cultural differences (work values influenced by national culture)” (p. 595). In sum, Oshagbemi and Gill (2004) say, work values affect how employees perceive their commitment to an organisation and particularly, how managers treat them. Like work values, analysts have had trouble trying to ascertain the extent that the same values or measures of managerial behaviours affect employee loyalty and commitment. This difficulty has opened a new debate regarding how people should measure employee loyalty and commitment.
Measuring Employee Loyalty and Commitment
The need to measure employee loyalty and commitment addresses the second, third and fourth research questions of this paper, which focus on employee satisfaction, turnover and motivation. In other words, understanding how to measure loyalty and commitment would provide a reliable indicator of how committed and motivated employees are. These variables can also be used to predict turnover. Albeit researchers affirm that different factors affect employee loyalty and commitment to an organisation (Paul, Bamel & Garg 2016), the greatest impediment to understanding the real impact of managerial behaviour on employee loyalty is the difficulty in measuring employee loyalty. Indeed, the greatest difficulty of measuring employee loyalty is its intangibility and subjectivity (Sissons, Green & Lee 2018). Therefore, unlike other organisational variables, such as profits and revenue, it is difficult to ascertain the true extent of employee loyalty. Informed by this dilemma, Wharton University (2012) says,
“The issue has been to put a dollar value on this: How much is it worth if employees consistently place the company’s interest ahead of other factors in those situations where they have the discretion? Probably a lot, but it is hard to put into dollar terms” (p. 6).
Besides Wharton University (2012), other researchers, such as Cobbs (as cited in Reisenwitz and Lyer 2007), have acknowledged the difficulty in presenting one measure for understanding employee loyalty and commitment. Notably, they say people use unclear measures to evaluate employee loyalty (Reisenwitz & Lyer 2007). Indeed, instead of measuring the true impact of the attribute, they only outline what they “hope” denotes employee loyalty. Despite this difficulty, Wharton University (2012) believes that using employee loyalty, as a reliable metric for measuring organisational performance is valid.
At the centre of the above analyses are questions regarding whether it is important for researchers to ascertain the level of employee commitment and loyalty, while some managers only require their employees to do what their superiors tell them to do (Sissons, Green & Lee 2018). As Paul, Bamel and Garg (2016) affirm, it is still vital for researchers to understand the relevance of employee commitment and loyalty to their organisational activities because today’s workplace environment cannot have managers who consistently doubt their decisions. From this background, it is crucial for managers to understand how their behaviour affects employees’ commitment and loyalty. Relative to this need, employee loyalty and commitment can be quantified using the Likert scale, which provides five or seven indicators of satisfaction.
Summary
This chapter has highlighted the key dynamics of employee motivation and loyalty standards. Therefore, the main issues that have been addressed in this literature review explain how management behaviours affect employee job satisfaction, employee turnover and employee workplace attitudes. However, most of the insights provided in this literature review are generic and broad. In other words, they do not explain context-specific factors relating to an organisation that may influence the relationship between managerial behaviours and employee commitment and loyalty. Consequently, this study seeks to fill this gap in the literature by using a case study approach of Palladium Company.
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