Employee Retention Policy: Theoretical Framework

Introduction

The main premise of the current research is that (1) the individual perceptions of employees in the public and semi-private sector organisations in Qatar are influenced by the implemented HRM practices, (2) and being explained with references to the Human Capital Theory and Social Exchange Theory, these perceptions form the attitude to the job such as satisfaction or dissatisfaction, and then, (3) influence the retention. From this point, in the context of rapidly growing economies, (4) HRM practices implemented with references to the configurational perspective form the employee perception and influence the further employee retention in the public sector (Rahman et al. 2013; Williams, Bhanugopan & Fish 2011). The proposed theoretical framework provides the background to understand the connection between the implementation of HRM practices based on the configurational approach and the employee retention tendencies to conclude about the effectiveness of SHRM in the context of Qatar. The aim of this literature review is to identify and discuss the relationships presented in the theoretical framework in order to state how SHRM approaches influence the effectiveness of HRM practices and the further employees’ behaviours measured with references to the factor of retention. Therefore, the literature review presents the detailed and logical discussion of the observed relationships between the theoretical concepts that support the study in the field of the HRM policy in Qatar.

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Individual Base Perception

There have been many studies showing a positive correlation between these HRM practices and employee perception of the HRM policy’s effectiveness (Alusa & Kariuki 2015, p. 73; Chew & Chan 2008, p. 504). The theoretical framework suggests that the HRM policy introduced in Qatar in 2009 with the focus on the SHRM bundling approach influenced the manner in which HRM practices were integrated in the public organisations.

HRM Policy

Researchers note that the HRM policy based on the configurational approach emphasises the role of the system’s interactions in the whole organisation (Colbert 2004, p. 346; Stavrou & Brewster 2005, p. 187). When HRM strategies are followed as bundles, the effects of the integration of practices increases, and the organisation and its work became perceived as the system (Dhiman & Mohanty 2010). The role of bundled HRM practices is important because these practices supported with the HRM policy are interrelated, and their main function is to reinforce each other (Maryam & Sina 2013, p. 701; Michie & Sheehan 2005). Waiganjo and Awino note that the configurational perspective reflected in the HRM policy supports the idea that organisations can gain more benefits while implementing many interrelated practices rather than focusing on one effective practice (Waiganjo & Awino 2012, p. 83). Focusing on formulations in the document, it is possible to note that the 2009 HRM policy in Qatar accentuated the necessity of following all the proposed principles and strategies with the focus on bundles of practices, where training and development practices are associated with the performance management practices and rewards and promotion techniques.

HRM Practices

HRM practices implemented in bundles are important to ensure that employees can acquire and develop the necessary skills with the focus on training and to increase their motivation with the help of performance management and rewards. In this context, researchers propose to distinguish between HRM practices discussed at the employees’ individual level and SHRM practices oriented to improving the organisational performance (Shih, Chiang & Hsu 2006, p. 757). Thus, it is significant to discuss the effectiveness of implemented HRM practices from two perspectives, (1) where the focus is on the employee perception and (2) on the role of the practices for increasing the organisations’ strategic potential when bundles of practices are integrated in the process (Onyemah, Rouzies & Panagopoulos 2010; Pourkiani, Salajeghe & Ranjbar 2011). The research by Choi and Lee explains how it is possible to concentrate on the configurational perspective in the process of implementing HRM practices and to refer to the employee perceptions (Choi & Lee 2013, p. 575). According to Choi and Lee, HRM practices need to be implemented as bundles because some combinations of HRM practices are “more likely to have positive effects on organisational performance than the application of a single HR practice, such as pay for performance, employee participation, or training” (Choi & Lee 2013, p. 575).

Studies demonstrate that the implementation of such HRM practices as training, performance management, and promotion in bundles can lead to the situation when employees will be trained to improve performance and achieve the organisational goals while being supported with the effective performance management (Bhatti et al. 2013; Bockerman & Ilmakunnas 2012, p. 245). However, changes in attitudes and performance can also be associated with the focus on choosing the best fit practices, appropriate for the concrete organisation (Shih, Chiang & Hsu 2006). Therefore, to expect positive outcomes, managers need to choose the really effective bundles for implementation and support them with appropriate rewards. Techniques for measuring performance need to be fair and associated with other practices in order to orient employees to achieving the higher results (Dar et al. 2014, p. 228). In their turn, rewards are expected to be based on performance measurement, and promotion can become the result of the appraisal (Den Hartog et al. 2013; Edgar & Geare 2005, p. 535). Thus, the HRM policy based on the configurational perspective influences the manner according to which HRM practices can be implemented in the organisation.

Employee Perception

Employee’s perception of HRM practices necessarily follows the stage of the HRM practices’ implementation. A number of researchers have focused on a positive impact of HRM practices on the employee perceptions in terms of increasing the employees’ productivity and job satisfaction as well as decreasing turnover intentions and absenteeism (Abdullah, Ahsan & Alam 2009, p. 66; Chen 2014, p. 357). Scholars state that it is important to distinguish between implemented and perceived HRM practices because intended HRM practices implemented by managers in bundles can be perceived by employees differently (Giauque, Anderfuhren-Biget & Varone 2013). Moreover, the available literature on the issue suggests that managers and employees see the effectiveness of HRM practices in a different way, and as a result, the outcomes can be unexpected and dependent of individuals’ visions (Den Hartog et al. 2013).

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Those employees who are provided with the relevant and fair rewards as well as with promotion opportunities are inclined to perceive their organisation positively and they can be discussed as committed to organisations (Hong et al. 2012). The perception improves if the promotion opportunities are supported with the provided training and development opportunities (Hong et al. 2012, p. 65). Researchers also state that when employees understand that their performance can be rewarded highly, their job satisfaction can increase in some cases, and the obvious attachment for the organisation can be observed (Gkorezis & Petridou 2012, p. 3599). In this context, employees’ perception of HRM practices depend on the practices’ orientation to satisfy employees’ needs and address their career expectations.

Theoretical Prediction

The theories that are appropriate to explain what practices can influence the employee perception, and then, the employees’ attitudes and behaviours and in what ways are the Human Capital Theory and the Social Exchange Theory (Chen 2014; Choi & Lee 2013). In the current research, these theories explain why managers need to implement HRM practices as bundles and what feelings are experienced by employees when practices related to training and development, performance, and promotion are integrated according to the configurational approach.

Human Capital Theory

Studies generally support positive associations between HRM practices implemented as a bundle and improved employees’ job satisfaction based on the Human Capital Theory (Chen 2014; Lepak, Bartol & Erhardt 2005). Thus, Human Capital Theory is usually referred to while explaining the employee retention with the focus on employees’ developed skills and abilities as well as experience and knowledge (Chen 2014, p. 356). In a situation of market relations in the sphere of employment, if an employee is perceived as a capital, a manager is oriented to creating necessary appropriate conditions to guarantee the employee retention because increasing turnover rates and absenteeism also contribute to the growth of the costs associated with the human capital (Kyndt et al. 2009; Lepak, Bartol & Erhardt 2005). In his turn, an employee also evaluates the benefits proposed by the management in terms of training and development opportunities, fair performance appraisal, and rewards and promotion opportunities. If an employee evaluates the monetary and psychological factors associated with adopted HRM practices positively, his or her motivation increases along with job satisfaction (Larsson et al. 2007).

A range of synergistic combinations of HRM practices such as training, performance, and promotion practices can become perceived as contributing to the monetary and psychological satisfaction of employees to influence the factor of retention. However, opponents of referring to Human Capital Theory state that this approach is rather simplistic and employees can be rarely motivated by the manner of HRM practices’ implementation (Bockerman & Ilmakunnas 2012). Nevertheless, researchers indicate that when HRM practices are implemented effectively and with the focus on the employees’ needs, the personnel can become oriented to forming the positive employee perception that leads to increasing job satisfaction and employee retention.

Social Exchange Theory

The Social Exchange Theory is based on the idea according to which it is possible to expect positive results of the employees’ productivity and performance if the implemented HRM practices are perceived by them as increasing their potential (Choi & Lee 2013, p. 578). This theory depends on the idea of evaluating expectations associated with management practices because managers integrate effective training, promotion, and performance management practices when they rely on receiving significant outcomes (Paille, Bourdeau & Galois 2010, p. 51; Paille 2012). If an employee receives the appropriate reward for the contribution to the organisation and has effective training and development opportunities, this employee chooses to stay with the organisation while reducing the costs for managers regarding turnover, recruitment, and absenteeism (Karanges et al. 2014). In this context, the employee and employer are perceived as main actors in the specific social exchange relationship (Karanges et al. 2014, p. 331). As a result, a manager or an employer can improve the retention practices while modifying HRM practices to achieve the higher results and influence the employees’ decisions to stay with the organisation or leave (Haley, Flint & McNally 2012, p. 76). Therefore, such practices as training and development, performance management, and rewards and promotion are discussed as employee retention strategies according to the Social Exchange Theory (Tzafrir et al. 2004). Furthermore, according to Harris, Wheeler, and Kacmar (2009, p. 372), the theory supports the idea that employees’ perception of HRM practices is influenced by the policies working in the organisation, and intentions to stay or leave are significantly affected by these policies because employees often feel obligation to stay with the company if the organisation is oriented to enhance their skills and guarantees promotion.

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Impact of Practices and Theories on Employee Attitude and Behaviour

The theoretical framework presupposes that there is a link between employees’ perception of HRM practices and their job satisfaction and intentions to leave the organisation that can be explained with references to the Human Capital Theory and the Social Exchange Theory. Although such researchers as Holtom et al. (2008) state that many factors need to be addressed to expect changes in employees’ attitudes and behaviours, other studies support the existence of such a link that influences the organisations’ experiences regarding turnover rates and retention (Kehoe & Wright 2013; Onyemah, Rouzies & Panagopoulos 2010; Rehman 2012)

Job Satisfaction

The presence of job satisfaction in the discussion of the practices’ effectiveness can improve the analysis of the relationship between HRM practices and retention (Edgar & Geare 2005, p. 535). Different studies have examined the observed relationship between HRM practices and the feeling of job satisfaction. Employees point at job satisfaction and other positive feelings associated with job when their work situation is regarded as positive and promising for their development in terms of compensation (Tsai, Edwards & Sengupta 2010, p. 2). If employees discuss their compensation and rewards as appropriate, they can experience higher job satisfaction. Similar results are observed when employees are satisfied with their development and promotion opportunities (ALDamoe, Yazam & Bin Ahmid 2011). Hasin and Omar (2007) showed that employees are inclined to respond actively to HRM practices in relation to their job satisfaction.

Choi and Lee have found that HRM practices associated with training, appraisal systems, feedback systems, and promotion are oriented to developing the employees’ competencies and increasing their self-efficacy as well as job satisfaction (Choi & Lee 2013, p. 577). It is important to state that when HRM practices are proposed in bundles, they provide the complex effect on employees, increasing their overall satisfaction and commitment to the organisation. Den Hartog et al. (2013) concluded in their research that effectively implemented HRM practices are positively related with job satisfaction of employees. The other researchers point at the connection between job satisfaction and such behavioural outcomes as the desire to stay with the organisation or leave (Majumder 2012; Marescaux, De Winne & Sels 2013).

Employee Retention

Employee reactions associated with HRM policies and practices are usually satisfaction, motivation, and commitment that influence the workers’ desires to stay with the organisation. Nishii, Lepak, and Schneider (2008) state that employees need to experience recognition that influences their job satisfaction and motivation as well as commitment. If employees feel the commitment to or attachment for the organisation because of their emotions, satisfaction, or obligation, managers can rely on the high retention rate in the company. In this context, researchers note that HRM practices implemented in organisations should promote the employees’ sense of significance, motivation, inspiration, and satisfaction (Onyemah, Rouzies & Panagopoulos 2010; Rehman 2012). Katou has found that employees’ job satisfaction, and then commitment, can be stimulated by managers through the integrated practices because of the employee perception of their effectiveness (Katou 2013, p. 679). Taplin and Winterton (2007) also support the idea that HRM practices are empirically linked to the phenomenon of retention in the organisation. In their turn, Kehoe and Wright claim that it is necessary to refer to the affective commitment as the main association between HRM practices and employees’ intent to stay with the organisation or leave it (Kehoe & Wright 2013).

Authors like Chew and Chan (2008) are inclined to focus on the idea that employee retention is a result of the promoted motivation and job satisfaction only when the overall climate at the workplace is positive and supported with adequate rewards and promotion opportunities. Moreover, the employees’ loyalty in relation to the organisation can be discussed as influenced by managers’ policies regarding the appraisal and promotion. In spite of such crucial factors as the relationships with a boss or colleagues, employees are inclined to state that their job satisfaction and commitment are closely associated with their visions of HRM practices (Paille, Bourdeau & Galois 2010, p. 42). Doherty (2010) has found that the employee retention is a result of the effective management programmes and strategies used in organisations in order to stimulate performance. When practices according to these strategies are effective and implemented appropriately, it is possible to speak about the commitment and retention (Onyemah, Rouzies & Panagopoulos 2010; Rehman 2012).

Link between Employee Perception, Attitude, and Behaviour

Studies show that there is a link between employees’ individual perceptions of HRM practices, such attitudes as job satisfaction, and their behaviour associated with the intention to stay with the organisation or retention (Hausknecht, Rodda & Howard 2009, p. 270; Holtom et al. 2008, p. 232). Those employees who perceive the adopted HRM practices positively indicate that these practices need to be associated with the opportunities for training and development, appraisal, and promotion. If these conditions are addressed, employees become satisfied with their job position and organisation and become affectively committed to it (Bhatti et al. 2013; Gberevbie 2010, p. 62). This attitude influences the behaviour and contributes to the improvement of employee retention rates in the organisation. Positive perceptions and emotions are also discussed by Glen (2006) as important factors to affect the employment relationship. Moreover, Sanders, Dorenbosch, and De Reuver (2008, p. 413) state that performance appraisal, career opportunities, and promotion practices need to be discussed as high commitment practices used in order to stimulate the employees’ motivation. Much effect is achieved when these practices are implemented in a bundle. From this point, employees’ perception of HRM practices’ effectiveness can be discussed as an important factor to speak about job satisfaction (Choi & Lee 2013; Rahman & Nas 2013).

Link between Employee Perception and Behaviour Supported with Theories

In spite of the identified relationship between the employee perception, attitude, and behaviour, researchers also focus on the relationship between employee perception of HRM practices and their behaviour associated with retention and supported with the discussed theories (ALDamoe, Yazam & Bin Ahmid 2011, p. 76; Glen 2006 p. 38). When employees evaluate the implemented HRM practices positively, their direct intention is to stay with the organisation that addresses their needs, as it is claimed according to the Social Exchange Theory. Perceptions of employees often depend on the completeness and nature of HRM practices, and effectively implemented practices in performance management, rewards and promotion, and training and development can influence the employees’ vision of the organisation as meaningful, make them feel like the part of the team and to have the intention to contribute to the organisation’s growth (Hausknecht, Rodda & Howard 2009, p. 270; Holtom et al. 2008, p. 232). The perspective from which employees see their managers’ efforts and HRM practices influences how these employees plan to contribute to the organisation in the future, while staying with it or leaving it (Chen 2014; Hausknecht, Rodda & Howard 2009).

Rapidly Growing Economies as the Context

Scholars note that in rapidly developing economies and such contexts as Qatar’s economy, HRM practices are implemented depending on the local cultural differences (Onyemah, Rouzies & Panagopoulos 2010, p. 1951). In terms of Qatar, it is appropriate to use HRM practices that are based on the quality of interactions between employees. Using the configurational approach in Qatar, managers need to remember that training in teams or rewards for the group work can serve better in this environment (Ibrahim & Shah 2012). Development of positive relationships in an organisation can be a meaningful motivating factor for an employee in Qatar.

The situation similar to the implementation of the HRM policy in Qatar was also observed in such countries as Malaysia, Kenya, and Korea during different periods because of the focus of authorities on improving the HRM strategies in public and private sectors (Abdullah, Ahsan & Alam 2009; Alusa & Kariuki 2015; Choi & Lee 2013; Ibrahim & Shah 2012; Osman, Ho & Galang 2011). From this point, in the context of rapidly developing economies, adopted HRM policies and implemented HRM practices based on the SHRM configurational perspective can be discussed as an effective choice to increase employees’ satisfaction and employee retention within the organisation (Yamamoto 2013, p. 750).

However, it is important to state that in the era of standardising management approaches and systems, it is important to refer to the specifics of different cultural contexts in order to choose perspectives and practices that are effective for the concrete environments (Ibrahim & Shah 2012; Maryam & Sina 2013). The studies also reveal that it is important to implement the practices while referring to the appropriate SHRM perspective (Collins & Clark 2003; Rasouli et al. 2013; Waiganjo & Awino 2012, p. 79). In countries with developing economies, organisations need to focus on configurational perspective in order to contribute to the strategy realisation and promote employee satisfaction in order to avoid turnover costs and barriers in the organisation’s functioning (Majumder 2012, p. 57).

While focusing on the cross-cultural perspective, it is important to state that in developing countries, the configurational approach can be more effectively implemented (Onyemah, Rouzies & Panagopoulos 2010). Focusing on clusters of practices, managers try to achieve the strategic goals typical for organisations by fewer means (Williams, Bhanugopan & Fish 2011, p. 201). The reason is that having the limited resources, managers working in the context of developing economies can rely on the fact that adopted HRM practices will reinforce each other while being implemented in bundles. In this context, the current research can significantly contribute to understanding the association between the integration of HRM practices as bundles, employee perception, and further rates of retention reported in the organisations from the rapidly developing economies and countries like Qatar.

Conclusion

The provided literature review is intended to support the approach used while developing the theoretical framework that demonstrates the relationship between the HRM Policy implemented in Qatar in 2009; such HRM practices as training and development, performance management, rewards and promotion; employee job satisfaction; and retention. The literature review also provides explanation regarding the relevance of referring to such theories as Human Capital Theory and Social Exchange Theory in order to support the observed relationships. The proposed theoretical framework is effective to provide the background for the whole research because it explains the connection between employees’ perception of the HRM practices, their job satisfaction, and further commitment to the organisation. Furthermore, organisations can be discussed as more effective and their retention rates can be higher, if managers are focused on setting appropriate HRM practices depending on the HRM policy’s background and certain cultural and economic context. The reviewed literature supports the developed theoretical framework in terms of determined links and connections between the theoretical concepts.

Reference

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