Factors that Influence Employee Retention in Childcare

Table of Contents

1. Introduction

2. Objectives of the study

3. Structure of this literature review

4. Scope and Limitation of this literature review

5. Literature review

5.1 The definition of talented employees and its importance to organization

5.2 Employee’s retention and motivation definition

5.2.1 The definition of employee retention

5.2.2 The definition of employees’ motivation

5.3 Motivation Factors Impacting On Employee Retention

5.3.1 Herzberg Theory

5.3.2 Motivation Factors Impacting On Employee Retention

6. Conceptual framework of employee motivation and retention

7. Summary

8. References

1. Introduction

Organizations are recently facing lots of problems relating to employees retention, both financially and psychologically (Shah, 2014). It is because of high replacement costs and associated with recruiting and training new employees and staff shortages, the questions of how to retain employees has been gained greater attention (Heavey, 2013; Sri, Krishna, & Farmanulla, 2016). As an importance of childcare sector in economy, which will encourage the parents return to work or work outside the home, the problems of recruitments and retention could be highly adverse to the other sectors. According to the Labour Force Survey (LFS), there is a decrease of around five per cent for the childcare workforce in Britain since 2005. Given low levels of pay and other pressures on the childcare workforce increased rates of staff turnover (Simon, Owen, Hollingworth, & Rutter, 2015). Recently, National Recruitment Survey found nearly a third of respondents (32%) had difficulties with staff recruitment and retention and they had lost more than 25% of their workforce in the past 12 months (Parenta, 2016). Furthermore, Over 30% of people in employment in the UK are over the age of 50, and there are unlikely to be enough younger people entering the labour market to replace this group when they leave the workforce, taking their skills and experience with them (ONSDigital, 2016). These evolutions cause not only a shortage of workers, but also a risk of losing knowledge and experience. This loss of knowledge and experience increases the importance of retaining talent. Because of demographic changes, it creates a profound effect on the UK labour market. The demand for talent will increase, while supply will decline. Consequently, there is an increasingly competitive landscape for recruiting and retaining talented employees. As a result, a “war for talent” will emerge.

With the necessary calling for not only retaining the talented staff for long term with the aim at decreasing the staff turnover but also attracting the best talents, many researchers approached employee retention have been conducted using motivation as strategy to retain employees which have provided the valuable data and the significant reasons why employees decide to leave or stay in an organization, but more exploration is essential to determine the recent factors identified by various researchers as the change of employees’ need s chorological under the development of socioeconomics.

2. Objectives of the study

This study on literature review on young employees’ retention on childcare sector undertakes the following objectives:

• To find out the different views of employee retention by previous researchers
• To determine  the main motivational factors which help to retain employee in organization

3. Structure of this literature review

In recent year, there are many studies have been exploring the staff retention topic in the context of a firm, a market or an industry. As a result, many frameworks with different dimensions on factors that make staff retention have been established and developed. This review will identify and measure the essential factors affecting to employees in today’s environment developed under theories of the needs and motivations of employees. The first part of the chapter begins with a definition of employees and the importance of talent employees to organization. Secondly, it is the definition of the staff retention and staff motivation concept. The third is the identification of factors that affect to employees’ retention developed under a famous foundation motivation theory Hertzberg’s Two-Factor Theory. Thereafter follow a discussion on the relationship between employees motivation and employees retention in order to develop the factors affecting the employees retention under motivation factors supported by recent researches. Then it goes on with the building a framework that is built by analysis above.  This review will end up with summarising this review.

4. Scope and Limitation of this literature review

This review is primarily concerned with research into factors affect to employees retention is a reflection of the available literature. It is hoped that such an approach will provide an appropriate basis for helping the management to know for which the reason employees tend to change their job, developing strategies to overcome barriers in retaining talented employees.

There are limitations to this review of the literature. Firstly, given the large number of studies contained in various literature databases and the imperfect functioning of keywords on the process of searching documents, it may be that useful studies that contained information pertaining to the topic but not explicitly described as such were overlooked. Secondly, many organizations exist that offer information of interest. The Internet offers many downloadable publications, some of which may contain valuable research findings, but limited resources did not permit a full search for these types of items. Furthermore, very few look at this issues recently place some limitations on the convincible of conclusions on factors affect retention. The useful valuable resources come from around 2010-2015, it is not enough strong to approve for the importance of factors effect on employees retention recently on this literature review.

5. Literature review

5.1 The definition of talented employees and its importance to organization

According to research by (Michaels, Handfield-Jones, & Axelrod, 2001), human resources in organizations are divided into three groups. The “A” group is the high performers’ team who will boost organization performance by adding value through their own effort and by inspiring and encouraging other employees they are associated. Group “B” is the solid performing employees who keep the business running day by day, always fulfilling the required tasks but they have little willpower to progress. Group “C” is the group of employees who rarely accomplish tasks with satisfactory results. It is not that “C” performers are the bad people; they are just in a position, which they cannot shine. They could make better contribution if they are in suitable position.

The group “A” or “talent” group, within the scope of this article, could be expressed through a variety of terms. (Goffee & Jones, 2007) call them “clever people”. The ideas, knowledge and skills of these employees create outstanding value from the resources that the organization provides them. (Berger & Berger, 2004) also explains this group of employees with the same meaning but uses a different term and refers to them as “super keepers”. He defines “super keepers” as those who have a lot of potential and high work efficiency, create unique values, unique strengths for the organization. Those people have significant differences in the performance of the organization in the present or future.

No matter what the talents people are, scholars agree that the talented workforce is the organization’s core human resources. Research shows that 80% of a business’s profits are generated by 20% of its “A” group workforce (Branham, 2005). Research by (Rueff & Stringer, 2006) also demonstrated that the value of talent employees increase the market value of an organization by 8%.  In addition, (Groysberg, Sant, & Abrahams, 2008) recognized that talented programmers work eight times more productive than normal programmers do, and only 1% the highest productivity inventors work five to ten times faster than conventional inventors do. These numbers are important, as they not only help to increase the profitability of the organization but also affect the operation management of the organization.

5.2 Employee’s retention and motivation definition

5.2.1 The definition of employee retention

There are many theoretical approaches in the study of employee retention. In the literature, retaining employees mean an effort to create an environment which keep engaged of employees and encourage employees to remain with organizations for a maximum period of time. For more detailed and recent definition for the concept of  employees retention, it is known as the process in which employees is encourage to stay with organizations for a long period of time despite more attractive salaries elsewhere (Das, 2013; Nema & Nougriaya, 2015). According to (Mita, 2014) cited on (Kossivi, 2016), employees’ retention is described as a technique adopted by businesses to maintain an effective workforce and at the same time meet operational requirements.

5.2.2 The definition of employees’ motivation

According to (Osabiya, 2015), he defines motivation as psychological driving force, which encourages individuals to achieve specific goal in order to fulfil some need or expectation. It could be described as the direction of a person’s behaviour in an organization towards work-related activities (Dobre, 2013). In other words, motivation is the result of the interaction of both unconscious and unconscious factors including the intensity of the desire or the need, the reward value of the goal or the desires of the individual and of his or her colleagues; it explains why people behave in a certain way (Ganta, 2014). In addition, motivation is described as a power that influence people to behave in certain ways boosting performance and directs towards accomplishing specific targets (Osabiya, 2015).

It is essential to identify the employees’ needs and motivation because of its crucial influencing on employee retention (Aguenza & Som, 2012). According to (Maslow, Stephens, & Heil, 1998) knowns as one of the foundation stones of motivation theory, people needs depending on what they have and they will desire next level when the lower needs has been fulfilled. In other words, when a need has been satisfied then another need will arise and should be fulfilled. The higher level of demand will act as a motivation factor, which directly affect to behaviour and performance of employees and organizations.

5.3 Motivation Factors Impacting On Employee Retention

5.3.1 Herzberg Theory

The literature refers to Herzberg’s motivation-hygiene theory, also known as the two-factor theory. Based on actual knowledge of the workers; Herzberg (1959) divided two distinct lists of factors (Kuranchie-Mensah & Amponsah-Tawiah, 2016). The first level mention about “hygiene” factors such as job security, salary, vacation, work condition, working relationship, company policy & administration. This factor is in the sense of maintenance factors that are essential for existence of motivation at workplace (John, 2009 ). These factors deal with job context and lead to job dissatisfaction (Aydin, 2012). If these maintenance factors are unfulfilled, employees will not be enthusiasm at work. The second level is the sense of encouragement factors called “motivators” factors such as recognition for one’s achievement, challenging in work or involvement in decision-making (Lewis, Packard, & D. Lewis, 2008). These factors deal with job content and lead to job satisfaction (Aydin, 2012). Encouraging factor is satisfying the needs of higher level and maintain satisfaction. Motivating staff requires a combination of both maintenance and encouragement factors, unable to focus on anyone factor (Elizabeth, 2009).

5.3.2  Motivation Factors Impacting On Employee Retention

The major motivational theory from Herzberg provided a theoretical background for this study. From these studies, motivators could be grouped into three major classes of workers needs and expectations cited in (Joshua – Amadi, 2002):

• Economic rewards such as salary, benefits and security
• Intrinsic rewards such as interest in the job, personal growth & development, appreciation, positive recognition and being valued
• Social relationship such as friendship at work, status and dependency

Most of the employees stay with the workplace if their managers use motivating tools to take an interest of employees in the organisation (Masaiti, Naluyele, & Masaiti, 2011). It means that successful retention efforts are the result in substantially good motivation level in an organisation. There are differential motivations factors, which influence their potential employees to stay for a long time. As the argument of Herzberg cited in (Samuel & Chipunza, 2009), motivation would only happen as a consequence of the use of intrinsic factors known as the self-desire to analyse one’s capacity to gain knowledge or find out new challenges. These intrinsic motivations include achievement, recognition, the work itself, responsibility, advancement, and growth. In others word, the causes of dissatisfaction that were referred to by Herzberg as “hygiene” factors would be eliminated as the result in a neutral state, not the result in a satisfaction state. However, many studies (Walker, 2001; Gberevbie, 2008; Muhammad, 2011) have identified different key extrinsic motivational variables influence employees’ retention and turnover such as competitive salaries, good relationships with co-workers and supervisors, the friendly working environment and job security

The classical theory of motivation developed by Frederick Winslow Taylor (1911) also suggested that in order to ensure employee motivation, managers must figure out the best way to guide staff working with strong support from the manager, or using of monetary incentives such as salaries and bonuses (Koumparoulis & Solomos, 2012). In addition, as cited in (Sinha & Sinha, 2012) , the studies by (Thomas, 2000) shows that the factors such as the salary, the benefits and compensation are redefining by employees in the modern studies as one of essential motivational variables to make employees want to stay in organizations. The effect of financial inducements on employees’ retention also approved by studies including (Samuel & Chipunza, 2009)or (Omotayo, Salau, Paul, Falola, & Hezekiah, 2014). These studies showed that salary affect to attract and retain employees, higher wages reduce quit propensity positively. Also with offering a better pay packages for potential employees, organization could compete in high labour markets.

Salary is an important step in determining motivation for work performance (Abdul Hameed, Ramzan, Zubair, Ali, & Arslan, 2014).However, in practice, wages are considered as a result in job outcomes and are often measured with low accuracy (Mitchell and Mickel 1999). (Parker & Wright, 2001) argued that money affect to bring the workers in the organization and satisfy them, but not retain employees. It means that low pay means organization would be losing employees, but pay high salaries does not mean that it could make employees stay with organizations. This issues also approved by a research conducted by the “Institute for Employment Studies” in the United Kingdom. They showed that only 10% of employees leaving the organization because of the dissatisfaction with pay as the main reason (Aguenza & Som, 2012). Although satisfaction is strongly correlated with wages and organizational commitment, but this relationship is only considered part of the complex picture. It means that the other factors should be also considered important that managers should take a flexible approach.

According to (Muhammad, 2011), employees will stay if they are rewarded. Employees are often rewarded based on quality-based performance. The sense of accomplishment of the accountability is important and a strong motive. Employees tend to stay with the organization when they feel their abilities, efforts and contributions are recognized and appreciated. It is becoming important for each organization to use the rewarding pool effectively to highlight the highest performance of employees, thereby increasing the rate of capital return on the human capital investments of the organization. Failure to do so will result in the degrading performance of the employee or the key employee leave the organization. Two researches by (Mercer-report, 2003), (Perrin, 2003) highlight the relationship between reward and retention of staff, and show insights into what employers are doing, how they feel, and what employees talk about reward issues. These studies continue to reinforce the belief that a well-rewarded program will support the management of talent employees.

As considered one of the essential factors in employees’ retention, it is necessary to recognize the needs of employees and provide a good working environment with the aim at keeping employees stay with organizations (Zeytinoglu & Denton, 2006).  A study of (Spence, Leiter, Day, & Gilin, 2009) also gathered evidence to support for the importance effect of favourable working environment on employees retention. The working environment concept is defined as “a flexible environment where working environment is enjoyable, and resources are adequately provided” (Sinha & Sinha, 2012).

It is indicated that according to Wells & Thelen (2002) cited on (Nema & Nougriaya, 2015),  “organizations which have generous human resource policies, have a very good chance to satisfy and retain employees by providing them an appropriate level of privacy and sound control on work environment which enhances the motivation levels to commit with the organization for the long term”. Hackman and Oldham job characteristics model (1976) developed a set of implementing principles in order to identify ways in which motivated employees in and of itself as well as create job satisfaction and creativity. Based on this theory, it is realized that high routinized and repetitive tasks affect to employees’ attitudes and behaviours. As a set of movements to be repeated, the benefits disappeared because of employees’ dissatisfaction. This is fundamental to intrinsic motivation (the work itself). It is proposed that jobs should be made better in ways of raising motivation, instead of just repetitive tasks simplify. Employees must determine the procedures in the job individual in scheduling the work. It shows the substantial freedom, independence at work. The employees know the job from start to finish and their work must have some certain importance that significantly affects the overall effectiveness of the organization. In addition, the job must allow the employee to perform substantial decision authority in order to make the employee feel responsible for the results of his or her work. Finally, work must be responsive to the supervisor, record employee accomplishments, and provide feedback to help employees work better next time. It helps employees know the true results of their work. Supported for this viewpoint, the studies from (Horwitz, Heng, & Quazi, 2003); (Ellett, Ellis, Westbrook, & Dews, 2007); (Loan‐Clarke, Arnold, Coombs, Hartley, & Bosley, 2010) also emphasized the importance of enjoyable and flexibility working place on employee retention.

In a new study, Glassdoor data scientist Morgan Smart look at 5,000 job transitions from a sample of thousands of résumés shared by job seekers on Glassdoor from 2007 to 2016 cited on Harvard Business Review  (Chamberlain, 2017). He found that even after controlling for pay, industry, job title, and many other factors, employees will leave for another company if stagnate in their current role happen. They have to stay a long time for a role without a title change; it means that they do not see their progression clearly with their current role to a better role in organization; in the end turn to new job in new organization obviously. This point is defined as developmental opportunities related to perceived careers success. According to (Herman, 2005) cited on (Kossivi, 2016), there is a direct correlation between career development or opportunities for growth and job retention. In the other hand, as the studies from (Cardy, 2011), (Kroon & Freese, 2013) mentioned that development opportunities positively increase an employee’s commitment to stay in an organization.

As one of a key retention factor in developmental opportunities, training element significantly affect to employees retention (Acton & Golden, 2003; Hassan, Razi, Qamar, Jaffir, & Suhail, 2013). According to (Willis-Towers-Watson, 2016) Career advancement opportunities are one of the top drivers of attraction and retention globally. Training is seen as a form of personal or organizational investment in human capital (Bawuro, Danjuma, & Ibrahim, 2016). Once enrolled in the workplace, staff will be offered training programs to improve their work skills. Organizations expect their employees to acquire new skills and knowledge to apply to work and to share with colleagues. According to (Anis, Rehman, Nasir, & Safwan, 2011; Hassan, Razi, Qamar, Jaffir, & Suhail, 2013), training opportunities meet not only the development needs of employees but also the organization’s workforce requirement. Equipped with the necessary professional skills that will motivate employees to do better, make them feel more challenging and have more promotion opportunities. According to Herzberg’s two factors theory (1959), training is the element of environmental factors that is the result of dissatisfaction. As an evidence of this, according to (Newman, Thanacoody, & Hui, 2011), this study conducted on 437 Chinese employees of five multinational enterprises operating in the Chinese service sector highlights that training is an important tool to maintain and improve employees’ commitment to organization. The result of this survey is consistent with social exchange theory, which posits human relationship is formed by the use of a subjective cost-benefit analysis. According to Bawuro, Danjuma & Ibrahim (2016, p.206), “Employees tend to adopt a social exchange relationship at work, with a pattern of reciprocity determining the perceived balance in exchanges over time. As a result, if this norm of reciprocity is satisfied within the workplace, a more trusting and loyal relationship between the employer and employee will evolve”.   As a cost of training, employees understand the organization consider them as an important factor, which is why organization decides to invest to them. As a result, employees work more enthusiastically because of sense of belongingness into organization.  Also as the self-desire, the human always wants to gain knowledge or find out new challenges (Samuel & Chipunza, 2009), the training have a direct ability to fulfil this desire. The training achieves a balance between the career needs of individual and the organization’s workforce requirement (Hassan, Razi, Qamar, Jaffir, & Suhail, 2013).

In addition, various studies noted that the way people are managed and the leadership style have direct influence on an organization ability to maintain its workforce. Kroon and Freese (2013) are emphasis that participative leadership style plays an important impact in employee retention. According to Ellett, Ellis, Westbrook and Dews (2007) cited on (Kossivi, 2016, p. 264) “supportive, quality supervision” and “leadership that values employees” has a significant role on employees’ retention. Managers and supervisors take on a new role when an organization gets into the business of employee development. They must become coaches to help people manage their careers and support their development efforts. According to the study by (Chew, 2004) on the impact of human resource management on retaining key staff of Australian organizations, an empirical study argued that motivation is dependent on leadership behaviours, working relationships, corporate culture and structure, working environment. The results from Towers Watson on Global Labour Force Study in 2014 noted that direct managers have a strong influence on the engagement of employees with their work and their willingness to contribute to the success of their company.

6. Conceptual framework of employee motivation and retention

Based on the above discussions, a research framework is developed, including two dimensions (employees’ motivation and employee’s retention) which are given below:

7. Summary

Employees play a very important role in the success or failure of organizations. Attracting and retaining highly talented employees and to ensure competitive advantage is an important issue for companies in all scales around the world. Organizations try to select and retain talented employees to compete in global market. Therefore, organizations must find appropriate and effective measures to attract, develop and retain talented people to ensure sustainability and the development of organization. The review of the literature finds HR practices are the most important and valuable means that influence employee’s retention in any organization. There are many factors influencing the attraction and retention of talented people, of which the two most important elements that any particular organization should be concerned about are: the group of “hygiene” factors, which concerns the organization, and the group of “intrinsic” factors or human factors knowns as the self-desire of employees. In general, four main factor groups including salary, benefits and promotion; working environment; job characteristics and leadership styles have great influences on the organizational commitment of the employees. It is essential to select the right person, arrange the right job, ensure the fit between organization and people, between people and work; have adequate pay and reward system in accordance with capacity, qualifications and individual contributions to the organization; availability for all employees having access to training and development  programs, making them are important elements in the organization. At the same time, the leadership, dynamic and creative management in organizations create suitable working environment; reasonable organizational structure with good coordination within and outside organizations; good organizational culture is extremely important for attracting and retaining talented people that any organization needs special attention in their development.

As a result of this literature review, many opportunities for future study have been emerged. Researchers have the scope of finding the causes of employee turnover, strategies to reduce employee turnover among employees working for future study. A research could be conducted on various other retention strategies, which increase retention of employees. The other researchers could use the results of this study in order to make the base for future study in this area.

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