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Facilitating Employee Retention through Employee Engagement and

Organization Commitment

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Journal of Information and Computational Science ISSN: 1548-7741

Facilitating Employee Retention through Employee

Engagement and Organization Commitment.

DR.SHINEY CHIB

DATTA MEGHE INSTITUTE OF MANAGEMENT STUDIES

Abstract:
Employee engagement acts as a key business driver for organizational success and excellence.
High levels of engagement in organization promotes organization commitment, retention of
talent, improves organizational performance and stakeholder value. Employee engagement is
influenced by many factors—like workplace culture, organizational communication, leadership
styles, trust and respect among the employees. Employee engagement is the level of commitment
and involvement an employee shows towards his organization and its values. It can be measured
by looking to the degree of involvement people show to their job, colleagues and organization.
Organizational commitment, fosters low turnover and absentee-ism, and contributes towards,
higher productivity. The purpose of this paper is to investigate the relationship between
employee engagement, organizational commitment and employee retention. Random sampling
method is adopted for the study.
Key words: Employee engagement, Organizational commitment, Employee retention

INTRODUCTION
Employee engagement, employee commitments and employee retention are critical
organizational requirements in this global era. These terminologies play a very crucial role in the
effective functioning and sustainability of the organization. There are various studies showing
the relationship between organizational performance and employees' engagement, for example,
Simpson (2009) and Andrew and Sofian (2012). Studies in western developed countries show
that there is a direct relationship between employee engagement, employee commitment and
employee retention. (Richardsen et al., 2006; Llorens et al., 2006; Hakanen et al., 2006; Saks,
2006; Demerouti et al., 2001; Maslach et al., 2001; Brown and Leigh, 1996). This study is an
effort to study the impact of employee engagement and organizational commitment on exit
decision of the employee. The paper is structured as follows. First the literature on the
relationship between employee engagement, organizational commitment and employee retention
were reviewed, in order to get the theoretical frame work.

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LITERATURE REVIEW AND THE STUDY HYPOTHESES

A. Employee Engagement : Employee engagement has already gained much popularity and
several researchers claim engagement has a positive relationship with customer satisfaction,
productivity, profit, employees' retention (Coffman and Gonzalez-Molina, 2002; Buckingham
and Coffman, 1999) and organizational success and profit (Richman, 2006; Baumruk, 2004).
Harter et al. (2002) argue that employee engagement is important for 'meaningful business
results and performance in many organizations'. Saks (2006) defines employee engagement as
the extent to which an individual is attentive and absorbed in the performance of his/her roles
(pp: 600-619). Job engagement refers to the extent to which an individual is actually fascinated
in the performance of his/her own individual job role (pp: 600-619).

B.Organizational Commitment: The concept of organizational commitment has generated

great attention among the researchers. Organizational commitment concept requires a great deal
of empirical studies where both contain an outcome and antecedent Mathieu and Zajac (1990).
According to Meyer and Allen, Organization commitment includes three kinds: affective
commitment, continuance commitment and normative commitment. Meyer and Allen, (1991,
p.67) define these three sorts of commitment as following: the affective commitment explains
“the employee's emotional attachment to, identification with, and involvement in the
organization”, Continuance commitment: “the awareness of the costs associated with leaving the
organization” and normative commitment represents a perceived obligation to remain in the
organization (Meyer et al., 2002).

C.Employee Retention: Organization facing severe challenges to retain good employees with
them. Retention has been viewed as ‘an obligation to continue to do business or exchange with a
particular company an ongoing basis (Zineldin, 2000). Employee retention is driven by several
factors like organizational culture, communication, strategy, pay and benefits, professional
development and succession planning (Logan, 2000). Studies on employee retention shows that
wooing existing employee through employee development programmes costs less than procuring
new employees (Davidow & Uttal, 1989). Highly satisfied employees have higher intensions of
persisting with their organizations, which discourages their exit decisions.(Mobley et al.,1979).
Many studies have validated the link between employee satisfaction and employee retention
(Anderson & Sullivan, 1993)

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HYPOTHESIS DEVELOPMENT
After conducting the Literature Review, the author is proposing the following research
proposition.

Organizational
Commitment

Affective
commitment
Employee Continuance
engagement commitment

Normative
commitment

Employee
Retention

Hypothesis:
H1: Employee engagement is positively related to affective commitment.
H2: Employee engagement is negatively related to continuance commitment.
H3: Employee engagement is positively related to normative commitment.
H4: Employee engagement and Organizational commitment is related to employee retention.
POPULATION AND SAMPLE: Sectors included for study was Academics, banking,
manufacturing, IT companies and, hotels. Sample size was 300. Sampling used was random
sampling. Data collection tool used was questionnaire. It was classified into 2 parts:
Demographic data consisting of 6 questions. Second part was further classified into 3 sections,
namely: Employee engagement, Organizational commitment and employee retention.
MEASURES
A.Employee Engagement: Employee engagement is defined as the measure of an employee’s
emotional and intellectual commitment to their organization and its success Hewitt Associates
(2004). There are two dimensions of employee engagement, namely: job engagement and
organizational engagement.(Saks’, 2006). Employee engagement was measured with the scale
developed by Gallup(1993-1998,2006).
B.Organizational Commitment: Organizational commitment parameters are measured with
Allen and Meyer’s instrument (1990). It included three dimension: namely affective
commitment, continuance commitment and normative commitment. The three-component
organizational commitment scale was considered has the most preferred and prevailing
conceptualization of organizational commitment (Bergman,2006). The affective commitment
scale consists of six items, continuance commitment six and normative scale consist of six items.

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C.Employee Retention: Literature review of existing literature (Agrela,et al 2008, Gale Group
2006, Thomas 2000, Boomer Authority 2009, Cunningham 2002, Walker 2001, Patrick Owens
2006) was conducted for exploring the factors of employee retention. Factors considered for this
paper was skill recognition, learning & working atmosphere, job flexibility, cost effectiveness,
training, benefits, career development, superior-subordinate relationship, compensation, loyalty,
communication and employee motivation. It included 12 items.
RESULTS
A. Response Rate
340 questionnaires were distributed. Out of that only 306 were returned for a response rate of 90
percent. However only 300 questionnaires were properly completed. 88.24 percent was the
response rate.
Table: 1: Distribution of Questionnaires

Items Number
Questionnaires distributed 340
Total responses 306
Unusable responses 6
Usable response 300
Total response rate 90.00%
Usable response rate 88.24%

B. Demographic Details
Table: 2: Demographic Profile of Respondents
Variables Percentage
Gender Male 61.6
Female 38.4
Educational Qualification Post graduate 59
Graduate 38
UG 3
Organization Type Private 69.3
Public 30.7
Academician 22.3

Sector Bank 11.8

Manufacturing 12.1
IT 27
Hotel 26.8

Martial Status Married 70.6

Single 29.4

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From the Table 2, it can be concluded that:

61.6% were male respondent and 38.4 % were female respondent. Maximum respondents were
postgraduate and their percentage was 59% and under graduates were only 3%. Maximum
respondents were from IT sector and Hotel Industry and were 27% and 26.8%. Out of 300
respondents, 70.6% were married.
C. Reliability Test
Table: 3: Reliability Statistics

Scale Name Cronbach’s Alpha No. of Items

Employee Engagement .86 12
Affective commitment .91 6
Continuance commitment .89 6
Normative commitment .83 6
Employee Retention .78 12

Table 3 provides the values of Cronbach alpha for all the scales. It ranges from 0.78 to 0.91.
these values are above 0.7 (Hair & Anderson,2002). Thus it can be concluded that the measures
have satisfied the reliability test.
D. Means and Standard Deviations of Study Variables
In this study , 5-point Likert scale was used to collect the responses, were 1=Strongly Disagree
and 5=Strongly Agree. The mean value was further categorized into three levels namely ‘low’,
‘moderate’ and ‘high’. Mean value less than 2, was categorized as ‘low’, between 2 to 3.5 under
‘moderate’ and values above 3.5 under ‘high’ value responses, whereas standard deviation
measures the dispersion of a set of data from its mean
Descriptive statistics of Employee Engagement
Table 4 explains shows the mean and standard deviation of employee engagement.
Table :4: Descriptive statistics of Employee Engagement
Variable Mean Standard Deviation
Employee Engagement 3.76 0.844

 Descriptive statistics of Organization Commitment

Table :5: Descriptive statistics of Employee Engagement
OC Dimension Mean Standard Deviation
Affective commitment 3.97 0.613
Continuance commitment 2.72 0.824
Normative commitment 3.15 0.813
Average 3.28 0.75

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Table 5 shows the mean and standard deviation for the three dimension of organization
commitment under study, namely affective commitment, normative commitment and
continuance commitment. The table indicates that affective commitment is highest and mean is
3.97. Lowest type of commitment is continuance commitment and its value is 2.72.
 Descriptive statistics of Employee Engagement
Table 6 explains shows the mean and standard deviation of employee engagement.
Table :6: Descriptive statistics of Employee Engagement

Variable Mean Standard Deviation

Employee Retention 3.58 0.82

E. Correlation Analysis
Table :7: Descriptive Statistics and Correlation
Descriptive Statistics Correlations

Mean Standard Deviation EE ER AC CC NC

EE 3.76 0.844 1
ER 3.58 0.82 .538* 1
AC 3.97 0.613 .438** .459** 1
CC 2.72 0.824 -.005* .030 .860** 1
NC 3.28 0.75 .581** .617** .451** -.032 1
*. Correlation is significant at the 0.05 level (2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed).
EE=employee engagement, AC=affective commitment, CC=continuance commitment, NC=normative commitment

Table 7 provides descriptive statistics and correlation for all study variables. Employee
engagement was positively related to affective commitment (r = .438, p, 0.01) and normative
commitment (r = .581 p, 0.01), and negatively related to continuance commitment (r = -.005, p,
0.05), thus, supporting hypotheses H1, H2 and H3. Organizational engagement is similarly
positively related to employee retention (r = .538, p, 0.05). Normative commitment (r = .617, p,
0.01), continuance commitment (r=0.030, p,0.05), affective commitment (r=0.459,p=0.01) are
related to employee retention. Study shows that employee engagement and employee
commitment dimensions have a positive correlation on employee retention. This supports
hypothesis 4. All correlations were at the moderate level and none of them is considered high
(0.70 or above). Therefore, multicollinearity does not remain a dire problem in this study.

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F. Multiple Regression Analysis

Table: 8: Multiple Regression Analysis

Model Summary
Model R R Square Adjusted R Square Std. Error of the
Estimate
1 0.659a .434 0.213 .003
a. Predictors: (Constant), OC, EE
ANOVAa
Model Sum of Squares df Mean Square F Sig.
Regression .282 2 .141 2.576 .001

1 Residual 16.280 297 .055

Total 16.562 299

a. Dependent Variable: ER
b. Predictors: (Constant), OC, EE

Coefficientsa
Model Unstandardized Coefficients Standardized t Sig.
Coefficients
B Std. Error Beta
(Constant) 3.689 .020 11.511 .000
1 EE .107 .002 .311 2.044 .000
OC .072 .0001 .147 .999 .001
a. Dependent Variable: ER

The main hypothesis predicted that the employee engagement and employee commitment are
positively related to employee retention. Multiple Regression Analysis is used to test the
Relationship between Employee Engagement, Organizational Commitment and Employee
Retention. The results of the regression analysis are shown in Table 8. The R square value
indicated that 43.3% of variance can be explained by employee engagement and organization
commitment. The regression results in Table 8 also showed that employee engagement (β =
0.311, p< .05) and Organization commitment (β = 0.147, p< .05) are significant determinants for
employee retention. This supports hypotheses H4.

DISCUSSIONS:
The purpose of this study was to investigate the impact of employee retention on employee
engagement and organizational commitment. The main research question was the relationship
of employee engagement on the three dimensions of organizational commitment (affective
commitment, continuance commitment, and normative commitment). The results of this study

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show that the impact of employee engagement on normative commitment was stronger than on
the impact of affective commitment and continuance commitment.
Employee Engagement and Affective Commitment: The correlation analysis reveals that
affective commitment can be predicted by job engagement. This result suggests that a higher
employee engagement will result in a higher affective commitment. Further explanation for this
result is that the employee who has a positive and fulfilling work-related state of mind (Schaufeli
and Bakker, 2004) is likely to report positive attitudes towards working and exhibit greater
affective commitment. It justifies that when employees hold a positive attitude and attachment
towards their organization, they show high levels of affective commitment. The finding of the
study corroborates the fact that engaged employees are more likely to have a greater attachment
to their organization (Schaufeli and Bakker, 2004).
 Employee Engagement and Continuance Commitment : The results of the study show
a significant and negative relationship between employee engagement and continuance
commitment. Conversely, when employees engagement increases, their continuance
commitment decreases and vice versa. Kahn (1990) is of the view that engagement or
disengagement at organization is affected by three psychological conditions, namely:
meaningfulness, safety, and availability. Hence, decision to continue depends on the
economic factors rather than psychological conditions. More research is required to throw
light on the unexpected result that employee engagement does not relate negatively to
continuance commitment.
 Employee Engagement and Normative Commitment: The results of this study indicate
that employee engagement has a strong relationship with the normative commitment.
Moreover, the results of this study show that employee engagement has a positive
relationship with the normative commitment. This result means that employees who have
a high organizational engagement will be higher on normative commitment. The strong
correlation observed between employee engagement and normative commitment is likely
due to the fact that employee engagement is the extent to which an individual is
psychologically present as a member of an organization (Saks, 2006). Therefore, when
employees feel exhilarated and captivated as a member of the organization, they may
report high normative commitment.

IMPLICATIONS:
This study has added to knowledge by examining the relationship between employee
engagement, organizational commitment and employee retention. This study has provided
empirical evidence to support the theory, when it shows that employees feeling more engaged in
their job and organization would report high levels of affective commitment and normative
commitment. These results are in line with that of Robinson et al. (2004) who described the
engagement as a two-way relationship between the employer and employee. Previous studies
focused mainly on work engagement (e.g., Brown and Leigh, 1996; Demerouti et al., 2001;
Hakanen et al., 2006; Llorens et al., 2006; Richardsen et al., 2006).

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LIMITATIONS AND FUTURE RESEARCH:

Although this research has made several contributions to the knowledge, it has several
limitations as follow. The first limitation of this research is related to its research design. This
study is limited to Nagpur city with a sample size of 300 only. Data is collected from the various
sectors like academics, manufacturing, IT, Hotel etc. Study can be carried out by focusing on a
particular sector instead covering various sectors. Thus the outcome will help in identifying the
problem area under the respective sector will help to find the solutions and thus will help in
reengineering the HR policies, if required. In-depth interviews with employees would be
helpful, especially because employee engagement, organizational commitment and employee
retention may vary according sectors and countries. Future studies can also be tailored to
investigate the effects of employee engagement and organizational commitment on employee
retention by, using multiple respondents in a given organization.

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