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Improving leader effectiveness: impact on employee engagement and retention

Journal of Management Development

ISSN : 0262-1711

Article publication date: 1 September 2022

Issue publication date: 22 November 2022

Fixing problems in an organization often involves developing managers in order to increase leader effectiveness. This paper aims to discuss the aforementioned issue.

Design/methodology/approach

Data collection includes multiple surveys and small group interviews. Analysis uses rigorous coding methods to construct a model of critical organizational values and behaviors essential for leadership effectiveness. The authors bring “theory to practice” by applying complexity leadership concepts in the authors’ intervention strategy.

Findings are categorized into three parts: identifying critical culture value gaps, applying complexity concepts to a scenario-based training intervention, and identifying intervention outcomes. Outcomes include transformed work environment led by leaders who respect others, share decision-making and enable employees to be interdependent.

Research limitations/implications

This explanatory case study contributes to research by applying complexity leadership theory to create a practical consulting intervention.

Practical implications

This work provides a template and process for managers using complexity leadership to inform their client interventions.

Originality/value

This case study identifies value shortfalls in a manufacturing plant, documents a scenario-based training intervention which develops managers to build organizational trust. Results include reducing turnover, improving job satisfaction and increasing production.

• Complexity theory
• Employee retention
• Scenario based training

Moore, J.R. and Hanson, W. (2022), "Improving leader effectiveness: impact on employee engagement and retention", Journal of Management Development , Vol. 41 No. 7/8, pp. 450-468. https://doi.org/10.1108/JMD-02-2021-0041

Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

Introduction

Organizations increasingly struggle to retain their employees, particularly those at an entry level. These concerns are often tied to a decrease in employee engagement and trust as well as an increase in workplace stress. Specifically, organizations that have experienced the highest crisis in retaining and hiring entry-level employees are in the manufacturing, service, distribution, health care and farming industries ( Ellinger et al ., 2002 ; The Conference Board, 2021 ; Uhl-Bien, 2021 ; van Hoek et al ., 2020 ). More than ever before, organizations struggling with employee shortages are hiring outside consultants to equip their frontline supervisors and managers to build an engaged team environment that supports the accomplishment of their team production objectives ( Barrero et al ., 2020 ; Corbishley, 2020 ; Maurer, 2021 ). Consultants in operations logistics have highlighted the importance of managers creating positive workplace environments ( Bushe and Nagaishi, 2018 ; Keller et al ., 2020 ; Maxey and Moore, 2017 ). Furthermore, organizational change consultants who assist organizations to become more adaptive, resilient and innovative point to rethinking leadership practices to move from authoritarian to adaptive strategies ( Moore et al. , 2020a ; Uhl-Bien and Marion, 2009 ; Uhl-Bien et al ., 2007 ).

Organizational change initiatives have a 25% rate of success ( Bucy et al ., 2016 ). A high rate of change failures partially point to the need for manager development to lead cultural change initiatives ( Gallup, 2019 ). Schein notes that “Culture creating, culture evolution, and culture management are what ultimately define leadership …” ( 1992 , p. 11). Correcting problems in an organization often involves developing managers to increase leader effectiveness who understand the interactions of their employees within their intertwined technical and social domains ( Donnelly et al ., 2020 ).

This explanatory case study identifies leader shortcomings in a manufacturing plant and develops these leaders to build organizational trust. We use grounded theory coding methods as they are rooted in the perspectives of participants, allowing us to identify meaning from their viewpoint, culminating in abstracting a process or theory ( Creswell and Creswell, 2017 ; Strauss and Corbin, 1997 , 1998 ). Applying grounded theory inquiry and qualitative case study methods, we identify leader shortcomings and provide an example of organizational change. We describe “casual links in real-life interventions” ( Yin, 2003 , p. 15). In this case, intervention was a result of substandard findings in two corporate surveys over a four-year period combined with high turnover, low employee satisfaction, low leader-employee trust, and low production levels. These issues prompted our research question: How do managers improve leader effectiveness, thus increasing employee engagement and retention?

Theoretic approach

A major contributor to leader ineffectiveness is an autocratic leadership style that clashes with the expectations of followers who value respect, openness to new ideas and decentralized problem-solving. Therefore, we utilize concepts from complexity leadership theory to interpret both research results and intervention strategies. Theoretical concepts of complexity leadership move from leader-centered and bureaucratic leadership behaviors to focus on collective, interactive dynamics that produce adaptive outcomes ( Burnes, 2005 ; Marion, 2008 ; Uhl-Bien and Marion, 2009 ; Uhl-Bien et al. , 2007 ; Greenhalgh, 2020 ). Generally, these easily facilitated group “processes” and organizational dynamics include collaboration, shared problem-solving, self-organization, information sharing, creativity, innovation and organizational learning ( Uhl-Bien, 2021 ; Nguyen, 2021 ). Because complexity leadership focuses on creating an adaptive organization, it must emerge from the bottom up ( Holland, 1995 ); it rests on employee engagement. This approach to adaptive leadership requires leaders to nurture an environment that encourages appropriate, ever-shifting levels of freedom and control based on conditions ( Backlander, 2019 ; Diesel and Scheepers, 2019 ; Marion, 2008 ; Uhl-Bien and Marion, 2009 ; Uhl-Bien et al. , 2007 ). This means employee freedom to innovate, participate in decision-making, interconnected through management support of frontline efforts, to better adapt to the organization's environment ( Mills et al ., 2010 ; Hanson and Moore, 2023 ). These processes are often counter to traditional leadership and management methods, as they increase levels of ambiguousness and nonpredictable outcomes. While a relatively new theory, complexity leadership has produced much in the way of academic theory elaboration and discussion. But more is being applied to real world situations such as health care ( Hanson and Ford, 2011 ), organizational change ( Burnes, 2005 ) and business consulting ( Moore et al. , 2020b ).

While some complexity leadership theory processes lack detailed study, others confirm relationships to effective adaptation. For example, research by Diesel and Scheepers (2019) show a strong relationship between complexity and an innovation environment that pursue emergent change ( Kearney and Lichtenstein, 2022 ). Others show links between complexity and adaptive, inclusive organizations ( Shani and Coghlan, 2018 ; Värlander, 2012 ).

Application

Our case study occurs at a large manufacturing plant in the southeastern USA. The plant produces parts for the automotive industry and has seen tremendous growth over the past 8 years. It now earns over $1 billion in revenue per year. Despite this success, the plant has triple-digit annual turnover among its hourly employees. Every two years, the employees complete a corporate-sponsored culture survey. The surveys indicate serious leadership issues between the front line and their leaders, with little change in the past four years. These leadership issues led to our involvement as consultants.

Now we will discuss the organization under study, then provide a synopsis of qualitative research findings to identify gaps in leader effectiveness. Next, we transition to practitioner applications of complexity leadership interventions through scenario-based manager development. Finally, we present indicators of the program's success in transforming a workplace culture to engage and retain its employees.

The organization

The plant employs over 900 people who are either full-time company employees or hourly temporary employees. Full-time company employees represent 80% of the workforce; 10% of these are salaried employees, and the remaining 70% are full-time hourly employees. The other 20% are temporary hourly employees who fluctuate based on the production demands.

The plant stresses traditional factors such as safety, quality, delivery, and cost (Moore, personal communication, May 31, 2016). The company does not focus on worker-manager relationships but rather on tasks and high production levels. Additionally, little time is devoted to employee or leader professional development or task-oriented training. Furthermore, the company made a number of attempts to initiate cultural change efforts with few results. Finally, they engaged outside consultants—researchers—to assist them in cultural change; in large measure, this action was implemented to change manager and supervisor behaviors that affect employee perceptions.

Upon arrival, we reviewed the corporate surveys and other historical data. We noticed that despite the standard posting of organizational values, serious value-based issues existed between frontline employees and supervisors as well as senior leaders. Significant shortcomings included failing to demonstrate a sense of caring or value for employees, respect for employees, and regard for employee opinions. Table 1 displays the seriousness of employee feelings and perceptions at their plant. This corporate survey included input by all plant leaders and employees.

Table 2 presents the formal corporate values, which are prominently displayed in the manufacturing plant. We present the survey results showing how many employees were satisfied with each aspect of the organization.

Culture of employee engagement

Leader effectiveness is increased or decreased by the overall organizational culture ( Lockwood, 2007 ; Markos and Sridevi, 2010 ). Managers who truly desire long-term change in leader effectiveness must address the organizational culture so that leadership behaviors align with the organizational culture and norms ( Devi, 2009 ; Macey et al. , 2011 ). Generally employee engagement focus comes from a company's concern for productivity ( Harter et al ., 2002 ). However, organizations should consider building a win-win scenario to balance organizational effectiveness with employee well-being ( Little and Little, 2006 ; Lockwood, 2007 ; Macey et al. , 2011 ; Markos and Sridevi, 2010 ; Parker and du Plooy, 2021 ). Organizational leaders during change initiatives develop interconnectivity between its employees which enables adaptive and innovative solutions ( Heifetz, 2003 ; Uhl-Bien and Arena, 2017 ; Diesel and Scheepers, 2019 ; McKim and Goodwin, 2021 ). Bushe and Nagaishi (2018) identify the importance of employees feeling that they can express their opinions and that their needs are being addressed ( Gagné and Bhave, 2011 ). Consequently, groups goals are clearer and there are fewer distractions ( Bushe and Nagaishi, 2018 ). Shani and Coghlan (2018) stress that employee engagement at all levels fuels important aspects of shared problem-solving and adaptiveness. Adaptiveness implies a shared protocol or set of values among employees that stimulates interaction, collaboration, shared decisions and overall team effort ( Uhl-Bien et al. , 2007 ; Heifetz, 2003 ). Additionally, Schein (1992 , p. 14) highlights development needs in many of these areas, such as learning, innovation, and adaptivity, if successful change is to occur ( Markos and Sridevi, 2010 ).

Organizational values and norms are embedded in everything an organization does ( Schein, 1992 ; Tatchell, 2006 ). As Schein (1992) and others have noted, formal values and organizational norms are the primary foundations of organizations. Core values significantly impact organizations, causing them to improve employee retention and satisfaction as well as address challenges related to restructuring and growth ( Tatchell, 2006 , p. 29). A culture of strong core values also has a positive impact on recruiting ( Tatchell, 2006 ). Organizational cultural change can be prosocial or maladaptive if not properly managed or nurtured ( Markos and Sridevi, 2010 ). Organizational values and norms may evolve unchecked due to a lack of understanding and intentionality by managers. Inadvertently, negative reinforcers may arise, which stymie organizational goals. To purposefully change culture, leaders must understand their own culture—what it is, how it is represented, and what they want to change ( Schein, 1992 ). Cameron et al. (2014) offer helpful ways for leaders to identify their existing culture and offer methods for reshaping it. We applied their principles in some of our cultural change efforts.

Some elements are critical to successful organizational change. Foremost is the fact that organizational members must be involved in the change ( Hodges, 2016 ) because people are the organization ( Hodges, 2016 ; Simon, 1997 ). However, managers often ignore employees in change efforts ( Hodges, 2016 ), perhaps because the organization is driven by a “criterion of efficiency,” which is represented as production numbers or revenue ( Simon, 1997 , p. 250). Furthermore, managers often have the misconception that control is the quickest and simplest way to invoke change. The problem resonates with complexity leadership in that executive control in change efforts often suppresses the key to organizational adaptation: participation by members who promote ideas, create innovations and solve problems ( Marion, 2008 , p. 5). The primary focus on efficiency and control comes at the cost of people-oriented dynamics and represents an outdated organizational model that is representative of the industrial age ( Uhl-Bien et al. , 2007 ). Uhl-Bien and Marion (2009 , p. 636) posit that “informal interactive dynamics… produce much of the adaptability in organizations” and are essential among organizational members for collective sense making ( Uhl-Bien and Marion, 2009 ).

Both Schein (1992) and Hodges (2016) mention the uncertainty and anxiety faced by organizational members during times of change. To address this, both authors stress the need for communication and attention to cultural factors that do not change, such as organizational history, past success, strong organizational values and vision. Additionally, from years of experience in applying complexity leadership elements, we have found that involving followers in the change increases buy-in, providing a sense of comfort and an element of excitement. Moreover, enabling employees to understand that changes are emergent (sudden) and unpredictable prepares the organization for a more ambiguous process ( Marion, 2008 ; Tsai et al. , 2019 ; McKim and Goodwin, 2021 ). Ironically, our experience indicates that organizational leaders are frequently stressed over outcomes that are nonpredictable. Their focus is not on general measures or improvement but on the inability to forecast specific production numbers or accurate cost-benefit analyses. Organizational leaders may not understand the organizational benefits of strengthening trust, focusing on professional development, building relationships with employees, in short embracing complexity.

Another critical aspect of change is identifying employee needs ( Hodges, 2016 ). We found two considerations to be helpful in both motivating employees to participate in change and improving the overall trust and production level of the organization. The first consideration is the employees' professional development needs. From the employee's perspective, what improves his/her job performance? Is it specialized training or certification? Leaders may need to reflect on what improves their employee's effectiveness. The second consideration is the collective needs of groups, teams and departments. Group dynamics can often be improved by meeting collective needs, such as team structure, team training and resources. Addressing these considerations embeds trust in the organizational culture, often improves production and allows organizations to remain united through challenging times. In a recent work in psychology, mindfulness is linked to leader effectiveness that emanates from behaviors that enable trust-based relationships between leader and followers ( Edmondson, 2019 ; Stedham and Skaar, 2019 ; Jung and Choi, 2020 ). Specifically, Stedham and Skaar (2019) discuss leader behaviors such as humility, authenticity, transparency, observation, positivity and resilience, which build trust and leader effectiveness.

Leading cultural change is certainly an important event that has ethical implications ( Hodges, 2016 ; Schein, 1992 ). Values have a central role in organizational life and leader responsibilities ( Burns, 2003 ). Leaders create formal organizational values, implementing personal and professional values in their daily decisions. Our research site offers an example in which formal organizational values represent one perspective, but the daily norms practiced by supervisors represent the opposite: while the word respect was espoused by the organization as a key value, the lack of respect demonstrated to subordinates was noted as one of the predominant complaints from the floor, which resulted in a lack of trust between followers and leaders. Thus, one of our foremost challenges was to embed espoused values, attributes and behavior into the culture of the manufacturing plant. Once accepted and practiced, these norms can be largely self-sustaining.

Research methods

Our research question for this case study is as follows: How do managers improve leader effectiveness, thus increasing employee engagement and retention? How and why questions lend themselves to theory and model building to grasp or solve the problem facing the researcher ( Strauss and Corbin, 1998 ; Yin, 2003 ). The case study method is unique, allowing researchers to integrate (a) real-life events, (b) organizational processes (c) and archival records to produce generalizable lessons ( Yin, 2003 ). The context and artifacts of the workplace are important factors in providing meaning to findings. For this case, we applied an explanatory case study strategy so that other organizations could see an example of addressing value change and so that we could offer generalizable concepts. We used grounded theory coding methods to first break down data, second organize the data in related categories and third delineate relationships between those categories ( Strauss and Corbin, 1998 ). From this coding we create a processual model. This inquiry process is rooted in the view of the participants and inductively comes to conclusions and generalizations to explain the relationships between actors ( Creswell and Cresswell, 2017 ; Merriam and Tisdell, 2015 ). We sought to apply our research findings to build a processual model ( Yin, 2003 ).

This study was framed on an epistemological stance of constructionism in which collective meaning and hence values were generated by organizational members ( Crotty, 1998 ). Our methods of data collection and analysis were qualitatively oriented to be conducive to the discovery of the collective and organizational beliefs, values and norms of the workforce. Qualitative methods disseminate data, grouping or summarizing the data in a thematic analysis ( Eisenhardt and Graebner, 2007 ; Merriam, 2009 ; Creswell and Báez, 2020 ). Consequently, individual perspectives are minimized while collective perspectives are elevated. Essentially, we abstract data to a level where participant perspectives are in harmony.

Data collection

In qualitative research findings, data can be collected from interviews, observations and artifacts. We employed each of these avenues. Data collected from observation extend beyond watching personal or group behavior; this method also includes informal interactions with employees. First, we reviewed data from the last four years of corporate surveys. Second, we conducted focus group interviews with open ended questions to collect detailed data on the major issues that emerged from the surveys. These group interviews were done at the operator level, across departments and shifts. This was extremely important to identify the actual narratives from the participants working in the plant to understand how and why they felt the way they did. Third, we constructed a survey to validate our findings from the corporate survey and to expand our understanding of major plant issues. Finally, we captured data through observations by walking the production floor, taking pictures of production boards (department visual management boards), and engaging front lines with informal questions and dialogue.

Artifacts such as company records and other cultural elements that shaped the plant environment were noted (pictures, posted values, statues, display cases, etc.). Additionally, we referred to two corporate culture surveys administered over a four-year period as well as other plant records. We maintained coding notes and photographs to capture data.

To validate findings and collect additional information on each topic, we produced a plant survey that included some open-ended questions. Both the corporate survey and our survey were distributed to the entire workforce; the response to our survey was over 60% ( Hanson and Moore, 2018 ).

Once significant themes were identified from the surveys, we conducted small group interviews with a total qualitative sample of 18 participants. Interviews were conducted on-site in a private setting to offer participants a sense of confidentiality and to remove outside noise and interruption. Participants were advised that the interviews were voluntary and that they could withdraw at any point. Interviews consisted of semi-structured, open-ended questions that explored the how and why of issues and allowed us to clarify and pursue emerging themes until data saturation was achieved.

To process qualitative data, we referred to Strauss and Corbin's (1998) three-step coding method, which is known for maintaining rigorous analytical methods. In open coding, we divided interview data into phrases. In axial coding, we sorted and resorted related data, placing them into general categories and subcategories that describe content or meaning. Once categories were established, we conducted selective coding to determine the central category. This step also involved making sense of categorial relationships. In building process models, this might demonstrate the flow of activities that lead to the phenomena under study. All three steps involve painstakingly writing coding notes that track each step and final conclusions.

As a result of our analysis, we constructed an initial model of critical organizational values and behaviors essential for effective leaders. To validate our model, we presented findings to participants as a member check to ensure that findings remained grounded in organizational perspectives and not in researcher bias ( Creswell and Creswell, 2017 ; Strauss and Corbin, 1998 ).

Our findings are categorized into the following: process utilized, results and leadership impact. First, the process utilized in scenario-based leader effectiveness training started by identifying the leadership gaps at the plant, then establishing effective leadership standards, and finished by developing the scenario-based leader effectiveness training. Second, the results demonstrate participating leaders' perceptions of the training and the changes still observed in the plant after two years.

Process utilized in leader effectiveness intervention

Table 3 presents a model of critical issues and sub issues within plant culture. Five keys areas emerged as being critical to employees. These categorical themes and subthemes are the most pressing issues to resolve if trust is to be restored between frontline workers and their leaders.

Scenario-based training

These scenarios include real-life examples and context gathered from interviews and frontline workers' input. Managers and supervisors agreed that their primary focus should be on providing respect and exhibiting a sense of caring to demonstrate to employees that they are valued and their opinions matter. Table 4 displays specific measurable items in our evaluation tool, each representing formal organizational values as well as participant practices and perceptions.

Lack of respect in negative situations

Lack of listening to associate's needs and concerns

Lack of constructive feedback

Lack of care demonstrated

Lack of team building efforts

Lack of recognizing the performance and value of others

Lack of communicating plant information, supervisor concerns, and priorities

Figure 1 describes the cultural value change model, which consists of four phases: pretraining, orientation and scenario training, feedback debriefing and self-evaluations and outcome assessments.

Leader development began with pretraining, which focused on understanding employee perceptions of critical plant issues to identify cultural value gaps. Training scenarios were then developed and piloted with the management team.

The second phase was training orientation, which introduced the overall purpose of the training. Each scenario comprised a small group (five to seven members) that was guided by two trainers on a simulated production line. Each participant had a script of a type of employee they were to embody for that scenario exercise. For evaluation, one trainer focused on group facilitation and debriefing, whereas the other highlighted leader facilitation and debriefing. Each group was informed that participants may need to ad-lib the script to focus on real issues at the plant (that address scenario topics) and that the instructors might play various roles to facilitate the scenario. Each member would act as the group leader in one of the scenarios. At the start of each scenario, one team member was appointed as group leader. The group then received the scenario background and role-playing instructions. The two facilitators answered questions, provided additional input as the scenario unfolded and intervened as needed. Interventions were intended to maintain focus on the outcomes to be evaluated and to ensure realistic scenarios.

The third phase of the training was the debriefing. One of the facilitators debriefed the leader via the evaluation instrument. The second facilitator debriefed the team as a group, also utilizing the evaluation card for group discussion. For example, the group facilitator asked whether there were ways to improve the demonstrations of respect to teammates. At the conclusion of the debriefing, the leader and the group shared lessons learned and offered corrections. Based on the lessons learned, corrections were introduced in later scenarios to improve supervisor performance. Scenario leaders identified gaps in the way they displayed the values, attributes, or behaviors that were being evaluated and then constructed individual development plans for improvements.

Finally, the last phase of the training was observed behavioral outcomes. In other words, the leaders applied what they learned. Examples include supervisors who changed their communication strategies with employees, redesigned their daily meetings for greater employee engagement, and focused on developing employee training.

Evaluation system

The training evaluation card ( Appendix ) lists the leader values, attributes, and behaviors that are expected by both plant leaders and employees. Each item has three measures: exceeds expectations (EE), meets expectations (ME), or offers opportunity for improvement (OI). The evaluation also utilizes the same three measurements for overall performance ratings for each scenario. The evaluation tool is meant to be helpful and constructive, focusing on developing leaders rather than measuring their ability to perform required tasks.

During each scenario, facilitators assessed a subset of values, attributes, and behaviors that was directly relevant to the focus of the scenario. These were prioritized and rated on the previously mentioned three performance measures. When the scenario was complete, facilitators opened the discussion by asking team members what they thought and what examples they observed during the training. The facilitators prompted the group as necessary to gather lessons learned. Once group discussion ended, the group moved to the next scenario, where a new leader was identified, and scenario cards were distributed. In the meantime, the previous leader from the earlier scenario received private feedback and discussion with one of the facilitators. Once the private feedback session was over, the leader was expected to devise an action plan by identifying values, attributes and behaviors to stop, continue, or start. They were also asked to produce a plan to implement these changes. The proposed action plan was due to supervisors 1 week after training was complete.

Results from the scenario-based leader effectiveness exercise

Development results were exhibited in two ways. First, supervisors positively evaluated the training and personally assumed ownership for implementing specific prosocial behaviors. The second evidence of change was the new behaviors modeled in the plant, which were observed by the researchers in the plant and reported by the human resources department. For example, supervisors moved their daily team meetings to quieter areas so employees could better participate and interact. Some managers posted elements and figures from the leadership training to remind the team of the importance of key values. Other supervisors added positive recognitions for team members during their team meetings. For excellent team achievements, a banner with a team picture celebrated their performance.

Supervisors were not the only ones presenting changed behavior in the plant. The management team, some of whom participated in the pilot training, also supported the new values. To acknowledge one of the top plant issues, they created an employment “bridge” from assembly to machining, allowing employees to transition from less skilled to more skilled positions. Consequently, employees wanted to improve their professional development and access additional training. The human resources department also demonstrated a change in behavior by supporting frontline supervisors with the training evaluation card. In one-on-one interactions with supervisors, the human resources team member addressed specific issues by reinforcing training values. Furthermore, the human resources department commissioned the development of another scenario-based training program for department managers. Finally, the human resources department was trained to conduct the scenarios, thus becoming trainers themselves.

Additionally, supervisors disclosed the impact of the training and explained how they were changed and how they developed. Table 5 presents three ways the training was effective. First, the role play simulated real-life manufacturing realities between employees and supervisors. Second, the subsequent reviews allowed supervisors to learn how to improve by removing or adding specific behaviors to increase their effectiveness. Finally, supervisors added their new behaviors to their identification badge as a reminder of their commitment.

After completing the training, team leader participants identified behaviors to stop, continue, or start, which was essential to their leadership development. One supervisor said, “I saw myself in the training. It was like looking in a mirror—and I saw myself. Right there I decided to change and I have not looked back.” Supervisors most often chose the core value of respect to improve their leadership style. They implemented a sense of caring for employees by being dependable and confident and listening effectively with a friendly approach. Finally, they improved their communication behavior to offer constructive feedback, provide employee development, and encourage empowerment, considering these elements to be essential to their success as leaders. Table 6 lists the summary of the key takeaways from supervisors.

Supervisors understood that supporting their employees—instead of being controlling and authoritarian—is key to effective leadership. Demonstrating respect and caring in employee interactions while building employee skill and confidence is effective in building employee engagement. Participants identified the improvements they planned to implement in their departments, such as developing training plans, identifying and improving training weaknesses in associates, providing clear procedural orientation to new employees and providing effective communication and constructive feedback to employees. Table 7 describes their key takeaway behaviors.

Two years after the introduction of the training scenarios, changes remain in place. Table 8 presents three main changes.

The human resources department continued to offer the scenario-based training to supervisors on a quarterly basis. They plan to offer training to any frontline employee considering a supervisory position. The human resources team has focused on supervisor development instead of being compliance focused, reactionary and punitive in supervisor and employee partnerships.

The plant culture has changed to adopt a participative decision-making approach instead of a top-down, autocratic leadership approach. Figure 2 describes how supervisors and engineers have learned to engage others in working toward consensus to achieve greater buy-in and more effective solutions.

An outcome of this consulting work demonstrates how complexity leadership concepts is an effective framework to operationalize intervention strategies. This allowed us to build understanding and a common language to contextualize why values are important in change efforts. How can employees be collaborative in a hostile environment? How can organizational adaptation occur if employees do not participate? In this case, strengthening critical values and behaviors enabled teamwork and adaptivity to occur.

Second, this complexity leadership intervention changed our consulting approach from being specialists who implemented strategic organizational changes to being facilitators who developed leaders to enable teams to make decisions, solve problems and participate in strategic decisions. This fundamental change, based on increased leader effectiveness, transformed the workplace environment to display respect, shared decision-making and increased employee engagement.

Implications

We cite two implications within our work. First, this study reveals practical ways to utilize research and address developmental shortfalls in organizational leader effectiveness . While many methods contributed to this, we provide one method that demonstrates how leaders' cultural values, attributes and behavioral shortcomings are identified, provided meaning and value and addressed in leader development.

Secondly, scenario-based training reveals universal utility when adapted to each organization's needs. It implements context and work-related problems with reflection and decision-making, thus placing issues into cultural boundaries. In other words, employees are challenged to operationalize organizational values and ethical behavior (i.e. consideration, respect, etc.) into daily life. Packard and Jones (2015) highlight the importance of seeking opportunities and methods to improve leader development processes, and we believe our work contributes to this important endeavor. Specifically, we provide answers to our research question: How do managers improve leader effectiveness, thus increasing employee engagement and retention? Many other training possibilities exist, and we echo Packard and Jones' (2015) call to continue to seek new opportunities and methods to improve leadership skills.

Future research

Over the past 24 months, COVID-19 has undeniably changed the way companies organize and execute work. One of the main challenges that organizations have faced during times of this pandemic is a crisis in retaining and hiring entry-level employees. Increasingly, organizations are finding that the effectiveness of their leaders is a key component to creating healthy workplaces, which are proven to engage and retain employees. Mary Uhl-Bien (2021) highlights many adaptive entrepreneurial changes made to meet COVID challenges. Her examples are bottom-up, where various actors rose to facilitate solutions to significant problems. Her examples provide a rich opportunity for detailed research on both complexity dynamics and the impact on organizations. We suggest that the disruption of COVID to the status quo of organizations results in much the same sort of disequilibrium found in the case study itself. In this situation, we propose that the complexity leadership approach was effective in times of functional disruption—that being little cooperation between management and the frontline. This work facilitating a transition stage where employees and their leaders adapt to new challenges. The organization was not trying to recapture a past reality of employee engagement based on previous values but rather looked to establish a new culture where participants shared their opinions and energies to build a new, stronger team. Adaptivity, with a participative leadership style, has the opportunity to create a new innovative and resilient team to solve new challenges. Medical industry and education have adapted rapidly but many public sectors have not applied complexity leadership adaptive practices ( Hanson and Ford, 2011 ; Uhl-Bien, 2021 ).

Limitations

A limitation of this paper is that it is a single case study within which we articulate generalizable concepts and models that typify the value in case study research, as noted by Yin (2003) . Future research can elaborate these concepts by conducting additional case studies.

Another limitation is that we conducted development training for approximately one year. While significant, we were unable to evaluate the full effectiveness of training over an extended period of time. We did not have access to longitudinal company data regarding turnover and employee productivity. As many researchers discuss in their development programs, individual perceptions of lasting benefits decline over time ( Packard and Jones, 2015 ). Our results pointed to increased trust, production, and employee satisfaction. We trained the human resources staff to become the plant's trainers; however, we cannot provide direct observations of how training evolved after our tenure at the plant. The human resources department's continued training indicates that they value its role in developing leader effectiveness to change their organizational culture.

This case study describes one method to improve leader effectiveness and increase employee engagement and retention. Developing leader effectiveness via value changes in organizational culture connects leaders to followers. This engagement improves organizational levels of trust, which are necessary to strengthen employee job satisfaction, reduce turnover and improve production. Increased leader effectiveness becomes a competitive advantage in a challenging labor market in which individuals value leaders who demonstrate that they respect their employees, are open to new ideas and decentralize problem-solving to the team.

While some management development approaches train managers with premade tools and standards ( Hedman, 2016 ), we constructed a tailored development program to address specific organizational issues and improve leader effectiveness. This theory-to-practice case study allowed a supportive theoretical lens to integrate related concepts in intervention strategies to improve organizational performance. We suggest further research to confirm the link between complexity leadership concepts and effectiveness in leaders. Furthermore, complexity leadership concepts focus on leader behaviors that enable employee interactions and interdependence as well as shared decision-making, which builds trust in and effectiveness of the leader.

This paper provides an explanatory case study that demonstrates how real cultural issues can be analyzed and utilized to conduct a critical model of organizational values and behavior. In this case, leader effectiveness training produced changes in supervisors, departments and the plant. Supervisors expressed that they were encouraged to develop stronger leader–employee relationships, which increased their influence. Trust increased as they provided conscious consideration and allowed employees to become more involved in decision-making. Department heads changed to exhibit respect toward employees. Notably, the human resources department invested time in supervisor development as a strategy to reduce the number of employee issues that came to their offices. Department leaders discovered the value in gathering input from different departments concerning the impact of new changes in the plant. Overall, employees were more engaged, participating in decision-making and being treated with more respect.

Scenario-based leader effectiveness model

Improvements in leader effectiveness

Partial results of latest corporate culture survey administered at 2-year intervals

Item priority rank	Item (survey question)	Effectiveness (% positive Perception)
1	I see trust and mutual respect in our workplace	33%
2	[Company] cares about me as a person	34%
3	I can try new things even if they lead to occasional mistakes	33%
4	At work, my opinions and ideas seem to count	34%
5	I think that the collaboration between departments is going well	27%

2014 Corporate Culture Survey

Formal organizational value	Corporate culture survey
Respect for each other	33%
Power of collaboration	27%
Personal integrity	Leader integrity 49%

2014 Corporate Culture Survey

Awards and recognition	Availability of training and development	Overtime issues	Respect and sense of caring	Streamlining inventory
Employees feel there is little appreciation for their work They seek verbal thanks or positive comments on work	Employees have expectations for job training and development that are not met Experienced workers want to give input Training accommodations lacking Constructive feedback missing	Employees are burned out and feel overworked This is related to lean programs and personnel reductions This is also related to poor planning	Lack of respect related to management behavior The way employees are treated Do not see management on the factory floor Leaders not holding others accountable	There seems to be little planning; this could be related to a lack of respect or sense of caring Employees deplete materials and must shut down lines

Adapted from Leading with complexity: A case of culture transformation, by , p. 16

Developmental results: effectiveness

Training results: Supervisor exit survey

Training results: supervisor takeaways

Training results: workplace transformations

Appendix Training evaluation card

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The Impact of Transformational Leadership on Employee Retention: Mediation and Moderation Through Organizational Citizenship Behavior and Communication

Hongyun tian.

1 School of Management, Jiangsu University, Zhenjiang, China

Shuja Iqbal

Shamim akhtar, sikandar ali qalati, farooq anwar.

2 Lahore Business School, The University of Lahore, Lahore, Pakistan

Muhammad Aamir Shafique Khan

Associated data.

The datasets generated for this study are available on request to the corresponding author.

This study investigates the impact of transformational leadership on employee retention in small- and medium-sized enterprises (SMEs) and probes the mediating role of organizational citizenship behavior (OCB) and the moderating role of communication. Data were collected using convenience sampling from 505 employees of SMEs. A Smart PLS structural equation modeling (PLS-SEM) was used to estimate the various relationships. The findings of the study reveal a positive and significant relationship between transformational leadership and OCB. Similarly, this study finds a positive and significant relationship in OCB and employee retention. In addition, OCB had a positive mediating effect on the relationship between transformational leadership and employee retention. Furthermore, communication positively moderates the transformational leadership– OCB and OCB–employee retention relationships. Leaders at SMEs should implement the traits of transformational leadership such as developing a compelling vision for employees, focusing on goal achievement, having problem-solving techniques, having a sense of purpose, and spending time on the training and development of the team to enhance OCB and employee retention.

Introduction

Small- and medium-sized enterprises (SMEs) face high levels of uncertainty and complexity concerning employee retention (ER) ( Park et al., 2019 ). Leadership plays a vital role in retaining employees ( Covella et al., 2017 ) and enhancing organizational citizenship behavior (OCB) ( Ahmet, 2014 ). Several leadership styles, including transactional, instrumental, laissez-faire, and transformational leadership (TL), have been studied in recent years ( Antonakis and House, 2014 ). TL inspires followers by attraction to advanced moral values and ideas ( Burns, 1978a ). In contrast to transactional leadership, TL significantly increases employee commitment within the organization ( Deichmann and Stam, 2015 ). Against the background of Bass (1985) , the TL theory best explains the model constructed for this study. The theory supports the idea that transformational leaders modify the behavior of subordinates ( Burns, 1978a ), resulting in a higher ER ( Sow et al., 2016 ). Furthermore, TL increases the intellectual ability of employees ( Fletcher et al., 2019 ). Past research shows that several of the world’s most successful companies have achieved their goals by implementing the TL process ( Sow et al., 2016 ; Dedaj, 2017 ; Jiang et al., 2017 ; Maaitah, 2018 ).

Employee retention is essential if organizations are to achieve and maintain success ( Das and Baruah, 2013 ; Arachchillage and Senevirathna, 2017 ; Paul and Vincent, 2018 ). ER has always been a significant concern for organizations because experienced employees make vital contributions to the success of an organization ( Das and Baruah, 2013 ). Additionally, ER fundamentally impacts the longevity of organizations, even though it is a challenging task in this age of intense competition ( Das and Baruah, 2013 ; Arachchillage and Senevirathna, 2017 ; Kaur, 2017 ; Nelms, 2018 ; Sulamuthu and Yusof, 2018 ). Scholars have discussed two levels of retention: individual and group turnover ( Muir and Li, 2014 ). Therefore, leaders must eliminate the reasons for low ER with the help of the human resource management department ( Deshwal, 2015 ; Juneja, 2015 ). Some scholars argue that TL plays a vital role in ER ( Khan, 2015 ; Kossivi et al., 2016 ; Nasir and Mahmood, 2016 ; Gyensare et al., 2017 ) and achievement of personal and organizational goals ( Sow et al., 2016 ; Gyensare et al., 2017 ). Dimensions of TL, including “idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration,” affect employee performance and retention ( Jiang et al., 2017 ).

It is essential to note that leaders’ effective communication and motivation enhance employee satisfaction ( Sergeeva, 2018 ), OCB ( Yildirim, 2014 ; Herfina and Rubini, 2015 ; Chan and Lai, 2017 ), which significantly affects ER ( Paillé et al., 2015 ; Popescu et al., 2015 ; Olendo and Muindi, 2017 ). There is evidence that employees show OCB when they are in an optimistic mood, and this finding has been further tested by relational mechanisms ( Nohe and Hertel, 2017 ). The relationship between TL and OCB is based on the trust between leaders and employees ( Nohe and Hertel, 2017 ). Owing to the direct and indirect impacts of interlinked behaviors, the effects of OCB on the ER cannot be ignored. Individual OCB affects ER in a way that the more the employees show individual OCB and a macrointerest in an organization, the less they will leave the organizations. Moreover, organizational factors such as helping, civic virtue, and sportsmanship affect the OCB of employees, further affecting ER ( Paillé et al., 2015 ). Past studies on TL have examined the mediating role of OCB on sustainable employee performance ( Jiang et al., 2017 ), creativity, and ER ( Rashid et al., 2018 ). However, this study aims to examine the mediating role of OCB between TL and ER. The lower level of ER in SMEs can be managed with proper communication, which leads to higher ER and SME performance ( Ugbam et al., 2012 ; Effiong et al., 2017 ). However, there is little research investigating the main reasons for high turnover in SMEs: that turnover is mainly due to their spending fewer resources on the well-being of employees compared with large organizations ( Bilau et al., 2015 ).

This study has the following contributions. Our approach takes a more inclusive perception to indulge the complex mediation role of OCB on ER. Previous studies on TL mainly examined the mediation role of OCB on sustainable employee performance ( Jiang et al., 2017 ), creativity, and ER ( Khokhar and Zia-ur-Rehman, 2017 ). However, we examine the mediating role of OCB on ER in Chinese SMEs. Furthermore, previous studies on TL examined the positive effects of communication on employee output and efficacy ( Hills, 2015 ; Luthra and Dahiya, 2015 ; Sadia et al., 2016 ). Moreover, effective communication by leaders was observed as a significant antecedent of OCB ( Yildirim, 2014 ; Herfina and Rubini, 2015 ; Diebig et al., 2017 ), but the moderating role of communication on TL, OCB, and ER was overlooked. We examine the moderation mechanism of communication. Finally, our study enriches the literature about TL, OCB, and ER.

Theoretical Background and Hypothesis

Past research has examined employees’ behavior predicted by several factors, such as the creation of a positive organizational climate to stimulate safe work behavior in employees ( Smith-Crowe et al., 2003 ). Employees’ behavior, including OCB, was positively affected by the ethical climate through the social identity approach ( Pagliaro et al., 2018 ). Ethical climates such as friendship utilizing the social identity approach projected better behaviors and attitudes of employees concerning many outcomes including turnover intention ( Teresi et al., 2019 ). Studies also found that organizational justice theory impacts the effects on OCB through perceived restorativeness ( Bellini et al., 2019 ). However, studies on TL have examined TL theory and its four dimensions significantly affecting OCB ( Jiang et al., 2017 ) and ER ( Adekanbi, 2016 ; Sow et al., 2016 ). It is based on the view that transformational leaders transform their followers by changing their insights, ambitions, morals, and potential ( Bass, 1985 ). The qualities of leaders stimulate change, and they interconnect and establish ways of change to achieve the desired results ( Burns, 1978b ). The original theory of Burns says that leaders can change the life of the subordinates by changing their ambitions, insights, values, and expectations. Based on the Bass (1985) theory, the independent variable TL in this study is linked to four factors, including individual consideration (IC), which refers to the concept that the needs of the members of the team are focused and prioritized. The leader serves as an exemplar, counselor, organizer, and trainer to encourage an employee to take part in team activities and exhibit OCB. Intellectual stimulation (IS) includes support and encouragement provided by managers or leaders to members of the team, to generate innovative ideas on how to change existing procedures or orders in order to produce effective results; this, in turn, helps to boost ER. Leader inspiration (LI) involves helping followers to pursue a goal. Leaders establish and convey a vision or objective that they want the team to achieve, and the team is inspired to achieve that goal thanks to the leader’s explanation of the reasons for doing so. The leaders help and coach their team members to proceed in achieving their tasks. Idealized influence (II) includes setting a practical example as a leader and exhibiting the qualities of innovative thinking, trust, uprightness, faith, interest, pride, and effective communication ( Bass, 1985 ). These factors significantly affect ER in SMEs.

Transformational Leadership

Transformational leadership focuses on real-time problems, defines new benchmarks, builds understanding, and motivates and shapes the behavior of subordinates to achieve organizational goals effectively ( Manshadi et al., 2014 ; Nagy and Edelman, 2014 ; Middleton et al., 2015 ; Jiang et al., 2017 ; Matwally and El Zarka, 2017 ; Arif and Akram, 2018 ). Studies suggest that the role of every manager in the organization is to be a leader instead of only a manager ( Hall et al., 2015 ). Organizational success improves through the enhanced effects of TL ( Sun and Henderson, 2017 ; Maaitah, 2018 ). TL also enhances employee performance in groups/teams ( Amin et al., 2016 ). Past research has shown that TL plays a critical role in the success of Chinese SMEs ( Lin and Sun, 2018 ). Chinese employees prefer leaders who exhibit the traits of TL (idealized consideration, IS, LI, and II), for instance, acting as a role model, selflessness ( Farh and Cheng, 2000 ), avoiding the use of abusive power, setting a good example, and working for employee well-being ( Dunfee and Warren, 2001 ; Cheng et al., 2004 ; Xiaoxia and Jing, 2006 ; Chen et al., 2012 ; Lin and Sun, 2018 ; Su et al., 2019 ).

During the past decade, there has been extensive research on TL and its relationship to multiple outcomes. TL significantly affects OCB ( Rodrigues and Ferreira, 2015 ; Sarwar et al., 2015 ; Ismaeelzadeh et al., 2016 ; Saif et al., 2016 ; Cofie, 2018 ; Hassi, 2018 ). Additionally, employees exceed their assigned duties when a TL style is used ( OCB, 2018 ). Within SMEs, all four dimensions of TL play a vital role in cultivating OCB ( Jiang et al., 2017 ). Past research examined the positive effect of TL traits on OCB ( Emami et al., 2012 ; Pickford and Joy, 2016 ; Majeed et al., 2017 ; Cofie, 2018 ). Bass (1985) explained that the qualities of transformational leaders such as individualized consideration, IS, inspirational motivation, and individualized influence enhance OCB in employees; for instance, Jiang et al. (2017) examined positive impacts of TL dimension on OCB. The following relationship has been established for this study:

Hypothesis 1: TL has a positive and significant impact on OCB.

Employee Retention

There is a considerable amount of literature on ER, highlighting its importance for all types of firms. The cost of losing employees is much higher than retaining them through compensation plans ( Carter et al., 2019 ). To investigate this issue, many factors have been considered, such as the control variables of age, education, experience, sex ( Deshwal, 2015 ), peer support ( Ali et al., 2017 ), recruitment and selection, job preview, organizational culture, employee relations, awards and recognition, work–life balance, and training and development ( Olendo and Muindi, 2017 ). Leadership equally benefits employees and organizations, and specifically, TL affects ER ( Amankwaa and Anku-Tsede, 2015 ), both directly and indirectly ( Khan, 2015 ; Nohe and Hertel, 2017 ). Transformational leaders improve subordinates’ performance by achieving organizational goals ( Sow et al., 2016 ) and implementing a reward system to retain employees ( Adekanbi, 2016 ). TL increases ER ( Abouraia and Othman, 2017 ; Gyensare et al., 2017 ; Jiang et al., 2017 ) and reduces turnover intention ( Maaitah, 2018 ).

Transformational leadership influences the retention choices of employees ( Sulamuthu and Yusof, 2018 ). Furthermore, the theory of transformational leaders strongly supports the relationship between TL and ER ( Amankwaa and Anku-Tsede, 2015 ; Khan, 2015 ). This study proposes that employees show higher levels of retention when leaders exhibit individualized influence, IS, inspirational motivation, and individualized influence. Past studies have examined the relationship between TL and ER through TL theory ( Adekanbi, 2016 ; Sow et al., 2016 ). Therefore, we have proposed the second hypothesis, as follows:

Hypothesis 2: TL has a positive and significant impact on ER.

Organizational Citizenship Behavior

The concept of OCB first appeared in the early 1980s and initially described the specified behavior of employees within the organizations. Scholars described “organizational commitment and individual traits” as factors to enhance OCB ( Emami et al., 2012 ). Voluntary behaviors of employees to prove themselves as good citizens of the organization are called OCB ( Tambe, 2014 ). Similarly, an organization’s success is critical without OCB ( Obiora and Okpu, 2014 ). The positive effects of OCB’s three dimensions, namely, public benefits, sportsmanship, and self-sacrifice, on employee well-being increase ER ( Tambe and Shanker, 2015 ; Yurcu et al., 2015 ). Additionally, OCB refers to the behaviors that employees exhibit outside of their formal responsibilities. Leaders can help employees enhance OCB and benefit the organization ( Pickford and Joy, 2016 ; Yaylaci, 2016 ; Zeyada, 2018 ). Furthermore, OCB refers to discretionary behavior, which is not directly or explicitly recognized by the formal reward system. However, such behaviors promote the effective functioning of the organization ( Majeed et al., 2017 ). OCB enhances both individual and team performance ( Mehdizadeh et al., 2018 ; OCB, 2018 ). Few studies have also examined a negative relationship between OCB and turnover intention ( Islam et al., 2012 ). A higher level of OCB significantly affects ER ( Dash and Pradhan, 2014 ; Paillé et al., 2015 ; Pivi and Hassan, 2015 ; Anvari et al., 2017 ; Olendo and Muindi, 2017 ; Mittal and Kaur, 2018 ). This relationship will be analyzed in Chinese SMEs with the following hypothesis:

Hypothesis 3: OCB has a positive and significant impact on ER.

Mediation Effect of Organizational Citizenship Behavior

Scholars have argued that OCB plays a critical role in SMEs’ success in China ( Farh et al., 2004 ). TL affects ER in Chinese SMEs, both directly and indirectly ( Sun and Wang, 2017 ). Furthermore, OCB was found to partially mediate the relationship between internal corporate social responsibility and intention to quit ( Rashid et al., 2018 ). Jiang et al. (2017) found that OCB mediated more than half of the effects of TL on sustainable employee performance. Saoula and Johari (2016) studied the positive mediation of OCB between the relationship of perceived organizational support and turnover intention.

Similarly, Khokhar and Zia-ur-Rehman (2017) examined the positive and significant mediating role of OCB between TL, creativity, and ER. Selamat and Ran (2019) found that OCB significantly mediates the relationship between organizational justice and performance within SMEs in China. Chiang and Hsieh (2012) found that OCB partially mediated the relationship between perceived organizational support and job performance. The four traits of Bass’s (1985) theory, including individualized influence, IS, inspirational motivation, and individualized consideration, develop specific leadership skills in leaders. Transformational leaders help to develop OCB in their followers ( Emami et al., 2012 ; Majeed et al., 2017 ; Cofie, 2018 ), further leading to ER ( Adekanbi, 2016 ; Sow et al., 2016 ). However, this relationship with the perspective of Chinese SMEs has not been extensively explored. We propose that OCB plays a mediating role in the relationship between TL and ER. Therefore, we develop the following relationship to check the mediation of OCB:

Hypothesis 4: OCB positively mediates the relationship between TL and ER.

Moderation Effect of Communication

Communication is critical to motivate employees, measure success, deliver products and services to customers ( Conrad, 2014 ; Nwata et al., 2016 ), and enhance the performance of employees ( Femi, 2014 ). Effective communication between leaders and employees significantly increases employee output and efficiency ( Hills, 2015 ; Luthra and Dahiya, 2015 ; Sadia et al., 2016 ) and employee commitment ( Marchalina and Ahmad, 2017 ). Therefore, through effective communication, employees feel valued, motivated, and rewarded for their efforts toward organizational success ( Kukla, 2017 ), and individual and organizational betterment ( Sergeeva, 2018 ). According to scholars, “communicators have finally started putting a greater focus on the development of leadership and management communication” ( Gatehouse, 2018 ).

Scholars have argued that effective communication by leaders increases OCB ( Yildirim, 2014 ; Herfina and Rubini, 2015 ). Diebig et al. (2017) studied the positive moderation effect of direct communication on TL and daily team cooperation. Garnett et al. (2008) studied communication as a moderator between organizational culture and public organizations’ performance. Pettit et al. (1997) studied the moderation of communication between job performance and satisfaction. Similarly, Villegas and Cerveny (2004) also found communication to mediate between job satisfaction and absenteeism positively. On the basis of the discussion above, we propose that communication could be considered a moderator between the relationships of TL, OCB, and ER. Bass’s (1985) theory supports the idea that leaders must effectively convey the vision and mission they have for the organization. This study explores the relationship in SMEs in China. All the constructed relationships are presented in Figure 1 .

Research framework.

Hypothesis 5: Communication positively moderates the relationship between TL and OCB.

Hypothesis 6: Communication positively moderates the relationship between OCB and ER.

Materials and Methods

Sample and procedure.

Employees of manufacturing SMEs in Jiangsu Province Mainland China participated in this study. A sample size of 505 was obtained using random sampling technique. A total of 600 employees were contacted personally and online to distribute the questionnaires. Out of the 516 questionnaires received, 11 were rejected owing to missing information/incomplete responses. A total of 505 (84.16%) response rates were recorded for further examination. A total of 406 male and 98 female participants accounted for 80 and 20%, respectively. Participants in the 20–30 (210), 31–40 (231), 41–50 (42), and 51–60 (21) age groups accounted for 41.5, 46, 8, and 4%, respectively. Similarly, 56 participants had intermediate (high school) education, 210 participants had bachelor’s degrees, 210 participants had master’s degrees, and 28 participants had Ph.D. degrees, accounting for 11, 41.5, 41.5, and 5.5%, respectively. Twenty-eight participants had less than 1 year of work experience, 196 participants had 1–5 years, 182 participants had 6–10 years, 77 participants had 11–15 years, and 21 participants had more than 15 years of work experience, accounting for 5.5, 39, 36, 15, and 4% of the total participants, respectively ( Table 1 ).

Demographic information.

This study examined the TL (e.g., “My leader articulates a compelling vision”) by five-item scale (α = 0.931, Table 2 ), developed by Bass and Avolio (1995) .

Measurement model.

Five items adapted from Lee and Allen (2002) were used to measure OCB (e.g., “I show genuine concern and courtesy toward colleagues,” α = 0.897, Table 2 ).

This study measured ER (e.g., “My work gives me satisfaction in this company”) by five-item scale (α = 0.926, Table 2 ), developed by Kyndt et al. (2009) .

Communication

Five items adapted from Roberts and O’Reilly (1974) were used to measure communication (e.g., “It is very important for me to progress upward in my present organization,” α = 0.895, Table 2 ).

Data Analysis

The statistical software SmartPLS was used to analyze data. First, measurement model techniques were used to test the Cronbach alpha, heterotrait–monotrait (HTMT) ratio, composite reliability (CR), and average variance extracted (AVE). Second, this study used discriminant validity and correlation to analyze the theoretical model. Third, the study assessed the structural model by analyzing collinearity/common method bias [variance inflation factor (VIF)], coefficient of determination ( R 2 ), F 2 , predictive relevance ( Q 2 ), and standardized root mean square residual (SRMR). Finally, this study performed structural equation modeling (SEM) to test the hypothesis.

Measurement Model

The reliability of the scales was determined by Cronbach’s alpha (CA) test. The validity of the measurement scales was found to be significant, with values of 0.895 for C, 0.926 for ER, 0.897 for OCB, and 0.931 for TL. Adequate CR or internal consistency reliability measured in the present study ranged between 0.923 and 0.948 (equal or above 0.7, as suggested by Bagozzi and Yi, 1988 ; Hair et al., 2011 ). Moreover, the present study met the threshold of convergent validity (AVE) of at least 0.50 ( Fornell and Larcker, 1981 ; Chin, 1998 ; Table 2 ).

According to scholars, the HTMT, to assess multicollinearity within the data, should not be higher than 0.9 ( Gold et al., 2001 ; Teo et al., 2008 ). The study met the standard, as results were found in the range of 0.343 to 0.736 ( Table 3 ). The discriminant validity results are presented in Table 4 , which shows a significant value of 0.84 for C, 0.879 for ER, 0.842 for OCB, and 0.886 for TL. Moreover, the results show that TL has a positive correlation with OCB (0.533), TL and ER (0.557), and OCB and ER (0.457); communication and TL, OCB, and ER have positive correlations with values of 0.59, 0.659, and 0.547, respectively.

HTMT (heterotrait–monotrait ratio).

Discriminant validity (latent variable correlation and square root of AVE).

Assessment of Structural Model

This study measured collinearity and common method bias issues through the VIF. VIF is defined as the reciprocal of tolerance. As suggested by the scholars Kock (2015) and Hair et al. (2011) , this study was considered bias-free with no values equal to or lower than 3.3 ( Table 5 ). Furthermore, Harman’s single factor test (suggested by Podsakoff et al., 2003 ) indicated that the maximum variance that is explained by a single factor is 38.4%. Henceforth, we conclude that this dataset does not suffer from common method bias ( Kock, 2015 ).

Structured model results.

According to previous studies, R 2 measures the model’s predictive power ( Sarstedt et al., 2014 ). The value of 0.418 indicates that 41.8% of variations in ER occurred because of independent variables (0.75 = substantial, 0.5 = moderate, and 0.25 = weak, as suggested by Henseler et al., 2009 ; Hair et al., 2011 ). Additionally, Cohen (2013) noted that the values of 0.02, 0.15, and 0.35 represent small, medium, and significant effects, respectively. If the value of f 2 is <0.02, it indicates that there is no effect. The results of the study shown in Table 5 show that there was an effect.

Predictive relevance is an indicator of the model’s out-of-sample predictive power or predictive relevance given by Stone and Geisser’s Q 2 value ( Geisser, 1974 ; Stone, 1974 ). In the SEM, Q 2 values larger than zero for a specific reflective endogenous latent variable indicate the path model’s predictive relevance for a particular dependent construct. The results of this study show medium predictive importance (0.02 = small, 0.15 = medium, and 0.35 = immense, as suggested by Geisser, 1974 ; Stone, 1974 ).

Standardized root mean square residual is the absolute measure of fit, and a value of zero indicates the perfect fit. SRMR is defined as “the root mean square discrepancy between the observed correlations and the model-implied correlations.” The results show a significant value of 0.065 ( Table 5 ), and if the value of SRMR is less than 0.08, it is generally considered a good fit ( Hu and Bentler, 1998 ). This study satisfies and ensures the goodness of fit.

Structural Equation Modeling

This study conducts the PLS-SEM to test the theoretical model. The findings show (H1) that TL had a positive and significant direct impact on OCB (β = 0.169, t = 4.737, p < 0.000). The direct effects of TL on ER (H2) were also positive and significant (β = 0.356, t = 6.479, p < 0.000). Similarly, the direct impact of OCB or ER (H3) was positive and significant (β = 0.179, t = 2.203, p = 0.033). OCB as a mediator (H4) had a positive and significant direct impact on the relationship between TL and ER (β = 0.030, t = 2.169, p = 0.000). Similarly, the impacts of communication as moderator on the relationship of TL and ER (H5), OCB, and ER were found to be positive and significant (β = 0.183, t = 5.035, p = 0.000), and H6 was noted to be negative but statistically significant (β = −0.181, t = 3.373, p = 0.001) ( Table 6 and Figure 2 ). The results were also supported by previous studies ( Jiang et al., 2017 ; Khokhar and Zia-ur-Rehman, 2017 ; Majeed et al., 2017 ; Olendo and Muindi, 2017 ; Cofie, 2018 ; Maaitah, 2018 ; Mittal and Kaur, 2018 ; Sulamuthu and Yusof, 2018 ).

Hypothesis constructs.

Partial Lease Square SEM model.

Figure 3 shows the interaction of communication on the relationship between ER and OCB. The lines on the graph show that if there is highly effective communication in SMEs, the moderation effect of communication will be higher, and the ER will be increased by OCB. Similarly, the Figure 4 shows the moderation effect in the relation of OCB and TL. ER will be increased in SMEs with effective communication.

Interaction diagrame of C between ER and OCB.

Interaction diagrame of C between OCB and TL.

The present study proposed and examined a mediation model of how TL impacts ER and a moderation model of how communication impacts the relationships of TL, OCB, and ER. Consistent with this study’s predictions, the TL has a positive and significant effect on ER through the mediation of OCB. Specifically, TL enhances ER and OCB through compelling vision, goal achievement, problem solving, and training and development. This study also examined the complex moderation process of TL’s influence on OCB and OCB’s influence on ER.

Theoretical Implications

First, the findings extend the research of TL. This study confirms that the ability of the leaders to articulate a compelling vision, skills at expressing confidence in goal achievement, innovative perspectives on problem solving, spending time on the training and development of the team, and specifically having a strong sense of purpose ( Bass and Avolio, 1995 ) impact OCB ( Rodrigues and Ferreira, 2015 ; Ismaeelzadeh et al., 2016 ; Saif et al., 2016 ; Majeed et al., 2017 ; Cofie, 2018 ) and ER ( Amankwaa and Anku-Tsede, 2015 ; Khan, 2015 ; Jiang et al., 2017 ; Maaitah, 2018 ). This study illustrates the complexity of the relationship between OCB and ER. Results show that employees of SMEs express genuine courtesy toward coworkers, even under the most tiring business or personal situations, which helps to enhance OCB. Moreover, this study elaborates that if employees willingly help coworkers, defend the organization’s name, and express loyalty toward the organization, ER increases ( Pickford and Joy, 2016 ; Olendo and Muindi, 2017 ; Mittal and Kaur, 2018 ).

Second, the results suggest that OCB has a decisive mediation role between TL and ER. The results show that transformational leaders can help increase ER more effectively if employees exhibit OCB ( Jiang et al., 2017 ; Khokhar and Zia-ur-Rehman, 2017 ). This study has examined that communication, including the importance (to employees) of moving upward in the organization, the streams of information they communicate to their immediate boss, and their feelings about how their boss can help their career growth. This study has uniquely examined the effects of communication as a moderator between the relationships of TL, OCB, and ER. Unlike other studies, this study reveals the positive impacts of OCB as a mediator in TL and ER. The primary implication of this study is the crucial mediating role of OCB and the moderating component of communication; these findings contribute significantly to the existing literature.

Practical and Managerial Implications

This study offers a few practical implications on how TL facilitates the increase in ER. Specifically, it is essential to understand that the traits of TL develop skills in managers to retain employees. SMEs should train leaders to develop TL characteristics in them. Accordingly, leaders should try to implement the skills of TL such as developing a compelling vision for employees, focusing on goal achievement, having problem-solving techniques, having a sense of purpose, and spending time on the training and development of the team to enhance ER.

Furthermore, leaders should pay attention to develop OCB in subordinates. Importantly, when leaders want to increase OCB, they should practice traits of TL to help and support the employee in achieving their goals, practice different problem-solving methods and train employees to enhance OCB. Moreover, leaders should not neglect the importance of communication with their employees to communicate the responsibilities clearly, to listen to the problems and issues in task performance, and to manage them accordingly.

Limitations and Future Research Suggestions

This study has a few limitations associated. First is the time limit bounded to obtain the maximum number of responses. This study is based on cross-sectional data, and more longitudinal studies are required to develop in-depth knowledge and to capture the relationships between variables as well as to check for differences in results if longitudinal data are used instead of cross-sectional data. The data for this study were gathered from 505 employees of SMEs in China, the sample size can be increased, and comparative analysis of the same model in private and public sector organizations can be checked. Moreover, the present study is exclusively focused on SMEs in China. Applying these results to different cultural contexts and populations may require appropriate alterations. Future research may include the study of other mediating variables, such as job satisfaction, deviant workplace behavior, and supervisor conflicts. Furthermore, there are multiple approaches to analyzing the relationships between the direct and indirect paths of the model.

Data Availability Statement

Ethics statement.

This study was carried out in accordance with the recommendations of the Ethical Principles of Psychologists and Code of Conduct by the American Psychological Association’s (APA). All participants gave written informed consent in accordance with the Declaration of Helsinki. The protocol was approved by the employee’s council of the participating organizations as well as the ethics committee of Jiangsu University, Zhenjiang. The patients/participants provided their written informed consent to participate in this study.

Author Contributions

HT, SI, and MK: conception and design of the study. SA, SI, and FA: acquisition of data and data analysis. MK and HT: performed the analysis. FA, SQ, and SI: drafting the manuscript. SA and MK: critical revision of manuscript.

Conflict of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Funding. This work was supported by the National Social Science Foundation of China (14BGL024): Research on the open innovation mechanism and promotional policy of small and medium-sized enterprises from the perspective of Network Embeddedness, and the National Natural Science Foundation of China (71774071): Research on low carbonization transition path of high carbon industry in China based on knowledge spillover of global value chain.

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It’s Time to Reimagine Employee Retention

• Helen Tupper
• Sarah Ellis

Three ways to increase the chance that top talent sticks around.

According to Gartner, the pace of employee turnover is forecast to be 50–75% higher than companies have experienced previously, and the issue is compounded by it taking 18% longer to fill roles than pre-pandemic. Increasingly squeezed managers are spending time they don’t have searching for new recruits in an expensive and competitive market. Unless efforts are refocused on retention, managers will be unable to drive performance and affect change. Leaders need to take action to enable their managers to keep their talent while still being able to deliver on results. Managers need help with three things. First, they need help shifting the focus of career conversations from promotion to progression and developing in different directions. Second, they need help creating a culture and structure that supports career experiments. Finally, managers need to be rewarded not for retaining people on their teams but retaining people (and their potential) across the entire organization.

This is a challenging time for managers. Alongside their day-to-day roles, many are facing a never-ending cycle of reskilling and recruiting on their teams. The need to reskill isn’t new, with the OECD estimating that 1.1 billion jobs are liable to be radically transformed by technology in the next decade. However, managers are now being asked to close the skills gap at the same time as they’re responding to pandemic-prompted resignations.

• Helen Tupper is the co-founder and CEO of Amazing If , a company with an ambition to make careers better for everyone. Together with her business partner Sarah Ellis, she is the author of two Sunday Times bestsellers, The Squiggly Career  and Y ou Coach You . Sarah and Helen are also hosts of the podcast Squiggly Careers, which has had 4m downloads, and their TED talk, The best career isn’t always a straight line , has been watched by almost 2m people.
• Sarah Ellis is the co-founder of Amazing If , a company with a mission to make careers better for everyone. Together with her business partner Helen, she is the author of two Sunday Times bestselling books, The Squiggly Career and You Coach You. Sarah and Helen are also hosts of the podcast Squiggly Careers, which has had 4m downloads, and their TED talk, The best career isn’t always a straight line , has been watched by almost 2m people.

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Project Proposal A critical evaluation of employee retention strategies

The key intention of the project is to understand the importance of employees’ retention in any organisation while understanding the effectiveness of the current sales executive retention strategies practiced by the SKG, and also to find the causes for the high voluntary turnover of sales executives. This project will present a way forward for SKG and give recommendations for other parts of their business. This project is of imperative importance for the company; the implications of the project are that the retention of sales executives is the decisive factor to take advantage of human resources for organisation to gain a competitive advantage. The initial and final review exposed that there is a need to understand the perception of top management and the sales executives with regard to the current retention strategies. This study provides SKG to formulate effective strategies to retain staff. By applying mixed research methodology to research retention strategies, this project has selected SKG as a single case study. The data was collected through primary and secondary methods. Primary data was collected through semi structured interviews with management and current and former sales executives and a survey with the current sales executives. The key findings of this project is that there is some gap in communication at the senior management as one line manager thought that, there was no strategy for retention, while the other believed that strategy will be training and development. It was also found that the sales executives are lacked of knowledge about the current retention strategies, even though majority said retention strategies were a big issue. Other findings for the sales executive turnover rate are high due to lofty workload, stumpy basic salary, less opportunities for career development and they are not satisfied with their work environment. To address these concerns, SKG does not have a proper feedback system.

Related Papers

International Journal of Management Practice

sanjeev m a , A. Surya

The profession of 'personal selling' is replete with problems of high turnover due to lack of 'job satisfaction'. The lack of job satisfaction leads to build up of 'turnover intention' among employees and translates in to 'turnover' at an opportune and suitable moment. The relation between job satisfaction and turnover intention has been proven to be conclusively negative. This study aims to explore the existence of a contradictory 'positive' relationship between job satisfaction and turnover intention, which can be categorised as 'dysfunctional turnover intention'. The study also explores whether practising managers are able to identify this dysfunctional turnover intention and if so what strategies are used to manage the dysfunctional turnover. Findings confirm the existence of 'dysfunctional turnover intention' among the research subjects; where there is uncommon positive relation between 'job satisfaction' and 'turnover intention'. It also appears that the line managers have developed their own strategies to manage such dysfunctional cases.

Alexander Decker

International Journal of Scientific and Engineering Research

Nuwan Wimalana

This study is to provide an understanding to the HR and Sales Management of the medium and large scale FMCG companies in Sri Lanka to identify some of the researched models and how those models have been implemented by the industry to mitigate the high Sales Force turnover which is hampering their business. The post war era in Sri Lanka created a huge opportunity for FMCG companies in the country to expand their distribution network to the entire Island including those areas where they did not have a proper access. With that the demand for the Sales Representatives increased significantly but the supply was lagging due to many reasons. As a result, the available sales people are at a high demand. The methodology was based on literature and discussions carried out with industry experts in selected cross sections of FMCG companies of Sri Lanka. Also interviews were held with a sample of senior Sales Representatives in the FMCG industry but not necessarily in the same companies where we interviewed industry experts. All above was based on convenience sampling. Developing new models on Organizational Culture, Sales Force Remuneration, Sales Force engagement and Organizational Commitment have been identified as probable solutions implemented by the FMCG industry in Sri Lanka towards mitigating the Sales Force Turnover but there is a wide scope for many more work to be done in this area. Also these findings can provide ideas for the education sector to develop certain tools to develop programs to career minded sales personnel. At the same time, the Government Policymakers can use these results to develop the required human resource through the youth development programs. Key words – Sri Lanka, FMCG, Sales Force Turnover

Zenodo (CERN European Organization for Nuclear Research)

sonia soans

D. Kasi nathan

Employee turnover is one of the largest though widely unknown costs an Organization faces. Employee retention is a process in which the employees are encouraged to remain with the organization for the maximum period of time.Many of the IT companies are using different retention strategies to retain their potential employees to reduce the cost to the company in recruiting and training new employees. Also it is very important to have a common framework strategy of retention for all the organizations in the same industry, especially it is very much require for the information technology industry which is facing lot of problem in recruitment and training due to poor retention of employees.The objective of this study is to examine the best practices in IT industries to retain employees. The research design adopted for this study is descriptive research. The required data were collected from the employees of the IT companies in Chennai by the help of a questionnaire among a sample of 110 ...

Yokesh Hari

Retaining the key employees (assets) has always been a matter of concern for organizations which deals into any of the sector such as retail, IT, education, Construction, Leather etc, as the success & failure depends on the employees of the organization. Today HR Managers are facing a pivotal challenge pertaining to their employee's turnover rate which could be reduce by applying necessary strategies which restrict them to stay in the organization. The purpose of the study is to examine the various factors affecting employee retention in different sectors of business along with identifying competitive strategy and human resource management practice to retain competent employee. This review paper reveals that factors such as supervisory support & employee commitment, compensation packages, Job satisfaction, Attractive rewards and recognition, annual performance appraisal and training opportunities, career propagation chances, organizational culture, motivation, development and challenging work environment have direct/ indirect impact on employee retention. The paper also compiled with a theoretical framework of employee retention based on relevant literature. Copy Right, IJAR, 2015,. pAll rights reserved

Publishing India Group

Earlier research studies indicate that employee retention is a challenging task for the organizations in todays scenario of competitive business environment. Manpower became a powerful tool for the growth of the organization and sustainability. Proper human resource management initiatives should be adopted by the organizations in order to decrease the employee turnover. The importance and trouble faced by the organizations in attracting the skilled employees and efforts to retain the skilled are the same. This paper explains the importance of employee retention in the growth of the organization and achieving the competitive advantage over the competing firms. The retention strategies should be formulated in such a way that the organizations grow with greater efficiency and innovation and achieve long lasting strategic business objectives. When an organization loses a talented employee there is a huge negative impact on innovation and services provided. The standard of the services provided by the organization declines which in turn affects the organizations growth and profitability. The impact of employee turnover affects the other HR functions like manpower planning, recruitment, selection training etc. It is observed from the past studies that when employees are satisfied with the organizations retention strategies they are more dedicated in doing their jobs and work for the organizations growth and sustain the advantage of competitiveness over the rivals.

Diwakar Singh

Employees are the most important, valuable and productive asset of an organization and retaining them is one of the toughest challenges for the managers. As the replacement cost of key employees involves huge turnover, there is a need to develop a fully integrative retention policy to tackle such type of problems. The objective of this study is to critically analyze the various works done in the field of employee retention and highlight factors responsible for employee departure and retention initiatives followed to retain them. As the study is descriptive in nature, a number of secondary sources are explored to synthesize the fragmented knowledge and present the literature review in a concise format. As the ever-changing technology, stiff competition, and globalization has brought human resources at the forefront in organizational roles, no organization wants to lose their talented employees. The literature review will present traditional retention techniques followed as well as contemporary techniques used to retain the employees. Also, more emphasis will be put on the factors such as leadership style of superiors, ability to exercise control with respect to decision-making and problem-solving, desire for career advancement and skills development, flexible working and ever increasing aspiration on retention of key employees.

Suman Pathak

The insurance sector in India is rising rapidly to bring in growth and employment opportunities. Insurance companies are basically human intensive, and human resources act as an undoubted differentiator. Quality manpower and its retention would act as a litmus test. Turnover of sales force has been high because of low entry and exit barriers. The paper addresses issues of recruitment, retention and turnover of sales force in insurance companies. An attempt is made to integrate them to Maslowćs Need Hierarchy. A survey was conducted among 350 employees who worked in or had left insurance companies to analyze factors that influenced their decisions and job satisfaction. The data were treated with factor analysis. Factors such as Safety & Security, Social & Esteem and Personal Work Style emerged as the influencers to join insurance companies. Primary Needs and Social & Self Esteem Needs were the factors associated with job satisfactionč Stress, Career Advancement and Work Environment e...

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