HR Practices as Determinants of Organizational Commitment and Employee Retention

Abstract

Globalization has not only helped the organizations to look for proficient employees, but also to retain the expert, talented and accomplished employees. Consequently, the role of Human Resource (HR) practices in fostering employees' engagement, organizational practices in retaining employees and employees' commitment is paramount. The main objective of the study is to examine, evaluate and interpret the relation between organizational HR practices and employee commitment, and to see whether these are positively or negatively correlated, as there are not many studies which examine whether there is a positive and negative relation between HR practices and employee retention in the Indian economy. About 100 employees from the Indian economy are considered. Primary as well as secondary data was collected using a questionnaire and the results are discussed in the light of the existing literature.IntroductionGlobalization, privatization and liberalization have brought a rapid change in the life of the individuals, work and society, leading to extremely flexible, boundaryless and creative activities (Baruch, 2004). As the business strategies change from a worker-intensive industrial society to an automated information society, the workforce increasingly becomes more educated with higher professionalism and a decrease in organizational loyalty. High skilled workers want to work on projects that enhance their career, knowledge asset and future earning power. Consequently, when the employees get a good opportunity, they abscond from that job. On the other hand, employers struggle to retain their valuable employees due to a general shortage of experienced candidates and aggressive recruitment tactics by others in the highly competitive era (Storey, 1992; DeYoung, 2000; and Evans et al., 2000). The high skilled worker identifies with a high skilled culture and helps the organization to stand out from others (Rogers, 2001).The concept of organizational commitment has attracted considerable interest in an attempt to understand and clarify the intensity and stability of an employee's dedication to the organization (Mester et al., 2003). Loyal, engaged employees tend to generate high performance business outcomes as measured by increased sales, improved productivity, profitability and enhanced employee retention (Tsui et al., 1995; and Rogers, 2001). Commitment strategies shape the desired employee behavior and attitude by forging psychological links between the organization and employee goals. Thus, the focus is on developing committed employees who can be trusted to use their discretion to carry out job tasks in ways that are consistent with organizational goals (Eisenhardt, 1985).Cascio (2003) describes retention as initiatives taken by management to keep employees from leaving the organization, such as rewarding employees for performing their jobs effectively; ensuring harmonious working relations between employees and managers; and maintaining a safe, healthy work environment. Literature surveys conducted by McNee et al. (1998) and Dockel (2003) identified the following six critical factors that need to be considered in the retention of high technology employees: (1) Compensation (base salary); (2) Job characteristics (skill variety and job autonomy); (3) Training and development opportunities; (4) Supervisor support; (5) Career opportunities; and (6) Work/ life policies.Several Human Resource (HR) practices were recently proposed to enhance effectiveness in organizations and to retain talented employees (Arnett and Obert, 1995; Dessler, 1999; and Pfeffer and Veiga, 1999), but the configurations of such practices are narrowly focused and the suggestions are often not theoretically grounded.Conceptual FrameworkIn India, there is no published literature that describes the effect of HR practices upon employee commitment as it broadly fails to correlate whether these are negatively or positively related to each other. …

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