Editorial Board

A Refereed Monthly International Journal of Management

The Influence of Managerial Leadership and Job satisfaction on Employee Retention: A Survey of IT Companies in Bangalore

Author

Abstract

Leadership of any organization should have the capability to engage the right people, at the right place and to the right degree at their work. This kind of engagement in true sense will only start when the leaders do away with the command and control approach rather adopt a conversational approach. Especially in today’s time, when discussions are largely focused on assessment of organizational capacity and capability to deal with disruptive market forces, exploring the potential role of managerial leadership assumes significance. It aims at building mutually beneficial relationships with the key internal stakeholders i.e., employees. This paper attempts to explore how leadership behaviors and job satisfaction influences employee retention. It will look into employee retention problems with an emphasis on supervisor-subordinate relationship and HR practices leading to job satisfaction in IT organizations in Bangalore. The study reveals the attitude and experience that the employees had with their previous employers with respect to HR practices, job satisfaction and supervisory support.

Keywords: Employee retention, HR Practices, Job satisfaction, Managerial leadership

Introduction

The word leadership emphasizes on some positive elevation. There are various aspects of being a leader. Like the servant leader, the compassionate leader, the tireless leader, responsible leader perhaps even the mindful leader. However, in today’s time, when discussions are largely focused on assessment of organizational capacity and capability to deal with disruptive market forces, exploring the potential role of managerial leadership assumes significance especially in this VUCA world( volatility, uncertainty, complexity, and ambiguity ). Peter Drucker rightly said that “leaders grow, they are not made” but the concern is that nobody knows exactly how to grow leaders. Its difficult to find leaders whose personal, professional, emotional, and intellectual capability could be mapped effectively onto a competency framework. Employees’ job satisfaction and commitment towards organization depends upon the leadership style of managers. A better understanding of relationships between managerial leadership, job satisfaction and its influence on employee retention can help identify better strategies for developing employee friendly HR practices especially related to reward & recognition for engaging & retaining competent workforce. Hence, contemporary developmental interventions in leadership is required.

Objectives

• To understand the role of managerial leadership in employee retention
• To determine to what extent supervisory support affects job satisfaction in IT organizations with a focus on Bangalore

Review of Literature

The term Leadership and Management are most often used interchangeably. Management is about planning, organizing and controlling the organizational resources while leadership is about aligning of employees’ interests & goals to that of organizational goals. In order to lead, one must be able to manage and hence the two are closely related. In the words of Koontz and O’Donnell, Leadership is the ability of a manager to induce subordinates to work with confidence and zeal. Leadership is defined by Armstrong (2012) as a process of inspiring people to do their best in order to achieve desired result. He stated that this involves developing and communicating a vision for the future, motivating people and securing their engagement. Northouse (2013) states that ineffective or inappropriate leadership styles can directly affect the performance and retention of employees in contemporary organizations. Retention management is about relationships. People need to feel like their contributions to the organization are valued (Taylor,2002). As per Harvard Business Essentials (2002), “The retention of good employees matters for three valid bottom line reasons; 1) the growing importance of intellectual capital 2) a causal link between employee tenure and customer satisfaction 3) the high cost of employment turnover continuity of competitive goods and services is assured” (Chitra, 2013).

Leadership style - According to L. J. Mullins (2000) Leadership style is defined as the way in which the functions of leadership are carried out and the manner that a manager chooses to behave towards employees. Various theories of leadership have introduced different styles of leadership. However, this paper focuses on behavioral studies and the leadership styles introduced by these studies. Leadership style is a behaviorally oriented approach to understanding the concept of leadership. Employees, normally look at their supervisor’s behavior as their style of leadership. From this viewpoint, Bryman (1992) asserted that ‘behavior approach’ and ‘style approach’ could be used interchangeably. The style approach focuses on leaders’ behaviors and explains how they combine task and relationship behaviors to influence subordinates in their efforts to reach an organisational goal (Northouse, 2004).

Theoretical Perspectives

Douglas McGregor suggested that fundamentally there are two approaches to managing people -Theory X and Theory Y. One is task-oriented leadership and other is relationship-oriented management style as advanced in the behavioral theory . McGregor made a powerful observation that managerial practice often expresses some very deep assumptions about the nature of human beings: Two competing theories about human nature, he claimed, dominate the managerial thought-world. Theory X states that an average employee in a company is lazy and self-centered, lacks ambition, dislikes change, and longs to be told what to do. On the other hand, Theory Y states that people usually accept and often seek responsibility. People will apply self-control and self-direction in the pursuit of organisational objectives, without external control or the threat of punishment. The best way to manage them is to manage as little as possible.

McClelland’s achievement theory identifies three motivators that he believed all individuals possess irrespective of age, gender or culture - need for achievement, need for affiliation and need for power. People will have different characteristics depending on their dominant motivating driver which could be any one among these.Therefore, the challenge for a manager here lies in understanding the employees’ dominant motivator so that he can employ motivating techniques accordingly. With an understanding of employees’ underlying motivating factor, the managers’ task to retain employees becomes easier.

The Behavioral theory assumes that leaders are made and not born. Leadership is based on definable and learnable behavior. Behavioral theory emphasizes on what leaders actually do. Leadership capability can be learnt rather than being inherent. The theory identifies two behaviors that leaders may exhibit; the task-oriented behavior and relationship-oriented behavior. In modern times, relationship-oriented behavior seems to be the preferred style.

On the whole, behavioral studies have put across two leadership styles -the task-oriented and the relationship-oriented leadership styles.

Task-oriented leadership behaviors - The primary concern of task-oriented leaders is achieving defined targets of their organisation. Northouse (2004) reveals that task-oriented leaders encourage their employees to achieve their objectives by giving them exact definitions about their roles, establishing objectives and criteria of evaluation, specifying directions and instructions, setting time schedules, and determining the ways by which goals could be achieved. He believed that task-oriented leaders often apply a one-way method to communicate with subordinates about their duties and responsibilities and the way they are expected to fulfill their tasks. Yukl & Mahsud (2010) specified some activities such as clarifying responsibilities and roles, defining objectives, performance measurement & control, and planning for short-term periods as the main behaviors of task-oriented leaders. What needs to be understood is that how task oriented behaviors are related to motivation of employees and their intentions to stay or leave the organisation. For example some employees may consider directions or instructions given by their supervisor as useful but some might consider it as too much of interference and may turn out to be demotivated.

Relationship-oriented leadership behaviors- Here the leaders mostly focus on building and developing interpersonal relationships. Northouse (2004) states that relationship-oriented managers prefer a two-way communication with their team members. This is because of their desire to support their employees socially and emotionally. According to Yukl & Mahsud (2010) the most important behaviors of relationship-oriented leaders could be categorized into three sorts of behaviors including Supporting, Developing, and Recognizing behaviors. Still the success of relationship-oriented leadership style will depend on the characteristics of a particular employee. For example, if the employee falls in the category of theory X, then relationship oriented style will not work.

Generally, Managers in organizations adopt different leadership styles depending upon their personal orientation. This orientation may be a result of their culture and education system in which they have been brought up or the influence of organisational factors. Any leadership style adopted by a particular manager impacts employee motivation, performance and commitment towards his/her job and organization. This in turn influences employees’ decision either to leave or stay with the organisation. Employee turnover in organisations is mostly attributed to all sorts of motivation and engagement factors. Nevertheless, an understanding of role of managerial leadership style needs to be explored and investigated in this context. This study contributes a significant implication in view of the general scarcity of empirical studies in India concerning the role of managerial leadership in employee retention.

Job satisfaction

In the simplest sense, job satisfaction is an employee’s attitude about his job and the organization in which he performs the job. Employee job satisfaction is found to be correlated with factors like compensation, leadership style of managers, company policy & procedures, recognition at work, working environment and having supportive co-workers as outlined in various studies. Earlier generations viewed their jobs predominantly as a source of income but today’s employees see their careers as more important (Murray, 1999). An empirical study conducted by Gaertner (1999) revealed that opportunities for promotion and supervisory support have a direct and positive impact on job satisfaction. Job satisfaction is considered to be the most important tool for employee retention. Job satisfaction refers to how employees perceive their jobs (Mc Shane & Glinow, 2005). It is an emotional state resulting from experiences at work. If employees experience high satisfaction with their jobs, it may create a pleasurable emotional state (Bartolo & Furlonger, 1999;Ivancevich, 2008) and a positive reaction with the organization (Feinstein, 2002; Oshagbemi,2000). The managerial leadership behaviour plays a significant role in employees ‘job satisfaction and retention. Igbaria and Guimaraes (1993) have identified five components of job satisfaction – work, supervision, co-workers, pay and promotion. This study captures employees’ experiences or disengagement level with various aspects of jobs like work, supervision, compensation & benifits & HR practices.

Methodology

It was felt that the views of employees who had left their previous organization can provide an excellent chance to investigate its supervisory leadership capability and its impact on turnover. Hence, the questionnaire was administered to 50 former employees of five IT organizations in Bangalore. The researcher had previously worked in IT organizations and hence this facilitated in convenience sampling and establishing connections with such individuals who were able to express themselves uninhibitedly in an interview about their expectations and satisfaction with the workplace practices. The focus was to understand the employees’ disengagement level with the supervisory relationship workplace environment and overall HR Practices which led to the turnover of employees.

Findings:

The data is presented in two parts – First, Data in tabular format reflects both- level of Satisfaction respondents experienced with their previous company and the level of Importance they attach to the specific aspects or factors leading to employee retention. The second part is the statistical respondents’ satisfaction versus importance they gave to each aspect of their job.

The data indicates that there is a negative co-relation between what they felt about particular aspects of job and the importance that they attach to each factor. It is interesting to note that there was no variation found in responses with respect to importance attached to being recognized for good job done. But there was significant variation in responses found with respect to satisfaction level. A high degree of variation was found in the aspect of having a supportive supervisor, having good communication with the supervisor and understanding what is expected of me. The satisfaction experienced by the respondents were quite varied in comparison to the importance they attach to that specific job aspect. Also there was a significant variation in responses with respect to Satisfaction level on the aspect of having supportive co-workers whereas for Importance there was not much variation found.

Descriptive Statistics: Satisfaction

Being recognized when I do a good job received the lowest rating indicating that employee recognition is the most important factor for retention. Equally important are Salary & benefit plans offered by the company. Employees were least satisfied with the above mentioned factors of their job which had probably made them to leave their previous jobs. The means reflect that employees were not satisfied with various aspects of their job.

Descriptive Statistics: Importance

The levels of importance respondents attached to these aspects suggest that the following were very important to them: Being recognized when I do a good job, Benefits, Having good communication with my supervisor , Being fairly treated by my supervisor, Understanding what is expected of me & Having a supportive supervisor. Rest all aspects are secondarily important to the employees.

T‐test: Satisfaction vs. Importance

The above table shows that there is a significant connection between respondents’ satisfaction with the various aspects of the job and the importance they attach to the each aspect. Employees were not satisfied with any of the factors and hence they expect the company to provide clarity in terms of what is expected of them, probably comprehensive deliberations on the goals set can help, having transparency in communication with respect to work & company’s policies & procedures and of course emphasis on monetary aspects cannot be ignored.

Discussion & Conclusion

The study indicates that there is a link between managerial leadership style, job satisfaction & employee retention. An inverse relationship was found between the managerial leadership style and the employees’ intention to leave. When employees perceive managers’ leadership style to be unfavourable, intention to leave the organization increases. This study concluded that the leadership style practiced by most of the managers in the selected organizations was not favorable for employee retention. The mean scores of employees’ satisfaction of job factors, organizational factors and . leadership behaviours of managers was found to be very low. Lack of recognition and communication was another reason for employees’ dissatisfaction. Managers’ recognition for good performance boosts employees’ morale and increases their satisfaction level with their jobs. Based on the findings of the study it is concluded that managers or supervisors adopted task-oriented leadership style rather than a relationship-oriented style as evident from the data above with respect to communication, recognition at work ,fair treatment and lack of clarity of their jobs. Managers focus more on getting the task done which may fulfil the short term goals but simply exchange of information cannot hold people for a long time. J. L. Price (2001) in his study also observed that the role of supervisory leadership is crucial in staff retention, and argues that employees leave managers not companies. According to Maslow’s hierarchy of needs theory, once individuals have satisfied one need in the hierarchy, it ceases to motivate their behavior and they are motivated by next level needs up in the hierarchy. In this study, employees’ job satisfaction with respect to recognition at work was found to be lower than salary & benefits. Once these primary needs are met, employees would look for belongingness needs i.e., relationships and esteem needs i.e., recognition at work. Seasoned professionals value leadership more than money to stay with an organization, this has been indicated by the data above. Softer aspects such as people management is more important than managing material resources. P.E Spector (1997) also observed that organizations can no longer afford to leave the responsibility for keeping well performing employees in the hands of the HR Departments. Responsibility and accountability for retaining talent need to move to employees’ supervisors. The significant connection between respondents’ satisfaction with the various aspects of the job and the importance they attach to the each aspect provides the evidence that, employees look forward to recognition at work, fairness, supportive managers & HR practices as preferred aspects of their job. The statistical results clearly signal employees opinion about their supervisors leadership style to be more of transactional in nature. This parallels with the study conducted in staff retention by J. Ng’ethe (2012) that employees are more likely to remain with an organization if they believe that their managers show interest and concern for them, if they know what is expected of them, if they are given a role that fits their capabilities and if they receive regular positive feedback and recognition. It has been noted in this study that leadership, job satisfaction and employee retention are closely interrelated.

Recommendation

This study brought out the critical role of leadership style of managers & job satisfaction on employee retention in IT companies in Bangalore. It is recommended that managers need to adapt favorable leadership practices to create a positive work environment to make employees feel good about coming to work. Leadership style adopted by managers should be given due attention & deliberation by the senior management. The extensiveness of communication determines the relationship quality between the employees & their managers which directly has an impact on organizational outcomes. Therefore, transformational leadership which is comparable to relationship-oriented leadership style is the key factor in mitigating turnover intentions. Managers can use any of the following to put relationship-based leadership style in practice to enhance employee job satisfaction. a)Idealized Influence- manager can act as a role model for his employees b)Inspirational Motivation -managers can challenge employees to leave their comfort zones, communicate about future goals and provide constructive feedback c)Intellectual Stimulation-Managers can encourage employees to be innovative & creative, facilitate in achieving higher order needs d) Individual Consideration- Manager can act as a mentor and listen to the employees’ concerns and needs. The quality of relationship an employee has with his or her immediate managers elongates employee stay in an organization.

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