Kelly Bretcher, Jonathan Hart, Kat Hollowell & Wendy Valentini

Kelly Bretcher, Jonathan Hart, Kat Hollowell & Wendy Valentini

“The Effects of Management Styles on Employee Engagement and Retention”

Research Paper

EDHR 614: Applying and Designing HRD Research

April 30, 2010

Is there a relationship between management style and employee engagement?

Is there a relationship between management style and employee retention rates?

Problem Definition

As many organizations are facing high turnover and low levels of employee engagement, they are turning to HRD professionals for assistance (need citation?). This research paper investigates if a particular management style can influence or change employee retention or employee engagement. Examining this issue in greater detail will help HRD professionals determine if coaching towards a particular management style could increase organization effectiveness. Specifically, this paper studies the relationship between management style and employee engagement, and between management style and employee retention rates.

Employee retention and employee engagement are significant issues facing today’s organizations due to the globalization of business, enhancements of technology and the overall change in the needs, wants and behaviors of a generationally diverse talent pool. The ability to retain an organization’s best talent is critical as turnover rates can be costly, especially when dealing with specialized talent or skills (citation to cover last two sentences?). Research (from?) has shown that organizations with high levels of employee engagement are likely to yield better financial and workplace safety results, and foster a stronger environment of innovation and creativity. Employee engagement is defined as “the extent to which employees commit to something, how hard they work, and how long they stay as a result of that commitment.” (CLC, 2004) Engaged employees are more likely to go above and beyond in their jobs, because they can understand how their job fits into the organization’s business goals, and they truly care about the results.

“The number one factor that influences employee commitment is the manager-employee relationship.” (Lockwood, 2007) Management styles can differ greatly between organizations and even between managers. Management style, as it relates to the manager-employee relationship, plays such a key role in employee retention that it is often described as the deal-breaker. Does one management style yield higher retention rates and engagement scores than another management style? Can HR and OD practitioners assist their organizations by modeling and training in one management style versus another to increase ability to retain the best talent and have an engaged workforce? This research paper will address those issues and will aid HRD professional in designing, measuring, and evaluating proactive workplace strategies that help attract and retain the best employees.

Review of the Literature

To further investigate how management styles are related to employee retention and engagement, six (? – only five listed here) empirical articles were reviewed. Smith & Canger (2004) explored the Big Five personality model and the relationship between the personality of managers or supervisor and the aggregated attitude of their subordinates. Their research consisted of three Internet-based that were distributed to employees for a US division of an international human capital management organization. Data was collected for 131 supervisors with a total of 467 subordinates, and only used data for their study from 484 employee (?? – taken from article review – is this clear?) Canger & Smith’s research included four surveys focused on personality, job satisfaction, affective organizational commitment and turnover intention. These surveys were used to measure whether a supervisor’s personality directly affects employee job satisfaction, organizational commitment and turnover intention. According to the authors, their study provides compelling evidence that supports the belief that supervisor personality plays a direct role in employee turnover and employee job satisfaction. In this study, employees had positive job related attitudes when direct managers or supervisors scored higher in areas of emotional stability, extraversion and agreeableness. In additional employees also displayed positive attitudes when their managers scored low on conscientiousness. One of the limitations from the study is the use of a subject group from only one organization. Corporate culture and environment could affect the sample study responses regardless of supervisor personality or employee attitudes (do we need to cite this statement – are we making an assumption?).

Another article reviewed “Role of Leadership in the Employee Withdrawal Process: A Constructive Approach”, authored by Gerarld R. Ferris, examines the contributions of average and dyadic leadership style to explain the variance in employee turnover. Ferris explored two hypothesis in his study. He studied the relationship of two factors, Average Leadership Style (ALS) and Leader-Member Exchange (LMX), and employee turnover. Leader-member exchange is a 1-5 response format scale used by Graen et al. to assess the quality of the supervisor-subordinate interaction. Average leadership style is the average of the LMX ratings of all subordinates reporting to a particular supervisor. The average was then assigned to each group member as an ALS score.

The sample for this study consisted of 81 registered nurses and their supervisors in a Midwestern hospital. The nurses in the sample were all female, with an average age of 34. The nurses in the sample were administered questionnaires by a researcher at the end of their shift. A morning and evening shift were covered. One year after the initial questionnaire, 9 of the 68 staff nurses had voluntarily left the organization. Turnover in this study was only 13% compared to 42% in Graen et al.’s initial study.

This study had 4 primary measurements. Leader-member exchange and average leadership style were the same measurements used in the Graen et al. study. Employee attitudes and overall job satisfaction were measured using two versions of the job descriptive index scale. The results indicated there was mixed support for the findings reported by Graen et al. in the initial study; however, both studies suggest that subordinates tended to leave less frequently when leader-member exchange scores were higher than the average. A hit rate table, creating high and low groups in the same manner as Graen et al., was examined further with respect to turnover and the LMX and ALS measures. The results of this analysis in relation to turnover do not strongly support the Leader-member exchange. Despite the findings of the hit rate analysis, this study’s results do favor the results of Graen et al.’s study that leader-member exchange is a stronger predictor of turnover than average leadership style. Additional support for Graen et al.’s study concerning LMX and employee attitude predictors of turnover was provided. LMX was found to be superior in the prediction of turnover than employee attitudes.

There are several easily identifiable limitations of this study including the all-female sample, single occupation sample, and the Midwestern locality. A limitation pointed out by the researchers was that Graen et al. did not address the extent to which between-unit and within-unit correlations account for a particular total correlation and the difference between the two. A statistical test of the difference between such correlations was not conducted. The current researchers suggest that future research may want to examine this further, especially due to the results of this current study suggesting the LMX turnover relationship to due more to individual differences rather than work group differences.

The third article, “A study of relationship between managers’ leadership style and employees’ job satisfaction”, researchers Ali Mohammad Mosadegh Rad and Mohammad Hossein Yarmohammadian explore the relationships between managers’ leadership styles and employees’ job satisfaction in an Iranian Hospital. The researchers infer that job satisfaction is critical to retaining and attracting good employees and they define job satisfaction as “an employees’ affective reaction to a job”. Satisfied employees have a tendency to be more productive, stay on the job longer, and are more innovative. (I like this – just wonder if it should be incorporated into the problem definition, citing the authors).

Rad and Yarmohammadian’s research investigate the relationship between managers’ leadership style and employees’ job satisfaction at Isfahan University Hospital in Iran. The results of the research allow for a better understanding of said relationship, which can aid further research, help with the strategies for recruitment, promotion, and employee training – problem definition or summary?

Rad and Yarmohammadian collected data through a distribution of two questionnaires among 950 employees selected at random and received an 86% response rate. Employees and managers received different questionnaires. The employees received a questionnaire related to their job satisfaction and their manager’s leadership style. Managers received a questionnaire related to their own? leadership style and job satisfaction.

The findings from the research indicate that the dominant leadership style of the managers in the organization is participative. The percentage of participative leadership styles among the managers is 100 percent for middle and senior managers, and 94.48 percent for front line managers. There is also a significant correlation between leadership style and employee job satisfaction. Data from the employees’ questionnaires indicate less job satisfaction with salaries, benefits, work conditions, promotion and communication, and more job satisfaction with the nature of the job, co-workers and supervision type.

Even though the results show a positive correlation between job satisfaction and leadership style, it does not necessarily mean that participative leadership style is the best style. Each organization has their own unique culture, so managers would have to use their experience to gauge which type of management style would be best for their employees. (Kat – is this what the authors said, or it this our interpretation?) One of the limitations of this research is that it was limited to an Iranian hospital; however, the researchers anticipate that their findings may be relevant to other organizations in different countries.

Researchers Agrusa and Lema studied the relationship between the perception of management styles and employee turnover in a Mississippi casino. To conduct their research, two questionnaires were went to 251 employees in the Mississippi casino industry, including supervisors and employees. The purpose of this survey was to gather data on personal assessments of management skills for supervisory employees (what supervisors felt were valuable management skills.) Question topics included levels of trust between supervisory and non-supervisory employees, types of incentives offered, amount of decision making, and thoughts on teamwork. The second questionnaire was specifically designed for non-management employees and gathered information on what they perceived to be effective management skills and whether or not their supervisors possessed these skills. This purpose of this survey was to understand what these employees felt were the most effective and supportive leadership behaviors.

The key results of Agrusa & Lema’s study indicated a significant difference in employee’s perceptions versus the perceptions of supervisors regarding management styles. While both employees and supervisor agreed in a number of areas, supervisors showed a significantly stronger level of agreement than their non-supervisor counterparts in the following areas; employee input into decision making, trusting relationships between supervisors and employees, managements efforts to encourage employees development, employee’s feeling well informed about decisions or changes within the organization; management’s concern for employee’s well-being; and perceptions that supervisors provide clear expectations and regularly praise employees. In general, managers perceived their leadership style in a more favorable light versus their employees. The limitation to this study was one casino was surveyed. The authors felt that further study in other hospitality organizations would be needed to further support their hypothesis.

In another empirical article, Lawson Savery investigated the relationship between perceived style of leadership and organizational commitment. This study consisted of surveying 302 employees in the Western Australian State headquarters. The survey involved the respondents scoring 23 different situations ranging from those they considered most important to those considered least important. As a result of Savery’s study, the author categorized the respondents into three groups based on their responses: The autocratic group (group 1 with 54%) who indicated they perceived the leadership style they received was an autocratic style, the consultative group (group 2 with 33%), who perceived they were consulted with about organizational decisions, and the democratic group (group 3 with 13%) who perceived the most democracy in the organization. The study indicated that the democratic group is receiving a style of leadership that is closest to their ideal type. This group had higher levels of organizational commitment while the respondents in the autocratic group had the lowest levels.

Respondents who perceived their leaders to have an autocratic leadership styles had the largest difference between their perceived and preferred style of leadership. The author suggests that the workforce prefers a democratic system as the democratic style leads to higher level or organizational commitment and job satisfaction. As with other studies, the limitations of this article included the sampling of only individuals in Australia.

References

**Agrusa, J & Lema, J. D. (2007). An examination of Mississippi gulf coast casino management styles with implications for employee turnover. UNLV Gaming Research & Review Journal, 11(1), 13-26. Retrieved January 20, 2010, from ABI/INFORM Research. (Document ID: 1286977511).
**Ferris, G. R. (1985). Role of leadership in the employee withdrawal process: A constructive replication. Journal of Applied Psychology, 70 (4), 777-781. Retrieved February 21, 2010, from OhioLINK Electronic Journal Center.
Lockwood, N.R. (2007). Leveraging employee engagement for competitive advantage: HR’s strategic role. SHRM Research Quarterly... ?

**Rad, A.M., & Yarmahammadian, M.H. (2006). A study of relationship between managers’ leadership style and employees’ job satisfaction. Leadership in Health Services, 19(2), xi-xxviii. Retrieved February 21, 2010 from ABI/INFORM Research. www.emeraldinsight.com/1366-0756.htm

**Savery, L.K. (1994). The influence of the perceived styles of leadership of a group of workers on their attitudes to work. Leadership & Organizational Development Journal, 15(4), 12-18. Retrieved February 21, 2010, from OhioLINK Electronic Journal Center.
**Smith, M. A. & Canger, J. M. (2004). Effects of supervisor "big five" personality on subordinate attitudes. Journal of Business and Psychology, 18(4), 465-481. Retrieved February 21, 2010, from ABI/INFORM Research. (Document ID: 640680491).
**van Quaquebeke, N., & Eckloff, T. (2010). Defining respectful leadership: What it is, how it can be measured, and another glimpse at what it is related to. Journal of Business Ethics, 91(3), 343-358. Retrieved February 21, 2010, from ABI/INFORM Research. (Document ID: 1941120381).

**Empirical Articles

1