Research Studies

Employee Development Spending Linked to Retention

Journal of Vocational Behavior, December 2010

Many companies have made wage and professional development cuts part of their recent budget-tightening strategies. But those companies may want to start re-investing in their most valued employees if they want to keep them, according to a recently published study on the relationship between career growth and organizational commitment, collaborated on by two Iowa State University management professors.

The study of 961 employees from 176 companies in 10 cities in the People's Republic of China found that it is not simply enough to provide a setting in which employees can meet their career goals and develop their abilities. Organizations must also back up their human resource practices with a reward system that visibly recognizes the worth and contributions of their employees if they are to build a sense of worker commitment.

James McElroy and Paula Morrow, both University Professors of management at Iowa State, collaborated with Qingxiong Weng and Rongzhi Liu from two universities in the People's Republic of China on the study, which appears in the December 2010 issue of the Journal of Vocational Behavior.

While the study surveyed Chinese employees, who responded at nearly an 80 percent rate -- a much higher rate than American workplace studies -- McElroy sees the results having implications for the "psychological contract" of American workers, too.

In the study, the researchers used past research and measures developed by J.P. Meyer and N.J. Allen on workplace commitment to assess how the subjects' four dimensions of career growth -- career goal progress, professional ability development, promotion speed and remuneration growth -- impacted their three types of organizational commitment (affective, continuance and normative). Their analysis controlled for gender, age, education and perceived employment opportunities.

They found that all four dimensions of career growth were positively related to affective commitment, or an employee's positive emotional attachment to the organization. But a subject's professional ability development was not significantly related to either their continuance commitment -- commitment derived from the perceived costs of leaving -- or their normative commitment, which reflect feelings of moral obligation.

The researchers conclude that career growth should be considered by managers seeking to build a committed workforce. For those companies that are still enduring difficult times and need to make cuts, the researchers suggest two ways in which they can mitigate the organizational commitment damage:

Provide a logical explanation for the cuts, and
Be transparent in the cutting process.