FACTORS AFFECTING EMPLOYEE LOYALTY EDWARD H. GETCHELL SUBMITTED IN PARTIAL FULFTLLMENT DEGREE OF MASTER OF SCIENCE. at the MASSACHUSETTS INSTITUTE OF

Transcription

1 FACTRS AFFECTING EMPLYEE LYALTY by EDWARD H. GETCHELL S.B.(1959) Massachusetts Institute f Technlgy M.S.(1961) Massachusetts Tnstitute f Technlgy SUBMITTED IN PARTIAL FULFTLLMENT F THE REQUIREMENTS FR THE DEGREE F MASTER F SCIENCE at the MASSACHUSETTS INSTITUTE F TECHNLGY June, 1975 Signature f Authr v Alfred P. Slan Schl f Management, May 9, 1975 Certified by Thesis Supervisr Accepted by.... Chairman, Departmental Cmmittee n Graduate Students Archives -1- JUN

2 FACTRS AFFECTING EMPLYEE LYALTY by Edward H. Getchell Submitted t the Alfred P. Slan Schl f Management n May in partial fulfillment f the requirements fr the degree f Master Science. ABSTRACT Emplyee turnver is an imprtant measure f an rganizatin's jb envirnment and the quality f its management. A cnsiderable investment f management time and effrt is devted t the recruitment, training, and maintenance f emplyees. Jb factrs cntributing t the lyalty f emplyees are extremely imprtant t the health f an rganizatin. The purpse f this thesis is t determine the mst significant jb factrs which affect the sense f lyalty an emplyee has fr his rganizatin. Data fr this research was btained in January, 1975 by a survey f the readership f Design News, a prfessinal engineering jurnal. The questinnaire cntained rughly 7 questins. Apprximately 1,2 cases were prcessed. Definitins and measures f lyalty were develped and applied t the data. The result was three majr lyalty categries cntaining the majrity f the cases. They were defined as Lyal, Dislyal, and Lcked-In. The lyal grup was used as a reference grup, and the dislyal and lcked-in grups were each cmpared t the lyal grup fr the variables in the questinnaire. Befre prcessing, the data was filtered t prvide a hmgeneus subset f cases. Filtering included selectin accrding t jb title, incme level, supervisry respnsibilities, academic achievement, and sex. The data were als subdivided int tw age grups representing yunger engineers and lder engineers. Jb factrs which mst significantly differentiated the lyal and dislyal grups, and the lyal and the lcked-in grups were separated by Age and rank rdered. These are the lyalty prfiles fr the yunger and lder dislyal and lcked-in engineers. -2-

3 Althugh many age dependencies were discvered, it was generally fund that the dislyal engineers, relative t their lyal cunterparts, expressed greater needs fr self actualizatin thrugh challenging wrk, recgnitin, influence, leadership, pprtunities fr advancement, and knwledge f their rganizatin. The yunger lcked-in engineers were fund t be essentially undifferentiated frm the yunger lyal engineers while the lder lcked-in engineers were fund t mre clsely resemble the lder dislyal engineers. Thesis supervisr: Ltte Bailyn Title: Assciate Prfessr f rganizatinal Psychlgy and Management The mst surprising and ttally unfreseen result f this research was the discvery that the dislyal engineer appears t be a mre valuable, but prly utilized resurce f aggressive talent and leadership cmpared t the lyal engineer wh appears mre cmplacent, mre self riented, and mre tlerant f pr management and inefficiencies and wh prefers fringe benefits and time fr persnal and family affairs t challenging wrk assignments and pprtunities fr leadership and advancement. -3-

4 -ACKNWLEDGEMENTS It is with deep gratitude that I wish t thank Prfessr Ltte Bailyn fr many unselfish hurs f help, inspiratin, and guidance. My appreciatin is als warmly extended t Mrs. Rita Pavlica wh, in the vanishing hurs befre its deadline, has typed this thesis with unfailing patience and accuracy. -4-

5 TABLE F CNTENTS Chapter Page ABSTRACT ACKNWLEDGEMENTS... I INTRDUCTIN... II BACKGRUND Jb Related Factrs Affe'cting Lyalty... Jb Satisfactin... e.e Emplyee Self Charracterizatn Jb Cmpatibility Predictability f with Scial Demands... Jb Relatinships and Demands...e *... Inertial Frce External Factrs... V sibility and,rn.psure TII METHLLGY... C Questinnaire!:cc:gn Classificatin int ccupatinal Categrie: The Ppulatin Sme Preliminary Results... TV LYALTY: DEFINITi-NS AND MEASUREMENTS Definitin f Lyalty Measures f Lyalty Further Filtering f Data The Nn-IlaInagement Engineer AdditinlI Selectin Criteria AgE: Analysis Technirque... V RESULTS AND DISCUS'-S Intrductin Lyalty Prfiles: Explanatin f Tables Climate Factr: Lyal v. Dislyal Yunger Engineers: Lyal v Di lyal lder Engineers... 5.`:.3 Lyal v. Lcked-In Yunger Engineer

6 Chapter Page Lyal vs. Lcked-In lder Engineers Hld, Push, Pull and Miscellaneus Factrs Lyal vs. Dislyal Lyal vs. Lcked-In Prfile Cmpari.sn: Dislyal with Lcked-In Climate Factrs Hld Factrs Push Factrs Pull Factrs Miscellaneus Factrs VI SUMMARY AND CNCLUSINS. B IBLIGRAPHY Appendix Page A QUESTTCNNAIRE AND RESULTS B DETAIL LYALTY PRFILE: YUNGER ENGINEERS. AGE 35 LYAL VS. DISLYAL C DETAIL LYALTY PRFTLE: LDER ENGINEERS, AGE 36 LYAL VS. DISLYAL D DETAIL LYALTY PRFILE: YUNGER ENGINEERS, AGE 35 LYAL VS. LCKED-IN E DETA!L LYALTY PRFILE: LDER ENGINEERS, AGE p 36 LYAL VS. LCKED-IN

7 LIST F TABLES Table Page 3-1 Magazine Circulatin Data by ccupatinal Functin and Business Classificatin Gegraphical Distributin f Sampled Ppulatin Magazine Survey Data Cmpared t Thesis Survey Questinnaire Data Crss-Tabulatin f Jb Satisfactin and Prbability f Vluntarily Changing Emplyer Crss-Tabulatin f Jb Satisfactin and Prbabflity f Vluntarily Changing Emplyer Fully Filtered Data Crss Tabulatin f Jb Satisfactin and Prbability f Vluntarily Changing Emplyer Fully Filtered Data, Age Crss Tabulatin f Jb Satisfactin and Prbability f Vluntarily Changing Emplyer - Fully Filtered Data, Age ; Lyalty Prfile fr Climate: Lyal vs. Dislyal Grups Cmparisn: Yunger vs. lder Nn-Management Engineers Lyalty Prfile fr Climate: Lyal vs. Lcked-In Grups Cmparisn: Yunger vs. lder Nn-Management Engineers Lyalty Prfile Lyal vs. Dislyal Grups Cmparisn: Yunger vs. lder Nn-Management Engineers Lyalty Prfile Lyal vs. Lcked-In Grups Cmparisn: Yunger vs. lder Nn-Management Engineers

8 CHAPTER I INTRDUCT IN ne f the mst valuable assets an rganizatin can have is a stable wrk frce. A cnsiderable investment f management time and effrt is devted t the recruitment, training, and maintenance f emplyees. The factrs cntributing t the lyalty f this wrk frce are extremely imprtant t the health f an rganizatin. In this thesis, an attempt is made t determine the mst significant jb factrs which affect the sense f lyalty an emplyee has fr his rganizatin. These lyalty factrs are further separated int characteristics which are mst imprtant t the lyalty f yunger emplyees and characteristics influencing the lyalty f lder emplyees. A distinctin is als made between dissatisfied emplyees wh are mtivated t vluntarily leave their present rganizatins, and dissatisfied emplyees wh, fr many reasns, are "lcked in" and will nt vluntarily seek new jbs. Data fr the analysis was btained by a survey questinnaire sent t a ppulatin cmpsed primarily f electrmechanical engineers. The questinnaire was designed t measure the level f satisfactin emplyees felt twards numerus "climate" factrs in their present jbs. Items in the questinnaire were als desinged t islate psitive and negative aspects -8-

9 f the jb envirnment which cause emplyees t remain at their present jbs (hlding frces) r cause them t leave their jbs (pushing frces r, in the case f external jb ffers, pulling frces). A relatively hmgeneus subset f respndents was selected frm the ttal data base and these respndents were classified int tw age grups, "yunger" and "lder", and int three grups accrding t certain lyalty criteria. By cmparing the lyalty grups with each ther, jb factrs were islated which differentiated the lyalty behavir f the respndents. Cmparisns between the lyalty prfiles f the "yunger" and "lder" age grups demnstrated the variatin f the lyalty related jb factrs with emplyee age. -9-

10 CHAPTER II BACKGRUND 2. Jb Related Factrs Affecting Lyalty In rder t investigate factrs that influence emplyee lyalty t an rganizatin, ne must first explre such questins as: Why d emplyees stay? Why d emplyees leave? Are the reasns fr leaving the direct ppsite f the reasns fr staying? f thse reasns fr an emplyee staying with an rganizatin, which are "gd" reasns, and which are "bad" reasns resulting in an unmtivated, turned ff wrker detrimental t verall rganizatinal prgress? 2.1 Jb Satisfactin Nt surprising, the literature indicates that the primary factr influencing lyalty is emplyee satisfactin with the jb as defined by him. The greater the individual's satisfactin with the jb, the greater is his lyalty t the rganizatin and the less his perceived desirability f mvement. But what are the jb factrs that lead an emplyee t feel satisfied? March and Simn (1958) have hypthesized three majr factrs: 1) The greater the cnfrmity f the jb characteristics t the self-characterizatin held by the individual, the higher the level f satisfactin. -1-

11 2) The greater the cmpatibility f wrk requirements with the requirements f ther rles, the higher the level f satisfactin. 3) The greater the predictability f jb relatinships and demands, the higher the level f satisfactin. These majr factrs are cnsidered in mre detail belw Emplyee Self Characterizatin There appear t be three types f individual evaluatins which are significant: estimates f ne's independence, ne's wrth, and ne's specialized cmpetences r interests. The greater the cnsistency between supervisry practices and emplyee independence, the less the cnflict between jb characteristics and individual self-image. The mre authritarian the supervisry practices, the greater the jb dissatisfactin arused. The lng term trends ver the pst war years wuld indicate a gradual, cntinuus reductin in the degree f authrity which is acceptable t the wrker. This is als reflected in the decreased emphasis given t bedience t authrity by ur primary training institutins, such as schls, churches, family, and even the military establishment. Each emplyee has a cnceptin f what he is wrth in mney and status which is t sme extent related t labr market values and envirnmental cnditins. The larger the amunt f tangible rewards ffered by the rganizatin (in terms f -11-

12 mney r status), the less the cnflict between the jb and the individual's self-image. (March and Simn, 1958). The ability f rganizatins t "buy" wrker jb satisfactin has decreased gradually ver the last three decades with the rising level f wealth and the increased security prvided by gvernment scial security and unemplyment prgrams. Als, the cnflict between an individual's self-image and the jb is reduced by the degree t which an emplyee participates in his jb assignment. The results f participative management, Thery Y management styles, and ther clsed lp nn authritative rganizatinal structures tend t supprt this. (Fx, 1971, Ritti, 1971). Emplyees want t be included in patterns f mutual influence while rganizatins are typically characterized by tall hierarchies, status differentials, and chains f cmmand. In the United States and in mst industrialized scieties, emplyees have been achieving higher levels f educatin and are bringing mre abilities and skills t the wrk place. With this increased level f educatin have cme higher expectatins and an increased awareness f large scale scial, mral, and eclgical prblems facing bth lcal and wrld scieties. There has resulted a shifting emphasis frm individualism and self achievement t a brader scial cmmitment which has had an impact n the perceived value f jbs in many f ur gvernmental and industrial rganizatins. -12-

13 In a similar manner, a high histrical rate f prmtin, measured as the rate f change f status r incme, will prduce a greater disparity between the jb and the individual's self-image. A persn has a tendency t base his future expectatins n his past recrd. This may partially explain sme f the discntent which is experienced by emplyees in ur cuntry in their late thirties and early frties since there is a well knwn decrease in the time rate f change and increment size f prmtins fr emplyees ver apprximately thirty years f age. Cntrast this with the straight line prmtin system based primarily n age used in Japan, where there appears t be cnsiderable less discntent at these specific age levels Jb Cmpatibility with Scial Demands Jb dissatisfactin and mtivatin fr jb change increase as wrk and time patterns demanded by the jb make it difficult r impssible t fulfill the rdinary scial expectatins f an individual. This bvius effect is clearly reflected in pay differentials fr undesirable wrk schedules such as night and weekend wrk. Hwever, March and Simn (1958) extend this argument t "scial" grups, e.g., friendship rles, within an rganizatin. They hypthesize that the smaller the size f the wrk grup the greater the cmpatibility f rganizatinal and ther rles. Where a jb stimulates the develpment f a number f single - purpse grups with verlapping membership,

14 wrkers can be expected t find the wrk less pleasant than where a multipurpse integrated grup exists. In larger rganizatins, a higher prbability exists fr an individual t becme invlved in verlapping and cnflicting grup memberships. There is, hwever, the balancing effect in larger rganizatins f greater pprtunities t transfer within the rganizatin rather than terminate. Bth the transfer rate (when requested by the emplyee) and the turnver rate are characteristic f wrker discntent within an rganizatin and shuld bth be cnsidered when analyzing the emplyment envirnment f an rganizatin (Carr, 1972). Management shuld be very much aware f the value, as seen by the emplyee, f internal "scial" grups. As a result f prmtins, transfers, mergers, rerganizatin, and ther managerial actins which disrupt internal scial grup structure, emplyees can experience cnsiderable psychlgical lss which can be reflected in jb alienatin. This prblem and pssible techniques fr its minimizatin are discussed by Levinsn (1972) Predictability f Jb Relatinships and Demands Mst individuals prefer t avid situatins f cnflict, anxiety, and uncertainty. A jb envirnment characterized by frequent interpersnal and inter grup cnflict, unclear decisin mechanisms with unpredictable utcmes, prly defined and ambivalent reward systems r zer sum" reward systems, intense -14-

15 time pressure, plitical rivalry and numerus ther factrs cntributing t jb uncertainty and persnal anxiety will prduce jb dissatisfactin and the desire t seek a mre predictable, hmgeneus, and stable wrk envirnment with a new emplyer. This shuld nt be extended t include a "healthy"' amunt f anxiety assciated with difficult and challenging wrk assignments, which mst emplyees accept willingly as an pprtunity fr self-actualizatin, and as a learning and grwing experience. Nr shuld this argument be taken t the ther extreme as an endrsement fr the simplificatin f wrk t mind stifling bredm. Indeed bredm r the feeling f uselessness are sme f man's cruelest stimulants f anxiety and jb dissatisfactin. 2.2 Inertial Frces There are imprtant inertial factrs which strngly affect emplyee lyalty, but d nt necessarily crrelate with jb satisfactin and high perfrmance. In fact, they may actually lead t "turned ff' emplyees. First, there is the tendency t remain at the present jb thrugh frce f habit and a reluctance t experience the anxiety f severing knwn relatinships and frming new nes. The greater the habituatin t a particular jb r rganizatin, the less the prpensity t search fr alternative wrk pprtunities. Thus an rganizatin may have a large number f "lyal" -15-

16 emplyees in terms f emplyment cntinuity wh are actually very dissatisfied with their jbs, but wh will nt vluntarily seek a new jb because f sme uncntrllable factr such as their age r a lng histry f wrking at that rganizatin. Secnd, there is the pensin benefit package which tends t hld emplyees at a jb, particularly lder nes, thrugh cmplicated investment rules, delayed cmpensatin schemes, and by the sheer accumulatin f value ver a perid f many years. Pensins certainly serve a useful rle which is nt being questined here. But management must be aware f the pssibility f emplyees becming "lcked in" by a pensin plan s that their lyalty des nt reflect jb satisfactin and a high degree f jb mtivatin, but rather the desire t prtect their share f their retirement benefits (Drucker, 1968). Crpratins ccasinally discver a heavy lad f "dead wd" in their upper age brackets wh are unprductive and wh d nt set a gd example fr their subrdinates. Early retirement is ne slutin frequently resrted t althugh it is smewhat f a "cp ut". It wuld appear mre lgical t discver ways in which t mtivate these individuals t their past prductivity levels t the mutual benefit f bth the cmpany and the individual. Sme imaginatin and careful thught will n dubt be required here since the mtivatinal needs f emplyees in the twilight f their careers are likely t differ significantly -16-

17 frm the needs f yunger emplyees. 2.3 External Factrs An accurate predictr f labr turnver is the state f the ecnmy. The greater the number f external alternatives, the greater the perceived ease f mvement, and hence the greater the flw f persnnel acrss cmpany lines. Fr a particular individual, there are ther qualifying factrs. Fr instance, the ease f mvement f male wrkers has, until recent years, been significantly greater than fr female wrkers. Nn prfessinal and unskilled wmen are rapidly appraching equality t men in ease f jb turnver tday. Fr wmen pssessing prfessinal skills, quite the ppsite cnditins exist tday and are likely t persist fr anther decade r tw. The situatin fr racial minrities is als imprving, but at a definitely slwer rate than fr wmen. An emplyee's age is an imprtant factr influencing the ease with which he can mve frm jb t jb. In ranking jb attributes, age is a negatively valued characteristic (Lmba, 1968). This is particularly true fr industries experiencing a dependence n high technlgical grwth, where wrker bslescence cmes early r is ften "terminal'" t that industry (Perrucci & Gerstl, 1969). This effect was prevalent in the aerspace industry slwdwn in the United States during the late 196's and early 197's. Lack f emplyment fr perids -17-

18 as shrt as six mnths t a year left many highly skilled semicnductr electrnics engineers and scientests "stranded" in the wake f the explsive technlgical prliferatin f the semicnductr industry. Related t an emplyee's age is the frequent crrelatin between length f service and jb specializatin. Again, there is ften a generally negative value placed upn high levels f specializatin - except by the current emplyer (Lmba, 1968). We frequently find the situatin, particularly at executive levels, where an emplyee has becme indispensable t the rganizatin, replaceable nly at prhibitive cst, and the emplyee can find anther psitin nly at prhibitive lss. f curse, ccasinally highly specialized individuals pssess skills which, at least temprarily, are in high demand and thse individuals may becme highly mbile and dislyal t their emplying rganizatins. ther external frces tending t hld an emplyee t his present jb wuld include the spuse's unwillingness t mve, a desirable lcatin, cnsideratin f children's ages and educatinal envirnment, t name a few. 2.4 Visibility and Expsure Certain jbs prvide the pprtunity fr bth high visibility fr the individual and a wide hrizn f pprtunities -18-

19 fr the individual t scan - bth cnditins strngly influencing the prbability f turnver. It is wrthwhile nting that a psitive feedback lp is generated by the jb dissatisfactin - jb search reactin, because by the prcess f searching, pprtunities are discvered increasing the perceived dissatisfactin f the present jb and mtivating the jb search twards mre searching and/r a jb change. There is evidently a threshld f dissatisfactin abve which search will begin. The threshld will be adjusted up r dwn thereafter, depending n the results f the search prcedure. The initial threshld level is a functin f factrs previusly discussed - the degree f jb satisfactin, age, race, sex, etc. -19-

20 CHAPTER III METHDLGY The data fr this research were btained by a survey questinnaire. The questinnaire was distributed by including it in an engineering magazine, Design News* which is mailed twice mnthly t qualified persnnel wrking primarily in electr mechanical engineering fields. The survey appeared in a regular article entitled "Design Management Frum" which is authred by Dr. T.F. Gautschi, P.E., and which cncentrates n persnnel and rganizatinal management prblems. The respndent was required t fill ut the questinnaire (mstly by checking the apprpriate respnse), tear ut the questinnaire, and mail the questinnaire (respndent's envelpe and stamp) t the publisher. The data are therefre the result f a "self selectin" prcess i.e., nly respndents sufficiently mtivated, fr unknwn reasns, t take the truble t answer the questinnaire becme part f the data base. The accuracy f these data is unknwn when extraplated t represent the entire ppulatin f ptential respndents. Hwever, by attempting t select a relatively hmgenus bdy f cases frm the ttal data base *A publicatin f Cahners Publishing C., Inc., 221 Clumbus Avenue, Bstn, Massachusetts. -2-

21 it is hped that the analysis and cnclusins discussed later are accurate and representative. With the exceptin f a questin asking fr jb title, all answers were essentially self-cding. 3.1 Questinnaire Design Prbably the mst severe cnstraint in designing a questinnaire t be placed in a magazine is that space is very limited. As a result, numerus questins, the answers t which may have had a very interesting bearing n the lyalty study, had t be eliminated, and the luxury f asking several similar r related questins t test respndents cnsistency was generally nt pssible. The questinnaire shwn in Appendix A was divided int seven sectins which were: 1) Wrk related backgrund data such as cmpany size, salary, number f peple supervised, etc. (questins 1 thrugh 7, 1 and 11). 2) Tw questins regarding the respndent's attitudes tward his present jb, ne inquiring abut the respndent's feelings f jb satisfactin (questin 8) and ne inquiring as t the prbability f the respndent's vluntarily changing jbs in the next tw years (questin 9). 3) A set f questins testing the imprtance that certain -21-

22 jb factrs wuld have fr the respndent in caxing him r her frm his present jb t a new jb. These factrs, which represent psitive aspects f the respndent's new jb, are referred t as "Pull" factrs (questin 12 A thrugh N). 4) A set f questins attempting t determine the imprtance that certain jb factrs wuld have in causing r encuraging a respndent t cnsider seeking a new jb. These factrs, which represent negative aspects f the respndent's present jb, are referred t as "Push" factrs (questin 13, A thrugh J). 5) A set f questins testing the extent t which certain jb factrs wuld tend t hld r restrain the respndent in his present jb in spite f attractive utside ffers. These are referred t as "ld" factrs (questins 14, A thrugh J). Unlike the Pull and Push factrs referred t abve, Hld factrs can represent either psitive r negative aspects f a respndent's present jb. Fr example, if a cmpany's lcatin is instrumental in restraining an emplyee frm seeking anther jb, that wuld be cnsidered a psitive jb factr because the emplyee is vluntarily making the decisin t stay. Cnversily, if the reasn is related t his wife's unwillingness t mve, that wuld be viewed as a negative jb factr. -22-

23 6) A set f questins relating t the satisfactin a respndent feels tward a number f factrs descriptive f their present jbs, such as the amunt f challenge and enjyment they receive frm their jbs. These are referred t as '!Climate t factrs (questin 15, A thrugh I). 7) Finally, a set f demgraphic questins t determine the respndent's age, sex, marital status, etc. (questins 16 thrugh 21). The demgraphic questins were placed last s as t minimize the tendency f the respndent's perceptin f his demgraphic "status" t affect his answers t the questinnaire. Furthermre, the questins under the Pull, Push, Hld, and Climate categries were scrambled using a randm number table t attempt t minimize any bias inherent in the sequence f these questins caused by the authr. 3.2 Classificatin int ccupatinal Categries All respnses t the questinnaires were precded with the exceptin f Jb Title. The respndent was asked t fill in his jb title n the questinnaire and these jb titles were then cded accrding t a set f ccupatinal categries and decisin rules. -23-

24 The framewrk fr develping the ccupatinal categries was prvided by Bailyn and Schein (1974). Because the ppulatin sampled by the Design News questinnaire was heavily cncentrated in the electr-mechanical engineering field, it was pssible t cnsiderably reduce the number f ccupatinal categries cmpared t thse used by Bailyn and Schein. Nnetheless, the variety f jb titles and descriptins was astunding and ccasinally misleading. It was therefre necessary t review mst respndent's jb titles in the light f ther data n each questinnaire befre cding the respnse. Such a cding technique has the bvius weakness that the cder can intrduce bias. Hwever, the criteria fr the ccupatinal categries were selected after a sampling f abut 1% f the questinnaires had been reviewed t get a "feel" f the lgical breakdwns f ccupatinal categries. As a result, mst respndents were able t be categrized with cnfidence int the ccupatinal categries selected. The respndents were classified int the ccupatinal categries given belw. 1) Tp Level General Manager (1.1%) - peple wh clearly ccupy tp level general management psitins were placed in this categry. Peple wh said they were -24-

25 self emplyed (questin 3) were excluded frm this categry. Typical jb titles falling int this categry are: President, Vice President (with n functin indicated), Divisin Manager r Divisinal Vice President, Vice President f peratins, Managing Directr, General Manager. 2) Functinal Manager (1.3%) - peple wh ccupy high level functinal, but nn technical psitins fall int this categry. Examples wuld include: Vice president f Finance, Treasurer, Cntrller r Assistant Cntrller, Chief Accuntant, Persnnel Directr, Manager f Industrial Relatins, Directr/Manager f Quality Assurance/Cntrl. * 3) Technical Manager - peple wh are clearly invlved in the management f a technical activity such as engineering, research, r prduct design and develpment, fall within the categry f technical manager. Furthermre, the categry f technical manager was brken dwn int three sub categries: 3 Technical Manager, Level 1 (7.9%) - these are peple wh have high level respnsibility and cntrl f brad *nly if salary, number f peple supervised and ther criteria clearly suggested this categry, therwise Business Staff (Functinal). -25-

26 technical activities. Representative jb titles include: Vice President f Engineering, Chief Engineer, Directr f Engineering, Directr f R&D, Manager r Assistant Manager f a technical area, Manufacturing Manager. 3b) Technical Manager, Level 2 (1.3%) - these are peple wh have middle level technical management functins which entail simultaneus management f persnnel, schedules, and budgets fr several prjects r tasks grups. Representative jb titles include: Prgram Manager, Sectin Head, Grup Leader r Unit Chief, Prductin Manager r Superintendent, Field Service Manager, Service Manager, Principal Engineer*, Prduct Manager*. 3c) Technical Manager, Level 3 (9.5%) - these peple are in the lwest level f technical management, with respnsibilities limited t budget, schedules, and persnnel n ne r a very limited number f prjects. Typical jb titles include: Prject Manager, Prductin Supervisr, Freman, Supervising Engineer, Supervisr f Prduct Develpment. *nly if significant management respnsibilities are clearly indicated by the number f peple supervised and salary. -26-

27 4) Nn Management Engineer (53.1%) - by far the largest number f respndents fell within the categry f nn management engineer. Althugh their salaries and jb titles range ver a brad spectrum, the majrity claimed that they supervised less than three peple (wh are likely t be technicians). Jb titles typically falling within this categry area: Prject Engineer, Prcess Engineer r Prduct Engineer, R&D Engineer, Electrical r Mechanical Engineer, Cmmunicatins Engineer, Packaging Engineer, Quality Cntrl Engineer, varius degreed engineers, e.g., Tl Design Engineer, Industrial Engineer, Field Service Engineer. Peple with jb titles such as Chemical Engineer, Member and Assciate Member f Technical Staff, Scientist, etc. were usually included in this categry after a careful survey f their questinnaire. 5) Nn Degreed Technlgists (12.7%) - this categry includes peple withut a cllege degree wh are largely prviding technical supprt t the nn management and level 3 technical management functinal managers. This categry was largely cmpsed f respndents having the fllwing jb titles: Assciate Engineer, Engineering Aid, Junir Engineer, Technician (all types), Mechanical Designer, Draftsman (all types), and Technical Illustra tr.

28 6) Business Staff (Functinal) (2.7%) - in this categry were cllected all respndents perfrming functinal business supprt activities such as planning, scheduling, and cntrl. Typical jb titles are: Engineering Crdinatr, Prductin Crdinatr, Quality Cntrl/ Quality Assurance Inspectr, Prductin Planner, Training Supervisr, Technical Writer. 7) ther (1.2%) - riginally, separate categries fr purchasing (purchasing agent, buyer, expeditr), marketing (salesman), were set up in anticipatin f a sizeable number f respndents falling int these categries. Because f the large amunt f prduct advertisement and infrmatin available in the Design News magazine, the assumptin was that a large percentage f respnses wuld cme frm the selling and purchasing prfessin. Essentially nne did. Therefre, these categries were cmbined with unemplyed, cnsultant, and all ther nn classifiable respndents int the categry "ther'". 3.3 The Ppulatin The magazine, Design News, has made available the fllwing infrmatin which prvides an accurate quantitative prfile f the engineering ppulatin reached by the magazine. The -28-

29 data in Table 3-1 is frm the Assciatin f Industrial Advertisers (AIA) media data frm fr the Design News magazine. TABLE 3-1. MAGAZINE CIRCULATIN DATA BY CCUPATINAL FUNCTIN AND BUSINESS CLASSIFICATIN Ttal 1973 direct circulatin Ttal secndary circulatin* Circulatin by ccupatin, title, r functin: Management r supervisin f the design functin Perfrmance f the design engineering functin ther 112,26 unknwn (1%) 21,619 (19%) 9,37 37 (8%) (-) Circulatin by business classificatin rdinance and accessries Fabricated metal prducts Machinery, except electrical Electrical equipment and supplies Transprtatin equipment Instruments & related prducts Miscellaneus manufacturing ind. Independent R&D labs Cnsulting engineering rg. Federal gvernment 3,372 9,797 33,411 33,516 17,752 9,717 1, ,26 (3'.%) ( 8.7%) (29.8%) (29.9%) (15.8%) ( 8.7%) ( 1.2%) (.8%) (.6%) ( 1.3%) (1%) *This refers t magazine cpies passed frm individual t individual. The gegraphical distributin f the sampled ppulatin is presented in Table 3-2. Additinal data (unaudited) based n surveys perfrmed by Design News in the past are presented in Table 3-3 because they are clsely related t data btained frm the survey fr this thesis and because they help t define the ppulatin frm which the thesis sample was btained. -29-

30 It is impssible t speculate n the differences between the results f the tw surveys nt knwing the circumstances under which the surveys were carried ut by Design News. TABLE 3-2. GEGRAPHICAL DISTRIBUTIN F SAMPLED PPULAT IN Area New England Maine New Hampshire Vermnt Massachusetts Rhde Island Cnnecticut Reginal Ttal Middle Atlantic New Yrk New Jersey Pennsylvania Reginal Ttal East N. Central hi Indiana Illinis Michigan Wiscnsin Reginal Ttal West S. Central Arkansas Luisiana klahma Texas Reginal Ttal Ttal Circulatin , ,885 1,689 5,94 7,66 24,289 8,551 3,448 9,796 7,857 3,772 33, ,945 Area West N. Central Minnesta Iwa Missuri Nrth Dakta Suth Dakta Nebraska Kansas Reginal Ttal Suth Atlantic Delaware Maryland Dist. f Cl. Virginia West Virginia Nrth Carlina Suth Carlina Gergia Flrida Reginal Ttal East S. Central Kentucky Tennessee Alabama Mississippi Reginal Ttal Ttal Circulatin 2,58 1,595 1, , , , , , ,636-3-

31 TABLE 3-2. (Cntinued) Area Ttal Circulatin Muntain Mntana 9 Idah 13 Wyming 7 Clrad 1,343 New Mexic 267 Arizna 1,352 Utah 439 Nevada 52 Reginal Ttal 3,572 Pacific Alaska -- Washingtn 1,167 regn 442 Califrnia 15,687 Hawaii 12 Reginal Ttal 17,38 U.S. Territries 22 GRAND TTAL 112,26 Surce and date f abve infrmatin: BPA Publisher's Statement, December 1973 Design News Circulatin Department. (Audited) -31-

32 TABLE 3-3. MAGAZINE SURVEY DATA CMPARED T THESIS SURVEY QUESTINNAIRE DATA Design News Questin Survey Thesis Survey Fr hw many different cmpanies have yu wrked? ne cmpany Tw r three cmpanies Fur r five cmpanies ver five cmpanies Hw many peple d yu supervise? Nne ne t three Fur t seven Eight t twelve Thirteen t twenty ver twenty 23 9% 41.9% 22.7% 11.5% 28.8% 27.3% 21.8% 9.3% 5.3% 5.5% 23.2% 38.% 21.1% 17% 44.6% 27.5% 4 t % 11 t 2 4.2% 4.7% What is yur annual salary range? Under $7,5 $7,51 t $1, $1,1 t $15, $15,1 t $25, ver $25, (Average annual salary) What is yur highest level f academic achievement? High schl Tw year cllege (assc.degree) Bachelr degree Master degree Prfessinal engineer PhD degree % nt used 3.5% nt used 34.8% 21.6% 55.7% 15t 24K 65.5% 6.% ver 28K 5.2% ($18,358) Est. (18,863) 11.8% 2.8% 25.4% 1-3 yr.cll.38.5% 46.9% 1.6% 15.7% 26.9% %.2% 1.2% 3.4 Sme Preliminary Results The cmplete survey questinnaire with tabulated results and prgram cdes is presented in Appendix A. The ttal number f questinnaires prcessed was The "average" respndent was abut 39 years ld, married, had 2.3 children, had wrked -32-

33 a ttal f abut 12.5 years fr a ttal f 2.4 cmpanies, and has been at his present jb abut 4 years. Ages f the respndents ranged frm 22 years t abve 6 years with a median age f 38.5 years. The age distributin was very brad, having a standard deviatin f years. A large number f respndents (34.6%) had wrked mre than 2 years, with the median career length being apprximately 13.7 years. Nearly a quarter (23.2%) had wrked fr nly ne cmpany, while 61.2% had wrked fr less than three cmpanies. This apparent lack f mbility was reflected in the number f years they had wrked fr their present cmpany. Sixty-five percent had been with their current emplyer fr five r mre years, and 32.6% fr 1 r mre years. Nn Management Engineers were the dminant grup with 53.1% f the cases falling int this ccupatinal categry. This was clearly reflected in the salary level where 41.% f the respndents earned between $15, and $2, per year. The median wage fr the Nn Management Engineers was apprximately $16,. The strng shwing f Nn Management Engineers was als reflected in the number f peple supervised by all respndents % claimed t supervise peple, and 72.4% supervised three r less peple. Almst all respndents (93.5%) were frm private industry as ppsed t public utilities r Federal, State, r Lcal -33-

34 Gvernment. Mst respndents were men (97.7%), and mst married (88.7%). Almst all (97.2%) had received educatin beynd high schl, but a surprising number (38.5%) had nt cmpleted a fur year cllege prgram. f key interest t subsequent data analysis are the questins abut jb satisfactin and the prbability f vluntarily changing jbs in the next tw years (questin 8 and 9, Appendix A). We find that 9.4% f the respndents were definitely dissatisfied with their jbs, and an additinal 24.7% claimed t be smewhat dissatisfied. Mst respndents, hwever, claimed t be at least smewhat satisfied with their jbs (44.8%), and and impressive 2.5% claimed t be definitely satisfied with their jbs. These percentages fllw clsely the answers regarding the prbability f vluntarily changing jbs in the next tw years. Here we find that 27.9% claim a % prbability f vluntarily changing jbs within tw years while nly 4.3% claim a 1% prbability f a jb change. Mst respndents did nt rule ut a jb change, hwever, with 36.2% claiming between a 1 and 49% chance f vluntarily seeking new emplyment within tw years. Interestingly, there were 19.6% fence sitters - peple claiming a 5% chance f seeking a new jb within tw years. The data did nt supprt several widely held beliefs abut wrkers. Fr instance, the length f time an emplyee remained -34-

35 with the same emplyer seemed t have n strng crrelatin t the degree f jb satisfactin he experienced. Respndents wh had wrked fr their present emplyers fr fur r less years were almst equally as satisfied n the average as wrkers wh had wrked 1 r mre years with their present emplyer; 68% f frmer claiming t be smewhat r definitely satisfied with their jbs cmpared t 68.5% f the latter. Hwever, 89.6% f the new arrivals" with less than ne year with their present emplyer were either smewhat r definitely satisfied with their jbs while a 'cling ff- was evident fr respndents with ne t tw years with their present emplyer. In this case nly 59.2% f the respndents were either smewhat satisfied r definitely satisfied. Wrkers with ne t tw years with their current emplyers als shwed the greatest tendency t say they might vluntarily change emplyers. While nly 5.9% f emplyees wh had spent mre than 1 years with their current emplyer indicated a better than 5% chance f changing emplyers, 16.7% f the new arrivals" and 27.3% f the ne t tw year veterans indicated a better than 5% chance f vluntarily changing emplyers. The data als did nt supprt the belief that increasing academic level is a precursr f jb satisfactin. N statistically significant trends were evident frm the questinnaire data n this pint. -35-

36 Many peple als are cnvinced that the variety f activities and respnsibilities, and the team-like relatinships pssible in a small cmpany are likely t prduce mre jb satisfactin in wrkers. This belief appeared t be supprted by the questinnaire data since 75% f the respndents frm small cmpanies (1 r less emplyees) claimed sme degree f jb satisfactin, while nly 64.5% f respndents frm large cmpanies (5 r mre emplyees) were similarily inclined. In the fllwing chapters criteria and definitins are develped t islate '"lyal? and W t dislyal" cases, and techniques are develped fr analyzing many jb factrs frm the questinnaire data t determine the relative imprtance f these factrs in encuraging jb lyalty in engineers. -36-

37 CHAPTER IV LYALTY: DEFINITINS AND MEASUREMENTS This chapter is devted t a discussin f the definitins and measures f lyalty, and the criteria and methds fr selecting the actual subset f cases frm the ttal data base which are used in the detailed data analysis. The reader is reminded that the purpse f this research, as reflected in the lyalty definitins and data selectin criteria, is nt primarity t learn abut the statistics f a certain class f emplyee, but rather t attempt t btain infrmatin useful t managers in perfrming their rganizatinal design, and the develpment f persnnel management and the reward system. 4.1 Definitin f Lyalty Fr the purpse f this research, "'Lyalty' will be defined as the tendency f an emplyee t cntinue wrking fr the same emplyer as ppsed t the tendency t leave a current emplyer and seek a jb with a new cmpany. Such a simple definitin includes bth "gd" and "bad' reasns fr being lyal" ' t a cmpany. That is, sme emplyees remain with a cmpany fr an extended perid f time because they have genuine psitive feelings abut their jb, while thers, althugh unhappy abut their jbs, cntinue with the same jb year after year because f external cnsideratins such as their age r their investment -37-

38 in a pensin plan. In the subsequent measurement and analysis, an attempt is made t deal with bth types f "lyal" emplyees. 4.2 Measures f Lyalty Ideally, a lyalty measure wuld include the entire past and future emplyment histry f an emplyee, r at least the ttal time, bth past and future,that an emplyee was with his present emplyer. Althugh such a lngitudinal study is impssible, the desired results may be apprximated by analyzing respnses t a questinnaire. The latter apprach was taken t btain data fr this research, althugh the apprximatin t the ideal data sample is smewhat weaker because the respndees were self selecting rather than a randm selectin. Tw questins frm the questinnaire are used t measure lyalty. ne attempts t apprximate an emplyee-'s actual behavir and the ther tries t assess his attitude tward his jb. The first behaviral indicatr is the respnse t questin 9 "What is the prbability that yu will vluntarily change emplyer in the next tw years?" Thse wh answered that their prbability f changing jbs was less than 49% were cnsidered ptentially lyal, while thse claiming 51% r larger prbability f changing jbs were cnsidered ptentially dislyal. Thse respndents wh claimed a 5% prbability f jb change were classified as undecided. The results f this first indicatr f lyalty frm the questinnaire are listed belw. -38-

39 Prbability f Vluntary Change f Emplyer in next tw years Number Percent Subttal Ptentially % % Lyal 1-49% % 64.1% Undecided 5% % 19.6% Ptentially 51-99% % Dislyal 1% 5 4.3% 15.8% Did nt respnd %.5% Ttal % 1% The secnd attitudinal indicatr used fr the differentiatin f the respndents int lyalty categries was the respnse t questin 8 "'Are yu satisfied with yur present jb?" Thse claiming sme degree f jb satisfactin were cnsidered ptentially lyal, thse claiming sme degree f jb dissatisfactin were classified as ptentially dislyal. The results f this secnd indicatr f lyalty frm the questinnaire are listed belw. Degree f Jb-Satisfactin Number. Percent Ptentially Definitely Satisfied % Lyal Smewhat Satisfied % Subttal % Ptentially Smewhat Dissatisfied % Dislyal Definitely Dissatisfied % Subttal % Did nt respnd 6.5% Ttal % -39-

40 Questins 8 and 9 have each served t subdivide the respndents int tw lyalty grups, ptentially lyal and ptentially dislyal, plus an undecided grup frm questin 9. Hwever, since the questins were independent, the grups s defined will verlap, i.e., a case classified as ptentially lyal accrding t questin 8 may be classified as ptentially dislyal accrding t questin 9. T subdivide the cases int unambiguus lyalty categries, certain simultaneus behavir and attitude cnditins are required. There are actually five separate lyalty classificatins pssible cmbining questins 8 and 9. The five grups are defined as fllws: 1. LYAL: An emplyee wh claims t be smewhat r definitely satisfied with his jb and ne wh claims that his prbability f vluntarily changing jbs in the next tw years is less than 5% will be classified as LYAL. Thus an emplyee must be bth relatively satisfied with his jb and inclined t stay with his present emplyer t be classified as LYAL. 2. DISLYAL: An emplyee wh claims t be smewhat dissatisfied r definitely dissatisfied and ne whse prbability f vluntarily changing jbs in the next tw years is greater than 5% will be classified as DISLYAL. An emplyee must therefre be relatively dissatisfied with his jb and be inclined t seek a new jb t be classified as DISLYAL. -4-

41 There are three additinal categries int which respndents may fall. They are: 3. LCKED-IN: These are cases in which the respndents claim jb dissatisfactin, but als claim less than a 5% prbability f leaving their present emplyer. There can be many cntributing factrs hlding these emplyees in their present jbs including current ecnmic cnditins, investment in pensin plans, r gegraphical r family cnstraints. This is an imprtant grup, bth in terms f the large percentage f the wrk frce in this categry, and in terms f their ptentially lw mtivatin and prductivity. 4. UNDECIDED: These are cases in which the respndent has shwn n psitive mtivatin t leave r t stay at their present jbs by indicating a middle f the rad 5% chance f vluntarily changing jbs within tw years,regardless f his indicated degree f jb satisfactin r dissatisfactin. 5. AMBIGUUS: These are cases in which the respndents indicate that they are relatively satisfied with their present jbs, but nnetheless are planning t actively seek new emplyment within tw years. The reasns fr jb changes are likely t be external t the jb envirnment and beynd the influence f management. By perfrming a crss-tabulatin f the cases accrding t questin 8 and 9, Table 4-1 is btained which prvides the -41-

42 , J Ill ll II I IlI I : H -4 C4 U] H W: a H H U] F4 W u Ef E-4 E - vl C V]H n > Z 4 CA I Nt [ rl r 4 II II 1 Z 2 UH. r. c II. U), Cli. cn Q) u >4 CNI H-- r r C,, II II H a Z - L4 E-l H. 11b-II Z Z Z P H H H H H H H E E MZ -4 CD w Prn F4 H H U] cx H H z Ut F rn a N 1 r- I II Z ry4 Z 4 r ry U X = * *,{ 1 U U, H < 4 Z Z II I r6 HZ n cn Z P42 N -t H 1- L1) U' UQ ~ ~ ~ C ~ ~ >N I -4 H >. Nt lcl E 4-i -2 UL) H-1., CU W,D-4 C P > H rl -42-

43 infrmatin necessary t classify the respndents int the five lyalty categries defined abve. The categries LYAL, LCKED-IN, and DISLYAL. have imprtant cnsequences fr this study f lyalty and will be used exclusively in the fllwing analysis. They are imprtant because these three categries each cntain a relatively large number f respndents, and respndents falling int the categries LCKED-IN and DISLYAL demnstrate certain behavir patterns ppsite r cntradictry t thse displayed by respndents in the categry LYAL. Respndents in the categry LYAL will thus be used as a reference in determining the relative imprtance t emplyee lyalty f the varius jb factrs cntained in the questinnaire. The categry AMBIGUUS will nt be used in the further analysis f lyalty in this study because f the relatively insignificant number f respndents in this categry. Furthermre, their behavir suggests that their reasns fr changing jbs are external t their present jb envirnment and therefre beynd the influence f management. Finally, the cases categrized as UNDECIDED will als nt be used in the subsequent analysis because their behavir is ambivalent. 4.3 Further Filtering f Data Additinal "filtering" f the data is necessary s that the cmparisn f LYAL with DISLYAL r LCKED-IN cases prvides meaningful results frm a persnnel management viewpint. A -43-

44 series f selectin prcesses was perfrmed n the cases t attempt t btain a mre hmgeneus sample f respndents. The gal f the selectin prcess was t islate a categry f respndents highly representative f ne f the majr emplyee categries with which the persnnel management prcess must deal. The series f "'filters' used are described belw The Nn-Management Engineer The data frm the questinnaire represent respndents having jb titles cvering the spectrum frm president t technician and draftsman. It is argued strngly that jb factrs which fster lyalty and jb satisfactin fr chief executives and high level management are nt necessarily similar t thse prducing lyalty and jb satisfactin in lwer echelns such as nn-management engineers r technicians. T be mst meaningful, the analysis f lyalty factrs in emplyment must be dne within a fairly hmgenus jb categry. The data frm the questinnaire (see Appendix A) shw that the majr respnse (53.1%) was frm emplyees categrized as Nn-Management Engineer. N ther jb title categry exceeded 13%. Fr this rather practical reasn, the ccupatinal categry Nn-Management Engineer was selected fr further analysis t the exclusin f all thers. It shuld be nted, hwever, that frm the pint f view f management, and mre specifically -44-

45 persnnel management, this is a highly desirable selectin because 1) the nn-management engineer represents ne f the largest categries f persnnel in mst technlgically based firms in bth numbers and mney terms, and 2) the nn-management engineering categry represents ne f the mst active and expensive recruitment, training, and maintenance activities f the persnnel management f a technlgically based firm, and 3) in mst engineering firms this categry als represents the largest resurce f talent, experience, and prductivity. Thse respndents classified as Nn-Management Engineers were fund t have the fllwing prfile: Salary: Age: 91% had annual salaries between $1, and $24, with a median f apprximately $17, % were between 35 and 5 years ld (inclusive) with a median f apprximately 35 years. Academic 98.2% had achieved academic levels between Achievement: 1 t 3 years f cllege and a Masters degree inclusive (45.8% had nt cmpleted cllege, hwever) Additinal Selectin Criteria Additinal filtering f cases was perfrmed in the areas f academic achievement levels, salary, supervisry respnsibility, sex, and self-emplyment. Basically, an attempt was made t eliminate the tails f the distributins in rder t develp a set f cases fr careful analysis which is mst highly -45--

46 representative f the main bdy f nn-management engineers and thus the main fcus fr management activities. (The authr believes that management, being largely humanistic, nn-mechanical prcess, tends t deal with peple wh are in the tails f the jb prfile distributin fr a given jb categry separately, as individual r special cases, and wuld nt apply general emplyment plicy rules t thse individuals.) The eliminatin prcesses and the reasning behind each are described belw. In sme instances the eliminatin f cases was nt as severe as wuld have been preferred because the relatively large variance fr sme variables wuld result in the eliminatin f t many cases. 1. Nn-Management Engineers claiming t be self-emplyed (.3%) were eliminated. There is a suspicin that sme f these are unemplyed, and in any case they d nt represent a "typical, emplyee fr management purpses. 2. Nn-Management Engineers having salaries in excess f $24, (2%) were eliminated fr tw reasns. First, such high salaries are nn-representative f the duties, respnsibilities, and remuleratin cnsidered nrmal fr such a jb categry. Secndly, because f the imperfect nature f the categrizatin f the respndents int jb classificatins, and the natural ambiguity assciated with jb titles, there is reasn t believe that such high salaried respndents lcated in the categry -46-