Human resource management practices and voluntary turnover: a study of internal workforce and external labor market contingencies

Abstract

We tested relationships between employee quit rates and two bundles of human resource (HR) practices that reflect the different interests of the two parties involved in the employment relationship. To understand the boundary conditions for these effects, we examined an external contingency proposed to influence the exchange-based effects of HR practices on subsequent quit rates – the local industry-specific unemployment rate – and an internal contingency proposed to shape employees’ conceptualization of their exchange relationship – their employment status (i.e. full-time, part-time and temporary employment). Analyses of lagged data from over 200 Canadian establishments show that inducement HR practices (e.g. extensive benefits) and performance expectation HR practices (e.g. performance-based bonuses) had different effects on quit rates, and the former effect was moderated by unemployment rate. The effects of HR practices on quit rates did not differ between FT and PT employees, but a different pattern of main and interactive effects was found among temporary workers. These findings suggest that employees’ exchange-based decisions to leave may be less affected by the number of hours they expect to work each week, and more by the number of weeks they expect to work.

Keywords:

• Economic exchange
• employment relationships
• employment status
• labor markets
• social exchange
• strategic human resource management
• voluntary turnover

Acknowledgements

We would like to thank Jennifer Hendry, Calum MacDonald and Herb Kee for their contributions to questionnaire development, sampling strategy and oversight of the data collection.

A separate, but overlapping, portion of the data-set used in this research was reported in a previously published study (Pohler & Schmidt, 2015).

Notes

1. The level 2 groups were derived from industry subsector and province – inserting dummy variables for these constructs reduced the between-group variance in intercepts, but not slopes, in the multilevel model. We included these dummies because they allowed us to estimate the main effects of region and industry subsector and also estimate a source of between-group slope variance (i.e. unemployment rates), which was the focus of Hypotheses 1 and 2.