Many companies spend a great amount of time money investigating the causes of employee turnover—for example, through programs of exit interviews. Usually the intent behind such studies is to find out why people leave—the idea being that if a company can identify the reasons for terminations, it can work to hold terminations, and turnover, down. <…>

Many companies spend a great amount of time money investigating the causes of employee turnover—for example, through programs of exit interviews. Usually the intent behind such studies is to find out why people leave—the idea being that if a company can identify the reasons for terminations, it can work to hold terminations, and turnover, down. <…>


Many companies spend a great amount of time money investigating the causes of employee turnover—for example, through programs of exit interviews. Usually the intent behind such studies is to find out why people leave—the idea being that if a company can identify the reasons for terminations, it can work to hold terminations, and turnover, down. <…>


Many companies spend a great amount of time money investigating the causes of employee turnover—for example, through programs of exit interviews. Usually the intent behind such studies is to find out why people leave—the idea being that if a company can identify the reasons for terminations, it can work to hold terminations, and turnover, down.

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While a company may obtain very valuable information from termination interviews, this kind of approach has two signal defects:

1. It looks at only one side of the coin—the termination side. If a company wants to keep its employees, then it should also study the reasons for retention and continuation, and work to reinforce these. From the viewpoint of a company’s policies on employment and turnover, the reasons why people stay in their jobs are just as important as the reasons why they leave them. An obvious point in evidence is that one individual will stay in a job under conditions that would cause another to start pounding the pavements.

As an analogy, consider the divorce rate. If one were really interested in doing something about it, he would have to understand why some people get divorced and why others stay married—the reasons for the two things are entirely different. Furthermore, the reasons for getting a divorce are not merely “just the opposite” of the reasons for staying in wedlock. He would have to do some real spadework on both sides of the fence to get a complete picture of the divorce phenomenon. Equally, in the corporate setting, there are definite rationales for terminating and definite (although sometimes unconscious) rationales for continuing.

2. This approach also tends to assume a perfect correlation between job dissatisfaction and turnover. Many a company works for low turnover because it thinks a low rate implies that its employees are pleased with their jobs—and, a fortiori, productive. This is not necessarily true, by any means. A low rate may just be the effect of a tight job market. Or perhaps the company has put golden handcuffs on its employees through a compensation scheme that emphasizes deferred benefits. There are many factors involved.

In itself, the fact that an employee stays on a payroll is meaningless; the company must also know why he stays there. We shall show, in fact, that some carelessly conceived methods of maintaining a low turnover rate can be detrimental to the financial health of a company and the mental health of its employees.

To get a more integrated view of work-force stability, we mounted a study to investigate the motivations to stay and proper ways to encourage it. (The study is described in the sidebar, “Background of the Study.”) This is the picture that has emerged.

Background of the Study

As part of an ongoing study, 406 employees from three companies completed anonymous questionnaires to provide the following information:

Personal data on 21 demographic variables (age, sex, race, length of service, education, skill level, marital status, and so on). Reasons for staying with their companies, including factors both inside and outside the companies. (The employees chose from a pretested list of reasons, including “I like the benefits,” “I have family responsibilities,” and “I’m a little too old to start over again.”) Personal values relating to the work ethic.

The “Values for Working” questions were based on Clare Graves’s work on psychological levels of existence.* Respondents were asked to allocate 12 points to multiple-choice statements about their personal beliefs regarding work itself, the kind of boss they like, benefit programs, pay, corporate profits, company loyalty, and the like. For example:

“The kind of boss I like is one who—

…Tells me exactly what to do and how to do it, and encourages me by doing it with me.

…Is tough, but allows me to be tough too.

…Calls the shots and isn’t always changing his mind, and sees to it that everyone follows the rules.

…Understands the politics of getting a job done, and knows how and when to bargain.

…Gets us working together in close harmony by being more a friendly person than a boss.

…Gives me access to the information I need and lets me do my job in my own way.”

* “Levels of Existence: An Open System Theory of Values,” Journal of Humanistic Psychology, Fall 1970, p. 131. (The “Values of Working” instrument is available only under Code of Ethics of American Psychological Association.)

Why do employees stay? The brief answer is “inertia.” Employees tend to remain with a company until some force causes them to leave. The concept here is very like the concept of inertia in the physical sciences: a body will remain as it is until acted on by a force.

What factors affect this inertia? There are two relevant factors within the company and also two relevant factors outside the company.

First, within the company, there is the issue of job satisfaction. Second, there is the “company environment” and the degree of comfort an individual employee feels within it. An employee’s inertia is strengthened or weakened by the degree of compatibility between his own work ethic and the values for which the company stands. The employee’s ethic derives from his own values and the actual conditions he encounters on the job. The company’s values derive from societal norms, formal decisions by the board of directors, and the policies and procedures of the managing group. A widening gap between these two vantages weakens inertia; a narrowing gap strengthens it.

Outside the company, one must consider an employee’s perceived job opportunities in other institutions. An employee’s perceptions of his outside job opportunities are influenced by real changes in the job market and by self-imposed restrictions and personal criteria. We found that some employees refuse to consider work in other locations because “I like the schools” or “I like my neighborhood.” These reasons not only strengthen inertia to stay with their present organization, but also strengthen inertia to stay with any organization within the same school district or neighborhood. However, if schools lose their appeal because of drug problems or neighborhoods become run down or polluted, the inertia to stay in the area is weakened, and, consequently, outside job opportunities become relatively more attractive.

Also, outside the company, there are nonwork factors that directly affect inertia, such as financial responsibilities, family ties, friendships, and community relations. Some workers told us, for example, that they would never leave their companies because they were born and reared in their present locale. Others said they stayed because they had children in local schools, could not afford to quit, or had good friends at work. Many of these employees also reported low job satisfaction—and yet they stay.

Does it matter whether an employee stays for job satisfaction or for environmental reasons? Yes, because it makes a significant difference to the company whether an employee “wants to” stay or “has to” stay.

How can retention be improved? A company might do this by reinforcing the “right” reasons for staying. By “right,” here, we mean a combination of job satisfaction and environmental reasons that jibes with the goals of the company. By “wrong” reasons, we would mean any combination of reasons for staying that is beneficial neither to the company nor to the employees. Thus if a company reinforces the right reasons for staying and also abstains from reinforcing the wrong reasons, its turnover—as distinct from its turnover rate—might be more satisfactory.

How does a company reinforce the right reasons? Companies can do this by providing conditions compatible with employees’ values for working and living.

If managements concentrate on understanding why employees stay, then they can act to reinforce the right reasons and stop reinforcing the wrong reasons. In other words, they can take a positive approach to managing retention, which will be more effective over the long run than the ordinary, negative approach of simply reducing turnover.

Satisfaction & Environment

Our study has provided four profiles of employees that are particularly useful in thinking through the twin problems of employee retention and employee turnover. The two important variables here are the employee’s satisfaction with his job and the environmental pressures, inside and outside his company, that affect his determination to continue or terminate.

Reasons for job satisfaction include achievement, recognition, responsibility, growth, and other matters associated with the motivation of the individual in his job. Environmental pressures inside the company include work rules, facilities, coffee breaks, benefits, wages, and the like. Environmental pressures outside the company include outside job opportunities, community relations, financial obligations, family ties, and such other factors. Exhibit I shows the relationship between job satisfaction and environmental factors for four types of employees, and also explains why each type stays.


Exhibit I. Job Satisfaction and Environment

The turn-overs are dissatisfied with their job, have few environmental pressures to keep them in the company, and will leave at the first opportunity. While employees seldom start out in this category, they often end up here, having experienced a gradual erosion of their inertia. Consider, for example, an employee who a few years ago was highly motivated, had three children in college, and was close to being vested in the company retirement plan. Today, his children are graduated, he is vested, and he has lost interest in his job. His inertia to stay has been greatly weakened, and he may shortly become a turnover statistic.

The turn-offs are prime candidates for union activities; they can easily generate employee-relations and productivity problems, and conceivably industrial espionage or sabotage. These employees are highly dissatisfied with their jobs and stay for mainly environmental reasons. For example, they may feel they are too old to start over again, or that they are financially dependent on the company benefit programs; or they may believe they can’t get a job on the outside. Employees trapped in this category have two alternatives: (1) they can look for outside help (for example, from unions or the EEOC); and (2) they can change their behavior and either “do exactly what they are told and no more” or decide to “get even with the company.”

The turn-ons are highly motivated and remain with the company almost exclusively for reasons associated with the work itself. This is most desirable from the company’s viewpoint because these employees really want to stay and are not locked in by the outside environment. However, if managerial actions reduce job satisfaction (even temporarily), turnover may rise dramatically. Since the inertia of the turn-ons is not strengthened by environmental factors, it is therefore not strong enough to make them stay without continual job satisfaction.

The turn-ons-plus are the most likely to stay with the company in the long run. These employees stay for job satisfaction plus environmental reasons. Even if job satisfaction temporarily declines, they will probably stay. The word “temporarily” is a key one, for if job satisfaction drops permanently, these employees become turn-offs. This transformation will not raise the turnover statistics, but it will increase frustrations and affect work performance.

Movement between classifications

The traditional approach to measuring and understanding terminations has focused on the turnovers. These employees generally represent a relatively small percentage of the total employee population, and hence emphasizing them exclusively tends to ignore the reasons the majority stay with the company. It also ignores the dynamic processes by which an employee moves from one classification into another.

Consider a young engineer who originally joins the company because he really wants to work there. He moves into a new city where he has very few ties with the community. As he develops his career, he begins to build some meaningful work relationships—he becomes a turn-on. The longer he remains in the locale, the more likely he is to become a turn-on-plus.

But suppose a time comes when his motivation is low. Will he leave? If benefit programs have created a financial dependency, if he has stock options that are not exercisable for two or three years, if he has children who are in good schools, if he has just purchased his dream house—then he probably will not become a turnover statistic. Nonetheless, he may become psychologically absent—a turn-off. The consequences may show up in alcoholism, chronic physical or psychological illness, divorce, low productivity and motivation, and perhaps unionization.

Suppose, instead, that this same engineer has continued to find job satisfaction. He may still stay for some environmental reasons, and the combination of reasons will probably be right—both he and the company find his employment fulfilling.

In neither case has he become a turnover casualty, but there is a dramatic difference between the two situations in terms of morale and productivity. One management observer has phrased it this way: “We have too many people in our organization who are no longer with us.”

One purpose of our research is to understand better the balance between job satisfaction and environmental reasons as it affects employee retention and to gain insight into ways to influence that balance.

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Who Stays & Why?

One way to approach the question of balance between job satisfaction and environmental reasons for staying is to look at the traditional demographic breakdowns, such as male/female, salary/wage, college/high school education, and other demographic contrasts, and also at employees’ personal work ethics. We designed our research to answer questions like these:

Do managers stay for reasons different from those of nonmanagers? Is the work ethic of younger employees different from that of older employees? What kind of employees (male, female, exempt, nonexempt, and so on) stay because they like their work?

What is the work ethic of those employees who stay because they like their job? Why do managers over 40, who have not had a promotion in five years and don’t like their job, stay with the company?

Our respondents gave many reasons for staying. We have broken these down into reasons relating to the environment outside the company—the external environment—and reasons relating to the work environment itself, within the company—the internal environment. Further, we have broken down the reasons relating to the internal environment into (a) motivational factors and (b) maintenance factors.

Exhibit II represents these two breakdowns. Each row of symbols in the exhibit is divided into three parts: