AMES, Iowa -- 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 issue of the Journal of Vocational Behavior.
"By looking at career growth in terms of what both individuals and organizations can do to further the careers of their employees, we found that organizations can build a sense of loyalty in their employees," said McElroy.
"The interesting thing was that if the organization reinforces skill acquisition [through their reward system], employees react by expressing higher levels of commitment," he continued. "In other words, promoting and rewarding skill acquisition results in greater bang for the buck in terms of commitment."
Applies to American workers' psychological contracts
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.
"The psychological contract is a mental schema that you carry around in your head concerning the relationship you believe exists between your contributions to your employer and what you're induced to contribute. It's sometimes called the contributions inducement contract," he said. "And so if you're induced less -- and the company offers you less -- in order to have that ratio be fair, you're probably going to contribute less and be less committed.
"The psychological contract is probably being broken on both sides," he continued. "People break it by jumping ship or putting less effort into their work. And organizations break it by downsizing, layoffs, or across-the-board pay freezes."
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.
"These findings suggests that developing one's professional abilities allows an employee to identify with the goals and values of the organization, but employees see these abilities as transferrable -- thus, not a cost to leave -- and unlikely to influence the employee's emotional attachment," McElroy said. "They also therefore see an organization's willingness to develop employees as a normal business activity, resulting in no sense of obligation to reciprocate, which explains the lack of relationship with normative commitment."
Something for managers to think about
The researchers conclude that career growth should be considered by managers seeking to build a committed workforce.
"It may be particularly useful in that many commitment-enhancing strategies have been directed at newcomers rather than longer-term employees," they wrote in the study. "Career growth may be a very viable way for managers to maintain or perhaps re-establish organizational commitment after difficult periods in an organization's history (e.g., layoffs, restructuring)."
For those companies that are still enduring difficult times and need to make cuts, McElroy says there are two ways they can mitigate the organizational commitment damage:
1. Provide a logical explanation for the cuts."If I cut your salary, you may be angry, but if I've got to cut everybody's salaries in order to keep everyone employed due to the economic times, then it's not really the fault of the organization," he said. "It's something else in the outside world that's causing this and so you're less likely to detract away from the organization in terms of your feelings about it."
2. Be transparent in the cutting process.
"If it's done in a very visible means where people
understand how those decisions are being made, they're
going to be more likely to perceive that they're
fair," he said. "But if they're done more
covertly, then there's a lot more room for guesswork on
whether you're being treated fairly or not."
