Research shows scale of financial compensation, company culture and senior management performance have big influence on decisions to leave companies

Abstract

Purpose

The purpose of this study is to develop tree-based binary classification models to predict the likelihood of employee attrition based on firm cultural and management attributes.

Design/methodology/approach

After preliminary analysis, the authors tested three hypotheses. One was: “Conditioned on an increase in salary, the magnitude of increase enhances the likelihood that an employee will leave their current firm despite differences between the old and new firm culture.” Two was: “Employees whose original firm has an overall rating greater than the 75th percentile that was also founded before 1900 are more likely to stay…” Finally, three was that: “Employees that maintain a low overall original firm rating are more likely to leave their firm upon a job transition, whereas those with higher overall ratings have a greater chance of remaining.”

Findings

After analyzing thousands of online resumes submitted to Glassdoor’s portal, the authors found that the scale of financial compensation, the company culture and senior management performance all played a major role in influencing decisions to move on.

Originality/value

They offered three concrete recommendations based on the study. First, they said it was vital for companies to maintain strong Glassdoor.com ratings. The results revealed that firms in the top 10% of ratings were over 30% more likely to retain employees during a job transition than companies in the lowest 10%. Second, providing competitive salaries was necessary. Finally, the data showed a large discrepancy between senior management and CEO Glassdoor ratings. The researchers advised HR departments to closely monitor the impact of senior management behaviour.

Citation

(2021), "Research shows scale of financial compensation, company culture and senior management performance have big influence on decisions to leave companies", Human Resource Management International Digest, Vol. 29 No. 3, pp. 12-13. https://doi.org/10.1108/HRMID-01-2021-0008