Exploring the impact of leadership on employee turnover from the perspective of a telecom company

Employee turnover is a key concern for firms around the world, affecting productivity, morale, and financial performance. The purpose of this study is to look at the relationship between leadership styles and employee turnover rates at a Vietnamese telecommunications firm.

TEXT | Nguyen Bao Tram and Ossi Koskinen
Permalink http://urn.fi/URN:NBN:fi-fe2024041517736

Using a mixed-methods approach, the study seeks to identify major factors contributing to turnover and investigate measures for increasing employee loyalty and satisfaction. The findings of surveys, interviews, and data analysis provide significant insights into the role of leadership in molding employee attitudes and behaviors, as well as actionable recommendations for organizational transformation.

Unraveling the Dynamics of Leadership and Employee Turnover

Employee turnover is a prevalent issue for enterprises worldwide, across industries and sectors. Extensive studies have been conducted to better understand the numerous reasons and effects of turnover, offering light on its complex dynamics and implications for organizational success. Theoretical frameworks, empirical investigations, and meta-analyses have all contributed to a rich tapestry of knowledge that identifies the causes, moderators, and results of turnover phenomena.

The turnover process model is a key theoretical framework that has received significant attention in the turnover literature (Mobley et al., 1979). This model views turnover as a dynamic process impacted by a variety of human, organizational, and external factors that evolve over time. Individual characteristics such as work happiness, organizational commitment, and perceived alternatives all influence turnover intentions and behaviors. Organizational characteristics such as leadership behaviors, organizational culture, and work environment all have a substantial impact on turnover outcomes, moderating the impact of individual-level variables. External elements such as labor market conditions, industry trends, and economic fluctuations help to contextualize turnover dynamics, emphasizing the complex interplay of micro and macro-level causes.

Within the range of organizational variables implicated in turnover processes, leadership appears as a key predictor, with a significant effect on employee attitudes, behaviors, and outcomes. Leadership styles ranging from transformational to laissez-faire have been the focus of substantial scholarly research, with researchers attempting to understand their disparate effects on employee turnover intentions and behaviors.

Transformational leadership, defined by a visionary outlook, inspirational motivation, intellectual stimulation, and individualized consideration, has received strong empirical support as a powerful catalyst for employee engagement, job satisfaction, and organizational commitment (Bass 1985). Leaders with transformational qualities motivate followers to go beyond their own interests and rally behind a common goal, instilling a sense of purpose and meaning into their work. As a result, employees are more loyal and dedicated, which reduces their tendency to consider leaving.

In contrast, laissez-faire leadership, characterized by a hands-off posture and abandonment of responsibility, fosters disengagement, apathy, and unhappiness among employees (Bass, 1985). Within organizational theories, there are not many paradigms that have gained strong evidence and acceptance like the view that when we study leadership and management there are two basic dimensions. These dimensions have had various names, but it is widely agreed that there is a people dimension/orientation and a task dimension/orientation of a leader. Laissez-faire leaders score low both on the task and people dimensions and are mainly interested in their benefits like their salary, status, fame, and their appearance on social media. They lack genuine interest in developing the operations of the organizations and to support the well-being of the employees. Employees suffer a sense of drift and ambiguity in the absence of clear direction and guidance, resulting in lower job satisfaction and increased turnover intentions. Laissez-faire leaders fail to give the necessary support, resources, and mentorship to maintain a positive work environment, increasing turnover and undermining corporate effectiveness.

Transactional leadership, with its emphasis on contingent compensation and corrective action, is the basis of transformational leadership (Avolio et al., 1999). Transactional leaders set clear objectives, assign performance targets, and administer rewards or sanctions depending on employee performance. One of the largest misunderstandings in organizational theories has been that many later authors state the opposite of transactional leadership (management) compared to what Burns, Bass, and Avolio have originally written about it. The founders of the concept of transformational and transactional leadership emphasize in their original texts that both the transactional basis (planning, organizing, directing, and controlling) and the transformational (vision, change, direction) parts are equally important and needed.

In addition to these classic leadership paradigms, contemporary leadership perspectives have contributed to a better understanding of the complex relationship between leadership practices and turnover results. Leader-member exchange (LMX) theory, for example, emphasizes the dyadic structure of leader-follower relationships, stressing employees’ differential treatment by their leaders as a key predictor of turnover intentions (Graen & Uhl-Bien, 1995). Employees who have high-quality connections with their leaders, defined by trust, respect, and mutual support, are more likely to have lower turnover intentions than those with low-quality LMX relationships.

Furthermore, situational circumstances and contextual nuances influence the impact of leadership on turnover results. Organizational culture, industry conventions, and society values moderate the effectiveness of leadership activities, influencing employee attitudes and behaviors (Hofstede, 1980). Cultural factors such as power distance, uncertainty avoidance, and collectivism influence employee expectations, preferences, and responses to leadership practices, emphasizing the importance of culturally sensitive leadership approaches that are customized to unique circumstances.

In general, the literature on leadership and turnover offers a comprehensive knowledge of the complex relationship between leadership behaviors, employee attitudes, and turnover outcomes. While transformational leadership has emerged as a powerful force for increasing employee engagement and lowering turnover intentions, laissez-faire leadership style carries substantial hazards, eroding employee morale and worsening turnover rates.

Contemporary approaches, such as LMX theory and cultural frameworks, provide important insights into the contextual nuances and situational contingencies that influence the effectiveness of leadership actions in reducing turnover. Moving forward, companies must use these findings to build leadership practices that foster a culture of engagement, trust, and empowerment, protecting their workforce from the epidemic of turnover.

Investigating Leadership Impact: Research Approach

This study uses a mixed-methods research methodology to extensively investigate the relationship between leadership styles and employee turnover at the case company (later VT). VT collaborated to conduct quantitative surveys across many divisions to gather information on employees’ impressions of leadership styles, turnover intentions, and job satisfaction. Concurrently, qualitative interviews with a purposive sample of employees broaden the researcher’s insight by diving into their lived experiences, offering light on the underlying motivations and attitudes that drive turnover. Email and social networking apps like Facebook, Viber, Zalo, and Telegram with the survey URL were used to convey the questionnaire. A total of 243 responses were collected, of which 232 responses were usable. Statistical analysis was carried out using the SPSS, to reveal complex correlations between 38 variables, illuminating the nuanced impact of leadership on turnover dynamics.

Insights into Leadership and Turnover Dynamics

Initial studies of survey data reveal strong links between leadership styles and employee turnover intentions. Transformational leadership emerges as a strong predictor of increased job satisfaction and organizational engagement, creating a work environment conducive to employee retention. Specifically, the findings indicated a low proportion of VT employees are genuinely satisfied with their jobs. Employees in different departments, genders, and education levels have varying degrees of job satisfaction, but employees with diverse types of contracts, experiences, age, and compensation are equally satisfied. Furthermore, the majority of employees do not agree that their leaders have significant levels of influence or intellectual stimulation.

Qualitative insights gained from interviews support quantitative findings, enhancing the researcher’s understanding of the complex interplay between leadership behaviors and turnover dynamics. Employees express a need for supportive and empowered leadership that values their efforts and provides opportunities for professional development. Concerns about communication gaps and recognition deficits highlight the need for leadership initiatives to boost employee morale and build a sense of belonging inside the company.

Implications for Leadership and Organizational Strategies

The study’s findings provide valuable insights into the subtle interplay between leadership styles and employee turnover dynamics in VT. By analyzing both quantitative data and qualitative narratives, we can uncover the varied nature of the relationship between leadership behaviors and turnover intentions, revealing light on crucial areas for organizational intervention and improvement.

One of the important takeaways from the data is the critical importance of transformative leadership in increasing employee engagement and decreasing turnover intentions. Transformational leaders, distinguished by their inspirational vision, personalized attention, and intellectual stimulation, have the capacity to foster employee loyalty and dedication. Transformational leaders can reduce turnover by empowering people, instilling a sense of purpose, and offering opportunities for growth and development. This creates a workforce that is profoundly invested in the organization’s success.

Transactional leadership, while potentially beneficial in terms of task performance and goal achievement, contains inherent hazards in terms of turnover intentions. The punitive components of transactional leadership, as expressed in management by exception (active and passive), may diminish employee motivation and satisfaction, ultimately increasing turnover rates. Organizations must establish a balance between contingent incentive mechanisms and punitive measures, ensuring that transactional leadership techniques are in line with employee requirements and business goals.

Furthermore, the qualitative findings from employee interviews emphasize the role of communication, recognition, and professional growth in determining employee perceptions of leadership effectiveness. Employees express a need for more open communication channels, transparent decision-making procedures, and possibilities for skill development and progression. To address these issues, organizations must invest in leadership training, communication tactics, and talent development programs that prioritize employee well-being and engagement. In conclusion, this study makes substantial progress in understanding the complex interplay between leadership styles and employee turnover in the telecommunications sector, as demonstrated by the case organization. By combining quantitative and qualitative studies, this study provides nuanced perspectives on the varied nature of turnover dynamics, as well as an understanding of the critical role of leadership in molding employee behaviors and attitudes. Moving forward, organizations must prioritize leadership development initiatives that focus on fostering transformative leadership behaviors that instill in employees a sense of purpose, belonging, and empowerment, thereby strengthening their resilience to the threat of turnover.

  • Mobley, W. H., Griffeth, R. W., Hand, H. H., & Meglino, B. M. (1979). Review and conceptual analysis of the employee turnover process. Psychological Bulletin, 86(3), 493-522.

  • Bass, B. M. (1985). Leadership and performance beyond expectations. Free Press.

  • Avolio, B. J., & Bass, B. M. (1999). Reexamining the components of transformational and transactional leadership using the Multifactor Leadership Questionnaire. Journal of Occupational and Organizational Psychology, 72(4), 441-462.

  • Graen, G. B., & Uhl-Bien, M. (1995). Relationship-based approach to leadership: Development of leader-member exchange (LMX) theory of leadership over 25 years: Applying a multi-level multi-domain perspective. The Leadership Quarterly, 6(2), 219-247.

  • Hofstede, G. (1980). Culture's consequences: International differences in work-related values. Sage.

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