Gaps in the Existent Literature
Nemanich and Keller (2007) suggest that there are new avenues for research in relation to the tools and methods that can be used to help employees to cope with change and manage employee uncertainty during organisational change. On the one hand, Guerrero (2008) emphasises the need to explore the impact and consequences of M&As on the workforce, but, on the other, there is a need to identify those tools that are conducive to employee retention during M&As. There is also a need to identify those factors that are critical for the effective integration during M&As (Appelbaum et al., 2007; Jayesh, 2013).
Employee retention is defined as the organisational voluntary process aimed at creating an environment, which encourages and motivates people to remain with the organisation for as long as possible. It is also defined as a combination of initiatives aimed at keeping employees from leaving the organisation such as rewards, positive relationships between employees and managers and a safe work environment.
The importance of employee retention is highlighted in the existent literature, especially in relation to the turnover cost. Employee turnover is expensive since, except from the monetary cost, the company incurs a replacement cost, and various hidden costs both monetary and psychological (Al-Emadi et al., 2015; Huang et al., 2006). The general recruiting costs to select and train new staff can even reach an annual salary for each position being filled (Gialouisi & Coetzer, 2013). Subsequently, the high costs associated with losing talented employees emphasise the need to adopt measures and practices that support employee retention (Al-Emadi et al., 2015; Kim, 2012).
A number of theoretical frameworks are associated with employee retention, they are discussed in the following subsections.
Human Capital Theory
The human capital theory assumes that the employees’ voluntary turnover is in fact an investment. This investment will generate returns in the long run. The decision of an employee to stay or leave the employing organisation is founded on the relation between the costs incurred and the benefits gained. This theory supports that employees will resist shifting jobs if the benefits do not exceed the monetary and psychological costs (Al-Emadi et al., 2015; Huang et al., 2006).
Social Exchange Theory
The social exchange theory deals with the assessment of social behaviour and social interactions. In particular, this theory states that the behaviour of a person reinforces the behaviour of others. This theory is grounded in “helping and supporting each other,” and the creation of such an environment at work, contributes towards a high employee retention rate (Al-Emadi et al., 2015; Allen & Shanock, 2013; Gentry et al., 2007; Jepsen &c Rodwell, 2010).
The resource-Bbsed theory focusses on developing and enhancing those employees’ skills which are critical for the organisation’s competitiveness and growth. The purpose is to enhance those skills that are important for the organisation and outsource skills of minimum value (Al-Emadi et ah, 2015).
Factors That Are Conducive to Employee Retention
The literature review revealed a number of factors which contribute towards employee retention and the prevention of voluntary turnover during M&As.
The existent literature suggests that there is a positive relationship between empowerment and employee retention (Al-Emadi et ah, 2015; Birt et ah, 2004; Gialouisi &c Coetzer, 2013). Employee empowerment is interwoven with certain factors which are conducive to employee retention such as corporate image, career progression and personal development. The image of a corporation depends greatly on the recruitment and retention of talented employees (Bansal, 2015; Gberevbie, 2010; Newton, 2015). Personal development and career opportunities are also related closely to employee retention (Sanda & Benin, 2011; Saunders et ah, 2009). Lack of career opportunities, management support and a clear career path often lead to employee redundancies (Burghardt & Helm, 2015; Gialouisi & Coetzer, 2013). Employee empowerment builds on trust, which is in turn a critical factor for employee retention (Erickson, 2015). Similarly, previous studies showed that low employee morale and motivation lead to employee resignations, especially among key and talented employees (Bruner, 2005; Garver, 2006; Krug & Aguilera, 2004; Marks & Mirvis, 2001). The uncertainty caused by M&As often result in low employee morale which subsequently forces employees to search for a new job position (Saunders et ah, 2009).