How Important Are Competitive Wages? Exploring the Impact of Relative Wage Rates on Employee Turnover in State Government

Abstract

In recent years, public management research has made great strides in explaining the drivers of employee turnover in the public sector, with key findings related to the role of employee loyalty, organizational satisfaction, person-organization fit, and compensation. This article contributes to this growing body of literature by assessing the influence of a previously untested driver of employee turnover at the state level of government: public-private wage equity. Contrary to conventional wisdom, results suggest that public-private wage equity does not significantly influence voluntary separation rates, whereas state government unionization and the average age of state government employees are found to be indirectly related to voluntary separation. Results also point to the potential implications of ethnicity, gender, and public service motivation in state government employee turnover and provide key insights for those seeking to further understand the impact of reduced expenditures on public sector wages and shifting age distributions in public sector employment.

Vive la Différence? The Impact of Diversity on the Turnover Intention of Public Employees and Performance of Public Agencies

“…Admittedly, turnover intention may not always lead to actual turnover (Jung 2010). Nevertheless, past research links turnover intent to a range of negative individual and organizational outcomes, including, for instance, diminished performance (see e.g., Jung 2010; Llorens and Stazyk 2011;Mobley et al 1979;Moynihan and Pandey 2008;Selden and Moynihan 2000). We measure intent to leave with a question that asks ''How likely is it that you will leave your agency in the next 12 months?''…”

“…Employee turnover imposes considerable costs on organizations, including, for instance, financial costs (e.g., employee replacement and training) and losses in institutional knowledge and organizational memory (Mobley et al 1979;Balfour and Neff 1993;Choi 2009;Llorens and Stazyk 2011;Moynihan and Pandey 2008;Staw 1980). Such costs ultimately lead to reductions in individual and organizational performance and productivity (Mobley et al 1979;Balfour and Neff 1993;Bertelli 2007;Choi 2009;Llorens and Stazyk 2011;Moynihan and Pandey 2008;Selden and Moynihan 2000;Staw 1980).…”

“…Although employees leave organizations for multiple reasons, turnover is primarily driven by job (dis)satisfaction, external environmental factors (e.g., economic climate, job availability), individual factors (e.g., age, job tenure, education, family responsibilities), and organizational factors (e.g., compensation, supervision, organizational culture and climate, equity of human resource policies, demographic diversity) (Mobley et al 1979;Choi 2009;Felps et al 2009;Llorens and Stazyk 2011;Moynihan and Pandey 2008;Rubin 2008). Notably, Choi (2009) argues diversity decreases the psychological attachment, commitment, and satisfaction of minority members, which subsequently increases the likelihood that minorities will leave their 472…”

Crowding Out Public Service Motivation? Comparing Theoretical Expectations with Empirical Findings on the Influence of Performance-Related Pay

“…The primary dependent variable in this study is employee job satisfaction, which is measured using two items from the Michigan Organization Assessment Questionnaire (Cammann, Fichman, Jenkins, & Klesh, 1979;Cook, Hepworth., Wall, & Warr, 1981;Seashore, Lawler, Mirvis, & Cammann, 1982). Past research demonstrates job satisfaction is the single most reliable predictor of employee turnover, which imposes considerable costs on organizations (Mobley, Griffeth, Hand, & Meglino, 1979;Moynihan & Pandey, 2008;Llorens & Stazyk, 2011). Past research demonstrates job satisfaction is the single most reliable predictor of employee turnover, which imposes considerable costs on organizations (Mobley, Griffeth, Hand, & Meglino, 1979;Moynihan & Pandey, 2008;Llorens & Stazyk, 2011).…”

“…Moreover, extrinsic motivators have long been linked to U.S. civil service systems (see, for example, Kellough & Lu, 1993). When employees are incapable of realizing their altruistic motives, they are more likely to report low levels of job satisfaction-a factor commonly associated with employee turnover (see, for example, Mobley, Griffeth, Hand, & Meglino, 1979;Moynihan & Pandey, 2008;Llorens & Stazyk, 2011;Pandey & Stazyk, 2008). Public service motivation research provides strong reason to suspect many public employees self-select into the public sector in order to fulfill their altruistic motives and intentions.…”