Employee well–being, turnover intention and perceived employability : a psychological contract approach

Abstract

The contemporary working environment is characterised by constant change and increased cognitive and emotional demands on employees. At the same time, long-term employment is no longer guaranteed and often employees are not loyal to one organisation throughout their careers. These changes alter and threaten the viability of the employment relationship. Employees still provide a competitive edge for organisations and their expectations should be managed in such a way that the current organisation remains the employee’s employer of choice. If employers fail to achieve this, employees will be less satisfied and voluntary turnover will result, with detrimental effects on the organisation, both directly and indirectly. In order to ensure the retention of valuable employees, organisations need to identify the predictors of employees’ intention to leave and the nature of the relationships between these factors. Previous studies focused on evaluating the content of the psychological contract and its relation to employee well-being and intention to leave. However, the focus should be less on what employees expect from employers and more on whether these expectations are being fulfilled, now and in future, and whether employees perceive it as fair. Although numerous studies have been conducted on the outcomes of the psychological contract, the evaluation of the state of the psychological contract and its predictive ability remains largely unexplored. More research is also needed to identify mediators in the psychological contract domain. Employability emerged as a coping resource for employees in times of uncertainty. Unfortunately, the more employable employees are, the more likely they will leave the organisation. Due to the assumed positive relationship between employability and performance, organisations should aim to enhance the employability of their employees but at the same time they should seek ways to retain these employees. Empirical research on the outcomes of perceived employability is limited and more research is also needed to identify moderators. The objectives of the study were 1) to determine whether the state of the psychological contract (as perceived by the employee) mediates the relationship between employees’ well-being and their intention to leave the organisation; and 2) to determine whether the state of the psychological contract (as perceived by the employee) moderates the relationship between perceived employability and employees’ well-being and their intention to leave the organisation, respectively. Structural equation modelling was used to establish the significance of the relationship between the variables simultaneously. Two structural models were evaluated; one with employee well-being as mediator and one with the state of the psychological contract as moderator. The results indicated that employee well-being partially mediates the negative relationship between the state of the psychological contract and intention to leave. The state of the psychological contract played a significant role in predicting individual outcomes. The results also indicated that perceived employability had a positive relationship with intention to leave. This is in line with previous international studies. Contrary to what was expected, no significant relationship was found between perceived employability and employee well-being. Furthermore, the state of the psychological contract did not moderate the relationship between perceived employability and employees’ well-being and their intention to leave the organisation, respectively. The results highlighted the importance of well-being as a factor in employees’ intention to leave the organisation. Recommendations were made for organisations and futher reseach.