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How to reduce turnover intentions in the family business: Managing centripetal and centrifugal forces
Business Horizons (2013) 56, 63—73
Available online at www.sciencedirect.com
www.elsevier.com/locate/bushor
How to reduce turnover intentions in the family business: Managing centripetal and centrifugal forces Dmitry Khanin Steven G. Mihaylo School of Business & Economics, Cal State Fullerton, SGMH 5340, Fullerton, CA 92834-6848, U.S.A.
KEYWORDS Family business; Turnover intentions; Centripetal forces; Centrifugal forces; Family embeddedness; Organizational commitment; Person-job (PJ) fit; Alternative employment opportunities
Abstract Turnover intentions refer to the anticipation of leaving one’s job. If realized, turnover intentions may result in loss of human talent and leakage of firm know-how to competitors. This article analyzes the causes and intensity of turnover intentions by contrasting two divergent forces. The first force is centripetal; it draws employees into an organization and makes alternatives less attractive. The second force is centrifugal; it makes the existing job less attractive compared to alternatives. This article argues that various combinations of centripetal and centrifugal forces can be observed in four distinct areas: the time-bomb, ineptitude, tug-of-war, and bestof-both-worlds ‘turnover zones.’ Respectively, the emergence and intensity of turnover intentions in each turnover zone is distinct. Thus, an interesting question to examine is: How do centripetal and centrifugal forces play out in the family business? Applying this analysis to a family firm operating in the western part of the United States helps explain the reasons family employees may or may not form turnover intentions, as well as such intentions’ relative intensity. This article argues that person-job fit and family embeddedness, which are observed when an employee shares the founder’s vision and the integrated values of the family and family business, help reduce turnover intentions. To succeed, however, family firms must also urge inept employees to form turnover intentions. # 2012 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.
1. What are turnover intentions and their causes? Voluntary turnover refers to employees leaving an organization of their own accord as opposed to being
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let go. Voluntary turnover may be preceded by turnover intentions: the anticipation of leaving one’s job. Turnover is often detrimental to business. When employees leave, companies may lose valuable human talent, and their sacrifice could become competitors’ gain. Training new employees requires allocating significant resources. Oftentimes, it also takes a long time and involves a steep learning
0007-6813/$ — see front matter # 2012 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved. http://dx.doi.org/10.1016/j.bushor.2012.09.005
64 curve. For a variety of reasons, this arduous process may not always be successful. This is why companies seek not only to attract valuable employees but also to cultivate and retain their key personnel even during challenging economic times. Studies have identified a variety of organizational factors that can mitigate turnover intentions. These include, for instance, good cultural fit with an organization, which is defined as person-organization (PO) fit, and organizational commitment. Personjob (PJ) fit is another important factor that needs to be considered very carefully. PJ fit measures how well an employee’s talent and skills match the job. Usually, people who do their jobs well also enjoy doing them. However, some may be good at the job they do but would prefer to do another job that better fits their personality. This is why it is important to measure how organizational commitment, PO fit, and PJ fit affect job satisfaction. Furthermore, one needs to understand how job satisfaction may influence the emergence and intensity of turnover intentions. Summarizing numerous studies on the subject, some scholars suggest a quickand-dirty solution to reducing turnover intentions: ‘‘increase person-organization (PO) fit to increase job satisfaction and to decrease intent to turnover’’ (Wheeler, Gallagher, Brouer, & Sablynski, 2007, p. 203). Unfortunately, such quick-and-dirty solutions may not be effective because they do not account for the actual complexity of the mechanisms producing turnover intentions and ignore the role of organizational contexts in this process. The objective of this article is to provide a more realistic explanation of what causes turnover intentions and what affects their intensity, making it more likely that they will be realized. To achieve this goal, this article examines the interface of two countervailing forces operating in organizations. The first force can be characterized as centripetal; it draws employees into an organization by making it appear more attractive than alternatives. The second force can be described as centrifugal; it drives employees away by making alternatives more attractive than the organization. The interface of centripetal and centrifugal forces affects whether or not turnover intentions emerge as well as their relative intensity. Aside from the broader organizational context, how do turnover intentions function in the family firm? Family firms are distinct in many ways from typical organization–—from ownership structure and governance to control, human resource (HR) management, and conduct (Chua, Chrisman, & Sharma, 1999; Daily & Dollinger, 1991). Similarly, how centripetal and centrifugal forces play out in the family business as well as their interface and effect on
D. Khanin turnover intentions may also be distinct. This article explains what makes turnover intentions in the family business distinct. Moreover, it suggests how family firms could benefit from either reducing or prompting family employees’ turnover intentions and how these objectives can be achieved. This analysis of turnover intentions is illustrated by the story of a successful family business operating on the western coast of the United States.
2. Centripetal and centrifugal forces in organizations The push factor (i.e., employee unhappiness with an organization) and the pull factor (i.e., the lure of alternative employment opportunities) could be regarded as two centrifugal forces driving employees away from an organization. Such push and pull factors may interact and reinforce one another. If this happens, the centrifugal effect is particularly strong and likely to produce turnover intentions. However, the opposite centripetal forces may counter centrifugal forces by drawing an employee into an organization. For instance, PO fit (i.e., a good match between an employee and the company) and PJ fit (i.e., a good match between an employee and his/her job) (Kristof-Brown, Zimmerman, & Johnson, 2005) could both be described as centripetal forces. Organizational commitment (usually broken down in the literature into three principal categories–—affective, normative, and continuance commitment) could also act as a centripetal force (Meyer & Allen, 1991). Affective commitment refers to when a person stays with a company out of love or affection. Affective commitment undermines turnover intentions because an employee is fond of the organization. In contrast, normative commitment feeds on an individual’s internalized sense of duty. It may also strengthen centripetal forces, just in a different way: through emphasis on responsibility. Finally, people may not stay in their current positions out of duty or love but rather because alternative job opportunities are hard to come by and/or appear unreachable or too challenging to even attempt to pursue. This is called continuance commitment. The related notion of job embeddedness (Chen, Ployhart, Thomas, Andersen, & Bliese, 2011; Mitchell, Holtom, Lee, Sablynski, & Erez, 2001) could also reinforce centripetal forces and decrease turnover intentions. It represents a combination of PO fit, links to other employees, and the anticipated agony or sacrifice of leaving an organization. If centrifugal forces are not operative but centripetal forces are strong and active, turnover intentions may
How to reduce turnover intentions in the family business: Managing centripetal and centrifugal forces never materialize or may be extremely weak and negligible.
3. The push and pull factors: Internal and external The push factor is usually associated with trying to get out of a current employment situation. Therefore, it is viewed solely as a centrifugal force. However, one can also be repelled rather than attracted by alternative employment opportunities. In contrast to an internal push (i.e., disliking the current job one has), the fear associated with the challenge of searching for other employment opportunities and trying to adjust and succeed in a new environment may be viewed as an external push. Along with the external pull (i.e., being attracted to alternative employment opportunities), an internal pull may also exist: being attracted to one’s existing job. Such an internal pull may be enhanced by good PO fit, PJ fit, and affective and normative commitment. Continuance commitment (i.e., avoiding the fear associated with the challenge involved in searching for better opportunities) enhances external push. To summarize, centripetal forces that attract employees to an organization have two different aspects: internal pull (reinforced by strong organizational commitment, high PO fit and PJ fit, and high job embeddedness) and external push (strengthened by continuance commitment). Similarly, centrifugal forces driving employees away from an organization have two manifestations: internal push (strengthened by low organizational commitment, weak PO fit and PJ fit, and low job embeddedness) and external pull (buttressed by superior alternative employment opportunities, including the temptation of change and new beginnings). The interaction
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of centripetal and centrifugal forces determines (1) whether or not turnover intentions are formed and (2) their relative intensity. Table 1 helps illustrates the emergence and intensity of turnover intentions in four interface areas between centripetal forces (i.e., internal pull and/or external push) and centrifugal forces (i.e., internal push and/or external pull), or turnover zones. The next section analyzes how different aspects of centripetal and centrifugal forces play out and interact in the four fundamental turnover zones and how their interface affects turnover intentions.
3.1. The time-bomb zone This turnover zone arises at the intersection of internal push (i.e., an employee’s unhappiness with the organization as a whole or his/her job and/or position) and external pull (i.e., the existence of superior alternative opportunities that appear feasible and attainable). In this turnover zone, only centrifugal tendencies operate, and the centripetal tendencies are negligible. Thus, the centrifugal forces are unchallenged and dominant. Imagine that you hate your job, and there are plenty of much better and readily available jobs around. What would you do? The moniker time-bomb zone means, of course, that it is only a matter of time that an employee who is simultaneously repelled by his/her current job and attracted by superior alternative opportunities is going to try to leave the organization. Does it matter in this explosive situation which of the two centrifugal forces is dominant? Yes, it does. Somebody entirely frustrated with his/her current job (i.e., internal push dominates external pull) may call it quits even before getting another job. Conversely, if external pull dominates internal push, one may stay a
Table 1. Centripetal forces (i.e., internal pull and external push) vs. centrifugal forces (i.e., internal push and external pull) and their effect on turnover intentions External pull: Other jobs are attractive
Internal push: Current job is unattractive
Internal pull: Current job is attractive
Time-bomb zone: Only centrifugal forces are present and could be mutually reinforcing
Tug-of-war zone: Centrifugal forces (i.e., external pull) collide with centripetal forces (i.e., internal pull)
Turnover intentions: Strong Turnover intentions: Low to strong
External push: Other jobs are unattractive
Ineptitude zone: Centripetal forces (i.e., external push) and centrifugal forces (i.e., internal push) could be mutually reinforcing but could also collide
Best-of-both-worlds zone: Only centripetal forces are present and could be mutually reinforcing Turnover intentions: Nonexistent
Turnover intentions: Low to moderate
66 little longer to try to obtain the best alternative available.
3.2. The tug-of-war zone This turnover zone describes more complex dynamics when a centripetal force (i.e., internal pull) collides with a centrifugal force (i.e., external pull). Neither internal push nor external push is at work here. Imagine someone that is perfectly happy with his/her job. No internal push comes into play, nor is he/she intimidated by the challenges associated with searching for alternative employment opportunities or fearful of the difficulties adjusting to new places. Therefore, there is no external push either. The two forces that are left and collide are the internal pull and the external pull: one loves his/her job but is tempted by opportunities. Hence, this is called the tug-of-war zone. If the centripetal force (i.e., internal pull) is dominant, an employee is more likely to stay. Conversely, if the centrifugal force (i.e., external pull) is dominant, an employee is more likely to leave. The emergence and strength of turnover intentions, however, may be affected by intervening factors, such as affective and normative commitment, job embeddedness, PO fit, and PJ fit. The external pull could be almost irresistible, a proverbial offer one cannot refuse: greater salary, a more interesting job, novelty, and change replete with good promotion prospects. However, such centripetal factors as job embeddedness (i.e., excellent collegial relationships) or normative commitment (i.e., sense of duty and dedication to the company’s vision and mission) may prevail.
3.3. The ineptitude zone This turnover zone describes a situation in which both the centripetal force (i.e., internal push) and centrifugal force (i.e., external push) stem from negative emotions, such as fear, frustration, or anger. Positive emotions, such as love, sense of duty, and belongingness, are lacking. Such imbalance may stem from people in this zone being unfit, inept, or incompetent in terms of their work. There are two possible scenarios that may play out in the ineptitude zone depending on how people react to failure. Some respond by losing self-efficacy, or confidence in their ability to do their job, and they know the reason for their frustration and self-doubt. These could be called the inept self-doubters or eternal sufferers. Others remain self-confident, ignoring their recurrent failures and living in denial. These can be called the inept happy campers. Still, a lack of job offers
D. Khanin others are getting or promotion opportunities that keep getting away could provide a reality check. Let us examine the first type–—the inept selfdoubters. They are in a difficult situation. On the one hand, inept self-doubters understand that they are not good workers. On the other hand, they equally realize that it would be very hard for them to find alternative employment. Why? This looks like a vicious cycle: other jobs are unavailable precisely because they are not good workers and/or do not have the required skills and qualifications. What about the second type? Inept happy campers rarely realize they are inept. However, some do but do not care. Others keep finding excuses or feel they have some other invisible virtues that make up for whatever they lack in aptitude. Nevertheless, even these insufficiently qualified, inept, but self-confident employees often recognize that getting another job for them would be a challenge. Employees lacking the requisite skills and qualifications for a job operate in the ineptitude zone. Usually, everyone knows that a certain employee is incompetent and cannot be trusted. People try to avoid being negatively affected by coworker incompetence. Some go out of their way to deal with another person within or outside the organization. Others pretend they are going to follow an incompetent employee’s advice but in reality do things their own way. Naturally, the two types of inept employees differ in their turnover intentions. An inept self-doubter may stay or try to leave depending on whether the internal push or external push is dominant. If one’s frustration with the existing job (i.e., the internal push factor) outweighs one’s fear of finding oneself in an even more difficult situation elsewhere (i.e., the external push factor), turnover intentions could be strong. Conversely, if one’s fear of change and inertia (i.e., the external push factor) outweighs one’s frustration with his/her current job (i.e., the internal push factor), turnover intentions are likely to be weak or even nonexistent. Such people may say: ‘‘I will never leave this organization!’’ Continuance commitment masked as affective commitment may rule in the ineptitude zone. In contrast, an inept happy camper is unlikely to develop turnover intentions at all. His/her situation is ideal. Despite being terrible at what they do, inept happy campers are confident that they are, in fact, very useful to the organization or do not care if they are not.
3.4. The best-of-both-worlds zone This final turnover zone is most beneficial for an organization. Centripetal forces are not countered in any meaningful way by centrifugal forces.
How to reduce turnover intentions in the family business: Managing centripetal and centrifugal forces Internal pull is reinforced by external push. Hence, the best-of-both-worlds zone is established. In this situation, the employee loves his/her job and would hate to go anywhere else. This ideal situation may be supported when individuals have affective and normative commitment, which could act in unison. Job embeddedness–—defined as good collegial relationships with coworkers–—accompanied by excellent PO fit and strong anxiety experienced when imagining leaving the company could also contribute to the best-of-both-worlds situation. This is because job embeddedness is a mix of internal pull and external push. Does it matter which of these two centripetal forces is dominant? Yes, as usual, it does. For instance, if internal pull dominates external push, one may feel highly eligible for other jobs and also confident that these jobs are within reach and attractive in their own way. However, this does not reduce the current job’s magnetism. Furthermore, an employee can also very clearly see the negative along with positive aspects of alternative employment opportunities. Still, turnover intentions may lurk in the background. If external push dominates, one is strongly opposed to alternative employment opportunities and is highly drawn to the existing job. As a result, turnover intentions are nonexistent. Next, this article will discuss what makes family firms different and how these differences affect the emergence and intensity of turnover intentions.
4. Centrifugal forces in the family business 4.1. Internal push Compared to non-family firms, family firms are distinct in various ways, such as ownership and governance (Greenwood, 2003; Steier, 2003), internal control systems, size and strategy (Daily & Dollinger, 1991, 1992, 1993), conduct (Chua et al., 1999), and HR practices (Carlson, Upton, & Seaman, 2006). Of course, many of these differences may stem from the fact that the majority of family firms are small businesses. The smaller size and simpler organizational structure typical of any small business naturally reduces emphasis on HR management. This can be described as the direct effect of size and organizational structure on governance. In addition, there is also an indirect effect: top managers in family firms often combine the roles of family and business leaders. They may feel that control could undermine their authority. Consequently, owner-managers of family businesses may
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often seek to avoid oversight (De Kok, Uhlaner, & Thurik, 2006). Weaknesses in internal control systems frequently produce so-called agency problems. Such problems occur when the manager (i.e., agent) acts in his/her own interests, which are harmful to the owner. However, in family firms, owners are also often top managers (i.e., agents). This is why family firms were long considered to be immune to agency problems. Later research established that agency problems do not go away in family firms; rather, they may take the form of principalprincipal problems. That is, owner-managers’ interests could diverge from other owners’ interests. Such other owners may not be employed in the family firm, or they may hold less important positions. For instance, Steier (2003) related a story about the founder of a family business lending a substantial sum of family capital to his youngest son to start his own venture without putting suitable controls in place. After the founder died and the youngest son’s venture essentially failed, the family was dismayed to find out that its capital had been substantially reduced by this error of judgment. Such principalprincipal conflicts may exacerbate turnover intentions. First, any work-related or work-family conflicts are bound to raise turnover intentions (Boles, 1996; Lee, 2006). Second, insufficient internal controls and professional HR practices in family firms may undermine family employees’ confidence in their future and produce uncertainty, anxiety, and anger. In other words, internal push in family firms could be aggravated by insufficient control over the top agent. In the example above, there was insufficient control over the top principal–—namely, one of the owners (i.e., principals) also acting as the top manager or agent representing other owners. Such lack of oversight could make other family owners feel powerless. The perception of inadequate transparency and accountability and feeling unprotected from the top principal’s risky behavior may produce turnover intentions. Voluntary turnover could be viewed by family members in this situation as an insurance policy. In other words, if the family capital gets wasted and/or lost through the top principal’s imprudent actions, family members employed in other businesses may still be able to fall back on other retirement funds. Prior studies (Barnett & Kellermanns, 2006) have demonstrated that non-family employees often wonder why they are not treated like family. Such dismay about not being regarded as family despite years of loyal service may induce turnover intentions in nonfamily employees (Memili & Barnett, 2008). However,
68 family employees could equally feel that insufficient checks and balances and the top principal’s unchallenged authority could be demeaning and pose a threat to their future. Scholars argue that altruism–—the intention to act in the interests of other human beings–—may be expressed in family firms as nepotism or overtly favoring family members (Schulze, Lubatkin, & Dino, 2003). However, favoritism may not be spread evenly. Family members could be frustrated that relatives enjoy the most favored status. Scholars have identified three positive characteristics of family firms: personalism, particularism, and parsimony. First, personalism describes how family firms are often used as vehicles for achieving their founders’ personal dreams, such as yielding beneficial outcomes for society. Particularism refers to how family firms often take an unusual route–—for example, by taking interest in developing the local community, a certain technology, or a progressive business model that the family feels especially strongly about and perceives as being part of its mission. Finally, parsimony refers to family firms’ habitual frugality, cost efficiency, economizing, bootstrapping, and avoidance of excessive expenditures and vulgar displays of wealth (Carney, 2005; Steier, Chua, & Chrisman, 2009). While these three characteristics contribute to family firms’ lasting success, they could also make them less attractive. For instance, parsimony may result in lower pay and benefits while personalism and particularism could lead to founder favoritism, which may enhance family members’ private financial costs (Astrachan & Jaskiewicz, 2008). Such issues affect the costs and benefits of family firms and may contribute to turnover intentions. In sum, the specific manifestations of agency (i.e., principal-principal) problems in family firms may create an additional internal push as a centrifugal force turning family employees away from the family business. Furthermore, familiness, or family firms’ distinct resources and capabilities (Pearson, Carr, & Shaw, 2008), may have a downside. Thus, personalism and particularism may feed into founder’s penchant to sacrifice business viability in pursuit of non-economic objectives. Parsimony could also be associated with a lack of resources and insufficient investment in opportunities. As a result of both principal-principal problems in family firms and resource limitations (Sirmon & Hitt, 2003), talented employees may feel that positive change would be hard to achieve in family firms due to a lack of oversight; a stagnant culture; and an ineffective, anemic strategy. In sum, internal push in family firms could be intensified by specific agency
D. Khanin problems related to top principals’ unlimited power and lack of oversight as well as by inappropriate use of resources dedicated to non-economic goals, insufficient pursuit of opportunities, and outdated strategies.
4.2. External pull The underlying differences between family and nonfamily firms could also buttress external pull. Family members often wonder what it would feel like to work in different types of business environments. Such natural curiosity may feed the external pull. Non-family businesses could also look attractive due to the greater compensation they provide as well as the more diverse and collaborative environment in which people of different ethnicities and nationalities work together. Family members are also often encouraged to acquire business experience working in other companies and gain exposure to various organizational environments and contexts to grow as managers. Non-family firms could also be more growth oriented (Daily & Dollinger, 1991, 1992, 1993) and professionally governed; boast unique capabilities in specific areas; and offer better compensation and promotion opportunities, including faster growth within the firm for talented and dedicated employees. In sum, external pull in family firms can be strengthened by the desire to acquire more diverse business experience and managerial skills, learn unique capabilities, prove one’s worth, achieve independence, and enjoy more generous compensation and early promotion prospects.
5. Centripetal forces in the family business 5.1. Internal pull Centripetal forces in family firms could also manifest themselves in a unique way compared to nonfamily firms. Scholars have argued that family employees frequently develop calculative commitment to the family business (Sharma & Irving, 2005). Calculative commitment is the upshot of costbenefit analysis. Such analysis may establish that a family employee ‘has to’ stay in the family business because the rewards of staying–—even when offset by some annoying costs incurred–—are still superior to the rewards of alternative employment in the long run. Family employees may feel, for instance, that by working in the family firm they can actually protect their wealth from being squandered by irresponsible top principals. Therefore, they may decide to join the
How to reduce turnover intentions in the family business: Managing centripetal and centrifugal forces family firm to keep an eye on their parents or siblings running the firm. Others may believe that family employees can enjoy numerous perks unavailable to other family members and non-family employees. Therefore, family members may try to obtain positions to get a nice spot at the table and avail themselves of such opportunities. Family employees can also be driven by genuine dedication to the founder’s vision, the family firm’s mission, and its duty to the local community and society. Recently, scholars have introduced the notion of socioemotional wealth as a motivator of family businesses. It is important, however, to point out that not all family members may share a socioemotional orientation. Both the concept of socioemotional wealth as the dual objective of the family business and familiness as distinct resources and capabilities of the family firm do not seem to take into account that family employees need to be true believers in the founder’s vision and share the family’s values to be able to partake in familiness or endorse the creation of socioemotional wealth. Therefore, this article introduces a different concept to explain the internal pull driving family employees into the family firm: family embeddedness. The term embeddedness, or rootedness, refers to being immersed in a certain environment and being strongly influenced by it. Granovetter (1985, 2005) argued that economic transactions are embedded in social contexts. Individuals may choose, for instance, to do business deals with people from the circle they know well or be influenced by social relatedness. The original emphasis of the term family embeddedness described how entrepreneurs creating new ventures are influenced by transitions in their family lives (Aldrich & Cliff, 2003). Therefore, family embeddedness did not initially focus on the uniqueness of the family business. In contrast, in this article, family embeddedness is defined as the integration of business and family values with the founder’s vision, which influences family employees’ mindsets. From this perspective, a family employee with a sense of family embeddedness is influenced by the family business’s unique mentality, which synthesizes family and business values revolving around the founder’s vision. The degree of family embeddedness reflects how much the values of the family business and the family intertwine to truly become family employees’ bedrock belief system. Family embeddedness occurs when a family employee shares the founder’s dream and has been brought up on family values that continue to influence the family business while business values concurrently infiltrate the family mindset. As a result of such concurrence or sharing of values, internal pull may grow substantially. It is important to note that
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family embeddedness implies a positive interface between the founder’s vision, the family, the family business, and the effect of family members’ socialization to make them into true believers of the family business’s fundamental values. Thus, internal pull in family firms can be strengthened by calculative commitment, which motivates family members to protect their interests by becoming employed in the family business, and family embeddedness, which motivates employees to integrate business values and family values.
5.2. External push Imperative commitment is ‘‘based on a feeling of self-doubt and uncertainty of the ability to successfully pursue a career outside the family business’’ (Sharma & Irving, 2005, p. 19). This is an example of an external push. Some family employees truly believe–—right or wrong–—that the only reason they are employed in the family firm is because of their family connection. Such feelings are especially common in the ineptitude zone discussed earlier. Oftentimes, family members get so much attention and care in the family environment that this makes them unprepared for real life with its inevitable adversity and challenges. There is much to say about the role of love and affection in the family. However, coddling may create future threats for the children one is trying to protect. This is why many families try to ensure family members get outside experience as doing so imparts a sense of reality and provides an opportunity to prove oneself before one may return to the family firm. Unfortunately, such baptism by fire is not always achieved. Some family members try desperately to fit in as they move into the more competitive and challenging environment of the non-family business but ultimately cannot make it and give up. Some can only secure low-paying or part-time jobs. Others try but cannot attain their personal goals. Once these prodigal sons and daughters are taken back into the fold, the damage has often been done. It may be very difficult for these family employees who lack selfefficacy or self-confidence to compete for alternative employment opportunities. They feel that their family connections are all they have and cling to them. Therefore, smothering love and lack of confidence in one’s ability to do the job right and compete with others may enhance external push in family firms. Thus, in summary, external push in family firms can be strengthened by lack of self-confidence or self-efficacy and prior failure, making family employees excessively dependent on the family firm. The next section describes how centripetal and centrifugal forces play out in the family firm.
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6. Jack’s story: The family business and turnover intentions A number of family employees were interviewed for this study. Their stories showed that centripetal and centrifugal forces play out differently in the family firm context and provided rich illustrations. However, one story seems more telling than others. It brought to life the abstract concepts discussed earlier. Naturally, names were changed to protect the identity of the individuals interviewed. Jack was one of the first family employees interviewed. Overall, he described the family business as being very successful. The business grew from his grandfather’s insight, and once it was implemented, the outcomes were nothing but spectacular. In fact, the original idea was so good that the family business practically ran itself. Jack admitted, however, that his family was not very driven. The bonanza Jack’s family had been enjoying could have been multiplied through ingenious marketing, but this required strong effort and unfortunately was never pursued. The firm was originally run by two brothers, Uncle Albert and Uncle Kent, and their responsibilities were divided. Uncle Albert was a talented engineer in charge of the technological aspects of the operation, and Uncle Kent was the administrator and was somewhat old fashioned. He did not believe that marketing mattered and felt good about everything exactly the way it was. More than anything, Uncle Kent cherished being the boss. Luckily, the business was performing so well that not much effort was required to keep it running. The expectation was that the customers would find the firm based on word of mouth and would place lucrative orders. All management had to do was to stay put. Oddly enough, it worked. Uncle Kent was skeptical about new-fangled ideas, including guerilla marketing and social media, and he did not seem to understand the importance of such approaches. They seemed irrelevant, something that other companies did for no reason at all. The firm was governed by the three joint mantras: ‘go slow,’ ‘easy does it,’ and ‘what’s your hurry’? Neither Uncle Albert (the technologist) nor Uncle Kent (the administrator) had turnover intentions. Uncle Albert could find a more interesting and higher-paying technological job outside the company. However, due to his ownership stake, no other job could even remotely match what he was pulling in as the top owner. Uncle Albert had relatively high PO fit. He seemed to enjoy the slow-paced, traditional culture at the company. In addition, his PJ fit was high. In other words, the job was much to his liking. He was driven by the strong internal pull, which was reinforced by family embeddedness. He shared his dad’s dream, and family and business values were
D. Khanin one in his mind. The external pull was there: as a technological genius, he would have loved the more challenging environment of a larger modern company. However, moneywise, such alternatives fell short, and his turnover intentions were weak. Hence, Uncle Albert occupied the best-of-bothworlds turnover zone. His internal pull was fortified by affective and normative commitment and family embeddedness. His external push stemmed from calculative commitment. In contrast, Uncle Kent did not seem likely to entertain turnover intentions of any kind. His alternative employment opportunities were nonexistent because he was an inept administrator. Subjectively, however, both his PJ fit and PO fit were high. He enjoyed the power and privileges that came with the job and took full advantage of them. Uncle Kent’s internal pull was driven by imperative commitment: a lack of alternatives. The internal push was absent because he did not comprehend that his performance was poor. Even if Uncle Kent had his doubts, staying with the company was fueled by imperative commitment due to the impossibility of getting another job as well as calculative commitment–—namely, the massive rewards he received from the family firm. Uncle Kent was a classical inept happy camper, a fully satisfied resident of the ineptitude zone. Unlike many less-fortunate family businesses, the firm crossed the generational divide successfully, and the transition went smoothly. The successors seemed to get along just fine. Both enjoyed the firm’s slowpaced, easy-does-it patriarchal culture. There were also three cousins employed in the family firm, and only a fourth cousin had opted out. The three cousins had different educational backgrounds, interests, capabilities, and prior experience. Cousin Jack was educated as an engineer, and he later acquired an advanced business degree. Cousin Steve was a business major and a marketing maven. Cousin Paul spent many years outside the family firm, working mostly as a disc jockey in a nightclub, but finally saw the light and belatedly joined the firm. Cousin Jack had very high PJ fit. He excelled at his job, enjoyed what he was doing, and was getting better at it all the time. He was also friends with non-family employees. Jack had plenty of experience working for other firms in which he had held higher positions. In fact, he had to take a pay cut to join the family firm. While Jack was driven by internal pull, he was not indifferent to external pull either. He had opportunities to join other companies and receive larger compensation packages. However, despite some turnover intentions that could be hard to disregard entirely, he chose to stay with the family firm. Both family embeddedness and
How to reduce turnover intentions in the family business: Managing centripetal and centrifugal forces calculative commitment were at work. He sincerely shared his father’s and grandfather’s dream and was a true believer in joint family/business values. However, Cousin Jack was no dreamer and was quite materialistic as well. His ownership share could have made the family firm a better deal even despite the lower salary and benefits. Thus, Cousin Jack occupied the tug-of-war zone. The external and internal pulls were at odds with internal pull winning due to both family embeddedness and calculative commitment. As a gifted marketer and salesman, Cousin Steve was unhappier than Cousin Jack ever was with the company’s culture. His PO fit, therefore, was low. In contrast, Cousin Steve’s PJ fit was very high. The job was right up his alley, and he was able to gradually change the company despite Uncle Kent’s resistance. There is no doubt that a talented marketing person like Cousin Steve could enjoy superior alternative employment opportunities. Moreover, Cousin Steve’s family embeddedness was lower than Cousin Jack’s, and his turnover intentions were higher. It would have been hard for him to reject the temptation of the exciting opportunities associated with more interesting opportunities to apply his talent (i.e., the external pull). He was also continually traumatized by having to deal with the recalcitrant, stagnant culture of the family business (i.e., the external push). Therefore, the gifted and energetic Cousin Steve seemed to be in the time-bomb zone. Finally, Cousin Paul was not high either on PO fit or PJ fit. He stayed solely for pragmatic reasons. His performance was suboptimal. Family members and non-family members alike were critical of his work. This generated a strong internal push, and Cousin Paul was well aware of it. However, in a parochial company like theirs, showing him the door was out of the question. Although Cousin Paul abhorred his job, he was determined to persevere and stay on. Cousin Paul was driven by an external push feeding imperative commitment. He was essentially trying to ensure he was not pushed aside when it came to allocating the family fortune. Having lost his external pull due to a long list of previous failures, he was mostly influenced by external push. Sticking around was probably the right decision for him, but it was not the best solution for the firm. Just like Uncle Kent, Cousin Paul was a denizen of the ineptitude zone, but he was not a happy camper. Table 2 summarizes the overall effect of familyspecific factors on the centripetal and centrifugal forces at work in this family business as well as the turnover zones occupied by the different members of the family.
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7. How can family firms manage employees’ turnover intentions? Should family firms try to reduce family employees’ turnover intentions? If so, what strategy should they use? Conversely, should family firms try to help family employees develop turnover intentions? If so, could this goal be achieved in a sensitive way? The answer to all of these questions seems to be yes. Family businesses should do everything they can to keep talented family employees and ease out inept family employees. Rethinking the discussion of turnover zones could help resolve both dilemmas. It is important to analyze the key centripetal and centrifugal forces governing employees’ motivations and turnover intentions. Let us start with the time-bomb zone. Clearly, employees residing in this zone represent a huge flight risk. While it could take them a long time to take the plunge, when the right opportunity presents itself, they could be on their way to another company in the blink of an eye. Should the family try to persuade them to stay? Such persuasion may work sometimes with salary increases and promises of greater latitude and promotion. However, such a move may be seen as too little too late. The decision really depends on how much value a particular employee has for the family company both now and in the future. If a young family employee wants to leave to try his/her luck in a different environment, the family firm may actually want to be supportive of this intent and even prompt other young family members to form such turnover intentions. If an employee has a good sense of family embeddedness, he/she will come back and bring in new competencies, renewed energy, self-confidence, and self-efficacy. This could be a positive, invigorating experience that could enrich the family firm and enhance its strategic repertory. However, when someone like Cousin Steve decides to leave, that could create a major problem for the family firm. Such a departure could deplete a firm’s talent pool and deprive it of a possible successor. To reduce such individuals’ turnover intentions, the family firm should grant them greater creative freedom now and protect them from the imposition of inept administrators like Uncle Kent. Family firms cannot afford to lose such talent as it could be devastating for them. Conversely, employees residing in the ineptitude zone should ideally be asked to leave. This may not be easy given their ownership stake, calculative commitment, and the difficulty of finding another well-paying job. The solution could be to find a job within the family firm that could increase their PJ fit. Alternatively, in exchange for some form of
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Table 2. Centripetal forces (i.e., internal pull and external push) vs. centrifugal forces (i.e., internal push and external pull) and their effect on turnover intentions in the family business External pull: Other jobs are attractive
Internal push: Current job is unattractive
Internal pull: Current job is attractive
Time-bomb zone: Only centrifugal forces are present and may reinforce one another
Tug-of-war zone: Centripetal and centrifugal zones collide
Internal push is intensified by top principal’s power, favoritism, lack of controls, inappropriate use of resources, insufficient pursuit of new opportunities, and outmoded strategies
Internal pull can dominate external pull and be strengthened by calculative commitment and family embeddedness
External pull is strengthened by the desire to acquire more diverse business experience, establish oneself, learn unique capabilities, compete on an equal footing with others, and enjoy more generous compensation and early promotion prospects in other firms
External pull may dominate internal pull but can be mitigated by calculative commitment and family embeddedness Cousin Jack: The talented engineer and administrator whose turnover intentions are weak due to family embeddedness
Cousin Steve: The talented marketer exhibiting moderate turnover intentions due to family embeddedness External push: Other jobs are unattractive
Ineptitude zone: The inhabitants lack self-efficacy and may be divided into inept self-doubters and inept happy campers External push is strengthened by overprotection or lack of self-confidence or self-efficacy due to low PJ fit, making employees believe they cannot survive outside the family firm Uncle Kent (inept happy camper) and Cousin Paul (inept self-doubter): Show no signs of turnover intentions due to a strong external push and calculative and imperative commitment
favor, family firms could negotiate with other businesses to create jobs for inept employees like Cousin Paul that would allow them to develop their capabilities. While Cousin Paul could be characterized as an inept self-doubter, Uncle Kent was a happy camper. Because such employees are so engrained in the company, asking them to leave would be problematic. A good solution could be creating jobs for such employees that would minimize the harm they are doing to the family firm while allowing them to think they are part of the team. Because Uncle Kent was able to easily convince himself of his merits even though no one else saw this perceived value, restructuring his job to decrease his ability to impair the firm could be quite realistic. The tug-of-war zone might be challenging to deal with as outside companies may offer superior alternative employment opportunities. To make sure
Best-of-both-worlds zone: Turnover intentions are minimal because an internal pull is complemented by an external push Uncle Albert: The talented engineer driven by internal pull (i.e., strong family embeddedness and PJ fit) and external push (i.e., calculative commitment due to cost/benefits analysis)
that talented family employees do not develop turnover intentions, family firms need to apply professional HR practices. Applying more control and oversight, using performance appraisal and seeking feedback, and trying to stay competitive on salary and benefits could allow family firms to decrease employees’ turnover intentions. That is, the goal is to make employees feel less uncertainty and fear for their future if they stay with the family firm. Greater transparency and accountability could also make family firms more desirable employers for family and non-family employees alike. At the same time, greater sense of family embeddedness could enable family firms to keep valuable employees even when it is hard for them to compete with more powerful, exciting, and generous competitors. Finally, the best-of-both-worlds zone seems to present the fewest challenges. However, even those occupying this area should not be taken for granted.
How to reduce turnover intentions in the family business: Managing centripetal and centrifugal forces Family firms need to continuously work on enhancing their employee’s family embeddedness and affective and normative commitment. Furthermore, family firms need to pay special attention to PJ fit. Sometimes, even inept employees could be made productive or at least less detrimental for the firm by limiting their activities to those areas they seem to understand the best. Similarly, the most talented employees deserve greater opportunities to experiment with their jobs and be creative. Finally, family firms need to understand that principal-principal problems are real and may play a critical role in generating turnover intentions. Greater transparency and accountability as well as professional HR practices are needed in family and non-family firms alike to reduce turnover intentions.
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Daily, C. M., & Dollinger, M. J. (1993). Alternative methodologies for identifying family-versus nonfamily-managed businesses. Journal of Small Business Management, 31(2), 79—90. De Kok, J. M. P., Uhlaner, L. M., & Thurik, A. R. (2006). Professional HRM practices in family owned-managed enterprises. Journal of Small Business Management, 44(3), 441—460. Granovetter, M. S. (1985). Economic action and social structure: The problem of embeddedness. American Journal of Sociology, 91(3), 481—510. Granovetter, M. S. (2005). The impact of social structure on economic outcomes. Journal of Economic Perspectives, 19(1), 33—50. Kristof-Brown, A. L., Zimmerman, R. D., & Johnson, E. C. (2005). Consequences of individuals’ fit at work: A meta-analysis of person-job, person-organization, person-group, and personsupervisor fit. Personnel Psychology, 58(2), 281—342. Lee, J. (2006). Impact of family relationships on attitudes of the second generation in family business. Family Business Review, 29(3), 175—191. Memili, E., & Barnett, T. (2008). Nonfamily employees’ perceptions of person-organization fit and voluntary turnover in family firms. Academy of Management Annual Meeting Proceedings, 1—6. Meyer, J. P., & Allen, N. J. (1991). A three-component conceptualization of organizational commitment. Human Resource Management Review, 1(1), 61—89. Mitchell, T. R., Holtom, B. C., Lee, T. W., Sablynski, C. J., & Erez, M. (2001). Why people stay: Using job embeddedness to predict voluntary turnover. Academy of Management Journal, 44(6), 1102—1121. Pearson, A. W., Carr, J. C., & Shaw, J. C. (2008). Toward a theory of familiness: A social capital perspective. Entrepreneurship Theory and Practice, 32(6), 949—969. Schulze, W. G., Lubatkin, M. H., & Dino, R. N. (2003). Toward a theory of agency and altruism in family firms. Journal of Business Venturing, 18(4), 473—490. Sharma, P., & Irving, G. (2005). Four bases of family business successor commitment: Antecedents and consequences. Entrepreneurship Theory and Practice, 29(1), 13—33. Sirmon, D. G., & Hitt, M. A. (2003). Managing resources: Linking unique resources, management, and wealth creation in family firms. Entrepreneurship Theory and Practice, 27(4), 339—358. Steier, L. (2003). Variants of agency contracts in family-financed ventures as a continuum of familial altruistic and market rationalities. Journal of Business Venturing, 18, 597—618. Steier, L. P., Chua, J. H., & Chrisman, J. J. (2009). Embeddedness perspectives of economic action within family firms. Entrepreneurship Theory and Practice, 33(6), 1157—1167. Wheeler, A. R., Gallagher, V. C., Brouer, R. L., & Sablynski, C. J. (2007). When person—organization (mis)fit and (dis)satisfaction lead to turnover: The moderating role of perceived job mobility. Journal of Managerial Psychology, 22(2), 203—219.
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How to reduce turnover intentions in the family business: Managing centripetal and centrifugal forces Dmitry Khanin Steven G. Mihaylo School of Business & Economics, Cal State Fullerton, SGMH 5340, Fullerton, CA 92834-6848, U.S.A.
KEYWORDS Family business; Turnover intentions; Centripetal forces; Centrifugal forces; Family embeddedness; Organizational commitment; Person-job (PJ) fit; Alternative employment opportunities
Abstract Turnover intentions refer to the anticipation of leaving one’s job. If realized, turnover intentions may result in loss of human talent and leakage of firm know-how to competitors. This article analyzes the causes and intensity of turnover intentions by contrasting two divergent forces. The first force is centripetal; it draws employees into an organization and makes alternatives less attractive. The second force is centrifugal; it makes the existing job less attractive compared to alternatives. This article argues that various combinations of centripetal and centrifugal forces can be observed in four distinct areas: the time-bomb, ineptitude, tug-of-war, and bestof-both-worlds ‘turnover zones.’ Respectively, the emergence and intensity of turnover intentions in each turnover zone is distinct. Thus, an interesting question to examine is: How do centripetal and centrifugal forces play out in the family business? Applying this analysis to a family firm operating in the western part of the United States helps explain the reasons family employees may or may not form turnover intentions, as well as such intentions’ relative intensity. This article argues that person-job fit and family embeddedness, which are observed when an employee shares the founder’s vision and the integrated values of the family and family business, help reduce turnover intentions. To succeed, however, family firms must also urge inept employees to form turnover intentions. # 2012 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.
1. What are turnover intentions and their causes? Voluntary turnover refers to employees leaving an organization of their own accord as opposed to being
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let go. Voluntary turnover may be preceded by turnover intentions: the anticipation of leaving one’s job. Turnover is often detrimental to business. When employees leave, companies may lose valuable human talent, and their sacrifice could become competitors’ gain. Training new employees requires allocating significant resources. Oftentimes, it also takes a long time and involves a steep learning
0007-6813/$ — see front matter # 2012 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved. http://dx.doi.org/10.1016/j.bushor.2012.09.005
64 curve. For a variety of reasons, this arduous process may not always be successful. This is why companies seek not only to attract valuable employees but also to cultivate and retain their key personnel even during challenging economic times. Studies have identified a variety of organizational factors that can mitigate turnover intentions. These include, for instance, good cultural fit with an organization, which is defined as person-organization (PO) fit, and organizational commitment. Personjob (PJ) fit is another important factor that needs to be considered very carefully. PJ fit measures how well an employee’s talent and skills match the job. Usually, people who do their jobs well also enjoy doing them. However, some may be good at the job they do but would prefer to do another job that better fits their personality. This is why it is important to measure how organizational commitment, PO fit, and PJ fit affect job satisfaction. Furthermore, one needs to understand how job satisfaction may influence the emergence and intensity of turnover intentions. Summarizing numerous studies on the subject, some scholars suggest a quickand-dirty solution to reducing turnover intentions: ‘‘increase person-organization (PO) fit to increase job satisfaction and to decrease intent to turnover’’ (Wheeler, Gallagher, Brouer, & Sablynski, 2007, p. 203). Unfortunately, such quick-and-dirty solutions may not be effective because they do not account for the actual complexity of the mechanisms producing turnover intentions and ignore the role of organizational contexts in this process. The objective of this article is to provide a more realistic explanation of what causes turnover intentions and what affects their intensity, making it more likely that they will be realized. To achieve this goal, this article examines the interface of two countervailing forces operating in organizations. The first force can be characterized as centripetal; it draws employees into an organization by making it appear more attractive than alternatives. The second force can be described as centrifugal; it drives employees away by making alternatives more attractive than the organization. The interface of centripetal and centrifugal forces affects whether or not turnover intentions emerge as well as their relative intensity. Aside from the broader organizational context, how do turnover intentions function in the family firm? Family firms are distinct in many ways from typical organization–—from ownership structure and governance to control, human resource (HR) management, and conduct (Chua, Chrisman, & Sharma, 1999; Daily & Dollinger, 1991). Similarly, how centripetal and centrifugal forces play out in the family business as well as their interface and effect on
D. Khanin turnover intentions may also be distinct. This article explains what makes turnover intentions in the family business distinct. Moreover, it suggests how family firms could benefit from either reducing or prompting family employees’ turnover intentions and how these objectives can be achieved. This analysis of turnover intentions is illustrated by the story of a successful family business operating on the western coast of the United States.
2. Centripetal and centrifugal forces in organizations The push factor (i.e., employee unhappiness with an organization) and the pull factor (i.e., the lure of alternative employment opportunities) could be regarded as two centrifugal forces driving employees away from an organization. Such push and pull factors may interact and reinforce one another. If this happens, the centrifugal effect is particularly strong and likely to produce turnover intentions. However, the opposite centripetal forces may counter centrifugal forces by drawing an employee into an organization. For instance, PO fit (i.e., a good match between an employee and the company) and PJ fit (i.e., a good match between an employee and his/her job) (Kristof-Brown, Zimmerman, & Johnson, 2005) could both be described as centripetal forces. Organizational commitment (usually broken down in the literature into three principal categories–—affective, normative, and continuance commitment) could also act as a centripetal force (Meyer & Allen, 1991). Affective commitment refers to when a person stays with a company out of love or affection. Affective commitment undermines turnover intentions because an employee is fond of the organization. In contrast, normative commitment feeds on an individual’s internalized sense of duty. It may also strengthen centripetal forces, just in a different way: through emphasis on responsibility. Finally, people may not stay in their current positions out of duty or love but rather because alternative job opportunities are hard to come by and/or appear unreachable or too challenging to even attempt to pursue. This is called continuance commitment. The related notion of job embeddedness (Chen, Ployhart, Thomas, Andersen, & Bliese, 2011; Mitchell, Holtom, Lee, Sablynski, & Erez, 2001) could also reinforce centripetal forces and decrease turnover intentions. It represents a combination of PO fit, links to other employees, and the anticipated agony or sacrifice of leaving an organization. If centrifugal forces are not operative but centripetal forces are strong and active, turnover intentions may
How to reduce turnover intentions in the family business: Managing centripetal and centrifugal forces never materialize or may be extremely weak and negligible.
3. The push and pull factors: Internal and external The push factor is usually associated with trying to get out of a current employment situation. Therefore, it is viewed solely as a centrifugal force. However, one can also be repelled rather than attracted by alternative employment opportunities. In contrast to an internal push (i.e., disliking the current job one has), the fear associated with the challenge of searching for other employment opportunities and trying to adjust and succeed in a new environment may be viewed as an external push. Along with the external pull (i.e., being attracted to alternative employment opportunities), an internal pull may also exist: being attracted to one’s existing job. Such an internal pull may be enhanced by good PO fit, PJ fit, and affective and normative commitment. Continuance commitment (i.e., avoiding the fear associated with the challenge involved in searching for better opportunities) enhances external push. To summarize, centripetal forces that attract employees to an organization have two different aspects: internal pull (reinforced by strong organizational commitment, high PO fit and PJ fit, and high job embeddedness) and external push (strengthened by continuance commitment). Similarly, centrifugal forces driving employees away from an organization have two manifestations: internal push (strengthened by low organizational commitment, weak PO fit and PJ fit, and low job embeddedness) and external pull (buttressed by superior alternative employment opportunities, including the temptation of change and new beginnings). The interaction
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of centripetal and centrifugal forces determines (1) whether or not turnover intentions are formed and (2) their relative intensity. Table 1 helps illustrates the emergence and intensity of turnover intentions in four interface areas between centripetal forces (i.e., internal pull and/or external push) and centrifugal forces (i.e., internal push and/or external pull), or turnover zones. The next section analyzes how different aspects of centripetal and centrifugal forces play out and interact in the four fundamental turnover zones and how their interface affects turnover intentions.
3.1. The time-bomb zone This turnover zone arises at the intersection of internal push (i.e., an employee’s unhappiness with the organization as a whole or his/her job and/or position) and external pull (i.e., the existence of superior alternative opportunities that appear feasible and attainable). In this turnover zone, only centrifugal tendencies operate, and the centripetal tendencies are negligible. Thus, the centrifugal forces are unchallenged and dominant. Imagine that you hate your job, and there are plenty of much better and readily available jobs around. What would you do? The moniker time-bomb zone means, of course, that it is only a matter of time that an employee who is simultaneously repelled by his/her current job and attracted by superior alternative opportunities is going to try to leave the organization. Does it matter in this explosive situation which of the two centrifugal forces is dominant? Yes, it does. Somebody entirely frustrated with his/her current job (i.e., internal push dominates external pull) may call it quits even before getting another job. Conversely, if external pull dominates internal push, one may stay a
Table 1. Centripetal forces (i.e., internal pull and external push) vs. centrifugal forces (i.e., internal push and external pull) and their effect on turnover intentions External pull: Other jobs are attractive
Internal push: Current job is unattractive
Internal pull: Current job is attractive
Time-bomb zone: Only centrifugal forces are present and could be mutually reinforcing
Tug-of-war zone: Centrifugal forces (i.e., external pull) collide with centripetal forces (i.e., internal pull)
Turnover intentions: Strong Turnover intentions: Low to strong
External push: Other jobs are unattractive
Ineptitude zone: Centripetal forces (i.e., external push) and centrifugal forces (i.e., internal push) could be mutually reinforcing but could also collide
Best-of-both-worlds zone: Only centripetal forces are present and could be mutually reinforcing Turnover intentions: Nonexistent
Turnover intentions: Low to moderate
66 little longer to try to obtain the best alternative available.
3.2. The tug-of-war zone This turnover zone describes more complex dynamics when a centripetal force (i.e., internal pull) collides with a centrifugal force (i.e., external pull). Neither internal push nor external push is at work here. Imagine someone that is perfectly happy with his/her job. No internal push comes into play, nor is he/she intimidated by the challenges associated with searching for alternative employment opportunities or fearful of the difficulties adjusting to new places. Therefore, there is no external push either. The two forces that are left and collide are the internal pull and the external pull: one loves his/her job but is tempted by opportunities. Hence, this is called the tug-of-war zone. If the centripetal force (i.e., internal pull) is dominant, an employee is more likely to stay. Conversely, if the centrifugal force (i.e., external pull) is dominant, an employee is more likely to leave. The emergence and strength of turnover intentions, however, may be affected by intervening factors, such as affective and normative commitment, job embeddedness, PO fit, and PJ fit. The external pull could be almost irresistible, a proverbial offer one cannot refuse: greater salary, a more interesting job, novelty, and change replete with good promotion prospects. However, such centripetal factors as job embeddedness (i.e., excellent collegial relationships) or normative commitment (i.e., sense of duty and dedication to the company’s vision and mission) may prevail.
3.3. The ineptitude zone This turnover zone describes a situation in which both the centripetal force (i.e., internal push) and centrifugal force (i.e., external push) stem from negative emotions, such as fear, frustration, or anger. Positive emotions, such as love, sense of duty, and belongingness, are lacking. Such imbalance may stem from people in this zone being unfit, inept, or incompetent in terms of their work. There are two possible scenarios that may play out in the ineptitude zone depending on how people react to failure. Some respond by losing self-efficacy, or confidence in their ability to do their job, and they know the reason for their frustration and self-doubt. These could be called the inept self-doubters or eternal sufferers. Others remain self-confident, ignoring their recurrent failures and living in denial. These can be called the inept happy campers. Still, a lack of job offers
D. Khanin others are getting or promotion opportunities that keep getting away could provide a reality check. Let us examine the first type–—the inept selfdoubters. They are in a difficult situation. On the one hand, inept self-doubters understand that they are not good workers. On the other hand, they equally realize that it would be very hard for them to find alternative employment. Why? This looks like a vicious cycle: other jobs are unavailable precisely because they are not good workers and/or do not have the required skills and qualifications. What about the second type? Inept happy campers rarely realize they are inept. However, some do but do not care. Others keep finding excuses or feel they have some other invisible virtues that make up for whatever they lack in aptitude. Nevertheless, even these insufficiently qualified, inept, but self-confident employees often recognize that getting another job for them would be a challenge. Employees lacking the requisite skills and qualifications for a job operate in the ineptitude zone. Usually, everyone knows that a certain employee is incompetent and cannot be trusted. People try to avoid being negatively affected by coworker incompetence. Some go out of their way to deal with another person within or outside the organization. Others pretend they are going to follow an incompetent employee’s advice but in reality do things their own way. Naturally, the two types of inept employees differ in their turnover intentions. An inept self-doubter may stay or try to leave depending on whether the internal push or external push is dominant. If one’s frustration with the existing job (i.e., the internal push factor) outweighs one’s fear of finding oneself in an even more difficult situation elsewhere (i.e., the external push factor), turnover intentions could be strong. Conversely, if one’s fear of change and inertia (i.e., the external push factor) outweighs one’s frustration with his/her current job (i.e., the internal push factor), turnover intentions are likely to be weak or even nonexistent. Such people may say: ‘‘I will never leave this organization!’’ Continuance commitment masked as affective commitment may rule in the ineptitude zone. In contrast, an inept happy camper is unlikely to develop turnover intentions at all. His/her situation is ideal. Despite being terrible at what they do, inept happy campers are confident that they are, in fact, very useful to the organization or do not care if they are not.
3.4. The best-of-both-worlds zone This final turnover zone is most beneficial for an organization. Centripetal forces are not countered in any meaningful way by centrifugal forces.
How to reduce turnover intentions in the family business: Managing centripetal and centrifugal forces Internal pull is reinforced by external push. Hence, the best-of-both-worlds zone is established. In this situation, the employee loves his/her job and would hate to go anywhere else. This ideal situation may be supported when individuals have affective and normative commitment, which could act in unison. Job embeddedness–—defined as good collegial relationships with coworkers–—accompanied by excellent PO fit and strong anxiety experienced when imagining leaving the company could also contribute to the best-of-both-worlds situation. This is because job embeddedness is a mix of internal pull and external push. Does it matter which of these two centripetal forces is dominant? Yes, as usual, it does. For instance, if internal pull dominates external push, one may feel highly eligible for other jobs and also confident that these jobs are within reach and attractive in their own way. However, this does not reduce the current job’s magnetism. Furthermore, an employee can also very clearly see the negative along with positive aspects of alternative employment opportunities. Still, turnover intentions may lurk in the background. If external push dominates, one is strongly opposed to alternative employment opportunities and is highly drawn to the existing job. As a result, turnover intentions are nonexistent. Next, this article will discuss what makes family firms different and how these differences affect the emergence and intensity of turnover intentions.
4. Centrifugal forces in the family business 4.1. Internal push Compared to non-family firms, family firms are distinct in various ways, such as ownership and governance (Greenwood, 2003; Steier, 2003), internal control systems, size and strategy (Daily & Dollinger, 1991, 1992, 1993), conduct (Chua et al., 1999), and HR practices (Carlson, Upton, & Seaman, 2006). Of course, many of these differences may stem from the fact that the majority of family firms are small businesses. The smaller size and simpler organizational structure typical of any small business naturally reduces emphasis on HR management. This can be described as the direct effect of size and organizational structure on governance. In addition, there is also an indirect effect: top managers in family firms often combine the roles of family and business leaders. They may feel that control could undermine their authority. Consequently, owner-managers of family businesses may
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often seek to avoid oversight (De Kok, Uhlaner, & Thurik, 2006). Weaknesses in internal control systems frequently produce so-called agency problems. Such problems occur when the manager (i.e., agent) acts in his/her own interests, which are harmful to the owner. However, in family firms, owners are also often top managers (i.e., agents). This is why family firms were long considered to be immune to agency problems. Later research established that agency problems do not go away in family firms; rather, they may take the form of principalprincipal problems. That is, owner-managers’ interests could diverge from other owners’ interests. Such other owners may not be employed in the family firm, or they may hold less important positions. For instance, Steier (2003) related a story about the founder of a family business lending a substantial sum of family capital to his youngest son to start his own venture without putting suitable controls in place. After the founder died and the youngest son’s venture essentially failed, the family was dismayed to find out that its capital had been substantially reduced by this error of judgment. Such principalprincipal conflicts may exacerbate turnover intentions. First, any work-related or work-family conflicts are bound to raise turnover intentions (Boles, 1996; Lee, 2006). Second, insufficient internal controls and professional HR practices in family firms may undermine family employees’ confidence in their future and produce uncertainty, anxiety, and anger. In other words, internal push in family firms could be aggravated by insufficient control over the top agent. In the example above, there was insufficient control over the top principal–—namely, one of the owners (i.e., principals) also acting as the top manager or agent representing other owners. Such lack of oversight could make other family owners feel powerless. The perception of inadequate transparency and accountability and feeling unprotected from the top principal’s risky behavior may produce turnover intentions. Voluntary turnover could be viewed by family members in this situation as an insurance policy. In other words, if the family capital gets wasted and/or lost through the top principal’s imprudent actions, family members employed in other businesses may still be able to fall back on other retirement funds. Prior studies (Barnett & Kellermanns, 2006) have demonstrated that non-family employees often wonder why they are not treated like family. Such dismay about not being regarded as family despite years of loyal service may induce turnover intentions in nonfamily employees (Memili & Barnett, 2008). However,
68 family employees could equally feel that insufficient checks and balances and the top principal’s unchallenged authority could be demeaning and pose a threat to their future. Scholars argue that altruism–—the intention to act in the interests of other human beings–—may be expressed in family firms as nepotism or overtly favoring family members (Schulze, Lubatkin, & Dino, 2003). However, favoritism may not be spread evenly. Family members could be frustrated that relatives enjoy the most favored status. Scholars have identified three positive characteristics of family firms: personalism, particularism, and parsimony. First, personalism describes how family firms are often used as vehicles for achieving their founders’ personal dreams, such as yielding beneficial outcomes for society. Particularism refers to how family firms often take an unusual route–—for example, by taking interest in developing the local community, a certain technology, or a progressive business model that the family feels especially strongly about and perceives as being part of its mission. Finally, parsimony refers to family firms’ habitual frugality, cost efficiency, economizing, bootstrapping, and avoidance of excessive expenditures and vulgar displays of wealth (Carney, 2005; Steier, Chua, & Chrisman, 2009). While these three characteristics contribute to family firms’ lasting success, they could also make them less attractive. For instance, parsimony may result in lower pay and benefits while personalism and particularism could lead to founder favoritism, which may enhance family members’ private financial costs (Astrachan & Jaskiewicz, 2008). Such issues affect the costs and benefits of family firms and may contribute to turnover intentions. In sum, the specific manifestations of agency (i.e., principal-principal) problems in family firms may create an additional internal push as a centrifugal force turning family employees away from the family business. Furthermore, familiness, or family firms’ distinct resources and capabilities (Pearson, Carr, & Shaw, 2008), may have a downside. Thus, personalism and particularism may feed into founder’s penchant to sacrifice business viability in pursuit of non-economic objectives. Parsimony could also be associated with a lack of resources and insufficient investment in opportunities. As a result of both principal-principal problems in family firms and resource limitations (Sirmon & Hitt, 2003), talented employees may feel that positive change would be hard to achieve in family firms due to a lack of oversight; a stagnant culture; and an ineffective, anemic strategy. In sum, internal push in family firms could be intensified by specific agency
D. Khanin problems related to top principals’ unlimited power and lack of oversight as well as by inappropriate use of resources dedicated to non-economic goals, insufficient pursuit of opportunities, and outdated strategies.
4.2. External pull The underlying differences between family and nonfamily firms could also buttress external pull. Family members often wonder what it would feel like to work in different types of business environments. Such natural curiosity may feed the external pull. Non-family businesses could also look attractive due to the greater compensation they provide as well as the more diverse and collaborative environment in which people of different ethnicities and nationalities work together. Family members are also often encouraged to acquire business experience working in other companies and gain exposure to various organizational environments and contexts to grow as managers. Non-family firms could also be more growth oriented (Daily & Dollinger, 1991, 1992, 1993) and professionally governed; boast unique capabilities in specific areas; and offer better compensation and promotion opportunities, including faster growth within the firm for talented and dedicated employees. In sum, external pull in family firms can be strengthened by the desire to acquire more diverse business experience and managerial skills, learn unique capabilities, prove one’s worth, achieve independence, and enjoy more generous compensation and early promotion prospects.
5. Centripetal forces in the family business 5.1. Internal pull Centripetal forces in family firms could also manifest themselves in a unique way compared to nonfamily firms. Scholars have argued that family employees frequently develop calculative commitment to the family business (Sharma & Irving, 2005). Calculative commitment is the upshot of costbenefit analysis. Such analysis may establish that a family employee ‘has to’ stay in the family business because the rewards of staying–—even when offset by some annoying costs incurred–—are still superior to the rewards of alternative employment in the long run. Family employees may feel, for instance, that by working in the family firm they can actually protect their wealth from being squandered by irresponsible top principals. Therefore, they may decide to join the
How to reduce turnover intentions in the family business: Managing centripetal and centrifugal forces family firm to keep an eye on their parents or siblings running the firm. Others may believe that family employees can enjoy numerous perks unavailable to other family members and non-family employees. Therefore, family members may try to obtain positions to get a nice spot at the table and avail themselves of such opportunities. Family employees can also be driven by genuine dedication to the founder’s vision, the family firm’s mission, and its duty to the local community and society. Recently, scholars have introduced the notion of socioemotional wealth as a motivator of family businesses. It is important, however, to point out that not all family members may share a socioemotional orientation. Both the concept of socioemotional wealth as the dual objective of the family business and familiness as distinct resources and capabilities of the family firm do not seem to take into account that family employees need to be true believers in the founder’s vision and share the family’s values to be able to partake in familiness or endorse the creation of socioemotional wealth. Therefore, this article introduces a different concept to explain the internal pull driving family employees into the family firm: family embeddedness. The term embeddedness, or rootedness, refers to being immersed in a certain environment and being strongly influenced by it. Granovetter (1985, 2005) argued that economic transactions are embedded in social contexts. Individuals may choose, for instance, to do business deals with people from the circle they know well or be influenced by social relatedness. The original emphasis of the term family embeddedness described how entrepreneurs creating new ventures are influenced by transitions in their family lives (Aldrich & Cliff, 2003). Therefore, family embeddedness did not initially focus on the uniqueness of the family business. In contrast, in this article, family embeddedness is defined as the integration of business and family values with the founder’s vision, which influences family employees’ mindsets. From this perspective, a family employee with a sense of family embeddedness is influenced by the family business’s unique mentality, which synthesizes family and business values revolving around the founder’s vision. The degree of family embeddedness reflects how much the values of the family business and the family intertwine to truly become family employees’ bedrock belief system. Family embeddedness occurs when a family employee shares the founder’s dream and has been brought up on family values that continue to influence the family business while business values concurrently infiltrate the family mindset. As a result of such concurrence or sharing of values, internal pull may grow substantially. It is important to note that
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family embeddedness implies a positive interface between the founder’s vision, the family, the family business, and the effect of family members’ socialization to make them into true believers of the family business’s fundamental values. Thus, internal pull in family firms can be strengthened by calculative commitment, which motivates family members to protect their interests by becoming employed in the family business, and family embeddedness, which motivates employees to integrate business values and family values.
5.2. External push Imperative commitment is ‘‘based on a feeling of self-doubt and uncertainty of the ability to successfully pursue a career outside the family business’’ (Sharma & Irving, 2005, p. 19). This is an example of an external push. Some family employees truly believe–—right or wrong–—that the only reason they are employed in the family firm is because of their family connection. Such feelings are especially common in the ineptitude zone discussed earlier. Oftentimes, family members get so much attention and care in the family environment that this makes them unprepared for real life with its inevitable adversity and challenges. There is much to say about the role of love and affection in the family. However, coddling may create future threats for the children one is trying to protect. This is why many families try to ensure family members get outside experience as doing so imparts a sense of reality and provides an opportunity to prove oneself before one may return to the family firm. Unfortunately, such baptism by fire is not always achieved. Some family members try desperately to fit in as they move into the more competitive and challenging environment of the non-family business but ultimately cannot make it and give up. Some can only secure low-paying or part-time jobs. Others try but cannot attain their personal goals. Once these prodigal sons and daughters are taken back into the fold, the damage has often been done. It may be very difficult for these family employees who lack selfefficacy or self-confidence to compete for alternative employment opportunities. They feel that their family connections are all they have and cling to them. Therefore, smothering love and lack of confidence in one’s ability to do the job right and compete with others may enhance external push in family firms. Thus, in summary, external push in family firms can be strengthened by lack of self-confidence or self-efficacy and prior failure, making family employees excessively dependent on the family firm. The next section describes how centripetal and centrifugal forces play out in the family firm.
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6. Jack’s story: The family business and turnover intentions A number of family employees were interviewed for this study. Their stories showed that centripetal and centrifugal forces play out differently in the family firm context and provided rich illustrations. However, one story seems more telling than others. It brought to life the abstract concepts discussed earlier. Naturally, names were changed to protect the identity of the individuals interviewed. Jack was one of the first family employees interviewed. Overall, he described the family business as being very successful. The business grew from his grandfather’s insight, and once it was implemented, the outcomes were nothing but spectacular. In fact, the original idea was so good that the family business practically ran itself. Jack admitted, however, that his family was not very driven. The bonanza Jack’s family had been enjoying could have been multiplied through ingenious marketing, but this required strong effort and unfortunately was never pursued. The firm was originally run by two brothers, Uncle Albert and Uncle Kent, and their responsibilities were divided. Uncle Albert was a talented engineer in charge of the technological aspects of the operation, and Uncle Kent was the administrator and was somewhat old fashioned. He did not believe that marketing mattered and felt good about everything exactly the way it was. More than anything, Uncle Kent cherished being the boss. Luckily, the business was performing so well that not much effort was required to keep it running. The expectation was that the customers would find the firm based on word of mouth and would place lucrative orders. All management had to do was to stay put. Oddly enough, it worked. Uncle Kent was skeptical about new-fangled ideas, including guerilla marketing and social media, and he did not seem to understand the importance of such approaches. They seemed irrelevant, something that other companies did for no reason at all. The firm was governed by the three joint mantras: ‘go slow,’ ‘easy does it,’ and ‘what’s your hurry’? Neither Uncle Albert (the technologist) nor Uncle Kent (the administrator) had turnover intentions. Uncle Albert could find a more interesting and higher-paying technological job outside the company. However, due to his ownership stake, no other job could even remotely match what he was pulling in as the top owner. Uncle Albert had relatively high PO fit. He seemed to enjoy the slow-paced, traditional culture at the company. In addition, his PJ fit was high. In other words, the job was much to his liking. He was driven by the strong internal pull, which was reinforced by family embeddedness. He shared his dad’s dream, and family and business values were
D. Khanin one in his mind. The external pull was there: as a technological genius, he would have loved the more challenging environment of a larger modern company. However, moneywise, such alternatives fell short, and his turnover intentions were weak. Hence, Uncle Albert occupied the best-of-bothworlds turnover zone. His internal pull was fortified by affective and normative commitment and family embeddedness. His external push stemmed from calculative commitment. In contrast, Uncle Kent did not seem likely to entertain turnover intentions of any kind. His alternative employment opportunities were nonexistent because he was an inept administrator. Subjectively, however, both his PJ fit and PO fit were high. He enjoyed the power and privileges that came with the job and took full advantage of them. Uncle Kent’s internal pull was driven by imperative commitment: a lack of alternatives. The internal push was absent because he did not comprehend that his performance was poor. Even if Uncle Kent had his doubts, staying with the company was fueled by imperative commitment due to the impossibility of getting another job as well as calculative commitment–—namely, the massive rewards he received from the family firm. Uncle Kent was a classical inept happy camper, a fully satisfied resident of the ineptitude zone. Unlike many less-fortunate family businesses, the firm crossed the generational divide successfully, and the transition went smoothly. The successors seemed to get along just fine. Both enjoyed the firm’s slowpaced, easy-does-it patriarchal culture. There were also three cousins employed in the family firm, and only a fourth cousin had opted out. The three cousins had different educational backgrounds, interests, capabilities, and prior experience. Cousin Jack was educated as an engineer, and he later acquired an advanced business degree. Cousin Steve was a business major and a marketing maven. Cousin Paul spent many years outside the family firm, working mostly as a disc jockey in a nightclub, but finally saw the light and belatedly joined the firm. Cousin Jack had very high PJ fit. He excelled at his job, enjoyed what he was doing, and was getting better at it all the time. He was also friends with non-family employees. Jack had plenty of experience working for other firms in which he had held higher positions. In fact, he had to take a pay cut to join the family firm. While Jack was driven by internal pull, he was not indifferent to external pull either. He had opportunities to join other companies and receive larger compensation packages. However, despite some turnover intentions that could be hard to disregard entirely, he chose to stay with the family firm. Both family embeddedness and
How to reduce turnover intentions in the family business: Managing centripetal and centrifugal forces calculative commitment were at work. He sincerely shared his father’s and grandfather’s dream and was a true believer in joint family/business values. However, Cousin Jack was no dreamer and was quite materialistic as well. His ownership share could have made the family firm a better deal even despite the lower salary and benefits. Thus, Cousin Jack occupied the tug-of-war zone. The external and internal pulls were at odds with internal pull winning due to both family embeddedness and calculative commitment. As a gifted marketer and salesman, Cousin Steve was unhappier than Cousin Jack ever was with the company’s culture. His PO fit, therefore, was low. In contrast, Cousin Steve’s PJ fit was very high. The job was right up his alley, and he was able to gradually change the company despite Uncle Kent’s resistance. There is no doubt that a talented marketing person like Cousin Steve could enjoy superior alternative employment opportunities. Moreover, Cousin Steve’s family embeddedness was lower than Cousin Jack’s, and his turnover intentions were higher. It would have been hard for him to reject the temptation of the exciting opportunities associated with more interesting opportunities to apply his talent (i.e., the external pull). He was also continually traumatized by having to deal with the recalcitrant, stagnant culture of the family business (i.e., the external push). Therefore, the gifted and energetic Cousin Steve seemed to be in the time-bomb zone. Finally, Cousin Paul was not high either on PO fit or PJ fit. He stayed solely for pragmatic reasons. His performance was suboptimal. Family members and non-family members alike were critical of his work. This generated a strong internal push, and Cousin Paul was well aware of it. However, in a parochial company like theirs, showing him the door was out of the question. Although Cousin Paul abhorred his job, he was determined to persevere and stay on. Cousin Paul was driven by an external push feeding imperative commitment. He was essentially trying to ensure he was not pushed aside when it came to allocating the family fortune. Having lost his external pull due to a long list of previous failures, he was mostly influenced by external push. Sticking around was probably the right decision for him, but it was not the best solution for the firm. Just like Uncle Kent, Cousin Paul was a denizen of the ineptitude zone, but he was not a happy camper. Table 2 summarizes the overall effect of familyspecific factors on the centripetal and centrifugal forces at work in this family business as well as the turnover zones occupied by the different members of the family.
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7. How can family firms manage employees’ turnover intentions? Should family firms try to reduce family employees’ turnover intentions? If so, what strategy should they use? Conversely, should family firms try to help family employees develop turnover intentions? If so, could this goal be achieved in a sensitive way? The answer to all of these questions seems to be yes. Family businesses should do everything they can to keep talented family employees and ease out inept family employees. Rethinking the discussion of turnover zones could help resolve both dilemmas. It is important to analyze the key centripetal and centrifugal forces governing employees’ motivations and turnover intentions. Let us start with the time-bomb zone. Clearly, employees residing in this zone represent a huge flight risk. While it could take them a long time to take the plunge, when the right opportunity presents itself, they could be on their way to another company in the blink of an eye. Should the family try to persuade them to stay? Such persuasion may work sometimes with salary increases and promises of greater latitude and promotion. However, such a move may be seen as too little too late. The decision really depends on how much value a particular employee has for the family company both now and in the future. If a young family employee wants to leave to try his/her luck in a different environment, the family firm may actually want to be supportive of this intent and even prompt other young family members to form such turnover intentions. If an employee has a good sense of family embeddedness, he/she will come back and bring in new competencies, renewed energy, self-confidence, and self-efficacy. This could be a positive, invigorating experience that could enrich the family firm and enhance its strategic repertory. However, when someone like Cousin Steve decides to leave, that could create a major problem for the family firm. Such a departure could deplete a firm’s talent pool and deprive it of a possible successor. To reduce such individuals’ turnover intentions, the family firm should grant them greater creative freedom now and protect them from the imposition of inept administrators like Uncle Kent. Family firms cannot afford to lose such talent as it could be devastating for them. Conversely, employees residing in the ineptitude zone should ideally be asked to leave. This may not be easy given their ownership stake, calculative commitment, and the difficulty of finding another well-paying job. The solution could be to find a job within the family firm that could increase their PJ fit. Alternatively, in exchange for some form of
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Table 2. Centripetal forces (i.e., internal pull and external push) vs. centrifugal forces (i.e., internal push and external pull) and their effect on turnover intentions in the family business External pull: Other jobs are attractive
Internal push: Current job is unattractive
Internal pull: Current job is attractive
Time-bomb zone: Only centrifugal forces are present and may reinforce one another
Tug-of-war zone: Centripetal and centrifugal zones collide
Internal push is intensified by top principal’s power, favoritism, lack of controls, inappropriate use of resources, insufficient pursuit of new opportunities, and outmoded strategies
Internal pull can dominate external pull and be strengthened by calculative commitment and family embeddedness
External pull is strengthened by the desire to acquire more diverse business experience, establish oneself, learn unique capabilities, compete on an equal footing with others, and enjoy more generous compensation and early promotion prospects in other firms
External pull may dominate internal pull but can be mitigated by calculative commitment and family embeddedness Cousin Jack: The talented engineer and administrator whose turnover intentions are weak due to family embeddedness
Cousin Steve: The talented marketer exhibiting moderate turnover intentions due to family embeddedness External push: Other jobs are unattractive
Ineptitude zone: The inhabitants lack self-efficacy and may be divided into inept self-doubters and inept happy campers External push is strengthened by overprotection or lack of self-confidence or self-efficacy due to low PJ fit, making employees believe they cannot survive outside the family firm Uncle Kent (inept happy camper) and Cousin Paul (inept self-doubter): Show no signs of turnover intentions due to a strong external push and calculative and imperative commitment
favor, family firms could negotiate with other businesses to create jobs for inept employees like Cousin Paul that would allow them to develop their capabilities. While Cousin Paul could be characterized as an inept self-doubter, Uncle Kent was a happy camper. Because such employees are so engrained in the company, asking them to leave would be problematic. A good solution could be creating jobs for such employees that would minimize the harm they are doing to the family firm while allowing them to think they are part of the team. Because Uncle Kent was able to easily convince himself of his merits even though no one else saw this perceived value, restructuring his job to decrease his ability to impair the firm could be quite realistic. The tug-of-war zone might be challenging to deal with as outside companies may offer superior alternative employment opportunities. To make sure
Best-of-both-worlds zone: Turnover intentions are minimal because an internal pull is complemented by an external push Uncle Albert: The talented engineer driven by internal pull (i.e., strong family embeddedness and PJ fit) and external push (i.e., calculative commitment due to cost/benefits analysis)
that talented family employees do not develop turnover intentions, family firms need to apply professional HR practices. Applying more control and oversight, using performance appraisal and seeking feedback, and trying to stay competitive on salary and benefits could allow family firms to decrease employees’ turnover intentions. That is, the goal is to make employees feel less uncertainty and fear for their future if they stay with the family firm. Greater transparency and accountability could also make family firms more desirable employers for family and non-family employees alike. At the same time, greater sense of family embeddedness could enable family firms to keep valuable employees even when it is hard for them to compete with more powerful, exciting, and generous competitors. Finally, the best-of-both-worlds zone seems to present the fewest challenges. However, even those occupying this area should not be taken for granted.
How to reduce turnover intentions in the family business: Managing centripetal and centrifugal forces Family firms need to continuously work on enhancing their employee’s family embeddedness and affective and normative commitment. Furthermore, family firms need to pay special attention to PJ fit. Sometimes, even inept employees could be made productive or at least less detrimental for the firm by limiting their activities to those areas they seem to understand the best. Similarly, the most talented employees deserve greater opportunities to experiment with their jobs and be creative. Finally, family firms need to understand that principal-principal problems are real and may play a critical role in generating turnover intentions. Greater transparency and accountability as well as professional HR practices are needed in family and non-family firms alike to reduce turnover intentions.
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