The relationship between the psychological contract and retention of staff in the banking sector in South Africa.

Abstract

ABSTRACT South African organisations are under a great deal of pressure to retain their available talent. Many industries have put in place talent management strategies to develop and retain staff, some of which remains unsuccessful. Furthermore, various factors such as the changing labour market, organisational transformation and the unstable global economic climate have affected the financial stability of organisations. The instability faced by organisations has ruptured relations of their employees causing distress and hence, resulting in employees seeking alternative employment. Thus, it is imperative to understand the employer-employee relationship under the terms and conditions of the psychological contract. The study focuses on establishing a relationship between the psychological contract and retention of staff in a banking institution in South Africa. The study was undertaken in Gauteng, South Africa, and was conducted within the retail IT department of a banking institution with a staff complement of 1400 staff. A sample of 304 professionals was drawn across using non-probability sampling technique. Data was collected using a questionnaire, the validity and reliability of which were determined by using Factor Analysis and Cronbach‟s Alpha Coefficient respectively. Data was analysed using descriptive and inferential statistics. The study established that there is a significant relationship between employees‟ expectations of their organisation and their importance of having these expectations met. The study established that there is a significant and direct relationship between the organisation‟s expectations of the employee and the importance of employees meeting those expectations. Various other findings relating to the dimensions of the psychological contract and the dimensions of employment information (career status, intention to seek alternative employment, employee commitment, job involvement, organisational support, job satisfaction, values and importance of work) were assessed and generated significant findings. Based on the results of the study, a model reflecting recommendations for managing the psychological contract and the employment information are presented, which when implemented, have the potential to enhance employee retention.