Human Resource Management Practices and Voluntary Turnover: A Study of Internal Workforce and External Labor Market Contingencies

Abstract

We tested relationships between employee quit rates and two bundles of human resource (HR) practices that reflect the different interests of the two parties involved in the employment relationship. To understand the boundary conditions for these effects, we examined an external contingency proposed to influence the exchange-based effects of HR practices on subsequent quit rates—the local industry-specific unemployment rate—and an internal contingency proposed to shape employees’ conceptualization of their exchange relationship—their employment status (i.e., full-time, part-time, and temporary employment). Analyses of lagged data from over 200 Canadian establishments show that inducement HR practices (e.g., extensive benefits) and performance expectation HR practices (e.g., performance-based bonuses) had different effects on quit rates, and the former effect was moderated by unemployment rate. The effects of HR practices on quit rates did not differ between FT and PT employees, but a different pattern of main and interactive effects was found among temporary workers. These findings suggest that employees’ exchange-based decisions to leave may be less affected by the number of hours they expect to work each week, and more by the number of weeks they expect to work.