Role of manager-employee relationships in retaining knowledge workers in IT industry.

Premalatha, P.

This study highlights that retention is possible not so much by HR strategies but by line strategies. The paper discusses the role of line managers in retaining knowledge workers in the Indian Information Technology (IT) Services industry using grounded theory research design. The research is based on in-depth interviews with sixteen line managers, eighteen employees, ten human resource management professionals and eight top management officials using purposeful and theoretical sampling. Results of the study highlight the experiences of employee-manager relationships in understanding the research phenomenon.

Introduction

The Information Technology and Business Process Management (ITBPM) industry is one of the major contributors to India's growing economy (Agrawal, Khatri and Srinivasan, 2012; NASSCOM, 2015). The Indian IT-BPM sector which is engaged primarily in outsourced 'knowledge work', have produced a highly visible new category of global 'knowledge workers' in India (Agrawal, 1999; Amar, 2002; Upadhya, 2009).The industry largely credits its growth and development to its Knowledge workers (Agrawal, 1999; Drucker, 1999) and the knowledge that the incumbents in the industry possess (Davenport & Prusak, 2000; Nonaka & Takeuchi, 1995; Polanyi, 1967).

When comparing the data between the year 2000-01 and 2013-14 (Table I), it is evident that the industry has remarkable contributions and employment generation for knowledge workers; 88 percent increase in IT Services and exports, 92 percent increase in BPM exports and 69 percent increase in domestic market and overall the sector accounts for 85 percent increase in number of knowledge workers employed in IT-BPM sector (NASSCOM, 2008; NASSCOM, 2015). These knowledge workers in the industry have transformed the industry and the country from just being a destination for support services to the space for high end knowledge-intensive products and services.

Though, the industry has its expansion and presence and growth within the country and globally, it witnessed difficulties, economic fluctuations and uncertainties (Kulshrestha & Sachdeva, 2011; NASSCOM, 2009; Paranjape, 2009) and human resources concerns (Agrawal, Khatri & Srinivasan, 2012; Gaan, 2011; Kummamuru, 2014; Mishra & Farooqi, 2013; NASSCOM, 2008; 2014; 2015) between late 1990s and 2015. Thus, the industry faces a challenge to attract and especially retain employees.

Rationale for the Study

Contemporary theories in management have neglected studying the role of line managers/immediate supervisors and their relationships with the employees in retaining knowledge workers. There is substantial literature pertaining to identifying and measuring factors such as job satisfaction, organizational commitment, job involvement, performance, intentions to quit and alternate employment opportunities leading to voluntary turnover etc (Premalatha, 2011). Contrary to the extant literature, insights from the industry interaction reveals that the role of line managers and the relationship with the employees are quoted as the main reason for voluntary turnover, engagement and retention of employees pertaining to knowledge workers in IT-BPM industry. It is misleading to rely on the existing literature to begin with for pursuing research in a sector which deals with dynamic and volatile contextual factors. Thus, as suggested by Charmaz (2006), this study did not begin with a theory or conceptual framework based on the available literature, as doing so may lead the inquirer conditioned or biased to the factors intensely quoted in the literature and may ignore the rest. Also, while analysing the methodology adopted in the existing literature, it was found that it is predominantly a positivistic paradigm. The present study focuses on the assumption that reality is subjective, multiple and socially constructed by its participants (Bryrnan, 1984; Gubaand Lincoln, 1994) and thus follows the grounded theory, a qualitative methodology. The objectives of the study are to explore the significance of manager-employee relationships in retaining knowledge workers in Indian IT Services industry and to formulate a substantive theory in the area of retaining knowledge workers.

Methodology

The study is based on the grounded theory design, a qualitative inquiry approach (Charmaz, 2006; Glaser & Strauss, 1967; Locke, 2001; Premalatha & Srivastava, 2014; Strauss & Corbin, 1998). Grounded theory is a qualitative research method in which the theory emerges from the rich data collected from multiple stakeholders. It is an inductive, theory discovery methodology that uses a systematic set of procedures to develop a theoretical account covering the features of a topic while simultaneously grounding the account in empirical observations of data (Glaser & Strauss, 1967).

The study is based on fifty two in-depth interviews from ten organizations in IT Services industry in India which includes stakeholder groups such as line managers (sixteen), employees (eighteen) who are the primary stakeholders and human resource management professionals (ten), management officials (eight) who are the secondary stakeholders for the study. The line managers in this study refer to the managers who head or lead the projects and head a team of employees. Purposeful sampling (Patton, 1990) and theoretical sampling (Glaser & Strauss, 1967) were used to locate the different stakeholders and data was collected through unstructured in-depth interviews. Interview data was transcribed verbatim and was analysed using open, axial and selective coding framework (Strauss & Corbin, 1998) and facilitated by the software Atlas ti version 5.0. In the open coding phase, the text (interview transcripts, field notes, theoretical memos and documents) were analyzed for important information pertaining to understanding the research phenomenon. This phase facilitated to uncover, name and develop concepts. In axial coding phase, events, observations, incidents, actions and interactions that were found to be conceptually similar in nature or related were grouped under 'categories'. Selective coding was used to identify the inter-linkages and relationships among the categories identified during the axial coding phase.

[FIGURE 1 OMITTED]

Results & Discussion

The study reflects the lived experiences of managers, employees and top level management in the industry. The following are identified as the best practices and strategies adopted by managers to bridge the relationship between employees and managers and to retain knowledge workers. The study captures the following as the evidently favored retention practices based on the field reality and not just merely on the prescriptive strategies that ought to be practiced. Grounded theory explains what is the phenomenon, not what should, could, or ought to be. The findings of the study is presented in fig. 1 and discussed under the following propositions:

Proposition 1. Empowering the role of line managers by adopting Middle-up-down management is likely to positively influence the retention of knowledge workers

Proposition 1.1. Middle-up-down management is proposed as a five dimensional construct constituted by the following dimensions:

* Accountability and Responsibility of middle level managers *

* Mediating role of middle managers to liaise between the business heads and the employees

* Aligning performance appraisals to organizational strategy

* Mentoring

* Enabling employee voice

The study highlights the significance of the role of managers in retaining talent as they are the resources who are instrumental in articulating the vision of the organization. Adopting middle-up-down management (Nonaka & Takeuchi, 1995) is proved to be apt in retaining talent. Top management articulates the vision or dream for the company, while front-line managers facilitate in cascading it to the field reality. The gap between the dream and reality is narrowed down by middle managers who mediate between the two by positioning themselves as the 'knot', 'bridge,' and 'knowledge engineers'.

Project Managers are highly criticized during appraisal periods especially in organizations where they adopt performance appraisals through 'forced ranking method' which is popularly referred to as 'Bell Curve Fitting'. It creates confusion, chaos, resentment, mistrust, disengagement and dissatisfaction, intentions to quit among the employees (Premalatha, 2012). Thus, it is imperative for the organization to be convinced with the rationale for adopting forced ranking, grooming managers and leaders to be accountable for the execution of forced ranking and linking this appraisal mechanism with the overall strategic intent of the organization. A good manager clarifies what is expected of his team members and their key performance indicators (KPI). Mentoring is an important job of any manager, especially the middle managers and it should not be left to HR alone. "A good mentor is someone absolutely credible whose integrity transcends the message - be it positive or negative, tells you things that you may not want to hear but leaves you with the feeling that you have been heard, interacts with you in a way that makes you want to become better, makes you feel secure enough to take risks, gives you the confidence to rise above your inner doubts and fears, supports your attempts to set stretch goals for yourself, and presents opportunities and highlights challenges you might not have seen on your own" (DeLong, Gabarro & Lees, 2008).

Successful organizations in the industry take more initiatives to make mentoring an important strategy. Employee retention is fostered when organizations create dialogical spaces for employees to express their concerns and review their employees' expectations and career development. During challenging times in the organization, the role of middle managers as a bridge between the top management and their associates becomes crucial. It was reported that there was increase in the frequency of communication to the employees from the top level management through their first line managers to the employees regarding the problems faced by the organization and its remedial measures.

Efforts were taken to reassure the talent by conveying decisions received from the top management and business heads on productivity measures, layoffs, salary cuts, withheld payments on performance bonus for the previous quarter and expected salary hikes for the forthcoming appraisal periods etc. These communication patterns and the role of middle managers help the members in the organization to sail through the difficult times and creating avenues for further growth and development.

Proposition 2: Role of line managers as vigilant and level 5 leaders is likely to positively influence retention of knowledge workers

Proposition 2.1: Grooming managers as vigilant leaders positively impacts the capability development of managers to handle challenges during difficult times.

Proposition 2.1a: Vigilant leadership is a two dimensional construct constituted by the following dimensions:

* Strategic foresightedness

* Culture of discovery in the workplace

Proposition 2.1b: Operationally myopic managerial behaviour negatively influences vigilant leadership

Proposition 2.2: Grooming managers to be level 5 leaders positively impacts managerial capabilities in enabling employee voice.

Proposition 2.2a: Level 5 leadership is a two dimensional construct constituted by the following dimensions:

* Personal Humility

* Professional will

Proposition 2.3: Leadership development programs positively impact the transformation of managers into leaders

Proposition 2.4: Knowledge management initiatives positively impact the transformation of managers into leaders

Proposition 2.5: Top management philosophy of empowerment positively impacts the transformation of managers into leaders

The study found that role allocation, bringing in role clarity in one's profile, taking initiatives as and when required, building rapport with employees and management, providing constant feedback to the members and being transparent are some of the expectations that employees have from their managers. The best way to engage and retain knowledge workers is to get managers to take responsibility for engaging and retaining their best people.

It is important for organizations to make managers more of a vigilant leader because their behaviors have an impact on employee retention and business at large. A single-minded focus on managing current operations narrows the field of vision of the management team and deters frontline employees from sharing concerns about troubling or promising signals on the horizon. A vigilant leader focuses externally and stays open to diverse perspectives, applies strategic foresight and probes deeply for second-order effects and encourages others to explore widely by creating a culture of discovery. Vigilant leaders make sure that they have a clear view of the big picture (Day & Schoemaker, 2008). Preparing managers to be vigilant leaders during uncertainties is highly crucial. Often, attrition increases in an organization when negative conversations increase. Therefore, in order to prevent these negative conversations from affecting the general climate in the organization, it is necessary that supervisors are able to address the concerns of employees effectively and provide them with accurate responses for questions they may have by adopting a proper recession plan.

Collins's (2001) level 5 leadership is important in understanding the role of managers leaders. Level 5 refers to a five-level hierarchy of executive capabilities, with level 5 at the top. Level 5 leaders embody a paradoxical mix of personal humility and professional will. The line and human resource managers participated in the study attributed their success of retailing talent to management and leadership development programs, workshops, knowledge sharing sessions that they have regularly attended and support and facilitation received from their supervisors and management.

Proposition 3: Role of managers as organizational ethnographers is likely to positively influence retention of knowledge workers

Proposition 3a: Organizational ethnographer is proposed as a five dimensional construct with the following dimensions:

* Effective interaction with employees

* Transparency in communication

* Open culture

* Connectedness to employee experiences

* Conducting stay interviews

Proposition 3b: Managers as organizational ethnographers is likely to positively influence the managerial capability of identifying employees' intentions to quit

Organizations take measures to allot time for managers to meet with their employees on a regular basis. It is reported that organizations have increased the touch time with the employees during tough times.

The study reveals that employees are comfortable with managers who are honest and transparent in their communication. Employees prefer clarity in communication. Organizations that create an open culture which reduces the hierarchical relationships and develops the managers who can be empathetic, compassionate, caring and approachable experience higher rate of retention. This promotes employees to open up with their issues both professional as well as personal, thus leading to a meaningful confrontation and interpersonal relationship.

To intensify the role of managers in retaining talent, the study identifies the need for 'development of manager as an ethnographer'(Premalatha, 2012). This could be a new paradigm in bringing about the desired changes regarding retaining knowledge workers in organizations. Ethnography is a qualitative research design in which the researcher describes and interprets the shared and learned patterns of values, behaviors, beliefs, and language of a culture-sharing group (Harris, 1968). Competencies of a good ethnographer prove to be a good value added approach when it is imparted to the managers. This sounds integral as managers are the ones who spend most of their time in dealing with people issues. Managers who play the role of a good ethnographer in understanding the lived experiences of employees, support the organizations to achieve sustainable competitive advantage by engaging and retaining the knowledge workers. This is attained mainly through rapport building. Managers can build effective relationships with employees only when they allow them to voice their opinions (Ancona et al, 2007). These conversational spaces act as points of retention, as employees are aware that the organization is being transparent with them and is giving them adequate opportunities to discuss their concerns in meaningful ways.

Being an organizational ethnographer facilitates the managers in sensing retention dilemma among their employees. Organizations lose employees when they fail to provide opportunities as desired by the employees, and when it is provided by their competitors. Some managers are pro-active in identifying the individual's career aspirations and identifying if there are available opportunities within the scope of the projects or in other projects within the organization. In case of referring employees to other projects, though, the manager loses a valuable employee from his project, the employee is retained within the organization.

When asked about this, most of the managers say that they can easily identify the signals when employees are all set to leave. Decisions to leave are not impulsive. Rather, the employees go through a period of intentions to quit. If the manager or the organization could understand during this period and discuss with the prospective leaver, the employee's intentions probably can be changed.

Proposition 4: Role of line managers in creating a retention culture is likely to positively influence retention of knowledge workers

Proposition 4a: Retention culture is proposed as a three dimensional construct with the following dimensions:

* Positive work place energy

* Workplace fun

* Conducting engagement surveys

Proposition 4b: Role of supervisors as a police officer is likely to negatively impact retention culture in organizations.

For employees in IT sector, their project and the team is their organization. Their culture is mainly based on the assumptions, shared meanings what people attribute to their project than to the entire organization. Organizations feel it necessary to foster the retention culture in their teams. The workforce feels the need to stay back when there is substantial positive energy in the workplace. "Creating the positive energy is going to be the major challenge for leaders and human resource management professionals over the next twenty years. Leadership is about managing energy, first in yourself and then in those around you" (Clawson & Newburg, 2005).

Organizations take initiatives to create a platform for employees to discuss and share what they feel about their stay in the organization during their tenure. This can happen only when organizations cultivate a conducive retention culture by building positive energy. However, the field data and the literature also reveal the role of organizations in creating abusive managerial behaviors and mindless expectations from the managers. The tough expectations from managers prevent them from considering the potential benefits of fun at work and expect them to act like police officers (Newstrom, 2002). Thus, the supervisor-as enforcer model placed significant binders on first-level managers, and their deeply held attitudes prevent them from seeing the possible gains to be attained from a lighter work atmosphere (Newstrom, 2002). Successful organizations conduct more frequent dip-stick satisfaction and engagement surveys within the verticals to understand the pulse of the employees.

It is interesting to note that organizations who are positive and appreciative about their future, conduct 'stay interviews' for their employees (Cooperrider & Whitney, 2005; Whitney, Cooperrider, Bloom & Kaplin, 2005). Stay interviews are the discussion conducted by line managers during the tenure of employees' stay in the organization. This is done on a regular basis to understand their needs, concerns, ideas, career anchor, career path and development goals for the individual and the organization. This contrasts the very popular 'exit interviews' which are done to understand the reasons for leaving and feedback about the organizational processes and systems while the person is all set to leave. These kinds of stay interviews reiterate the need for line managers to be the organizational ethnographers.

Conclusion

The theory developed as an outcome of this study using grounded theory focuses on the relevance and utility to the settings studied, providing the stakeholders some understanding and control over situations they encounter on a daily basis (Glaser & Strauss, 1967). The substantive theory formulated is closely linked to the practice domain. The research findings are discussed with middle managers, senior managers and human resource professionals to understand its relevance in practice domain. The findings of the study serve as a guideline for managers for understanding their role in retaining knowledge workers. The growing complexity of people issues in the organization demands HR to be strategically aligned with business planning and line management (Ulrich, 1987). Role of line managers is important in talent retention like any other HR functions. Successful organizations believe that though HR policies and practices are formulated by HR professionals in consultation with line managers, it is the line managers who play the main responsibility in implementing these strategies. It is evident from the voices of employees that the qualities and capabilities of their immediate manager (Ancona et al, 2007; Brewster, Brookes & Gollan, 2015; Day & Schoemaker, 2008; Newstrom, 2002) are important elements in retaining knowledge workers. Interpersonal relationship with supervisors has significant impact on turnover intentions among new entrants in the software industry (Kannan & Vivekanandan, 2012). It is the line managers who deal on a daily basis with allocating roles and monitoring the performance of their subordinates (McGuire, Garavan, Saha & O'Donnell, 2006). Subordinates who perceived their supervisors as more abusive were more likely to quit their jobs. Abusive supervision impacts lower job and life satisfaction, lower normative and affective commitment, and higher continuance commitment, conflict between work and family and psychological stress and less favorable attitudes to jobs (Tepper, 2000). The consequences of abusive supervisory behavior (Ashforth, 1997; Bies & Tripp, 1996; Tepper, 2000) and the absence of supervisor support will lead employees to develop aversive experiences and feelings of inefficacy and psychological distress (Mirowsky & Ross, 1989) which costs the organization and develops turnover intention and finally turnover. Excessive personnel turnover is costly to the organization (Cascio, 1982).

The growing demand for knowledge workers in the industry calls for immediate action plans to retain them. Organizations should aim to measuring retention rather than turnover. (Waldman & Arora, 2004). Organizations in the industry have adopted effective HRM systems for knowledge workers (Achim, 2014). Giving line managers the responsibility for HRM enables them to link the people more closely with other aspects of day-to-day management as they have frequent, direct contact with employees and, therefore, an opportunity to understand and respond quickly to employee concerns that the HRM function cannot match (Brewster, Brookes & Gollan, 2015). Middle managers are the 'linking pins' in the realization of HRM strategy (Currie & Proctor, 2001). Thus, retaining knowledge workers is not merely an HR strategy; it is a line function and a corporate strategy (Premalatha, 2012).

Future Research Implications

The propositions emerged from this study can be researched using a positivistic paradigm. The study may not hold good for generalizability of the findings. It can be extended and checked for possible transferability of the research outcomes to knowledge-intensive sectors such as IT product companies, banking, financial services and insurance, consulting, pharma, retail and manufacturing, as attrition and replacement of talent are always a major concern in these sectors. Witnessing continuous changes in the business environment, behavioral changes in the current workforce, shift in psychological contract, demand more interpretivist approach than a positivistic paradigm for exploring the research phenomena in fields such as organizational behavior and human resource management (Premalatha & Srivastava, 2014). The study also recommends the need for replacing the extant theories and developing new theories in management through grounded theory methodology, as some of the extant theories have become obsolete in today's context.

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P. Premalatha is Associate Professor, Centre for Human Resource Management and Labor Relations, School of Management and Labor Studies, Tata Institute of Social Sciences (TISS), Deonar, Mumbai 400088. Email: premalatha@tiss.edu

Table 1 Knowledge Professionals in Indian IT-BPM
Sector: 2000-01 to 2013-14 (Nos)

Sector/     2000-1    2001-2    2002-3    2003-4     2004-5
Year

IT          162000    170000    205000    296000     316000
Services
and
Software
Exports

BPM          70000    106000    180000    216000     316000
Exports

Domestic    198114    246250    285000    318000     352000
Market

Total       430114    522250    670000    830000    1058000

Sector/      2005-6     2006-7     2007-8     2008-9    2009-10
Year

IT           513000     690000     860000     877000     958000
Services
and
Software
Exports

BPM          415000     553000     700000     635000     738000
Exports

Domestic     365000     450000     378000     450000     500000
Market

Total       1293000    1693000    1938000    1962000    2196000

Sector/     2010-11    2011-12    2012-13    2013-14 (a)
Year

IT          1003000    1153000    1295000      1407000
Services
and
Software
Exports

BPM          770000     826000     879000       917000
Exports

Domestic     527000     562000     601000       640000
Market

Total       2300000    2542000    2775000      2964000

(a): Estimated Values

Source: NASSCOM, 2008 and NASSCOM, 2015