THE UNIVERSITY OF NORTHAMPTON

Faculty of Business and Law

2017/2018

MODULE: STRM042 Critical Issues in Business

Module Tutor: Dr. Rachel Fitzgerald

Literature Review on

Leadership and employee retention in the age of business

uncertainty”

Student Name: P.A.N. Chandana Kumara

Student ID: 18414494
 Table of content

Introduction ................................................................................................... 3

Review of Literature .................................................................................... 4

Introduction to leadership ......................................................................... 4

Importance of employee retention ............................................................ 5

Importance of leadership in the age of business uncertainty ................... 6

Conclusion ................................................................................................... 8

References ................................................................................................... 9

2
 Introduction

Due to the lack of perfect and comprehensive information, we are living in a very uncertain and
destructive business environment today. So, it’s a common fact that everything around us is
uncertain. Not only the businesses and organizations, owing to this uncertain situation nobody can
guarantee job security. However, employee retention plays a huge role and Leaders of the
organizations need to be able to manage the situation. As suggested by Samuel (2004),
leadership is all about change and improvement. So, every leader has a huge responsibility to
forecast the potential threats and uncertain situations in their respective businesses and
industries and implement strategic plans to overcome those challenges accordingly.
This literature review will mainly discuss about the leadership and employee retention in the
age of business uncertainty. This study will further advance to discuss about the importance
of retaining employees, how leaders should effectively manage the business uncertain
situations. Will discuss and critically evaluate these qualities comparing selected previous
studies. Also, this literature review has been broken down into several key topics such as
“Introduction to leadership”, “Importance of employee retention”, and “Leadership & employee
retention in the age of business uncertainty”. Under each sub heading, will combine all points
together and do a complete evaluation and synthesize to support the main argument.
Furthermore, will identify the gaps and provide necessary recommendations to research further.
Finally, will summarize the key points which were discussed through this study and address
under “Conclusion” section.

3
 Review of Literature

Introduction to leadership

Ecoggins (2016) describes the history of leadership studies and evolution of leadership
Theories. He says while leadership has been a topic of interest since the dawn of man,
leadership and management studies were taken up in earnest in the early 20th century. This hub
chronicles a kind of evolution in leadership behavior studies from the traits of effective leaders to
follower-centered leadership theories proposed in the late-20th, early 21st century. (Ecoggins,
2016). Adding quite similar to this argument, Peter (2015) introduces the evolution of leadership
and he says definition of leadership appearing in the first three decades of the 20th century
emphasized control and centralization of power with a common theme of domination (Peter,
2015). He agreed and accepts the previous author’s statement. According to Simon (2013),
Leadership is a contested term with multiple meanings and diverse practical applications. This
author explores the idea of leadership including attributes to leadership in different stand point
when compared with previous authors and he further elaborates his point and says Leadership
is created in our minds (individually & collectively), converted into social roles and positions, and
internalized into identities (Simon, 2013, p.27).

Since then, many authors have researched on leadership and they have given different point of
views based on their research. Samuel (2004) suggests leadership is all about change and
improvement. While the leader empowers, the manager controls. Here the author very
specifically introduces the leader’s role. This fact is further elaborated by Nanjundeswaraswamy
& Swamy (2014) and said in this global competitive environment, effective leadership style is
necessary to reduce the attrition rate. From the effective leadership styles only it is possible to
achieve organizational goal productively. Leadership styles effect on the employee performance
and productivity (Nanjundeswaraswamy & Swamy, 2014). So giving totally different perspective
to previous authors, Nanjundeswaraswamy & Swamy (2014) describe the leadership styles in
their research and elaborate it further.

Taking another step forward compared to previous authors, Joanne (2003) suggests a
completely different argument in her research and she says leadership is a particular type of
relationship, the hallmarks of which are power and/or influence, obligation & responsibility
(Joanne, 2003). So she basically talks about the importance of relationships as a leader. Adding
further points into his previous argument, Joanne (2003) says leadership is a process in which
the activities of many are organized to move in a specific direction by one (Joanne, 2003). Also
she says leadership is an influence relationship between leaders and followers who intend real
changes that reflect their mutual purposes (Joanne, 2003). So this proves how important mutual
understanding when it comes to leadership.

All these authors have looked into leadership from the employee and organization standpoint in
general and some has given different opinion and definitions but it was noticed that none of
these authors have really paid attention to generation changes and how leaders should change
their approach based on gender and age limit especially in 21st century. Observed it as an area
to research further.

4
Importance of employee retention

Nanjundeswaraswamy & Swamy (2014) have researched and emphasized that in this global
competitive environment, effective leadership style is necessary to reduce the attrition rate
(Nanjundeswaraswamy & Swamy, 2014). So while they discuss about the importance of
employee retention, they have paid attention to leadership styles as well. Having further
elaborated this point they say from the effective leadership styles only it is possible to achieve
organizational goal productively (Nanjundeswaraswamy & Swamy, 2014). This study proves
leadership styles directly effect to the employees’ performance and productivity.
As described in “Armstrong’s handbook of human resources management practices”, human
resources management policies and practices need to be based on an understanding of the
factors that affect the behavior of people in organization (Armstrong and Taylor, 2014). So this
proves that leaders have the authority and full responsibility to handle and manage the business
uncertainty and structure the human resources policies to support that need. Above argument is
acknowledged by Michael (2016) and he suggests leaders need to engage in strategic
workforce planning to better anticipate workforce needs and priorities. Proactive measures,
such as comprehensive talent management, including smart hiring and enhanced retention
strategies, must be developed (Michael, 2016). He introduces four ways to recruit and retain
best talents and encourages employers to pay attention to talent development.

Another study has been done by two researches on employee retention strategies and their
research mainly cover the importance of human factor and they have provided many strategies
to retain & groom employees. Balaji & Anand (2017) suggest human resources are the
livelihood of all types of organizations. Even though all types of the organizations are now a
days, found to be technology driven, yet human resources are required to run the technology.
Here they have specifically discussed about the importance of human factor even though we
have introduced technology in our organizations. This is a very good approach and also this is
something which has been missed out by previous researches. They further elaborated this
concept and added with all round development in each and every area of the economy, there is
stiff competition in the market. With this development and competition, there are lots and lots of
avenues and opportunities available in the hands of human resources (Balaji and Anand, 2017).
This is a good example to prove that human factor is very important even though we develop
our businesses through technology. So business leaders should be able to identify this need
and retain their employees. Finally Balaji & Anand (2017) suggest securing and retaining skilled
employees plays an important role in any organization, because employees’ knowledge and
skills are central to companies’ ability to be economically competitive. When compared with
other researches, this can be considered as very good approach because most of the elements
have been covered in terms of leadership and employee retention including organizational
culture and finally they have provided strategies to retain employees. But still there is a room to
further research this topic as their suggestions do not provide detail guidance on how to retain
skilled employees.

On the other hand, none of the above researches have discussed about the consequences of
failures in employee retention in detail. All researches have discussed about the importance of
employee retention but it is imperative to discuss the potential threats so organizations can
better plan and prepare to face the uncertain situations.

5
However, considerably good and in depth analysis has been done by SHRM Foundation about
the importance of employee retention in the age of uncertainty and in that research the author
David (2008) says a critical department at American Home Shield was experiencing an annual
turnover rate of 89%. The company estimated the direct financial costs associated with losing
employees and hiring and training replacements at over $250,000 annually (David, 2008).
Similar study has been done by another two authors & they said thirty case studies taken from
the 11 most-relevant research papers on the costs of employee turnover demonstrate that it
costs businesses about one-fifth of a worker’s salary to replace that worker (Heather and Sarah,
2012).These are classic examples & these stats indicate that higher rate of employee turnover
is an unbearable cost to every organization.

Serenity (2018) wrote an article to Harvard Business Review on the same topic and she says
many companies and leaders have failed to develop plans for the employees who have
progressed in their career but may not see many opportunities left at the existing company.
(Serenity, 2018). As described above, higher employee turnover is an additional cost to
companies. She encourages the importance of employers’ intervention to help employees when
they have career crisis.

Having reviewed above authors’ literatures, identified two major gaps. First, it was noticed that
none of these authors have discussed about the value of key employees (A players) in an
organization. Highly tenured employees mean not just skilled employees, they have invaluable
amount of contacts and relationship with their customers and stakeholders. Companies can
replace skills but not the relationships and contacts. So this is something all leaders need to pay
attention. When it comes to business uncertain situation, leaders should pay immediate
attention to retain at least their key employees, this can be further researched and provide
strong recommendations and suggestions.

Second gap is, all above researches have looked at the employee retention from the
organization stand point, but it’s recommended to do further research from employees’
perspective as it would directly impact to those employees and their inter-dependents during the
business uncertain situations.

Importance of leadership & employee retention in the age of business uncertainty

Business leaders increasingly find themselves in unfamiliar territory marked by high levels of
uncertainty and instability, a slowing global economy, and shifting political realities. Global
economic policy uncertainty has tripled since 2000 and continues to accelerate (Reeves et al.,
2017). This study acknowledges the driving forces in the business world which lead to
uncertainty. These researches further describe their argument and say this systemic uncertainty
feeds into corporate decision-making (Reeves et al., 2017). So they acknowledged that
business leaders take crucial decisions in the age of uncertainty which many not in favor of
employees all the time. Another study was conducted by Gordon (2016) and he also
acknowledged this fact and said leading in times of uncertainty can be difficult, but we need to
remember it can be even more difficult for our teams, and they are looking for us to guide them
and lead them to success (Gordon, 2016). In this research Gordon (2016) emphasizes the
importance of leadership role in the age of business uncertainty and he further added in times of
uncertainty, the leader is the rock to which people cling, it gives them hope and confidence, but

6
this can be diminished very quickly if the leader is absent for lengthy periods, as doubt and
uncertainty will increase (Gordon, 2016). This research covers many good arguments which can
be appreciated because in addition to emphasizing the importance of leaders’ role, at the end
Gordon (2016) provides 7 ways to boost confidence and moral in the age of uncertain time.
That’s a very good approach when compared with previous group research. HRD Connect
(2018) conducted a quite similar research and they also introduced 5 new perspectives for
leaders to adopt in uncertain times. This can be considered as an eye opener for most of the
leaders and introduces few advance and timely solutions which was missed out by other
researches above. They added a final remark and say “a fresh mindset, with positive actions on
each of these five themes will not only raise business performance in 2018, it will better insulate
the business from uncertainties ahead” (HRD Connect, 2018). In a nutshell they basically
highlight leader’s positive attitude towards the receptiveness to change and adaptability to face
the uncertainty.

Rob (2017) found that organizations around the world face unprecedented strategic challenges.
Old models are being swept away. Economic volatility combined with rapid advances in
technology, intensifying competition and an unpredictable political landscape call for clarity of
thought and speed of action (Rob, 2017). This is a good example to prove that uncertainty is
everywhere and business world and leaders must be prepared to overcome the threats. He
further added and says unquestionably, this necessitates both good leadership and fresh
thinking (Rob, 2017). This argument leads to a valid question and need to review how leaders
need to change in order to overcome potential challenges in the business world today. However
the author has completed the research leaving this question and further research can to be
done.
Another researcher from Tsinhua University of China conducted a comprehensive research on
this topic and introduced few important uncertain theories. According to Boding (2015)
uncertainty theory was founded in 2007 and subsequently studied by many researchers.
Nowadays, uncertainty theory has become a branch of axiomatic mathematics for modeling
belief degrees (Boding, 2015). This author has done an in-depth analysis covering all aspects
belong to uncertainty and introduced many measurements and theories including uncertain
reliability analysis, uncertain risk analysis etc. which will ultimately help any leader to predict and
manage the uncertainty. When compared with previous researches, this can be considered as
the best and comprehensive approach introduced to manage the uncertainty in every industry
and business functions.
Rob (2017) cited Yell HR director Nikki Jacob’s statement and says In uncertain times when
things move fast and change often in business, the best leaders know they must be more
adaptable and cannot rely on their old tried and tested techniques (Rob, 2017). Here the author
introduces the importance of effective change management approach similar to HRD Connect’s
research to overcome challenges in the age of business uncertain situations. That’s what
actually leaders need to plan and do. Further added to this point and Rob (2017) says they must
view their role as more collaborative and more nurturing of great talent to bring through people
that will contribute to their team’s success (Rob, 2017). More collaborative approach is always
good to achieve team success and through that organizations and leaders can overcome any
challenge and retain their key employees in an uncertain situation.

7
 Conclusion
Having reviewed literature on Leadership and Employee retention in the age of uncertainty, it
was observed that accountable leaders with positive mindset along with strategic vision are very
important to overcome challenges in the age of uncertainty and retain their key employees. Also
receptiveness to change is very important and leaders need to drive the same culture all across
the organizations.

As described all trough out this literature review, nobody can stop uncertainty and it’s happening
everywhere in the globe and we all need to prepare to overcome the challenges. This study was
done addressing leadership and leadership in the age of uncertain and addressed how leaders
should anticipate uncertainty in their respective businesses.

Also reviewed leadership and uncertain theories including the importance of HR policies and
practices using recommended literature. Having reviewed and critically evaluated selected
research articles, found gaps for further research and they were suggested under each point. In
summary, following areas can be further researched:

 Focus on employee retention from employees’ stand point, not only the business &
organization perspective
 Discuss about the value of key employees
 Further elaborate strategic movements & plans to retain key employees
 Impact to businesses due to high employee turnover

As a conclusion to this literature review, it was evident that leaders play a huge role in every
organization and they can make or break their businesses. Also uncertain situations are the
very crucial time period to show and measure real leadership qualities and as described by
many authors, employees are watching their leaders and they expect a great support from their
leaders to sustain. Also as leaders, it’s important to predict potential threats in their businesses
and make strategic plans to overcome them by working collaboratively with all functions. Finally
employee development and talent engagement is very important.

8
 Referencing

Armstrong, M. & Taylor, S. (2014) Armstrong’s handbook of human resource management

practice. 13th ed. Philadelphia, PA: Kogan Page Ltd.
Balaji, M. & Anand, K. (2017) Employee Retention Strategies – An Empirical Research. Global
Journal of Management and Business Research: E Marketing. 17 (1), 1-7.
Boding, L. (2015) Uncertainty Theory. 4th ed. German: Springer.
David, G. (2008) Retaining Talents. United States of America: SHRM Foundation.
Ecoggins, (2016) The History of Leadership Studies and Evolution of Leadership Theories
[online]. toughnickel.com. Available from: https://toughnickel.com/business/The-History-of-
Leadership-Studies-and-Evolution-of-Leadership-Theories. [Accessed 18th April 2018].
Gordon, T. (2016) 7 Ways to Boost Confidence and Morale in Uncertain Times [online].
Inc.com. Available from: https://www.inc.com/gordon-tredgold/7-ways-successful-leaders-deal-
with-chaos-and-uncertainty.html. [Accessed 10th April 2018].
Heather, G. & Sarah, J. (2012) There Are Significant Business Costs to Replacing Employees.
Center for American Progress: 1 (1), 1-9.
HRD Connect (2018) 5 new perspectives for leaders to adopt in uncertain times [online].
hrdconnect.com. Available from: https://www.hrdconnect.com/2018/01/29/5-new-perspectives-
for-leaders-to-adopt-in-uncertain-times/. [Accessed 14th April 2018].
Joanne, B. (2003) The Ethics of Leadership. Belmont, CA: Wadsworth/Thomson.
Michael, B. (2016) 4 ways to recruit and retain the best talent [online]. World Economic Forum.
Available from: https://www.weforum.org/agenda/2016/12/four-ways-to-hire-the-best-talent/.
[Accessed 10th April 2018].
Nanjundeswaraswamy & Swamy (2014) Leadership Styles. Advances in Management: 7 (2), 57
– 62.
Peter, G. (2015) Leadership. 7th ed. United States of America: SAGE Publications, Inc.
Reeves, M., Levin, S., Harnoss, J. and Ueda, D., (2017) The Five Steps All Leaders Must Take
In The Age of Uncertainty. MIT Sloan Management Review: 59 (1), pp. n/a-0.
Rob, G. (2017) Leadership in uncertain times [online]. hrmagazine.co.uk. Available from:
http://www.hrmagazine.co.uk/article-details/leadership-in-uncertain-times. [Accessed 14th April
2018].
Samuel, D. (2004) Leadership. United States of America: Electronic & Database Publishing, Inc.
Simon, W. (2013, p. 26 - 27) Leadership. 2nd ed. United States of America: SAGE Publications.
Serenity, G. (2018) Many Employees Have a Mid-Career Crisis. Here’s How Employers Can
Help [online]. Harvard Business Review. Available from: https://hbr.org/2018/03/many-
employees-have-a-mid-career-crisis-heres-how-employers-can-help. [Accessed 14th April
2018].

9
Final Grading & Feedback

10