How employee tenure shapes firm's growth

Some employees spend their whole careers at one firm. Others hop around to different jobs every year or so. Most fall somewhere in between spending a few years at each workplace.

Employers, on the other hand, tend to focus on employee retention because recruiting and training new staff proves costly in terms of time and budgetary considerations. But, do long-serving employees help or hinder a company?

Many Masters of Business Administration students in Kenya seek to examine employee length of tenure as a cause of firm outcomes. However, instead of an independent variable, usually tenure is used more sensibly as a control variable in most studies.

One would hope that the longer an employee stays with a firm then the more they feel part of the team and therefore become more willing to help out co-workers, supervisors, and the organisation during times of need. However, Hal Gregersen found that no relationship exists between length of service at a company and these extra role helping behaviours above and beyond set job duties.

So, new employees are just as likely to be useful, kind, friendly, and helpful as seasoned long-serving staff members. Interestingly, he also uncovered that the longer workers stay with a firm, they do not feel any more committed to their colleagues or even to their customers than newer workers. The longer an employee stays with an employer, they only feel more committed to top management and not to the firm itself. Additional researchers Thomas Wright and Douglas Bonett discovered some slightly different affects. They found new employees felt strong allegiance to a new company akin almost to a sort of new job euphoria. Then within six months the initial honeymoon feeling with an employer starts to reduce until it dies off completely and organisation commitment flattens out and remains fairly constant throughout an employee’s tenure with a firm.

Karen Beck and Carlene Wilson interestingly established that in the Australian National Police, a more stressful profession than technology, finance, or manufacturing sectors, that there were significant and consistent declines in commitment to the police force across time for the majority of individuals in their sample.

So, different research teams found differing impacts of tenure. Most researchers tend to feel that tenure plays only a nominal role in how employees feel, perceive, and behave. So, including length of service to an organisation only as a control variable makes sense and should likely not be such a factor in so much Kenyan graduate-level research when analysing employees.

However, tenure at a firm does hold a significant impact on behaviour when assessing management teams. Sydney Finkelstein and Donald Hambrick uncovered that executive-team tenure significantly impacts how a company acts strategically and therefore holds impact on firm performance. Newer management teams tend to take more risks and be unconventional with strategic direction and therefore enjoy or suffer from higher or lower than industry standard performance.

However, longstanding management teams stick more to industry norms in their strategic planning and lead companies toward performance typical of respective industries. In short, desire innovation in your firm? Then always retain some contingent of a mix of newer and more tenured executives. Rank and file employee tenure, on the other hand, holds much less of an effect.