Reducing Turnover in Franchise-Based Small Business Organizations: The Role of Trust, Justice and Commitment

Aneil Mishra, Karen Mishra, Lee Grubb

Abstract


Turnover is costly in any business, but even more so in a small business where employees wear many hats and often feel like part of the family. This is a study of a national franchise organization and eight of its small business franchisees to understand the roles of trust, organizational commitment, and justice on employee turnover.  The results demonstrate that there are ways employers can limit turnover, and hence, reduce the costs of employment.  Higher levels of procedural, distributive and interactional justice all are positively related to higher levels of employee trust in franchise management.  Employee trust in franchise management is positively related to both normative and affective commitment.  In addition, employees who report higher levels of empowerment also have greater organizational commitment in all forms.  In turn, affective commitment and employee tenure are found to be negatively related to voluntary turnover. Overall, small business employers who work to build trusting relationships with employees through open communication and strong interpersonal relationships will reduce unwanted turnover in their organizations.

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 University of Houston-Clear Lake