Talent Management in a multigenerational workforce

Transcription

1 The impact of Talent Management practices on the psychological contract and the moderating role of generations. Thesis Master Human Resource Studies Sanne Klifman Rentmeesterlaan MK TILBURG ANR: Supervisor: dr. Mariëlle Sonnenberg Second assessor: dr. Marc van Veldhoven Period: February 2009 December 2009 Theme: Talent Management

2 Talent is the engine of the modern organization - Peter Cheese- 2

3 Table of content 1. Introduction Research question Relevance Theoretical framework Talent Management What is talent? What is Talent Management? Talent Management as part of the strategy Conclusion Talent Management Psychological contract How are Talent Management practices related to psychological contracts? Generations Generational differences as moderator Methodology Research design and procedure Sample statistics Instruments Independent variable: Talent Management practices Dependent variable: Psychological contract fulfilment Moderator: Generations Control variables Preliminary data analysis Results Correlations Exploring analysis Hierarchical multiple regression analysis Regression equation Hypotheses testing The impact of Talent Management per generation Conclusion Discussion Limitations and implications Limitations Implications for future research Practical implications References Appendix I English questionnaire Appendix II Dutch questionnaire Appendix III Talent Management practices Appendix IV Psychological contract scale: fulfilment of employer obligations Appendix V Elaboration of regression equation (Generation X as reference category) Appendix VI Elaboration of regression equation (Baby Boom generation as reference category)

4 Abstract The objective of this research is to investigate the relationship between Talent Management and psychological contract fulfilment. Based on signaling theory it was hypothesized that Talent Management practices are positively associated with the fulfilment of the psychological contract, and that this relation is moderated by generations. In this research three generations are distinguished: Baby Boomers, Generation X and the Millennial generation. To investigate our hypothesis data was collected within 7 large organizations. First, exploring interviews were held with the Talent Management executive of each of the organizations to get insight into the Talent Management strategy of that particular organization. In addition to these interviews a questionnaire was conducted and spread among employees that are pinpointed by the organization as talented. In total 340 respondents participated in this research. The results reveal a positive relation between the amount of Talent Management practices and psychological contract fulfilment and this relation is moderated by generations. The Baby Boom generation reacts slightly less positive on Talent Management in terms of psychological contract fulfilment compared to Generation X. Talent Management practices seem to be a key tool for organizations in fulfilling the obligations as an employer, but also to manage the expectations employees hold towards the organization. Besides, this research gives insight into the most effective Talent Management practices per generation. Since employees from different generations tend to respond differently to Talent Management practices in terms of psychological contract fulfilment. The present research adds to the existing Talent Management literature, given that this is one of the first empirical researches concerning Talent Management. Key words: Talent Management, psychological contract, signaling theory, generations. 4

5 1. Introduction CIPD (2006a) research found that 51 percent of organizations undertake Talent Management activities and 94 percent of organizations agree that well-designed Talent Management development activities can have a positive impact on the performance of the organization. Due to the financial crisis and the economic downturn, organizations need savings. This could bring Talent Management in a difficult position. Cheese, Farley and Gibbons (2009) argue that the talent strategy deserves the same attention as all the other strategic issues, but because of the downturn Talent Management does not get what it deserves. Next to the financial crisis, organizations need to deal with other influencing factors, such as the globalization of the labour market, the changing workforce demographics and skill shortages (Accenture, 2009). Scholars and practitioners acknowledge that talent is harder to find and retain, and easier to waste and lose than ever before (Cheese, Thomas & Craig, 2008). Cheese et al. (2008, p. 9), offer a solution in these harsh times: The secret to sustained competitive success in the new economic world is to build a talent-powered organization that sustains and builds all the skills needed to compete. Organizations realize that people, intellectual capital, and talent are ever more critical to organizational success (Boudreau & Ramstad, 2005). Therefore, Talent Management seems to be a critical success factor in the changing environment. Talent Management is defined by the CIPD as (2007, p.3) the systematic attraction, identification, development, engagement/ retention and deployment of those individuals with high potential who are of particular value to an organization. This definition highlights that Talent Management contains different stages from attracting talent to retaining talent. Based on the signaling theory (Spence, 1973), it can be argued that the organization sends signals to its employees by offering Talent Management practices. These Talent Management practices represent a choice by the organization of what the organization believes is important behaviour and what the organization offers to the talented employees. Rousseau (1995) uses the term structural signals for vehicles people use to convey commitments and offer inducements for present and future behaviour. Previously, Spence (1973, p. 357) defined the term signals as observable characteristics attached to the individual that are subject to manipulation. Rousseau (1995) stated in her definition of structural signals, that signals are inducements for present and future behaviour. For instance, job applicants use signals from the organization to draw conclusions about an organization's intentions, actions, and characteristics because they do not have perfect information about the organization (Rynes, in Suazo, Martínez & Sandoval, 2009). These signals provide information about what life might be like in the organization (Turban, 2001). From this angle it can be said that Talent Management practices are creating expectations by employees about the organization and the way the organization deals with its talented employees. In other words, Talent Management practices influence the employment 5

6 relationship. The psychological contract is seen as an important framework for understanding the employment relationship (Bal, de Lange, Jansen & van der Velde, 2008), and will be used as such in this research. Psychological contracts are defined as an individual s beliefs in reciprocal obligations between employees and employers (Rousseau, 1990, p. 389). The assumption is that organizations sent relevant signals to their employees by its Talent Management practices. This will provide employees better clarity in understanding the employment relationship, i.e. the perceptions of what is expected of them and what they can expect from the organization in return. These clear perceptions and expectations will lead to less broken promises and to a higher fulfilment of the psychological contract. Another question that comes to mind is whether the relation between Talent Management practices and the psychological contract will be the same for all employees. Today s workforce is more diverse than ever (Arsenault, 2003), and one way of explaining differences between people is by generation (Crampton & Hodge, 2007). Understanding generational values and attitudes within the workplace can be strategically useful for the organization (Crumpacker & Crumpacker, 2007). Research shows that each generation has its own characteristics, values, and attitudes towards work (Jenkins, 2008). Because of these generational differences, it can be argued that employees from different generations will not respond the same to Talent Management practices and as a consequence will evaluate the employment relationship differently. This research assumes that Talent Management practices are positively related with the psychological contract, but that the strength of this relation will be different for each generation. The aim of this research is to examine the relationship between Talent Management practices and the psychological contract and whether this relation will differ for employees from different generations. 1.1 Research question In this research the following research question will be studied: To what extent are Talent Management practices associated with the fulfilment of the psychological contract of talented employees, and to what extent does this relation differ for employees from different generations? 6

7 Generations Talent Management practices Psychological contract fulfilment Figure 1 Conceptual model The sub questions that will be answered in this research are: - What is talent? - What is Talent Management? - What is meant with the psychological contract and how is this contract related to Talent Management practices? - What is meant with generations? - What is the influence of generations on Talent Management and the psychological contract? 1.2 Relevance The term Talent Management becomes increasingly more common (CIPD 2006a). More and more attention is paid to Talent Management but there is not much empirical research on the subject apart from specific studies done on Management Development. From a theoretical perspective, findings from the angle taken in this research are therefore a contribution to the literature in that this research gives insight into the relation between Talent Management and the fulfilment of the psychological contract. In addition, this research will answer whether Talent Management practices are a tool to manage the psychological contract of employees. From a practical perspective, this research is interesting for organizations that are already involved in Talent Management as well as for organizations that want to develop a Talent Management strategy. The present research will give insight into the effect of Talent Management practices on the fulfilment of the psychological contract and the differences in fulfilment per generation. Organizations can use the findings from this research to develop a Talent Management strategy that matches the needs of employees from all generations. By doing this, the organization has the best suitable and effective Talent Management approach. 7

8 2. Theoretical framework 2.1 Talent Management What is talent? The starting point for any research into Talent Management must inevitably be an exploration of what is meant by talent (CIPD, 2007). Scholars and practitioners differ in their definition of talent and the characteristics that a talent should have. For example, Cheese et al. (2008, p. 46) write the following about talent: The traditional use of the word talent usually refers to a special gift ( ). In business it has come to encapsulate all the various attributes of people today. Essentially, talent means the total of all experiences, knowledge, skills, and behaviours that a person has and brings to work. Talent therefore is used as an all-encompassing term to describe the human resources that organizations want to acquire, retain and develop in order to meet their business goals. According to Michaels, Handfield-Jones and Axelrod (2001, p. XII) talent is seen as the sum of an individual s abilities, which includes his or her intrinsic gifts, skills, knowledge, experience, intelligence, judgement, attitude, character, and drive. They add that it also incorporates the individual s ability to learn and grow. Another definition is of the CIPD (2007, p.3), they argue that talent consists of those individuals who can make a difference to organizational performance, either through their immediate contribution or in the longer-term by demonstrating the highest levels of potential. Although there are differences in the definition of the term talent, in this research talents are the employees that are valued by the organization as talented. In the sense that these employees are pinpointed by their employer as talents based on their added value to the organization What is Talent Management? Talent Management is seen as a difficult and complex phenomenon to study (CIPD, 2006b), one of the main reasons is that there is no agreement on the precise meaning (Lewis and Heckman, 2006). Although these difficulties, Blass (2007, p.33) defined Talent Management as the additional management processes and opportunities that are made available to people in the organization who are considered to be talent. Blass and April (2008) add that Talent Management is thus about the additional elements that are afforded to high potentials/high performers, not about the general processes that are available to every member of the organization. Another definition is of SHRM (in Lockwood 2006, p.1), they stated that Talent Management is the implementation of integrated strategies or systems designed to increase workplace productivity by developing improved processes for attracting, developing, retaining and utilizing people with the required skills and aptitude to meet current and future business needs. In this research, Talent Management is used to describe the additional practices that are aimed at the talented employees. These practices are provided to the talented employees in order to develop them. Hence, the focus of this research into Talent 8

9 Management is Talent Management practices that are offered to talented employees with the purpose to develop the skills and knowledge of the talented employees Talent Management as part of the strategy Although many organizations have begun to recognize the important role talent plays in their success, few are managing talent strategically (Cheese et al., 2008). In the literature quite a lot of attention is paid to the link between Talent Management and strategy (Boudreau & Ramstad, 2007; CIPD, 2008; Heinen & O Neill, 2004; Lewis & Heckman, 2006). In her inaugural lecture, Van der Sluis (2008) stated that Talent Management from a strategic perspective means: enabling employees to develop their talents in the direction of the organization s strategic goal, in a way that adds value to the organization. SHRM (in Lockwood, 2006) stated that Talent Management is a primary driver for organizational success as well. The ultimate purpose of Talent Management is to secure the continuity of the organization. According to Hiltrop (1999), superior talent is increasingly recognised as the prime source of sustainable competitive advantage in high performance organizations. Cheese et al. (2008) argue that building a talent-powered organization is the secret to sustained competitive success. They defined a talent-powered organization (p.10) as: An organization that invests in building distinctive capabilities in managing talent to produce extraordinary results for the organization. Talent-powered organizations are adept at defining talent needs, discovering diverse sources of talent, developing the organization s individual and collective talents, and deploying talent in ways that engage and align people around a compelling set of objectives Conclusion Talent Management Talented employees are the employees that are identified by the organization as talented because of their added value to the organization. These employees are part of the Talent Management process which includes different steps like attracting, developing and retaining talent. Talent Management is a very important tool in the changing environment and having the right talent in place can make an organization more competitive. Talented employees are hard to imitate and could lead to sustainable competitive advantage. In order to achieve this, the Talent Management strategy needs to be aligned with the business strategy. 2.2 Psychological contract The psychological contract is defined by Rousseau (1990, p. 390): Psychological contracts are an individual s beliefs regarding reciprocal obligations. Beliefs become contractual when the individual believes that he or she owes the employer certain contributions (e.g. hard work, loyalty, sacrifices) in return for certain inducements (e.g. high pay, job security). As perceived obligations, psychological contracts differ from the more general concept of expectations in that contracts are promissory and reciprocal. 9

10 A psychological contract consists of three aspects: perceived employee obligations, perceived employer obligations, and perceived fulfilment or violation of employer obligations (Schalk & Freese, 1997). The perceived obligations employees and employers hold to each other are reciprocal and will be evaluated by the employee. According to Rousseau and Tijoriwala (1998), evaluations address individual judgments about organizational experiences against the contract itself. The outcomes of the evaluation are fulfilment, breach or violation of the contract. Psychological contract fulfilment is defined as the degree to which a contract party is perceived as keeping its contract terms (Rousseau & Tijoriwala, 1998). When the organization does not fulfil its obligations, employees may experience psychological contract breach. Contract breach is defined as the cognitions of an employee that the organization has failed to deliver its obligations (Morrison & Robinson, 1997). Contract breach may result in contract violation. Violation occurs when one party in a relationship perceives the other to have failed to fulfil promised obligations (Robinson & Rousseau, 1994). Violation is distinct from breach (unmet expectations and perceptions of inequity) in that the responses will be more intense than in the case of unmet expectations (Robinson & Rousseau, 1994). The signals that the organization sends provide better understanding and clarity of the employment relationship, i.e. the employee knows both what the organizations expects and what the organization offers to its employees. Because of this clarity it is assumed that the contract will be more fulfilled. Therefore, the focus of this research is on the fulfilment of the employer obligations. The psychological contract is a reciprocal contract which takes into account both the employer and employee obligations, but will not be used as such in this research. The centre of attention of the present research is the fulfilment of the employer obligations, hence the focus of this research is on one part of the reciprocal psychological contract. 2.3 How are Talent Management practices related to psychological contracts? Signaling theory can be used to examine how HR practices can create psychological contracts (Suazo et al., 2008). A signal is an interaction between two parties (Sonnenberg, 2006). There is an informed party, the signaller, and an uninformed party, the signal receiver (Sonnenberg, 2006). Here, the organization is seen as the signaller and the talented employees are the signal receivers. Suazo et al. (2008) found that HR practices influence psychological contracts, furthermore Sonnenberg (2006) concluded that based on signaling theory there is a relation between HR practices and the psychological contract. This line of reasoning regarding HR practices can also be used with regard to Talent Management. Spence s signaling theory (1973) is used to explain that Talent Management practices create or influence the psychological contracts of talented employees. The organization is sending signals with its Talent Management practices to employees about the way the organization attracts and develops their talented employees. As a consequence of these signals, employees will draw conclusions about organization s intentions, actions and characteristics (Rynes, in Suazo et al., 2008). The implementation of Talent Management practices show the talented employees that the 10

11 organization values their talented employees and that the organization is willing to invest in them. Besides, these signals provide a good indication of the extent to which the employer meets his obligations. Therefore it can be expected that more Talent Management practices will lead to more fulfilment of the psychological contract. Hypothesis 1: The more Talent Management practices perceived, the more psychological contract fulfilment of talented employees. 2.4 Generations Many demographers and social commentators have drawn attention to the shift in attitudes across generations. Understanding these shifts is vitally important in understanding how to manage and attract different generations (Cheese et al., 2008). In the paper of Papenhausen (2006, p. 161 based on Strauss and Howe (1991)), a generation is defined as a cohort-group whose length approximates the span of a phase of life and whose boundaries are fixed by peer personality. Others define a generation as people passing through time who come to share a common habitus, hexis and culture, a function of which is to provide them with a collective memory that serves to integrate the generation over a finite period of time (Eyerman & Turner, in Arsenault, 2004, p. 127). Although scholars use different definitions of a generation, there is general agreement that each generation has distinct values, attitudes, behaviours, expectations, habits, motivational buttons, view of authority and expectations of leadership (Crampton & Hodge, 2007). There are two important factors that characterize a generation, namely birth rate and events of the time (Crumpacker & Crumpacker, 2007). In other words, the fluctuation of birth rates (stagnation or a growth in the population) and events that have big impact (e.g. war) result in groups of people that look alike. The society started generational labelling in the 20th century (Smola & Sutton, 2002) but the labels and the years those labels represents are inconsistent in the literature. Table 1 shows some of the labels that are used to describe the generations and their time range. Although these labels are a bit arbitrary, there is a common agreement but differences are visible. 11

12 Table 1: Division of generations Division of generations Veterans (or Traditionalists): born between 1920 and 1940 Baby Boomers: born between 1947 and 1967 Generation X: born between 1970 and 1980 Generation Y (or Nexters or Millenials): born between 1980 and 1990 Veterans: born between 1922 and 1943 Baby Boomers: born between 1944 and 1960 Generation Xers: born between 1961 and 1980 Generation Nexters: born between 1981 and 2000 Silents: born between 1925 and 1945 Baby Boomers: born between 1946 and 1964 Generation-Xers: born between 1965 and 1980 Millennials: born after 1980 Baby boomers: born between 1940 and 1960 Generation X: born between end of 1960s and end of 1970s Generation Y: born after 1980 Author(s) Crampton & Hodge (2007, p. 16) Arsenault (Adapted from Zemke et al. 2003, p. 129) Jenkins (2009, p. 19) Cheese et al. (2008, p. 37) In the present research three generations are distinguished, namely the Baby Boom generation (born between 1944 and 1967), Generation X (born between 1968 and 1980) and the Millennial generation (born after 1980). Since the literature leaves room to manoeuvre these cohorts are chosen because these cohorts present the three generations in the sample the best. In the Netherlands it is (still) normal to retire when the age of 65 is reached; therefore the starting point of the Baby Boom generation is at Generational differences as moderator According to Cheese et al. (2008) understanding generational differences is crucial to understand engagement, motivational issues, career direction and the expectations employees hold towards the organization. Several studies demonstrated that differences in attitudes towards work are explainable because of generational differences (Cennamo & Gardner, 2008; Smola & Sutton, 2002), career stage and generational differences (Conway, 2004; Hess & Jepsen, 2009). Companies need to attract, motivate and retain the best talent and therefore need to change the way they recruit, provide benefits and create a corporate culture that actively demonstrates respect and inclusion for workers from all generations (Jenkins, 2008). In other words, organizations need to keep in mind generational differences when the organization is dealing with its employees. The organization is sending signals with its Talent Management practices and it is argued that the amount of Talent Management practices 12

13 is positively associated with the fulfilment of the psychological contact of talents. As each generation has its own values and attitudes towards work (Jenkins, 2008), it is likely that talented employees will respond differently, due to generational differences, to Talent Management practices and will therefore evaluate their psychological contact differently. The generation to which a person belongs is derived from the year in which someone is born (Crumpacker & Crumpacker, 2007). Therefore it is important that this research investigates whether differences between employees can be explained by generational differences or that the differences are explainable because of age differences. The focus of this research are the generational differences and for that reason age is taken into account as a control variable. Discussed is that an increase in the amount of perceived Talent Management practices is positively associated with psychological contract fulfilment of talented employees. Generations will moderate this relation; the relation will be stronger for one generation than another. Hypothesis 2: Generations moderate the relationship between Talent Management practices and psychological contract fulfilment of talented employees. Baby Boomers are highly competitive and have a positive attitude towards personal and professional growth (Crumpacker & Crumpacker, 2007). They are loyal to their employer (Crampton & Hodge, 2007) and change jobs and working practice infrequently if at all (Cheese et al., 2008). The painted portrait of Generation X is often more negative (Cennamo & Gardner, 2008), e.g. Generation X is generally sceptical towards authority (Crumpacker & Crumpacker, 2007) and is less loyal than the Baby Boom generation (Crampton & Hodge, 2007). In contrary to these negative descriptions, Generation X is characterized to be very adaptable to job instability, willing to develop its skill sets and take on challenges (Jenkins, 2008). Generation X may prefer to work for organizations that value skills development as very important (Smola and Sutton, 2002) and have a stronger desire to be promoted than the Baby Boom generation (Smola and Sutton, 2002). The Millennial generation is the most educated generation (Jenkins, 2008). The Millennial generation is highly confident and optimistic, expect immediate feedback and almost continuous recognition (Crumpacker & Crumpacker, 2007). This generation has a great willingness to work hard and set goals (Jenkins, 2008). They seek personal development and rewards (Vaiman & Vance, 2008), expect and demand the maximum opportunity for personal fulfilment (Cheese et al., 2008) and value career development more than other generations (Zemke et al., in Cennamo & Garner, 2008). Since Millennials are very eager to develop themselves and as they value tools for personal and career development more than other generations, it is hypothesized that this generation will respond the strongest on Talent Management. In other words, the relation between Talent Management and psychological contract fulfilment is stronger for the Millennial generation compared to the Baby 13

14 Boom generation and Generation X. Since Generation X has a stronger desire to be promoted compared to the Baby Boom generation and because Baby Boomers are in a more advanced career stage, it is argued that the relation between Talent Management and psychological contract fulfilment is weaker for the Baby Boom generation compared to the other two generations. Hypothesis 3: The relation between Talent Management practices and psychological contract fulfilment will be weaker for the Baby Boom generation compared to Generation X. Hypothesis 4: The relation between Talent Management practices and psychological contract fulfilment will be stronger for the Millennial generation compared to Generation X. Hypothesis 5: The relation between Talent Management practices and psychological contract fulfilment will be weaker for the Baby Boom generation compared to the Millennial generation. 3. Methodology 3.1 Research design and procedure The purpose of this research is to measure the relation between the amount of Talent Management practices and the fulfilment of the psychological contract and whether this relationship is moderated by generations. The research design is quantitative and explanatory and the research is cross-sectional since the data was gathered at a single point in time (Baker, 1999). The unit of analysis is the individual, i.e. talented employees from different organizations. First, exploring interviews were held with a Talent Management executive. These interviews were used to discuss the context of Talent Management, i.e. to find out what Talent Management means within their organization, which employees are marked as talents and what the organization does in order to develop their talented employees. The Talent Management executive was asked to select talented employees to take part in the research and afterwards the questionnaire 1 was spread. The organization was able to choose whether they wanted to send the questionnaire or that they preferred the author to do this. In order to increase the response rate two reminders were sent. Each selected talented employee received an with a link to the questionnaire, so the data was collected electronically. This type of data collection enables respondents to fill out the questionnaire anonymous which decreases social desirability. 1 English questionnaire in Appendix I and Dutch questionnaire in Appendix II. 14

15 3.2 Sample statistics CIPD (2006a) stated that 75 percent of private sector and 46 percent of public sector organizations employing over 500 employees undertake Talent Management activities. Hence, the seven organizations that participated in this research are big national and multinational organizations that have at least 500 employees. In total 344 talented employees took part in this research, which results in a response rate of 43 percent. Only 4 respondents were deleted from the sample since these respondents did not fill in at least 80 per cent of the questionnaire items. Table 2 shows the characteristics of the sample. In total 77.6 percent of the respondents is male and 22.4 percent is female. The average age is and the average work experience is years. The average tenure is years, 95.9 percent of respondents has a fulltime position and 62.1 percent has a management position. The educational level is rather high, most respondents have a higher educational level (63.8 percent upper-level tertiary certificate (university degree) and 20.9 percent lower-level tertiary certificate (in the Netherlands: HBO)). Since there are no statistics available of the characteristics of talented employees, a comparison could not be made. As a consequence, it is unknown whether the sample of the present research is representative for the talented employee. Table 2: Sample statistics Mean SD Percentage N = % Age Work experience Tenure Gender - Male 77.6% - Female 22.4% Educational level - Inadequately completed elementary education 1.2% - Completed (compulsory) elementary education - - (Compulsory) elementary education and basic vocational qualification 0.6% - Secondary, intermediate vocational qualification 3.5% - Secondary, intermediate general qualification 4.1% - Full secondary, maturity level certificate 5.9% - Higher education - lower-level tertiary certificate 20.9% - Higher education - upper-level tertiary certificate 63.8% Employment contract - Part-time 4.1% - Full-time 95.9% Position - Manager 62.1% - Non-manager 37.9% Organizational type - American 52.6% - Bank/insurance 12.9% - Military 34.4% 15

16 3.3 Instruments Independent variable: Talent Management practices At the time of this research, there was not an existing scale to measure Talent Management practices. The main reason for this is that organizations have their own approach to Talent Management. The CIPD (2006a) made a list 2 with 16 Talent Management practices that are commonly used by organizations. This list was used and each Talent Management executive was asked to make the list specific for their organization in order to make it easier for the respondents to recognize the Talent Management practices. The respondents were asked to indicate whether their employer offers or offered them the opportunity to make use of the Talent Management practices. The answer categories of the Talent Management scale were Yes, No and Don t know. Thus, the talents were asked whether they perceive the Talent Management practice as available for them. The answer category Yes was used to calculate the amount of Talent Management practices that the employee perceives. Concluding, the score on the scale reflects the number of Talent Management practices perceived by the talented employee. The higher the score, the more perceived Talent Management practices. Principal Component Analysis (PCA) was done to test the developed scale. First, the Talent Management scale was assessed on suitability of the data for PCA. Second, the criteria (correlation, KMO and Barlett s test of sphericity) were checked, which were in favour of Principal Component Analysis. The author has chosen to do a PCA with one component extracted, including all 16 Talent Management practices. Next, a reliability analysis was done and Cronbach s Alpha of the Talent Management scale is 0.720, which represents a reliable scale Dependent variable: Psychological contract fulfilment Psychological contract fulfilment was measured with the revised Tilburg s Psychological Contract Questionnaire (Freese, forthcoming) based on Freese (2007) and contained 70 items. The scale contains the employer obligations, the employee obligations, the fulfilment of these obligations and violation. In the present research fulfilment is measured as the fulfilment of the employer obligations 3. The employer obligations are distinguished in six areas including job content, career development 4, social atmosphere, organizational policies, work-life balance and rewards. The employees fulfilment of each of these components was measured with the question To what extent did your employer fulfil previous obligations?. Principal Component Analysis and a reliability analysis were done. Psychological contract fulfilment has an Alpha of 0.803, which represents a reliable scale. Respondents were asked to answer on a five-point rating scale (1 = not at all; 5 = to a very great extent), reflecting the extent of the fulfilment of the psychological contract. Concluding, the score on 2 Complete list in Appendix III. 3 Scale psychological contract fulfilment in Appendix IV. 4 This part of the psychological contract scale measures the fulfilment of the employer obligations in the area of career development. Although career development is similar to Talent Management, the author chose to keep this part of the scale as well in order to maintain the reliability of the scale. 16

17 the scale reflects the fulfilment of the psychological contract, i.e. the higher the score, the more fulfilment of the psychological contract Moderator: Generations The moderating variable, generation, is measured with one item in the questionnaire. The respondent was asked to fill out in what year he or she was born. The year of birth was translated into the generation the employee is part of. The Baby Boom generation is represented by respondents born between 1944 and 1967 (N=109), respondents born between 1968 and 1980 are labelled as Generation X (N=179), and respondents born after 1980 are labelled as the Millennial generation (N=52). Since generation is a categorical variable, two dummies were made. Depending on the reference category the dummies are Baby Boomers and Millennials (Generation X as reference), and Generation X and Millennials (Baby Boom as reference) Control variables The present research includes some control variables as well. The variables that were controlled for are age and gender (e.g. Chiu & Peng, 2008). These control variables were taken into account because Chiu & Peng (2008) demonstrated that both age and gender have an influence on the psychological contract. Controlling for age is of great importance in the present research, because the moderating variable, generations, is related to age. Since there is little research done on the issue of Talent Management, only control variables that proved to have an influence on the psychological contract were taken into account. 3.4 Preliminary data analysis First, the data was screened on errors and missing values. Since the data was gathered via an electronic questionnaire, there were no errors. As mentioned before (see 3.2 Sample statistics), 4 respondents were deleted because these respondents were missing more than 20% of the items. Second, the data was examined on outliers and assessed on normality. The normality of the psychological contract fulfilment scale was first checked on the Kolmogorov-Smirnov statistic. Its significance (sig. p < 0.001) suggested violation of the assumption of normality. When looking at the histogram, the distribution of the scores on psychological contract fulfilment seemed to be reasonably normal. The box plot showed some outliers and therefore the trimmed mean was checked. The mean of psychological contract fulfilment is whereas the trimmed mean is Since these mean scores on psychological contract fulfilment hardly differ, it is not recommended to remove respondents. The same is done for the Talent Management practices scale. The Kolmogorov-Smirnov statistic showed again violation on the assumption of normality (significance p < 0.001), but the histogram showed that the distribution of the amount of Talent Management practices was reasonably normal. The box plot showed some outliers, but looking at the mean (9.1559) and trimmed mean 17

18 (9.2810) on the amount of Talent Management practices it was not necessary to remove respondents from the sample. Third, the data was checked on linearity and homoscedasticity. The different plots were conducted. The normal probability plot showed a reasonably straight diagonal line from bottom left to top right and the scatter plot showed that the residuals were roughly rectangularly distributed with most scores concentrated in the centre. These plots showed that the assumptions were not violated. After the preliminary data analysis the main analyses are done. To start, the correlations between all variables are calculated. This analysis is done to describe the strength and direction between the variables and to check which variables should be taken into account in the research. Then, hierarchical multiple regression analyses are done to test the developed model and hypotheses. This is followed by an elaboration of the regression equations. Finally, a one-way between-groups analysis of covariance was conducted to analyse the impact of the Talent Management practice per generation. Recalling, in all analyses the control variables are taken into account. Now the results of the main analyses are presented. 4. Results 4.1 Correlations Table 2 shows the means, standard deviations and the correlations (Pearson s r) of the different variables of this research. Given that gender is a categorical variable, it is not relevant to calculate Pearson s r. Therefore the point-biserial correlation was calculated for gender in relation to Talent Management practices and psychological contract fulfilment, as these two variables are the main variables of this research. Talent Management practices and psychological contract fulfilment have a medium correlation, which allows the author to do hierarchical regression analysis. The point-biserial correlations of gender demonstrate that men perceive slightly more Talent Management practices and also to have slightly more psychological contract fulfilment compared to women. Because of the fact that these correlation coefficients are very small, gender is left out of consideration as control variable. The second control variable age is not significantly correlated with Talent Management practices or psychological contract fulfilment either. The fact that age is not correlated with Talent Management practices is explainable because Talent Management practices are offered to the employees that the organization pinpointed as talented. It depends on the Talent Management strategy which employees are seen as talented. In some organizations the focus of Talent Management is on younger employees, whereas other organizations focus on middle-aged or older employees. Thus, it depends on the strategy of the 18

19 organization to which employees Talent Management practices are offered. The sample of the present research includes seven different organizations that offer Talent Management practices to employees from different age categories. Hence, it can not be argued that an increase in age leads to an increase in the amount of Talent Management practices, or the other way around that an increase in age leads to a decrease in the amount of Talent Management practices that are offered. Although age is not significantly correlated to Talent Management practices or psychological contract fulfilment, age is still taken into account as a control variable in all analyses because age is strongly related to the concept of generations. Table 3: Descriptive statistics and intercorrelations 1. Talent Management practices (0.720) 2. Psychological contract fulfilment ** (0.803) Mean SD Dummy Baby Boom Dummy Millennials ** - 5. Dummy Baby Boom * TM practices ** ** ** - 6. Dummy Millennials * TM practices ** 0.127* ** 0.940** ** - 7. Age ** ** 0.752** 0.503** - 8. Gender a 0.032a 0.263** ** 0.251** ** 0.290** - Notes: a. Point-biserial correlation b. Figures between brackets ( ) represents Cronbach s alpha reliability coefficient. c. * Correlation is significant at the 0.05 level (2-tailed). d. ** Correlation is significant at the 0.01 level (2-tailed). 4.2 Exploring analysis The positive correlation between Talent Management and psychological contract fulfilment indicates that when the amount of Talent Management practices increases, the fulfilment of the psychological contract increases as well. This positive relation is shown in graph 1. Graph 1 shows that an increasing amount of Talent Management adds to the fulfilment of the psychological contract (within the sample). This increase is visible for all three generations, but the strength of the increase is different for each of the generations. The relation between Talent Management and psychological contract fulfilment looks linear for Millennials, whereas Generation X and Baby Boomers show the biggest increase in fulfilment when Talent Management increases from 4 to 8 practices. The different lines indicating the fulfilment per generation cross, which suggests interaction. Further analysis is done to test whether the differences in psychological contract fulfilment between the three generations in the sample are significant and can therefore be generalized towards other populations. 19

20 Graph 1: Relation between Talent Management and psychological contract fulfilment per generation 4.3 Hierarchical multiple regression analysis Hierarchical multiple regression was done to test the developed model (Figure 1), which suggests that the relation between Talent Management and psychological contract fulfilment is moderated by generations. Table 4 presents the results of the hierarchical regression analysis with Generation X as the reference category, whereas table 5 presents the results of the regression analysis with the Baby Boom generation as the reference category. Talent Management practices and generations were entered at Step 1, in order to see how much of variance in psychological contract fulfilment is explained solely by the main variables. In step 2 the control variable age was entered. This is done to see whether controlling for other influencing variables leads to more explained variance in psychological contract fulfilment. Step 3 tests the entire model, including the interaction effects. Model 1 (table 4 and 5) explains 15.9 percent of variance in psychological contract fulfilment. The total variance explained after entering age is still 15.9 percent, indicating that age is not explaining more variance in the fulfilment of the psychological contract. Therefore it is not surprising that F change is not significant. In addition, model 2 shows that generations do not have a significant effect on psychological contract fulfilment, meaning that there is no direct relation between generations and the fulfilment of the psychological contract. Model 3 explains respectively 17.0 percent (model 3 in table 4) and 17.1 percent (model 3 in table 5) of variance in fulfilment of the psychological contract. 20

21 Although the percentage of explained variance is slightly more than model 1 and 2, the change in F is not significant. Adding the interaction effect of generations does not lead to a significant better explaining model. Therefore prudence is needed when looking at the results that will be presented next. Table 4: Hierarchical multiple regression Generation X as reference category Model 1 Model 2 Model 3 B β Sig. B β Sig. B β Sig. Constant Talent Management practices * * * Dummy Baby Boom * * * Dummy Millennials * * * Age * * Dummy Baby Boom * TM practices * Dummy Millennial * TM practices * R² Sig R² F Change Sig. F Change Table 5: Hierarchical multiple regression Baby Boom as reference category Model 1 Model 2 Model 3 B β Sig. B β Sig. B β Sig. Constant Talent Management practices * * * Dummy Generation X * * * Dummy Millennials * * * Age * * Dummy Generation X * TM practices * Dummy Millennial * TM practices * R² Sig R² F Change Sig. F Change

22 4.4 Regression equation The output of the regression analyses shows the interaction effects of the dummy variables compared to the reference category. The output of the regression analysis does not inform about the actual B and Beta of the generation dummies, but report the difference in B compared to the reference category. The actual B of the dummy variables still has to be calculated, this is done with a regression equation. The results of the hierarchical regression of both model 2 and 3 in table 4 and model 2 and 3 in table 5 are used to fill in the regression equations. The regression equations are elaborated in Appendix V (Generation X as reference category) and Appendix VI (Baby Boom generation as reference category). The regression equation with Generation X as a reference category shows that the constants of the three generations hardly differ, whereas the calculated B s do differ for the three generations. The regression equation revealed that B = for Generation X, B = for the Baby Boom generation, and B = for the Millennial generation. The elaboration of the regression equation with the Baby Boom generation as a reference category gives the same kind of results. The Baby Boom generation has B = 0.053, for Generation X is B = and for the Millennial generation B = Concluding, the regression equation reveals that the relation between Talent Management and psychological contract fulfilment is the biggest for Generation X and the weakest for the Baby Boom generation. It was argued that the effect of Talent Management would be weaker for the Baby Boom generation compared to the other two generations. These differences in effects are visible within the sample and further analysis is needed to find out whether these results can be generalized towards other populations. 4.5 Hypotheses testing Model 2 tests to what extent psychological contract fulfilment is related to Talent Management practices (controlled for age). The model shows a positive relation between the amount of Talent Management practices and the fulfilment of the psychological contract (B = 0.053; p < 0.001). The amount of Talent Management practices appears to be a significant predictor of psychological contract fulfilment, confirming hypothesis 1. Hypothesis 2, 3, 4 and 5 suggest a moderating role of generations on the relation between Talent Management and psychological contract fulfilment. The interaction effects are presented in model 3. Model 3 (table 4) reveals that there is a significant interaction effect of Baby Boomers (B = , p < 0.05), indicating that the effect of Talent Management on psychological contract fulfilment is slightly weaker for Baby Boomers compared to Generation X. Hypothesis 3, assuming that the effect of Talent Management on psychological contract fulfilment is weaker for Baby Boomers compared to Generation X, is thus confirmed. On contrary, model 3 (table 4) does not show a significant interaction 22