Although, small businesses are key sources of innovation, employment, and growth—generating billions of dollars annually to the global economy; there is still little research on the relationship between transformational leadership (TFL), employee turnover intentions, and voluntary turnover in small companies (Barrett & Mayson, 2005). Consequently, this section highlights three main practical implications for small businesses willing to utilize TFL as a means of mitigating employee turnover intentions.
Implications for Social Relationships
Contrary to general views, compensation is not the main antecedent of employee turnover intentions in small businesses. Instead, the similarities among coworkers’ social characteristics (particularly age and tenure) as well as employee perceptions of management are more important than monetary incentives (Chang, Wang, & Huang, (2013). This is normally the case in small companies with horizontal structures that are more likely to have direct (often face-to-face) interactions among organizational members. Additionally, employees typically congregate, forming bonds and networks, with others who share similar demographics or with those whom they admire and respect (Lawrence, 2006; Mehra, Kilduff, & Brass, 1998). As a result, perceived friendships, shared connections, and respect for those in the workplace are important determinants of employee turnover intentions. Likewise, Whiteoak (2007) maintains that someone’s perception of his/her group plays a crucial role in determining his/her level of commitment and willingness to leave the group. However, it should be noted that diversity in the workplace promotes innovation which is important for small businesses existing in unpredi...
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...nformal work structures; conflicts arising from the close working relationships among organizational members; and a general lack of career advancement opportunities. In sum, while it not a panacea, transformational leadership may help mitigate these catalysts of employee turnover intentions by instilling a sense of shared identity, loyalty, and commitment to a higher organizational purpose.
Lastly, this paper’s major limitations are: (a) it does not account for the fact that organizations are complex, dynamic entities that represent shifting management and organizational needs. As such, different leadership styles (or a combination thereof) may be required at any given point in time; and (b) this paper does not examine how diversity (including age, gender, ethnicity, and sexuality) influences employee turnover intentions and voluntary turnover in small businesses.
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