Proposing a Robust Model to Reduce Employees’ Turnover Intentions in an Ethical Leadership Framework: Empirical Evidence from the Healthcare Sector

Abstract

Employee turnover is expensive and disruptive for an organization. Studies have already mentioned that the economic cost of turnover is huge, ranging from 90% to 200% of the existing employee’s salary. With an increase in turnover rate, the social fabric of an enterprise may be disrupted. Additionally, organizations with an increasing turnover are expected to lose intangible knowledge and skills, operational effectiveness, customer satisfaction, and product or service quality. In a healthcare context, an increasing turnover rate has more consequences than other sectors because the healthcare sector worldwide is already identified as a sector facing resource scarcity. Exacerbating the situation, current evidence suggests that employee turnover has been increasing globally in the healthcare sector. The literature suggests that an ethical leadership style may reduce employees’ likelihood of quitting an organization. However, such literature is sparse in healthcare, especially from the perspective of a developing economy in the Global South, which is more resource-deficient than the Global North. To fill this knowledge gap, this study investigates the relationship between ethical leadership style and turnover intentions in the healthcare context of the Global South. This study also tests the mediating effect of intrinsic motivation and psychological contract fulfillment in the above-proposed relationship. Furthermore, the conditional indirect effect of resilience is also tested. The data are collected from the hospital employees through a self-administered questionnaire. The hypothesized relationships are tested through structural equation modeling. The empirical evidence indicates that ethical leadership reduces employees’ turnover intentions significantly. The results further confirm the mediating and moderating effects of intrinsic motivation, psychological contract fulfillment, and resilience. These results have different theoretical and practical implications for the healthcare sector. The results especially highlight the role of ethical leaders in a hospital to deal with the challenge of turnover, which has been rising worldwide.