Improving Employee Turnover Intention: Outsourced Human Resources vs. In-house Human Resources

Small business research has neglected comparing employees’ perceptions on variables related to in-house human resources (HRI) vs. outsourced human resources (HRO) in small businesses. We used a mixed methods research design to study this issue. The first study consisted of 11 in-depth interviews. The qualitative insights we gained helped to guide survey construction for the second quantitative survey-based study. For the survey, 101 HRI U.S. employees and 97 HRO U.S. employees filled out a survey. Results from the HRI and HRO samples were equivalent in terms of participants’ years of work experience, work schedule, gender, company size, company age, perceived timely HR response to a concern/issue, average HR response time, and turnover intention. However, the HRO sample had higher perceived employee engagement and organizational culture (OC). Subsequent hierarchical regression analyses comparing the two samples showed that although OC was a common correlate for explaining the outcome of turnover intention in both samples, employee engagement, timely HR response, and average HR response time were significant correlates of turnover intention only for the HRI sample.