The Effect of Organizational Reputation on Public Employees’ Retention: How to Win the “War for Talent” in Constitutional Autonomous Agencies in Mexico

Abstract

Retaining valuable employees is a critical task for public organizations to present themselves as competent and efficient to their multiple audiences. However, despite the importance of staff mobility dynamics for public organizations, retention is an issue that has not been thoroughly studied in human resource management research. In the case of Mexico, retaining the most valuable staff is becoming more difficult because its public administration is characterized by corruption and patronage. The article argues that reputation sustains a reciprocity exchange between employees and employers, which is reflected in longterm labor relationships. Using a survey of employees of five Constitutional Autonomous Agencies in Mexico, the article shows that having a positive reputation is a crucial factor for public employees when deciding whether to stay or leave their jobs. The findings imply that building and maintaining a positive reputation must be relevant for public managers because of its implications for HRM.

Keywords

retention organizational reputation reputation management social exchange turnover/organizational mobility

Introduction

A crucial task for human resource management (HRM) in public organizations is to retain¹ valuable employees—those who are considered to provide organizations with a competitive advantage (Redondo et al., 2021). In a setting where public jobs are scarce resources and the demand for high expertise employees increases (Chordiya et al., 2017; Llorens et al., 2018), recruiting, training, and developing staff is costly, and turnover becomes expensive and disruptive (Cardy & Lengnick-Hall, 2011; Grotto et al., 2017). Furthermore, turnover is significant because it lowers public services’ quality and stability (Mor Barak et al., 2001). The growing competition for valuable, experienced, and qualified employees—not only between public and private organizations but also among public organizations—is becoming more intense every day, causing a “war for talent” (Meaney & Keller, 2017).

According to the OECD (Äijälä, 2001), the public sector is not well-paid compared to the private sector; the public sector’s image is not positive and therefore is not attractive to future candidates; merit systems are unreliable, and HRM practices are insufficient for staff development. These factors lead public agencies to have problems retaining their most valuable employees. So, how do public organizations retain their most qualified and experienced employees in the middle of this “war?”

Organizational reputation is a vital asset that influences retention in public organizations (Arnold et al., 2003; Carpenter, 2001, p. 29; Huang & Provan, 2007, p. 438). However, the implications of organizational reputation have not been thoroughly discussed in HRM research in the public sector (Wæraas & Dahle, 2020). Particularly, there is a gap in the literature concerning the empirical relationship between reputation and the retention of public employees; studies that have addressed retention issues in the public sector drawing on reputation theory are conceptual proposals that have not tested this relationship empirically (e.g., Bankins & Waterhouse, 2019). Thus, this article aims to fill this gap in the literature by examining the relationship between organizational reputation and the retention of public employees. It argues that organizational reputation influence on public employees’ decisions is critical when evaluating whether to stay or leave their jobs.

This article contributes to the literature and practice of HRM and organizational reputation in several ways. First, this study argues organizational reputation is an intangible asset with various impacts on HRM practices (e.g., Dahle, 2022; Larsen & Vesan, 2012; Lee & Zhang, 2021; Wæraas & Dahle, 2020). Particularly, the study shows that the perception of public employees about their organizations helps explain their intentions to stay or not in their organizations; employees who perceive a better reputation in their organizations are more likely to stay in their jobs. This argument is complementary to the public service motivation (PSM) perspective (Cho & Perry, 2012; Perry, 1997; Perry & Wise, 1990) as this work demonstrates that reputation is an intangible asset that motivates public employees to sustain long-term employment relationships. Drawing on organizational reputation scholarship, this article considers organizational reputation a set of perceptions of internal and external audiences regarding the public organization’s past actions and current performance (Capelos et al., 2016; Carpenter, 2010; Christensen & Lodge, 2018; Wæraas & Byrkjeflot, 2012).

Second, despite their importance for building and maintaining reputation, internal audiences—such as employees—have not been further examined in this body of literature (Gilad, 2012; Wæraas & Dahle, 2020). Studies on organizational reputation have focused on studying audiences based on estimated potential threats (van der Veer, 2021), where external audiences tend to be more relevant to organizations (Carlstedt, 2021; Wæraas & Dahle, 2020), leaving internal audiences little explored as a result. This paper answers the call to study internal audiences in greater detail (Boon et al., 2021; Maor, 2016) by analyzing employees’ perceptions based on their experiences within their agencies and other agencies of the same administrative context, showing how important this type of audience is for reputation management.

Third, retaining qualified employees is critical as it preserves institutional memory and allows knowledge to be passed on to new hires (Cho & Perry, 2012). In public administration literature, the study of retention strategies have been focused on job responsibilities (e.g., Ban et al., 2016; Winkler et al., 2019), salary and benefits (e.g., Lewis & Durst, 1995; Rose & Gordon, 2010), and working conditions (e.g., Choi, 2020; Hu et al., 2021). However, recent studies have analyzed intangible assets as alternative retention strategies, such as Nezhina et al. (2021) on the effect of image and prestige on Russian public service employees’ retention, Chordiya (2019) on the effect of inclusive organizational practices (like diversity management) on federal American officers’ retention, and Langbein and Stazyk (2018) on the relevance of employee voice—participation in organizational problems—to retention. This study contributes to this growing set of research on intangible assets and retention. Moreover, this article broadens the scope of existing scholarship on reputation management, showing how reputation management is an organizational task that strengthens the employment relationship between employees and employers. It focuses on understanding organizational reputation management as an innovative tool with implications for HRM (e.g., Dahle & Urstad, 2021). The literature on reputation management has focused on shaping audience perceptions based on organizational components such as task and mission (Verhoest et al., 2021; Willems et al., 2021) or strategic communication (Bach et al., 2021; Jacobs et al., 2022; Maor, 2020). However, little research has shown that reputation management is also about involving employees in building and maintaining reputations. Therefore, this article presents organizational reputation management as an alternative strategy to retain experienced and qualified personnel.

Finally, organizational reputation scholarship lacks studies in contexts different from those commonly studied, such as the United States, the UK, the Nordic region, or Israel, where democracy and public administration are more robust than in other countries and regions (Bustos, 2021; Rimkutė, 2020). This article discusses the organizational reputation framework considering the Mexican case, from which the analysis can be fostered in contexts other than those commonly studied. The study shows that organizational reputation is a powerful and innovative tool for improving HRM practices in different contexts. To that end, the research question of this article is the following: Why do public employees want to stay in their jobs while others do not? Drawing on a quantitative survey analysis of employees from five Constitutional Autonomous Agencies (CAA), this article shows that Mexican CAA employees’ evaluation to stay or move to another job position in the future is associated with positive organizational reputations.

Organizational Reputation and Retention

Organizational reputation is an audience-based theory (Carpenter & Krause, 2012). It is characterized by the perceptions held by multiple external and internal audiences that interact directly or indirectly with organizations (Capelos et al., 2016; Carpenter, 2010; Christensen & Lodge, 2018; Wæraas & Byrkjeflot, 2012). An audience is any individual or collective that observes an organization and can judge it (Carpenter, 2010). Audiences have different characteristics, and their perceptions have different impacts on organizations: “what one audience sees is not necessarily what another audience sees” (Carpenter, 2010, p. 34). Thereby, organizational reputation estimates the sum of perceptions of a different set of audiences regarding organizations’ unique characteristics over time (Maor, 2016).

There are two types of audiences according to the literature. Internal audiences evaluate the organization’s internal character through their professional responsibilities and mandates (Boon et al., 2020)—employees, legislators, political and judicial authorities, and other state-level agencies as regulators or audit agencies. External audiences assess how organizations present themselves in everyday life (Goffman, 1959)—citizens, civic associations, academic and professional experts, or media. While extant literature has focused on studying external audiences such as citizens or media (e.g., Kuenzler, 2021; Peci, 2021; Salomonsen et al., 2021) because of their importance as “fire alarms” for organizations (McCubbins & Schwartz, 1984), few studies have examined organizational reputation from internal audiences’ point of view (see Blom-Hansen & Finke, 2020; Christensen & Gornitzka, 2019). The absence of studies analyzing the influence of internal audiences in building and maintaining reputation limits the understanding of HRM’s role plays in projecting the image of a reliable, efficient, and competent organization in front of the external audiences.

Organizations have multiple ways to approach their audiences according to their interests, and they use reputation management to ensure they are targeting the right audiences with the right signals. Reputation management has become strategic for public organizations because of the relevance of reputational threats and opportunities (Wæraas & Byrkjeflot, 2012; Wæraas & Maor, 2015). Likewise, it helps build and maintain a favorable reputation that works as a shield against organizational damages (Capelos et al., 2016). On the contrary, the lack of reputation management could lead agencies to lose legitimacy or even result in their termination (Etienne, 2015; Luoma-aho, 2007). Hence, public managers must pay attention to their multiple audiences by attending meetings, cultivating experts’ advice, improving strategic communication (Carpenter, 2004; Maor et al., 2013), or producing adequate environmental factors to attract and retain valuable employees.

Organizational reputation is an emerging concept in public administration literature that helps understand the dynamics of mobility in public organizations. Again, organizational reputation depends not only on the perceptions of external audiences but also on how employees perceive themselves (Kolltveit et al., 2019). Therefore, studying employee mobility dynamics under the lens of reputation provides insights into the importance of employee perceptions on HRM practices. Public organizations could invest in reputation management as a retention strategy to moderate employee turnover (An, 2019; Chang & Hahn, 2006).

Retention refers to HRM practices aimed at keeping the most talented employees (Coldwell et al., 2008). Moreover, retention is both the antecedent for and outcome of a positive reputation. On the one hand, public organizations that retain their most valuable employees can efficiently and effectively fulfill their mandates, showing themselves as competent to their multiple audiences. On the other hand, presenting the organization in everyday life as competent helps build and maintain a positive reputation that allows agencies to retain their most valuable employees because of its several benefits, particularly the status resulting from being part of a well-reputed agency.

The existing literature on staff mobility has considered several factors that influence the intention of employees to stay. For example, Hausknecht et al. (2009) identify 12 retention factors from a literature review covering 50 years of mobility studies. These factors are (1) advancement opportunities, (2) constituent attachments, (3) extrinsic rewards, (4) flexible work arrangements, (5) investments, (6) job satisfaction, (7) lack of alternatives, (8) location, (9) nonwork influences, (10) organizational commitment, (11) organizational justice, and (12) organizational prestige. According to the authors, the last factor—originally proposed by Muchinsky and Morrow (1980)—is similar to definitions of reputation and one of the more prominent factors in high performers’ decision to stay. This factor recognizes an effort from the organizations to attract and retain talented employees by presenting themselves as an “employer of choice” (Hausknecht et al., 2009). Employees evaluate these factors based on comparisons between their work and the labor market for which they are inserted (e.g., their salary compared to the market). For instance, Lévy-Garboua and Montmarquette (2004) and Lévy-Garboua et al. (2007) compared current job and future opportunities to determine employees’ intentions to leave. The employee’s perception of the organization’s reputation can serve as a catalyst for employee action to stay or not to stay since reputation influences job decisions (Lee & Zhang, 2021).

As stated, there is a dearth of empirical studies about the relationship between retention and organizational reputation in the public sector. However, because of its importance for firms, research on corporate reputation has analyzed this link, showing how organizational reputation could help retain staff in public organizations. Moghaddam et al. (2021) argue that, through internal reputation management, building a positive reputation helps retain CEOs and improves firm market performance. Chun (2005) states that stakeholders’ perception of corporate reputation influences employee retention because having the best employees creates customer satisfaction and loyalty. Lastly, Harvey and Groutsis (2015) show that a positive country’s reputation plays a central role in the global talent competition.

In the public sector literature, reputation studies have gained growing academic attention from scholars of different disciplines since the early 2000s. Organizational reputation theory explains how the management of audiences’ perceptions has several benefits for public organizations, including their very survival (Luoma-aho, 2007). Externally, building and maintaining a positive reputation allows organizations to gain autonomy and legitimacy (Busuioc & Rimkutė, 2020; Rimkutė, 2020; Roberts, 2006); strategically manage communication (Maor et al., 2013; Moschella & Pinto, 2019), or facilitate cooperation between organizations (Busuioc, 2016; Capelos et al., 2016).

Internally, research on organizational reputation argues that a positive reputation motivates public servants (Valasek, 2018), helps in attracting a racially and gender diverse pool of applicants (Lee & Zhang, 2021), and develops employees’ organizational attachment (Gilad et al., 2018). These studies underline the relevance of addressing reputation as an essential internal managerial tool. However, despite the increased attention that organizational reputation studies have caught in the last decades, the extant literature still lacks studies that empirically examine the relationship between organizational reputation and employees’ retention in the public sector.

This article argues that reputation sustains a generalized reciprocity exchange in any organization between employees and employers, which is reflected in long-term labor relationships; if the organization has a positive reputation, employees obtain benefits and are more likely to repeat that interaction in the long-term, staying in their job (for a more extended discussion on the possible micro-mechanisms that explain the relationship between organizational reputation and retention, see Supplemental Appendix).

Reputation is a solution to collective action problems (Baker & Bulkley, 2014). The reciprocal transactions within collectives lead to the development of shared goals and organizations to achieve them (Blau, 1964). In that sense, a positive organizational reputation is a shared goal between employees and employers that enhances feelings of obligation, gratitude, and trust, building mutual support between the parties, resulting in long-term working relationships (Gong et al., 2010). From the organizations’ point of view, if employees perceive a commitment to meeting their needs, they feel compelled to reciprocate (Dahle & Urstad, 2021; Wæraas & Dahle, 2020). For instance, Molm (1994) highlights that interdependence relations in social exchange reduce risks and facilitate cooperation, while Gould-Williams and Davies (2005) argue the relevance of social exchange as a predictor of employee commitment, employee motivation, and retention.

This analysis seeks to show that organizations with a positive reputation may increase the possibilities of retaining the most valuable employees. This leads to the following hypothesis:

H1: There is a significant positive relationship between organizational reputation and retention in the Mexican CAA.

Research Design

Following the political science approach of reputational studies (Wæraas & Maor, 2015), this article focuses on studying agencies with some degree of autonomy from the executive (e.g., formally independent or non-majoritarian agencies). CAA are the Mexican version of non-majoritarian institutions (Pardo & Dussauge-Laguna, 2017). Given the proximity and importance of non-majoritarian agencies on citizens and the merit-based (non-political) process for appointing boards, reputation is their primary source of legitimacy (Overman et al., 2020; Rimkutė, 2018). Reputation scholarship has mainly focused on this type of agency because a positive reputation legitimizes the regulatory power beyond and above agencies’ legal fiat (Busuioc & Rimkutė, 2020).

Context

The literature concerning the study of staff retention in Latin American countries has focused on analyzing this phenomenon in private organizations (e.g., Posthuma et al., 2021; Redondo et al., 2021). However, little has been explored in this fundamental task for HRM in Latin American public administration. This analysis helps understand how organizational reputation management—here understood as an HRM tool—can improve the performance of public organizations, retaining experienced and qualified public officers in their job positions. The study suggests that reputation management should be understood and considered when analyzing retention strategies in public organizations. Thus, the Mexican case shows that, in a scenario where traditional HRM instruments—such as the civil service—are not enough to attract and retain public servants, public organizations in the region must consider alternatives to fulfill these critical human resources tasks.

Mexico is considered a country in a transition to democracy, and its public administration is characterized by corruption and patronage (see Dussauge-Laguna & Casas, 2021; Meza & Pérez-Chiqués, 2021). In such a low reputation setting, Mexican public organizations allegedly suffer from attracting and retaining qualified and experienced employees.

This article analyzes retention in Mexico’s CAA. Although Mexico’s CAA vary in their policy domains, size, age, and design, these agencies are comparable in several features. First, CAA’s legal autonomy derives from the Mexican constitution. Second, they are part of an administrative context in which they are not tied to the executive power’s decisions and government cycles (Pardo & Dussauge-Laguna, 2017). Third, their executive boards are appointed by the legislative power at the executive’s proposal. Fourth, because CAA are formally autonomous, they have room to maneuver in choosing which aspects of their reputation to emphasize. Finally, they can decide their HRM practices autonomously—all of them have well-established civil services. Because of these last two characteristics, it is expected to find different reputation management and retention strategies in the nine analyzed agencies. This situation allows us to examine how internal audiences perceive their organizations. CAA thus provides an example of the importance of reputation management for HRM in the public sector. Table 1 lists the nine CAA considered in this study.

Table 1.

Constitutional Autonomous Agencies in Mexico.

No.	Name	Policy field
1	Bank of Mexico	Monetary policy
2	National Electoral Institute	Elections management
3	National Human Rights Commission	Human Rights
4	National Institute of Statistics and Geography	Statistics
5	Federal Commission for Economic Competition	Competition policy
6	Federal Institute of Telecommunications	Telecommunications policy
7	National Institute for the Evaluation of Education	Education policy
8	National Institute of Access to Public Information and Personal Data Protection	Accountability policy
9	National Council for the Evaluation of Social Policy	Social policy

Note. After conducting this research, the current administration terminated the National Institute for the Evaluation of Education.

Data

Primary data for this study come from an original database, which contains information about employees’ perceptions regarding the reputation of the CAA and variables related to their working conditions. We collected data from five CAA employees (see Table 2) between March and June 2019 through an online survey. The survey was randomly assigned to each participant to ask their perceptions regarding one of the CAA. In three agencies, an invitation to participate in the survey was sent through their institutional email. This request stipulated that “the request was to participate in a scientific study where the answers are anonymous.” For the other two agencies, an institutional email list was downloaded through the Mexican government transparency website (portaltransparencia.gob.mx). After obtaining permission from CAA executives, we sent an invitation, including the same phrase used in the other three cases. From a total of 2,132 emails sent, this study obtained 518 responses—a rate of 24.29%. After excluding missing values, the final sample was 497 (see Appendix 1 for sample description).

Table 2.

CAA Surveyed and Rates of Response.

Agency	Total employees	Mails sent	Answers	Answer rate (%)	Final Sample	No retention	%	Retention	%
Federal Commission for Economic Competition	319	306	46	15.0	46	19	41.3	27	58.7
National Council for the Evaluation of Social Policy	188	183	86	47.0	84	43	51.2	41	48.8
Federal Institute of Telecommunications	772	765	146	19.1	135	71	52.6	64	47.4
National Electoral Institute	308*	308	131	42.5	129	54	41.9	75	58.1
National Institute for the Evaluation of Education	582	570	109	19.1	103	50	48.5	53	51.5
Total	2,169	2,132	518	24.3	497	237	47.7%	260	52.3%

Note. The number of employees in the National Electoral Institute corresponds only to those employees who are part of the National Electoral Professional Service working in Mexico City.

Measures

Measurements of reputation are critical for organizations because they contribute to “close the gap” between actual and projected reputation (Wæraas & Sataøen, 2014). This study uses the tool developed by Lee and Van Ryzin (2019) to measure organizational reputation. Because Mexico has a low-reputed public administration, testing reputation with a standardized measure would help understand how important the cultural context is for reputation. This approach is relevant for this article because the authors designed it precisely to evaluate individual-level variation perceptions on organizational reputation in any administrative context (Lee & Van Ryzin, 2019). As shown in Appendix 2, the survey contains 30 questions regarding five domains of reputation: performance, morality, procedural fairness, technical competence, and general reputation. This tool has only been used to evaluate the perceptions of American citizens (see Lee & Van Ryzin, 2019, 2020). Thus, this article tests it in a different audience, Mexican employees, to know if the tool could work as a suitable measurement to other contexts.

Dependent variable

The dependent variable is retention intention, a proxy for actual employee retention (e.g., Rezwan & Takahashi, 2022; Mehmood et al., 2019). Other studies have shown that intent and behavior correlate (Gevrek et al., 2017). In this study, it is not possible to predict the actual retention with the data collected. However, research in organizational research has demonstrated that the use of “intention” as a substitute variable for the “actual” variable is justified if the actual variable measure is not available (see Dalton et al., 1999; Dess & Robinson, 1984). This article measures intention retention by comparing current job and future job opportunities in the same administrative context (see Lévy-Garboua & Montmarquette, 2004; Lévy-Garboua et al., 2007). A mismatch between an employee’s perception of her agency’s reputation and her perception of the reputation of other agencies can lead to dissatisfaction, which may cause an employee to seek a job with that similar agency. To capture employees’ intention to stay in their job, the questionnaire asked Which of these agencies would you prefer to work for in the future? The alternatives were the nine CAA. Depending on the answer, it was codified with a dummy variable to differentiate employees who intend to stay in their organization from employees who intend to move to another CAA in the future. The variable is coded 1 for employees who would stay and 0 for those who would rather leave their current organizations (see Table 4 for frequencies).

Independent variable

Organizational reputation was captured using Lee and Van Ryzin’s (2019) measurement tool. This tool considers thirty items on Likert scales to assess the audiences’ perceptions at the individual level regarding Carpenter’s (2010) multidimensional framework (performative, technical, procedural, and moral). It also includes a new dimension added by the authors corresponding to a general facet. We conducted an exploratory factor analysis (EFA) using principal components factoring (PCF) to calculate individual measures of reputation. According to DeCoster (1998), besides identifying the nature of the constructs underlying responses in a specific content area, EFA generates “factor scores” representing values of the underlying constructs for use in other analyses. This “score” is a linear combination of all measures, weighted by the corresponding factor loading (DeCoster, 1998). After obtaining the scores from the 30-items reputation measurement, the “reputation score” could be used like any other variable in a statistical model (see Appendix 2 for more details). It is worth clarifying that EFA fully standardizes observed variables in the analysis. Also, factor loadings are standardized regression weights (Fontaine, 2005). Thus, factor scores are standardized to have a mean of 0 and a standard deviation of 1 (Hair et al., 2014). As Table 3 shows, the standardized value of reputation ranges from −4.65 to 3.56.

Table 3.

Descriptive Statistics.

Type	Variable	Type	Average	Standard deviation	Min. value	Max. value
DV	Retention	Categorical	0.523	0.50	0	1
IV	Reputation	Continuous	−0.000^a	1.00	−4.65	3.56
CV	Salary	Categorical	3.09	1.16	1	5
CV	Benefits	Categorical	3.18	1.19	1	5
CV	Job Location	Categorical	2.27	1.04	1	4
CV	Seniority	Categorical	2.70	1.38	1	6
CV	Hierarchy	Categorical	0.169	0.375	0	1
CV	Age	Continuous	38.4	9.73	20	66

The average for reputation is −0.0000000007730083.

To measure the sampling adequacy of the sample, we performed a Standard Kaiser–Meyer–Olkin (KMO) test, obtaining a value of 0.982, which is considered a “marvelous” value (Mulaik, 2010). Second, to verify test factorability, we conducted a Bartlett test of sphericity, obtaining a p-value of .000 (p > .05). The criterion for determining the number of factors is the eigenvalue (≥1) criterion, and we used a varimax orthogonal rotation, which simplifies interpretability because it minimizes the number of variables within each factor as much as possible (Comrey & Lee, 1992). Finally, we used Cronbach’s alpha (.9814) as a reliability test to analyze internal consistency—values over .7 are considered accepted (Hair et al., 2014). Appendix 2 reports the results of the PCF analysis.

Control variables

This study considered control variables that might affect employees’ decisions to stay in their jobs, including extrinsic rewards such as salary and benefits. We chose these variables to be consistent with prior retention studies (e.g., Alhmoud & Rjoub, 2020; Hausknecht et al., 2009). Regarding salary and benefits, each variable was captured as a single survey item and measured on a Likert scale. The survey asked employees about their perception of their extrinsic rewards compared to the labor market. These variables take values 1 (for employees who strongly agree that their salaries and benefits are over the job market’s average) and 5 (for those who strongly disagree with that statement). The analysis expected that these variables will not be positively related to retention because organizational success and public employees’ satisfaction and motivation are related to intrinsic motivation (Perry & Wise, 1990; Rigby & Ryan, 2018).

Furthermore, the study account for job location with a scale variable in which the nearest home-office relation is coded with 1 and the farthest with 4. The expected result with this variable is that employees who live closer to home are more likely to stay in their current job than those who live further away because job location is essential in deciding to change jobs or residence to reduce travel costs (van Ommeren, 1998). Another control in the model is seniority (years at the current position). This categorical variable has 6 levels (1 = 0 to 1 year to 6 = more than 10 years at the current position). We expect that seniority may affect the intention to stay in the agency; the longer an employee has worked in an agency, the higher the perceived investment in staying or risk of leaving (Langbein & Stazyk, 2018). Also, we control by the hierarchical level of the employees. The hierarchical level can help to clarify jobs and missions and may influence the incentive to stay in the agency (Davis & Stazyk, 2015). This variable is coded as a dummy. The first category (coded = 0) refers to lower and medium-level employees (analyst, technician, operative, head of area, subdirector), and the second level (coded = 1) is relative to high-level managers (area director and general director). We expect that high-level staff is more likely to increase the intention to stay in the agency. Finally, the study incorporates age as a demographic variable measured in years. Previous research on human resources has noted the impact of age on work-related variables (Vui-Yee & Paggy, 2020).

Table 3 reports the descriptive statistics of the research variables, and Table 4 shows the frequency for each categorical variable.

Table 4.

Frequency for Categorical Variables.

Variable	Categories	Codes	Frequency	Percent
Retention	No retention	0	230	47.7
	Retention	1	267	52.3
		Total	497	100
Salary	Strongly agree	1	57	11.5
	Agree	2	79	15.9
	Undecided	3	185	37.2
	Disagree	4	113	22.7
	Strongly disagree	5	63	12.7
		Total	497	100
Benefits	Strongly agree	1	50	10.1
	Agree	2	89	17.9
	Undecided	3	152	30.6
	Disagree	4	132	26.6
	Strongly disagree	5	74	14.8
		Total	497	100
Job Location	10–30 minutes distance	1	138	27.8
	30 minutes to 1 hour distance	2	167	33.6
	1 hour–1 hour and a half distance	3	113	22.7
	more than an hour and a half distance	4	79	15.9
		Total	497	100
Seniority	0–1 year	1	65	13.1
	Between 1 and 3 years	2	225	45.3
	Between 3 and 5 years	3	111	22.3
	Between 5 and 7 years	4	31	6.24
	Between 7 and 10 years	5	22	4.43
	More than 10 years	6	43	8.65
		Total	497	100
Hierarchy	Lower and medium-level employees	0	413	83.1
	High-level managers	1	84	16.9
		Total	497	100

Results

The hypothesis of the study suggests that an agency with a higher organizational reputation is expected to have a higher probability of employee retention among Mexican CAA. We used four linear probability models to test whether organizational reputation impacts the likelihood of employee retention. These linear models are estimated instead of logistic estimations for ease of interpretation of the results. Also, the results of linear probability models are very similar to those obtained from nonlinear models (Hellevik, 2009; Wooldridge, 2002). The variable we are interested in modeling is retention intention, an indicator of whether an employee intends to stay in the organization (retention intention = 1) or not (no retention intention = 0). A regressor that ought to have power in explaining whether an employee intends to stay in the organization is organizational reputation.

The models for calculating employee retention probabilities are reported in Table 5. The table presents the β coefficients and standardized errors (SE). The coefficients indicate the association of the corresponding variable with the retention intention probabilities in relation to the base category “no retention intention.” We tested for multicollinearity using variance inflation factors (VIF). None of the VIF is above 10—the highest is 1.572—indicating multicollinearity is not a concern (Field et al., 2012).

Table 5.

Linear Probability Regression Results.

	Dependent variable:
	Retention
	(1)	(2)	(3)	(4)
Reputation	0.053** (0.023)	0.063*** (0.022)	0.070*** (0.023)	0.058*** (0.022)
Salary2	0.026 (0.037)		0.023 (0.033)
Salary3	−0.011 ;£:0.076)		−0.034 (0.077)
Salary4	−0.034 (0.083)		−0.063 (0.085)
Salary5	−0.139 (0.096)		−0.113 (0.097)
Benefits2	−0.133** (0.039)		−0.136** (0.090)
Benefits3	−0.033 (0.033)		−0.061 (0.033)
Benefits4	−0.073 (0.036)		−0.064 (0.036)
Benefits5	−0.067 (0.097)		−0.062 (0.097)
Job_Location2	−0.163*** (0.057)			−0.160*** (0.057)
Job_Location3	−0.193*** (0.063)			−0.130*** (0.062)
Job_Location4	−0.179** (0.070)			−0.169** (0.070)
Seniority2	0.030 (0.069)			0.036 (0.069)
Seniority3	0.064 (0.080)			0.043 (0.079)
Seniority4	0.036 (0.113)			0.033 (0.113)
Seniority5	−0.064 (0.124)			−0.076 (0.123)
Seniority6	0.033 (0.106)			0.063 (0.105)
Hierarchy1	0.102* (0.061)			0.093 (0.060)
Age	0.007** (0.003)			0.007*** (0.003)
Constant	0.452*** (0.135)	0.522*** (0.022)	0.637*** (0.035)	0.314*** (0.109)
Observations	497	497	497	497
<2	0.039	0.018	0.034	0.072
Adjusted R²	.052	.016	.016	.051

p < .1. **p < .05. ***p < .01.

Regarding the independent variable, the model shows a significant relationship between organizational reputation and retention. Having a better reputation is a significant predictor of whether the employee intends to stay in the job. We could say that employees who perceive a better reputation of their organizations are significantly more likely to stay in their job than those who have a worse perception of it. As it is possible to observe in Table 5, in model 1, which uses all the variables, the relationship between organizational reputation and intention to stay is significant (β = .058; p < .05), showing support for Hypothesis 1. This means that employees working in organizations with a higher reputation are more likely to stay. The probability of intended retention increases approximately six percentage points for each increased point in the perceived reputation.

To analyze this relationship more in depth, we tested this relationship in three different models. Model 2 contains only the independent and dependent variables. Model 3 considers independent and dependent variables and only extrinsic rewards as control variables. Model 4 considers all the variables, excluding the extrinsic rewards variables. The results were nearly the same as those in Model 1—all the models show a significant relationship between reputation and intended retention. Therefore, we find strong support for H1. These findings provide empirical support to the relevance of the influence of organizational reputation on retention (Bankins & Waterhouse, 2019; Carpenter, 2001; Lee & Whitford, 2013; Luoma-aho, 2007).

Among the control variables, the results show that job location and age are significantly related to retention. In the case of job location, the indicator variables have a slightly different interpretation. For example, employees who live between 30 minutes and 1 hour from the office (job_location2 in the model 1), compared to employees who live between 10 and 30 minutes from the office (job_location1; reference category), decrease the probability of retention by 17% approximately (model 1: β = −.168; p < .01; model 4: β = −.160; p < .01). This means that employees who leave farther reduce the probabilities of retention. Age is related positively to retention. Older employees are more likely to stay in the organization, while being a younger employee reduces the likelihood of retention; for each one-unit change in age, the probability of retention (compared to no retention) increases by 0.7% (see models 1 and 4). Furthermore, it is important to underline that control variables related to extrinsic rewards used in this model—salary and benefits—did not affect employees’ retention in any of the models (see models 1 and 3). Also, other control variables such as seniority and hierarchical level were not significant in the models (see models 1 and 4). Thus, according to the models, these variables do not affect the employees’ intention to stay.

We perform a Wald test for each group of categorical variables to assess whether each group’s overall effect is significant in the model. Confirming the results of the model, the outcomes of this test show that only job location group is significant (χ² = 12.8, 0.0052, p < .01) while salary and benefits groups are not significant (χ² = 3.9, p = .26, p > .01, and χ² = 5.3, p = .41, p > .01, respectively). Even when the category related to employees who agreed with their benefits (Benefits2) has a significant coefficient, the Wald test showed no overall significance related to the benefits variable. Nor were the control variables for seniority and hierarchical level significant in this test (χ² = 1.9, p = .86, p > .01, and χ² = 2.9, p = .08, p > .01, respectively). Finally, Figure 1 shows the predictor effects for the seven variables in model 1 (the best-fit model), including lower and upper-end points of 95% confidence intervals for the fitted values. The vertical axis labels are on probability scale.

Figure 1.

Predictor effects of the variables of interest.

Discussion

Extant reputation literature has correctly suggested that a positive reputation can be helpful for retaining the most valuable employees (Bankins & Waterhouse, 2019; Carpenter, 2001; Lee & Whitford, 2013; Luoma-aho, 2007). This article shows that organizational reputation is a critical factor influencing employees’ decisions whether to stay working with their organizations. The findings also provide insights into the relevance of intrinsic motivation in HRM by confirming that people who work in the public sector consider this decision based on factors different from monetary rewards (e.g., Moynihan & Pandey, 2007; Perry & Wise, 1990). The study focused on the perceptions that an internal audience has regarding its organization, showing that organizational reputation could be an innovative framework to motivate employees and thereby improve organizational performance.

As the existing literature on reputation in the public sector has suggested, reputation is a relevant intrinsic motivator for public employees who perform government tasks (Carpenter & Krause, 2012, 2015). Intrinsic motivation appears because of the positive reactions from engagement in work activities (Bloom & Colbert, 2011) rather than from factors external to the work experience itself, such as rewards and performance incentives (Gagné & Deci, 2005). In this case, as Carpenter and Krause (2012) stated, reputation is “developed endogenously by the internal character of the administrative organization in terms of mission and solidarity” (p. 26). Reputation is the outcome of mutual support between employees and employers to achieve a common goal; therefore, it tends to engender feelings of personal obligations, commitment, and job satisfaction. In this sense, reputation sustains a generalized reciprocity social exchange, which is reflected in employees’ long-term relationships with their organizations (see also Oliver, 2018). This argument supports the idea that higher intrinsic motivation is a desirable outcome for long-term employment relationships (Kreps, 1997; Tsui et al., 1997).

Developing a positive reputation is difficult in a setting where public institutions suffer from bashing by external audiences (Gilad et al., 2018). Thus, winning the “war for talent” in a low-reputed context implies the use of innovative HRM practices such as reputation management. Public managers must understand the importance of the employees and correspondingly match, as far as possible, their expectations derived from a reciprocal exchange that includes not only extrinsic motivations—such as salaries and benefits—but also intrinsic. For doing this, agencies could focus on employee value proposition (EVP) initiatives. EVP refers to the balance between extrinsic and intrinsic motivations that employees perceive or experience through being part of an organization (Heger, 2007). If employees do not perceive this balance between intrinsic and extrinsic rewards positively, they can be encouraged to leave the organization. In turn, if employees perceive that their organizations are committed to offering them intrinsic and extrinsic motivations according to the context and the job market, they probably might stay in their organizations.

This study examines the employee-based implications of reputation-oriented HRM practices (e.g., Wæraas & Dahle, 2020). It shows that building, improving, and maintaining a positive reputation must be a shared goal between employees and employers because it provides them benefits at the organizational and individual levels. Therefore, HRM should make organizational reputation a visible common objective to motivate all employees to achieve organizational goals. As public administration depends on bureaucracy as a critical element in delivering goods and services, it will be necessary for organizations to retain their most valuable employees to improve their outcomes and thereby improve perceptions vis-à-vis their multiple audiences.

Conclusion

This study contributes to the retention and organizational reputation literature by testing the relationship between reputation and retention in public sector organizations among a sample of 497 employees in the Mexican CAA. The case shows how organizational reputation can be an intangible asset to improve employee retention. In contexts in which organizations are subject to a constant downsizing of their organizational structures and patronage prevails over merit-based criteria, employees suffer from “layoff syndrome” every time political changes come to the scene, making them develop feelings of mistrust and anxiety replacing trustworthiness and security (Reichheld, 1996). In this scenario, reputation management appears as an alternative to retaining employees in which reciprocity of social exchange can make them feel part of organizational goal achievements, thus strengthening their attachment to the organization.

Despite the study’s findings to better understand the relationship between reputation and retention in the public sector, it is important to consider its limitations. First, results were produced from a non-representative survey. This research focused on public employees of five CAA, which clearly represent a small part of the Mexican public administration, limiting the generalizability of this article’s findings. These agencies are sometimes called “islands” because their autonomy allows them to conduct better administrative practices than the rest of public administration. Future research could examine a representative sample of employees of other federal institutions or local organizations to learn about their perceptions of organizational reputation.

Second, this is a cross-sectional analysis, and organizational reputation may change over time (Maor, 2016). This study was conducted in a period of relative stability for the CAA. However, Mexico’s current political situation is allegedly in the middle of a backsliding democratic process, affecting the public sector and especially the CAA—the termination of the National Institute for the Evaluation of Education is just an example (Dussauge-Laguna, 2021). This situation may have changed—positively or negatively—the expectations and perceptions of audiences and, therefore, the reputations of the CAA, which could influence the results of this study. Future research agenda may consider longitudinal studies. A longitudinal study could test how long it takes to change reputation valence (negative or positive) to affect employee retention. Also, such a study could contradict the claim of this study and prove that changes in reputation over time do not affect retention rates.

Third, this study did not test any causal micro-mechanisms. The research design of this study leaves us unable to make causal claims about the relationship between reputation and retention. Future studies may test the effect of the three micro-mechanisms developed in this study (for an extended discussion on the possible micro-mechanisms that explain the relationship between organizational reputation and retention, see Supplemental Appendix). A first mechanism suggests that employees and employers working toward a positive reputation as a shared goal reinforce reciprocity, which is reflected in long-term working relationships. A second explanation suggests that, because of its benefits, status regulates the strength of the association between a positive reputation and retention. Moreover, a third mechanism suggests that employees who feel their needs—such as having a positive reputation—are being met by their employers are more inclined to stay with the organization to which they belong.

Fourth, this study uses a small cross-section data set. Partly because of the small sample size, strong results do not emerge. However, the estimates provide some evidence that the hypothesized link between organizational reputation and retention may be present in the data. In addition, the results of this study are based on only five agencies of the nine Mexican CAA. These article’s results may encourage future efforts to generate better measurements of this relationship. Finally, this study may be susceptible to common method bias—a usual and expected issue in public management studies that use surveys as a source of data (Jakobsen & Jensen, 2015)—because surveyed employees’ perception of the reputation of their agencies is related to their own activities and commitment to the organizations, which possibly inflate the observed relationship between the variables of interest. As we cannot totally exclude the possibility of common source bias because of using the same survey responses to measure independent and dependent variables, the results should be interpreted with caution.

Organizational reputation is a research area in public administration and HRM in the public sector that deserves further study. This study contributes to the literature on public employees’ mobility by offering an opportunity to think about the influence of reputation management on the way employees process their intentions to stay in the job. Based on the results, there are some practical implications of the study. First, organizational effectiveness depends on recruitment and retention strategies to develop a talented and motivated workforce (Reina & Scarozza, 2021). In that sense, agencies could guide the selection processes to choose candidates interested in long-term reputational incentives (Carpenter & Krause, 2015).

Second, this study’s findings emphasize that intrinsic motivations (such as organizational reputation) increase job satisfaction and commitment and reduce mobility in the workplace, increasing organizational performance (Cho & Perry, 2012; Hancock et al., 2013). Public organizations must be aware of the possibilities of managing reputation as a strategic management tool with crucial implications for organizational performance (Krause & Douglas, 2005). However, future research may deepen the study of organizational reputation as a twofold motivator. Reputation is built intrinsically and extrinsically by the perceptions of the internal and external audiences regarding an organization. Thus, on the one hand, as it was argued in this article, reaching a positive reputation works as an intrinsic motivator by sharing a common goal between employees and employers (see also Dahle & Urstad, 2021). On the other hand, when employees are extrinsically motivated, their behaviors are performed to obtain an external reward (Chen & Bozeman, 2013). Thus, reputation could also be understood as an extrinsic motivator because of its external benefits, such as status. More research is needed to explore this further.

Finally, organizational reputation must be an organization’s collective goal. Organizational reputation is an asset in permanent construction and a product of the collaborative work between employees and employers. In that sense, public managers must involve employees in reputation management activities such as strategic communication (Maor, 2010), promoting core values (Lockert et al., 2020), strategic self-presentation (Wæraas & Sataøen, 2014), or developing internal identity (Wæraas & Byrkjeflot, 2012).

Although the study’s findings are limited to the Mexican context and may apply only to executive agencies or non-majoritarian institutions—and no other federal agencies or governmental levels— the analysis provides insights on how organizational reputation influences employee decisions in the workplace. Particularly, the study showed that public employees value intrinsic motivations when assessing stay in their current positions. More significantly, this article provides an empirical view of the relationship between organizational reputation and employees who project to stay in their jobs and those who do not. Reputation management can influence employees to feel more committed to organizations (Gilad et al., 2018), and if organizations can offer them a balanced package of extrinsic and intrinsic rewards, the likelihood of retaining the most valuable ones will increase. Future research that examines the impact of organizational reputation on different HRM processes should inform public administration practitioners about the relevance of reputation for public organizations. Specifically, it is necessary to understand the extent to whether reputation management can affect employee perceptions regarding their workplace. Also, to improve the quality of the studies in the field and benefit administrative practice, future studies could analyze the “duality” of internal audiences. This duality means that internal audiences, such as employees, also have an outsider perspective like other external audiences (see Doering et al., 2021). Also, reputation literature could study how perceived external prestige (how an internal audience perceives external audiences’ views the organization) affects employee intention to stay.

Finally, this research was motivated by the fact that no research has been conducted to test the relationship between reputation and retention in the public sector. This article is even one of the first investigations on HRM to study a case in a different country from those commonly studied using the organizational reputation approach, which provides evidence about the importance of organizational reputation as an asset with high relevance for public management in different cultural contexts. Thus, further research on HRM is needed to examine this theory in contexts other than those usually studied.

Supplemental Material

sj-docx-1-rop-10.1177_0734371X221130973 – Supplemental material for The Effect of Organizational Reputation on Public Employees’ Retention: How to Win the “War for Talent” in Constitutional Autonomous Agencies in Mexico

Supplemental material, sj-docx-1-rop-10.1177_0734371X221130973 for The Effect of Organizational Reputation on Public Employees’ Retention: How to Win the “War for Talent” in Constitutional Autonomous Agencies in Mexico by Edgar O. Bustos in Review of Public Personnel Administration

Footnotes

Appendix

Appendix 2.

Description of Survey Items and PCF Factor Analysis Results.

Dimension	Items		Factor1	Factor 2	Uniqueness
General	Item1	I have a favorable opinion about this agency	0.8518		0.1296
	Item2	I believe this agency is doing a good job	0.8591		0.1207
	Item3	I do not have much respect for this agency		-0.6940	0.3883
	Item4	Overall, this agency has a good reputation	0.8039		0.2316
	Item5	This agency is a waste of taxpayer’s money		−0.7048	0.3558
	Item6	I have a negative impression about this agency		−0.7619	0.2272
Performative	Item7	This agency is a well-run organization This	0.8384		0.2052
	Item8	This agency is effective at its job This	0.8243		0.2138
	Item9	This agency does a poor job		−0.7931	0.1873
	Item10	This agency is a high performing agency	0.7815		0.3286
	Item11	This agency often fails to get things done		−0.5542	0.6332
	Item12	This agency has the capacity to get things done	0.8018		0.2236
Moral	Item13	This agency can be trusted to do what is right	0.8740		0.0987
	Item14	This agency maintains high ethical standards	0.8255		0.2150
	Item15	This agency seems to be corrupt		−0.7724	0.2138
	Item16	This agency protects democratic values	0.8477		0.1757
	Item17	This agency is sometimes dishonest		−0.7645	0.2874
	Item18	I believe what this agency says	0.8317		0.1788
Procedural	Item19	This agency respects due process	0.8571		0.1668
	Item20	This agency is highly transparent	0.8166		0.2155
	Item21	Although I sometimes disagree with its decisions, this agency always follows the rules	0.8070		0.2701
	Item22	This agency treats people fairly	0.7619		0.3696
	Item23	This agency protects the rights of citizens	0.7661		0.3357
	Item24	This agency is politically neutral	0.7430		0.3485
Technical	Item25	This agency has the technical expertise to do its job well	0.7525		0.3066
	Item26	This agency is technically competent	0.7784		0.2874
	Item27	This agency has highly skilled employees	0.7851		0.2744
	Item28	This agency bases its decisions on evidence	0.7757		0.3323
	Item29	This agency has the skill to deal with complex situations	0.8069		0.2392
	Item30	This agency lacks technical knowledge		−0.6753	0.5012

Note. Factor loadings >0.5 are the only values considered for the analysis, which is regarded as rigorous. The proportion of variance explained by these two factors is 73.13% (51.63% by factor1 and 21.50% by factor2). To obtain the reputation “score,” the analysis only considers the first factor. The second factor gathers all negative wording items, which suggests this is a different dimension from positive reputation (Lee & Van Ryzin, 2019).

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Edgar O. Bustos

Supplemental Material

Supplemental material for this article is available online.

Notes

Author Biography

Edgar O. Bustos is a visitant research professor at Centro de Investigación y Docencia Económicas (CIDE) in Aguascalientes, Mexico. His research interests are human resources and intangible assets management. His work has been published in Public Administration Review. He was an ASPA Founders’ Fellow (2019).

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