An empirical study on the relationship between board of directors characteristics and employee turnover : Evidence from belgian Small and Medium Entreprises

Abstract

This empirical study investigates the characteristics of boards of directors and their impact on employee turnover within small and medium-sized enterprises (SMEs) in Belgium. Boards of directors play a crucial role in corporate governance and strategic direction, directly influencing organizational culture and human resource management practices.

The primary objective of this research is to analyze how specific board characteristics, such as size, diversity, age, Women CEO affect employee turnover rates in Belgian SMEs. Employee turnover represents a significant challenge for SMEs, impacting both productivity and operational costs.

The findings of the study indicate that certain board characteristics have a significant impact on employee turnover. Actually, board characteristics that have been studied, for instance: board size, board age, gender diversity, and the presence of women CEOs exhibit varying degrees of influence on employee turnover. The negative association observed between board size and turnover suggests that smaller boards might be less effective in retaining employees, possibly due to lack of cohesive decision-making or the short-term focus as smaller boards might prioritize immediate operational issues over long-term strategic planning. Furthermore, the positive relationship between board age and employee turnover indicates that older boards may struggle to adapt to the needs of a dynamic workforce.

These conclusions have important implications for SMEs seeking to improve their governance and reduce employee turnover. By optimizing the composition of their boards of directors, companies can not only enhance their organizational performance but also create a more stable and attractive working environment for their employees.