Controllable vs. Uncontrollable Factors of Employee Turnover Intentions: An Empirical Evidence from Textile sector of Pakistan. 1
DR. MAHMOOD A. BODLA 2 ABDUL HAMEED
Abstract Employee turnover has substantial cost as it is a loss of social capital. The paper examines one of the major human resource issues i.e. employee turnover intentions in to two dimensions: controllable and uncontrollable factors. Controllable factors are the organizational factors and uncontrollable factors are the environmental factors. Five variables are used for the measurement of controllable factors which include satisfaction with pay, satisfaction with working conditions, satisfaction with supervision, organizational commitment, and Job stress. Job hopping and perceived alternative employment opportunities are the two variables used for measurement of uncontrollable factors. The data is collected from 252 first line managers and supervisors of textile sector of Pakistan for ascertaining the reasons of employee turnover. The statistical tools employed to analyze the data are correlation and regression analyses. In the end, paper suggests guidelines for the Human Resource Managers and Researchers.
Key Words: Employee Turnover Intentions, Controllable and Uncontrollable Factors Introduction
Employee is a valuable asset for the organization. Employee means the individual who performs certain tasks and duties for the accomplishment of organizational goals. Turnover means voluntary cessation of membership of an organization by an employee of that organization. (Morrell et al 2001). Turnover intention is broadly defined as attitudinal (thinking of quitting), decisional (intention to leave), and behavioral (searching for a new job) processes proceeding voluntary turnover (Sager et al., 1998, Khatri 2000). Employee turnover incurs significant cost, both in terms of direct costs (replacement,
1
2
Director COMSATS Institute of Information Technology, Technology, Sahiwal,Pakistan Lecturer Management Sciences, COMSATS Institute of IT. Islamabad, Pakistan
recruitment and selection, temporary staff, management time), and also (and perhaps more significantly) in terms of indirect costs (morale, pressure on remaining staff, costs of learning, product/service quality, organizational memory) and the loss of social capital (Dess and Shaw, 2001). Employee turnover is a major issue for companies in many Asian countries such as Singapore, Hong Kong, South Korea, Malaysia, and Taiwan (Syrett, 1994; Barnett, 1995; Chang, 1996; Khatri 2001). The importance of workforce turnover as a sustainability sustainabilit y issue has been recognized by the Global Reporting Initiative (GRI), which has included turnover as a core social performance indicator in its Sustainability Reporting Guidelines (GRI 2002). Employee turnover is giving sleepless nights to human resource managers in textile sector of Pakistan. The textile sector is selected due to two reasons. First of all, there is an alarming employee turnover rate i.e. 12% (Majid et al 2000). Second reason is that textile industry represents Pakistan’s largest employer as well as key sector for the economy having almost 68% of total export earning (Bukhari 2005) is the largest sector of Pakistan. This study has three main objectives. First and foremost objective is to explore the reasons and intentions of employee turnover.
Most of the studies on turnover were
conducted in the Western Organizational context (Khatri et al., 2001) and there is a vast difference in economic, social, and cultural environments. Therefore, second objective is to find out the implications in the Asian context.
The last objective is to partition the effects of controllable factors (such as satisfaction with pay, working condition and organizational commitment), and uncontrollable factors (such as alternative employment opportunities and job-hopping) on turnover intention. The partitioning of the effects would lead to better analysis of the turnover problem. Theoretical Framework & Hypothesis
There are two schools of thoughts on employee turnover research: the labor market school and psychological school. The labor market school deals with the issues such as demand & supply, job search, availability of job opportunities or perceived alternatives. The psychological school concerns with those issues principally related to psychological accounts such as job satisfaction, organizational commitment, organizational climate, and job stress. Both schools of turnover research are unable to predict and explain the adequately reasons and measures for organization to manage turnover effectively (Morrel et al., 2001). The framework for the study is presented in Figure 1. It includes two groups of independent variables which include controllable and uncontrollable factors. Controllable factors are the organizational & psychological factors i.e. job satisfaction, organizational commitment, and job stress. Uncontrollable factors are the environmental or labor market factors i.e. perceived alternative employment opportunities and job hopping. Turnover Intention is the dependent variable in the study. Mobley (1982) indicates that there are four primary determinants of turnover: Job satisfaction-dissatisfaction; expected utility of alternative internal work roles; expected utility of external work roles; and nonwork values and contingencies.
Job satisfaction describes how content an individual is with his or her job. There are a variety of factors that can influence a person's level of job satisfaction; some of these factors include the level of pay and benefits, the perceived fairness of the promotion system within a company, the quality of the working conditions, and the job itself.
Controllable Factors
Job Satisfaction Organizational Commitment Job Stress -
-
Employee Turnover Intention
+
+
Uncontrollable Fact ors
Alternative Employment Opportunities Job Hopping
Figure 1: Schematic Diagram for Employee Turnover Model Including Controllable and Uncontrollable Factors
Falkenburg and Schyns (2007) describe job satisfaction as a behavioral cycle; as a cause of behavior consists of satisfaction with different aspects of the job and the work situation. Satisfaction is the extent to which employees like their work. There is a negative relationship between job satisfaction and withdrawal behavior. Job satisfaction can be divided into three dimensions: satisfaction with pay, satisfaction with nature of work, and satisfaction with supervision. The relationship between job satisfaction and turnover is one of the thoroughly investigated variables in turnover literature. Many studies report a negative relation between job satisfaction and turnover (e.g. Khatri et al (2001), Bluedorn (1982), Arnold and Feldman (1982), Cotton and Tuttle (1986), Mobley (1982), Price (1977). Employees are more likely to leave an organization when they are dissatisfied. Koh and Goh,s (1995) investigate the relationship between job satisfaction and employee turnover intention in Singapore and classified job satisfaction into eight categories: physical working conditions, co-workers, financial rewards, supervision, company identity, kind of work, amount of work and career future. Khatri et al. (2001) report job satisfaction into three perspectives; satisfaction with pay, supervision, and nature of work. There is a negative relationship among all the three dimensions of job satisfaction in the study of employee turnover intention. Thus: Hypothesis 1: Job satisfaction is negatively associated with turnover intention. Hypothesis 1a Satisfaction with pay is negatively associated with turnover intention. Hypothesis 1b Satisfaction with work is negatively associated with turnover intention. Hypothesis 1c Satisfaction with supervision is negatively associated with turnover
intention.
Organizational commitment is “the employee's psychological attachment and affiliation to the organization”. It can be compared with other work-related attitudes, such as Job Satisfaction, defined as an employee's feelings about their job, and Organizational Identification, defined as the degree to which an employee experiences a 'sense of oneness' with their organization. According to Meyer and Allen's (1991) there are three "mind sets" which can depict an employee's commitment to the organization: Affective Commitment: is defined as the employee's positive emotional attachment to the organization. Continuance Commitment: The individual commits to the organization because he/she perceives high costs of losing organizational membership. Normative Commitment: The individual commits to and remains with an organization because of feelings of obligation. Aryee et al.’s (1991) shows a negative relationship between organizational commitment and turnover intention of professional accountants in Singapore. In the same way, Wong et al. (1996) in their longitudinal study of 485 graduate students in
Hong Kong found
organizational commitment a strong predictor of turnover. Several other scholars (Khatri (2001), Kim et al. (1996), Ben-Bakr et al. (1994), Tett & Meyer (1993), Arnold & Feldman (1982), have also found organizational commitment an important predictor of turnover. Van Breukelen et al. (2004) indicate that job satisfaction and organizational commitment are negatively associated with turnover intentions. Therefore, Hypothesis 2: Organizational commitment is negatively associated with turnover
intention.
Job stress and turnover intentions have gained increasing importance in the recent literature. NIOSH (2008) defines Job stress as the harmful physical and emotional responses that occur when the requirements of the job do not match the capabilities, resources, or needs of the worker. Stress also occurs when the situation has high demands and the worker has little or no control over it. Job stress can lead to poor health and injury. Lucy et al. (2004) investigate the variables that may be the reasons for intentions to leave and findings of the study suggest that intentions to quit is largely influenced by job dissatisfaction, lack of commitment to the organization, and feeling of stress, which influenced by job stressors. Job stressors such as workload, job ambiguity, which are the factors that activate the chain of psychological states that lead to intentions to quit. Managers should observe employee workloads, and the relationships between supervisors and subordinates in order to reduce and manage job stress. Price (2001) defines Job stress is a situation by which job duties are difficult to fulfill. There are four types of stress which can be distinguished: workload (amount of effort required by a job), role ambiguity (unclear job obligations), role conflict (inconsistent job obligation), and resource inadequacy (lack of means to perform a job). Janssen Peter et al (1999) suggest that emotional exhaustion is primarily predicted by a lack of social support from colleagues, and by the demanding aspects of work, like working under time pressure and strenuous work i.e. work overload. Stress related problems among workers increase absenteeism and high turnover (Mikkelsen et al, 2000). Thus Hypothesis 3: Job stress is positively associated with turnover intentions.
Uncontrollable factors are the environmental factors which include Job-hopping and Alternative employment opportunities. These factors related to labor market school of thought (Morrel et al., 2001). Job hopping and Alternative employment opportunities included in theoretical frame work (Figure 1). Job-hopping means frequently movement of job from one place to another place without any specific reason. Ghiselli (1974) defines job-hopping, as ‘hobo syndrome’ which means and includes ‘the periodic itch to move from a job in one place to some other job in some other place’. Employees searching alternative jobs even they have secured job (Chew, 1993). Job hopping is one of the most important factors of employee turnover. Some employees leave due to social influence from peer/colleagues and some employees leave the organization as a fun and no apparent reason. Job hopping is positively associated with turnover intention (Khatri et al., 2001). Thus: Hypothesis 4: Job hopping is positively associated with turnover intention.
Alternative employment opportunity is another uncontrollable and labor market variable. Opportunity means availability of alternative jobs in the environment. The larger alternative employment opportunities exist in the environment, more chances of awareness among the employees, and then they evaluate cost and benefit analysis and have intentions to switch jobs (Price 2001). Past literature suggests that there is a positive relationship between alternative employment opportunities and employee turnover intention (Khatri et al., 2001; Hulin et al, 1985).
Hypothesis 5: Alternative employment opportunity is positively associated with turnover
intention.
Research Methodology The sample comprised 252 first line managers and supervisors from Textile sector of Pakistan. The textile sector was divided into five broad categories i.e. Ginning, Spinning, Weaving, Finishing, and Garments. The data was collected from first line managers & supervisors of spinning, weaving, and finishing industries on the basis of two stage sampling. In first stage, constructed strata on the basis of spinning, weaving, and finishing organizations of Lahore, Pakistan and then selected 50 organizations by the simple random sampling. In the second stage, first line managers and supervisors selected from the above 50 organizations. The data was collected by physically and self administered survey (Questionnaire). The questions were asked on five point likert scale from the respondents. The questionnaire consisted of three sections i.e. controllable factors, uncontrollable factors and Turnover intention. Job satisfaction, organizational commitment, job stress, job hopping, and alternative employment opportunities were the independent variables. Turnover intention was the dependent variable. To increase the response rate, the employees were informed regarding the research objective and confidentiality. The response rate was 84% (252/300) and most of the questionnaires filled by visiting the organization physically and some questionnaires dispatched to the organizations. The respondents were 21% female and 79% male. The participants’ ages ranged from 20 to 40 years.
Measures
Controllable variables included job satisfaction, organizational commitment, and Job stress. Job satisfaction was measured on five point likert scale and this variable divided into three dimensions i.e. satisfaction with pay, working condition, and supervision. Three items were used for measuring each dimension. These were adapted from the Minnesota Satisfaction Questionnaire (Weiss et al., 1967) and the Index of Organizational Reaction Questionnaire (Smith, 1976). The reliabilities of three scales showed satisfactory with Cronbach alphas of 0.63, 0.84, and 0.65, respectively, for satisfaction with pay, working condition and supervision. Organizational Commitment Questionnaire (OCQ) was used to measure employee commitment level, developed by Khatri and his colleagues (Khatri et al, 1974). Eight items were used for the measurement of organizational commitment. The scale showed a good reliability i.e. 0.81. Job stress four items were used to measure, developed by Vigoda and Kapun (2005). The job hopping was measured on three item scale which already developed by Khatri and his colleagues (Khatri et al., 2001). The scale showed reliability i.e. Cronbach alpha 0.71. The perceived alternative employment opportunities scale contained six items and was adopted by Michaels and Spector (1982), Arnold and Feldman (1982), Billing and Wemmerus (1983) and Modey et al (1984). The scale showed good reliability i.e. 0.76 and single factor in factor analysis.
The three item turnover intention scale from the Michigan Organizational Assessment Questionnaire (Cummann et al, 1979) and two items from Bluedorn (1982) were used. The Cronbach alpha was 0.84 in the study.
Analyses & Results The statistical tools employed to analyze the data are Pearson’s correlation and regression analyses by using SPSS. Pearson’s correlation is a reasonable and familiar means of assessing linear association between variables.
Satisfaction with Pay
Satisfaction with work
Satisfaction with supervision
Organizationa l commitment
Job Stress
Job hopping
Alternative Employment opportunity
Turnover intention
Satisfaction with Pay
Pearson Correlation
1
Satisfaction with work Satisfaction with supervision
Pearson Correlation Pearson Correlation
.438(**)
1
.330(**)
.427(**)
1
Organizational commitment
.345(**)
.245(**)
.340(**)
1
-.222(**)
-.218(**)
-.214(**)
-.004
1
Job hopping
Pearson Correlation Pearson Correlation Pearson Correlation
-.112
.070
-.121
-.079
.070
1
Alternative Employment opportunity
Pearson Correlation
-.102
-.055
-.078
-.008
.095
.045
1
-.409(**)
-.378(**)
-.340(**)
-.272(**)
.266(** )
.223(** )
.223(**)
.000
.000
.000
.000
.000
.000
.000
.
252
252
252
Job Stress
Turnover intention
Pearson Correlation Sig. (2tailed) N
252 252 252 252 252 Table 1: ** Correlation Correlation is significant significant at the 0.01 level (2-tailed)
1
Employee turnover intention is a dependent variable. Job satisfaction, organizational commitment, Job stress, Job hopping, and Alternative employment opportunities are the independent variables in the research of 252 first line managers and supervisors of textile sector. Satisfaction with pay, working condition, and supervision has a strong negative
correlation with employee turnover intention i.e. -0.409, -0.378, -0.340 at a p<0.01 level of significance respectively. Organizational commitment also has a negative correlation with employee turnover intention at a p<0.01 level of significance i.e. -0.272. There is a positive correlation between job stress and employee turnover intention i.e. 0.266 at a p<0.01. Job hopping and Alternative employment opportunities also have a positive relationship with employee turnover intention i.e. 0.223 and 0.223 respectively at a p<0.01 level of significance. So, Pearson’s Correlation shows that job satisfaction is negatively associated with turnover intention. It means satisfaction with pay, working condition, and supervision is negatively associated with turnover intention. When job satisfaction increases, employee turnover intention decreases. Organizational commitment is also negatively associated with turnover intention. Job satisfaction leads to organizational commitment. Whenever, organizational commitment will increase, employee turnover intention will decrease. Job stress is positively associated with turnover intention. It means that when job stress conditions just like workload increases, employee turnover also increases. Job hopping and alternative employment opportunity are also positively associated with turnover intention. When bad habits develop just like switching job with no apparent reasons or due to friends and colleagues then turnover intention also increases. Controllable factors (job satisfaction, organizational commitment, and job stress) are highly correlated with turnover intention as compare to uncontrollable factors (job hopping and alternative employment opportunity). It means that controllable factors are more dominant and play very important role in employee turnover intention. When
employee dissatisfied, job stress, and has a lack of interest and concern with organization then employee has more intention to switch job. Coefficients (a)
Unstandardized Coefficients Model 1
B
Standardized Coefficients
Std. Error
(Constant)
3 . 6 19
.445
Satisfaction with Pay
- . 1 83
.064
Satisfaction with work:
- . 2 44
Satisfaction with Supervision
t
Beta
Si g.
8.139
.000
- . 180
-2. 880
.004
.072
- . 215
-3. 399
.001
- . 0 96
.064
- . 092
-1. 497
.136
Organizational Commitment
- . 1 35
.063
- . 122
-2. 128
.034
Job Stress
.143
.060
.133
2.405
.017
Job Hopping
.169
.049
.186
3.454
.001
Alternative Employment Opportunity
.203
.071
.152
2.874
.004
Table 2: Dependent Variable: Employee turnover intention “B” lists the regression coefficients for the independent variables i.e. satisfaction with pay, nature of work, supervision, organizational commitment, job stress, job hopping, and alternative employment opportunities at P<0.01 level of significance. These represent the slope and Y-intercept for the regression line. There is one constant in table 2 that is 3.619 while other regression coefficients represent the slope and Y-intercept -0.183, -0.244, 0.096, -0.135, 0.143, 0.169, and 0.203 respectively. Employee Turnover Intention = 3.619 + (- 0.183*SP) + (- 0.244*SW) + (- 0.096*SS) + (- 0.135*OC) + (0.143*JS) + (0.169*JH) + (0.203*AEO)
Regression equation explains the variance and factors responsible for employee turnover intention. Satisfaction with pay is responsible in employee turnover intention is – 18.3%, -24.4%
satisfaction
with
work,
-9.6%
satisfaction
with
supervision,
-13.5%
organizational commitment, 14.3% job stress, 16.9% job hopping and 20.3% Alternative employment opportunities. The values listed under “Beta” represent an alternative set of coefficients that would be used instead if all variables were first converted to Z-scores. Satisfaction with pay is negatively associated with turnover intention and regression coefficient is -0.183. Satisfaction with nature of work, and supervision also negatively associated with turnover intention and regression co-efficient is -0.244, -0.096, respectively. Organizational commitment is negatively associated with turnover intention and regression co-efficient is -0.135. Job stress, job hopping and alternative employment opportunities are positively associated with turnover intention and their regression coefficients are 0.143, 0.169, and 0.203 respectively.
Discussion and Conclusion Employee turnover intention is a major issue for the human resource managers and has a significant cost of hiring and replacement. Employee has intention to switch when he is dissatisfied from his pay, supervision and nature of work. A satisfied employee is more committed to the organizational work and has strong loyalty and affiliation with the organization. Job stress is the mental tension caused by the workload, working condition, and lack of means to perform job. So, job stress is another reason for switching job from one to another organization. Job hopping and alternative employment opportunities are the environmental factors who responsible for employee turnover intention.
Job satisfaction and organizational commitment are negatively associated with turnover intention. Job stress, job hopping and alternative employment opportunity is positively associated with turnover intention. Controllable or organizational factors (job satisfaction, organizational commitment, job stress) are more responsible for the intentions of employee turnover as compare to uncontrollable
or
environmental
factors
(job
hopping,
alternative
employment
opportunity). Human resource personnel can manage employee turnover by providing competitive pay package, inspirational supervision, and congenial working condition which ultimately produce committed and loyal employees. Job stress can be managed by proper division of work and counseling service for the solution of stress related problems. The researchers can extend this research by adding more variables just like organizational change and its impact on employee turnover intentions, managers’ leadership style and employee turnover intention. They can compare this study into two dimensions manufacturing vs. service sector employees by increasing sample size which will give broader view and comprehensive frame work of employee turnover intention.
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