Voluntary turnover

Voluntary turnover CHAPTER NO.1 Introduction Background 1.01 Employee turnover is a much-studied phenomenon. There is a vast literature on the causes of voluntary employee turnover dating back to the 1950s. 1.02 Voluntary turnover is a major problem for many organizations in many Asian countries (Barnett, 1995; Chang, 1996; Syrett, 1994). Employee turnover is giving sleepless nights to human resource managers in many countries in Asia (Naresh Khatri). Organizations are spending lots of money to reduce employee turnover. Employee turnover is also one of the issues faced by many organizations in Pakistan. Objective of the Research Study 1.03 The objective of the study is to know the factors of employee turnover, why employee quit the jobs and leave the organizations and which factor influence the most while leaving the organization. 1.04 The objective of the study is to know the factors, which influence the most in employee turnover in, call center industry in Pakistan. Problem statement 1.05 What are the factors of employee turnover in the organizations? Research Questions a) What are the reasons; employees quit their jobs and leave the organizations? b) What is the role of the factors (alternatives, intention to quit, job satisfaction, organizational commitment, wages and conditions, employee characteristics, training and development and influence of co-workers) in employee turnover? c) Which factors cause the most in the employee turnover? Rational Of the Study 1.06 The purpose of the research study â€Å"Factors of employee turnover† is to help out the managers to figure out the factors of employee turnover in the organizations. So that the managers easily can find, why employee is leaving the organization? According to the results they can make the plans to reduce the employee turnover in the organizations. Definitions of the Terms 1.07 â€Å"Employee turnover is defined as, the ratio of number of workers that had to be replaced in a given time period to the average number of workers†. CHAPTER NO 2 Literature Review 2.1 Over time there have been a number of factors that appear to be consistently linked to turnover. An early review article of studies on turnover by Mobley (1979) revealed that age, tenure, overall satisfaction, job content, intentions to remain on the job, and commitment were all negatively related to turnover (i.e. the higher the variable, the lower the turnover). In 1995, a meta-analysis of some 800-turnover studies was conducted by Hom and Griffith, which was recently updated (Griffith, 2000). Their analysis confirmed some well-established findings on the causes of turnover. These include: job satisfaction, organizational commitment, comparison of alternatives and intention to quit. 2.2 The top factor cited in most studies is low compensation and inadequate benefits. Lack of appreciation and feeling that the employer values the employees contributions also ranks high on the list of reasons for employee turnover. Another contributing factor to employee turnover is poor management. This includes such factors as poor communication from leadership, lack of training, too much change, lack of resources necessary to do the job, lack of recognition that an employee is dissatisfied with career development opportunities, harassment, demeaning behavior, and a lack of flexibility toward employees. Lifestyle changes, such as the transfer of a spouse, birth of a child, or the need for a shorter commute will also cause employee turnover. (Kathleen Goolsby) 2.3 Some variables and factors are examined and discussed in more detail below. Comparison of Alternatives 2.4 The comparison of alternatives is a factor that plays a role in employee turnover. The relationship between alternatives and turnover on an individual level has been researched widely since March Simons 1958 seminal work on ease of movement. 2.5 Much of the subsequent research focused on the link between job satisfaction, perceived alternative opportunities and turnover. Later, researchers began to focus on the role of both actual and perceived opportunities in explaining individual turnover decisions. 2.6 Subsequent research has indicated that actual alternatives are a better predictor of individual turnover than perceived opportunities. Research on the impact of unemployment rates as a proxy for actual opportunities in employee turnover revealed that unemployment rates affected the job-satisfaction/turnover intent relationship but not actual turnover (Kirschenbaum Mano-Negrin, 1999). They concluded that macro level analysis predicted turnover patterns but perceptions of opportunities did not. This point was reinforced in their study on medical centers in various locations used measures of perceived and objective opportunities in internal and external labor markets. The authors concluded that objectives opportunities were a better set of explanations of actual turnover behavior than either perceived internal or external labor market opportunities. 2.7 Nevertheless, while actual alternatives appear to be a better predictor of turnover, there is also well-established evidence of the link between perceived alternatives and actual turnover. In their most recent meta-analysis, Griffith (2000) confirmed that perceived alternatives modestly predict turnover. Intentions to Quit 2.8 Intension to quit is one of the factors that play a role in employee turnover. Mobley (1979) noted that the relationship between intentions and turnover is consistent and generally stronger than the satisfaction-turnover relationship, although it still accounted for less than a quarter of the variability in turnover. Much of the research on perceived opportunities has been found to be associated with intentions to leave but not actual turnover (Kirschenbaum Mano-Negrin, 1999). Organizational Commitment 2.9 Many studies have reported a significant association between organizational commitment and turnover intentions (Lum, 1998). Tangs (2000) study confirmed the link between commitment and actual turnover and Griffiths (2000) analysis showed that organizational commitment was a better predictor of turnover than overall job satisfaction. 2.10 Researchers have established that there are different types of organizational commitment. Allen Meyer (1990) investigated the nature of the link between turnover and the three components of attitudinal commitment: affective commitment refers to employees emotional attachment to, identification with and involvement in the organization; continuance commitment refers to commitment base on costs that employees associate with leaving the organization; and normative commitment refers to employees feelings of obligation to remain with the organization. Simply, employees with strong affective commitment stay with an organization because they want, those with strong continuance commitment stay because they need to, and those with strong normative commitment stay because they feel they ought to. Allen and Meyers study indicated that all three components of commitment were a negative indicator of turnover. In general, most research has found affective commitment to be the most decisive va riable linked to turnover. Job Satisfaction 2.11 The relationship between satisfaction and turnover has been consistently found in many turnover studies (Lum, 1998). Mobley 1979 indicated that overall job satisfaction is negatively linked to turnover but explained little of the variability in turnover. Griffith (2000) found that overall job satisfaction modestly predicted turnover. In a recent New Zealand study, Boxall (2003) found the main reason by far for people leaving their employer was for more interesting work elsewhere. It is generally accepted that the effect of job satisfaction on turnover is less than that of organizational commitment. Characteristics of Employees 2.12 Despite a wealth of research, there appear to be few characteristics that meaningfully predict turnover, the exceptions being age and tenure. Age is found to be negatively related to turnover (i.e. the older a person, the less likely they are to leave an organization). However, age alone explains little of the variability in turnover and as age is linked to many other factors, alone it contributes little to the understanding of turnover behavior. 2.13 Tenure is also negatively related to turnover (the longer a person is with an organization, the more likely they are to stay). Mangione in Mobley concluded that length of service is one of the best single predictors of turnover.; Griffith also found that age and tenure have a negative relationship to turnover. 2.14 There is little evidence of a persons sex being linked to turnover. Griffiths 2000 meta-analysis re-examined various personal characteristics that may be linked to turnover. They concluded that there were no differences between the quit rates of men and women. They also cited evidence that gender moderates the age-turnover relationship (i.e. women are more likely to remain in their job the older they get, than do men). They also found no link between intelligence and turnover, and none between race and turnover. Wages and Conditions 2.15 Wages and conditions is one of the variables of the employee turnover. Mobley (1979) concluded that results from studies on the role of pay in turnover were mixed but that often there was no relationship between pay and turnover. Other studies found no significant relationship. 2.16 On the other hand Campion (1991) cited in Tang suggests that the most important reason for voluntary turnover is higher wages/career opportunity. Martin (2003) investigates the determinants of labor turnover using establishment-level survey data for the UK. Martin indicated that there is an inverse relationship between relative wages and turnover (i.e. establishments with higher relative pay had lower turnover). Pay and Performance 2.17 Griffith (2000) noted pay and pay-related variables have a modest effect on turnover. Their analysis also included studies that examined the relationship between pay, a persons performance and turnover. They concluded that when high performers are insufficiently rewarded, they leave. They cite findings from Milkovich and Newman (1999) that where collective reward programs replace individual incentives, their introduction may lead to higher turnover among high performers. Attitudes to Money 2.18 For some individuals pay will not be the sole criterion when people decide to continue within an existing job. In the study of mental health professionals, Tang (2000) examined the relationship between attitudes towards money, intrinsic job satisfaction and voluntary turnover. One of the main findings of this study is that voluntary turnover is high among employees who value money, regardless of their intrinsic job satisfaction. However, those who do not value money highly but who have also have low intrinsic job satisfaction tended to have the lowest actual turnover. Furthermore, employees with high intrinsic job satisfaction and who put a low value on money also had significantly higher turnover than this second group. The researchers also found that placing a high value of money predicted actual turnover but that withdrawal cognitions (i.e. thinking about leaving) did not. Training and Career Development 2.19 Martin (2003) detected a complex relationship between turnover and training. He suggested that establishments that enhance the skills of existing workers have lower turnover rates. However, turnover is higher when workers are trained to be multi-skilled, which may imply that this type of training enhances the prospects of workers to find work elsewhere. The literature on the link between lower turnover and training has found that off-the-job training is associated with higher turnover presumably because this type of training imparts more general skills (Martin, 2003). Effect of Vocational Training 2.20 In a study examining the effect of apprenticeships on male school leavers in the UK, Booth and Satchel (1994) found that completed apprenticeships reduced voluntary job-to-job, voluntary job-to-unemployment and involuntary job termination rates. In contrast, incomplete apprenticeships tended to increase the exit rate to these destinations relative to those who did not receive any training. Winkelmann (1996) reported that in Germany apprenticeships and all other types of vocational training reduce labor mobility in spite of the fact that the German apprenticeship training is intended to provide general and thus more transferable training. Career Commitment 2.21 Chang (1999) examined the relationship between career commitment, organizational commitment and turnover intention among Korean researchers and found that the role of career commitment was stronger in predicting turnover intentions. When individuals are committed to the organization they are less willing to leave the company. This was found to be stronger for those highly committed to their careers. The author also found that employees with low career and organizational commitment had the highest turnover intentions because they did not care either about the company or their current careers. 2.22 Individuals with high career commitment and low organizational commitment also tend to leave because they do not believe that the organization can satisfy their career needs or goals. This is consistent with previous research that high career committers consider leaving the company if development opportunities are not provided by the organization. However, this group is not apt to leave and is likely to contribute to the company if their organizational commitment is increased. Chang found that individuals become affectively committed to the organization when they perceive that the organization is pursuing internal promotion opportunities, providing proper training and that supervisors do a good job in providing information and advice about careers. Influence of Co-Workers 2.23 A 2002 study by Kirshenbaum and Weisberg of 477 employees in 15 firms examined employees job destination choices as part of the turnover process. One of their main findings was that co-workers intentions have a major significant impact on all destination options the more positive the perception of their co-workers desire to leave, the more employees themselves wanted to leave. CHAPTER NO 3 Method Research Procedure 3.01 The research is a descriptive study. A descriptive study can be defined as, â€Å"A study that focuses on a particular situation or set of situations, reports on important aspects observed, and attempts to determine the interrelationships among them.† 3.02 The goal of the descriptive research study is to offer to researcher a profile or to describe relevant aspects of the phenomena of interest from an individual, organizational, industry- oriented, or the other prospective. (Uma Sekran) 3.03 The purpose of the research study â€Å"Factors of employee turnover† is to help out the managers to figure out the factors of employee turnover in the organizations. So that the managers easily can find, why employee is leaving the organization? According to the results they can make the plans to reduce the employee turnover in the organizations. Sampling 3.04 The sample for the research is taken through the random sampling. The type of sampling is cluster sampling. In this type of sampling I have chosen 100 employees as a sample to fill out the questionnaire. These employees are from different departments and their positions in the departments are also different. The sample of the employees consists of top level managers, middle level managers and non managers. Data Collection Secondary Data 3.05 Secondary data is collected from the journals, newspapers, and publications and pervious research studies. Most of the data is taken from the previous research papers on employee turnover, which are available on the Internet libraries. Primary Data 3.06 For the primary data, I have designed a questionnaire according to factors described above in the literature review. The questionnaire is filled by 100 employees from different organizations. The employees are from top level management, middle level management and no managerial level. Data Analysis 3.07 Each question is analyzed by using data tabulation method; tabulation consists simply counting the number of cases that fall in to various categories. Tabulation Frequency Distribution 3.08 Frequency distribution is method to conclude the questionnaires, frequency distribution method simply reports the number of responses that each question received and is the simplest way of deterring the empirical distribution of the variable. A frequency distribution organizes data in to classes or group of values and shows the number of observations. 3.09 The presentation of tabulation frequency distribution is done by column charts, bar charts and pie charts etc. CHAPTER NO 4 Results and Discussion What is your gender? Table 1 Gender Frequency Percentage Valid Percentage Cumulative % Male 75 75 75 75.00 Female 25 25 25 100.00 Total 100 100 100 Pie Chart 1 4.1 This table shows that the sample of 100 questionnaires was distributed randomly among male and female employees. In which we observed that 75% were male students and 35% were female employees. What is your age? Table 2 Age Frequency Percentage Valid Percentage Cumulative % 20-24 24 24 24 24.00 25-29 31 31 31 55.00 30-34 21 21 21 76.00 35-39 13 13 13 89.00 40-44 6 6 6 95.00 45-Above 5 5 5 100.00 100 100% 100% Pie Chart 2 4.2 The above table shows that questionnaires were divided into six different age groups i.e. from 20-24, 25-29, 30-34, 35-39, 40-44 45-Above. Out of this 31% employees were aged from 25-29. 24% were aged from 20-24. 21% were form 30-34. 13% were from 35-39. 6% from 40-44%, 5% from 45-above. What is your department? Table 3 Department Frequency Percentage Valid Percentage Cumulative % Administration 11 11 11 11.00 Marketing 15 15 15 26.00 Operations 7 7 7 33.00 Customer Services 31 31 31 64.00 Finance 10 10 10 74.00 Human Resource 17 17 17 91.00 Technical 9 9 9 100.00 Total 100 100 100 Pie Chart 3 4.3 The above table shows that the questionnaire was divided in six different departments i.e. administration, marketing, operations, customer services, human resource and technical. Out of this 31% employees are from customer services, 17% from human resource, 15% from marketing, 11% administration, 10% from finance, and 9% are from technical departments. What is your position in the job? Table 4 Position Frequency Percentage Valid Percentage Cumulative % Top management 14 14 14 14.00 Middle management 21 21 21 35.00 Supervisor 34 34 34 69.00 other 31 31 31 100.00 Total 100 100 100 Pie Chart 4 4.4 This above table shows that the questionnaire divided in the employees of top management, middle management, supervisors, and other level of employees. Out of this 34% employees are from supervisory level, 31% are from other levels, 21% employees are from middle level management, 14% are from top management. What is your monthly salary? Table 5 Salary Frequency Percentage Valid Percentage Cumulative % Below 15000 17 17 17 17.00 Between 15001-20000 27 27 27 44.00 Between 20001-25000 21 21 21 65.00 Between 25001-30000 15 15 15 80.00 Between 30001-35000 14 14 14 84.00 Between 35001-above 6 6 6 100.00 Total 100 100 100 Pie Chart 5 4.5 This above table shows that the questionnaire was divided to the employees in six different salaries ranges i.e. Below 15000, between 5001-20000, between 20001-25000, between 25001-30000, between 30001-35000, between 35001-above. Out of this 27% employees are getting the salary between 15001-20000,21% getting the salary between 20001-25000, 17% getting the salary below 15000 ,15% are getting the salary between 25001-30000,14% are getting the salary between 30001-35000, 6% are getting the salary 35001-above. For how long do you work for the organization? Table 6 Period Frequency Percentage Valid Percentage Cumulative % Less than 3 months 5 5 5 5.00 Between 3-6 months 27 27 27 32.00 Between 6-12 months 21 21 21 53.00 Between 1-2 years 15 15 15 68.00 Between 2-4 years 17 17 17 85.00 More than 4 years 15 15 15 100.00 100 100 100 Pie Chart 6 4.6 This above table shows that the questionnaire divided in to employees are from six different categories i.e. less than 3 months, between 3-6 months, between 6-12 months, between 1-2 years, between 2-4 years, More than 4 years. Out of this, 21% employees are working for between 6-12 months, 27% are working for between 3-6 months, 17% are working for between 2-4 years, 15% are working for between 2-4 years More than 4 years. 5% are working for less than 3 months. Rate the following about your job satisfaction. My job means a lot more to me than just money. Table 7 Frequency Percentage Valid Percentage Cumulative % Strongly Disagree 26 26 26 26.00 Disagree 19 19 19 45