The Impact Of Job Satisfaction On Employee Turnover Intention (a Case Study Of Bunna International Bank )

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A B S T R A C T

This study, which was conducted at Bunna International Bank S.C, had two-fold objectives. Firstly, to investigate the direct relationship between job satisfaction and employee turnover intention. The second part of the objective examined the relationship between perceived available employment opportunity and turnover intention. Besides, the study attempts to determine the differences in the turnover intention based on demographic variables (age and tenure). The study also hypothesized that there are significant differences in the turnover intention of the clerical employees in Bunna International Bank S.C at different age and length of service; and there is a dominant factor influencing turnover intention among skilled personnel in the organisation. A survey instrument was used to obtain data from a research sample containing 103 clerical employees and additionally secondary data was retrieved from formal sources. Using SPSS version 20, ANOVA, correlation and regression tests were performed to arrive at the findings. The research yielded evidence for a significant negative cause-effect relationship between job satisfaction and employee turnover intention, indicating that on average, employees who are dissatisfied reported having intentions to leave the organization. Working condition demonstrates the strongest relationship. However, the result shows neither age groups nor length of service groups have significant difference with turnover intention. A significantly moderating positive relationship between perceived available employment opportunity and employee turnover intention was identified, since the survey results show interestingly, that employees who are satisfied and have high perceptions of available job alternatives will still have higher intentions to quit their job in comparison with satisfied employees who have low perceptions of available job alternatives. Based on the findings a number of management recommendations and directions for future research are provided.

Table of Contents

 

ACKNOWLEDGMENTS............................................................................................................. iii

Table of Contents.................................................................................................................... iv

LIST OF FIGURES...................................................................................................................... vi

LIST OF TABLES........................................................................................................................ vii

ACRONYMS........................................................................................................................... viii

A B S T R A C T.......................................................................................................................... ix

CHAPTER 1: INTRODUCTION..................................................................................................... 1

1.1        BACKGROUND OF THE STUDY..................................................................................... 1

1.2        STATEMENT OF THE PROBLEM.................................................................................... 4

1.3        RESEARCH QUESTIONS............................................................................................... 5

1.4        OBJECTIVES OF THE STUDY......................................................................................... 5

1.5        SIGNIFICANCE OF THE STUDY..................................................................................... 6

1.6        SCOPE OF THE STUDY................................................................................................. 6

1.7        LIMITATION OF THE STUDY......................................................................................... 7

1.8       DEFINITIONS OF TERMS.............................................................................................. 7

1.9        ORGANIZATION OF THE RESEARCH REPORT................................................................ 8

CHAPTER 2: LITERATURE REVIEW............................................................................................. 10

2.1          INTRODUCTION...................................................................................................... 10

2.2          DEFINITION OF EMPLOYEE TURNOVER..................................................................... 10

2.3        SOURCES OF EMPLOYEE TURNOVER......................................................................... 12

2.4        EFFECTS OF EMPLOYEE TURNOVER........................................................................... 14

2.5        TURNOVER INTENTION............................................................................................ 15

2.6         THE MODEL OF EMPLOYEE TURNOVER INTENTION.................................................... 17

2.7          VARIABLES RELATED TO TURNOVER INTENTION....................................................... 18

2.8        DEFINITION OF JOB SATISFACTION........................................................................... 22

2.9        THEORIES OF JOB SATISFACTION.............................................................................. 25

2.10      FACTORS OF JOB SATISFACTION............................................................................... 31

2.11      THEORETICAL FRAMEWORK AND HYPOTHESES.......................................................... 34

CHAPTER 3: RESEARCH DESIGN AND METHODOLOGY.............................................................. 41

3.1        INTRODUCTION....................................................................................................... 41

3.2        RESEARCH DESIGN................................................................................................... 41

3.3          RESEARCH LOCATION, POPULATION AND SAMPLE................................................... 43

3.4          DATA COLLECTION INSTRUMENTS........................................................................... 44

3.5          DATA COLLECTION METHOD.................................................................................... 48

3.6          DATA ANALYSIS TECHNIQUES.................................................................................. 49

3.7          ETHICS AND CONFIDENTIALITY................................................................................ 50

CHAPTER 4: RESULTS AND ANALYSIS....................................................................................... 51

4.1          INTRODUCTION...................................................................................................... 51

4.2          DATA SET AND RESPONSE RATE............................................................................... 51

4.3          CHARACTERSTICS OF THE RESPONDENTS................................................................. 52

4.4          DESCRIPTIVE STATISTICS ON THE RESEARCH VARIABLES........................................... 54

4.5          MAIN MODEL OF INFERENTIAL TESTS....................................................................... 55

4.6          SUMMARY OF HYPOTHESIS TESTING........................................................................ 60

4.7        SUMMARY............................................................................................................... 61

CHAPTER 5: DISCUSSION, CONCLUSION AND RECOMMENDATIONS......................................... 63

5.1        INTRODUCTION....................................................................................................... 63

5.2          DISCUSSION............................................................................................................ 63

5.3          LIMITATION OF THE RESEARCH................................................................................ 69

5.4          CONCLUSIONS........................................................................................................ 69

5.5        SIGNIFICANCE, IMPLICATIONS AND RECOMMENDATIONS........................................ 71

5.6          FUTURE DIRECTIONS............................................................................................... 75

REFERENCES........................................................................................................................... 76

ANNEXES............................................................................................................................... 82

CHAPTER 1: INTRODUCTION

 

1.1        BACKGROUND OF THE STUDY

Employee turnover has become a worldwide issue that has puzzled organizations, researchers and practitioners for years. Currently, employee turnover permeates most of the organizations in both developed and developing nations (Tariq et al, 2013). The CIPD (2011) survey report on employee turnover rate in the UK indicated that the nationwide turnover rate in 2006 was 18.1 per cent. According to the report, employees’ turnover varies from sector to sector. In the average the turnover for the public sector was 13.3 percent while it was 22.6 percent for the private sector. The report however, did not explain why such a large variation occurred between the public and the private sectors.

Employee turnover can be conceptualized in terms of different categories which include: demographic (e.g. gender, age, educational level), occupational (e.g. skill level, experience, tenure, status), organizational related factors (e.g. firm size, industry, job content, working environments, style of leadership, type of organizational structure, pay scale, reward, advancement opportunity, job security and job involvement). (Mobley et al, 1979).

Various studies have made a clear distinction between actual turnover and the concept of turnover intention, which relates to behavioral attitudes. According to Ajzen (1991), intentions are a statement about a specific behavior or interest. Mobley (1977) defined turnover intention as the intention to leave the job on a voluntary basis. Various studies have investigated this construct and have used similar terms such as intention to leave, intention to quit and withdrawal intention. In a more elaborate definition of this construct, turnover intention can be understood as the intention to voluntarily change employers or to depart the entire labor market.
Turnover intentions are the best predictors of actual turnover based on past studies. Horn et al. (1992) argued in their study that intention to quit and actual turnover had a significant positive relationship. It was argued by Gregory et al. (2007) that behavioral intention to quit is theoretically seen as an important antecedent to actual turnover. Mobley (1977) described turnover intention as the final cognitive step in the decision making process of leaving or staying.

Job satisfaction has been a widely studied variable in determining turnover intention. It is certainly a highly important variable in organizational studies (Kinicki, Schreisheim, McKee-Ryan & Carson, 2002). In fact, most of the studies have been fragmented in identifying an effective mix of practices that could improve the commitment, satisfaction and intention to stay in the organization (Chew & Chan, 2008). Job satisfaction is a factor that in the long run will be able to encourage employees to work (Mudor & Tooksoon, 2011). This is the reason why Mudor and Tooksoon stresses that high attention is to be given to employees’ job satisfaction as firms will encounter with cost of recruitment as employees leave the organization and these organizations need to replace them to get the job done.

Job satisfaction can be used to predict turnover. (Spector, 1997). Hom and Kiniki (2001) also agreed on the notion that job satisfaction can be used to understand turnover process. According to Milkovich and Boudreau (1997), a study of Singapore accounts found that job satisfaction is the main predictor of turnover intention.

Newstorm and Davis (1984) had recognised that high turnover at any organizational levels constitutes a waste of human resources. Abelson and Baysinger (1984); and Dalton and Todor (1982) in Newstorm and Davis (1984) agreed with this view and said that turnover is not a good phenomenon for organization because valuable human resources are lost. In today’s changing world of work, reasonable levels of employee-initiated turnover facilitated organizational flexibility and employee independence, and they can lessen the need for management layoff.

Thus, Berry (1997) initiated that the organization must go straight to the employees when they think about job satisfaction. This is because they are involve in every single task in the organization and therefore, they could give the necessary feedback to the employers regarding their satisfaction to the job they have been performed.

Moreover, Seta, Paulus and Baron (2000) pointed out that by knowing the factors contributing to the employees’ satisfaction, the organization can plan properly and take an appropriate step to increase positive behavior among employees. However, no one would seriously challenge the idea that mismanaging organizational change can result in people choosing to leave (Jackofsky et al, 1986).

This investigation is important as an early preparation for the organization to deal with this change because of work opportunities are low and turnover intention of employees will also increase. As compared to when the economy is blooming where job opportunities are great and immensely sought by job hunters.

Muchinsky and Morrow (1980); Muchinsky (1993) in their study believe that under good economic conditions with plentiful of jobs, dissatisfaction could cause the turnover if other opportunities are available in the market. On the other hand, conditions of high unemployment will decrease the feelings of dissatisfaction among employees. The opinion is also agreed by Rosse (1991) in Jones, Steffy and Bray (1991) that the organization should not feel overly satisfied with the good attitudes shown by their employees during the hard economic times. Similarly, Carrell, Kuzmits and Elbert (1992) also found that the turnover closely follows economic swings.

Inter-linkage

In Mobley's 1977 article, he theorized that lack of job satisfaction led to thinking about quitting, which led to job search, which could then lead to an intention to quit, or vice versa, which could eventually result in actual turnover. Lambert, Hogan & Barton (2001) found that job satisfaction significantly impacted turnover intentions and perceived availability of jobs also had a relation with turnover intentions.

All these aforementioned findings make reference to the linkage of the variables. This linkage informed the conceptual model, which is derived from the notion that employees in Bunna International Bank S.C currently experience low job satisfaction, focus on external job alternatives and subsequently develop an intention to leave their employer.

Altogether, it can be assumed that the competitive existence of an organization significantly relies on effectively managing staff turnover and ensuring that good performers and key personnel are motivated to stay and have no intentions to quit.

Therefore, research in job satisfaction and turnover intention can help the organization to identify main factors that can contribute to the turnover intention and rate of turnover. Based on finding of study an organization can make remedy action in order to create favorable working conditions that can enhance the rate of retention.

1.2      STATEMENT OF THE PROBLEM

High employee turnover ultimately could negatively affect the performance of any organization. Cotton and Tuttle (1986). This also holds true for Bunna International Bank S.C (BIB). The Human Resource Directorate and the executives of the Bank have been tried to tackle the problem but they did not be successful.

Currently the problem of employees’ turnover becomes the severe problem of the main concern of the BIB. During the past four years, 205 employees, which is about 30% of the current number of employees have left the bank. To curve increasing rate of employees’ turnover, employees’ needs should be properly addressed.

Seta, Paulus and Baron (2000) pointed out by knowing the factors contributing to the employees’ satisfactions; the organization can plan properly and take appropriate step to increase positive behavior among employees. Proper trainings in their work settings, growth opportunities at work; job security and good compensation benefits for example might improve employees’ level of satisfaction in the organization.

The study tries to identify problems arising like pay& benefits, promotion, and working conditions which lead to dissatisfaction among ‘Clerical staff’ in Bunna International Bank and possible high turnover. Therefore, to reduce the turnover intention of employees, the organization must find the factors that caused the turnover intention and affect the job satisfaction of workers.

1.3        RESEARCH QUESTIONS

The specific research questions addressed are:

  1. Do employee’s job satisfaction factors can be the main factor for turnover intention?
  1. Does the prevailing external employment opportunity in labor market can affect employee turnover intention?
  1. Do demographic factors (age and tenure groups) have relationship with turnover intention?
  1. Which of the job satisfaction factors and the demographic factors influence turnover intention?

1.4      OBJECTIVES OF THE STUDY

1.4.1 General objective:

The general objective of this study is to investigate the relationship of job satisfaction (IV) and perceived Available Employment opportunity (MV) to turnover intention (DV) among the clerical staff.

1.4.2. Specific objective:

(a). To identify the relationship of pay& benefit, promotion and working conditions to the turnover intention among the clerical staff.

(b). To identify the difference in the demography factors (age and tenure groups) to the turnover intention among the skilled clerical staff.

(c). To identify the dominant factor of turnover intention of the clerical staff.

(d). To identify the relationship between perceived available employment opportunity and turnover intention.

1.5      SIGNIFICANCE OF THE STUDY

The significance of this study is found in the contribution to the existing body of knowledge on job satisfaction, perceived available employment opportunities and turnover intentions.

The turnover rate at Bunna International Bank S.C for the past four years is very high. However, it is better for the Bank to predict the turnover intention among clerical staff by investigating the factors of job satisfaction that will lead to turnover intention.

Furthermore, this research can also help Bunna International Bank S.C to save their budgets for human resource functions. Pigors and Myers (1981) said that turnover is costly for an organization. Organization needs to allocate high budget for new hires included in the expenses during employment procedures, such as recruiting and selection, and training period. At the same time, the cost of training consists of the job training and also cost of time taken to reach peak of productivity.

The valuable information generated from this study also gives a clearer picture to the organization regarding workers’ concern of turnover. It can help the organization to generate some useful ideas during the human resource planning as an effort to increase the workers’ satisfaction and decrease the workers’ intention to leave.

1.6      SCOPE OF THE STUDY

Even though the Bank currently has 78 branches, the scope of the study will be limited only in the head office and 31 city branches which are located in Addis Ababa due to time and other constraints. This study will also be limited to the Bank’s employees belonging to the category of “Clerical” staffs.

Furthermore, only three factors of job satisfaction and one other predictor that influence the turnover intention of the workers are being investigated, namely, pay& benefit, promotion, working conditions and perceived available employment opportunity. Besides these factors, there might be other factors such as organizational culture, organizational commitment, supervisors and Co-workers that can influence the turnover intention, which are not being considered in this study.

There are only two variables from the demographic factors tested with turnover intention like age and length of service. There are also other demographic factors such as educational level and marital status that may not be measured in this study.

1.7      LIMITATION OF THE STUDY

The findings of this study may not be representative of what takes place in other sectors of the industry and as such this limits the generalisability of the findings. This study also relies on self-report and therefore, would be limited by the truthfulness of the participants. There is no way to ensure the honesty of the participants which can potentially exert an influence on the results.

1.8 DEFINITIONS OF TERMS

The research will use some conceptual and operational words that related to the research objectives to define some of the terms in this study. The definitions are as follow:-

Turnover intention:- Turnover Intention is one's behavioral intention to quit. According to Tett and Meyer (1993) in Rumery (1994), the turnover intention refers to the 'conscious and deliberate willfulness of the workers to leave the organization'. Vandenberg and Nelson (1999) defined intention to quit as the 'individual own estimated probability (subjective) that they are permanently leaving their organisation at some point in the near future.

Employee retention (versus employee turnover) refers to the continued employment of employees. Optimally, high-quality, productive employees are retained.

Job Satisfaction:- According to Newstrom and Davis (1984) 'job satisfaction is a set of favorable and unfavorable attitudes with which, employees view their work. It expresses the amount of agreement between the employee expectations from the job and rewards that the job actually provides.

Pay:- Pay is viewed as part of the sanction system used in the organisation to motivate compliance with its rules and regulations (Mueller and Price, 1990). Lum, Kervin, Clark, Reid and Sirola (1998) explained for the individual employee, pay is viewed as an important reward and outcome.

Employee Benefits: An employee benefit is “any type of plan sponsored or initiated unilaterally or jointly by employers and employees in providing benefits that stem from the employment relationship that are not underwritten or paid directly by government” (Yohalem, 1977, p.19).

Promotion:- Promotion is defined as 'the movement of a person to higher level position in the company' (Mondey & Noe, 1990). Conceptually, promotion is also defined as 'there assignment of an employee to a higher level job within an organization' (Carrell et al., 1992).

The work itself:- Oxford Advance Learner's Dictionary (1995) defined the work as 'what is done by somebody'. The work itself also refers to the working environment of the workers and their perception about the job that they are responsible for.

Tenure (Length of Service):- Length of service refers to the 'period of the time lapsed since the most recent date of hire. Therefore, if an employee has a break in the period of service, only the break will be captured (Workforce profile, 1996). The length of service of the workers can be divided into four groups, which are 'below one year', '1 - 2 years', '3 - 4 years' and '5 years and above'.

Age:- Age can be defined as 'the length of time that a person has lived' (Oxford Advance Learner's Dictionary, 1995). The age of workers can be divided into four groups, which are 'below 30 years old', '31 - 45 years old', '46 - 60 years old' and '61 years old and above'.

1.9   ORGANIZATION OF THE RESEARCH REPORT

The study consists of five chapters in which each will be discussed in depth later. Chapter one is apprehensive in terms of preparing the whole research by concerning the various important aspects such as problem statement, an illustration of the general and specific objectives of the study. Background of the company being studied is also briefly discussed. Chapter two consists of review of related literatures and empirical researches related to the problem being investigated and theoretical framework of the study. Chapter three includes the methodology and procedure applied for the study in detail. Analysis and presentation of the findings emerging from the study are presented in Chapter four. The fifth chapter contains a summary of the study and findings, discussions, conclusions and recommendations for further research

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