CHAPTER 2: THEORETICAL BACKGROUND ON EMPLOYEE TURNOVER
2.2. Factors influencing employee turnover intention
2.2.3. Factors influencing employee turnover intention at Setech
All of the above models all recognize that employees’ intention to leave their job comes from both internal and external factors. Internal factors include personal job preferences, interests,… External factors include job environment, advancement opportunity, alternative-job opportunity, compensation compared to average compensation in the market,…
Even though all of the models above are the results of thoroughly research and market-testing process, they cannot be applied in the case of Setech. In case of Mobley, Griffeth, Hand, & Meglino (1979)’s model, the model recognizes that employees’ reasons to resign come from three main factors, which are personal, organizational and market factors. However, because market factor is an unstable factor that requires additional research apart from this study, thus, the researcher choose to apply part of this model to Setech. Lee T. W. & Mitchell T. R. (1991)’s model goes in-depth into employee turnover intention after considering various aspects, including triggers to form turnover intention, employee satisfactions as well as external push. However, unfolding model fails to mention in detail the factors that lead to voluntary turnover intention, resulting to employees resigning from companies.
Based on these models and aspects that lead to employee turnover intention, the researcher adapts them into a similar model that is suitable for Setech as well as
other Vietnamese companies. The proposed model is as of the following:Chuyên đề thực tập Tốt nghiệp
X1
X2 X3
X4 X5
Figure 2.5: Employee turnover Model
Source: Model developed by author, 2017 Even though the model developed by author consisting of 5 factors does not cover every factor that can impact employee turnover intention; for the purpose of this research, the researcher adapts these aspects into a model that is suitable for Setech and can thoroughly reflect the reality of employee turnover and turnover intention at Setech.
2.2.3.1 Work environment (X1)
Work environment is one the key organizational factor leading to turnover intention of an employee. Factors of a good working environment including organizational stability, friendly competitiveness among staffs, comfortable working environment… enable employees feel attached to their job and reduce the level of their turnover intention. Opposite from that, organizational instability has
Employee turnover intention Work environment
Compensation policy
Job training and Career Advancement
opportunity
Management behavior
Alternative job
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been shown to have a high degree of high turnover. According to Zuber’s “A career in food service cons: high turnover”, employees are more likely to stay when there is a predictable work environment and vice versa (Zuber, 2001). In organizations where there was a high level of inefficiency there was also a high level of staff turnover (Alexander et al., 1994). Therefore, in situations in which organizations are not stable, employees tend to think of quiting and look for more stable organizations because with stable organizations they would be able to predict their career advancement.
2.2.3.2 Compensation policy (X2)
Compensation is arguably an important factor that influences employee turnover intention in both profit and non-profit organizations. Even if employees find organizational mission and goals satisfy their interest and their desire, they would not like to stay and contribute their talent to the organizations if they feel that the compensation is not enough. Griffeth et al. (2000) also noted that pay and pay- related variables have a modest effect on turnover. Their analysis included researches that studied the relationship between compensation, employees’
performance and employee turnover intention. They came to a conclusion that when high performers are insufficiently rewarded, they are more likely to form tuenover intetion, which might lead to the resignation from their current positions.
2.2.3.3 Job training and Career Advancement (X3)
According to David and Stephen (2005), career development is one of prominent factor that contributes to employee turnover intention. Motivational factors including recognition and advancement opportunities are important in keeping employees stay loyal with the organizations they are working for. In order to motivate employees, employees need to feel that their work bears fruit and advancement opportunities are the result of their commitment.
Dessler (2000) also insisted that job training and career development programs of an organization helped an individual in the organization to identify the gap between their skill and advancement requirement and thus, devote themselves
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to achieve a goal they set out. With structured and well-function advancement plan, employees are encouraged to try their best and are enabled to have equal opportunity of being promoted. By making employees feel that they have a chance of being in a higher position, organizations are having them fostering commitment .
According to Dessler, a clear and equal opportunity in career development builds sense of organizational ownership and minimizes employee turnover intention. From organizational view point, career development can reduce costs due to the reduction in turnover intention and employee turnover. Moreover, from employee’s point of view, a clear career development plan can help improve moral, boost productivity, and push the organization to become more efficient.
Besides career development, job training is one the factors that directly affect the intention of leaving. If the company consists of different levels of job training catering to different types and skills of employees, they will be more prepared for their job, thus, making employees feel that the position they are working for is suitable for them. Otherwise, with lack of job training, employees often feel that they are not well-prepared for the positions they are being assigned to, which may result in them forming turnover intention.
2.2.3.4 Management behavior (X4)
Management behavior is one of the key factors that lead to employees forming the thoughts of leaving organizations they are working for. Management ability to retain its employee and keep them with their knowledge gives a competitive advantage and increase service quality and productivity. However, in companies that do not acknowledge that management is their weaknesses, chances are that mismanagement is the character that embeds in the core of the company.
Management behavior includes treatments among staffs, participation in decision making process, working schedule… All of these reasons may have a negative or positive influence on employees’ will to work.
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2.2.3.5 Alternative job(X5)
Abdul Rahman et al. (2008) reported that availability of alternative job opportunities had significant positive impact on turnover intentions. Moreover, turnover is more likely to occur to a high performer than a low performer within a company due to the condition of the market. Carsten and Spector (1987) responded that high unemployment rates reduce voluntary turnover. In addition, job dissatisfaction and intentions to leave appear less likely to translate into turnover when unemployment rates are high. One of the reason why is due to the fact that low performer may not have many attractive alternative job opportunities unless there is a shortage of workers in the labor market. In contrast, companies are always seeking for high performers regardless of the market condition.
This factor concerns both internal and external condition and environment of the firm. If the firm has good environment and reward star employees adequately according to their work performance, employees may not feel the need to look at another job. However, if employees have any dissatisfaction toward their job, they might want to accept any alternative offer that they feel as more suitable.