Title:
Predictors of Employee Turnover Intention in the IT Service Industry in Cagayan
de Oro City
1.
Author: Valdehueza – Caragos,
Odette Leh____Chan____
(Last Name) (First Name) (Middle Name)
2.
Type of Document: Dissertation
3.
Type of Publication: Unpublished4. Institution: Capitol University, Cagayan de Oro City
5. Sponsor for Funded Research: None
6. Keywords: Predictors, Employee Turn-over Intention, IT Service Industry, Cagayan de Oro City
7. Abstract
Turnover has been a major issue pertaining to
Information Technology (IT) personnel since the very early days of computing
and continuing in the present (Moore, 2000; Niedermann & Sumner, 2003).
Besides experiencing a lack of qualified workers, the industry is having a
difficult time retaining those already hired (Silva, 2008). IT personnel have a
strong tendency to leave a current employer to work for another
organization. Determining the causes of
turnover within the IT work force and controlling it through human resource
practices is imperative for organizations (Igbaria & Greenhaus, 1992). It was suggested that IT companies review
their compensation packages regularly and study industry benchmarks. It would also
help if they can independently monitor employee perception and behavior to
accurately gauge employee sentiments towards the organization (Silva,
2008). According to a study on “The
Global Financial Crisis and Business Process Outsourcing in the Philippines” by
Patrick Louie E. Bonifacio, some companies in the BPO Industry operating in the
Philippines are expanding despite the financial crisis. Although a boon to the
economy, the business process outsourcing industry has its share of
difficulties. To cite, the 24/7 operations in the call center industry have
higher turnover rates compared to most other industries in the Philippines.
Beyond this, the industry has difficulty attracting the kind of talent it needs
to take advantage of the boom in business (http://www.tucp.org.ph/news).
In this study, we examined the predictors of
employees’ turn-over intention in the IT Service Industry in Cagayan de Oro
City.
It is important to note that this study has
certain limitations. First, the study focused mainly on the predictors of
employees’ turnover intention in the IT Service Industry in Cagayan de Oro
City. The result of the study is greatly
dependent on the response rate of the respondents. Although conducting the
study allowed the researcher to examine the issues in-depth, it cannot be
generalized to other IT Service Establishments in a national level. Second, the sample drawn for the present
study consisted of 273 respondents working in the IT Service Industry in
Cagayan de Oro City. Hence, the research involving additional samples may be
needed to ensure appropriate generalization of the results and calls for
greater research to confirm the pattern seen in these results. Third, the study
was conducted in 2008 and the data collected were for a specific period only,
from January 2008 to June 2008. The
results were valid for that time period and the circumstances of the
respondents at that time. However, since
then there has been an economic change.
It is possible if the survey was conducted today, results might be
different.
The independent variables in this study are:
socio-demographic characteristics that include the respondents’ age, sex, civil
status, number of dependents, type of IT Service Industry, educational
attainment, employment status, rank, monthly salary, and length of service with
the present company; job satisfaction factors as motivation items that include
promotion, challenging assignments, recognition, achievement, responsibility,
professional growth, work itself and use of best abilities; and, job dissatisfaction factors as hygiene items
that include relations with co-workers, technical supervision, merit increases,
working conditions, security of tenure, employee benefits, home life, workgroup
and management policies. Turn-over
intention is the dependent variable.
SUMMARY
The
Problem
The study has nine research problems:
1. What
is the socio-economic and demographic profile of the respondents in terms of age, sex, civil status, number of
dependents, type of IT Service or BPO Company, educational attainment, rank,
monthly salary, and length of service with the present company?
2. What
is the employee turn-over rate of IT Service Industry in Cagayan de Oro City
from January 2008 to June 2008?
3. What
is the job satisfaction level of the employees in the IT Service Industry in
Cagayan de Oro City in terms of the following motivation variables?
a. Promotion,b. Challenging assignments,
c. Recognition,
d. Achievement,
e. Responsibility,
f. Professional Growth,
g. Work itself and
h. Use of best abilities.
4. What
is the job dissatisfaction level of the employees in the IT Service Industry in
Cagayan de Oro City in terms of the following hygiene variables?
a. Relations with supervisor,
b. Relations with co-workers,c. Technical supervision,
d. Merit increases,
e. Working conditions,
f. Security of tenure,
g. Employee benefits,
h. Home life,
i. Workgroup and
j. Management policies.
5. What is the level of employees’ turn-over
intention in the IT Service Industry in Cagayan de Oro City?
6. Is there a significant relationship between
the employee turn-over intention and the socio-economic and demographic
characteristics of the respondents?
7. Is there a significant relationship between
the employees’ turnover Intention in the IT Service Industry in Cagayan de Oro
City and the following motivation variables?
a. Promotion,
b. Challenging assignments,c. Recognition,
d. Achievement,
e. Responsibility,
f. Professional Growth,
g. Work itself and
h. Use of best abilities.
8. Is there a significant relationship between
the employees’ turnover Intention in the IT Service Industry in Cagayan de Oro
City and the following hygiene variables?
a. Relations with supervisor,b. Relations with co-workers,
c. Technical supervision,
d. Merit increases,
e. Working conditions,
f. Security of tenure,
g. Employee benefits,
h. Home life,
i. Workgroup and
j. Management policies.
9. Based on the findings, what action plan can
be formulated to minimize employee turnover of IT Service Industry in Cagayan
de Oro City?
Review of
Related Literature and Studies
Chapter 2
discusses the recent literature and studies surrounding the theoretical
framework as well as other defining characteristics of the study. The framework
as discussed is the Herzberg Two Factor Theory. Other related areas of the
study are also discussed. It first
discusses turnover, the cost and the causes of high or low turnover. Then discussed the psychological and
management theories exist regarding the types of job content which is
intrinsically satisfying to employees and which, in turn, should minimise
external voluntary turnover that includes Herzberg’s Two factor theory,
McClelland’s Theory of Needs, and Hackman & Oldham’s Job Characteristics
Model (Hackman, 1980). It further
discusses the Philippine IT Action Agenda for the 21st Century and some
IT-related studies on Cagayan de Oro City.
Research
Methodology
Chapter 3 describes the methodology used to
determine the employees’ turnover intention in the IT Service Industry in
Cagayan de Oro City. The structure of
this chapter will begin with the design of the study, and then discusses the
location of the research and respondents, the instrumentation, the survey
administration, the variables, the data collection procedures, and finally the
data analysis procedures.
The study is an example of descriptive
research. The design will include
elements of both a quantitative and qualitative nature and triangulation. This study employs self-administered
questionnaires and interviews.
The results will be presented in tabular and in
graphical form for readability and easy comprehension. This research utilized the qualitative and
quantitative interpretation of data. The
qualitative interpretation involves the ranking of the two factor items and the
turnover intention from the questionnaire.
The quantitative interpretation utilizes the Frequency, Percentages and
Regression as statistical tools.
Presentation, Analysis and Interpretation of
Data
Chapter 4 presents the data on the stated
problems in the study. The researcher utilized survey questionnaires and focus
group discussions to appraise the predictors of turnover intentions in the IT
Service Industry in Cagayan de Oro. In
this study, the independent variables were presumed to have relationship with
the employees’ turnover intention. The sequence of the presentation, analysis
and interpretation of results were organized according to the specific problems
stated in Chapter 1.
Summary of Findings, Conclusion and
Recommendation
Chapter 5 presents a summary of findings, based
on the data collected which were subjected to statistical treatment and
analysis. Conclusions, insights, management implications were drawn in the
light of findings and corresponding recommendations were given.
Preliminary information revealed that 64% of the
respondents are from below 25 years old followed by age bracket from 26 to 35
years old that accounted to 30.77% and the least was from above 35 years old
that accounted 14% of the total respondents.
Of the 273 respondents surveyed, there were more female respondents
(52.01%) than male respondents (47.99%). Majority of the respondents were
single accounting to 79.85% of the total respondents surveyed while there were
19.05% of the respondents were married, there were 1.10% of the respondents
separated and none of the respondents were divorced. A large percentage of the respondents, 84.62%,
indicated that they have none or only one dependent, 12.45% of the respondents
have 2 – 3 dependents, 2.56% of the respondents have 4 – 5 dependents and the
least percentage, 0.37% indicated that one respondent have 6 – 7 dependents. Most of the respondents, 91.94% belong to the
Call Center IT Service Industry, 3.30% of the respondents from the Medical
Transcription and 4.76% of the respondents from the Software Development. Most
of the respondents are Bachelor’s degree holder, accounting to 48.35% of the
total respondents surveyed while 46.89% of the respondents are College level,
4.75% of the respondents are postgraduate level and none of the respondents are
postgraduate degree holder. Most of the
respondents are in the non-supervisory level, 77.29%, while only 22.71% of the
respondents are in the supervisory position.
Most of the respondents, 61.54%, received a monthly salary ranging from
7,001 – 10,000 pesos, followed by respondents receiving below 7,000 pesos
monthly salary at 20.15% then respondents receiving monthly salaries ranging
from 13,001 – 15,000 pesos at 7.69%, 7.33% of the respondents received monthly
salary ranging from 10,001 – 13, 000 pesos and 3.30% of the respondents
received monthly salaries above 15,000 pesos.
Most of the respondents, 53.85%, are with the present company for less
than a year, followed by 45.79% respondents that are with their company for 1 –
3 years already. Only 0.37% of the
respondents are with their company for 4 – 6 years and none of the respondents
answered that they are working for more than 6 years with their present
company. This implies that majority of
the respondents were newly hired in the IT Service Industry.
The data also revealed that there is a high
turnover rate in the call center industry as compared to medical transcription
and software development. The Call
Center IT Service Industry has 42.96% of employee turnover rate while Software
Development IT Service Industry has 31.65% and Medical Transcription IT Service
Industry has 13.51%. Exit interviews by Human Resources Manager in the IT
Service Industry were done to all workers that quit from their job and the
reasons cited are bad training design, oppressive trainors, too much stress,
too much pressure, wanted to work where one can move freely in the workplace,
pay not worth the effort, wanted to work in a standard working hours, offered
another job and wanted to practice their profession or bachelor’s degree
graduated.
The results revealed further that all the
respondents have high level of motivation or job satisfaction in terms of
promotion, challenging assignments, recognition, achievement, responsibility,
professional growth, work itself and use of best abilities in the IT Service
Industry in Cagayan de Oro City.
Likewise, in rating the responses from strongly agree as very highly job
dissatisfied to strongly disagree as very low job dissatisfied, the result
showed that the respondents indicated low job dissatisfaction on relations with
supervisor relations with co-workers, merit increases, working conditions,
security of tenure, employee benefits, home life, workgroup and technical
supervision and indicated moderate job dissatisfaction on management
policies. This implies that most of the
employees were not totally dissatisfied with the aspect aforementioned.
The results also indicated a moderate turnover
intention level of the respondents. The reasons cited were lack of break time
because of time pressure; the unholy hours in the morning; rigid training and
trainers; inflexible work conditions for personal necessities; and pay not
worth the effort. The respondents also mentioned inaccurate descriptions of the
job; training does not correspond to the realities of the job; heavy workloads
because respondents were forced to assume the jobs of the departing workers;
burnout, supervisors do not provide mentoring and coaching; lack of respect
that deny a sense of professionalism in the workplace; absence of career
ladders; continue studies; and their work do not fit with their personal lives.
The results further revealed that all of the
socio-demographic characteristics of the respondents showed significant
relationships with their turnover intention and, of the eight job satisfaction
variables, only four (challenging assignments, recognition, professional growth
and use of best abilities) had significant relationship with turnover intention
while there were seven of the ten job dissatisfaction variables (relations with
supervisor, relations with co-workers, technical supervision, security of
tenure, employee benefits, home life and workgroup ) showed significant
relationships with turnover intention.
In order to address issues on high turnover in
the IT Service Industry in Cagayan de Oro City, an action plan to minimize
employee turnover was formulated. The
goal is to improve retention of workers in the IT Service Industry in Cagayan
de Oro City. The action plan addresses
three issues, to name: the socio-demographic characteristics, the job
satisfaction variables and the job dissatisfaction variables.
The researcher therefore concludes that of the
eight job satisfaction characteristics identified in Herzberg’s
Motivation-Hygiene Theory, the results of this study indicated that only four
job characteristics evidently have the capacity to gratify the respondents’
needs, to name: challenging assignments, recognition, professional growth and
the use of best abilities, thus influenced their intentions to stay or leave
the company. In the same way, of the ten
hygiene or job dissatisfaction variables mentioned by Herzberg, only seven
significant factors influenced respondents’ preference to stay or quit, to wit:
relations with supervisor, relations with co-worker, technical supervision, and
security of tenure, employee benefits, home life and workgroup. This study has also tested the relationship
of the socio-demographic characteristics of the respondents to that of their
turnover intention and it is clear that the respondents’ decision to stay (or
leave) the IT Service Industry were also significantly influenced by their age,
sex, civil status, number of dependents, type of IT Service or BPO Industry,
educational attainment, rank, monthly salary and length of service with their
present company. Three overarching deductions can be drawn from the results.
First, by carefully reviewing the profile of the applicants in the recruitment
and selection process, the establishment can hire employees who will be more
likely to stay in their company. Second, by increasing job satisfaction in
terms of challenging assignments, recognition, professional growth and the use
of best abilities, respondents will be more apt to stay in their organization.
And third, by lessening the level of job dissatisfaction in terms of relations
with supervisor, relations with co-worker, technical supervision, and security
of tenure, employee benefits, home life and workgroup, retention should
improve.
In minimizing the issues on employee turnover,
an action plan was proposed. The
following were the action plan’s objectives: Objective One addresses
socio-demographic issues; Objectives
Two, Three, Four and Five deal with job satisfaction issues; and Objective Six,
Seven, Eight, Nine, Ten and Eleven tackle job dissatisfaction issues.
This study has straightforward but profound
management implications with respect to the cost of employee turnover and the
prevention of future employee turnover. Based on the findings and conclusion of
the study, the researcher recommended the following: In improving the retention
of workers in the IT Service Industry in Cagayan de Oro City, managers could
apply the action plan proposed in this study to minimize turnover. Additionally,
a study made by a BPO Industry in India suggested that exit interviews can be
conducted to know the reasons for employees’ resignations. The study also
proposed that at the time of recruitment, IT Service Industry could do the
following: (1) select the right people through competency screening; (2) use
psychometric tests to get people who can work at night and handle the monotony;
(3) offer an attractive, competitive, benefits package; (4) make clear of
performance enhanced incentives and other benefits and keep these promises
later; and, (5) IT Service Industry can set up offices in smaller towns, or
recruit from there, where opportunities are few. When at the office, (1) ensure
that an employee’s work is communicated clearly and thoroughly including the
details of the job, its importance, the process and the maximum time that can
be allotted to complete it; (2) give the employees necessary tools, time and
training for them to do their job well; (3) have a person to talk to each
employee at regular intervals; (4) the quality of the supervision an employee
receives is critical to employee retention; (5) provide the employees a stress
free work environment; (6) ensure that employees know that their work is
important for the organization; (7)
provide employees’ reward, recognition and appreciation; (8) offer excellent career growth prospects;
(9) home-work life balance initiatives are important; and (10) implement
proficiency models, which are well integrated, with HR processes like selection
and recruitments, training, performance appraisal and potential appraisal. As regards the night shifts schedule of the
industry, the following were also proposed: (1) have doctors advise them about
health problems and the ways and means to deal with them; (2) organise
programmes where people from other professions, who have night shifts talk to
employees about their experiences; (3) organise training, counselling and
development programmes for employees; (4) if needed, provide special lights in
the workplace to ensure that their bodies get sufficient vitamin D; and (5) one
distinct disadvantage of night shifts is the sense of disorientation with
friends and family members (http://www.bpoindia.org/research).
The researcher also recommended for further
studies on the following: A replication of the study at different geographical
locations and culture would throw a light on this study. A further study may be
conducted separately for the socio-demographic characteristics, job
satisfaction and job dissatisfaction so that more detailed and appropriate
solutions could be provided for it.
Also, in the light of the Global Financial Crisis, a study on the trend
of the staff attrition in the IT Service Industry is also recommended. It is also recommended that a separate study
for each type of IT Service Industry, call centers, medical transcription and
software development by firm size could be made to have a complete assessment
on employees’ turnover intention. A cost and benefit analysis may also be done
for employees’ turnover and another area for recommended research is to
investigate the preferences of recently separated employees in order to draw
comparisons between the one they left and the one they prefer. The researcher also recommends further
studies to examine employees’ perception to actual decisions. Research into these areas could provide
managers with a better idea of what strategies to use to attract and retain
employees.
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