Oct - 21 - For - Binder

INTRODUCTION
Having successfully grown over the last four years, the call center industry has been considered
a sunshine industry. This means that what the Philippines is merely seeing a prelude of what
more is to come over the next several years. However, in the light of our current labor market, it
seems that this sunshine would not last that long. This paper argues that although the call center
is being relied upon by various economic pundits in the government and in the private sectors,
the considerable job turnover and inadequate supply of call center specific labor are the
concealed flaws of the industry. The silently bleeding industry in the form of turnover poses a
major factor for potential outsourcers of whether to outsource in the Philippines or in other
countries instead. The first part of this paper is an exposition on the nature of the call center
industry: the nature of work, its players, and its production goals and objectives at the worker
and firm level. This section illuminates our understanding of what type of labor should the
market supply in the light of the increasing demand for call center jobs. The second section
discusses the outsourcing trends in the Philippines. The fourth discusses the review of literature
on job turnover, which pertains to job turnover studies conducted in the US and to studies
conducted in the Asia Pacific and in the Philippines. The fifth section discusses the theoretical
framework with the specification of the equation that will be used.
Statement of the Problem

In the light of the prevalent turnover in the call center industry, the main objective is to identify
the sets of job satisfiers, wage differences, human resources practices, supervisory and
managerial mechanisms that are likely to predict firm- level quit rates then empirically evaluate
the predictive reliability of these variables using data from a survey of agents from two call
center zones.
Significance of the Study

Different articles have already been written about the issues and problems in the call center
industry and identified the factors that lead to job turnover. However, very little to none has been
said about how large would the impact of changes in company policies and company incentives
will be on the job turnover. Being able to identify the probable impact of selected variables will
be able to help firms and their HR department find the appropriate combinations of action plans
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to improve their wages and benefits structure as well as their company practices that can improve
employee- employer relations.
Scope and Limitations

The data will be limited to covering the call center firms within the Ortigas and Eastwood
Cyberzone areas. Since the data of attrition (or job turnover) from firms is not available (if not
very highly confidential), the data will be in a form of a survey. Worse, even the government
cannot provide the figures for the labor turnover in the call center industry. Despite the absence
of corporate data, the mere fact that the paper is about predictive patterns of job turnover can be
satisfied by the survey of individual call center employee. The data will also be limited to the call
center agents and will pertain to the turnover behavior of supervisors and upper management.
Due to the limited and time constraints, approximately 120+ call respondents will be gathered in
this research, which will cover the 12,000 – 14,000 agents in the two call center cyberzones.
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II. THE NATURE OF THE CALL CENTER INDUSTRY
What is a Call Center?
A call center is more prominently called contact center or profit center. It is a central point of
an organization from which customer contacts are managed through voice, e-mail or chat.
Contact centers use special software that allows contact information to be routed to appropriate
people, contacts to be tracked and data to be gathered (Baziotopulos, 2006). A number of such
call center services include inbound sales, directory assistance, technical support, or billing
inquiries.
The Need for Contact Centers and the Importance of Customer Care
The advancements in information technology and in telecommunications has enabled
consumers and even firms to transact in order to take advantage of products or services of a
company simply wither by phone or by internet. The role of contact centers is to expand the
marketing of a product or retain the valued users of a company’s products or services. In order
for the company to gain more revenues and at the same time retain its current share of the
market, effective customer care is needed to provide that quality customer service experience.
NATURE OF CALL CENTER WORK

Since the clients are based on a different time zone such as US or UK, call center work in the
Philippines often begins on a graveyard shift. Thus call center employees will inevitably be
exposed to the graveyard working conditions. Call center agents work for at least eight (8) hours
and even render several hours of overtime work in response to the client’s needs. Few would
doubt that those work in the call centers have extremely high-pressure jobs. Agents are on the
phone for hours and deal with unseen customers, some of them can be angry, discriminating or
impatient. The upper and frontline managers stay for longer hours in order to complete summary
reports of the agents’ performance and are submitted and presented to clients.
Call center agents are taking its toll due to the adverse working conditions (graveyard, non-stop
talking on phone for several hours) and its effects on health and leisure (such as stress, loss of the
“normal day life” routine, staying up to wok at night). Because call center employees are paid
night differentials, additional meal and transportation allowances in order to compensate for
graveyard work, and for traveling to work at night. More often than not, the customer service
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work is indeed repetitive that employers even add additional incentives or performance bonuses
to those who consistently perform and render long periods of employment with the company.
Ideal Type of Workers

Based from the exposition above on the nature of the industry and business rationale behind it,
call center agents must possess one essential or main skill: proficient oral and written
communication in the English language. Furthermore, the call center agent must preferably
possess a good understanding and even experience in business practices, can assimilate to the US
or UK culture and be familiar with the nuances of American or British idioms and their specific
accents.
PHILIPPINE CALL CENTER INDUSTRY: TRENDS AND COMPETTIVENESS

At the start of the millenium, the call center industry was an emerging powerhouse in the
Philippines. Estimates from the Board of Investments (BOI) show that the industry has been
aggressively expanding since 2001 at an astounding rate of 100 percent annually, from less than
1,000 seats in 2000 to more than 69,000 at the end of 2004. In terms of world market share of
contact center services, the Philippines amassed nearly 20% of all the world’s customer contact
services. By 2008, it was forecasted to get a lion’s share of the world’s customer service market
at 50%. Furthermore, as the industry earned USD 1.12B last 2005, industry forecasts a massive
inflow of more revenues of up to USD 12B by 2010.
Enjoying its rich supply of “Americanized” labor force, the country has attracted its young
professionals by offering wages far better than the local industry jobs. In fact it offers a salary
range above par compared to the local industries.
“Americanized” and Amicable Labor Force

In the new wave of outsourcing, Philippines is one of the leading players in the global contact
center market. The American education system combined with the exposure of the country to
various American music and culture enabled the Filipinos to assimilate itself quicker in the
Western way of dealing. In, some able to speak fluently in English and almost mimic the
American accent. This gives Filipinos are huge advantage over its Indian rivals in customer
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service, of which the Indian customer service is tainted to have heavily British- Indian accent
that creates an intimidating factor to Americans.
Another positive impression that Filipinos gained is the delivery of customer service that is
value- added. The Filipinos hospitality and general friendliness is what the people are known for:
taking time to understand the American customer’s concern, empathizing with the former, and
sometimes going an extra mile to offer a helping hand.
International Competition
A look into Table 4 below shows the Philippine’s competitiveness relative to other countries of
attractiveness to business outsourcing. Philippines tied with India in terms of overall costs and
placed second best in terms of quality of infrastructure. Furthermore, US companies ranked the
country next to India and Malaysia in terms of attractiveness of location on a scale of 1-5 (with
1= highest, 5= lowest). The country however suffered major setbacks in terms of access to
market, risk profile and business environment where China, Malaysia and Mexico led in these
categories.
Table 4. Outsourcing attractiveness index for offshoring countries, 2004
(1= most attractive, 5= least attractive)
Country Total Vendor Access to Risk Business Quality of
cost landscape market profile Environment Infrastructure
Philippines 1.5* 4.5 3.5 3.9 3.7 2.8
India 1.5 2.2 3.5 2.7 3.6 3.3
Malaysia 1.7 4.7 3.3 2.2 3.4 2.5
China 1.8 3.7 1.8 3.4 3.6 2.5
Brazil 2.2 3.5 4.2 2.8 3.0 2.0
Mexico 2.2 4.7 2.8 3.5 2.6 2.0
Czech Rep 2.6 4.7 3.5 2.2 3.0 3.0
Hungary 2.6 4.7 3.3 2.3 2.8 3.8
Poland 2.7 4.0 3.3 2.7 3.1 3.0
Russia 3.0 4.5 2.8 3.5 3.3 3.3
Source: Location Cost Index database, McKinsey Global Institute
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In another report by McKinsey (see Table 5), India leads in terms of being a global supplier of
offshore services at USD 12.2 billion in 2003. The Philippines trails behind at sixth, producing a
value of USD 1.7 billion worth of services for its outsourcing clients.
Table 5. Rankings, Services Offered by Offshoring Countries, 2003
COUNTRY VALUE OF SERVICES

OFFERED (billions USD)
India 12.2
Iceland 8.6
Canada 3.8
Israel 3.6
China 3.4
Asia (without India & China) 2.3
Philippines 1.7
Eastern Europe 0.6
Mexico 0.5
Australia 0.4
Russia 0.3
Thailand 0.1
South Africa 0.1
Source: McKinsey Global Institute
CHALLEGES OF THE SUNSHINE INDUSTRY
Supply Side Problem

In the first section of this paper, we have witnessed the drastic growth of the investments in the
call center industry as well as the increasing employment. However, the good news may not last
that long. It is true that the Philippines has the stock of labor to meet the requirements of call
center work. In fact more foreign companies tend to outsource every year. The problem is not
about the demand. What is alarming is the country’s supply of call-center specific labor. Simply
put: we don’t have enough manpower to meet the ever increasing demand for the growing call
center industry.
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Former DTI Undersecretary Gregory Domingo was able to gather information among several
call centers and noted that only 3-5 out of 100 applicants are hired for the job (Viray, 2003). This
means that if the country produces a yearly average of 380,000 college graduates, then only
19,000 would be hired for the call center job. Since the projected demand for 2004 was
approximately 40,000 agents, this means that the industry’s human resources needs to hire other
past graduates, pirate from the currently employed market, and even sign up college
undergraduates and high school graduates.
Figure 2.1 depicts the Philippine call center labor market where demand for the job increases
but with a constant supply of call center labor. Thus, the growing demand (from L 0 to L1) simply
drives the wages up (from W0 to W1).
Wages, Pesos
SL
W0
W1
D’L
DL
Labor (# of
workers)
L0 L1
Fig 2.1
III. REVIEW OF LITERATURE
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This section shows the various studies conducted in relation to the factors that affect employee
turnover: from the various effects of wage changes, job performance, employee bonuses, HR
(human resources) practices, to the firm’s decision- making in job promotions of its employees.
FOREIGN LITERATURE
Supervision and Job Turnover
Krackenhardt et al (1981) studied on the effect of supervisory interactions on job turnover. The
study covered tellers in fifty branches of a commercial bank and gathered data on the turnover
tendencies and job performance based on the supervisors’ ability to implement specific goals the
latter learned from management workshops and a control group (those who did not undergo the
said workshop). The results show that turnover rates during the implementation of the set goals
(during the manager’s workshop) were significantly lower for the experimental group than the
controlled group. Group meetings (both formal and informal) and counseling sessions have
significantly improved turnover rates. Higher supervisory efficiency combined with group
meetings and counseling have better results for lowering job turnover than low efficiency
supervisors. This is because highly efficient supervisors are able to structure the work
effectively, thereby allowing these managers to have more time allotted to group meetings and
counseling sessions.
Performance & Wage Growth Factors

Leonard (1987) discussed the efficiency wages theory and its implications on job tenure. In his
survey of employment conditions in the technological (IT) sector of one state, the simple and
multiple regression results show the significant effect of wage differentials on job turnover.
Furthermore, additional controls such as total employment and occupational composition reduce
the wage effect of turnover by as much as 14 percent. The study is also limited in such a way that
the data on the profitability of firms remains scarce (if not confidential) as to finding out how
much wages can increase so that the firms can maintain decent levels of profit.
Leonard’s study was supported Bishop’s (1990) discussion on job performance and salary
increases (1990). It was shown that productivity was negatively related on the worker’s job
turnover performance. This relationship holds so long as the measures of an individual’s
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productivity are reliable. Furthermore, the consistent and long-run practice of rewarding
exceptional performance yields positive results: the best performers stay and the less productive
ones leave voluntarily. Data was obtained from the National Center for Research in Vocational
Education (NCRVE) with data showing the job matching between the employee and the work
itself and how it affects turnover. Most of the respondents were line managers from small and
large companies from both unionized and non-unionized firms. Among the potential biases was
the fact that the respondents may be reporting past performance of individuals who are already
separated from the company (fired or resigned), who were already promoted or who were still
working with the firm. Another bias would be the fact that there are measurement errors in
productivity indicators.
Table 2.1 Relative Productivity and Separation Rates (In %)

Non-Unionized Establishments
Unionized 200+ 20-199 1-19 Total
Establishments Employees Employees Employees
Quit:
Relative 106 102 96 93 95
productivity
Quit Rate 11.8 10.0 14.6 19.6 16.9
Layoff:
Relative 104 109 106 93 99
Productivity
Layoff Rate 14.5 4.7 3.1 5.9 5.9
Discharge
Relative 79 73 76 73 75
Productivity
Discharge 2.7 3.0 5.7 6.4 5.7
Rate
N 267 173 1,028 1,727 3,195
Source: Bishop, 1990
Based from the data above (Table 2.1), larger firms tend to have lower quit rates and at the
same time have relatively higher employee productivity. Dismissed workers were also observed
to have higher quit rates.
Another estimate was used to identify the determinants of turnover behavior. Table 2.2 and 2.3
below shows how quit rates are affected by gender, additional training, tenure, and firm size.
From Table 2.3, we can see that quit rates decreases by as much as 50 percent as the worker
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matches with the job and improves his productivity (3-12 weeks). In terms of involuntary
separations, only the years of schooling is significant although it has a wrong sign (greater
schooling leads to higher quit rates). Women have significantly lower quit rates. In terms of the
effects of training on job turnover, more specific training leads to lower rates. However, it can be
seen in Table 2.3 that 100 additional hours of training lowers the discharged rates but increases
voluntary quit rates. The coefficient on training versus quit rates however was not significant. In
addition, as the productivity hits the 3rd to the 13th week, quit rates significantly gone down and
chances of promotion improves (Table 2.3). Larger firms improve the worker’s chances of
promotion as the size of the firm improves the employee’s productivity. Furthermore, higher
training intensities improve one’s chance for promotion.
Table 2.2 Turnover & Productivity (Interactive Specification)

Log Tenure Involuntary Quit Promotions
Separation
Training .045 -.084*** .047 .075**
Intensity (1.15) (3.22) (1.46) (2.38)
Productivity -.652*** -.197 .240 -.415**
2nd week (2.64) (1.21) (1.19) (2.10)
Productivity, 2.198*** -.756*** -.486** 1.201***
weeks 3-13 (8.84) (4.61) (2.39) (6.07)
Productivity -.188 .878* .234 -.609
X union (.27) (1.89) (.41) (1.20)
Productivity -.301** -.172** .211** .273**
X log (2.52) (2.19) (2.17) (2.63)
establishment
Training .072***
intensity X … … … (3.48)
log
establishment
R2 .574 .179 .106 .222
NOTE—t-statistics are in parenthesis; *significant at .10 level; **significant at .05 level;
***significant at .01 level
Table 2.3 Determinants of Turnover and Promotion

Variable Log Involuntary Quit Promotion
Tenure Separation
Quality of Match
Productivity (3-12 2.444*** -.779*** -.491** 1.17**
wks) (9.55) (4.51) (2.34) (5.77)
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Productivity -.876*** -.167 .337 -.518***
(3.51) (.99) (1.65) (2.61)
Training (1- 12 .026 -.070** .052 .043
weeks) (.64) (2.51) (1.54) (1.31)
Credentials of
New Hire
Years of school -.019 .018* -.006 -.012
(1.2) (1.65) (.47) (.95)
Coop Student .247** -.037 -.128 .178**
(2.56) (.60) (1.62) (2.32)
Relevant -.021 .032 -.071 .049
Experience (.29) (.63) (1.17) (.83)
Female .112 -.013 -.131* .082
(1.3) (0.02) (1.88) (1.2)
Conditioning
Variables
Log potential .593*** .163 .445*** .226
tenure (2.72) (1.11) (2.50) (1.31)
Log potential .040 .021 -.068* -.019
squared (.96) (.73) (2.00) (.58)
Hours per week .0080 .00007 -.0034 .016***
(.64) (0.02) (.85) (4.19)
Intercept .049 -.015 -.012 .030
(1.49) (.66) (.46) (1.13)
R2 .585 .153 .094 .208
N 477 447 477 477
NOTE—t-statistics are in parenthesis; *significant at .10 level; **significant at .05 level;
***significant at .01 level
Employee Bonus and Job Turnover

When Bishop discussed wage growth and turnover, Blakemore, Low and Orminston (1987)
discussed the effect of employee bonuses on job turnover. The presence of temporal income risk
among risk- averse workers is the motivation behind offering the pay scheme that provides
flexibility in times of uncertainty. The positive correlation between the bonus pay and outside
offers adds a flexible offer-matching ability to the compensation package (Blakemore et al,
1987).
Table 2.4 The Bonus Effect on Voluntary Turnover

(1) (2) (3) (4) (5) (6)
Constant -.70 -.38 -5.66 4.44 -1.16 1.54
(2.4) (.4) (2.3) (1.7) (8.3) (.5)
EARN(X 10-3) -.05 -.03 … … … …
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(2.0) (1.2)
Ln(EARN) ... … -.67 -.48 …. …
(2.5) (1.6)
BONUS(X 10-3) … … … … -.38 -.03
(1.9) (1.1)
Ln(BONUS) -.35 -.38 … -1.5 … -.40
(1.7) (1.9) (1.8) (1.9)
ED … -.01 -1.5 -.01 … -.01
(.1) (1.8) (.2) (.1)
EXP … -.01 … -.01 … -.02
(.1) (.9) (1.3)
Likelihood 11.88 20.51 14.92 20.95 13.46 18.25
Ratio Test
Source: Blakemore et al, 1987
The table above (Table 2.4) shows that bonuses are significant factors in affecting voluntary
separation decision of workers. Bonus pay lowers quit rates by as much as 38 percent as
compared to earnings changes on quit rates which only has a mere 3%. Indeed the flexible
structure of its pay scheme offers its workers risk reduction and counters any outside offers.
Promotion Decisions of the Upper Management

In another research performed by Lam and Schaubroeck (2000), employees whose applications
for promotion were rejected exhibited performance drops, increased absenteeism and high
tendencies of quitting in the short run. However, they asserted that in the long run, these
aspirants’ performance will eventually go back to their normal levels. The main condition for the
resumption of normal performance is that the management must enable its promotion applicants
to understand that promotions are determined worker’s own actions.
Table 2.5 Predictors of Annual Quit Rates

Variable Tobit 1 Tobit 2 Tobit 3 Tobit 4
Employee Voice
Union -0.152*** -0.114****
(0.027) (0.026)
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Problem-Solving -0.092*** -0.084***
Groups (0.023) (0.024)
Self-Directed Teams -0.049* 0.058**
(0.026) (0.028)
Cost-Cutting HR
Practices
Downsizing in Last 3.267**** 8.088****
Five Years (0.687) (2.309)
Part- Time Workers 0.212*** 0.251***
% (0.074) (0.079)
Temporary Workers 0.281**** 0.236****
% (0.058) (0.059)
Electronic 0.047** 0.050**
Monitoring (0.022) (0.023)
Variable Pay 0.066* 0.107***
(0.036) (0.036)
Commitment-
Enhancing HR
Practices
Mobility % -0.073*** -0.040*
(0.026) (0.023)
Training -0.006 -0.005
(0.006) (0.005)
Pay to Local Cost of -.152*** -0.102***
Living (0.034) (0.033)
Control Variables
Female % -0.026 -0.030 -0.071* -0.067*
(0.036) (0.036) (0.040) (0.037)
Ln of Establishment 0.0130** 0.016 0.010 0.020***
Employment (0.007) (0.007) (0.007) (0.007)
Branch 0.025 0.033 0.051 0.022
(0.023) (0.023) (0.025) (0.024)
Former Bell 0.014 -0.034* -0.027 0.017
Company (0.024) (0.020) (0.022) (0.023)
Human Resource 0.046** 0.017 0.037* 0.025
Department (0.019) (0.020) (0.021) (0.020)
College Graduates -0.011 0.009 0.059** 0.035
(0.023) (0.024) (0.028) (0.027)
Constant 0.105*** -0.024 0.199**** 0.124
(0.039) (0.040) (0.046) (0.048)
Observations 576 545 521 492
Likelihood Ratio Chi 113.150 124.560 84.340 173.120
Pseudo R- Sq 0.674 0.767 0.509 1.303
Likelihood Ratio -27.3/ 4149 -18.91/ 1291 -40.62/ 8212 20/1309
Source: Batt et al (2002)
NOTE—*significant at .10 level; **significant at .05 level; ***significant at .01 level; ****significant at .001 level
Employee Voice and HR Practices

Batt et al (2002) looked into the effect of the firm’s commitment to set up policies and
practices that improves organizational performance from various telecommunication firms:
mobile phone, cable television and internet services- related providers. Annual quit rate was
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measured in percent, the collective voice union presence was captured by a dummy variable
(1=union and 0 for otherwise), team participation was measured as a percentage of employees in
the firm participating either in problem- solving groups or in self- directed teams. In general, the
independent variables measure the percentage of employees in that firm that has the independent
variable attribute.
Table 2.5 shows the significant effect of organizational initiative towards reducing quit rates.
The presence of unions, self- direct teams and problem- solving groups significantly contribute
to reductions in job turnover. Furthermore, the presence of internal mobility of workers,
additional training and increased responsiveness of employee pay to changes in the cost of living
also significantly reduces quit rates (see Tobit equations 3 and 4). And in contrast, visible forms
of cost- cutting practices sends a negative signal, causes job speculation and employee distrust to
their firms, thereby increasing quit rates.
LOCAL STUDIES
The study of Umali (2005) on the Philippine call center industry, discussed issues and
problems associated with job turnover. It was asserted that stress at work, health and safety
issues while working in the night shift, boredom and limited advancement opportunities are the
main issues that performance needs to be addressed in order to improve he turnover performance
of the industry. The survey by UNI- Apro and UNI- PLC found that nearly one third and nearly
one-half of the call center employees showed heavy and highly moderate pressures at work.
Tough performance appraisals and stringent selection of employees eligible for regular
employment were identified as pressures at work. About a third of the respondents experienced
health- related problems in working in the night shift such as insomnia, hypertension, migraine,
sleeping disorder and respiratory tract infections. Furthermore, since there is little room for
higher positions, career advancement opportunities are simply limited.
A study in a specific call center company (Viray 2004), the turnover rate was at an astounding
rate of 49.78%. The top reasons are as follows: 31% resigned due to lack of opportunities within
the firm or lack of career growth, 16% are said to have left due to the unfavorable work
schedules, 10% are said to have left due to the lack of challenge (considers the call center job as
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a no brainer) or lack of job compatibility (cannot apply what has been learned in college), and
other reasons include unfavorable company policies, lack of recognition in the job, and poor
benefits.
Another study (Sibal, 2006) also showed that the call center industry is bereft of the supply of
competent managers. According to the Call Center Association of the Philippines, only 2-3% of
the applicants qualify for the managerial or supervisory positions in the industry. Moreover, it
has also discussed the fact that SMEs in the country does not automatically produce corporate
managerial talents.
Based from the previous section, only a few percentage of the young labor force are able to
qualify in the call center job. And so the firm pays higher wages to retain its employees and
prevent them from being “pirated” by rival firms.
International Studies of Job Turnover

An international research firm callcenters.net also conducted a study on the turnover behavior
in the call center industry that focused in the Asia Pacific Region (Wallace 2003 and 2006). In
the initial study in 2003, only 6% of the call centers surveyed in the Philippines said that they did
not experience any agent turnover. More than a third of the firms surveyed declared a small
turnover of less than 5%., although the mean turnover in 2003 was 13%. Outsourcing call centers
(those who were tapped by as vendors by the client firms) were observed to have higher turnover
rates than in-house call centers (those firms that already have call centers on their own that
simply set up their centers in the Philippines). Furthermore, 49% of the total agent turnover in
2003 left the call industry while 42% transferred to other rival call centers. In addition, call
center agents stay up to an average of 19 months then leave. In terms of health, call center agents
on the average have 8 days of sick leaves every year.
In 2006, the same research firm reassessed the job turnover performance of the call centers,
particularly in the Asia Pacific Region. In a survey of 354 organizations that represent 828 call
centers, the respondents were asked to fill out information on their market size, cost per output
and other statistical information such as job turnover.
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Table 2.6 JOB TURNOVER RATES 1999 AND 2003
JOB TURNOVER RATES (%)
None <5 5- 10 11-15 16- 20 21- 25 26- 30 > 30
1999 33% 8% 25% 3% 8% 6% 6% 11%
2003 6% 35% 18% 8% 14% 8% 6% 4%
Outsourcing 9% 18% 18% 18% 9% 9% 9% 9%
In-house 5% 39% 18% 5% 16% 5% 8% 3%
Source: Wallace (2003)
Table 2.7 JOB TURNOVER IN THE ASIA- PACFIC REGION (except India)
Country CHINA KOREA INDIA PHILIPPINES SINGAPORE
Turnover Rate (%) 16 17 31 20 19
Moved to competing 49 36 67 62 17
centres (%)
Tenure of Staff in 20 24 11 19 27
months
Days taken as Sick 6 3 15 8 7
Leave Yearly
Source: Wallace (2006)
Table 2.7 above shows that India and the Philippines take the lead in terms of job turnover
rates at 31% and 20% respectively. Consequently, these two countries ranked last in terms of
length of stay. Singaporean and Korean call center agents stay 6-9 months longer than the former
counterparts. India and the Philippines once again leads in the number of days of sick leaves per
year with 15 and 8 days respectively. Job turnover and recruitment are the highest concerns
among call centers in the Asia Pacific Region.
IV. THEORETICAL FRAMEWORK
The Job Mobility Equation

A worker’s decision to quit work in his current job is can be summarized by the equation,
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Σ Nt Σ Ot > Ct
(1+r)t (1+r)t
where Nt = wages in the new job

Ot = wages in the old job
r = interest rate
t = time
Ct = cost of moving
Source: Borjas, 2000; Kaufman & Hotchkiss, 2003; Ehrenberg and Smith, 2003
This means that the condition for moving is that the difference in the present value of the
wages between the current and the new job is significantly greater than the cost of moving. In
this section, the initial discussion will be the effect of wages on turnover (efficiency wages
theory), then move into discussing the non-wage factors that may either impede or provoke job
movement. Among them is employee satisfaction, the firm’s human resources practices, the
employee’s confidence in the supervisory and managerial competence of the firm, and lastly the
worker’s attributes (control variables).
Efficiency Wages Theory

Obviously, paying higher salaries would definitely improve not only the productivity of the
firm’s current staff, but can also sustain the level of productivity in the long run through reduced
employee turnover (Raff and Summers, 1987). The key assumption behind this theory is that
employee work effort, or “efficiency” is a positive function of the wage rate. Thus, the higher the
wage the firm pays, the harder its employees work (Kaufman and Hotchkiss, 2003). A higher
wage elicits greater effort because employees value their jobs more and have higher morale, and
at the same time raises the cost of being fired for shirking on the job (Shapiro and Stiglitz, 1984).
.
The wage factor is supported by the efficiency wage theory that higher wages reduces
turnover but that the increases in the wage premium should reach the point where the marginal
reductions in turnover would still allow the firm to reach decent profits.
NON WAGE FACTORS
17
Job Satisfaction
Job Match (Sense of fulfillment). Even if the current pay of the worker is far better than the
outside offers, one factor that can negate the responsiveness of job turnover to wage differences
would be the job match. In this context, job match means not only the worker’s skills in meeting
the job requirements but also the fact that the job itself allows the person to make use of
everything that was learned from the degree earned or such that the job creates a sense of
personal fulfillment. Simply put, the match quality determines job duration (Jovanovic, 1979).
This is a very important factor when analyzing the call center industry, especially with the fact
that it employs generally anyone that has good English fundamentals and basic computer
literacy.
Availability and the Use of Non-Wage Benefits. Job satisfaction not only depends on the number
of non-wage benefits (such as sick leaves and vacation leaves) but mainly depends on the ability
of the employees to actually use them. In fact, Gary Becker (1965) mentions the need for
productive consumption in the form of vacation leaves, sick leaves or the consumption of health
and welfare- improving subsidies offered by the firm are needed to indirectly improve the
efficiency of the worker. Figure 1 below depicts the turnover decision based on wage/ benefit
mix.
The graph shows the firm’s isoprofit curve JK together with two indifference curves I A and IB.
The optimal combination for the worker is the tangency point between the indifference curve and
offer curve (points Q and Z). In general, most companies cannot provide options for the
employee to choose a combination from the isoprofit curve. Given the wage- benefit
combination WQFQ of worker A in his current firm, the only way worker A can get to his desired
wage- benefit mix at indifference curve IB is to quit the current firm and transfer to the firm that
offers the wage-combination WZFZ at indifference curve IB.
Fig 1. Wage-Benefit Turnover Decision Model
Wage per hour (W)
18
J
WQ Q
IA
Z
WZ
IB
FQ FZ K Employee Benefits per hour (F)
Source: Kaufman and Hotchkiss, 2003
Employer Location. Economic theory predicts that the when the costs of quitting a job are
relatively low, job mobility is more likely. If a change of employer due to locational factors does
not necessarily require a change of residence, then turnover is more likely (Parsons, 1979;
Roback, 1982).
HR Practices and Organizational Commitment

The firm’s human resources (HR) plays a vital role in understanding how organizational
commitment can affect turnover outcomes. That role is the ability to reinforce the employee’s
commitment to the organization, whereby the worker identifies with his particular company and
also maintains one’s relationship in the organization in order to facilitate its goals (Blau and
Boal, 1987).
Employee Voice. Organizations that set up focused group discussions to enable workers to
express their dissatisfaction at work and be given the opportunity to be involved in problem-
solving of work concerns indeed improve the performance of workers and generates higher
organizational commitment (Batt et al 2002).
Training and Employee Development. Improving the firm’s stock of labor and developing
potential candidates for leadership positions through training serves both augment labor
19
productivity and prolong the duration of employment.(Kreuger and Rouse, 1984). Furthermore,
by facilitating training workshops for career development, the worker increases one’s
dependence on the firm for his overall development.
Supervisory Competence
Supervisory competence plays an important role in turnover outcomes because (a) supervisors
have a degree of control of the work by improving structures that can improve work conditions,
(b) supervisors provide feedback to employees thereby has the ability to dictate work behavior
outcomes and (c) supervisors have control over the rewards system and job security of its
employees (Krackhardt et al, 1981). Providing a positive coaching and counseling experience,
having a good knowledge and understanding the business impacts of team and individual
performance, and the ability to provide an individual career development plan for one’s agents
enables the supervisor to significantly reduce quit rates. Furthermore, when supervisors are
perceived to initiate structure, set goals, assist with problem- solving, provide social and material
support and give feedback on job performance, their subordinates experience lower ambiguity,
hence greater satisfaction with their job (O’ Driscoll and Beehr, 1994).
Managerial Competence
The macro-level of firm decision-making made by the upper management also creates a
significant impact on employee productivity and job turnover. When the targeted performance
goals set by the upper management are unrealistic or inconsiderate (meaning that the goals set
needs to met at the cost higher employee burnouts and higher job stress combined a more strict
performance monitoring, regardless of its effect on employee morale), higher quit rates are very
likely to occur. In addition, if the promotion selection is clearly based the measurable and
reliable performance metrics, then turnover rates will be moderated or even lessen (Bishop,
1990). Furthermore, if the management clearly explains the reason for the promotion of selected
employees, then the post-rejection effects such as low morale, frustration, and job quitting would
also be moderated (Lam and Schaubroeck, 2000).
Worker Attributes
20
The worker attributes are intrinsic properties of the employee that can significantly alter the
effects of extrinsic variables (such as wage changes or changes in HR practices) on the turnover
decisions of workers.
The first attribute is age. The young worker will have higher probabilities of quitting due to the
constant effort to search for the “ideal” fit that suits his personality, current skills and even
lifestyle, and anything that meets the current satisfaction. As the worker ages, temporary
satisfiers are eventually replaced by the desire to look for the work that provides long term
financial rewards and the sense of stability in staying in that particular work. Hence, age appears
to be a deterring factor in the worker’s decision to quit (Borjas, 2000).
Gender also affects turnover outcomes. Many studies have shown the significant differences in
job tenures and turnover behavior between men and women. Working women usually have
higher quit rates and therefore have shorter job tenures than men (Ehrenberg and Smith, 2003).
Interrupted careers among women due to child bearing and rearing affect the inflow of human
capital, resulting into lower wages, lower job tenures and higher quit rates.
Education is another factor that affects turnover outcomes. Various studies show that
education can either improve or shorten the job tenure. More educated workers are prone
towards being always on a lookout for jobs that maximizes the individual’s potential. In fact,
they are very confident about being mobile workers because they possess higher levels of skills
that is almost attractive in every labor market (Royalty, 1998). However, higher levels of
education can also lower turnover incidences, provided that the job highly fits the individual and
the job creates a sense of fulfillment. Education therefore goes hand in hand with job matching in
order to effect lower probabilities of turnover (Barron et al, 1993).
The size of the firm can also dictate turnover outcomes. Large firms offer more possibilities
for job transfers and promotions. In addition, large firms generally pay higher wages (Oi, 1991).
This is because larger firms have greater needs for dependable and steady workers because
employees who shirk their duties can pose greater costs on highly interdependent production
process (Ehrenberg and Smith, 2003).
21
Finally, job tenure also affect the worker’s decision to quit. Highly tenured workers are
assumed to already have matched themselves with the work and in fact mastered their work.
Furthermore, improved job tenure oftentimes entail higher wages in the long run (Borjas, 2000).
Therefore, job familiarization out of longer job tenures may impose larger costs of adjustment
from the current to the new one, a cost that is not strong enough to affect the other wage and
non-wage benefits offered outside.
The relationship of the several non-wage factors can be summarized by the diagram below.
Fig 2. Summarized effects on the decision to quit
Job Satisfaction
Day Shift
Shorter travel time
Use of leaves/ enjoying company benefits
HR Practices
Offers Training
Career Development
Reduced
Probability of
Supervisory Competence Quitting
Positive coaching experience
Understands the business
Helps in career development
Management Competence
Explains promotion decisions clearly
Proper selection of promoted employees
CONSEQUENCES OF TURNOVER
Worker Level
The age-earnings profile displays the differences in earnings between workers who have stayed
in their work for a long time as compared to workers who keep on moving. Figure 3.1 obviously
22
shows the large foregone earnings of a worker who always moves. Although a worker may earn
higher in the new than the old one, it may just be enough to offset the costs incurred while being
unemployed and at the same time while looking for a new job. Furthermore, the workers who
stay at their current jobs longer will have a steeper age-earnings profile within any given job.
Figure 3.1
Wage
Stayers
Movers
Age
T1 T2 T3
Source: Borjas, 2000
V. RESEARCH METHOLODGY
Sampling Design
The data will be gathered from the Eastwood Cyberzone area and the Ortigas Cyberzone area.
Both sites are among the major call center zones in Metro Manila. Due to the major time and
cost constraints in conducting this research, the technique to obtain the samples is through the
-cluster sampling and simple random sampling combination. The Ortigas Pasig Cyberzone area
23
and Eastwood Cyberzone will be divided into several clusters. Geographically, the call center
companies are converged into these specific clusters and forms an imaginary triangle
1. Ortigas area beside the MRT Ortigas Station and Unionbank vicinity,
2. Ortigas area within the SM Megamall Discovery Suites vicinity,
3. Ortigas area within the Shangri-la vicinity and Crossings vicinity
SM Megamall- Discovery
Suites
• Ambergris
Solutions
• Enfra USA
• Client Logic
Shaw
Blvd.
MRT-Ortigas Station &
Shangri-la & Crossings
Union Bank
Teleperforamcne
• Convergys
Sykes Asia
• ICT
Sterling Global
• Hellcorp
EDSA_______________________________________________
The Eastwood Cyberpark will also be divided into several clusters

4. Eastwood Cyberpark :Inside the of Eastwood City beside the Marikina River and Fitness
First
5. Eastwood Cyberpark: Located at the heart of Eastwood City, particularly at the
Cybermall building housing several call centers
6. Eastwood Cyberpark: Near the C-5 road particularly the call centers housed at the
Citibank and Epixtar Building
To C-5 Katipunan Ave

27
Citibank Bldg
Citibank NA
E-Telecare
Epixtar Bldg
Epixtar
Marikina
24
River
Marikina River &
Fitness First
Eastwood Cybermall Link2 Support
SITEL Trend Micro
E-Telecare Emerson
Siemens
IBM
The first stage is randomly choosing four (4) of the six (6) clusters, using the Table of Random
Numbers (Appendix E of Lind, Marchal and Wathen, 2003). We look at the first digits of the
random numbers to choose from one to six, with the starting point at any sector of the table.
After the selection of the clusters, sixty samples (60) will be drawn from each cluster. On the
second stage, thirty (30) of the sixty (60) sub-samples will be randomly drawn from each cluster.
The gathering of sample data is further limited since the data collection can hardly penetrate
the specific offices of call centers due to security concerns. In this regard, data will be collected
from the areas where the targeted employees take their breaks. In the Eastwood area, the
respondents are randomly picked from the Starbucks Eastwood City, beside the office elevator in
the Cybermall building, beside 7-11, the Foodstreet area, the Fitness First area, and every
smoking area of the call center agents. In the Ortigas area, the samples will be randomly chosen
from the Robinson’s Equitable Tower, Seattle’s Best Robinson’s Galeria, and McDonald’s
beside the UnionBank Tower. To make the selection of respondents in the clusters random, the
respondents who immediately notice the presence of the surveyor are the ones selected.
Prior to administering the survey, the objectives of the survey will be explained. The
respondents are informed that the survey being completed is related to a graduate thesis. The
samples will be asked to fill out a survey that can be completed in 5-10 minutes. The surveys are
conducted in such a way that the respondents are informed that the survey being completed is
related to a graduate thesis. The respondents must be assured that the survey completed does not
provide an immediate action plan to change their company’s business practices.
25
The initial questions asked in the surveys are questions that profile the respondent’s basic
information such as age, number of months in the current job, and the number of dependents.
This will be followed by a set of questions about their rate of satisfaction and confidence levels
with their current work, the human resources, their supervisors and the management. Their rates
of approval are quantitative measured using a Likered Scale of 1 to 5 (with 1= Strongly
Disagree, 5= Strongly Agree). In the econometric model, it is hypothesized that higher Likered
Scores lowers the probability of quitting given a set of various external offers (such as higher
wages). In addition to the rates of approval, the contingency question (yes or no) of whether to
quit the current job or not will be asked in the survey in order to have the response as a
dependent dummy variable (with 1= YES, I wll resign, and 0= NO, I will not resign).
Empirical Specification of the Model

The empirical application of the job turnover model is with a binary choice model in which the
decision to quit depends on the independent variables. The distribution of the outside offers (in
the form of higher wages) is given by the equation,
Y = α + β 1WAGE + Σ β i CONTROLi + ε i
26
Y = α + β 1WAGE + Σ β i CONTROLi + Σ β j JOBSATi + Σ β k HRSATi
+Σ β L SUPSATi
+Σ β m MGTSATI + + ε i
where i, j, k, L, m = 1, 2, 3 subcategories per index
α = constant
WAGE = wage difference (%) increase being offered outside

CONTROL = the i number of control variables in the regression such as
AGE of the worker in years
GENDER of the employee: 1= if male and 0 = otherwise
TENURE = number of months in the current job
EDUCATION = number of years in school
SIZE = firm size based on the number of employees
DEPEND = the worker’s number of dependents
To measure the effect of the non-wage outside offers on turnover decisions given the current
assessment of their situation with their employer, we have:
Y = α + β 1WAGE + Σ β i CONTROLi + Σ β j JOBSATi + Σ β k HRSATi

+Σ β L SUPSATi
+Σ β m MGTSATi + ε i
where i, j, k, L, m = 1, 2, 3 subcategories per index
Y would have different representations,
YSAT = job- satisfaction improvements offered by the outside firm
YHR = human- resource practice improvements offered by the outside firm
YSUP = supervisory enhancements offer by the outside firm

YMGT = upper management enhancements offered by the outside firm
α = constant
JOBSAT = Job satisfaction index with i number of questions (agents score is 1 to 5 with 1= poor and 5=
27
excellent)
HRSAT = Human Resources Practices Index with i number of questions (index with i number of
questions ; agents score the variable with 1 to 5 with 1= poor and 5= excellent)
SUPSAT = Supervisory Confidence Index with i number of questions (index with i number of
MGTSAT = Management Confidence Index with i number of questions (index with i number of
CONTROL = the i number of control variables in the regression such as

AGE of the worker in years
GENDER of the employee: 1= if male and 0 = otherwise
TENURE = number of months in the current job
EDUCATION = number of years in school
SIZE = firm size, based on the number of employees
DEPEND = the worker’s number of dependents
To measure the effect of the shorter travel (offered by the outside firm) on turnover decisions
given the current assessment of their situation with their employer, we have:
Y = α + + β 1TRAVEL + Σ β i CONTROLi + Σ β j JOBSATi + Σ β k HRSATi

+Σ β L SUPSATi
+Σ β m MGTSATi + ε i
where TRAVEL = travel time of the worker going to work in minutes
The a priori results are given in the table below

EXPECTED SIGN
REGRESSORS (Probability of Quitting)
28
Outside Wage Increases Offered (10%, 20%, 30%, 40% and 50%) Positive
Control Variables
Age Negative
Gender Negative
Number of Dependents Negative
Job Tenure Negative
Education (in years) Positive
Travel Time (in minutes) Positive
Non-Wage Factors
JOB SATISFACTION INDEX
A. Job match: can use what has been learned in college Negative
B. Working on night shift Negative
C. Work Benefits: can use leaves for rest or leisure Negative
HR Practices
A. Adequate Provision of Training Workshops for Career Development Negative
B. Presence of Employee Voice Negative
Supervisory Competence
A. Delivers coaching and counseling with a positive experience Negative
B. Supervisor has a hard time explaining the business impact of agent performance Positive
C. Supervisor cannot help his agents towards career growth Positive

Managerial Competence
A. Selects employees for promotion on performance Negative
B. Management cannot properly explains how the decision for promotion was made Positive
60
C. Management cannot set realistic targeted performance for the workers Positive
50
60
40 VI. DATA FOR
50
TENURE
DESCRIPTIVE
30 STATISTICS
40
TENURE
20
30
10
20
0
10 16 20 24 28 32 36 40 44
29
0 AGE
0 500 1000 1500 2000 2500
SIZE
Figure 7.1 Tenure and Size Figure 7.2 Tenure and Age
60
50
40
TENURE
30
20
10
0
11 12 13 14 15 16 17 18 19 20
SCHOOL
Figure 7.3 Tenure and Years of Schooling
Table 7.2
Table 7.1 Size and Job Satisfaction
Size and Tenure Average Average Average
Size (number Score Score Score
Size (number of Average Tenure (in of employees) JS1 JS2 JS3
employees) months)
100- 350 2.72 3.20 3.44
100- 350 4.61
400- 750 3.16 3.55 3.42
400- 750 5.98
800- 1100 8.04 800- 1100 3.52 3.52 3.28
1200- 2000 28.41 1200- 2000 3.10 3.54 2.92
Table 7.3 Size and Human Resources Competence

Average Average Average
Size (number Score Score Score
of employees) HR1 HR2 HR3
100- 350 3.00 3.00 3.36
30
400- 750 3.16 3.19 2.97
800- 1100 2.80 3.32 3.24
1200- 2000 3.10 3.10 3.62
Table 7.4
Size and Supervisory Competence
Size Average Average Average
(number of Score Score Score
employees) SUP1 SUP2 SUP3
100- 350 3.24 2.84 3.16
400- 750 3.26 2.48 2.97
800- 1100 3.32 2.20 2.48
1200- 2000 3.79 2.15 2.46
Table 7.5
Size and Management Competence
Size (number of Average Score Average Score Average Score
employees) MGT1 MGT2 MGT3
100- 350 2.80 3.00 3.12
400- 750 3.29 3.29 3.35
800- 1100 2.76 3.08 3.28
1200- 2000 3.49 2.26 2.28
Table 7.7 Age and Job Satisfaction

Table 7.6 Age and Tenure
Average Tenure Score Score Score
Age (in months) Age JS1 JS2 JS3
20- 24 9.76
20- 24 3.33 2.54 2.72
25-29 16.61
30-35 15.15 25-29 3.66 2.13 2.66
36 yrs and older 6.80 30-35 3.00 2.85 3.31
36 yrs & older 3.20 2.80 2.40
Table 7.8 Table 7.9

Age and Human Resource Competence Age and Supervisory Competence
Average Average Average Average Average Average
Score Score Score Score Score Score
Age HR1 HR2 HR3 Age SUP1 SUP2 SUP3
20- 24 3.13 3.07 3.41 20- 24 3.33 2.54 2.72
25-29 2.96 3.18 3.23 25-29 3.66 2.13 2.66
30-35 2.92 3.23 3.23 30-35 3.00 2.85 3.31
36 yrs &
above 3.20 3.40 3.60 36 yrs & older 3.20 2.80 2.40
Table 7.10
Age and Management Competence
Average
Score Average Score Average Score
Age MGT1 MGT2 MGT3
31
20- 24 3.26 2.67 2.80
25-29 3.05 2.84 3.00
30-35 3.23 3.31 3.00
36 yrs & older 2.80 3.40 3.40
Table 7.11
Mean Results on All Genders
Variable ALL Female Male

AGE 26.10 25.98 26.22
GENDER - 0.00 1.00
SIZE 879.48 810.00 948.97
DEPEND 0.85 0.92 0.78
TENURE 13.41 12.73 14.10
SCHOOL 14.97 14.97 14.97
TRAVEL 53.10 51.28 54.92
JS1 3.13 3.17 3.08
JS2 3.47 3.27 3.67
JS3 3.23 3.15 3.32
HR1 3.03 2.98 3.08
HR2 3.15 2.97 3.33
HR3 3.32 3.28 3.35
SUP1 3.44 3.22 3.67
SUP2 2.39 2.45 2.33
SUP3 2.74 2.70 2.78
MGT1 3.14 2.93 3.35
MGT2 2.85 2.97 2.73
MGT3 2.94 2.92 2.97
Table 7.13
Table 7.12 Schooling and Job Satisfaction Index Scores
Schooling and Tenure Average Average Average
Average Score Score Score
Tenure (in Schooling JS1 JS2 JS3
Schooling months) 12-14 yrs 3.00 3.45 3.35
12-14 yrs 11.77
15-17 yrs 3.30 3.50 3.18
15-17 yrs 14.10 18 yrs &
18 yrs & above 19.19 above 2.78 3.33 2.89
Table 7.15
Table 7.14 Schooling and Supervisor Competence Index
Schooling and HR Index Scores
Mean Mean Average Average Average
Mean Score Score Score Score Score Score
Schooling HR1 HR2 HR3 Schooling SUP1 SUP2 SUP3
12-14 yrs 3.33 2.49 2.80
15-17 yrs 3.55 2.36 2.73
32 18 yrs & above 3.44 2.00 2.44
12-14 yrs 3.00 3.02 3.24
15-17 yrs 3.14 3.30 3.32
18 yrs &
above 2.56 3.00 3.78
Table 7.16
Schooling and Management Competence Index

Score Score Score
Schooling MGT1 MGT2 MGT3
12-14 yrs 3.09 2.91 3.18
15-17 yrs 3.04 2.86 2.80
18 yrs & above 4.11 2.44 2.33
INTERPRETATION OF RESULTS
Tenure
Based from Figure 7.1 and Table 7.1, job tenures tend to be higher as the size of the firm
increases. Firm size indicates general stability that assures longer employee- employer
relationships. In addition, Tables 7.2 and 7.3 show that workers in larger firms gave better
feedback to their employer as expressed by better scores in job satisfaction (JS), HR competency
(HR), and supervisory and upper management competency indexes (SUP and MGT).
Age
From Figures 7.2 and Table 7.6, job tenures tend to be lower for the younger age brackets (20-
24 yrs) and the oldest age bracket (36 yrs and above). Graphically, the age and tenure
relationship shows an inverted U- shaped curve. In terms of job satisfaction, workers in the 25-
29 yrs age bracket gave the best scores in job match between current profession and the related
degree in college (JS1 in Table 7.7). At the same time the 25- 29 yrs age bracket had the lowest
tolerance of working at night (JS3 in Table 7.7). People in the 30- 35 yrs age bracket had the
highest dissatisfaction in terms of not being to take enough time off for leisure (JS3 scores in
Table 7.7). In addition, the workers in the 36 yrs & above age bracket gave the best scores on
their supervisors overall competence (SUP1- SUP3 in Table 7.9) but gave the lowest scores on
the managerial competence of the upper management (MGT1- MGT3 in Table 7.10). This may
33
indicate the vast experience of these older workers allow them to identify and compare the types
of management that sustains the high morale and performance of its employees.
Gender
Based from Table 7.11, both male and female workers nearly have the same average ages.
However, male workers are employed at relatively larger firms. This implicitly argues that larger
firms employ dependable and steady workers that male labor can offer more than the female
labor (Zabel, 1993). Better scores of men in JS2 shows that men obviously are more tolerant to
the hazards of working at night. In terms of HR competence, female scores in the employee
voice index (HR2) are lower than men, showing that women are more aggressive in voicing out
their job concerns than men. In the supervisory competence category, both male and female
workers gave good feedback on their supervisor’s business and leadership knowledge and the
effort to help in employee career growth (SUP2 and SUP3). In terms of management
competence, both genders gave neutral scores in categories (MGT- MGT 3).
Schooling
Figure 7.3 shows the graphical relationship between years of schooling and job tenure,
resembling an inverted U- shaped curve (if plotting the extreme points of the scattered diagram).
Based from Table 7.12, average job tenure is higher for workers with more years of schooling.
The reason is that several of the workers in the 18 yrs schooling & above bracket are taking up
their post-graduate degrees (MBA and MA in Education) while working in the call center. From
Table 7.14, the more schooled workers in the 18 yrs schooling & above category registered
lowest scores in job match (JS1) between current profession and the related college degree.
Compared to the other years of schooling brackets, the former surprisingly gave very good
scores in the supervisory and upper management competence indexes (Table 15 & 7.16).
Overall Mean Scores

From the first column of Table 7.11, the mean age of the sample group was 26 years old and
were employed at firms that have an average employee size of 880 workers. The average tenure
of the samples was 13 months and generally underwent close to 15 years of schooling. The
34
average travel time of the workers in the sample was close to an hour (53 minutes) indicating
that workers reside farther from the central call center cyber-districts of Ortigas and Eastwood.
Moreover, the samples gave neutral to good scores in almost all of the indexes. Looking into the
probit regression results (in the next section of this paper) however will show that although
workers gave these decent scores, these workers will still be attracted to outside firms that offers
better wage and non-wage benefits.
VII. PROBIT REGRESSION: DATA & RESULTS
table 8.1 PROBIT REGRESSION RESULTS: The new company offers a WAGES INCREASE
Variable Equation (1) Equation (2)
35
-2.509 -2.240
C (0.746) (0.998)
WAGE 0.067** 0.076**
(0.005) (0.006)
AGE 0.022 0.027
(0.016) (0.017)
GENDER 0.192 0.168
(0.122) (0.147)
SIZE -0.0004** -0.00031**
(0.0002) (0.00018)
0.024 -0.013
DEPEND (0.055) (0.062)
0.007 0.007
TENURE (0.006) (0.007)
-0.021 -0.024
SCHOOL (0.041) (0.046)
-0.115*
JS1 (0.063)
-0.031
JS2 (0.075)
-0.043
JS3 (0.056)
-0.218**
HR1 (0.076)
-0.044
HR2 (0.089)
0.019
HR3 (0.073)
-0.014
SUP1 (0.070)
-0.103
SUP2 (0.066)
0.332**
SUP3 (0.068)
0.046
MGT1 (0.059)
-0.164**
MGT2 (0.080)
0.126*
MGT3 (0.070)
S.D. dependent var 0.4903 0.4903
Akaike info criterion 0.9695 0.8972
Schwarz criterion 1.0281 1.0438
Hannan-Quinn criter. 0.9923 0.9543
Avg. log likelihood -0.4714 -0.4153
McFadden R-squared 0.2996 0.3830
Total obs 600 600
NOTE: * indicates significant at 10% level; ** significant at 5% level; Standard errors are in parenthesis
Table 8.2 PROBIT REGRESSION RESULTS: The new company offers a WAGE INCREASE
YWAGE10 YWAGE20 YWAGE30 YWAGE40 YWAGE50
(10% salary (20% salary (30% salary (40% salary (50% salary
increase) increase) increase) increase) increase)
Variable Equation (1) Equation (2) Equation (3) Equation (4) Equation (5)
-3.778 -1.872 0.478 1.293 -1.637
C (10.217) (2.521) (1.991) (1.960) (2.646)
36
0.358 0.088* 0.037 -0.026 0.063
AGE (0.314) (0.047) (0.035) (0.032) (0.055)
GENDER -0.006 -0.0005 -0.0001 -0.0001 -0.050
(0.005) (0.0005) (0.0004) (0.0003) (0.375)
SIZE -0.165 0.436 0.222 -0.0005
- (0.388) (0.305) (0.282) (0.0004)
1.810 -0.072 -0.131 -0.056 0.236
DEPEND (1.490) (0.193) (0.144) (0.115) (0.166)
-0.272 0.020 0.001 0.004 0.012
TENURE (0.348) (0.019) (0.014) (0.014) (0.019)
-0.704 0.019 -0.022 -0.034 -0.003
SCHOOL (0.840) (0.116) (0.088) (0.095) (0.123)
-2.672 -0.482** -0.061 -0.044 0.255
JS1 (1.795) (0.172) (0.127) (0.126) (0.168)
1.385 0.154 -0.124 -0.013 0.092
JS2 (1.067) (0.198) (0.153) (0.145) (0.196)
-0.981 -0.024 -0.097 -0.002 0.152
JS3 (0.759) (0.140) (0.113) (0.110) (0.159)
-0.789 -0.112 -0.177 -0.400** -0.317
HR1 (1.394) (0.198) (0.148) (0.154) (0.210)
3.192 -0.133 -0.317** 0.046 -0.313
HR2 (2.991) (0.232) (0.187) (0.180) (0.256)
-1.343 -0.009 0.102 0.008 0.363**
HR3 (1.129) (0.194) (0.144) (0.145) (0.217)
-0.702 -0.043 -0.122 0.078 0.178
SUP1 (1.260) (0.171) (0.143) (0.141) (0.173)
-1.847 -0.012 -0.102 -0.119 -0.284
SUP2 (2.137) (0.148) (0.129) (0.135) (0.217)
2.926 0.466** 0.287** 0.378** 0.536**
SUP3 (2.512) (0.168) (0.130) (0.141) (0.229)
1.339 -0.128 0.054 0.129 -0.161
MGT1 (1.072) (0.152) (0.121) (0.116) (0.155)
-1.904 -0.323 -0.082 -0.088 -0.282
MGT2 (1.982) (0.199) (0.155) (0.159) (0.222)
1.533 0.072 0.162 0.094 0.217
MGT3 (1.781) (0.170) (1.40) (0.138) (0.186)
S.D. dependent var 0.2189 0.3666 0.4790 0.4920 0.3666
Akaike info criterion 0.4385 0.9452 1.3585 1.4544 0.9870
Schwarz criterion 0.8567 1.3866 1.7999 1.8958 1.4283
Hannan-Quinn criter. 0.6083 1.1244 1.5377 1.6336 1.1662
Avg. log likelihood -0.0693 -0.3143 -0.5209 -0.5689 -0.3352
McFadden R-squared 0.6511 0.2807 0.1954 0.1547 0.2329
Total obs 120 120 120 120 120
Table 8.3 PROBIT REGRESSION RESULTS: The new company offers a BETTER JOB
SATISFACTION
YSAT3
YSAT1 YSAT2 (non-wage
(better job match) (Day Shift) benefits)
Equation Equation Equation Equation Equation Equation
Variable (1) (2) (3) (4) (5) (6)
C 5.763 4.856 4.311 3.102 0.900 1.197
(2.165) (2.926) (2.150) (2.744) (1.988) (2.543)
37
AGE 0.006 0.068 0.011 -0.007 -0.018 -0.057
(0.045) (0.062) (0.046) (0.054) (0.041) (0.052)
GENDER 0.247 0.498* -0.298 -0.493 -0.508 -0.571
(0.330) (0.455) (0.342) (0.430) (0.333) (0.411)
SIZE -0.0007 -0.001 -0.0004 -0.0002 0.0002 0.001
(0.0005) (0.001) (0.0005) (0.0006) (0.001) (0.001)
DEPEND -0.086 -0.122 0.084 0.083 -0.0004 -0.011
(0.163) (0.231) (0.153) (0.190) (0.161) (0.214)
TENURE 0.008 0.018 -0.002 -0.011 -0.022 -0.041**
(0.019) (0.030) (0.019) (0.028) (0.021) (0.024)
SCHOOL -0.194* -0.253* -0.056 -0.017 -0.212** -0.292**
(0.109) (0.144) (0.107) (0.124) (0.108) (0.133)
JS1 -0.804** -0.920** -0.501** -0.493** 0.245 0.391**
(0.155) (0.202) (0.159) (0.185) (0.160) (0.196)
JS2 -0.2712* -0.237 -0.793** -0.721** -0.289* -0.645**

(0.158) (0.223) (0.187) (0.224) (0.168) (0.245)
JS3 -0.0640 -0.169 -0.020 -0.005 0.990** 1.244**
(0.125) (0.156) (0.128) (0.149) (0.149) (0.217)
HR1 0.200 -0.150 -0.004
(0.258) (0.205) (0.232)
HR2 -0.601** -0.198 0.400
(0.297) (0.217) (0.291)
HR3 0.034 -0.029 0.217
(0.253) (0.237) (0.201)
SUP1 -0.028 0.227 -0.148
(0.208) (0.204) (0.209)
SUP2 0.288 0.242 -0.004
(0.188) (0.176) (0.194)
SUP3 0.470** 0.289 0.317
(0.206) (0.178) (0.194)
MGT1 0.353 0.053 -0.196
(0.230) (0.173) (0.197)
MGT2 -0.2083 -0.045 0.226
(0.250) (0.245) (0.241)
MGT3 -0.2025 -0.117 -0.243
(0.212) (0.199) (0.192)
S.D. dependent var 0.4247 0.4247 0.4193 0.4193 0.5015 0.5015
Akaike info criterion 0.8710 0.8299 0.8313 0.8965 0.8784 0.8914
Schwarz criterion 1.1033 1.2712 1.0636 1.3379 1.1107 1.3327
Hannan-Quinn criter. 0.9654 1.0091 0.9256 1.0758 0.9728 1.0706
Avg. log likelihood -0.3522 -0.256596 -0.3323 -0.2899 -0.3559 -0.2873
McFadden R-squared 0.3517 0.527684 0.3767 0.4562 0.4857 0.5847
Total obs 120 120 120 120 120 120
Table 8.4 PROBIT REGRESSION RESULTS: The new company offers BETTER
HUMAN RESOURCES PRACTICES
YHR2
YHR1 (Employee YHR3
(Presence of Career Involvement & (Timely given:
Dev’t Program) Participation) Bonuses & Incentives)
Variable Equation (1) Equation (2) Equation (3) Equation (4) Equation (5) Equation (6)
C 5.478 -13.854 3.712 3.082 3.229 2.998
(4.280) (11.774) (2.006) (3.007) (2.128) (3.159)
38
0.009 0.017 -0.006 -0.022 -0.034 -0.083
AGE (0.048) (0.179) (0.044) (0.064) (0.047) (0.062)
0.048 0.179 0.044 0.064 0.047 0.062
GENDER 0.952* 0.003 0.517 0.097 0.405 0.317
(0.554) (0.03) (0.343) (0.469) (0.343) (0.458)
SIZE -0.0004 -0.001 -0.0004 0.0006 0.0009
(0.0008) - (0.001) (0.001) (0.0005) (0.0006)
DEPEND 0.175 1.114 -0.013 -0.215 0.062 0.013
(0.213) (0.905) (0.150) (0.195) (0.143) (0.183)
TENURE -0.021 -0.059 0.032 0.035 -0.045* -0.055*
(0.031) (0.141) (0.021) (0.028) (0.024) (0.032)
SCHOOL 0.171 1.674 -0.020 -0.057 0.033 0.080
(0.231) (1.201) (0.102) (0.125) (0.111) (0.134)
JS1 -1.138 -0.289 0.214
(1.039) (0.192) (0.215)
JS2 -1.461 -0.078 -0.348
(1.104) (0.224) (0.276)
JS3 1.229 0.120 0.396**
(0.796) (0.163) (0.194)
HR1 -2.491** -9.182* -0.340** -0.536** -0.366* -0.505**
(0.554) (5.374) (0.146) (0.203) (0.165) (0.212)
HR2 -0.327 -2.173 -0.839** -1.020** -0.136 -0.074
(0.296) (1.750) (0.194) (0.282) (0.183) (0.230)
HR3 -0.080 0.918 -0.112 -0.102 -0.744* -0.845
(0.243) (0.937) (0.174) (0.214) (0.187) (0.230)
SUP1 1.006 0.062 0.036
(0.961) (0.218) (0.226)
SUP2 1.611 -0.136 -0.142
(1.218) (0.202) (0.209)
SUP3 1.632* 0.422** 0.471**
(0.983) (0.174) (0.196)
MGT1 2.116 0.313 -0.183
(1.535) (0.204) (0.199)
MGT2 -0.157 0.284 -0.104
(0.641) (0.250) (0.250)
MGT3 0.922 0.070 -0.004
(0.930) (0.210) (0.219)
S.D. dependent var 0.4920 0.4920 0.4484 0.4484 0.4396 0.4396

Total obs 120.0000 120 120 120 120 120
Table 8.5 PROBIT REGRESSION RESULTS: The new company offers BETTER SUPERVISORS
YSUP3
YSUP1 YSUP2 (Provides
(Positive Coaching (Business & Leadership Individual
Experience) Knowledge) Dev’Program)
Equation Equation
Variable Equation (1) (2) Equation (3) Equation (4) (5) Equation (6)
1.282 13.360 -1.120 -0.314 -1.569 -0.190
C (3.323) (6.973) (2.772) (3.354) (2.560 (3.014)
3.323 6.973 2.772 3.354 2.560 3.014
39
GENDER -0.780* -1.938** -0.714 -0.953 0.067 -0.648*
(0.466) (0.895) (0.447) (0.532) (0.047) (0.480)
AGE 0.120* 0.205** 0.072 0.078 -0.748* 0.102
(0.063) (0.100) (0.053) (0.059) (0.415) (0.059)
SIZE -0.0001 -0.0013 -0.0005 -0.0005* 0.0002 0.0001
(0.0007) (0.0013) (0.0006) (0.0007) (0.0006) (0.001)
DEPEND -0.653** -0.692 -0.280 -0.358 -0.062 -0.180
(0.321) (0.469) (0.232) (0.284) (0.205) (0.241)
TENURE -0.003 0.027 0.024 0.029 -0.010 0.003
(0.026) (0.041) (0.025) (0.029) (0.025) (0.031)
SCHOOL -0.217 -0.900** -0.100 -0.160 -0.054 -0.106
(0.196) (0.431) (0.149) (0.189) (0.129) (0.148)
JS1 -0.320 -0.171 0.139
(0.308) (0.240) (0.232)
JS2 -0.370 0.008 -0.437
(0.393) (0.293) (0.344)
JS3 -0.754** -0.128 -0.095
(0.344) (0.217) (0.179)
HR1 -0.468 0.047 0.067
(0.477) (0.285) (0.245)
HR2 1.622** 0.188 -0.006
(0.767) (0.339) (0.341)
HR3 -0.162 -0.106 -0.032
(0.156) (0.276) (0.245)
SUP1 -1.051** -2.193** -0.573** -0.635** -0.513* -0.717**
(0.272) (0.695) (0.212) (0.267) (0.193) (0.287)
SUP2 0.794** 1.830** 1.534** 1.631** -0.105 -0.220
(0.269) (0.702) (0.343) (0.402) (0.228) (0.265)
SUP3 0.150 0.250 -0.447** -0.623** 1.067* 1.066**
(0.193) (0.301) (0.249) (0.294) (0.212) (0.260)
MGT1 -0.093 -0.026 -0.020
(0.280) (0.206) (0.209)
MGT2 -0.012 0.161 0.345
(0.337) (0.296) (0.260)
MGT3 -0.212 0.159 -0.057
(0.287) (0.233) (0.202)
S.D. dependent var 0.4703 0.4703 0.4703 0.4703 0.5010 0.5010
Total obs 120 120 120 120 120 120
Table 8.6 PROBIT REGRESSION RESULTS: The new company offers BETTER
MANAGEMENT
YMGT1 YMGT2 YMGT3
(Performance-based (Promotion Decision- (Realistic Performance
promotion) Making) Goals)
Equation Equation Equation Equation Equation Equation
Variable (1) (2) (3) (4) (5) (6)
C -0.977 -2.951 -3.763 -3.929 -1.802 0.117
(2.002) (2.917) (2.321) (3.430) (2.346) (3.791)
AGE -0.003 0.013 -0.067 -0.081 -0.023 0.037
(0.046) (0.057) (0.054) (0.073) (0.048) (0.080)
40
GENDER -0.478 -0.963* -0.306 -0.203 -0.749 -1.228*
(0.381) (0.536) (0.429) (0.694) (0.462) (0.706)
SIZE 0.0009 0.0013* 0.0015** 0.0018** 0.0013** 0.0015*
(0.0006) (0.0008) (0.0006) (0.0009) (0.0006) (0.0008)
DEPEND -0.201 -0.330 0.030 0.078 0.042 -0.429
(0.173) (0.210) (0.180) (0.276) (0.197) (0.340)
TENURE -0.009 0.009 -0.011 0.012 -0.016 0.025
(0.022) (0.028) (0.025) (0.036) (0.022) (0.033)
SCHOOL 0.022 0.050 0.025 0.116 -0.079 -0.024
(0.116) (0.129) (0.134) (0.193) (0.142) (0.184)
JS1 -0.455** -0.386 -1.052**
(0.224) (0.257) (0.391)
JS2 0.315 -0.011 -0.078
(0.255) (0.289) (0.329)
JS3 0.329 -0.185 0.076
(0.214) (0.245) (0.257)
HR1 -0.060 0.010 -0.046
(0.231) (0.265) (0.323)
HR2 0.173 0.083 0.246
(0.269) (0.342) (0.411)
HR3 -0.231 -0.135 -0.630
(0.256) (0.333) (0.422)
SUP1 0.069 -0.570** -0.238
(0.216) (0.280) (0.263)
SUP2 0.006 0.596** -0.136
(0.185) (0.280) (0.267)
SUP3 0.284 -0.398 0.498*
(0.192) (0.277) (0.287)
MGT1 -0.662** -0.904** -0.168 -0.172 -0.348** -0.530*
(0.153) (0.225) (0.157) (0.224) (0.168) (0.271)
MGT2 0.469** 0.408* 1.152** 1.799** 0.185 -0.202
(0.181) (0.233) (0.241) (0.503) (0.220) (0.337)
MGT3 0.371** 0.462** 0.359* 0.423 1.242** 1.818*
(0.166) (0.211) (0.190) (0.313) (0.261) (0.444)
S.D. dependent var 0.4996 0.4996 0.4951 0.4951 0.5015 0.5015

Total obs 120 120 120 120 120 120
Table 9.1 PROBIT REGRESSION RESULTS: The new company offers TRAVEL TIME REDUCTION
Equation Equation
Variable (1) (2)
C -1.9783 -2.599
(0.509) (0.901)
TRAVEL 0.0289** 0.033
(0.005) (0.005)
AGE 0.0179 0.017
(0.018) (0.020)
GENDER -0.0447 -0.059
(0.152) (0.183)
41
SIZE 0.00001 0.00024
(0.0002) (0.00022)
DEPEND -0.0273 -0.043
(0.035) (0.048)
TENURE 0.0008 0.006
(0.008) (0.009)
SCHOOL -0.0003 0.004
(0.008) (0.009)
JS1 -0.077
(0.079)
JS2 -0.232**
(0.098)
JS3 0.013
(0.072)
HR1 -0.132
(0.093)
HR2 0.117
(0.109)
HR3 -0.034
(0.095)
SUP1 0.050
(0.088)
SUP2 0.216**
(0.080)
SUP3 0.032
(0.085)
MGT1 0.013
(0.075)
MGT2 0.023
(0.105)
MGT3 0.127
(0.090)
S.D. dependent var 0.4368 0.4368
Akaike info criterion 1.0595 1.0121
Schwarz criterion 1.1459 1.2280
Hannan-Quinn criter. 1.0938 1.0979
Avg. log likelihood -0.5075 -0.4505
McFadden R-squared 0.1070 0.2074
Total obs 360 360
Table 9.2 PROBIT REGRESSION RESULTS: The new company offers

TRAVEL TIME REDUCTION
Variable 10% travel reduction 25% travel reduction 50% travel reduction
C -4.646 -0.041 0.927
(3.672) (2.275) (1.889)
AGE 0.062 -0.011 0.026
(0.047) (0.042) (0.032)
SIZE -0.365 0.006 0.0004
(0.467) (0.334) (0.272)
GENDER -0.0001 0.0002 0.0004
(0.0005) (0.0004) (0.0003)
DEPEND -0.100 0.043 0.006
(0.211) (0.144) (0.113)
42
TENURE -.100 0.043 0.006
(0.211) (0.144) (0.113)
SCHOOL -0.009 -0.032 -0.133
(0.177) (0.105) (0.088)
JS1 -0.121 -0.232 0.061
(0.193) (0.142) (0.122)
JS2 -0.292** -0.170 -0.288**
(0.283) (0.176) (0.150)
JS3 0.095 -0.111 0.048
(0.179) (0.132) (0.108)
HR1 -0.231 -0.025 -0.197
(0.264) (0.170) (0.141)
HR2 0.392 0.00003 0.126
(0.304) (0.203) (0.165)
HR3 -0.066 0.029 -0.074
(0.268) (0.170) (0.137)
SUP1 0.192 0.038 0.034
(0.235) (0.154) (0.133)
SUP2 0.687 0.155 0.111
(0.285) (0.139) (0.123)
SUP3 -0.364 0.139 0.120
(0.292) (0.147) (0.123)
MGT1 -0.0003 -0.014 0.033
(0.211) (0.136) (0.113)
MGT2 0.125 -0.046 -0.044
(0.275) (0.174) (0.145)
MGT3 0.333 0.158 0.063
(0.245) (0.150) (0.130)
S.D. dependent var 0.3224 0.3886 0.5010
Akaike info criterion 0.7873 1.1266 1.5371
Schwarz criterion 1.2287 1.5679 1.9785
Hannan-Quinn criter. 0.9666 1.3058 1.7164
Avg. log likelihood -0.2353 -0.4050 -0.6102
McFadden R-squared 0.3467 0.1500 0.1168
Total obs 120 120 120
PROBIT REGRESSION INTERPRETATION OF RESULTS
Wage Offers
Based from Table 8.1, equations 1 and 2 shows that higher wage offers (WAGE) by outside
firms significantly increases the worker’s decision to quit (YWAGE) at 5% level. Going back to
equation 1, the size of the firms (SIZE) significantly reduces the worker’s decision to quit,
indicating that firm stability can significantly deter quit behavior. Incorporating the other
variables as in equation 2 shows that firm size loses its significance. However, better job matches
43
between the work and college degree (JS1), the presence of a career development program by the
company’s HR and its supervisors (HR1 and SUP3), and the management’s good promotion
decision making (MGT2) and realistic goal setting (MGT3)—all these factors help in
significantly deterring the worker’s decision to quit his current job given attractive wage rates
offered outside. The significant effect of number of years of schooling on quit decision may be
attributed to the fact that the samples show prolonged studying to earn a postgraduate degree
makes the part-time student workers stick to the current job until they have completed their post-
graduate degrees (see Table 7.12).
Table 8.2 looks into the turnover behavior at each rate of wage increase offered by outside
firms. At 10 percent salary increase offer (see equation 1 where the GENDER variable was
dropped to prevent the singular covariance error in the probit regression), there are no
significant factors that can either deter or encourage the worker to quit. At 20 percent salary
increase offer, job match (JS1) and the supervisor’s career- pathing ability (SUP3) are significant
deterrents of quit decisions while age (AGE) significantly increases the probability of quitting.
At 30 percent wage offer, the supervisor’s career- pathing ability (SUP3) and the presence of
employee voice (HR2) can significantly decrease the probability of quitting. At 40 percent wage
offer, the supervisor’s career- pathing ability (SUP3) and the presence of the company’s career
development program (HR1) significantly deter quit behavior. At 50 percent wage offer, the
firm’s timeliness in giving out work incentives and bonuses (HR3) and the supervisor’s career-
pathing ability (SUP3) significantly discourages the tendency to quit the current job.
Job Satisfiers
Based from Table 8.3, equation 1 shows that an outside firm offering a job that matches with
the worker’s course in college (YSAT1) encourages the worker to quit the more the worker is
dissatisfied with the current job match (JS1). From equation 2, the probability of quitting
decreases, the more the worker is satisfied with the job match (JS1), the more the worker is able
to see an employee voice in the company (HR2), and the more worker sees his supervisor
helping to build a career path for him (SUP3).
44
Given an outside firm that offers a daytime shift (YSAT2), equations 3 and 4 shows that the
worker will not quit his job the more the worker can tolerate the hazard of the “graveyard shift”
(JS2) and is satisfied with the job match of his current work with his college degree (JS1).
Based on equations 5 and 6, better scores in the tolerance of the night shift (JS2), more years of
schooling (SCHOOL) and job tenure (TENURE) significantly reduces the worker’s chances of
quitting the current job, but the probability will increase if the worker finds it hard to get leisure
time or time-off from work (JS3).
Better HR practices and systems

Based from Table 8.4, the worker will significantly be discouraged from leaving the company
given an external offer of a career development program in the outside firm (YHR1) if the
worker sees the same career development plan set up in his current employer (HR1) and the quit
decision is more likely of the worker were male (GENDER), all based from equation 1. In the
second equation, better scores in HR1 supported by the supervisor’s ability to create a career
path for the worker (SUP3) will significantly deter the worker’s decision to quit.
Suppose there is an outside offer that provides an avenue for employee involvement in the
management’s decision making and a voice for grievances (YRH2). From equation 3 and 4, the
chances that the worker will quit decreases if the worker sees the presence of career development
plan from his current employer (HR1), sees same voice and employee involvement mechanism
in his current company (HR2), and the supervisor can offer help in the employees career growth
in the company (SUP3).
Based from equations 5 and 6, suppose that the worker is offered by the outside firm an HR
system in which the performance incentives and bonuses are given on time (YHR3). The worker
will be deterred from quitting if he is already tenured in his current job (TENURE), if he sees a
career development plan set up by his current employer (HR1), sees the same timeliness of
giving the incentives and bonuses in his current employer (HR3), and is able to find it easy to
take time-off from work (JS3).
Competent Supervisors
45
From Table 8.5, suppose there is an outside firm that has a set of supervisors who can deliver
effective coaching on performance improvement (YSUP1). Given that offer, equation 1 shows
that the worker will significantly be discouraged from leaving if the worker is male and has an
increasing number of dependents (DEPEND), plus the fact that he sees his supervisor as an
effective coach (SUP1). The worker will have a higher probability of leaving as the worker is
older (AGE) and that the worker sees the lack of business insight from his supervisor (SUP2).
From equation 2, the worker will be discouraged from resigning given the said offer with the
same conditions as in the first equation and that the worker is more schooled (SCHOOL).
Suppose that the worker is offered by an outside firm with a set of supervisors who have good
business and leadership backgrounds (YSUP2). From equation 3, the probability that the worker
would quit given the offer will increase if the worker agrees that his current supervisor has poor
management and leadership fundamentals (SUP2), and the probability of quitting will decrease if
the supervisor delivers effective coaching (SUP1) and if the supervisor helps in the workers
career growth in the company (SUP3). Incorporating all other variables as in equation 4 shows
that all the supervisory competence index scores will significantly affect the worker’s decision to
quit but being male in gender significantly reduces the probability of quitting.
In another hypothetical offer by an outside firm such that the worker is provided a set of
supervisors who can help in building career path for the worker (YSUP3), equation 5 shows that
the worker will be encouraged to stay at the current firm if the worker is male and that the
worker gave positive feedback on the supervisor’s coaching effectiveness and career- pathing
ability (SUP1 and SUP3). Incorporating all other variables as in equation 6, the probability that
the worker will quit his current job decreases as the worker gets older (AGE) and that the worker
gave positive feedback on the supervisor’s coaching effectiveness and career- pathing ability
(SUP1 and SUP3).
Competent Management
Based on Table 8.6, suppose there is an outside firm that offers a set of upper management that
that promotes people based on performance (YMGT1). From equation 1, the probability of
46
quitting the current job increases the poorer are the feedbacks given by the worker of the
management’s overall competence (MGT1- MGT3). From equation 2, the probability of quitting
the current job decreases if the more the worker is male, the more the worker is satisfied with the
current job match (JS1), and the better are the feedbacks given by the worker of the
management’s overall competence (MGT1- MGT3). The probability of quitting the current job
increases as the size of the firm increases. This means that the competition for promotion is
tougher due to the bigger number of “internal applicants” (assuming all internal applicants are
equally top performers), thereby creating a tendency for the firm to promote people other than
performance.
Suppose that there is an outside firm that offers the worker a set of upper management that
makes good decisions in choosing people for promotion and reinforced by proper explanation
(YMGT3). From equation 3, the probability of leaving the current employer given the said offer
increases the poorer are the feedbacks given by the worker of the management’s promotion
decision –making (MGT2), the more unrealistic the performance targets are set by the
management (MGT3) and the larger the size of the firm (SIZE). From equation 4 and with the
same external offer, the worker’s decision to quit will be more likely, the larger the size of the
firm (SIZE), the poorer are the scores in the supervisor’s coaching competence and in
supervisor’s business and leadership knowledge (SUP2), and the poorer the scores on upper
management’s promotion decision- making (MGT2). The larger the firm in terms of larger
number of employees implies a greater difficulty selecting people for promotion and come up
with a very explanation for the promotion decision because more employees would mean more
“internal applicants” that the upper management can choose from.
The worker will have a higher probability of leaving the current employer given an outside offer
of better management that sets realistic performance targets, the larger the firm size (SIZE), and
the poorer are the scores in MGT1 and MGT3 (based from equation 5). Incorporating all other
variables as in equation 6, the probability of leaving increases the larger the firm (SIZE) and the
poorer are the scores MGT1 (promotion based on performance) and MGT3 (realistic
performance goals), but the worker will be deterred from leaving if he is satisfied with the job
match (JS1) and that the worker is male.
47
Job Location & Reduction of Travel
Suppose that an outside firm offers a reduction in time travel for the worker (TRAVEL). From
equation 1 in Table 9.1, the worker will have a higher probability of quitting if his travel time
going to his current office increases (TRAVEL). From the second equation and given the same
external offer, the worker will have a higher probability of quitting if his travel time going to his
current office increases (TRAVEL), and if the supervisor is perceived to lack business and
leadership fundamentals (TRAVEL and SUP2). The probability of quitting decreases the more
tolerant the worker is working in the graveyard shift (JS2). Table 9.2 presents the different travel
savings the outside firm can offer to the worker. At 10 percent travel time reduction, the worker
will more likely quit if the supervisor is perceived to lack business and leadership fundamentals
(SUP2). At 25 percent travel time reduction, there no significant deterrents or instigators for the
worker to quit. At 50 percent travel time reduction, the probability of quitting decreases the more
tolerant the worker is working in the graveyard shift (JS2)
VIII. CONCLUSION
This paper has analyzed the turnover behavior of call center agents in Eastwood and Ortigas
cyber-zones. From the results of the data obtained as well from the probit regression, it can be
verified that the difference in wage rates offered by outside companies have a significant impact
on the worker’s decision to quit the current job. In short, money is what really matters among
call center agents. Even if money the main factor when making a decision of whether to stay or
leave, then it would not be profitable for firms to engage in battling rival firms with counter
48
wage offers back to their employees. It would also not be beneficial for workers to frequently
leave jobs just for a higher salary. Rather than outbidding rival firms to retain the last of its
workers, spending in infrastructures or systems that provides career growth and that enhance the
skills of its agents, increase the worker’s participation in the firm’s decision making, ensure
employment security and maintain positive labor relations—all these factors are proven to
significantly reinforce the worker’s decision to stay and the same time enable the firm to even
attract more productive workers.
Although they are not consistently significant factors to deter or encourage the worker’s
decision to quit, the worker attributes gives important signals to firms to adjust their structure or
system in order to properly respond to the potentially positive and negative effects that the
worker attributes can bring.
IX. POLICY IMPLICATIONS
HR REFORMS
Increased spending on human resources management is the foremost effective tool in confronting
the problem of job turnover in the call center industry. The resources must be spent on the
following aspects of human resource management: identifying current issues, employment
selection, employee involvement and participation (EIP), pay scheme and more importantly,
career advancement/ career development programs.
49
Identifying current issues
The first task that firms must do is to find out what infrastructures or systems it currently lacks
and what it currently has. Through its human resources, the firm must be able to know and
understand why employees are leaving the organization. An exit interviews is a good way to find
out what practices wrong or what are missing. However, such interviews are “too-late-the-effort”
strategies. Running surveys across the organization and close coordination of the HRD (human
resources department) with the line managers and the supervisors helps the firm to particularly
identify employment concerns and helps to improve the selection of new employees. Moreover,
it is also important for firms to determine the current costs of turnover (spanning from the
employee’s separation to the hiring and training of the replacement). This way the firm may be
able to gain an insight on the magnitude of how much the job turnover is significantly impacting
the firm’s profitability.
Employee Selection
Call center firms need to improve the screening process in order to distinguish not only top and
low-level performers but also distinguish workers who will render either a long- run or short-run
employment relationship with the company. Spence (1973) has shown that it pays for a firm to
spend its resources on enhancing the methods of employment selection that identifies the key
performance criteria of jobs and the knowledge, skills, and abilities needed by workers and then
attempt to select the right people for the right jobs (Kaufman and Hotchkiss, 2003).
Administering personality tests also help in identifying employees that not only fit the skills
requirements but also fit into the culture of the organization. The main economic implication of
employee selection is the objective of identifying the optimal hiring standard—that is, the
optimal signal that enables the firm to differentiate between two groups at the least costs in terms
of resources used in the screening process (Kaufman and Hotchkiss, 2003).
Compensation Strategy
The probit regression results on the effect of wages on turnover decisions was nothing but
obvious. Because of this, firms need to identify the kind of compensation strategy that will
encourage the workers to stay and at the same time attract new employees.
50
The objective of the firm’s management is to find the competitive compensation package (that
is, the competitive level of pay and the competitive form of pay) that will maximize the firm’s
profits, given the employee’s preferential pay schedule. In addition, call center firms must exert a
greater amount of effort in determining the appropriate compensation package, given the
difficulties in measuring the productivity of service- related processes.
Employee Involvement and Participation (EIP)

The policy implications of employee involvement and participation do not necessarily mean
that call center firms do not have venues for employee voice or EIP.
First, what firms need to do is to apply or resort to other forms of EIP, whether direct or
indirect. Direct forms of EIP include feedback session, focused groups discussions or quality
circle (a practice borrowed from Japan in which groups of employees meet after work or during
break time and confer with the management’s representatives to improve work quality). Indirect
forms of EIP include employee representation in the Board of Directors (employee
representatives are appointed to sit down in board meetings to provide the employee’s
perspective on major decisions facing the firm) or applying the increasingly popular peer review
panel (a panel that consists of workers and management representatives that offers a
recommendation or a binding decision regarding disputes).
Second, in choosing various methods of employee involvement and participation, firms must
optimize the amount of participation and representation (P/R) that employees can have. From an
economic efficiency standpoint, this optimal amount of P/R means that firms must adopt these
practices to the extent that the marginal benefits from participation and representation exceed the
costs (Lazear, 1999). From an ethical or moral standpoint, the amount of participation and
representation must be up to the point where employees can truly feel the sense of workplace
democracy and social justice prevailing in the organization.
Career Development
51
Based on the probit regression results, one of the strongest deterrents of quit behavior would be
the presence of career development program that is authored propelled by the firm and the
supervisor. Hence, if call center agents see their current professions as a career or seek their
company’s or their supervisors for career guidance, chances are that these employees would
foster a longer relationship with their employer.
What is important is that these firms must set up various career workshops that will equip the
call center agents the necessary skills needed in order to assume higher positions in the
organization. Leadership seminars, training assistant development programs, computer software
& programming workshops are perfect examples of the development programs that firms can set
up so that it can also have its own internal labor market pool in case demand arises for higher
positions due to organizational expansion. Furthermore, these career workshops also serve to
strengthen both the legitimacy and the competence of the newly promoted employees in
assuming the higher positions in the organization.
MANAGEMENT REFORMS
Promotion Tournament vs. “Office Politicking”
The regression results certainly verified the significant impact of the upper management’s
promotion decision making on the employee turnover outcomes. Two of the most important
tasks that the upper management must do is to make sure that rewards are closely linked to
performance and to make sure that performance metrics reflect the true performance of the
employee.
55
An effective strategy that call center firms can use to motivate top performers as well to show
that promotion is based on performance (and not based on “office politicking”) is through
promotion tournaments. Promotion tournaments have several central features: (1) who will win
is uncertain, (2) the winner is chosen based on relative performance (relative to its competitiors),
and (3) the rewards are concentrated in the hands of the winner (Bognanno, 2001). If one of the
central features are violated (for example, the applicants already know who is the favored
candidate for promotion due to management bias), then there would be no incentive for top
52
performers to exert more effort and the same time discourage people to join the promotion
tournament. Thus, a promotion tournament strategy that is reinforced by the strong adherence
and proper implementation will certainly yield positive results towards motivating employees
and most of all keep its top performers in the organization.
The Virtual Groups

Rather than making an outright organized union that will storm the corporate gates, an
alternative strategy would be to use the internet and the personal computer. Constructing a web-
site for call center employee groups or peers (1) to organize different concerns of workers, (2)
create on-line information on the employee’s labor rights and privileges, and (3) provide various
legal remedies eventually serve as means towards introducing virtual organized labor groups that
will have an appeal to today’s generation (Cooper et al, 2003)
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APPENDIX : SURVEY QUESTIONAIRE
Ateneo de Manila University

Graduate School of Economics
Ateneo de Manila University
Loyola Heights Campus
Katipunan Avenue, Loyola Heights, Quezon City 1108, Philippines TELEPHONE (+63.2)426.6001
SURVEY RESEARCH for GRADUATE STUDIES
58
Name of Respondent (optional) _________________________
AGE
GENDER [ ] male [ ] female
Estimated number of employees in your company
NUMBER OF DEPENDENTS
LENGTH OF STAY IN YOUR CURRENT CALL CENTER (in months)
Years of studying
[grade school + high school + college + post graduate (if applicable)]
TRAVEL TIME TO WORK in minutes

===================================================================
Answer the following questions and simply indicate the NUMBER OF YOUR CHOICE
ON THE BOX
Strongly Disagree= 1 Disagree= 2 Neutral= 3 Agree= 4 Strongly Agree= 5
JOB SATISFACTION INDEX
1. Job Match: My work makes me apply what I learned in my degree. JS1
2. Night Shift: I can tolerate the health & safety hazards in working at night. JS2
3. Use of Benefits: I find it hard to get leaves to get some rest or find time for leisure JS3
HR SATISFACTION INDEX
1. Employee Growth: The company provides training workshops for Career Development. HR1
2. Employee Voice: The company provides an avenue for agents to affect upper mgt decisions. HR2
3. Delivery of Incentives: The company makes sure that incentives or bonuses are given on time. HR3
59
SUPERVISORY COMPETENCE INDEX
1. Coaching& Counseling: My Team Leader delivers positive experience during 1-on-1s. SUP1
2. Business Knowledge: My Team Leader HAS A HARD TIME EXPLAINING the SUP2
business impact of a low agent performance.
3. Career Growth: My Team Leader DOES NOT HELP me towards my career growth. SUP3
MANAGEMENT COMPETENCE INDEX
1. Promotion Selection: The management promotes people based on performance. MGT1
2. Transparency: The management CANNOT PROPERLY EXPLAIN MGT2

how the promotion decision was made.
3. Realistic Targets: The management DOES NOT SET reasonable performance targets. MGT3
=====================================================================
OUTSIDE OFFERS: SALARY INCREASE

YES, I will resign= 1 NO= 0
The new company offers…
1. 10% salary increase. W10 . YWAGE
3. 30% salary increase. W30 YWAGE

OUTSIDE OFFERS: LESS TRAVEL TIME
1. Given a 10% REDUCTION in Travel Time to Work YTRAVEL

YTRAVEL

YTRAVEL
60
OUTSIDE OFFERS: BETTER JOB SATISFACTION
1. A job that makes you use of what you’ve learned in your college degree. YSAT1
2. A daytime job. YSAT2
3. Easy to apply and use of leaves. YSAT3
OUTSIDE OFFERS: BETTER HUMAN RESOURCES

1. A Career Development Program YHR1
2. A grievance mechanism to raise concerns to the management YHR2
3. Delivering work incentives and bonus on time. YHR3
OUTSIDE OFFERS: BETTER SUPERVISORS

1. A more competent set of Team Leaders who can deliver a positive experience
YSUP1
during 1-on-1 discussions
2. A set of Team Leaders who understands the impact of agent performance to the business YSUP2
3. A set of Team Leaders who helps agents towards their pursuit for career growth YSUP3
OUTSIDE OFFERS: BETTER MANAGEMENT

The new company offers… YES, I will resign= 1 NO= 0
1. The selection of promoted employees based on performance YMGT1
and intangible skills (e.g. analytical skills, communication skills)
2. Proper explanation of how the promotion decision was made. YMGT2
3. Management that sets realistic performance goals for the employees YMGT3
61
Thank you for filling out the survey.
62

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INTRODUCTION

Statement of the Problem

Significance of the Study

Scope and Limitations

NATURE OF CALL CENTER WORK

Ideal Type of Workers

PHILIPPINE CALL CENTER INDUSTRY: TRENDS AND COMPETTIVENESS

“Americanized” and Amicable Labor Force

Table 5. Rankings, Services Offered by Offshoring Countries, 2003

COUNTRY VALUE OF SERVICES

CHALLEGES OF THE SUNSHINE INDUSTRY

Supply Side Problem

III. REVIEW OF LITERATURE

Performance & Wage Growth Factors

Table 2.1 Relative Productivity and Separation Rates (In %)

Table 2.2 Turnover & Productivity (Interactive Specification)

Table 2.3 Determinants of Turnover and Promotion

Employee Bonus and Job Turnover

Table 2.4 The Bonus Effect on Voluntary Turnover

Promotion Decisions of the Upper Management

Table 2.5 Predictors of Annual Quit Rates

Employee Voice and HR Practices

International Studies of Job Turnover

IV. THEORETICAL FRAMEWORK

The Job Mobility Equation

where Nt = wages in the new job

Efficiency Wages Theory

NON WAGE FACTORS

Fig 1. Wage-Benefit Turnover Decision Model

Wage per hour (W)

FQ FZ K Employee Benefits per hour (F)

Source: Kaufman and Hotchkiss, 2003

HR Practices and Organizational Commitment

Fig 2. Summarized effects on the decision to quit

Source: Borjas, 2000

The Eastwood Cyberpark will also be divided into several clusters

To C-5 Katipunan Ave

Empirical Specification of the Model

where i, j, k, L, m = 1, 2, 3 subcategories per index

WAGE = wage difference (%) increase being offered outside

Y = α + β 1WAGE + Σ β i CONTROLi + Σ β j JOBSATi + Σ β k HRSATi

where i, j, k, L, m = 1, 2, 3 subcategories per index

Y would have different representations,

YSAT = job- satisfaction improvements offered by the outside firm

YHR = human- resource practice improvements offered by the outside firm

YSUP = supervisory enhancements offer by the outside firm

CONTROL = the i number of control variables in the regression such as

Y = α + + β 1TRAVEL + Σ β i CONTROLi + Σ β j JOBSATi + Σ β k HRSATi

where TRAVEL = travel time of the worker going to work in minutes

The a priori results are given in the table below

Number of Dependents Negative

Job Tenure Negative

Education (in years) Positive

Travel Time (in minutes) Positive

JOB SATISFACTION INDEX

B. Working on night shift Negative

C. Work Benefits: can use leaves for rest or leisure Negative

A. Adequate Provision of Training Workshops for Career Development Negative

B. Presence of Employee Voice Negative

A. Delivers coaching and counseling with a positive experience Negative

C. Supervisor cannot help his agents towards career growth Positive

A. Selects employees for promotion on performance Negative

JS2 -0.2712* -0.237 -0.793 -0.721 -0.289* -0.645**