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A Revisit on Impact of Job attitudes on Employee Turnover: An Empirical Study in Indian IT Industry Dr.

Niharika Gaan1

Abstract This study reexamines the relationship between the job satisfaction, organizational commitment and turnover empirically with sample size of 308 information system professionals from giant companies of Indian software and BPO sectors. It views turnover from attitudinal perspective. Results reveal that the relationship between organizational commitment and turnover is inconsistent with the earlier literature. However, job satisfaction seems to be explaining significant amount of incremental variance in turnover intention. Further, it is suggested for future study that the turnover model should try to investigate the precursors to turnover intention by taking occupational commitment, job satisfaction and non-attitudinal aspects of it as independent variables. Key words: Employee turnover, Organizational commitment, Job satisfaction, Information system professionals 1.0 Introduction: Turnover has been a major issue pertaining to IT personnel since the very early days of computing and continuing to the present. It has been noted frequently that IT personnel have a stronger than average tendency to leave a current employer to work for another organization. Therefore, high turnover is a general trend found especially in IT industry
1. Dr. Niharika Gaan is working as an Assistant Professor in Center for Management studies, which is affiliated to Biju Pattnaik University of Technology.

which has also been subject of considerable research. It is so because turnover of highly skilled employees can be very expensive and disruptive for firms (Reichheld, 1996). Losing highly skilled staff members may incur substantial costs associated with recruiting, re-skilling, and hidden costs associated with difficulties completing projects and disruptions in team-based work environments. Information technology (IT) personnel exemplify highly skilled professionals and called as knowledge worker (Reed, 1996; Frenkel & Korezgynski, 2002). Indias abundant, high quality and cost effective services and its vast resource of skilled software human power have made it an attractive location for global software clients. There has been a steady growth in the number of Indias IT professionals over the last decade. From a base of 6,800 knowledge workers in 1985-86, the number increased to 522,000 software and services professionals by the end of 2001-02. It is estimated that out of these 522,000 knowledge workers, almost 170,000 are working in the IT software and services export industry; nearly 106,000 are working in the IT enabled services and over 220,000 in user organizations. According to NASSCOM-McKinsey Report 2005 the offshore IT and BPO industries directly employ around 700,000 professionals and provide indirect employment to approximately 2.5 million workers. With the steady gains of females at both software companies prompting NASSCOM to believe that womens involvement in IT services will climb a further 10% per cent by 2007. The critical issue is also revolving around procuring an adequate pool of well trained applicants from which to hire new employees from. Yet, while the number of qualified employees is dwindling, there is an increasing need to retain well-trained employees and to lower search, hire, training and general turnover costs, to boost employee loyalty and morale, and to maintain a highly productive and creative workforce. Thus objective of the study is to reconsider the employee turnover model from psychological perspectives. This is investigated by examining the relationship between the job satisfaction, organizational commitment and turnover intention. It also tries to redefine the relationship between the job satisfaction, organizational commitment and

turnover intention. This is examined by finding the mediating effect of organizational commitment on the relationship between the job satisfaction and turnover intention. 2.0 Background and hypotheses: Researchers have extensively studied precursors to employee turnover in an effort to develop understanding of the attitudes that stimulate employees to leave employment with a specific organization. In an attempt to clarify the relationships among various attitudinal antecedents of turnover, Tett and Meyer (1993) performed meta-analysis on 178 independent samples from 135 studies. They estimated the relationships among job satisfaction, organizational commitment, turnover intention, and actual turnover (Tett and Meyer, 1993). Their examination concluded that job satisfaction and organizational commitment each contribute independently to the prediction of intention to turnover, and that such intentions are predicted more strongly by job satisfaction than by organizational commitment. Lee, Mitchell, Holtom, McDaniel, and Hill (1999) argue strongly that attitudinal findings alone are not sufficient to explain the full range of issues involved with turnover. Lee and Mitchell (1994) go so far as to state: .In short, over 17 years of research on the traditional turnover models suggests that many employees may leave organizations in ways not specified by traditional models.. Supporting this position, Hom, Caranikas-Walker, Prussia, and Griffeth (1992) found in a meta-analysis of turnover studies that the effects of precursors to turnover, such as job satisfaction, are moderated by external economic issues, such as employment rates. While existing theory generally ties turnover to low job satisfaction, Lee et al. (1999) argues that new theories are needed to explain the varied conditions under which people leave organizations. Jiang and Klein (1999), for example, report a 25- 35% turnover rate for IT employees in Fortune 500 firms. Moreover, a series of studies of the key issues facing senior IT practitioners have consistently listed human resource management as a leading key issue (e.g. Niederman, Brancheau, and Wetherbe, 1991). Prior research on turnover among IT employees has focused on attitudes leading to intent to turnover with much the same findings as those reported by Tett and Meyer (1993) (e.g. Guimaraes and Igbaria, 1992; Igbaria, and Baroudi, 1995; Igbaria, Greenhaus, and Parasuraman, 1991; Igbaria, and

Guimaraes, 1999; Igbaria, Parasuraman, and Badawy, 1994; and Igbaria, and Wormley, 1992). From this psychological perspective, intent to turnover is a result of individual factors such as employee demography, job dissatisfaction, or lack of organizational commitment (e.g., Ryan, 1989; Discenza & Gardner, 1992; Igbaria & Siegel, 1992; Igbaria & Greenhaus, 1992; Igbaria, Meredith, & Smith, 1994; Joseph & Ang, 2003). This research has provided valuable insights into why IT professionals intend to leave their jobs. However, it does not explain actual turnover patterns. Longitudinal studies of turnover in non-IT contexts (Farkas & Tetrick, 1989; Johnston et al., 1993; Kirschenbaum & Weisberg, 1990; Vandenberg & Nelson, 1999) suggest that intent to turnover does not always predict actual turnover behavior. Recent research in psychology and organizational behavior implies that actual turnover is strongly influenced by internal labor market attributes such as promotability, wage levels, skills demand, and external labor market attributes such as mobility, and availability of jobs (Hom & Kinicki, 2001; Trevor, 2001; Kirschenbaum & Mano- Negrin, 1999).

Retaining information technology (IT) professionals is important for organizations, given the challenges in sourcing for IT talent. Prior research has largely focused on understanding employee turnover from an intra-individual perspective. In the Turnover of information technology professionals: the effects of internal labor market strategies by Slaughter and Ang (2004) study, the researchers have examined employee turnover from a structural perspective. They investigate the impact of Internal Labor Market (ILM) strategies IT turnover of organizations. ILM strategies include human resource rules, practices, and policies including hiring an employee. The research study on Job turnover among MIS professionals: an exploratory study of employee turnover by Neiderman and Summer (2001) addresses the issue of IT worker turnover. It reports on a survey IT workers who graduated over the past decade (19901999) from Saint Louis University. Research questions target IT worker demographics, such as age and gender and Job satisfaction, salary, job tasks, and opportunity factors for

both prior and current employment. Results included ranking of different factors comprising Job satisfaction (satisfaction with financial compensation was high and with fringe benefits was low). Further there is another research study where they have identified a multidimensional set of HR practices likely to increase retention among IT employees and considered citizenship behaviors as well as two distinct types of organizational commitment as key antecedents of turnover intentions. Thus the authors Pare, Tremblay, and Lalonde (2001) in their research study Workforce retention: what do IT employees really want? have presented and tested an integrated model of turnover intentions that addresses the unique nature of the IT profession. This study IT Retention: The social context of turnover among information technology professionals Lee (2002) focuses on the role played by social support from supervisors and colleagues in helping to minimize turnover intentions among computer professionals. Although the concept of social support has been widely used in the occupational stress literature, it has rarely been applied in turnover research. This study explains why social support is particularly salient to computer professionals' turnover. It develops a model that posits that (i) social support is positively related to job satisfaction and negatively related to turnover intention. Career plateau is a popular construct that has been associated with a number of work outcomes. This study introduced a related construct called professional plateau. It is defined as the point where employees find their job unchallenging and it provides few opportunities for professional development and future employability. The research study by Lee (2002) Career plateau and professional plateau: impact on work outcomes of information technology professionals have proposed that career plateau and professional plateau are related to three work outcomes: namely, career satisfaction, Job satisfaction, and turnover intentions. The aforementioned literature survey provides a complete picture of turnover intention being studied from diverse perspective: psychological perspectives, intra-individual perspectives and structural perspectives. Due to scanty availability of research on

employee turnover in Indian context, buzzing and growing issue of turnover in Indian IT organizations, this study makes an attempt to reconsider employee turnover from attitudinal perspectives. Thus looking at the background the hypothesis framed are as follows: H1: Job satisfaction is positively related to organizational commitment. H2: Job satisfaction is negatively related to turnover intention. H3: Organizational commitment will be negatively related to turnover intention. In other words organizational commitment mediates the relationship between job satisfaction and turnover intention. 3.0 Method: 3.1 Overview A pilot study was undertaken in local IT companies in Ahmedabad before undertaking the final survey. The purpose to undertake pilot study was to understand the set up both holistically and to collect preliminary data about the Software and BPO organizations. An open-ended interview was taken to find out the effect of attitudinal aspects of job satisfaction on turnover intention. The open-ended questionnaire contained eight questions which involve all the three variables and their effect on each other. About 25 interviews were conducted in four IT companies of Ahmedabad to confirm the objectives of the study. 3.2 Sample After undertaking pilot study, the final survey was decided and the author immediately went to places which were considered to be hub of It industry. Bangalore is considered to be the Silicon Valley of India and home of the corporate giants in IT namely, Infosys, Wipro, Satyam, IBM, Compaq and so on. So to get an easy access to different IT companies and captures the sample size of 300 respondents, it was advised to choose Bangalore for the field study. Out of 308 sample size of IS professionals, data of 68 in number was collected from IT division of BPO companies. The rest 240 respondents

were covered in software companies and categorically 60 respondents from each group of professionals like programmers, system analysts, test engineers, and system administrator. Thus sample represented wide range of roles performed by information system professionals and also involved diversity in terms of gender and educational background. 3.3 Procedures The initial stage of data collection involved briefing about the study to Vice President (HR) and also its impacts on the respondents and organization in terms of benefits. This was the prerequisites to get access to the organization they belong to. These authorized persons were either personally approached or requested through mail. After getting permission from the Vice President (HR) of the companies like Satyam, Wipro, Honeywell, and Seimens, the survey was conducted with the help of questionnaire accompanied by the covering letter carrying the explanation of the purpose of the study. The structured questionnaire was used for survey purpose, which was running for 2 pages, consisting of items measuring job satisfaction, organizational commitment and turnover intention. The respondents were assured the confidentiality of information. Towards the end of the April 2004, the questionnaires were distributed in all software companies. The questionnaires were returned on an average after 6 weeks of the administration. Some of the respondents had returned the filled questionnaire within four days or a week. The total number of usable questionnaires received was 69, 55, 54, and 62 from Wipro Technology, Seimens, Satyam and Honeywell, respectively. Two hundred and forty usable questionnaires were returned out of 458 respondents approached from software companies, representing a return rate of 52.4%. Similarly the response rate in BPO was much higher. The total number of questionnaires returned was 17, 21, 15 and 15 from Wipro Spectramind, Daksh, Exl services and Nipuna services, respectively. Out of 90 respondent approached, 68 usable questionnaires were returned in BPO companies representing a return rate of 75.6%. Demographic characteristics like age, gender, total experience, experience with the current organization, education and finally designation was gathered along with the questionnaire. The full time employers with a tenure

experience of 2 years and more than that were considered. The descriptive statistics on frequency and percentage of sex by different groups has been depicted in the Table 1 and 2 respectably. The returned responses 68 in number from BPO represent BPO IT professionals. Out of 240 respondents 62 are females and rest 178 respondents are males in software sector. Similarly, 11 females respondents from BPO IT professionals had returned the filled questionnaire and rest 57 were males. The trainees and those who were holding post above project manager in hierarchy were excluded from the present study as they do more of generalist role than the specialist role like programming, analyst, test engineer or system administrator job. The average age of the respondents after calculation showed 27 years and 4 months carrying standard deviation 2.3713. About 38.6% of IS professionals are carrying educational background of B.E in computer science. Majority of them have been in this occupation for 3 to 4 years. The distribution in terms of company tenure is slightly skewed towards employees serving for 2-3 years. The percentage of such employees has come out to be 87% having standard deviation of 1.07. Table 1: Frequency and Percentage of Sex by Different Groups (N=308)

Total

Male Female

246 62 189 51 57 11 308

79.87 20.13 78.75 21.25 83.8 16.2 100

Software Male (Software) Female (Software) BPO Male (BPO) Female (BPO) Total

3.4 Scales: The established scales for all the variables were taken for the present study. The Cronbanch Alpha reliability measures were computed to test their internal consistency. The internal consistency reliability has been evaluated by computing the Cronbachs alpha coefficients for each scale which has been shown in Table 5. Job satisfaction: Overall job satisfaction was measured using items drawn from Job satisfaction Survey developed by Specter (facet- specific level job satisfaction, 1997). The reliability and validity of the scales as demonstrated by Spector (1985) ranges from . 60 to .91. Cronbachs alpha of the scale in this study is .87. Different items were measured using a 5-point Likert type scale. Organizational Commitment: There were four items to measure the above variable and were taken from the scales developed by Mowday & Porter (1982) showing reliability of .82. Cronbachs alpha of the scale in this study is.70. Items were measured using a 5point Likert type scale. Turnover intention: This was measured by 3 items developed by Thatcher (2002) showing .99 reliability. Cronbachs alpha of the scale in this study is.86. Items were measured using a 5-point Likert type scale. The Cronbachs alpha ranges from .63 onwards indicating that each measure demonstrated acceptable internal consistency. Table 2: Cronbachs Alpha Reliability Coefficients for Different Scales (N=308) Sl.No 1 2 3 Variables Organizational Commitment Turnover Intention Job Satisfaction No. of Items 4 3 36 Cronbanch Alpha .70 .86 .87

4.0 Data analysis The author tested the hypotheses using regression analysis and Baron and Kennys (1986) procedures for testing mediation. According to Baron and Kenny, to demonstrate mediation, it was first necessary to show that the independent variable is related to both the proposed mediator and dependent variable. Next, a link between the proposed mediator and dependent variable must be established. Finally, the effect of the independent variable on the dependent variable must be shown to be eliminated or significantly reduced after controlling the potential mediator. 4.1 Results Table 3 presents the means, standard deviations, zero-order correlations, and reliability coefficients (Cronbach ) of the study variables. Respondents reported a mean level of job satisfaction of ( 3.2 ) and a mean intention to quit score of ( 2.7 ) (3 is the midpoint on the 5 point scale used). As expected, organizational commitment was negatively and significantly related to intention to quit (r = - .35 ; p < .000 ). Job satisfaction is positively and significantly related to Organizational commitment ( r= .42 ; p<. 000) and negatively and significantly related to turnover intention (r= -.52; p<.000 ). Recall that Baron and Kennys (1986) procedures for demonstrating mediation require first showing that the independent variable be related to both the proposed mediator and dependent variable. Therefore further analyses were conducted by adopting Baron and Kennys procedures of regression. Table3: Descriptive statistics, reliabilities and intercorrelations for study variables Variable 1 Job Satisfaction 2 Organizational Commitment 3 Turnover Intention Mean 3.20 3..88 2..70 SD 4.19 2.68 3.51 1 (.87 ) .42** - .52** (.70 ) -.35 * (.86 ) 2 3

Notes: N=308, reliabilities for multiple measure are in parentheses, p< .001-.005

H1 predicted a positive relationship between job satisfaction and organizational commitment, H2 predicted a negative relationship between organizational commitment and turnover intention and H3 predicted that organizational commitment mediates the relationship between job satisfaction and turnover intention. Applying the procedures outlined by Baron and Kenny (1986), organizational commitment was regressed on job satisfaction variable. As depicted by Table 4 the results indicated that this variable significantly and positively predicted organizational commitment, = .42, t (308)= 8.13, p<.01. Job Satisfaction is predicting 18% of the variance in Organizational Commitment as indicated in Table2. It also presents that job satisfaction is positively and significantly related to organizational commitment. Therefore, H1 was accepted. Next with the use of Hierarchical regression, turnover intention was regressed first on job satisfaction followed by organizational commitment. The results indicated in Table5 shows that a significant and negative relationship between job satisfaction and turnover intention, = .-.52, t (308)=-8.55 , p< . 001, thereby supporting H2. Organizational commitment was found to explain only 11% of variance in turnover intention which is less than explained by Job satisfaction. Finally to test mediation turnover intention was regressed on organizational commitment followed by job satisfaction. The results as indicated in Table 3 show that when the organizational commitment was partialled out the effect of job satisfaction on turnover intention was significant. Job satisfaction was found to explain a significant amount of incremental variance in turnover intention. Thus organizational commitment cannot be said to mediate the relationship between job satisfaction and turnover intention, thereby resulting in rejection of H3.

Table4: Results of Regression Analysis of Organizational Commitment on Job Satisfaction (N=308) Variable
R2 R2 change t

Job Satisfaction Note: * *p< 0.01

.18

8.13**

.42

Table5: Results of regression analysis on Intention to Quit (N=308)


Variable R2 R2 change t

Effect of Job satisfaction before partialling out Organizational commitment Step1: Job Satisfaction -8.55** -.52 Step2: Organizational Commitment -3.13* -.31 .27 .11 -.16

Effect of job satisfaction after partialling out organizational commitment Step 1: Organizational Commitment -6.70* -.16 Step2: Job Satisfaction -8.55** -.45 Note: * *p< 0.01, *p< 0.02 .10 .30 .20

5.0 Discussion on the findings: Job Satisfaction and Organizational Commitment: The findings of the present study show that Job satisfaction is positively related to organizational commitment, it confirms the established findings (Baroudi, 1985; Bartol, 1983; Dougherty, et.al., 1985; Michaeles & Spector, 1982; Griffeth, et. al., 2000; Lee, et. al. 2000; Joseph and Ang, 2003). Organizational commitment is commonly viewed as intervening variables in the turnover process (e.g., Hom & Griffeth, 1995; Mowday et al., 1982; Price & Mueller, 1986). Those two variables are viewed as an essential component

of turnover models because their empirical relationship with voluntary turnover has been firmly established through numerous meta-analyses (e.g., Cohen, 1993; Cohen & Hudecek, 1993; Cotton & Tuttle, 1986; Hom & Griffeth, 1995; Hom, Caranikas-Walker, Prussia, & Griffeth, 1992; Steel & Ovalle, 1984; Tett & Meyer, 1993). Organizational Commitment and Turnover Intention: This study attempted to examine the effects of job satisfaction on organizational commitment and turnover intention. Further it also investigated the former empirical study which advocated that the relationship between job satisfaction and intention to quit is mediated by Organizational commitment. Consistent with the expectations the results of the study show that organizational commitment is inversely related to the Intention to leave. The findings confirm the earlier studies (Baroudi, 1985; Bartol, 1983; Dougherty, et.al., 1985; Michaeles & Spector, 1982; Griffeth, et. al., 2000; Lee, et. al. 2000; Joseph and Ang, 2003). But the power of explaining the turnover intention in this study is less that of job satisfaction. The underlying thesis posits that organizational commitment impact on turnover intention is conspicuously missing out from IT turnover research. The impetus provided by organizational commitment for IT professionals to leave the organization has diminished and it is very closely related to the findings of Joseph and Ang ( 2003). On the contrary, the weak relationship between Job satisfaction and Turnover intention in the earlier research is not supported in these findings. The pattern, which emerges from these particular findings, states implicitly that Organizational commitment is mediating the relationship between the job satisfaction and turnover intention. The results probably would have been different if all three dimensions (affective, continuance and normative components), as discovered by Meyers and Allen (1990), were considered to measure the organizational commitment and its impact on the organization. Probably Job satisfaction is the intervening variable between organizational commitment and turnover intention. Researchers often propose Job satisfaction and organizational commitment as intervening variables between other determinants (e.g., structural and individual variables) and outcomes like stay intentions and employee turnover (Iverson, 1992; Mueller et al., 1992; Price & Mueller, 1986a). A substantial body of empirical evidence links greater commitment to greater intent to stay and,

consequently, lower turnover (DeCotiis & Summers, 1987; Hom & Griffeth, 1995; Kalleberg, 1987; Lee et al., 1992; Lincoln & Kalleberg, 1996; Mathieu & Zajac, 1990; Mowday et al., 1982; Mueller et al., 1992; Price & Mueller, 1986a; Randall, 1990; Somers, 1995). Fewer studies support a direct link between Job satisfaction and turnover (Mueller et al., 1994), yet several support an indirect influence through commitment (Lincoln & Kalleberg, 1985, 1990; Mowday et al., 1982; Mueller et al., 1994; Price & Mueller, 1986a; Wallace, 1995). This particular study has been able to produce a direct link between Job satisfaction and turnover intention and confirming some earlier studies ( Agarwal & Ferrat, 1999, Gomolski, 2000; Schwochau et al., 1997; Tsui et. al., 1995). Probably the concept of the organizational commitment is less relevant to Indian IT industry. The findings support and confirm the earlier studies on knowledge worker by Reed (1996) and Frenkel &Korezgynski (2002). They stated that as organizations when move towards adopting flat structure neither employees nor management expect longterm relationship. So it depends upon the marketability of knowledge worker on skill and knowledge in the external labour market. Secondly the occupational commitment is more important to knowledge worker than the organizational commitment (Reed, 1996; Frenkel & Korezgynski, 2002). Therefore, the management should try to satisfy them by keeping up their job expectations.

6.0 Limitation of the study: The data collection was restricted to a major city and two cosmopolitan cities in India where talent is abundant. The replication of the study at different geographical locations and culture would throw a light on this study. The sample drawn for the present study consisted of 308 IS professionals working in various Software and ITES throughout India cannot generalize the results. Hence, the research involving additional samples may be needed to ensure appropriate generalization of the results and calls for greater research to confirm the pattern seen in these results. The firm size should be controlled here so that

the results represent a certain class of firm of specific size. Though the organizations were larger in size the findings cannot be generalized to medium and small size organizations. Most of the successful large size organizations are either foreign or Indian based multinational companies. The work culture generally differs depending upon the type of IT industry: Indian based or foreign based multinational companies. The study should be careful while making selection of either of the multinational companies for data collection. This study has not taken this specific issue while collecting data.

7.0 Future research: The greatest contribution of the present study to the theoretical world has come from the explanatory power of job satisfaction towards turnover intention as observed from the findings. The correlation between the job satisfaction and turnover intention is higher than the correlation between the organizational commitment and turnover intention. It is suggested that occupational preferences tap the rationalized outcome of the individual decision making (Long et al, 1988). Understanding how occupational preferences affect turnover decisions will clarify the link between the job satisfaction and turnover intention. As per the contemporary literature studied by Reed (1996) and Frenkel & Korezgynski (2002), the important proposition can be made here that Proposition1: IS professional are more committed to the occupation than to the organization in Indian context. Proposition2: IS professional occupational commitment mediates the relationship between their job satisfaction and intention to quit in Indian context. Further the study should also try to investigate the precursors to occupational commitment and turnover intention. This would provide remedies to reduce mobility and job shifting of the knowledge worker in the organization. The study also indicates future effort towards investigating the non-attitudinal dimensions and determinates to job outcomes. This is a clue which can be interpreted from the present finding stating that the attitudinal dimension exhibits only 30%of variance in Job satisfaction. Henceforth, the

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