Employee turnover intention. Empirical evidence from the Savings and Loans Companies in Ghana


Master's Thesis, 2013
206 Pages, Grade: A

Excerpt

TABLE OF CONTENTS

DEDICATION

ACKNOWLEDGEMENTS

LIST OF TABLES

LIST OF FIGURES

LIST OF ABBREVIATIONS

ABSTRACT

CHAPTER ONE INTRODUCTION
1.1 Background of the Study
1.2 Statement of the Problem
1.3 Objectives of the Study
1.4 Hypotheses
1.5 Significance of the Study
1.6 Delimitations of the Study
1.7 Definition of Terms
1.8 Research Assumptions
1.9 Chapter Disposition

CHAPTER TWO LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK
2.0 Introduction
2.1 Employee Turnover Intention
2.2 Theoretical Review
2.2.1 Multi-Route Turnover Theory
2.2.2 Equity Theory
2.2.3 Two-Factor Theory
2.2.4 Situational Leadership Theory
2.2.5 Turnover Process Models
2.3 Antecedents of Employee Turnover Intention
2.3.1 Pay Satisfaction
2.3.2 Job Satisfaction
2.3.3 Leadership Styles
2.3.4 Organisational Commitment
2.3.5 Psychological Climate
2.4 Consequence of Turnover Intention
2.4.1 Absenteeism
2.5 Thoughts of Quitting as a Moderator Variable
2.6 Conceptual Framework
2.7 Summary of Review

CHAPTER THREE RESEARCH METHODOLOGY
3.0 Introduction
3.1 Research Paradigm
3.2 Research Design
3.3 Population
3.4 Eligibility Criteria
3.5 Sample and Sampling Technique
3.6 Instruments
3.6.1 Turnover Intention
3.6.2 Thoughts of Quitting
3.6.3 Pay Satisfaction
3.6.4 Job Satisfaction
3.6.5 Leadership Styles
3.6.6 Organisational Commitment
3.6.7 Psychological Climate
3.6.8 Absenteeism
3.6.9 Demographic Variables
3.7 Procedure: Ethical Consideration and Data Collection Method
3.8. Data Analysis
3.9 Profile of Study Area in National Context
3.9.1 Ashanti Region
3.9.2 Greater Accra Region
3.10 Contextual Overview of Savings and Loans Companies in Ghana

CHAPTER FOUR RESULTS AND DISCUSSION
4.0 Introduction
4.1 Demographic Characteristics of Respondents
4.2 Examination of Hypotheses
4.2.1 Assumption of Linearity
4.2.2 Assumption of Homoscedasticity
4.2.3 Assumption of Independence of Residuals
4.2.4 Assumption of Multicollinearity
4.2.5 Pay Satisfaction
4.2.6 Job Satisfaction
4.2.7 Transformational Leadership
4.2.8 Transactional Leadership
4.2.9 Affective Commitment
4.2.10 Normative Commitment
4.2.11 Continuance Commitment
4.2.12 Psychological Climate
4.3 Relationship between Turnover Intention and Absenteeism
4.4. Moderation Effect
4.4.1 Thoughts of Quitting as a Moderator between Turnover Intention and Acceptable Absence Legitimacy
4.4.2 Thoughts of Quitting as a Moderator between Turnover Intention and Accountable Absence Legitimacy
4.5 Additional Analysis
4.6 Discussion of Findings
4.6.1 Pay Satisfaction
4.6.2 Job satisfaction
4.6.3 Transformational Leadership
4.6.4 Transactional Leadership
4.6.5 Affective Commitment
4.6.6 Normative Commitment
4.6.7 Continuance Commitment
4.6.8 Psychological Climate
4.7 Relationships between Turnover Intention and Absenteeism
4.8 Moderation Effect

CHAPTER FIVE SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.0 Introduction
5.1 Summary of Key Findings
5.2 Conclusions
5.3 Recommendations
5.4 Direction for Future Research
5.5 Limitations of the Study

REFERENCES

APPENDICES
APPENDIX I
APPENDIX II
APPENDIX III
APPENDIX IV
APPENDIX V
APPENDIX VI

LIST OF TABLES

Table 3.1 Distribution of Savings and Loans Companies Branches and Workforce Strengths in the Greater Accra and Ashanti Regions

Table 4.1 Distribution of Respondents’ Demographic Characteristics

Table 4.2 Means, Standard Deviations, Pearson’s Product Moment Correlation and Internal Consistency of Study Variables

Table 4.3 Hierarchical Multiple Regression Analyses for Antecedents and Turnover Intention

Table 4.4 Hierarchical Multiple Regression Analysis for Turnover Intention and Absenteeism

Table 4.5 Hierarchical Moderated Multiple Regression Analysis of Thoughts of Quitting and Turnover Intention on Absenteeism

Table 4.6 Hierarchical Multiple Regression Analysis for Antecedents and Absenteeism

Table 4.7 Summary of Results of the Study

LIST OF FIGURES

Figure 2.1 Simplified version of March and Simon’s Decision to Participate Model

Figure 2.2 Mobley’s Employee Turnover Decision Process Model

Figure 2.3 Jackofsky’s Basic Model of Voluntary Turnover

Figure 2.4 Hypothesized Turnover Intention Model

Figure 4.1 Relationship between Turnover Intention and Acceptable Absence Legitimacy for Low and High Thoughts of Quitting

Figure 4.2 Relationship between Turnover Intention and Accountable Absence Legitimacy for Low and High Thoughts of Quitting

Figure 4.3 Bivariate Scatterplot showing Relationship between Pay Satisfaction and Turnover Intention

Figure 4.4 Bivariate Scatterplot showing Relationship between Job Satisfaction and Turnover Intention

Figure 4.5 Bivariate Scatterplot showing Relationship between Transformational Leadership and Turnover Intention

Figure 4.6 Bivariate Scatterplot showing Relationship between Transactional Leadership and Turnover Intention

Figure 4.7 Bivariate Scatterplot showing Relationship between Affective Commitment and Turnover Intention

Figure 4.8 Bivariate Scatterplot showing Relationship between Normative Commitment and Turnover Intention

Figure 4.9 Bivariate Scatterplot showing Relationship between Continuance Commitment and Turnover Intention

Figure 4.10 Bivariate Scatterplot showing Relationship between Psychological Climate and Turnover Intention

Figure 4.11 Bivariate Scatterplot showing Relationship between Turnover Intention and Acceptable Absence Legitimacy

Figure 4.12 Bivariate Scatterplot showing Relationship between Turnover Intention and Accountable Absence Legitimacy

Figure 4.13 Final Model of Antecedents and Outcomes of Turnover Intention

LIST OF ABBREVIATIONS

illustration not visible in this excerpt

DEDICATION

This work is dedicated to my mother, Prophetess Susana Afua Amoakoa, and all my siblings especially Sandra Asiedu Koranteng. To God be the Glory.

ACKNOWLEDGEMENTS

I am highly indebted to my supervisor, Samuel Kwasi Dartey-Baah (PhD) for his timeless dedication, guidance, corrections and constructive criticisms throughout the supervision of this thesis. Also, I wish to express my heartfelt appreciation to Professor Helena M. Addae of the University of Wisconsin Whitewater, USA for her support, motivation and insightful suggestions throughout the entire thesis period.

My profound gratitude also goes to Prof. Samuel Aryee of Kings College London and Assistant Professor Soumendu Biswas of Management Development Institute of India for their assistance at the proposal stage of this thesis. Also, I wish to express my heartfelt appreciation to Assistant Professor Nathaniel Boso of Leeds University, UK for his input during the data analysis section of the thesis and Mr. Eric Anane, a PhD Scholar at University of Durham, UK for providing me with all the recent scholarly articles referred to in this thesis.

Many thanks to the Presidents of Ghana Association of Savings and Loans Companies and Ghana Microfinance Institution Network for the permission granted to work with their association members. Again, I wish to register my sincere thanks to all the authors whose measuring instruments and scholarly articles I made reference to in this thesis.

Finally, I wish to express my gratitude to Mr. Daniel Anokye-Mensah, Head of Human Resource in Advans Ghana Savings and Loans Limited and Mr. Desmond Kwawu, Human Resource Manager for Adehyeman Savings and Loans Limited for their invaluable support during the data collection stage of this thesis.

ABSTRACT

The study examined the relationship among antecedents, employee turnover intention and outcome variables. First, it was proposed that pay satisfaction, job satisfaction, affective commitment, transformational leadership, transactional leadership, psychological climate, normative commitment and continuance commitment would antecede employee turnover intention. Next, turnover intention was expected to influence perceptions of absenteeism. Finally, thoughts of quitting was presented as a moderator between turnover intention and absenteeism as acceptable or accountable work behaviour. A nonexperimental, cross-sectional, descriptive correlational design was adopted for the study. Also, the multi-stage sampling method was used to select the three hundred and forty (340) employees who completed the survey instrument. Hypotheses were tested through correlational and hierarchical regression analytic procedures. The antecedent variables were all significant and inversely related to employee turnover intention and employee turnover intention on the other hand was also significantly related to acceptable absence legitimacy. However, for the turnover intention model, the hierarchical regression analysis results indicated that affective commitment, normative commitment, pay satisfaction, job satisfaction and transformational leadership predicted employees intention to quit. For the absenteeism model, the hierarchical regression analysis results showed that turnover intention did not influence employees’ perception of acceptable and accountable absence legitimacy and thoughts of quitting did not also moderate the postulated relationship. It was concluded that management in the SLCs should pay utmost attention to employees pay satisfaction, job satisfaction, affective commitment, normative commitment and transformational leadership in order to lessen or completely eliminate the high turnover rate in the NBFIs.

CHAPTER ONE INTRODUCTION

1.1 Background of the Study

A unique attribute of the 21st century organisation is the constant pace of change. Coupled with this attribute are the challenges of rapid technological change, global competition, workforce diversity and organisational restructuring, which confront most organisations in today’s corporate world. Despite the fact that organisations may differ in the precedence they attach to the human resource component in their efforts to achieve high productivity and gain competitive advantage, they all recognize the value of a qualified, motivated, stable and responsive workforce (Huselid, 1995). Yet, a specific challenge confronting most organisations in the light of high uncertainty in retaining qualified employees is the issue of employee turnover intention.

Most organisations in the world today are confronted with the dilemma of prevalent employee turnover which is costly, lowers productivity and morale and tends to get worse if not dealt with instantly and appropriately. Employee turnover conservatively costs an organisation approximately 60% of an employee’s annual salary (Allen, 2008). For instance, Vance (2006) reported that Caterpillar, a giant multi-national construction equipment manufacturer, saved about $9 million in turnover costs alone at one of its European based plants. Again, a study by Khatri, Budhwar and Fern (1999) revealed that employee turnover was giving sleepless nights to human resource managers in the Asian countries of China, Hong Kong, Malaysia, Singapore and Taiwan. The quarterly reports of the Ministry of Manpower, Government of Singapore (1998) revealed that the average annual turnover rates by the banking and finance sector increased from 22.8% in 1995 to 25.2% in 1996 and fell back to 22.8% in 1997. Furthermore, Barnard and Rodgers (1998) reported that the average monthly resignation in Singapore as at 1995 was as high as 3.4%, as compared to 2.9% and 2.7% for South Korea and Taiwan respectively. Thus, the discourse so far confirms the earlier assertion by Khatri, Budhwar and Fern (1999) that voluntary turnover is a major problem for companies in many Asian countries, especially banking and other financial institutions of which the savings and loans companies (SLCs) belong.

An international comparison of turnover intention based on the International Social Survey Program [ISSP] about “Work Orientations” in 2005 showed that high turnover rate of employees occurred in countries such as France (17.48%), Mexico (17.42%), USA (15.0%), Dominican Republic (14.63%), New Zealand (14.47%) and Australia (14.26%). On the contrary, low employee turnover rates were reported in Slovenia (4.0%), Japan (3.74%) and Czech Republic (3.11%). South Africa, the only African country to have appeared in the survey recorded an average employee turnover rate of 12.2% (ISSP, 2005; Henneberger & Sousa-Poza, 2002; Perez, 2008). Again, the turnover intent by industry (HR Barometer, 2007) showed that the health and social care sector scored the highest, 18.5%, turnover intention while agriculture and forestry sector had the lowest score, 1.3%. It is interesting to note, however, that the banking and insurance industry scored an average of 7.8% of turnover intention out of the 12 industries (Perez, 2008).

Like the rest of the world, the issue of employee turnover is no different in Africa. For example, the Youth Employment Network report on private sector demand for youth labour in Ghana and Senegal confirmed that high personnel turnover rates seem to be most problematic in the banking and other financial services sector in Ghana. Despite the fact that the sector boasted of the highest youth employment potential in 2009, it had the highest turnover rate of 27% out of the 26 surveyed sectors in Ghana. Unlike Ghana, however, findings from Senegal showed the turnover rate in the banking and other financial services sector as 3rd in ranking, with a score of 15% (The Youth Employment Network, 2009).

Additionally, the recent economic crunch has been perceived in some quarters as a major cause of high labour turnover since most companies had to fold up their operations and existence. However, existing evidence shows that the high labour turnover in Africa and Asia does not result in people losing their jobs per se but rather labour playing ‘musical chairs’ with firms, that is moving from one job to another, which is popularly termed ‘job-hopping’ (The Straits Times, 1999; The Youth Employment Network, 2009).

Employee turnover intention and its impact on organisational effectiveness has remained the focus of human resource and industrial-organisational researchers in recent times (Adjei-Appiah, 2008; Chen, Polyhart, Thomas, Anderson & Bliese, 2011; Onyishi, Ucho & Mkavga, 2012; Perez, 2008; Pitts, Marvel & Fernandez, 2011; Sean, Godkin, Fleischman & Kidwell, 2010). The phenomenon and its related antecedents is a subject of global concern and attract significant interest due to its psycho-economic dimensions and organisational significance. This is as a result of the fact that high turnover rates result in organisations losing inestimable amounts of money, resources, knowledge and even their business. Also, the advent of diverse organisations in the nations of the world and the related increase in the requirement of skilled labour force calls for competition among organisations to hire and retain the best employees. Consequently, employee turnover intention becomes one of the major human resource problems of most organisations because of the envisaged negative impact it has on organizations and employee morale. This, therefore, compels managers to seek better ways to manage their employees in order to retain valued human resources and sustain high performance.

It is imperative at this juncture to differentiate between actual turnover and intention to turnover, even though some scholars (e.g. Arnold, 1999; Price, 2001) have suggested turnover intent as a proxy construct for measuring actual turnover. According to Loquercio, Hammersley and Emmens (2006), staff turnover is a generic term and typically can be taken to refer to two different issues:

“Primarily, it refers to the proportion of workers leaving in a given time period but prior to the anticipated end of their contract. It is also used to describe ‘staff rotation’ where they move from one contract or assignment to another, whether on an open-ended or a fixed-term contract (p.1).”

Thus, this definition gives a lucid premise upon which an employee leaving an organisation can be classified as authentic turnover or not. Employee turnover can occur in any organisation and may be either voluntary or involuntary. Voluntary turnover refers to termination initiated by employees. Involuntary turnover, on the other hand, is the one in which the employee has no choice in the termination as it might be due to long term sickness, death, moving overseas, or employer-initiated termination (Loquercio et al., 2006). Moreover, employee turnover can also be classified into internal and external. Internal turnover involves employees leaving their current position, and taking a new position with the same organisation. Internal turnover has both positive and negative consequences and can only be moderated and controlled by typical human resource mechanisms, such as internal recruitment policy or formal succession planning. The commonly used formula to calculate a crude turnover rate for any given period is given as the total number of leavers over a time period per the average number of staff employed over a time period multiplied by hundred (Aksu, 2008; Loquercio et al., 2006).

Unlike actual turnover, turnover intention is not overt. Intention as a psychological construct is “a statement about a specific behaviour of interest or curiosity” (Berndt, 1981, p.639). Tett and Meyer (1993) defined turnover intention as conscious willfulness to seek other alternative job opportunities in other organizations. Similarly, employee turnover intention is defined as an employee’s voluntary intention to leave an organisation (Saks, 2006). In other words, it is a conscious and deliberate defiance by a worker to quit an organisation.

Intention plays a key mediating role between attitudes and turnover and is often used in research as a proxy for actual turnover (Arnold, 1999; Barry & Okun, 2011; Price, 2001). This is appropriate for several reasons. In the first place, studies indicate that only a small number of employees normally leave their employing organisations. Besides, turnover intention is a more useful variable than actual turnover for both employers and academic researchers (Dalessio, Silverman & Schuck, 1986). In addition, results on the study of the relationship between employees’ intention to turnover and actual turnover have given support to the significant relationship between these variables (Lambert, Hogan, & Barton, 2001). To buttress this claim, Steel and Ovalle’s (1984) meta-analysis reported an average correlation of .50 between intention to turnover and actual turnover. Steel and Ovalle (1984) further stated that turnover intent was more predictive of actual turnover than job satisfaction or commitment. In a similar vein, Carmeli and Wiesberg (2006) asserted that an employee’s intention to engage in a certain type of behaviour, such as turnover intention, is a significant predictor of that employee’s future behaviour. Hence, turnover intention captures the individual’s perception and evaluation of job alternatives.

The extant literature on the antecedents of turnover intentions has highlighted intent to leave rather than actual turnover as the outcome variable since employees decide in advance whether to leave the organization or not before their eventual exit. This is in line with Attitude-Behaviour theory (Fishbein &Ajzen, 1975) which posits that one’s intention to engage in a specific behaviour is the close predictor of that behaviour. In line with this assertion, some scholars (e.g. Hom & Griffeth, 1991; Onyishi et al., 2012; Tett & Meyer, 1993) have argued that research on turnover and turnover intentions has tended to focus on building conceptual models which link other antecedents such as job satisfaction, perception of employment opportunities and organisational commitment. Thus, these work-related antecedents influence turnover intention which in turn also influences actual turnover.

Aside the usual job satisfaction and organisational commitment for understanding employees’ intention to turnover and actual turnover, other promising new constructs such as pay satisfaction, leadership behaviour and psychological climate could meaningfully influence turnover intention and its related organisational outcomes. For the purpose of this study, variables that have been found to influence employee turnover intention were called antecedents (pay satisfaction, job satisfaction, transformational leadership, transactional leadership, affective commitment, normative commitment, continuance commitments and psychological climate) while the effects associated with the degree of turnover intention were considered outcomes (acceptable and accountable absence legitimacy). According to Saks (2006, as cited in Shuck, 2010, p.5), an antecedent variable is defined as “a specific condition or factor that influences or predicts a particular behaviour to emerge in practice; whereas, an outcome variable refers to the resulting effect of a specific activity or condition.” Against this backdrop, this study sought to investigate the antecedents and outcomes of employee turnover intention in SLCs in Ghana.

1.2 Statement of the Problem

The emergence of different SLCs in Ghana and the related increase in the requirement for skilled workers have brought about intense competition among SLCs to hire and maintain the best employees. Moreover, Igharia and Greenhaus (1992) opined that excessive turnover in general can be fatal to organizations due to the shortage of expertise in the job market and the high cost associated with the training of new employees. Thus, employee turnover intention becomes one of the major human resource challenges of the savings and loans companies in Ghana.

Furthermore, in any business environment, challenges cannot be completely ruled out and SLCs are not spared the agony of going through such challenges. One of these challenges is high staff turnover owing to low salary structures and absence of other incentives. A study by Bratlie, Fitzgerald and Meyyappan (2011) on microfinance institutions in Ghana revealed that staff turnover rate was exceptionally high in 2009, a situation which might have been caused by an employee retention strategy which was not thought through sufficiently beforehand. Again, the issue of employee turnover is becoming more severe in the savings and loans companies. The annual reports of ProCredit Savings and Loans Company Limited in Ghana have indicated that “staff retention remained a major challenge throughout the year, as both banks and non-bank financial institutions continued to poach experienced staff” (ProCredit Ghana, 2007, 2008, p.30). To buttress this point, the 2009 annual report of ProCredit Ghana further showed a relatively less staff turnover rate than in 2007 and 2008. This intervention was as a result of proactive human resource policies which resulted in a net staff retention of 4.5%. Additionally, given the high employee-customer relation and interaction in the non-bank financial institutions, turnover intention has a special importance in the savings and loans industry.

The extant literature on turnover intention is replete with studies in both the private and public sectors by various scholars (e.g. Adjei-Appiah, 2008; Akintayo, 2007; Babajide, 2010; Hom & Griffeth, 1991; Mobley, Griffeth, Hand & Meglino, 1979; Onyishi et al., 2012; Semordzi, 2012; Wang, 2006). Although, the concept of employee turnover intention has gained significant attention among researchers and academics in diverse fields, the concept remains in need of serious empirical research in less explored areas in developing economies like Ghana. Again, while much has been discussed on the subject of employee turnover intention, little is known about the antecedents and consequences of turnover intention in the domestic savings and loans companies in Ghana. This study, therefore, seeks to fill this gap by providing research support and ideas for further action.

Also, most of the studies on turnover intention have focused primarily on the traditional antecedents of job satisfaction and organisational commitment. However, none of these studies has been able to explain the influence of other potent psychological antecedents of the workplace on turnover intention in the non-bank financial institutions. This knowledge gap has thus created a void of information required to guide further research and practice in organisations. As a result, the need to examine antecedents and outcomes of employees’ turnover intention in the savings and loans companies in Ghana becomes imperative.

1.3 Objectives of the Study

The main objective of this study was to examine the antecedents and outcome variables of employee turnover intention in SLCs in Ghana. Specifically, the study sought to:

1. Find out the relationship between antecedents and employee turnover intention.
2. Examine the relationship between employee turnover intention and the perception of absenteeism.
3. Determine the moderating role of thoughts of quitting in the predicted relationship between employee turnover intention and their perception of absenteeism.

1.4 Hypotheses

To further explore the study objectives, three sets of hypotheses were formulated and tested for statistically significant relationships. The first set was related to the relationship between antecedents and turnover intention as an outcome variable. The second set of the hypothesis tested the relationship between turnover intention and the perception of absenteeism as acceptable or accountable work behaviour. Lastly, the moderating role of thoughts of quitting between turnover intention and absenteeism was also verified.

H1: There will be a negative relationship between employees’ pay satisfaction and their intention to leave.

H2: There will be a negative relationship between employees’ job satisfaction and their turnover intention.

H3a: Employees’ perceptions of transformational leadership will influence their turnover intention.

H3b: Employees’ perceptions of transactional leadership will impact their turnover intention.

H4a: There will be a negative relationship between affective commitment and turnover intention.

H4b: There will be a negative relationship between normative commitment and turnover intention.

H4c: There will be a negative correlation between continuance commitment and turnover intention.

H5: The perception of psychological climate will influence employees’ intention to quit.

H6: There will be a positive relationship between turnover intention and employees’ perceptions of absenteeism.

H6a: There will be a positive relation between turnover intention and employees’ perception of acceptable absence legitimacy.

H6b: There will be a positive relation between turnover intention and employees’ perception of accountable absence legitimacy.

H7: Employees’ thoughts of quitting will moderate the relations between their turnover intention and their perceptions of absenteeism.

H7a: Employees’ thoughts of quitting will moderate the relationship between their intention to turnover and their acceptable absence legitimacy.

H7b: Employees’ thoughts of quitting will moderate the relationship between their intention to turnover and their accountable absence legitimacy.

1.5 Significance of the Study

The concept of turnover intentions has gained substantial attention among academics, practitioners and researchers (Loquercio et al., 2006; Perez, 2008; Wang, 2006) but the concept remains in need of additional empirical research in less explored areas in developing economics like Africa (Onyishi et al., 2012). This study provides novel findings in the area by testing a new employee turnover intention model. This new information could potentially serve as a structure for implementing efficient and effective employee turnover intention interventions within the non-bank financial institutions (NBFIs) in Ghana.

Besides, in view of the fact that satisfaction is sometimes considered as a precursor of commitment, employees who are committed are less likely to leave their jobs and more likely to be concerned with improved organisational performance. The findings of this study could afford policy makers the opportunity to focus attention on evolving strategies that will bring about job satisfaction and commitment among employees in SLCs. Also, the findings will enable management to control employees’ desire to quit their jobs and other withdrawal related behaviours such as absenteeism and voluntary turnover.

Again, the findings of this research inform theory in relation to employees’ turnover intentions. For instance, this research tested a unique combination of variables (i.e., pay and job satisfaction, transformational and transactional leadership, affective, normative and continuance commitment, and psychological climate) untested simultaneously before and the results revealed new perceptive of how each variable impacts employee turnover intention. More so, the findings of this study augment the understanding of moderating influence of thoughts of quitting in the link between turnover intention and absenteeism.

In addition, findings from this study will help situate Human Resources practitioners in the future of their organization’s success as these variables are shown to have a significant correlation with important organisational outcome variables such as acceptable and accountable absence legitimacy. Also, knowledge generated from this study could be used to inform other fields of study such as education, public affairs and non-profit administration which may be challenged with similar organisational constraints and conditions.

Finally, findings from this study add to the literature on antecedents and outcomes of employee turnover intention in the Banking and Non-Bank Financial Institutions. This will stimulate further research in the area at different geographical locations within and outside the country. Moreover, it will provide a significant tool for policymakers and researchers alike who have future intentions of researching into this area. Consequently, future empirical research on employee turnover intention could benefit from it over time.

1.6 Delimitations of the Study

The scope of the study was limited to employees in the SLCs in Ghana. A study of this nature should have involved almost all the employees in the microfinance institutions (e.g. Rural and Community Banks, Financial NGOs, Credit Unions, Susu Collectors, and Micro-insurance Services) in the country irrespective of their locations. However, the study was restricted to the selection of employees from only SLCs in two regions in Ghana due to financial and time constraints required to complete the entire thesis.

The second delimitation included demographic factors (e.g. gender, age, position, tenure and marital status) that may have contributed to the development of employees’ intentions to turnover, but these factors are not examined in this study instead they are controlled due to their potential to influence the postulated links. The third delimitation concerned work and family-related variables such as work-to-family conflict and family-to-work conflict. The presence of this work and family-related variables could have promoted or detracted from the presence of employee turnover intention; however, an examination was beyond the scope of this study.

1.7 Definition of Terms

For the purpose of this study, the following terms were defined as follows:

Antecedent: This term referred to a specific condition or factor that influenced or predicted a particular behaviour that will emerge in practice (Saks, 2006). Antecedents examined in this study included pay and job satisfaction as measured by the Job Satisfaction Survey [JSS] (Spector, 1997); transformational and transactional leadership styles as measured by the Multifactor Leadership Questionnaire [MLQ 5x Short] (Bass & Avolio, 2004); affective, normative and continuance commitment as measured by Organisational Commitment Questionnaire [OCQ] (Meyer & Allen, 1997); and psychological climate as measured by the Psychological Climate Measure [PCM] (Brown & Leigh, 1996).

Outcome: This term referred to the resulting effect of a specific activity or condition (Saks, 2006). Outcome variables examined in this study included turnover intention as measured by Turnover Intention Questionnaire (Jackofsky & Slocum, 1987) and Absenteeism as measured the Absence Legitimacy Questionnaire (Addae, 2003).

Job satisfaction: This is described as a combination of psychological, physiological and environmental circumstances that cause a person to say ‘I am satisfied with my job’ (Happock, 1935, p.47).

Leadership: This term described a process that influences individuals and groups’ concerns with facilitating the performance of tasks of the group, and focuses on setting and achieving goals (Prabhakar, 2005).

Commitment: This described an employee’s ‘willingness to persist in a course of action and reluctance to change plans’ (Vance, 2006, p.4).

Psychological climate: This phrase is defined as the perception and interpretation of an organisational environment in relation to an employee’s perception of well-being (Brown & Leigh, 1996).

Turnover intention: This phrase is defined as an employee’s voluntary intention to leave or quit an organisation (Saks, 2006).

Absenteeism: This was defined as the extent to which employees perceive absenteeism as acceptable work behaviour, and is embedded in the social context within which the behaviour is enacted (Addae & Jones, 2002).

1.8 Research Assumptions

The study was established on the following assumptions: (a) an employee’s intention to turnover is the final cognitive step in the decision making process of actual voluntary turnover (Steel & Overall, 1984); (b) every employee has the potential to stay or leave a particular job; (c) human beings naturally seek positive experiences at work and employees who lack these experiences become dissatisfied with their work; (d) employee turnover intention is an inherent psychological thought that can be developed over a time period; and (e) just as work is a personal experience, intention to quit is also a personal decision based on numerous factors such as pay satisfaction, job satisfaction, leadership styles, organizational commitment and psychological climate.

1.9 Chapter Disposition

Chapter one comprise of the background of the study followed by the statement of the problem, the research objectives, and hypotheses. Furthermore, the significance of the study, scope of the study, definition of terms and chapter disposition are also discussed. The second chapter provides a review of related literature that supports the study. The chapter is divided into two sections: review of theoretical literature and review of empirical literature. The chapter concludes with a conceptual model on the existing theories and the empirical reviews that are studied.

Chapter three describes the research methodology used to conduct the study. It starts with a detailed discussion of the research paradigm and the research design adopted for this study. Further, the population, sample and sampling technique, instrument, procedure for data collection and ethical consideration, data analysis and profile of the study area are also considered. The fourth chapter presents the data analyses and detailed discussion of findings. In this chapter, data analysis and statistical methods were applied using Microsoft Excel 2010 and International Business Machine Statistical Product and Service Solutions (IBM SPSS) for Windows version 20.0. The analysis and statistical tests used in the research include descriptive statistics, reliability tests (Cronbach’s alpha, Kaiser-Meyer-Olkin measure of sampling adequacy, and Bartlett’s test of sphericity), factor analysis, Pearson’s product moment correlation coefficient and hierarchical regression analysis. An alpha level of 0.05 was assumed for all the tests.

Lastly, the fifth chapter presents a summary of the key findings, conclusions and recommendations based on the findings. The chapter concludes with direction for further research in the area of employee turnover intention, and limitations of the research.

CHAPTER TWO LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK

2.0 Introduction

This chapter examines the available literature that is appropriate for the phenomena being studied. First, the chapter begins with an introduction to the concept employee turnover intention. Next, appropriate theories and models that support the study are reviewed. Subsequently, relevant literature around each of the antecedents and outcome variables examined in this study is explored. The chapter concludes with a conceptual model and brief summary of the review.

2.1 Employee Turnover Intention

Interest in the study of turnover intention as a proxy for actual turnover has gained much popularity among researchers and academics in the area of industrial-organizational psychology (Griffeth, Hom & Gaertner, 2000; Mitra, Jenkins & Gupta, 1992; Riley, 2006) and personnel management (Price, 2001).

According to Watson Wyatt Worldwide (2007), the United States recorded the world’s highest voluntary turnover rate at 11%. However, the turnover rate for critical skill or top performing employees was recorded as 5% (Watson Wyatt Worldwide & WorldatWork, 2007). Consistent with the aforementioned statistics, Mobley et al. (1979) observed that turnover is influenced by a battery of factors such organizational factors, job-related factors and labour-market expectations. Also, included in the list are individual values and beliefs as well as individual employees’ characteristics. Therefore, turnover intention eventually influences actual turnover behaviour.

However, the intention to exit the organization may be either voluntary or involuntary. In the context of this research, turnover intention is defined as an employee’s voluntary intention to quit the organization (Saks, 2006). As a result, turnover intention captures individual employee’s perception and evaluation of job alternatives (Mobley et al., 1979). According to Rust, Stewart, Miller and Pielack (1996, as cited in Walker & Sorce, 2009), quitters generally cost the organization one and half to two and half times their annual salary in separation, replacement, and training costs. Further, turnover intention is a serious issue especially because of the costs associated with high labour turnover. Kumar, Reamendran and Yacob (2012) opined that the phenomenon consist of cost of recruiting and selecting new employees as well as the cost of loss of sales due to the low expertise of new employees.

Similarly, turnover intention is said to also disrupt organization’s operational procedures which ultimately leads to inefficiencies. Besides, Staw (1980) stated that “the higher the level of position to be filled in the organization, the greater the potential for disruption” (p.256). Thus, operational disruption occurs when key members vacate their post. Likewise, high turnover requires organizations to spend considerable amounts of time inducting the new employees to the social, performance norms and culture of an organization (Riley, 2006). Furthermore, the empirical studies indicate that a significant inverse relationship exists between turnover rates and productivity (Shaw, Gupta & Delery, 2005). Thus, voluntary turnover reduces an organization’s human capital component and therefore associates negatively with organizational performance.

Although the extant literature is replete with the negative consequences of turnover intention, researchers have also pointed out that there are positive ramifications (Barrick & Zimmerman, 2005; Dalton & Todor, 1979; Perez, 2008). For instance, the personal benefit of turnover intention includes salary increase and working closer to home. Besides, the organization may benefit when a veteran worker leaves and is replaced by a younger, more energetic and talented person who brings fresh ideas and expertise from previous job or school (Dalton, Krackhardt & Porter, 1981). Additionally, turnover may result in promotion and movement of employees into new positions. Dalton and Todor (1979) suggested that reasonable levels of turnover are tolerable and encouraged as new employees may contribute fresh ideas, knowledge and skills to problem solving tasks and different working styles that can enhance the social capital of the organization.

2.2 Theoretical Review

This section reviews the theories and models that are relevant to this study. The theories considered include the following: Multi-route Turnover theory, Equity theory, Hygiene-motivation theory, and Situational Leadership theory. In addition, some relevant turnover process models such as March and Simon’s decision to participate model, Mobley’s turnover decision process model and Jackofsky’s integrated process model are reviewed and critiqued.

2.2.1 Multi-Route Turnover Theory

The multi-route turnover model by Steers and Mowday (1981) incorporated several variables that were not included in earlier models. The theory hypothesized that job satisfaction, organizational commitment and job involvement influenced employees’ affective responses to the job, and affective responses also influenced employees’ desire and intention to stay or quit (Samad & Yusuf, 2012). Thus, the actual behaviour of employees staying or quitting is the final step of a sequence of variables. This implies that all the variables affect one another sequentially.

Additionally, the multi-route model added several concepts that were not discussed explicitly in previous turnover theories. First, the model revealed the effect of availability of information about job and organization on the job expectations. Secondly, it divulged the influence of job performance on the affective responses to the job. Thirdly, the model looks at the impact of both job attitude and satisfaction on the actual turnover of employees. Finally, the model disclosed the importance of non-working influence and its interaction with the affective responses on the intention to quit and the possibility of an employee to change their environment before deciding to leave the organization. As a result, Lee and Mowday (1987) opined that the model gives new areas and opportunities to investigate and do empirical research.

Lee and Mowday (1987) argued that the interactive relationships mentioned in the multi-route turnover model has not been subjected to rigorous statistical testing and thus could be a drawback. Nevertheless, the sequential nature of Steers and Mowday’s (1981) turnover theory was deemed appropriate for this study since the study’s hypothesized model seeks to investigate numerous antecedent and outcome variables of turnover intention as well as moderating the effect of thoughts of quitting.

2.2.2 Equity Theory

Adams’ (1965) equity theory explains how people develop perceptions of fairness in the distribution and exchange of resources. Mullins (2010) emphasized that equity theory operates on the “norm of reciprocity” and focuses on people’s feelings of how fairly they have been treated in comparison with the treatment received by others. Again, operating on the basis of the exchange theory, Bratton et al. (2007) observed that the basic premise of equity theory is that there is one important cognitive process that involves employees comparing what effort other employees are putting into their work and what rewards they receive, with their own experience.

Furthermore, Adams (1965) equity theory stated that pay satisfaction is determined by an employee’s perceived input-outcome balance. Hence, employees feel satisfied when payment is equitable and feel dissatisfied if an inequity exists. In other words, pay satisfaction is determined by the perceived ratio of what employees receive from the job compared to how much they put into the job (Adams, 1965; Lawler, 1971). Put differently, Mullins (2010) stressed that most exchange involve a number of inputs and outcomes and people place a weight on these various inputs and outcomes according to how they perceive their importance. In furtherance to this, Bratton et al. (2007) indicated that “this ‘social comparison’ process results in feelings of equity or inequity, and leads employees to form judgments on the value or ‘valence’ of a reward or outcome” (p.256).

According to equity theory, employees perceive effort and reward not in absolute but in relative terms (Adams, 1965), in the form of an inputs to outcome ratio. The behavioural consequence of inequity is that (a) the feeling of inequity causes tension, which is an unpleasant experience, (b) the presence of inequity therefore motivates the person to reduce the level of tension and the perceived inequity, (c) the magnitude of perceived inequity in turn determines the level of tension and (d) the level of tension created determines the strength of motivation (Mullins, 2010). A key application of equity theory is in the area of reward management (Bratton & Gold, 2007; Bratton et al., 2007). Thus, managers should be careful to avoid setting pay rates that cause employees to feel underpaid relative to others inside or outside the organization.

2.2.3 Two-Factor Theory

Herzberg and his colleagues (Herzberg, Mausner & Snyderman, 1993) proposed a two-factor theory in which job satisfaction and dissatisfaction were influenced by different factors. The two-factor theory emphasized that employees’ needs are influenced by two types of factors: hygiene (or extrinsic) and motivating (or intrinsic) factors. Extrinsic factors include salary, working conditions, supervision, company policy, poor interpersonal relations and job security (Mullins, 2010). The absence of hygiene factors will result in employees’ job dissatisfaction. Contrariwise, the fulfillment of extrinsic needs only eliminates hindrances to job satisfaction and in itself does not bring about job satisfaction.

The theory, however, proposed that intrinsic factors such as achievement, recognition, the nature of work, responsibility, advancement, and growth seem to be related to job satisfaction. Hence, organizations cannot motivate employees until what dissatisfies them has been removed (Herzberg, 1966). In line with this assertion, Mullins (2010) stressed that to motive employees to give of their best, management must give proper attention to the motivation or growth factors. Nevertheless, hygiene factors are necessary to avoid unpleasantness at work and to deny unfair treatment (Mullins, 2010). Put differently, the meeting of lower-level needs of employees is not motivating but can have a demotivating impact if not met. Therefore, true motivation occurs only when an employee’s higher-level needs are met (La Motta, 1995).

Moreover, Herzberg’s (1966) growth needs are the factors that motive employees to the highest level of performance. According to Schultz (1982), these motivators are an integral part of work itself and include factors such as nature of work the itself, the person’s sense of achievement, level of responsibility, personal development and growth, recognition for a job well done and feedback. The fulfillment of the motivators can promote employees’ job satisfaction (Furnham, Petrides, Jackson & Cotter, 2002; Herzberg et al., 1993). In a later study, Spector (1997) generalized fourteen job satisfaction facets based on Herzberg et al.’s two-factor theory.

Despite the criticism of the two-factor theory on grounds of limited application to manual workers and “methodologically bound” (Mullins, 2010), the relevance of the theory to job satisfaction and employee turnover intention cannot be underestimated. In line with the forgoing discourse, Nel et al. (2004) opined that a dissatisfied employee cannot be motivated and retained and it is therefore imperative that an organization first gives attention to hygiene factors before introducing growth factors in the workplace.

2.2.4 Situational Leadership Theory

The situational leadership model, developed by Paul Hersey and Kenneth Blanchard, suggests that the leader’s behaviour should be adjusted to the maturity level of the followers in relation to the work (Hersey & Blanchard, 1977). In addition, Bratton, Callinan, Forshaw and Sawchuk (2007) emphasized that the model employs two dimensions of leadership behaviour: one dimension is task or production-oriented, and the other is relationship or people-oriented. Task-oriented behaviour is the extent to which the leader defines, structures, and organizes the task of the followers while relationship-oriented is the extent to which the leader builds a personal relationship with his followers (Hellriegel, Slocum & Woodman, 1989; Mullins, 2010).

According to the model, the level of subordinate maturity determines the appropriate mix of task-oriented and relations-oriented behaviour for the leader (Yukl, 2010). This is because a high-maturity subordinate has both the ability and confidence to do a task, whereas a low-maturity subordinate lacks ability and self-confidence. Again, Yukl (2010) opined that for a low-maturity subordinate, the leader should use substantial task-oriented behaviour and be directive in defining roles, clarifying standards and procedures, and monitoring progress on attainment of objectives. As subordinate maturity increases to a moderate level, the leader can decrease the amount of task-oriented behaviour and provide more relations-oriented behaviour. As a result, the leader should act supportively, consult with the subordinate, and provide praise and attention as and when needed. For a high-maturity subordinate, Bratton et al. (2007) and Yukl (2010) claim that the leader should use a low level of task-oriented and relations-oriented behaviours. This kind of subordinate has the ability to do the work without much direction or monitoring by the leader, and the confidence to work without much supportive behaviour by the leader.

Besides, Hersey and Blanchard (1977) noted that subordinate maturity may regress, requiring a flexible adjustment of the leader’s behaviour. For instance, Yukl (2010) stated that a highly motivated subordinate may become apathetic after a personal tragedy, which would require closer supervision and a developmental intervention designed to boost maturity. Nevertheless, Bratton et al. (2007) asserted that one key limitation of the situational leadership model is the absence of central hypotheses that could be tested, which would make it a more valid, reliable theory of leadership. Besides, the model lacks a clear explanation of the process by which leader behaviour influences subordinate performance. Also, Barrow (1977) argued that maturity is a composite of diverse elements and the procedure used by Hersey and Blanchard to weight and combine them is highly questionable.

Despite the shortcomings of the model, Bratton et al. (2007) observed that it is a widely used prescriptive approach to leadership because it focuses attention on followers as important participants in the leadership process. Further, Yukl (2010) noted that the emphasis on flexible, adaptive behaviour, which has become a central tenet of some recent theories and research, is the hallmark of Hersey and Blanchard’s (1977) model. Again, Hersey and Blanchard’s model indicates that it is imperative to treat different followers differently, and to vary behaviour as the situation changes.

2.2.5 Turnover Process Models

This section presents three renowned turnover models which have shaped the course of research in turnover. It begins with March and Simon’s (1958) Decision to Participate model, followed by Mobley’s (1977) Turnover Decision Process model and ends with Jackofsky’s (1984) Integrated Process model.

2.2.5.1 Decision to Participate Model

March and Simon’s (1958) model is considered as the source for later employee turnover models. In their classic book “Organizations”, the authors introduced a universal theory of organizational equilibrium which underscored the importance of balancing employee and organization contributions and motivations (Holtom, Mitchell, Lee & Eberly, 2008). The decision to participate model is based on two factors that determine an employee’s balance. The two factors include perceived desirability to leave and perceived ease of movement.

According to Holtom et al (2008) and Trevor (2001), the two concepts are typically referred to as job satisfaction and perceived alternatives. Besides, March and Simon (1958) emphasize individual differences in ability and demographic variables (e.g., age, gender and tenure) as key determinants of perceived ease of movement whereas organizational size and job satisfaction control perceived desirability of movement (Samad & Yusuf, 2012). However, Holtom et al. (2008) noted that organization size was a macro-level variable in March and Simon’s model. Thus, when inducements are increased by the organization, this will lower the tendency of the workers to leave and vice versa (Morrell et al., 2001, as cited in Long, Ajagbe, Nor & Suleiman, 2012).

One crucial criticism of this model is that it is static rather than a procedural view of turnover. Besides, Samad and Yusuf (2012) and Long et al. (2012) argued that the decision to participate model also failed to incorporate important antecedents that could influence the turnover process such as role stress or the dimensions of commitment. The schematic illustration of this model is shown in Figure 2.1

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Figure 2.1: Simplified Version of March and Simon’s Decision to Participate Model Source: Morrell et al. (2001, p.62)

2.2.5.2 Turnover Decision Process Model

For the past three decades, Mobley’s (1977) employee turnover decision process model has altered the path of turnover research. However, the turnover decision process model was developed based on previous studies such as March and Simon’s (1958) framework of perceived desirability and ease of movement, and Porter and Steer’s (1973) model of met-expectation and intention to leave.

According to Mobley (1977), the decision to turnover process model is heuristic rather than descriptive and by inference, the model can be described as a sequence of cognition which begins with the process of evaluating the existing job followed by the emotional state of satisfaction or dissatisfaction. An outcome of dissatisfaction is to initiate thought of quitting. The next stage according to Perez (2008) is the evaluation of the expected utility of search (e.g. desirability of possible alternatives travel or lost work time) and the cost of quitting (e.g. loss of vested benefits). However, if the perceived possibility of finding an alternative is available and the associated cost is not high, then the next stage would be behavioural intention to search for alternatives which is followed by an actual search. Moreover, if alternatives exist, then an evaluation of the alternatives will proceed. Next, evaluation of the present job alternatives are carried out. Mobley (1977) argued that if the evaluation favours the alternative, then behavioural intention to quit will be stimulated, followed by the final decision to quit (see Figure 2.2 for illustration).

According to Holtom et al. (2008), Mobley et al. (1979) were among the first to identify potential moderating effects on the turnover decision. However, a major criticism of Mobley’s framework is that it serves only as a preliminary model for the development of the later models. Also, the framework only included linkages of turnover process without antecedents of turnover process such as job satisfaction facets and organizational commitment (Allen & Shanock, 2012; Samad & Yusuf, 2012).

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Figure 2.2: Mobley’s Employee Turnover Decision Process Model

Source: Long et al. (2012, p. 286)

2.2.5.3 Integrated Process Model

The integrated process model by Ellen Jackofsky is a path model that examines the effect of job performance on employee voluntary turnover. In the basic model, job performance influenced both desirability of movement and ease of movement as presented earlier by March and Simon (1958).

According to the integrated process model, desirability of movement is all about leadership and its effect on job satisfaction whereas ease of movement is determined by the expectation of finding alternatives. These two movements were considered as main factors which would stimulate the intention of employees to leave the organization voluntarily (Long et al., 2012). Further, the link between job performance and job satisfaction is indirect due to the influence of leader’s behaviour on job satisfaction. Thus, job performance will lead to a certain leader’s behaviour which in turn will affect job satisfaction (Jackofsky, 1984; Jackofsky & Slocum, 1987).

The model further postulates a causal relationship between job satisfaction and thoughts of quitting as well as between expectation of finding alternatives and thoughts of quitting (Jackofsky & Slocum, 1987). Thus, the thoughts of quitting emanate from either desirability of movement or ease of movement. Finally, individual’s intention to quit emanate from thoughts of quitting and intention to quit also leads to job turnover (Jackofsky & Slocum, 1987).

The obvious criticism leveled against this model is that though potential antecedents and job performance were anticipated to be highly interacting in this model, it is still inadequate to comprehend an organization’s turnover intention without taking into consideration other relevant issues like individual factors and extra-organizational factors.

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Figure 2.3: Jackofsky’s Basic Model of Voluntary Turnover

Source: Jackofsky (1984, p.77)

2.3 Antecedents of Employee Turnover Intention

This section reviews relevant literature around each of the antecedent variables observed in the study and further explores their relationships with employee turnover intention. First, pay satisfaction will be examined, followed by job satisfaction, transformational and transactional leadership, affective, normative and continuance commitment as well as psychological climate perception.

2.3.1 Pay Satisfaction

The concept of employee pay satisfaction is an area of study that has interested numerous researchers over the last three decades. The concept, pay satisfaction, gained much prominence in the mid-1980s to mid-1990s (Currall, Towler, Judge & Kohn, 2005) after Heneman and Schwab (1979, 1985) had developed the Pay Satisfaction Questionnaire (PSQ) which focused on four distinct dimensions, viz. level, structure, system and form. Evidence from the extant pay satisfaction literature has shown that dissatisfaction with pay is related to decreased interest in work and motivation (Nazir, Shah & Zaman, 2013) and a number of withdrawal behaviours, such as lateness to work (Koslowsky, Sagie, Krausz & Singer, 1997), turnover intentions (Trevor, Gerhart & Boudreau, 1997) and absenteeism (Weiner, 1980).

Although, there are many social factors that organizations can utilize to enhance the effectiveness and efficiency of their employees, the impact of salary or pay cannot be underestimated. In line with this argument, Oshagbemi (2000) stated that pay or salary is an acknowledgement and consequently regarded as a reward to motivate and improve workers behaviour towards the goals by their employers. Similarly, pay satisfaction has been demonstrated to positively affect organisational commitment (Lum et al., 1998) and job performance (Currall et al., 2005) and negatively influence employee absenteeism (Williams et al., 2006) and turnover intentions (Kim & Garman, 2004; Miceli & Mulvey, 2000). To buttress this point, Heneman and Judge (2000) concluded in their study that pay satisfaction or dissatisfaction can have imperative and undesirable consequences on diverse employee outcomes such as turnover intention, actual turnover and absenteeism.

Nisar, Zafar, Mahmood, Sohail, Sher and Safdar (2012) conducted a study on teachers’ satisfaction regarding their pay at the University of Punjab. The researchers sampled 200 respondents made up of male and female contractual and permanent lecturers. The results showed that 47% reported medium level of pay satisfaction, followed by 35% that recorded low level of pay satisfaction with only 18% reporting high levels of pay satisfaction.

Furthermore, Nazir et al. (2013) conducted a study examining remuneration of university teachers in Pakistan. The researchers examined the relationship between pay satisfaction and job satisfaction and established a positive relationship between pay satisfaction of workers and their job satisfaction. They concluded that pay satisfaction positively affected job satisfaction and further led to a decrease in turnover in academia. Hence, pay is one of the most important and basic determinant of job satisfaction and a number of indicators of withdrawals such as, turnover intentions [and absenteeism] of university teachers in Pakistan. Similarly, Pfeifer (2010) investigated the impact of wages and job levels on worker absenteeism. The researcher used a sample of 1,187 full-time white-collar workers in a large German company from January 1999 to December 2005. Consistent with the study’s main hypothesis, the researcher concluded that absenteeism was inversely correlated with the dimensions of pay (absolute wages, relative wages, and hierarchical levels).

In another study, Currall et al. (2005) examined the relationship between pay satisfaction and outcomes at the organisational level. In a multi-level and multi-method data with a sample of 6,394 public school teachers, the researchers found that pay satisfaction was negatively related with average teacher turnover intentions. As hypothesized by the researchers, the path from pay satisfaction to teacher turnover intentions was significant (β = −.42, p < .01). Consequently, Currall et al. concluded in their study that organisations that are characterized by employees with low pay satisfaction are susceptible to high rates of employee turnover. Similarly, Lum, Kervin, Clark, Reid and Sirola (1998) conducted a study in Canada that investigated paediatric nurses’ turnover intention and found that pay satisfaction had both direct and indirect effects on turnover intention.

Studies in the field of HR practices (Baloch, Ali, Ahsan & Mufty, 2010; Gyensare & Asare, 2012) have also established a significant relationship between compensation and a number of organisational outcome variables. For instance, Tessema and Soeters (2006) in a study on employees in Eretria civil service found a positive relationship between compensation practices and job satisfaction. Furthermore, Stringer, Didham and Theivananthampillai (2011) explored the relationship among motivation, pay satisfaction and job satisfaction of front-line employees in Austrialia. The researchers used a sample of 91 respondents and found a significant positive correlation between satisfaction with pay and front-line employees’ job satisfaction. In addition, Gyensare and Asare (2012) studied human resource practices and psychiatry nurses’ perceived performance in Ghana and established that compensation practice (r =.45, p < .01) has a significant positive relationship with psychiatry nurses’ performance. Likewise, a study by Choudhury and Mishra (2011) on Business Process Outsourcings (BPOs) at Orissa in India, found a significant positive link between pay satisfaction and job satisfaction (r =.48, p < .001) among the 106 respondents sampled.

Contrariwise, in a quantitative non-experimental study on employees of domestic private banks in Taiwan, Wang (2006) examined the relationship of pay satisfaction, job satisfaction, organisational commitment and turnover intention and concluded that pay satisfaction is not a determinant of employee turnover decisions. Similarly, Garner and Hunter (2012) found no significant relationship between pay satisfaction and turnover intentions among Substance Use Disorder (SUD) staff. From the issues discussed so far, it is convincing to argue that the absence of proper compensation practice is tantamount to low motivation and morale at work as well as withdrawal reaction behaviours such as lateness to and absence from work, turnover intentions and actual turnover among employees. Hence, it was conceptualized that pay satisfaction would inversely influence employee turnover intention.

2.3.2 Job Satisfaction

The construct job satisfaction requires an in-depth understanding because of its principal consequence on human resource policies and practices (Armutlulu & Noyan, 2011; Rayton, 2006) and organisation-related factors such as job performance, organisational commitment, turnover intentions and absenteeism. Job satisfaction, after the seminal work of Happock (1935), gained adequate attention by academics and researchers in industrial-organizational psychology, human resource management and organisational behaviour. In line with the foregoing assertion, Walker and Sorce (2009) emphasized that extensive research has been conducted on job satisfaction and several other constructs such as organisational commitment (Samad & Yusuf, 2012; Weng, Huang, Tsai, Chang, Lin & Lee, 2010), turnover intention (Brough & Frame, 2004; Ostroff, 1992; Price, 2001) and absenteeism (Lum et al., 1998; Oshagbemi, 2003) than any other construct in the literature.

Job satisfaction is so important that its absence often leads to lassitude and reduced organizational commitment. Besides, dissatisfied employees are more likely to quit their jobs or be absent than satisfied employees (Yucel & Bektas, 2012). For instance, Samad and Yusuf (2012) examined the relationship between job satisfaction, commitment, and turnover intent of doctors in Malaysian public hospitals. The researchers used 21 items made up of three components (i.e. intrinsic, extrinsic and general job satisfaction) to measure job satisfaction. They found that general satisfaction (r =-.49, p < .05), intrinsic satisfaction (r =-.44, p < .05) and extrinsic satisfaction (r =-.68, p < .05) were all inversely correlated with turnover intention. Samad and Yusuf (2012) further revealed that job satisfaction facets had a significant positive effect on organisational commitment whereas organisational commitment indicated a significant negative effect on turnover intention. The researchers concluded that overall satisfaction of doctors was a good predictor of their intention to turnover (β =-.152, p < .05).

Again, Walker and Sorce (2009) examined the correlates of job satisfaction among 749 early career employees in printing and publishing occupations. The authors summarized the results of their study as follows: (a) almost all (90.4%) of the respondents were satisfied with their overall job. However, 36% planned to actively seek a new job in the next year; (b) those who planned on making a job change were likely to stay in the same industry (28.0%), while an additional 12.0% will look for a new job within the same company; (c) another 12.9% will look for a new job in a different industry. They concluded that though employees claimed to be satisfied with their current jobs, their turnover intentions were alarming.

Maqbool, Murtaza and Rehman (2012) studied the impact of job satisfaction and organisational commitment on the turnover intentions of 100 employees of public sector organizations in Pakistan. The researchers concluded in their study that a significant negative relationship exists between job satisfaction and turnover intentions. Likewise, Brough and Frame (2004) also found that intrinsic job satisfaction was a direct predictor of employee turnover intention. In addition to this, Ostroff (1992) concluded in his study that a negative correlation exists between job satisfaction and turnover intention.

Using path analysis with LISREL 8.7, Baranik, Roling and Eby (2010) examined the mediating role of POS between mentoring support received and work attitudes in the health sector. Although, POS did not appear to mediate the proposed model as was initially conceived, the authors established that the path coefficients between job satisfaction (β =-.25) and organisational commitment (β =-.44) were significant and negatively linked with turnover intention. Baranik et al. concluded that as employees feel more satisfied at work and committed to their organisations, they tend to think less about leaving their current position.

Onyishi, Ucho and Mkavga (2012) found a significant negative relationship between job satisfaction and employee turnover intention. In a cross-sectional study of the relationship between job satisfaction and turnover intentions among 200 civil servants in Benue State of Nigeria, using the Minnesota Satisfaction Questionnaire (MSQ) developed by Weiss, Dawis, England and Lofquist (1967), the authors’ regression analysis showed that job satisfaction was significant and negatively related to turnover intention (β=-.38, p<.001). They concluded that job satisfaction contributed 14% to the unique variance in turnover intention.

Further, using a sample of 300 permanent employees of Total Nigeria Plc. in Lagos State, Mbah and Ikemefuna (2012) studied the impact of job satisfaction on employee turnover intention. Using a chi-square test of independence, Mbah and Ikemefuna (2012) provided evidence that, the greater employee job satisfaction (χ2 [4] =352.6, p<0.05), the less likely they are to express their intention to quit. The researchers found that all three facets of job satisfaction namely, pay satisfaction (χ2 [4] =6.99, p<0.05), satisfaction with nature of work (χ2 [4] =12.27, p<0.05) and satisfaction with supervision (χ2 [4] =1162.92, p<0.05) were statistically significant at the 5% significance level and inversely related to turnover intention. The researchers concluded in their study that the greater the job satisfaction of employees, the less likely they are to quit their jobs. Hence, employees with high levels of job satisfaction hold positive attitudes toward their jobs that those who are dissatisfied with their jobs.

Also, a cross-sectional survey by Rageb, Abd-El-Salam, El-Samadicy and Farid (2013) among college of management and technology (CMT) staff-members in Egypt revealed a significant inverse correlation between job satisfaction and employees turnover intention. Despite the fact that the study was restricted to a single school with a sample size of only 65 staff-members, the findings of Rageb et al.(2013) give us an idea of what is happening in the Arab world with regard to the relationship between job satisfaction and employee turnover intention.

Furthermore, studies in the healthcare industry have shown that job satisfaction is one of the major predictors of turnover intention and retention (Choong, et al., 2012; Coomber & Barriball, 2007; Hayes et al., 2006; Larrabee et al., 2003) in both developed and developing economies. Besides, Cohen and Golan (2007) reported that job satisfaction has pointed out as first related to turnover intention and intent to stay. Thus, employees who feel dissatisfied with their jobs will try as much as possible to find another job in other companies, switch to other jobs within an organisation or switch to other profession all in search for better alternative jobs. In Pakistan for instance, Bouckenooghe, Raja and Butt (2013) used the trait activation theory to explain the moderating effect of job satisfaction on the relationship between affect and intention to quit and concluded that job satisfaction indeed moderated the affect-turnover intent relationship.

Additionally, there is high level of employee dissatisfaction and turnover crisis in the hospitality industry in Malaysia. This is evidenced by the findings of AlBattat and Som’s (2013) conceptual study which specified that an international perspective on a turnover crisis begins when an employee faces the case of dissatisfaction from a poor working environment and considers leaving the current job. Thus, employees’ dissatisfaction will affect their commitment to work and lead them to turnover from the organisation either physically or mentally (Pathak, 2012). Similarly, Tracey and Hinkin (2008) found out that employee turnover rates are influenced by employee dissatisfaction within the job environment and reduce their contribution to the job.

Malik, Danish and Munir (2011) conducted a study on turnover intention and its impact on organisations. The empirical study utilized 277 respondents from five major industries in Pakistan namely, manufacturing, higher education, banking, telecommunication and hospitality industries. The authors concluded that job satisfaction (r=-.334, p<0.01) was significant and negatively correlated with employee turnover intention. Also, in New Zealand, research has shown that an inverse relationship exists between job satisfaction and turnover intention (Herlin, 2010).

Furthermore, unsatisfied employees often lose their initiatives and enthusiasm to work which often result in absenteeism and turnover. Consistent with the preceding assertion, Mehand, Waage and Sein (2005) found a negative relationship between employee’s job satisfaction and turnover intention. In addition, other studies have shown a moderate relationship between job satisfaction and turnover intentions (Khatri, Fern & Budhwar, 2001; Samad, 2006 as cited in, Saporna & Claveria, 2013).

Although, most studies on the job satisfaction-turnover linkage have focused on other institutions rather than on the non-bank financial institution, the vital role of job satisfaction in any organisation cannot be derided. It is considered as an imperative indicator of how staff members feel about their job commitment to the organisation and their turnover intentions (Kumari, 2011; Mount, 2006; Spector, 1997; Yucel & Bektas, 2012). The obvious reason is that satisfied employees are more likely to be creative and innovative than dissatisfied employees. Further, satisfied workers are more likely to come up with breakthroughs that would allow the organisation to grow and change positively with time and market conditions than dissatisfied workers. Based on the foregoing discussions, it was postulated that job satisfaction would be negatively related to employee turnover intention.

2.3.3 Leadership Styles

The volition and willingness of employees to remain in their organizations contribute to workforce stability and organisational effectiveness. Yet, this volition and willingness are only feasible when employees are satisfied with the leadership behaviour practiced by the organization. To buttress this point, Kozak and Uca (2008) opined that leadership style is an important management tool because, if properly utilized, it can enhance positive relationships with employees, improve the organizational climate and increase service performance (Gillet, Fouquereau, Bonnaud-Antignac, Mokounkolo & Colombat, 2013).

The relationship between transformational-transactional leadership styles and turnover intention has been explored by researchers (e.g., Bycio, Hackett & Allen, 1995; Martin & Epitropaki, 2001; Tse & Lam, 2008; Wells & Peachey, 2010). However, results of their studies have often shown that transformational rather than transactional leadership is the key factor in reducing and mitigating turnover intentions (Long & Thean, 2011). In a similar study, Martin and Epitropaki (2001) found that transformational leadership was inversely related to voluntary turnover intentions among employees from seven for-profit businesses. Also, Bycio et al. (1995) in a study on the conceptualization of transactional and transformational leadership in the health sector showed that greater degrees of transformational leadership were associated with reductions in intentions to leave the nursing profession.

Research has shown that transformational leadership rather than transactional and laissez faire leadership, results in higher levels of employees satisfaction, commitment and performance (Alam & Mohammad, 2009; Mester, Visser, Roodt & Kellerman, 2003). Given that high levels of satisfaction and commitment have been demonstrated to have an inverse relationship with intentions to quit, it is therefore lucid to assume that a similar relationship would exist between transformational-transactional leadership styles and intentions to quit. In addition, good leadership appears to increase satisfaction and commitment, and decrease sickness absenteeism (Kara, Uysal, Sirgy & Lee, 2013) and turnover intentions.

Also, in the context of health, Ramey (2002) examined nurse managers’ leadership styles and job satisfaction of registered staff nurses in an Appalachian state. Using data from a sample of 200 registered staff nurses, the author found a positive, moderate correlation between job satisfaction of registered nurses and transformational leadership of nurse managers (r =.38, p <.01). Further, the author reported a negative and weak relationship between job satisfaction of registered staff nurses and transactional leadership of nurse managers (r =-.25, p <.05). The findings of the study supported a positive relationship between transformational leadership styles and registered staff nurse job satisfaction.

In a recent meta-analytic study on leadership, commitment and culture, Jackson, Meyer and Wang (2013) stated that transformational leadership was shown to be positively related to affective and normative commitment, while contingent reward and active management-by-exception were positively related to affective commitment. The meta-analysis further revealed a stronger relationship between transformational leadership and both normative and continuance commitment in countries that valued collectivism. Nevertheless, the transformational leadership-affective commitment link was not affected by societal individualism-collectivism.

Also, in the sports arena, some studies have examined the effects of transformational and transactional leadership on the organisation (Burton & Peachey, 2009; Choi Sages, Park & Cunningham, 2007; Yusof & Shah, 2008). The outcomes of these studies have revealed that transformational leadership rather than transactional leadership promotes more positive organisational outcomes. Besides, a negative effect of voluntary turnover on organizational performance has also been reported in sport management (Hill, 2009; White, Persad & Gee, 2007).

Several scholars have reported significant positive relationship between transformational leadership style and organisational commitment (e.g., Davenport, 2010; Mert, Keskin & Bas, 2010; Shukui & Xiaomin, 2009). For instance, Mert and some colleagues established in their study that inspirational motivation, individualized consideration and intellectual stimulation factors of transformational leadership were more importantly associated with organisational commitment (Avolio, Zhu, Koh & Bhatia, 2004) and job satisfaction (Emery & Barker, 2007) than idealized influence.

2.3.3.1 Transformational Leadership

Transformational leadership has been reported in the literature to be related to turnover intentions (Albrecht, 2006; Alexandrov, Babakus & Yavas, 2007; Dupré & Day, 2007). For instance, Dupré and Day (2007) indicated that factors associated with supportive management of personnel were indirectly related to turnover intention through the mediating influence of job satisfaction. In addition, Alexandrov et al. (2007) argued that employees’ perception of management concern for both employees and customers have a significant effect on turnover intentions.

In a quantitative, exploratory and descriptive survey using 94 construction workers in Kuwait, Najm (2010) examined the influence of transformational and transactional leadership behaviours on the success of project and employees’ turnover intention. Using stepwise regression analysis, the author reported that the independent variables that entered the model predicted 59.2% of the variance in the criterion variable, turnover intention. The coefficients of the four independent variables that predicted construction workers turnover intentions were idealized influence (β =-.334), intellectual stimulation (β =-.189), active management-by-exception (β =.267) and passive management-by-exception (β =.193). The study concluded that construction firms could limit the upswing of staff turnover and increase the likelihood of project success by implementing and fostering an environment that focuses mainly on transformational leadership behaviours such as idealized influence and intellectual stimulation.

[...]

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Details

Title
Employee turnover intention. Empirical evidence from the Savings and Loans Companies in Ghana
College
University of Ghana, Legon  (University of Ghana Business School)
Course
MPhil Human Resource Management
Grade
A
Author
Year
2013
Pages
206
Catalog Number
V322354
ISBN (eBook)
9783668263970
ISBN (Book)
9783668263987
File size
4147 KB
Language
English
Notes
This master's thesis was adjudged the best thesis in Human Resource Management for the 2013 academic year. So far, two peer-review journal articles and a conference paper have been published out of it.
Tags
employee, empirical, savings, loans, companies, ghana
Quote paper
Michael Asiedu Gyensare (Author), 2013, Employee turnover intention. Empirical evidence from the Savings and Loans Companies in Ghana, Munich, GRIN Verlag, https://www.grin.com/document/322354

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