Master Thesis
Level: master’s program
Perceived Work-related Factors and Turnover
Intention
- A Case Study of a South Korean Construction Company
Author: Jinseok Yang and Philip Wittenberg Supervisor: Lenka Klimplova
Examiner: Tao Yang
Subject/main field of study: Master’s thesis in Business Administration/ Strategic HRM Course code: FÖ 3027
Credits: 15
Date of examination: June 13th, 2016
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Purpose – Employee turnover entails considerable costs and is a major problem for the construction industry. By creating an extensive framework, this study aims to examine whether perceived work-related factors affect turnover intention in South Korean construction companies.
Research design – The paper is based on the results of a questionnaire of 136 employees that was conducted and provided by a Korean construction company. Research hypotheses were tested via correlation analyses. The most influencing work-related factors, as well as differences among job levels, were determined by multiple regression analyses.
Findings – Communication, immediate leaders, organizational commitment, and organizational pride substantially affect turnover intentions. All of these factors can be considered as relational factors. The most influencing factors differ among job levels. Discussion/practical implications – Immediate leaders should be aware of their role in retaining employees and enhance communication, organizational commitment and pride. This study shows how the importance of certain variables differs for groups of employees. Theoretical implications/limitations– This study is based on a sample of employees from a Korean construction company. Therefore, the generalizability of the findings has to be tested. Future research should test the proposed framework with other factors or resources. Originality/value – This study shed light on the turnover subject in the South Korean construction industry. It shows that different factors can influence turnover intention among job levels. A framework was created, which is based on 16 work-related factors including organizational factors, HRM practices and job attitudes.
Keywords Employee turnover, Turnover intention, Work-related factors, Job level, Construction, South Korea, Organizational pride, Organizational commitment, Communication, Immediate leader
Contents
1. INTRODUCTION ... 1
2. CONCEPTUAL FRAMEWORK ... 5
2.1 Theoretical background ... 5
2.1.1 Social Exchange Theory ... 5
2.1.2 Turnover and turnover intention ... 5
2.1.3 Job level and turnover reasons ... 6
2.2 Creating the framework: Work-related factors influencing turnover intention ... 7
2.2.1 Organizational factors ... 8 2.2.2 HRM practices ... 14 2.2.3 Job attitudes ... 19 3. RESEARCH DESIGN ... 25 3.1 Research strategy ... 25 3.2 Data collection ... 27 3.3 Data description ... 28
3.4 Data analysis methods ... 29
3.5 Data quality, limitations and ethical considerations ... 30
4. FINDINGS ... 32
4.1 General description... 32
4.2 Correlation analysis ... 34
4.3 Multiple regression analysis ... 35
5. DISCUSSION & PRACTICAL IMPLICATIONS... 41
6. CONCLUSION ... 45
References ... 47
1
1. INTRODUCTION
Employee turnover continues to be a serious problem for organizations even though it has been researched for more than 60 years (March & Simon, 1958; Nawaz & Pangil, 2016). Turnover is defined as the individual movement across the membership boundary of an organization (Price, 2001). It is closely related to the loss of competitive advantages. According to the resource-based view (RBV), competitive advantages originate from strategic resources which are scarce and difficult to imitate and transfer (Wernerfelt, 1984; Grant, 1991; Amit & Schoemaker, 1993). Numerous scholars have pointed out that human resources are one of the strategic resources which lead companies to competitive advantages. For example, Boxall and Purcell (2011) contended that the special quality of human resources can lead companies to a sustainable market leadership position. Additionally, they argued that competitive advantages based on human resources are superior and hard to copy by competitors (Boxall & Purcell, 2011). McWilliams, Van Fleet and Wright (2001) also asserted that a highly skilled and motivated workforce has great potential to create a source of sustainable competitive advantages. The assurance that human capital is strategically important to a firm’s viability and success implies how crucial it is to prevent high skilled employees from leaving organizations.
Not only is turnover closely related to the loss of firms’ competitive advantages, it can also cause monetary and non-monetary costs for the firm. Monetary costs arise through the hiring process of new employees (Haider, Rasli, Akhtar, Yusoff, Malik & Aamir, 2015), such as advertising, screening, verifying credentials, interviewing and the training of new employees (Nair, 2009). Additional costs are caused through time and administration necessary for exit interviews (Korsakienė, Stankevičienė, Šimelytė & Talačkienė, 2014). Non-monetary costs occur in form of the loss of specific knowledge, know-how, skills (Yamamoto, 2011; Mitchell, Holtom & Lee, 2001), customers and contacts, productivity (Shaw & Dewald, 2011) and social capital (Sutherland & Jordaan, 2004). In the future, these lost attributes are likely to be transferred to competing organizations, enabling them to gain competitive advantages (Ramlall, 2003). Overall, it can be concluded that the loss of employees can negatively impact the competitive advantages of a firm (Shaw, Gupta & Delery, 2005) and cause relevant costs (Haider et al., 2015; Yamamoto, 2011). Thus, it can be maintained that understanding employees’ turnover behavior is crucial for an organization’s viability.
2 extrinsic rewards and advancement opportunities as work-related factors and family responsibilities as a personal factor. However, Baysinger and Mobley (1983) criticized the previous turnover studies which focused on personal factors. They suggest that turnover studies should focus on factors that can be influenced by HR managers (human resources managers) and organizations. Based on this point of view and in order to suggest practical implications for organizations, the scope of this study is limited to work-related factors such as organizational communication, performance appraisal, and organizational trust. Since the reasons to leave an organization may differ according to job levels (Hausknecht, Rodda & Howard, 2009), the present research will highlight differences in turnover behavior of both managerial and non-managerial employees. The fact that job level differences have not been extensively studied in the literature (Hausknecht et al., 2009), further motivates this intention.
3 The need for research is especially necessary in the South Korean construction industry since the sector has one of the highest voluntary employee turnover rates (Appendix 1). According to the statistical data from the Ministry of Labor in South Korea (2016), the average voluntary turnover rate between 2011 and 2015 was 2.1% in South Korea. The average rate in the construction industry during the same period was 3.6%. It had the third highest rate, compared with 17 other industries in South Korea. Only two industries, namely accommodation and food services (5.2%) and business facilities management and business support services (3.9%), had higher turnover rates during this period (Employment Labor Statistics Korea, 2016). Another reason for studying employee turnover in the construction sector is the fact that human capital is the most important source to successfully accomplish projects. Tupenaite, Kanapeckiene and Naimaviciene (2008) claimed that tacit knowledge is an essential determinant of successful performance and a competitive edge in the construction industry. Tacit knowledge refers to the inexpressible knowledge that people acquire. It is difficult to codify and has both subjective and personal characteristics (Hislop, 2005). Thus, it can be argued that retaining skilled and knowledgeable employees is a critical factor in the construction industry. It is therefore valuable to conduct research in this particular sector. While turnover studies in South Korea have been conducted in other industries, such as nursing (Moon & Han, 2011), hospital (Sung, Seo & Kim, 2012), nonprofit (Kang, Huh, Cho & Auh, 2014) and IT (Chang, 2008), to our knowledge, no such research has been carried out in the construction sector. Hence, the study aims to examine whether perceived work-related factors affect turnover intention in South Korean construction companies. To fulfill this aim the two research objectives are formulated. The first objective is to examine the relationship between work-related factors and turnover intention among job levels. The second is the determination of the most influencing work-related factors among job levels. To reach these objectives, a case study of a South Korean construction company will be conducted.
5
2. CONCEPTUAL FRAMEWORK
In this chapter the conceptual framework of this study, as well as relevant theoretical background is presented.
2.1 Theoretical background
2.1.1 Social Exchange Theory
This study is based on the fundamental concepts of social exchange theory. Social exchange theory implies an ‘exchange’ process between two parties, that is mutually contingent, and mutually rewarding (Emerson, 1976). According to this theory, various social exchange relationships exist between members of an organization (Cropanzano & Mitchell, 2005). Numerous studies (Gilhs, 2008; Ko, 2005; Rice, 2009; Schakett, 2009; Swift, 2007) adopted this theory to explain the relationship between employees behavior and a diversity of organizational aspects. According to Wayne, Shore and Liden (1997), high level of social exchange can contribute to building a sense of attachment and commitment towards the organization.
Furthermore, when employees have a positive perception of a social exchange relationship with their employers, they are less likely to leave their organizations (Nawaz & Pangil, 2016). For instance, Abubakar, Chauhan and Kura (2015) indicated that employees have a tendency to stay at their current job when they are satisfied with the salary, performance appraisal, training and development and career growth in their organizations. In addition, the greater employees satisfaction with organizational support, the more likely they will feel a responsibility to reward their organization (Eisenberger, Huntington, Hutchinson & Sowa, 1986; Eisenberger, Stinglhamber, Vandenberghe, Sucharski & Rhoades, 2002). One way to do this is by remaining in and staying loyal towards the organization. Thus, social exchange theory suggests that organizations and managers can provide organizational support to achieve desirable attitudes and behaviors from employees, for example, low turnover intention (Gould-Williams, 2007; Gould-Williams & Davies, 2005; Spencer, Buyens & Taylor, 2012).
2.1.2 Turnover and turnover intention
6 satisfaction with the organization, compensation, organizational communication, and a declining of reputation (Doh, Smith, Stumpf & Tymon, 2011; Cotton & Tuttle, 1986).
The causes for turnover can be involuntary or voluntary. Involuntary turnover reflects the decision of an employer to terminate the employment contract of an employee (Shaw, Delery, Jenkins & Gupta, 1998). Additionally, uncontrollable reasons like injury, sickness and death can also cause involuntary turnover. Voluntary employee turnover explains that individual perception of employees can actually result in turnover (Javed, Khan, Yasir, Aamir & Ahmed, 2014). Voluntary employee turnover can be influenced by the following factors: the perception of work quality (Jackofsky & Peters, 1983), and job satisfaction (Law, 1995).
Turnover is closely related to turnover intention, as the actual turnover behavior depends on the individual’s intention to leave the company. It is defined as a cognitive process by which one considers resigning from work (Mobley, Griffeth, Hand, & Meglino, 1979). In other words, it is an employee’s unexpressed plan to quit work within a certain time period (Lambert & Hogan, 2009). Various researchers found that turnover intention is the most immediate determinant of actual turnover behavior (Bluedorn, 1982; Igbaria & Greenhaus, 1992; Mobley et al., 1979). This present research assigns turnover intention as a dependent variable and examines the influence of work-related factors on this intention.
2.1.3 Job level and turnover reasons
7 Accordingly, it can be assumed that the most impacting work-related factors might not be identical for managerial and non-managerial level employees.
2.2 Creating the framework: Work-related factors influencing turnover
intention
Various authors (Ø gaard, 2006; Muchinsky & Morrow, 1980; Branham, 2005) conducted research to evaluate the influence of work-related factors on turnover intention. By examining turnover literature, it was observed that the work-related factors included in previous studies can be classified into following categories: organizational factors, HRM practices, and job attitudes. However, previous studies seem not to include various factors from all three categories (Appendix 2). A need for future research in this field has been also expressed by a number of authors (Juhdi, Pa'wan & Hansaram, 2013; Abubakar, Chauhan & Kura, 2014; Cotton & Tuttle, 1986; Nawaz & Pangil, 2016). In order to create an extensive view of turnover intention in an organization, the framework for this study will include factors from all three categories. The work-related factors were chosen based on a review of turnover studies and meta-analyses of turnover. Most frequently used work-related factors were compiled and aligned with the data used for the study. However, in order to make this study feasible, the number of chosen work-related factors is limited to 16.
8 2.2.1 Organizational factors
The organizational factors include: goals and direction, immediate leader, communication, company’s reputation, culture towards risk taking and collaboration.
Goals and direction
Strategic planning is the organizational process of defining its goals or direction, and making decisions on allocating its resources to achieve them (Business Dictionary- strategic planning, 2016). Empirical evidence suggests that the establishment of clearly defined organizational objectives and goals decrease employee turnover intention and increase job productivity (Moncarz, Zhao & Kay, 2009). Furthermore, organizations with effective and well-communicated mission and goals were found to experience lower turnover rates (Moncarz et al., 2009). In order to ensure that the defined objectives are achieved, individual employee’s efforts should be linked to the organizational goals (Lee & Conrad, 2009). Not only does this help reach goals and objectives, it also increases employee job satisfaction (Ostroff, 1992). To conclude, clearly established organizational goals that are understood by employees and are linked to their individual efforts do not only increase the overall job satisfaction, but also influence the turnover intention. Therefore, the framework of this paper includes questions that intend to evaluate whether or not the employees understand the company's vision and business goals. Additionally, they are asked if their individual goals are linked to the goals of the team and the company. Lastly, the employee perception of their department’s mission and goals is evaluated. According to a recent report by the Korean Chamber of Commerce and Industry (KCCI) and McKinsey (2016), employees and management in South Korean companies had significantly different perceptions of the goals and the directions of their companies. Employees had a low perception of goals and directions while management perceived them as high, communicating these within the organization. Based on the social exchange theory, it can be assumed that the low perception of South Korean employees regarding goals and directions leads to increase turnover intention. Accordingly, the following hypotheses are formulated. It is expected that a high perception of goals and direction will decrease the intention to leave and vice versa.
H1a: The perception of goals and direction has a negative relationship with turnover intention among the employees of South Korean construction companies.
9 H1c: The perception of goals and direction has a negative relationship with turnover intention among managerial employees of South Korean construction companies.
Immediate leader
An effective organizational leadership can help prioritize aims for employees and can provide guidance toward achieving the overall corporate goals (Business Dictionary – organizational leadership, 2016). It has been observed that dissatisfaction with immediate leaders is a contributor to turnover (Christmas, 2008). An early review of turnover studies by Cotton and Tuttle (1986), indicated that the satisfaction with supervision or the immediate leader was utilized as an independent variable in several studies. Furthermore, various studies examined factors that influence the employee’s satisfaction with their supervisors. Sušanj and Jakopec (2012) stated that fairness is one important factor which increases employees’ satisfaction with their immediate leader. This means, for example, that immediate leaders evaluate employees’ performance consistently, rationally and objectively. Trust and satisfaction can further be increased if employees are pleased with their leader’s communication. More precisely, when leadership listens to what team members say and reflect opinions into decision making (Podsakoff, MacKenzie, Moorman & Fetter 1990). Folkman (2010) further revealed that consistent behavior of immediate leaders is a crucial factor that influences employee satisfaction, commitment and trust towards immediate leaders. To sum up, satisfaction with immediate leadership has a direct impact on employee’s turnover intention. Fairness, transparency and satisfying communication affect the employee’s satisfaction with leadership, and are therefore analyzed in this study. Since the relationship with supervisors has been verified as a negative determinant of turnover intention in previous research in South Korea and China (Kim, Lee & Lee, 2013; Kim, 2015), a similar result can be expected in South Korean construction companies. Accordingly, the following hypotheses are formulated. It is expected that a high perception of immediate leader will decrease the intention to leave and vice versa.
H2a: The perception of immediate leader has a negative relationship with turnover intention among the employees of South Korean construction companies.
H2b: The perception of immediate leader has a negative relationship with turnover intention among non-managerial employees of South Korean construction companies.
10 Communication
Organizational communication can be referred to as communication among different hierarchic levels, as well as communication between employees in the organization (Turkalj & Fosić, 2009). Studies have shown that communication is an important determinant that significantly influences turnover intention of both management and non-management personnel (Moncarz et al., 2009). It is not only important that the management is able to clearly communicate with their employees (downward communication), but also relevant that employees can easily deliver messages to their leaders (upward communication) (Turkalj & Fosić, 2009). Additionally, easy communication within and between teams or departments (sideward communication) also increases the perceived satisfaction of communication (Turkalj & Fosić, 2009). In summary, communication that has been proven to be an important influencer for turnover consists of downward-, upward- and sideward communication. The satisfaction of employees regarding these three communication forms will be measured within this research. The satisfaction of employees regarding these three communication forms will be measured within this research. South Korean companies, compared to other global companies, have an underdeveloped organizational communication (Korea Chamber of Commerce & Industry, 2016). This is represented by one-way communication from top to bottom. Based on the social exchange theory, it can be assumed that the low perception of South Korean employees concerning communication in organizations leads to an increase in turnover intention. Accordingly, the following hypotheses are formulated. It is expected that a high perception of communication will decrease the intention to leave and vice versa.
H3a: The perception of communication has a negative relationship with turnover intention among the employees of South Korean construction companies.
H3b: The perception of communication has a negative relationship with turnover intention among non-managerial employees of South Korean construction companies.
H3c: The perception of communication has a negative relationship with turnover intention among managerial employees of South Korean construction companies.
Company’s reputation
11 competitiveness of organizations to current and potential employees (Branham, 2005). In order to be known as competitive, organizations need to adapt to changing market conditions, especially in the era of globalization, new technologies and high transparency (Reeves & Deimer, 2011). Employees therefore are asked about their perception regarding the competitiveness of their organization as well as its ability to adapt to a changing environment. Finally, it is evaluated whether they generally believe the organization is a good place to work for. Previous research in South Korea (Kwon & Rupp, 2013) presented negative relations between a company’s reputation and turnover intention, especially among high performers in organizations. An identical correlation can be expected in South Korean construction companies. Accordingly, the following hypotheses are formulated. It is expected that a high perception of company’s reputation will decrease the intention to leave and vice versa.
H4a: The perception of company’s reputation has a negative relationship with turnover intention among the employees of South Korean construction companies.
H4b: The perception of company’s reputation has a negative relationship with turnover intention among non-managerial employees of South Korean construction companies.
H4c: The perception of company’s reputation has a negative relationship with turnover intention among managerial employees of South Korean construction companies.
Culture towards change and risk-taking
12 high perception of culture towards change and risk-taking will decrease the intention to leave and vice versa.
H5a: The perception of culture towards change and risk-taking has a negative relationship with turnover intention among the employees of South Korean construction companies.
H5b: The perception of culture towards change and risk-taking has a negative relationship with turnover intention among non-managerial employees of South Korean construction companies.
H5c: The perception of culture towards change and risk-taking has a negative relationship with turnover intention among managerial employees of South Korean construction companies.
Collaboration
Collaboration can be defined as an arrangement in which two or more parties (which may or may not have had any previous relationship) work collectively towards a common goal (Business Dictionary – Collaboration, 2016). Internal collaboration focuses on cooperation within an organization (Hillebrand & Biemans, 2003). Pinkerton (2005) conducted a study which related poor internal collaboration to turnover in the nursing sector. Furthermore, Christmas (2008) observed that dissatisfaction with management and departmental relationships are contributors to turnover. The employee perception concerning collaboration in teams and with other departments thus is evaluated. Additionally, the perceived effectiveness of sharing information and ideas within the organization is examined. Since the strong negative correlation between collaboration and turnover intention has been previously verified in research in South Korea (Park & Kim, 2009), the identical result can be expected in South Korean construction companies. Accordingly, the following hypotheses are formulated. It is expected that a high perception of collaboration will decrease the intention to leave and vice versa.
H6a: The perception of collaboration has a negative relationship with turnover intention among the employees of South Korean construction companies.
H6b: The perception collaboration has a negative relationship with turnover intention among non-managerial employees of South Korean construction companies.
13 To sum up, a high perception of the six chosen organizational factors is expected to decrease the turnover intention of employees. Thus, a negative relationship between the organizational factors and turnover intention is anticipated. The relationship between the organizational factors and turnover intention are illustrated in Figure 1.
14 2.2.2 HRM practices
The HRM practices include the factors performance appraisal, compensation, promotion, hiring, training and career development and job design.
Performance appraisal
15 H7a: The perception of performance appraisal has a negative relationship with turnover intention among the employees of South Korean construction companies.
H7b: The perception of performance appraisal has a negative relationship with turnover intention among non-managerial employees of South Korean construction companies.
H7c: The perception of performance appraisal has a negative relationship with turnover intention among managerial employees of South Korean construction companies.
Compensation
Compensation is another crucial factor in HR practices that it is closely related to turnover intention. A number of empirical findings proved that compensation plays a key role regarding turnover intention and retention (Lawler & Rhode, 1976; Chew & Chan, 2008). According to Chan and Kuok (2011), more than 90% of firms acknowledge that salary is a dominant reason for employees’ turnover in the hospitality and tourism industry in Macau. Dissatisfaction with salary leads to employees moving to another company for better financial gains (Chan & Kuok, 2011). Hence the implication that organizations need to offer competitive compensation packages to reduce turnover intention. In addition, employees expect that their skills, experience and knowledge are appropriately reflected in a compensation system (Long, Perumal & Ajagbe, 2012). Hence, the framework of this research includes questions regarding the employees’ satisfaction with their compensation, considering the cost of living, the labor market pay level, and their performance. Since previous research in South Korea verifies that compensation has a negative relationship with turnover intention (Choi, Jeong & Kim, 2015), the identical result can be expected in South Korean construction companies. Accordingly, the following hypotheses are formulated. It is expected that a high perception of compensation will decrease the intention to leave and vice versa.
H8a: The perception of compensation has a negative relationship with turnover intention among the employees of South Korean construction companies.
H8b: The perception of compensation has a negative relationship with turnover intention among non-managerial employees of South Korean construction companies.
16 Promotion
According to Cotton and Tuttle’s (1986) meta-analysis and review, 16 studies revealed that promotional opportunity is correlated to employee turnover. Recent studies still consider promotion as a determinant of employee turnover. Lack of advancement opportunity was one of the most influencing turnover factors (Korsakienė et al., 2014). Cafaro (2001) also stated that promotion and work design are the major reasons for employees’ deciding to join, remain or leave a company. Concerning promotion, fairness is a critical point for employee satisfaction (Parker, Nouri & Hayes, 2011). A strong link between job performance and promotions leads to a high perception of justice and satisfaction of employees (Parker et al., 2011). Studies revealed that transparent promotion criteria are another crucial factor of employees’ perceived fairness (McEnrue 1989; Saal & Moore, 1993; Pearce, Branyiczki & Bakacsi, 1994; Kaplan & Ferris, 2001). Being able to communicate during the promotion process contributes to employee satisfaction (Lind, Tyler & Huo, 1997; Folger & Cropanzano, 1998). Hence, linkage to job performance, transparency of the criteria, and appropriate feedback are chosen as criteria for the measurement of employees’ perception regarding promotion. Since, based on previous research in South Korea (Korea Institute of Local Finance, 2014), promotion is claimed to have a negative relationship with turnover intention, this result can also be expected in South Korean construction companies. Accordingly, the following hypotheses are formulated. It is expected that a high perception of promotion will decrease the intention to leave and vice versa.
H9a: The perception of promotion has a negative relationship with turnover intention among the employees of South Korean construction companies.
H9b: The perception of promotion has a negative relationship with turnover intention among non-managerial employees of South Korean construction companies.
H9c: The perception of promotion has a negative relationship with turnover intention among managerial employees of South Korean construction companies.
Hiring
17 likely have high organizational commitment (Cho, Woods, Jang & Erdem, 2006). Accordingly, the framework includes questions measuring the degree as to how employees perceive their company’s hiring procedures. The questions will in particular emphasize the validity and suitability of the hiring practice. Previous research in East and Southeast Asian countries including South Korea (Yalabik, Chen, Lawler & Kim, 2008) shows that hiring has a negative relationship with turnover intention. This result can also be expected in South Korean construction companies. Accordingly, the following hypotheses are formulated. It is expected that a high perception of hiring will decrease the intention to leave and vice versa.
H10a: The perception of hiring has a negative relationship with turnover intention among the employees of South Korean construction companies.
H10b: The perception of hiring has a negative relationship with turnover intention among non-managerial employees of South Korean construction companies.
H10c: The perception of hiring has a negative relationship with turnover intention among managerial employees of South Korean construction companies.
Training and career development
Training practices contribute to a high-skilled workforce and reduce turnover (Huselid, 1995). Through training, companies can ensure a high quality of performance and, at the same time, employees are able to acquire new skills and knowledge, being able to work more effectively (Long, Perumal & Ajagbe, 2012). Walsh and Taylor (2007) stated that a lack of opportunity for professional growth and development was a major turnover factor, besides dissatisfaction with compensation. The questions in the framework are therefore related to opportunities and organizational support for training and career development. Kim (2015) contended that South Korean companies need to provide employees with opportunities for training and career development to reduce turnover intention. Based on this argument, the following hypotheses are formulated. It is expected that a high perception of training and career development will decrease the intention to leave and vice versa.
H11a: The perception of training and career development has a negative relationship with turnover intention among the employees of South Korean construction companies.
18 H11c: The perception of training and career development has a negative relationship with turnover intention among managerial employees of South Korean construction companies.
Job design
Previous studies found that employees who perceive their work as meaningful and interesting are most likely to remain in their organization (Walsh & Taylor, 2007; Samuel & Chipunza, 2009). How much discretion employees have in their work is a critical aspect of turnover behavior. A job which allows independent work and leeway of freedom increases the employees’ intention to stay in a company (Kinnear & Sutherland, 2000). The discretion of planning and autonomously executing tasks play a major role in increasing employee retention (Korsakienė et al., 2014). The efficient allocation of work in a team is another influencer of employee turnover. According to the study of De Pierro (2003), the three top reasons for the high turnover rate among 267 New Jersey special education administrators was workload. Another study indicated heavy workload as one of the critical factors influencing turnover intention (Chan & Morrison, 2000). Therefore, it can be assumed that efficient work allocation affects turnover intention by contributing to the solution of the workload problem. Thus, the research includes questions regarding meaningful and interesting work, job discretion and job allocation in order to measure the employee perception of their job design. The negative correlation between employees’ satisfaction of their job design and turnover intention was verified in previous research in South Korea (Park & Kim, 2009). An identical result can be expected in South Korean construction companies. Accordingly, the following hypotheses are formulated. It is expected that a high perception of job design will decrease the intention to leave and vice versa.
H12a: The perception of job design has a negative relationship with turnover intention among the employees of South Korean construction companies.
H12b: The perception of job design has a negative relationship with turnover intention among non-managerial employees of South Korean construction companies.
H12c: The perception of job design has a negative relationship with turnover intention among managerial employees of South Korean construction companies.
19 Figure 2: The negative relationship of HRM practices and turnover intention
2.2.3 Job attitudes
Job attitudes include organizational pride, organizational commitment, trust and job involvement.
Organizational pride
20 of pride to the employee. The way the company is seen and recognized in the external environment will establish solidarity and commitment within the organization (Alvesson, 1992). In addition, organizational pride implies that employees gladly recommend this organization's products or services to friends and family (Truss, Alfes, Delbridge, Shantz & Soane, 2013). To sum up, how employees perceive organizational pride essentially influences their turnover intention. In order to measure the employee perception, they are asked if they are proud of the company's name, if they are proud to work in the company and if they would recommend this organization's products or services to friends and family. In a recent study in South Korea (Kim, 2015), the negative correlation between organizational pride and turnover intention was verified. Thus an identical result can be expected in South Korean construction companies. Accordingly, the following hypotheses are formulated. It is expected that a high perception of organizational pride will decrease the intention to leave and vice versa.
H13a: The perception of organizational pride has a negative relationship with turnover intention among the employees of South Korean construction companies.
H13b: The perception of organizational pride has a negative relationship with turnover intention among non-managerial employees of South Korean construction companies.
H13c: The perception of organizational pride has a negative relationship with turnover intention among managerial employees of South Korean construction companies.
Organizational commitment
21 Korea (Moon & Han, 2011) shows that organizational commitment is a determinant of turnover intention. This result can be expected in South Korean construction companies. Accordingly, the following hypotheses are formulated. It is expected that a high perception of organizational commitment will decrease the intention to leave and vice versa.
H14a: The perception of organizational commitment has a negative relationship with turnover intention among the employees of South Korean construction companies.
H14b: The perception of organizational commitment has a negative relationship with turnover intention among non-managerial employees of South Korean construction companies.
H14c: The perception of organizational commitment has a negative relationship with turnover intention among managerial employees of South Korean construction companies.
Trust
Trust refers to “one party's willingness to be vulnerable to another party based on the belief that the latter party is competent, open, concerned and reliable” (Mishra, 1996. p. 265). Casta (2003) demonstrated that trust plays a main role for the social relations between individuals and organization. The social bounds based on trust are likely to increase an employee’s intention to stay in a long-term relationship with the organization (Barrick & Zimmerman, 2009). Trust towards management has often been examined in literature, because it strongly affects employees’ performances (Balkan, Serin & Soran, 2014). Employees are motivated for high performance when they trust and respect the leader (Reychav, Sharkie, 2010). In contrast, employees who distrust their leaders tend to feel worried, which results in low job satisfaction (Knoll & Gill, 2011). Further studies contend that positive internal relations lead to high retention rates (Hausknecht et al., 2009; Ulrich, Lavandero, Hart, Woods, Leggett & Taylor, 2006; Christmas, 2008). The questions therefore aim to measure perceived trust in management, supervisors and colleagues in the organization. Trust within organizations was proven to have a negative correlation with turnover intention in previous research in South Korea (Lee, Kim, Kim, Kwon & Cho, 2013). The identical result can be expected in South Korean construction companies. Accordingly, the following hypotheses are formulated. It is expected that a high perception of trust will decrease the intention to leave and vice versa.
22 H15b: The perception of trust has a negative relationship with turnover intention among non-managerial employees of South Korean construction companies.
H15c: The perception of trust has a negative relationship with turnover intention among managerial employees of South Korean construction companies.
Job involvement
Various studies showed evidence that involved employees are inclined to be motivated and proud in their work. Moreover, the employees have a sense of individual fulfilment and they experience the same given worktime as relatively shorter than others do (Biggs, Brough & Barbour 2014; Ryan & Deci 2001; Saks 2006). The employees can experience the feeling of mastery through individual accomplishment and this empowers them to confront challenges (Carlson, Kacmar, Wayne & Grzywacz, 2006). The empowerment of workers helps organizations avoid a lack of competent employees by reducing turnover (Laschinger & Finegan, 2005). Furthermore, research has proved that engaged workers are less likely to seek alternative employment (Maslach, Schaufeli & Leiter, 2001; Schaufeli, 2004; Timms & Brough, 2013). The questions therefore try to measure the extent of the employees’ proactive attitude to their job. The negative correlation between job involvement and turnover intention was verified in previous research in South Korea (Lee & Shin, 2005). The identical result can be expected in South Korean construction companies. Accordingly, the following hypotheses are formulated. It is expected that a high perception of job involvement will decrease the intention to leave and vice versa.
H16a: The perception of job involvement has a negative relationship with turnover intention among the employees of South Korean construction companies.
H16b: The perception of job involvement has a negative relationship with turnover intention among non-managerial employees of South Korean construction companies.
H16c: The perception of job involvement has a negative relationship with turnover intention among managerial employees of South Korean construction companies.
23 Figure 3: The negative relationship of job attitudes and turnover intention
25
3. RESEARCH DESIGN
In this chapter the research design of this study is presented, discussing the research strategy, methods of data collection and analyses, as well as the issues concerning the data quality.
3.1 Research strategy
The purpose of this research is to examine whether perceived work-related factors affect turnover intention in South Korean construction companies. In order to fulfil this aim, the study is designed as quantitative research. One way to distinguish quantitative and qualitative research is to differentiate between numeric data (e.g. numbers) and non-numeric data (e.g. words) (Saunders, Lewis & Thornhill, 2012). Accordingly, quantitative research is commonly used as a synonym for data analysis procedures (e.g. statistics) that generate and utilize numerical data or data collection techniques such as questionnaires. Since this research is based on secondary data which is numeric and in form of questionnaires, quantitative research is a suitable approach. However, the study also contains some qualitative attributes because it is based on the perception and opinions of employees (Saunders et al., 2012).
Quantitative research is usually associated with a deductive approach (Saunders et al., 2012). This approach consists of building a hypothesis from existing theory that can be accepted or rejected (Gronvius & Lernborg, 2009). The framework and hypotheses were in the previous chapter. In the framework, employees’ turnover intention is utilized as dependent variable and perceived work-related factors as independent variables. In addition, job level is used as a control variable to examine differences between the non-managerial and managerial employees.
The case study strategy is employed to conduct the research. The case strategy allows us to take a closer look at the organization analyzed. Hamel, Dufour and Fortin (1993, p. 34) emphasized the descriptive nature of the case study method when they describe it as “the in-depth study of one particular case”. However, this study does not intend to focus on a holistic reflection of the researched organization. Instead, it explores the potential relationships between different variables in the specific case of a South Korean construction company.
26 industry. Considering the financial outcome and the number of its employees, the company is of a medium size compared to other companies in the group. However, all of them have similar HRM policies and practices, so that employees can experience comparable working conditions and benefits. As all of the 69 companies belonging to the group operate under similar circumstances, the results of this study do not only reflect upon the situation of the researched company, but on the situation of all companies in the group. Bloomberg reported that the sales volume of the Top 10 conglomerates in South Korea reached up to 84 percent of South Korea’s GDP (Gross domestic product) in 2012 (The CEO daily, 2016). This not only influenced economics, but also significantly affected South Korean society. The influence of the major conglomerates was even perceived as being stronger than that of governmental organizations such as prosecutors and Constitutional Courts (EAI, 2016).
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3.2 Data collection
To achieve the aim of this study, standardized data needs to be collected measuring employees’ turnover intention and their perception of work-related factors. Standardized data is collected in a common format that enhances the comparison progress (IBM, 2014). As both the employee perception towards work-related factors and their turnover intention are based on the individual’s interpretation, the data can be categorized as opinion-based information. In addition, factual information is required since the results are controlled for job levels.
Secondary data was utilized in this study. Data that has already been collected for another purpose is referred to as secondary data (Saunders, 2012). This data can be further analyzed to provide different or additional knowledge. The main advantages of using secondary data is that resources, in particular money and time can be saved (Saunders, 2012). Additionally, it enables the access to large amounts of data and coverage of a broad scope of individuals (Vartanian, 2010). Using secondary data as a main source in this study offers the advantage to conduct the research in a limited time period include a high number of variables, measured in numbers.
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3.3 Data description
The questionnaire was conducted from January to March in 2012 by the researched company. Originally the questionnaire was designed and conducted to measure general satisfaction of employees towards the company. It consisted of 18 categories, such as performance evaluation, organizational culture and work process. Each category had between 4 to 21 questions assigned to evaluate the employee satisfaction. In addition, questions were asked regarding overall satisfaction, employees’ motivation, and turnover intention. Although the data represents the circumstance of the company from four years ago, it is still considered as meaningful because no significant changes of vision, mission, core values, policies and HRM practices in the company have taken place.
The questionnaire was posted on the company’s intranet, allowing all 423 employees to access and answer it. The respondents were allowed to fill out the questionnaire during their working time in order to increase the response rate. Additionally, all employees were asked via email to fill out the questionnaire as soon as it was released. Periodically, team leaders and managers were encouraged to inform their team members to fill out the questionnaire. Anonymity was guaranteed in order to get honest and insightful feedback that employees might not be comfortable mentioning otherwise (Wright, 2005). The only personal information collected was job level (manager or non-manager) and age. The questionnaire did not include gender, as just 10 out of the 423 employees are female employees. Questions were formulated in Korean which is the corporate language in the participating organization.
The research population for this study is defined as all employees of the company at the time the survey was conducted. The research can be referred to as total investigation, since the survey was accessible to each of the 423 employees. Saunders et al. (2012) contended that it is an advantage to collect data from the entire population. Among the entire population, 234 employees (55%) were managers and 189 non-managers (45%). The questionnaire was filled out by 150 employees, which constitutes the response rate of 35.7%. However, as respondents’ personal information was missing in 14 questionnaires, they were excluded from the research. The final response rate was therefore adjusted to 32.3% (136 respondents). The distribution of the job level was as following: 79 managers (58%), 57 non-managers (42%). This corresponds with the distribution of the population and increases the reliability of the data.
29 level. The managers’ age ranges from 33 to 53 years, with the mean of 42.65 years (standard deviation 4.40). The samples’ job level distribution is in line with the distribution within the entire organization in which 45% of the employees are employed at the non-manager level and 55% at the manager level. With an average age of 42.65 years, employees at the manager level are approximately six year older than employees at the non-manager level. The respondents’ age and job level is represented in Table 1.
Obs Percent Age
Mean Std. Dev. Min. Max
Total sample 136 100 39.96 6.28 28 53
Non-manager 57 41.91 36.23 6.61 28 52
Manager 79 58.09 42.65 4.40 33 53
Table 1: Age and Job level
To measure the employee perception towards the 16 work-related factors, three questions were extracted from the original questionnaire for each factor. Answers to the questions were given on a five point Likert scale: (1) “strongly disagree”, (2) “disagree”, (3) “neither agree nor disagree”, (4) “agree”, (5) “strongly agree”. The Likert scale, in which the respondent is asked how strongly he/she agrees or disagrees with a comment or statement, is very common for rating questions (Saunders et al., 2012). The turnover intention of employees was measured by the question “How high is your intention to leave the company (in percentage)?”. As mentioned before, the intentions to leave are related to the actual turnover and are regarded as its strongest predictor. Answers were given on a five-point scale in percentage: (1) “0%”, (2) “25%”, (3) “50%”, (4) “75%”, (5) “100%”.
3.4 Data analysis methods
30 different job levels, the study will employ the multiple regression analysis. The employees’ intention to leave the employer is selected the dependent variable and the perception regarding the work-related factors are the independent variables. As the data was measured in a non-natural metric (Likert scale), it is unclear whether a one-unit change is "large" or "small" according to the scale (Menard, 2004). However, using a standardized coefficient instead of an unstandardized ensures that the amount of change in the independent variable should be adequate to produce significant change in the dependent variable (Menard, 2004). Furthermore, standardized coefficients are beneficial when comparing the relative influence of different independent variables (Menard, 2004). Therefore, standardized coefficients are used in order to determine the most influencing factors of turnover intention. The data from the questionnaires is inserted into Excel and the mean of the answers for three questions, which are assigned to each independent variable, is calculated. The value is regarded as the perception of each factor. The data is transferred to STATA in order to conduct the analyses. In addition, descriptive statistics in the form of mean, standard deviation and Cronbach’s alpha will be utilized to describe the distribution of the data (Denscombe, 2010).
3.5 Data quality, limitations and ethical considerations
31 As all 16 factors have a Cronbach’s alpha of 0.9 and above, the samples’ responses are internally consistent. It is thus to be expected that the data can provide in-depth explanations regarding the topic of this paper.
The following additional limitations in the research need to be acknowledged. First, this study is based on a questionnaire that was developed and conducted by the researched organization. Thus, no influence could be made on the design of the questionnaire. It could actually have been useful to include additional questions. Second, the data from the questionnaire is self-reported and therefore subjective. This implies the possibility of common method variance (Chen, Huang & Hsiao, 2010). Conducting research within a single company as well as following the case study strategy can influence the potential of generalizing the results (Saunders et al., 2012). As the researched company represents a typical case, implications for practitioners and researchers can be derived, even though the case study strategy allows no statistical generalization. Using data collected within one organization allows for better control and could improve the validity of the research (Fu, 2009). A large number of respondents from a single organization are likely to fully represent a specific context (Gold & Arvind Malhotra, 2001). A study based on a small number of respondents from multiple organizations might have the contrary result. Certain limitations might also occur when using secondary data. The data variables might not be suitable for the research, the quality of the data cannot really be controlled and the data may have been collected several years in the past (Saunders, 2012). The data utilized for this research was originally collected to measure employees’ general satisfaction within the organization. As the turnover intention was also part of the research, a large proportion of the original questionnaire proved suitable for this study. Based on previously mentioned reasons, such as the high response rate and the pilot test that was conducted, the quality of the data is regarded as sufficient to reach the aim of this study. The fact that the data was collected in 2012 could be regarded as a limitation; however no major differences should be expected in a new collection of data. (Reason e.g. the situation of the employees has not changed since 2012.)
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4. FINDINGS
In this chapter the findings of this study are presented, by describing the data and conducting correlation and regression analyses.
4.1 General description
The turnover intention was measured on a scale from 1 to 5 (1=0%, 2=25%, 3=50%, 4=75%, 5=100%). Overall, the distribution of results for the turnover intention of the two job levels show similar tendencies, especially when comparing the response for the scale of 50%, 75% and 100%. The 25% scale was selected by the majority of both groups. Remarkably, no respondents chose the scale 5 which represents a turnover intention of 100%. The biggest difference between the groups was observed at the 0% scale. The proportion of managerial employees’ responses (24.05%) for this scale was approximately 5% higher compared to that of non-managerial employees (19.30%). Notably, the non-managerial level had an approximately 3% higher proportion of responses at the 25% scale of turnover intention. To sum up, 77.94% (N=106) out of the total sample considered the possibility of turnover, whereas 22.06% respondents (N=30) did not intend to leave the company Overall, it was observed that the proportion of non-managerial employees who had the intention to leave the company is 4.75% higher than that of managerial employees. The turnover intention of the respondents is represented in Table 2.
Turnover Intetion
Total sample Non-manager Manager Freq. Percent Freq. Percent Freq. Percent
0% 30 22.06 11 19.30 19 24.05 25% 69 50.74 30 52.63 39 49.37 50% 21 15.44 9 15.79 12 15.19 75% 16 11.76 7 12.28 9 11.39 100% - - - - Total 136 100 57 100 79 100
Table 2: Turnover Intention
33 organizational commitment (Mean = 3.98, SD = 0.55), organizational pride (Mean = 3.72, SD = 0.73) and job involvement (Mean = 3.71, SD = 0.42). The three factors that the non-managerial employees rate the highest are organizational commitment (Mean = 3.82, SD = 0.59), organizational pride (Mean = 3.58, SD = 0.72) and goals and direction (Mean = 3.50, SD = 0.51). Managerial employees rate organizational commitment (Mean = 4.10, SD = 0.50), organizational pride (Mean = 3.82, SD = 0.73) and goals and direction (Mean = 3.78, SD = 0.49) the highest. Both job levels highly rate the same three factors, however when observing the results of the total sample, it is noticed that job involvement is rated higher than goals and direction. However, the mean of goals and direction (Mean = 3.66, SD = 0.51) was the fourth highest of the total sample. Thus, the perception of both job levels and of the total sample all show the same tendencies. On the other hand, in all groups, three HRM practices, namely performance appraisal, compensation and promotion were perceived to be considerably low, as was communication. In other words, employees of the company are not satisfied with some HRM practices such as performance appraisal, compensation and promotion, as well as communication. These results are represented in Table 3.
Table 3: Cronbach’s alpha, mean and SD for total, non-managerial and managerial employees
Work-related factors Alpha Total sample Non-manager Manager Mean SD Mean SD Mean SD
Org. factors
Goals and direction 0.90 3.66 0.51 3.50 0.51 3.78 0.49 Immediate leader 0.91 3.29 0.83 3.39 0.76 3.22 0.87
Communication 0.90 2.79 0.68 2.76 0.63 2.81 0.73
Company's reputation 0.90 3.26 0.69 3.09 0.74 3.38 0.66 Culture towards risk taking 0.90 3.21 0.49 3.15 0.53 3.25 0.44
Collaboration 0.90 3.44 0.53 3.30 0.51 3.54 0.52 HRM practices Performance appraisal 0.91 2.88 0.63 2.84 0.67 2.90 0.60 Compensation 0.91 2.80 0.67 2.68 0.65 2.89 0.68 Promotion 0.90 2.75 0.62 2.68 0.68 2.80 0.57 Hiring 0.91 3.32 0.08 3.30 0.08 3.22 0.07
Training and career development 0.91 3.57 0.64 3.46 0.66 3.64 0.62
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4.2 Correlation analysis
Inter-correlations between the variables are presented in Appendix 5 (total sample), Appendix 6 (non-manager) and Appendix 7 (manager). Negative correlations indicate that employees with a higher perception of the factors tend to show less intention to leave the organization than those with lower perceptions. Within the total sample, all factors are negatively correlated to turnover intention with statistical significance (p ≤ 0.05), with the exception of hiring. Even though hiring shows a negative coefficient, it is not statistically significant. Thus, 15 out of 16 work-related factors, among the total sample, were proved to have a negative correlation to turnover intention. These results therefore provide support for hypothesis 1a, 2a, 3a, 4a, 5a, 6a, 7a, 8a, 9a, 11a, 12a, 13a, 14a, 15a and 16a. Differences were observed within the non-manager analysis. Here, hiring, as well as training and career development have no statistically relevant correlation to turnover intention. Thus, 14 out of 16 work-related factors among the non-manager sample proved to have a negative correlation to turnover intention. Therefore, hypothesis 1b, 2b, 3b, 4b, 5b, 6b, 7b, 8b, 9b, 12b, 13b, 14b, 15b and 16b can be supported. Within the managerial employees all factors are negatively correlated to turnover intention. However, the factors goals and direction, performance appraisal, compensation, hiring, training and career development have no significant correlation. Thus, 11 out of 16 work-related factors have a negative correlation to turnover intention and the hypothesis 2c, 3c, 4c, 5c, 6c, 9c, 12c, 13c, 14c, 15c and 16c can be supported. As illustrated in table 4, among the manager group the fewest factors proved to be negatively correlated to turnover intention.
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Work-related factors Total sample
(a) Non-manager (b) Manager (c) Organizational factors
H1 Goals and direction X
H2 Immediate leader
H3 Communication
H4 Company's reputation
H5 Culture towards risk taking
H6 Collaboration HRM practices H7 Performance appraisal X H8 Compensation X H9 Promotion H10 Hiring X X X
H11 Training and career development X X
H12 Job design Job attitudes H13 Organizational pride H14 Organizational commitment H15 Trust H16 Job involvement
Table 4: Negative relationships of work-related factors ( = supported; X = not supported)
4.3 Multiple regression analysis
36 (manager). According to the literature, there is no agreement on a formal criterion for VIF cutoff values. Suggestions in literature are 3.33 (Diamantopoulos & Siguaw, 2006) and 5 or 10 (Craney & Surles, 2002). This research employed the lowest criteria among them, namely 3.33, since significant correlations among independent variables were observed by the conduction the correlation analyses above. Accordingly, as all three analyzed groups show at least one VIF value exceeding 3.33, multicollinearity problems need to be solved in order to reduce its negative effects.
VIF
Variable Total sample Non-manager Manager
Goals and direction 2.63 3.40 2.27
Immediate leader 1.71 1.66 2.13
Communication 2.42 2.89 2.61
Company's reputation 2.82 4.63 2.64
Culture towards risk taking 2.61 3.86 2.35
Collaboration 1.83 2.22 2.06
Performance appraisal 1.75 2.65 1.72
Compensation 1.59 1.70 1.86
Promotion 2.32 2.91 2.50
Hiring 1.09 1.29 1.11
Training and career development 1.55 2.01 1.91
Job design 2.49 2.13 3.25
Organizational pride 3.34 5.46 3.38
Organizational commitment 2.63 3.88 2.28
Trust 2.73 4.52 2.59
Job involvement 2.18 2.22 2.88
Table 5: VIF (variance inflation factor)
37 to assess model selection uncertainty and to evaluate parameter importance (Anderson & Burnham, 2002). When choosing from several models, the one with the lowest BIC is preferred (Niezrecki, 2015).
Numbers of factors
Total sample Non manager Manager Adj R2 BIC Adj R2 BIC Adj R2 BIC
1 0.30 319.01 0.55 110.17 0.29 190.26 2 0.38 306.87 0.59 108.05 0.33 188.21 3 0.41 302.99 0.63 105.27 0.35 190.25 4 0.43 303.61 0.64 105.97 0.37 191.10 5 0.43 306.32 0.65 107.26 0.38 193.10 6 0.43 309.44 0.66 109.04 0.39 194.65 7 0.44 312.32 0.67 111.04 0.40 196.86 8 0.44 315.47 0.67 113.64 0.40 200.07 9 0.44 319.01 0.67 116.47 0.39 204.21 10 0.44 323.10 0.67 119.17 0.38 208.45 11 0.44 327.56 0.66 122.72 0.37 212.71 12 0.44 331.86 0.66 126.10 0.37 216.95 13 0.43 336.32 0.65 130.09 0.36 221.26 14 0.43 340.94 0.64 134.12 0.35 225.56 15 0.42 345.84 0.64 138.14 0.34 229.88 16 0.42 350.75 0.63 142.18 0.33 234.21
Table 6: Best subset regression
38 highest detected value VIF is 1.73 which is lower than the adopted VIF cutoff value. Notably, higher turnover intentions were predicted with negative perceptions of immediate leader, organizational pride and communication, and vice versa.
Table 7: Multiple regression of total sample
For the non-manager sample, according to Table 6, the third model which contained the three factors immediate leader, organizational pride and company’s reputation was chosen for our analysis. The results of this analysis are provided in Table 8. The variance explained by the regression model was 63% (Adj R-squared). This result shows no differences compared to the Adj R-squared (63%) of the regression model including all 16 factors (see Table 6). The three variables significantly predicted turnover intention of non-managerial employees (p-value ≤ 0.05). With a beta score of -0.431, company's reputation was the most influencing factor of turnover intention, followed by organizational pride (beta score = -0.357) and immediate leader (beta score = -0.215). The highest detected VIF value is 1.76 which is lower than the adopted VIF cutoff value. Hence, low perceptions of company’s reputation, organizational pride and immediate leaders are strongly associated with higher turnover intention of the employees.
Number of obs = 136
R-squared = 0.42
Adj R-squared = 0.41
Turnover Intention Coef. Std. Err. T P> |t| Beta VIF
Immediate leader -0.290 0.084 -3.46 0.001 -0.265 1.34
Organizational pride -0.423 0.095 -4.45 0.000 -0.339 1.34
Communication -0.342 0.115 -2.97 0.004 -0.258 1.73
