THE IMPACT OF JOB SATISFACTION ON EMPLOYEE TURNOVER INTENTION (A CASE STUDY OF BUNNA INTERNATIONAL BANK )

A B S T R A C T

This study, which was conducted at Bunna International Bank S.C, had two-fold objectives. Firstly, to investigate the direct relationship between job satisfaction and employee turnover intention. The second part of the objective examined the relationship between perceived available employment opportunity and turnover intention. Besides, the study attempts to determine the differences in the turnover intention based on demographic variables (age and tenure). The study also hypothesized that there are significant differences in the turnover intention of the clerical employees in Bunna International Bank S.C at different age and length of service; and there is a dominant factor influencing turnover intention among skilled personnel in the organisation. A survey instrument was used to obtain data from a research sample containing 103 clerical employees and additionally secondary data was retrieved from formal sources. Using SPSS version 20, ANOVA, correlation and regression tests were performed to arrive at the findings. The research yielded evidence for a significant negative cause-effect relationship between job satisfaction and employee turnover intention, indicating that on average, employees who are dissatisfied reported having intentions to leave the organization. Working condition demonstrates the strongest relationship. However, the result shows neither age groups nor length of service groups have significant difference with turnover intention. A significantly moderating positive relationship between perceived available employment opportunity and employee turnover intention was identified, since the survey results show interestingly, that employees who are satisfied and have high perceptions of available job alternatives will still have higher intentions to quit their job in comparison with satisfied employees who have low perceptions of available job alternatives. Based on the findings a number of management recommendations and directions for future research are provided.

CHAPTER 1: INTRODUCTION

1.1        BACKGROUND OF THE STUDY

Employee turnover has become a worldwide issue that has puzzled organizations, researchers and practitioners for years. Currently, employee turnover permeates most of the organizations in both developed and developing nations (Tariq et al, 2013). The CIPD (2011) survey report on employee turnover rate in the UK indicated that the nationwide turnover rate in 2006 was 18.1 per cent. According to the report, employees’ turnover varies from sector to sector. In the average the turnover for the public sector was 13.3 percent while it was 22.6 percent for the private sector. The report however, did not explain why such a large variation occurred between the public and the private sectors.

Employee turnover can be conceptualized in terms of different categories which include: demographic (e.g. gender, age, educational level), occupational (e.g. skill level, experience, tenure, status), organizational related factors (e.g. firm size, industry, job content, working environments, style of leadership, type of organizational structure, pay scale, reward, advancement opportunity, job security and job involvement). (Mobley et al, 1979).

Various studies have made a clear distinction between actual turnover and the concept of turnover intention, which relates to behavioral attitudes. According to Ajzen (1991), intentions are a statement about a specific behavior or interest. Mobley (1977) defined turnover intention as the intention to leave the job on a voluntary basis. Various studies have investigated this construct and have used similar terms such as intention to leave, intention to quit and withdrawal intention. In a more elaborate definition of this construct, turnover intention can be understood as the intention to voluntarily change employers or to depart the entire labor market.
Turnover intentions are the best predictors of actual turnover based on past studies. Horn et al. (1992) argued in their study that intention to quit and actual turnover had a significant positive relationship. It was argued by Gregory et al. (2007) that behavioral intention to quit is theoretically seen as an important antecedent to actual turnover. Mobley (1977) described turnover intention as the final cognitive step in the decision making process of leaving or staying.

Job satisfaction has been a widely studied variable in determining turnover intention. It is certainly a highly important variable in organizational studies (Kinicki, Schreisheim, McKee-Ryan & Carson, 2002). In fact, most of the studies have been fragmented in identifying an effective mix of practices that could improve the commitment, satisfaction and intention to stay in the organization (Chew & Chan, 2008). Job satisfaction is a factor that in the long run will be able to encourage employees to work (Mudor & Tooksoon, 2011). This is the reason why Mudor and Tooksoon stresses that high attention is to be given to employees’ job satisfaction as firms will encounter with cost of recruitment as employees leave the organization and these organizations need to replace them to get the job done.

Job satisfaction can be used to predict turnover. (Spector, 1997). Hom and Kiniki (2001) also agreed on the notion that job satisfaction can be used to understand turnover process. According to Milkovich and Boudreau (1997), a study of Singapore accounts found that job satisfaction is the main predictor of turnover intention.

Newstorm and Davis (1984) had recognised that high turnover at any organizational levels constitutes a waste of human resources. Abelson and Baysinger (1984); and Dalton and Todor (1982) in Newstorm and Davis (1984) agreed with this view and said that turnover is not a good phenomenon for organization because valuable human resources are lost. In today’s changing world of work, reasonable levels of employee-initiated turnover facilitated organizational flexibility and employee independence, and they can lessen the need for management layoff.

Thus, Berry (1997) initiated that the organization must go straight to the employees when they think about job satisfaction. This is because they are involve in every single task in the organization and therefore, they could give the necessary feedback to the employers regarding their satisfaction to the job they have been performed.

Moreover, Seta, Paulus and Baron (2000) pointed out that by knowing the factors contributing to the employees’ satisfaction, the organization can plan properly and take an appropriate step to increase positive behavior among employees. However, no one would seriously challenge the idea that mismanaging organizational change can result in people choosing to leave (Jackofsky et al, 1986).

This investigation is important as an early preparation for the organization to deal with this change because of work opportunities are low and turnover intention of employees will also increase. As compared to when the economy is blooming where job opportunities are great and immensely sought by job hunters.

Muchinsky and Morrow (1980); Muchinsky (1993) in their study believe that under good economic conditions with plentiful of jobs, dissatisfaction could cause the turnover if other opportunities are available in the market. On the other hand, conditions of high unemployment will decrease the feelings of dissatisfaction among employees. The opinion is also agreed by Rosse (1991) in Jones, Steffy and Bray (1991) that the organization should not feel overly satisfied with the good attitudes shown by their employees during the hard economic times. Similarly, Carrell, Kuzmits and Elbert (1992) also found that the turnover closely follows economic swings.

Inter-linkage

In Mobley’s 1977 article, he theorized that lack of job satisfaction led to thinking about quitting, which led to job search, which could then lead to an intention to quit, or vice versa, which could eventually result in actual turnover. Lambert, Hogan & Barton (2001) found that job satisfaction significantly impacted turnover intentions and perceived availability of jobs also had a relation with turnover intentions.

All these aforementioned findings make reference to the linkage of the variables. This linkage informed the conceptual model, which is derived from the notion that employees in Bunna International Bank S.C currently experience low job satisfaction, focus on external job alternatives and subsequently develop an intention to leave their employer.

Altogether, it can be assumed that the competitive existence of an organization significantly relies on effectively managing staff turnover and ensuring that good performers and key personnel are motivated to stay and have no intentions to quit.

Therefore, research in job satisfaction and turnover intention can help the organization to identify main factors that can contribute to the turnover intention and rate of turnover. Based on finding of study an organization can make remedy action in order to create favorable working conditions that can enhance the rate of retention.