Chapter 2

Literature Review

24
2.1. Employee Retention

Employee retention is not an unexplored area. Many experts, authors and

researchers have examined, explored and studied many aspects in this field of

study. This section provides a chronological literature review and contributions of

many researchers and experts in the field of Employee Retention, Job Satisfaction

and Employee Turnover.

Kerr and Slocum (1987) and Kopelman and colleagues (1990) have suggested that

an organization’s cultural values influence its human resource strategies, including

selection and placement policies, promotion and development procedures, and

reward systems.Different strategies result in psychological climates that foster

varying levels of commitment and retention among employees working in different

organizations.As a result they concluded that the variation in employee retention

across organizations may be related to organizational culture values also.

Maertz and Campion (1998) stated “relatively less turnover research has focused

specifically on how an employee decides to remain with an organization and what

determines this attachment…retention processes should be studied along with

quitting processes”.

The Resource Based View (RBV) of Barney and Wright (1998) ; Holland, Sheehan

and Cieri (2007) have stated that there are three types of resources that work as a

pillar for the organisation. These are organization, human and physical capital. The

human capital is the most important because it can give the competitive edge to the

organization due to its uniqueness. Armstrong and Murlis (1998) were of the view

that long term commitment to an organisation is no longer expected by either party

.In an indepth study by Qadria Alkandari and Amani Abdullah Hammad (2009) on

25
employees retention in Private sector, it has been concluded that retention factors

like salary and compensation are regarded as the most important to the private

sector workforce in the state of Kuwait followed by benefits like leave and differed

compensation. Items like good retirement plan and employee retention schemes are

regarded important for private sector retention.

Lashley and Chaplain (1999), claims “ labour turnover is not only a significant

dollar cost but also intangible cost”. In addition to this ‘retention’ and ‘turnover’ is

strongly related to goodwill and reputation of an organisation as potential

employee.

Kaye and Jordan-Evans (2000), Galagan (2000), Salopek (2000) and Kinni and

Von Hoffman (2000) provided the following and considered them important in

employee retention.These include: supporting work environment, caring about

workers’ private lives, employee wellness and values, team work and team support,

giving employees autonomy to work; providing a nurturing, enjoyable and fun

work environment, providing an environment of trust in which two way

communication flows freely and employees suggestions are respected.

Steel, Griffeth, and Hom (2002) added that “the fact is often overlooked, but the

reasons people stay are not always the same as the reasons people leave”.

Researchers such as Amadasu (2003); Taplin et. al. (2003); Gberevbie (2008) have

found that if appropriate employee retention strategies are adopted and

implemented by organisations employees will surely remain and work for the

successful achievement of organisational goals . In the view of Acton et. al.,

(2003), the Human Resource Department plays an active role in retaining its

employees, it make policies for employee betterment such that employee would be

26
satisfied with the organization and stay with the firm for longer time.This shows

that it is not just retention of employees but also retention of valued skills. Cutler

(2001) was of the view that one of the most important demands on management

today in any organization is keeping the most vital and dynamic human resources

motivated and dedicated. It is not important to see who the organization hires but

what counts is that who are kept in the firm. Resrarchers such as Cascio (2003);

Heneman and Judge (2003); Gberevbie (2008) have agreed that an organization’s

inability to formulate and implement strategies capable of recruiting competent

employees and retaining them to achieve organizational goals is one of the main

challenge facing organizations in the area of performance.

Workforce Planning for Wisconsin State Government (2005) has defined employee

retention as “….a systematic effort to create and foster an environment that

encourages employees to remain employed by having policies and practices in

place that address their diverse needs.” According to Olowu and Adamolekun

(2005), it is becoming more essential to secure and manage competent human

resource as the most valuable resource of any organization, because of the need for

effective and efficient delivery of goods and services by organizations, whether in

public or private sector. Thus for an organization to achieve its goals, appropriate

strategies for employee recruitment and retention are essential for enhanced

performance. Researchers such as Arnold (2005); Herman (2005); Hiltrop (1999)

believed that effective training and opportunities to learn and develop enhance

employee retention.

Researcher such as Kaliprasad (2006) has confirmed that despite the fact that an

organization may try to bring all the essential and required factors into play to

27
enhance employee retention, an employee can still choose to leave the workplace

because of, for example, bad management. Kaliprasad (2006) pointed out that an

organizations ability to retain its employees completely depends upon its ability to

manage them. He found out four interlinked processes that can be utilized for an

effective human resource management system: the motivational process; the

interaction process; the visioning process; and the learning process. Likewise,

Wilson (2006) in his study has stated about a survey done by the Chartered Institute

of Personnel and Development’s Recruitment and Turnover Survey 2006, where it

has been found that the second most frequently cited action to increase employee

retentions was learning and development opportunities. Gebauer (2006), have

found that the Chinese workers focus primarily on the availability of learning and

development opportunities while deciding whether or not to join an organization;

this has been observed as the most important factor in attracting workers and

keeping them engaged and motivated on the job. Baker (2006) has given stress on

the fact that hiring new employees is far difficult as well as costlier than to keep the

current employees in the organization.That is why the core issue in any

organization is to give a continuous ongoing effort to identify and try to keep all

the best performers irrespective of their age.

Holland et. al., (2007) forwarded the view that the importance of human capital

has been increasing because it can give the competitive edge to the organisation

due to its uniqueness . Hytter (2007) has found that the personal premises of

loyalty, trust, commitment, and identification and attachment with the organization

have a direct influence on employee retention. She also demonstrated that

workplace factors such as rewards, leadership style, career opportunities, the

28
training and development of skills, physical working conditions, and the balance

between professional and personal life have an indirect influence. Pritchard (2007)

was of the opinion that training and development is one of the important retention

programmes incorporated by an organization in an effort to retain their employees.

Gberevbie ( 2008) has stated that employee retention strategies refer to the plans

and means, and a set of decision-making behavior formulated by the organisations

to retain their competent workforce for performance.

Ferguson and Brohaugh (2009) in a study has stated that, the talented people

always have options in their career as such the business firms are trying to attract

and retain the employees. In the view of Samuel and Chipunza (2009),

organization must always try to reduce the turnover of their employees because it

puts burden on the organization in terms of money and human resource and as such

retention is crucial especially for those employees who are related with the

operations. Michael O. Samuel and Crispen Chipunza (2009) have revealed in their

research work that certain variables like training and development,

recognition/reward for good performance, a competitive salary package and job

security are crucial in influencing employees’ decision to leave or remain in an

organization and should not be under-estimated when formulating a retention

policy.

In another study carried out by Davidson et. al., (2010) and Chalkiti and Sigala

(2009), it was found that an organisation, by working in areas such as career

progression, team support (socialization), good work environment and

communication, etc, can not only enhance employee retention but can also reduce

cost, both tangible as well as intangible, because it can give the competitive edge to

29
the organization due to its uniqueness. According to Kennedy and Diam (2010),

Molina and Ortega (2003), Acton et. al., (2003), Chapman (2009), Holland et. al.,

(2007), an organization has to use its human resources in such a way that they can

perform the job efficiently by using their core skills. In this context, the firm has

two options; the first option is to hire new employees, train them and make them

habituated to the working conditions and the environment of the firm or try to

retain the existing employees who are aware with the company policies ,

environment and working conditions. As stated by Chiboiwa, Samuel and

Chipunza (2010), if an organization have dissatisfied employees with them it will

hamper their productivity and quality, as such they should try to retain their

competent employees.

Sakinah Mat Zin et.al., (2012) conducted a study on HRM practices and its

applicability in the SME in Malaysia and gave a conceptual model for employee

retention which was also a modified version of Herzberg’s Two-Factor Theory

which highlights the various practices and factors which can help in retaining

employees in an organization.

30
Fig 2.1: Basic Structural Model for Retention of Employees (Modified Version
of Herzberg’s Two-Factor Theory)
Source: Research paper by Sakinah Mat Zin et. al (2012)

Muhammad Umer et.al, (2011) in a research study on a BPO company in Pakistan

forwarded the following conceptual model of employee retention and the factors

influencing retention. They concluded that independent variables like career

development, supervisor support, work environment and work life balance have a

significant correlation with dependent variable of employee retention.

31
 Fig 2.2: Conceptual framework of employee retention
Source: Research paper by Muhammad Umer et.al, (2011)

2.2. Identification of Employee Retention Factors from

Previous Research Works

Fitz-enz (1990) recognized that employee retention is not influenced by a single

factor, but there are hosts of factors which are responsible for retaining employees

in an organization. Management need to pay attention to factors such as

compensation and rewards, job security, training and developments, supervisor

support culture, work environment and organization justice etc. According to

Osteraker (1999), the employee satisfaction and retention are the key factors for the

success of an organization. The Retention factor can be divided into three broad

dimensions, i.e., social, mental and physical. The mental dimension of retention

consist of work characteristics, employees always prefer flexible work tasks where

they can use their knowledge and see the results of their efforts which, in turn,

helps in retaining the valuable resources. The social dimension consists of the

32
contacts that the employees have with other people, both internal and external. The

physical dimension consists of working conditions and pay. Stein (2000), Beck

(2001), Clarke (2001), Parker and Wright (2001) have rightly observed that

organization must utilize an extensive range of human resource management

factors to influence employee commitment and retention. Kaye and Jordan-Evans

(2002) were of the view that challenging work, good supervisors and employee

development opportunities plays an important role in employee retention. Kehr

(2004) divided the retention factors into three variables: power, achievement and

affiliation. Dominance and social control represents power. When personal

performance exceeds the set standards, it represents achievement and affiliation

refers to social relationships which are established and intensified. Hytter (2007)

found that factors such as personal premises of loyalty, trust, commitment, and

identification and attachment with the organization have a direct influence on

employee retention. She also explained that workplace factors such as rewards,

leadership style, career opportunities, the training and development of skills,

physical working conditions, and the balance between professional and personal

life have an indirect influence. Taylor (1998) pointed out four main reasons for

people working in the organization and for staying as well as leaving the place of

work and the reasons have been labeled as: Organization Issues, Job Issues, Leader

Issues, and Team Issues. Eva Kyndt , Filip Dochy et. al., (2009) have found in their

study, while investigating employee retention that personal factors such as level of

education, seniority, self-perceived leadership skills, and learning attitude and

organizational factors such as appreciation and stimulation, and pressure of work

are of great relevance in employee retention.

33
2.2.1. Compensation and Retention

Trevor et.al, (1997) has proved that rise in pay has a negative impact on turnover.

Stewart (1997) forwarded the view that factors such as incentives and bonuses help

in employee retention. Armstrong (1996) and Rankin (2000) argued that

compensation offered by other organizations can act effectively to retain

employees. Davies, Taylor, and Savery (2001) forwarded the view that

compensation to top workers is given by every organization but very few

organizations uses it strategically. They said that “Salary and benefits policies are

not being used strategically, within the organization to improve morale, reduce

turnover, and achieve targets within an establishment”. Gardner et. al., (2004) was

of the view that pay is considered as a motivator as well as employee retention

technique. Milkovich and Newman ( 2004) have clearly stated that among all types

of reward, monetary pay is considered one of the most important and significant

factor in retention. In a research by Moncraz, Zhao and Kay (2009) it has been

concluded that although compensation was not one of the top factors influencing

non-management turnover but compensation can act as a critical factor in reducing

managerial turnover and increasing commitment.

2.2.2. Reward and Recognition and Retention

Freedman (1978) posits a view that effective rewards and recognition helps in

making a favourable work environment, which in turn motivates an employee.

Recognition is regarded as an employees feeling of value and appreciation and as

such, it boosts up morale of employee, which ultimately increases productivity of

organizations. Agarwal (1998) has given an explanation to the term reward as

something that the organization offers to the employees in response of the work as

34
well as performance and something which is desired by the employees. According

to Walker (2001), recognition from bosses, team members, co-workers and

customer enhance loyalty. Researchers’ such as Allen and Griffeth (2001); Cole

and Bruch (2006); in their empirical studies have found that, linking rewards with

performance helps in increasing an employees’ intention to stay in an organization.

In an annual survey of “Watson Wyatt”, USA (2002) among 12,750 employees at

all levels of job, it has been found that recognition is important for workers and

they want that their work is recognized and appreciated. Lawler (2003) argued that

human resources directly affect the prosperity and survival of an organisation.

Organizations can succed only when they fully comply with the business strategy

through maintaining a balance between reward and recognition for employees.

Silbert (2005) forwarded the view that reward is important because it has an

enduring impression on employees which in turn gives the employees an

impression that they are valued in the organization.Andrew (2007) has directly

stated that rewards and recognition is the basis of employee commitment and

satisfaction.

2.2.3. Promotion or Opportunity for Growth and Retention

Pergamit and Veum (1989) in their study found a close and positive correlation

between promotions and job satisfaction and which in turn helps in retaining

employees. Research by Meyer et. al., (2003) has shown internal career

development of employees is often the best predictor of an employee's affective

commitment. Such plans include advancement plans, internal promotion and

accurate career previews at the time of hiring. Prince (2005) argued that talented

employees are required for maintaining a competitive advantage and employees

35
want career growth opportunities to develop and rise in their career ladder. Such

plans include advancement plans, internal promotion and accurate career previews

at the time of hiring. Eyster, et. al. (2008) stated that job flexibility along with

lucrative career and life options, is a critical incentive for all employees.

2.2.4. Participation in Decision-Making and Retention Strategy

Hewitt (2002) has mentioned that modern businesses always keeps its employees

well informed about all the important affairs of its business and involves them in

decision-making at all levels which can exploit the talents of its employees.

Supporting the view Noah (2008) found in his research that employee involvement

in decision-making helps in creating a sense of belongingness among the

employees, which helps in creating a good congenial working environment and

contributes towards building a good employer-employee relationship.

2.2.5. Work-Life Balance and Retention Strategy

Work-life balance is increasingly important for engagement and affects retention.

Hyman et. al., (2003) in their empirical research in the UK found that interventions

of work demands into personal life (e.g. working during the week-end) resulted

into heightened stress and emotional exhaustion among the employees.Work-life

balance is increasingly important for engagement and affects retention. In a study

conducted by the Australian telework Advisory Committee (2006) it has been

found that 70% of businesses that incorporated teleport options reported a number

of positive benefits, such as increased business productivity and reduced costs,

improved employee flexibility and work life balance, and increased workforce

participation .

36
2.2.6. Healthy Work Environment and Retention Strategy

Allen (1997) stated that supportive work environment where individual

contribution is valued helps in satisfying and retaining employees. According

to Miller, Erickson and Yust (2001), employees get benefited by work

environment that provide sense of belonging. Wells and Thelen (2002) have

stated in their study that organizations which have generous personalization

policies, have a very good chance to satisfy and retain employees by providing

them an appropriate level of privacy and sound control on work environment

which enhances the motivation levels to commit with the organization for the

long term. Ramlall (2003) stressed the need for recognizing the individual

needs of an employee in an organization as it will encourage commitment and

provide a suitable work environment. Lowe’s (2003) in his research

conducted a survey on 2500 Canadian workers and found a close link between

Psycho-physical factors which include interpersonal relations, and availability

of other forms of support systems for making a place of work healthy. Wells

and Thelen (2002) have stated in their study that organizations which have

generous human resource policies, have a very good chance to satisfy and

retain employees by providing them an appropriate level of privacy and sound

control on work environment which enhances the motivation levels to commit

with the organization for the long term. When employees in an organization is

provided with a positive work environment, they enjoy the work which they

are doing and they feel that they are making a difference and all of them pull

together to move the organization forward.

37
2.2.7. Training and Development and Retention Strategy

Messmer (2000) found that one of the important factors in employee retention is

investment on employee training and career development. Organization always

invests in the form of training and development on those workers from whom they

expect to return and give output on its investment. Smit and Cronje (2002) and Hay

(1999) in their respective studies explored that training and development as an

important strategy that can be adopted for retaining the best employees in the

organization. Tomlinson (2002) forwarded the view that organizations can keep the

leading edge in this competitive world by having their employees well trained in

the latest technologies. Training is a powerful retention and recruitment tool.

Training is essential for an employee. It not only enhances the knowledge and

skills of an employee but also motivates them to bring perfection in their work.

Proper training and development is a source of job satisfaction to the employees, a

retention technique often employed by the employers. Garg and Rastogi (2006),

explained that in today’s competitive environment feedback is very essential for

organizations from employees and the more knowledge the employee learn, the

more he or she will perform and meet the global challenges of the market place.

Handy (2008) has mentioned that proper innovation, and assimilation of new

knowledge is essential for survival in any work environment. Thus knowledge is

the most expensive asset of any firm.

2.2.8. Proper Leadership and Retention Strategy

Proper leadership is necessary or the success of any organization. Leadership

behavior can affect trust and satisfaction of employees in an organization a leader

can not only guide and motivate its employees but also can retain them in their job.

38
Eisenberger and associates (1990) suggested that a employees perception regarding

an organization is strongly influenced by their relationship with the supervisor.

McNeese-Smith (1995) mentioned in his study of Leadership behavior of

hospital directors found that there is significantly positive relation between

productivity, work satisfaction and organizational commitment of staff.

Research studies by Tulgan(2001); Galagan,( 2000); Kaye and Jordan-Evans,

(2000); Kinni and Von Hoffman,( 2000) highlighted that employer- employee

relationship is the single most significant factor in influencing organisation’s

ability to retain the employee . Brunetto and Farr-Wharton (2002) argued that

supervision of the immediate manager increases the level of job satisfaction in

the public sector employees. Chung-Hsiung Fang, Sue-Ting Chang, Guan-Li

Chen (2009) has found that leadership style can affect organizational

commitment and work satisfaction positively and work satisfaction can affect

organizational commitment and work performance positively.

2.2.9. Job Security and Retention

Abegglen (1958) found during the study of Japanese workers that employment

features like lifetime employment and seniority system, job security leads to

high commitment, job satisfaction as well as retention of employees in an

organization .Researchers such as Ashford et. al., (1989); Davy et. al.,

(1991)conducted studies on job security and job satisfaction and found that that

job dissatisfaction is the outcome of insecurity among employees. Rosenblatt

and Ruvio, (1996) conducted a research on the job insecurity and found that job

performance and organizational commitment are negatively correlated with job

insecurity.

39
 Table 2.1: Factors, Some Contributing Authors and Research papers

Factors Authors Research Papers Year

Compensation C.O. Trevor, B. Gerhart, Voluntary turnover and job 1997

J.W. Boudreau. performance: curvilinear and the
moderating influences of salary
growth and promotions.
D.Davies, R. Taylor, C. The role of appraisal, remuneration 2001
Savery. and training in improving staff
relations in the Western Australian
accommodation industry: A
comparative study.
DG Gardner, L Van The effects of pay level on 2004
Dyne, JL Pierce. organization-based self-esteem and
performance: a field study.
GM Milkovich, JM Compensation (8th ed.). 2004
Newman.
E Moncraz,.,J.Zhao, An exploratory study on US 2009
and C.Kay. lodging properties, organizational
practices and employee turnover
and retention.
Reward and N.C. Agarwal Reward Systems: Emerging Trends 1998
Recognition and Issues.

J.W. Walker “Perspectives” Human resource 2001

planning

L.T. Silbert The effect of Tangible Rewards on 2005

Perceived Organizational Support.

Promotion and M. R. Pergamit, and J. “What is a promotion?” 1999

opportunity for R.Veum.
Growth
Meyer, John, Laryssa Best Practices: Employee Retention 2003
Topolnytsky, Henryk
Krajewski and Ian
Gellatly.

B.J. Prince. Career-focused employee transfer 2005

processes.

L. Eyster, R Johnson Current strategies to employ & 2008

and E. Toder . retain older workers.

Participation in P.Hewitt High Performance Workplaces: 2002

Decision Making The Role of Employee Involvement
in a Modern Economy

40
 Y. Noah A Study of Worker Participation in 2008
Management Decision Making
Within Selected Establishments in
Lagos, Nigeria.

Work-Life J. Hyman and J. “Lacking balance? Work-life 2004

balance Summers employment practices in the
modern economy”

Work N. Miller, A. Erickson Sense of place in the workplace: 2001

environment and B. Yust. The relationship between personal
objects and job satisfaction and
motivation.

M.Wells and L. Thelen. What does your workspace say 2002

about you? The influence of
personality, status and workspace
on personalization.

S. Ramlall Managing Employee Retention as a 2003

Strategy for Increasing
Organizational Competitiveness.
Training and M. Messmer Orientations programs can be key 2000
development to employee retention.
A. Tomlinson High Technology workers want 2002
Respect.
P. Garg and R. Rastongi New model of job design 2006
motivation employees
Performance.
L.W. Handy The importance of the work 2008
environment variables on the
transfer of training.
Leadership R.Eisenberger, P. Perceived organizational support 1990
Fasolo, , and V. Davis- and employee diligence,
LaMastro commitment, and innovation.
McNeese- D.Smith Job Satisfaction, Productivity, and 1995
Organizational Commitment.

Y. Brunetto, R .Farr- Using social identity theory to 2002

Wharton explain the job satisfaction of
public sector employees.

Chung-Hsiung Fang, Applying Structural Equation 2009

Sue-Ting Chang, Guan- Model to Study of the Relationship
Li Chen Model among leadership style,
satisfaction, Organization
commitment and Performance in
hospital industry.

41
 Job-Security J.C.Abegglen The Japanese Factory. Aspects of 1958
Its Social Organization

S. Ashford, C .Lee, and Content, causes, and consequences 1989

P. Bobko of job insecurity: A theory-based
measure and substantive test.

J. Davy, A. Kinicki, C. Developing and testing a model of 1991

Scheck survivor responses to layoffs.

Z. Rosenblatt, A. Ruvio A test of a multidimensional model 1996

of job insecurity. The case of
Israeli teachers.

2.3. Job Satisfaction

Hoppock (1935) was of the view that job satisfaction is any combination of

psychological, physiological and environmental circumstances, which cause a

person truthfully, satisfied with his/her job.

Locke (1976) defined job satisfaction as “a pleasurable or positive emotional state

resulting from the appraisal of one’s job or job experience.”

Feldman and Arnold (1983) have defined job satisfaction as, “Job satisfaction will

be defined as the amount of overall positive affect (or feelings) that individuals

have towards their jobs”.

Davis et. al., (1985) stated that job satisfaction is a combination of positive and

negative feelings that workers have towards their work. When a worker joins a

business organization, he brings with him the needs, desires and experiences which

he expects from his job. Job satisfaction represents the extent to which expectations

matches with the real awards. Job satisfaction is closely linked to that individual's

behaviour in the work place.

Researchers such as Ashford et. al., (1989); Davy et. al., (1991) found in their

studies that insecurity among employees leads job dissatisfaction.

42
Rain, Lane and Steiner (1991) stated that job satisfaction is correlated to life

satisfaction which means that people who satisfied with life will tend to be satisfied

with the job and people who satisfied with job will tend to satisfied with their life.

Vidal at al., (2007) in their research found that job satisfaction is a complex

phenomenon which is influenced by factors like salary, working environment,

autonomy, communication and organizational commitment.

According to Reichheld (1996) there are three criteria that impetus how hard

employees are working. They work hard when: (1) they have job pride, (2) when

they find their jobs interesting and meaningful, and (3) when they are recognized

for their work and benefit from the work they have accomplished.

A relevant research by Spector (1997) and Hirschfield (2000) indicated that the

different aspects of job satisfaction could be split according to Herzberg’s two

dimensions. The intrinsic satisfaction refers to job tasks and job content such as

variety, autonomy, skill utilization, self-fulfilment and self-growth.

Murray (1999) has clearly stated that job satisfaction has direct effect on level of

absenteeism, commitment, performance and productivity. Furthermore, job

satisfaction not only improves the retention of employees but also reduces the cost

of hiring new employees.

Sokoya (2000) in his investigation on job satisfaction level among the public sector

managers found that income or compensation is the most valuable determinant of

job satisfaction. In a study by Al–Aameri, (2000) it has been found that satisfied

employees tend to be more productive, creative, and committed to their employers,

and recent studies have shown a direct correlation between staff satisfaction and

patient satisfaction in health care organizations.

43
According to Finn (2001) job satisfaction is the extent to which the employee is

satisfied with his present work and the degree to which his needs and wants

satisfied are satisfied by the job.

Arnett, Laverie and McLane (2002) found that employee satisfaction is linked to

positive employee behaviour such as having a customer orientation. Job

satisfaction can be a leading contribution factor for the success of a service industry

employer. It is axiomatic that satisfied employees tend to lead to satisfied guests.

Opkara (2002) found that job satisfaction is the result of various factors like pay,

promotion, the work itself, supervision, relationships with co-workers and

opportunities for promotions.

Crossman and Abou-Zaki (2003) also agreed that job satisfaction affects the quality

of the services the employees are providing.

Van Dick et. al., (2004) have identified job satisfaction as a predictor of turnover

intention; they argue that it is a mediating variable between organizational

identification and turnover intention. According to their study, organizational

identification feeds into job satisfaction which in turn, predicts turnover intention.

Guest (2004); Silla et. al., (2005) highlighted important factors like low job

security, working conditions and the nature of work, low wages and lack of

promotion, low job autonomy directly affects the level of job satisfaction of

employees.

Kim et. al., (2005); Willem et. al.,(2007) were of the view that job satisfaction

includes what employee feels and perceives about its job and what are their

experiences on work, and whether they feel positive or negative about the job..

According to Hong et. al., (2005), job satisfaction is one of the most frequently

44
studied areas in organizational behaviour research, and it is also a fundamental

variable in both research and theory of organizational experience range from job

design to supervision. Lu, While, and Barriball (2005) stated that the traditional

model of job satisfaction focuses on all the feelings that an individual has about

his/her job. Buitendach and Witte (2005) on the other hand stated that extrinsic

motivation refers to other factors such as pays, co-workers and work conditions.

Vidal et. al., (2007) in his study tried to establish a relationship between turnover

and job satisfaction and has stated that it relates to the turnover and the position

assigned to the employees on their return, as well as the accuracy of their

expectations and influences their job satisfaction.

Al-Hussami (2008) stated that job satisfaction and dissatisfaction depends on the

nature of the job as well as on the expectation what’s the job supply to an

employee. Al-Hussami (2008) in his study has said that if employees are more

satisfied with their job it will enhance their ability of creativity and productivity; it

is also directly correlated with the customer satisfaction. According to him the low

wages and less job satisfaction are the major components that are affecting the

retention. The supervisory support, lack of respect and motivation are also the

attributes of the job dissatisfaction. Abdul Rahman, Raza Naqvi and Ismail Ramay

(2008) have revealed that job satisfaction and organizational commitment had a

negative effect on turnover intentions, whereas perceived alternative job

opportunities had a significant positive correlation with turnover intentions and is

the major factor associated with turnover intention among IT professionals in

Pakistan. George et. al., (2008) expressed that job satisfaction is a collection of

various feeling and beliefs that a person have about his current job. A person’s

45
degree of job satisfaction and attitudes about their jobs as a whole can range from

extreme satisfaction to extreme dissatisfaction. People also can have attitudes about

various aspects of their jobs such as the kind of work they do, their co-workers,

supervisors or subordinates and their pay. In a research study by Mahmoud AL-

Hussami (2008) on job satisfaction among nurses, it has been concluded that there

exist a positive correlation existed between the, job satisfaction and other variables

like organizational commitment, organizational support, level of education, and

transformational leadership. Nurses are more likely to be committed to the

organization when they are provided a proportionate amount of job autonomy and

equitable workloads.

In a research by Rizwan Qaiser Danish and Ali Usman (2010), they have

expressed and found that promotional opportunities, proper reward and

compensation, job security and proper supervision as well as cooperation from the

supervisor can act as good motivator for the employees and can lead to job

satisfaction. Lane et. al., (2010) found that job satisfaction is a complex

phenomenon which is influenced by factors like salary, working environment,

autonomy, communication and organizational commitment.

Another important study made by Dr. Samina Nawab and Komal Khalid Bhatti

(2011) on influence of compensation on employee satisfaction in educational sector

revealed that compensation management can effect Job satisfaction and employees’

organizational commitment. For utilizing employee’s fully, potential organization

can use employee compensation as method for enhancing employee’s Job

satisfaction.

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Another important research study made by Ahmad Faisal Mahdi et. al., (2012) on a

sample of 32 executives and non-executives employees it has been found that both

intrinsic as well as extrinsic components of job satisfaction have a negative impact

on turnover intention of employees. It has been found that, the intrinsic satisfaction

is significantly inversely correlated with turnover intention as compared to the

extrinsic satisfaction. In an empirical study conducted by Alamdar Hussain Khan

et. al., (2012) in the autonomous medical institutions of health department of

Pakistan it has been concluded that factors of job satisfaction such as pay,

promotion, job safety and security, working conditions, job autonomy, relationship

with co-workers, relationship with supervisor, and nature of the work significantly

affect the level of job satisfaction. Javad Eslami and Davood Gharakhani (2012)

mentioned in their study of role of job satisfaction on organizational commitment

that job satisfaction have positive and significant effects on organizational

commitments.

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2.4. Employee Turnover

Price (1977) defines the term “turnover”: the ratio of the number of organizational

members who have left during the period being considered divided by the average

number of people in that organization during the period. Many researchers have

tried to answer the question as to what determines people's intention to quit by

investigating possible antecedents of employees’ intentions to quit. Until date,

there has been little consistency in findings, which is partly due to the diversity of

employed included by the researchers and the lack of consistency in their findings.

Therefore, there are several reasons why people quit from one organization to

another or why people leave organization.

Chruden (1980), Testa (2008) in their studies have found that high turnover rates of

skilled professionals can pose as a risk to the business or organization, due to

human capital (such a skills, training and knowledge) cost. Notably, given the

natural specialization of skilled professionals, these employees are likely to be

reemployed within the same industry by a competitor.

Price and Muller (1981) found that job dissatisfaction influenced actual turnover

indirectly through its direct effect on turnover intention. Schervish (1983) was of

the view that good local labour market conditions improve organizational stability.

The main causes of high labour turnover in an organization are poor personnel

policies, poor recruitment policies, poor supervisory practices, poor grievance

procedures, or lack of motivation. All these factors indicate that there is no proper

management practices and policies on personnel matters hence the employees are

not recruited scientifically, promotion policy of the organization is not

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communicated to the employees properly, no grievance procedures are there in the

organization and as such the employees decides to quit.

Many researchers such as DeMicco and Giridharan (1987); Dyke and Strick

(1990); Cantrell and Saranakhsh (1991); Denvir and Mcmahon (1992) have

mentioned that attention need to be paid to the issue of turnover because turnover

has some significant effects on organizations.

Zedeck and Mosier, (1990) have mentioned that the issue of employee turnover has

been very crucial and important to managers, researchers and individuals. Idson

and Feaster (1990) have stated that big organizations can provide employees with

better chances for advancement and higher wages and hence ensure organizational

attachment.

Jackson (1981) and Stear (1991) have stated in their studies that high turnover is

caused by unhappiness with the work, inadequate compensation, unsafe and

unhealthy conditions, unrealistic expectations, inappropriate processes or tools, and

poor candidate screening. Other causes are lack of career opportunities and

challenges, dissatisfaction with the job-scope or conflict with management.

Alexander et. al., (1994) was of the view that in organizations where there was a

high level of inefficiency there was also a high level of staff turnover.

From the point of view of Susskind at el., (2000) turnover problem should be dealt

with careful strategies exclusively concentrating on human resource problems.

According to Abassi et. al. (2000) employee turnover is the rotation of workers

around the labor market; between firms, jobs and occupations; and between the

states of employment and unemployment.

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Zuber, (2001) found that employees are more likely to stay when there is a

predictable work environment and vice versa. Zuber also stated that instable

organization have a high degree of employee turnover. Trevor ( 2001) posit the

view that intelligent people whose performance is good in their jobs are believed to

get more employment opportunities than those of average or poor employees and

as such are more likely to leave their jobs.

Kevin et. al. (2004) have stated that although, there is no standard framework for

understanding the employees turnover process but a wide range of factors are

useful in predicting employee turnover. In the view of Firth et. al. (2004) ,the

experience of job related stress (job stress), the range factors that lead to job related

stress (stressors), lack of commitment in the organization; and job dissatisfaction

make employees to quit. Manu et. al. (2004) argued that for economic reasons

employees quit from organization. Using economic model they showed that people

quit from organization due to economic reasons and these can be used to predict

the labour turnover in the market.

Costello ( 2006) was of the view that when companies hire the best people, new

talents hired and veterans are enabled to reach company goals,maximizing the

investment of each employee. Taking the time to listen to employees and making

them feel involved will create loyalty, in turn reducing turnover, allowing for

growth.

Henry Ongori (2007) has concluded in his study that employees are the long-term

investments in an organization and as such management should encourage job

redesign-task autonomy, task significance and task identity, open book

management, empowerment of employees, recruitment and selection must be done

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scientifically with the objective of retaining employees and decreasing employee

turnover.

Zheng and Lamond (2009) have found out that training, size, length of operation

and the nature of the industry are significantly related to turnover.

Babak et. al., (2010) found in their study that under influence of global business

culture now employer do understand the cost of loosing employee even in a

country where high level of unemployment prevails and they (employers ) are

using different tactics like decentralization and effective rewards to overcome

employee turnover.

A.C. Benedict et. al., (2012) has concluded in their study on effects of turnover that

labour turnover, if not controlled can have its disastrous effects. It can, not only add

to the cost of the organization but the departing employees can also lure the

existing employees out of the organization. The additional turnover can make it

difficult for the organization in employing good and new employees. E.Deepa and

M.Stella (2012) has revealed in their study that to reduce the employee turnover

rate in an organization, it has to concentrate more on working condition and Safety

measures which in turn helps the organization to retain their employees.

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 Figure 2.3: The Employee Retention and Job Satisfaction Conceptual Model

The above model clearly depicts that employee retention factors have a direct

relationship with job satisfaction. If these factors exist in the organization then the

tendency to leave the job or switch over to some other job gets reduced. Thus job

satisfaction as well as employee turnover are always negatively correlated to one

another. The model clearly shows that if the above mentioned factors exist in the

organization it will not only help to attract new employees into the organization but

will also lead to the retention of the existing employees into the organization. Lee

and Mowday (1987) and Tett and Meyer (1993) in their studies have concluded

that high job satisfaction leads to lower turnover, while low satisfaction leads to

higher turnover. Fornell et. al., (1995) stressed on the importance of job satisfaction

upon retention and pressurized on the fact that major and strong economies now

conduct large sample surveys to understand employee satisfaction and predict its

impact upon employee retention and financial performance. Thus it can be

concluded that presence of factors like reward and recognition, compensation,

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work life balance, proper leadership and supervision, job security etc helps in

satisfying employees in an organization which in effect helps in reducing the

intention of the employees to shift over to other job which directly results into

retaining the human resources in the organization.

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