Employee Turnover After Financial Crisis in 2008

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Employee turnover



1.1 Background of Studies

Employee turnover is the hottest and current issue that always discusses by the government, since we are confronted with the global economic crisis on 2008. The crisis of economic is directly affected to the corporation, especially the production line and manufacturing company. The unexpected crisis will arise in the employee turnover rate happened no matter for the voluntary or involuntary case and it achieved the highest rate within the past 20 years in Malaysia as well.

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Therefore, other than the efforts and measurements had been taken by the government like donated sustention fund to secondary industry, the efforts of employers are vital to minimize the employee turnover.


On the other hand, the advance knowledge likes the significant of the compensation and benefits package toward the employee and the preference of employees toward the different types of the compensation and benefits package are necessary to implant and infuse to all the employers in order to retain their quality workers. There are some factors are directly influenced to the employee turnover in the real working environment. The employers will enjoy the benefits if they manage to retain their employees or minimize the employee turnover problem by implementing the felicitously compensation and benefits package.


The higher employee turnover rate is considering the severely problem to a particular country because it is absolutely bringing negative effects in progressing development. The employee turnover rate definitely cannot be terminated, but I sincerely wish that this problem can fully minimize. I strongly believe that the compensation and benefits ways might be able to minimize the employee turnover in the working place.


1.2 Introduction

Turnover rate is considering the severely problem to a particular country because it is absolutely bringing negative effects in progressing development. The employee turnover rate definitely cannot be terminated, but I sincerely wish that this problem can be fully minimized. I strongly believe that the compensation and benefits ways might be able to minimize the employee turnover in the working place.


This research is related to how the compensation and benefits way in minimizing the employee turnover rate. In fact, compensation and benefits play a vital role in retaining the employees in an organization. Compensation and benefits can be defined as the process that taken by the Human Resource Management on every single day like setting the rules and procedures around the salaries, a direct way as cash paid and indirect way like given benefits to the employees. This element is highly mentioned in the employment contract and concerned by the employees as well.


On the other hand, compensation and benefits can be taken as different meaning from the perspective of a member of society, a stockholder, a manager, or an employee. Therefore, let us recognize the meaning by each perspective of the group. Compensation and benefits can be seen as a reflection of justice in society; stockholders are also interested in how employees are paid. Some believe that using stock to pay employees creates a sense of ownership that will improve performance, which will, in turn, increase stockholder wealth; for managers compensation influences their success in two ways. First, it is a major expense and second is the power to influence employee behaviors and to improve the organization’s performance; the pay individuals receive in return for the work they perform is usually the major source of their financial security. Hence, pay plays a vital role in a person’s economic and social well-being. Employees may see compensation as a return in an exchange between their employer and themselves, as an entitlement for being an employee of the company, or as a reward for a job well done (Milkovich and Newman, 2008).


Employees will emphasize more to the compensation and benefits that provide by the organization or company because they contribute their times, efforts, talents and they wish to get better return in compensation and benefits. The compensation and benefits package for the employees is like the exchange value between the employer and employee. The employers offer the benefits packages such as health care, dependent care, income protection and so on to mitigate t employees’ no matter for current or future risk. The employees contribute their efforts in order to appreciate the compensation and benefits package that offered by the employers. Compensation and benefits include pay received directly as cash (for example: base, merit, incentives, cost-of-living adjustment) and indirectly as benefits (for example: pensions, medical insurance, program to help balance work and life demands, brightly colored uniforms (Milkovich and Newman, 2008).


Nowadays, the employees are more emphasizing to cash compensation but there are still quite numbers of employees prefer to non-cash compensation like benefits. Employees may concern to what packages have been offered by the employers and ultimately increase their self-wealth. Employees may have different preferences towards the compensation and benefits package because it takes as the motivation tool to them if it can suit or fit to them. It is crucial to all the employers in understanding the preferences of employees toward the compensation and benefits package because they are come from various genders, religious, geographic location, and age and so on. The employers might be able to retain the workers if apply the proper compensation and benefits to the employees.


Employees often desire to get a liberally and fair compensation and benefits package for their own expectation because it will directly influence to employees’ job satisfaction. Meanwhile, this factor will lead to employees’ turnover if they thought they didn’t deserve expectation returns. Therefore, compensation and benefits is the deep knowledge that should implant to all the employees because it will definitely assist them to retain their workers.


Apart from that, employee turnover can be defined as the number of permanent employees leaving the company within the reported period versus the number of actual Active Permanent employees on the last day of the previous reported period (physical headcount). The number of leavers, that are included in Employee Turnover, only includes natural turnover (resignations, termination, retirement, etc.); it does not reflect any redundancies. Planned redundancies are reported and explained separately if relevant for employee turnover (Laurus & Nobilis, 2008). Mobley (1982) defines employee turnover as the common voluntary cessation of membership in an organization by an individual who receives monetary compensation for participating in that organization. This definition primarily focuses on separation from an organization rather than on accession, transfer, or other. Besides, employee turnover can be also defined as the number of workers who leave from their workplace under certain circumstances.


All the organizations will definitely encounter with the employee turnover because it is unavoidable and inevitable but manageable. Employee turnover can be categorized as voluntary and involuntary turnover. Voluntary turnover occurs when employees leave the organization deliberately (i.e. quitting); this can be contrasted with the involuntary turnover, which occurs when employees leaving the organization without choosing to do so (i.e. being fired or laid off) (Lee, Weller, & Trevor, 2008). Sometimes voluntary turnover happened because the employees desire to seek more salary, while the involuntary happened when they are considered as redundant capital. Therefore, compensation and benefits might be able to influence the voluntary turnover as the cost and expenses will be incurred or increase if voluntary turnover happened in particular organization. The organizations have to spend more costs to provide training and development and seeking for the new employees if they are not able to retain their employees.


1.3 History

In English, “compensation” means something that counterbalances, offset, or make up for something else. However, if we look at the origin of the word in different languages, we get a sense of the richness of the meaning, which combines entitlement, return, and reward.


In China, the traditional characters for the word “compensation” are based on the symbols for logs and water; compensation provides the necessities in life. In the recent past, the state owned all enterprises and compensation was treated as an entitlement. In today’s China, compensation takes on a more subtle meaning. A new word, dai yu, is used. It refers to how you are being treated- your wages, benefits, training opportunities, and so on. When people talk about compensation, they ask each other about the dai yu in their companies. Rather than assuming that everyone is entitled to the same treatment, the meaning of compensation now included a broader sense of returns as well entitlement.


“Compensation” in Japanese is kyuyo, which is made up of two separate characters ( kyu and yo), both meaning “giving something.” Kyu is an honorific used to indicate that the person doing the giving is someone of high rank, such as a feudal lord, an emperor, or a samurai leader. Traditionally, compensation is thought of as something has given by one’s superior. Today, business consultants in Japan try to substitute the word hou-syu, which means “reward” and has no associations with notions of superiors. The many allowances that are part of Japanese compensation systems translate as teate, which means “taking care of something.” Teate is regarded as compensation that takes care of employees’ financial needs. This concept is consistent with the family, housing, and commuting allowance that are still used in many Japanese companies.


These contrasting ideas about compensation- multiple views (societal, stockholder, managerial, employee, and even global) and multiple meanings (returns, rewards, entitlement) – add richness to this topic (Milkovich and Newman, 2008). That is the reason why compensation and benefits are more emphasized by the employers because it is essential in minimizing the employee turnover.


1.4 Research Objective


1.4.1 To identify the relationship between compensation and benefits in minimizing the employee turnover.

The research conducted on the link between dissatisfaction with the pay and voluntary turnover appears to be inconclusive. Tang (1991) recommended that the most crucial reason for voluntary turnover is regarding to higher wages/career opportunity. There is an inverse relationship between relative wages and turnover (i.e. establishments with higher relative pay had lower turnover) (Martin, 2003). Salary growth had a pronounced effect on turnover in the studies that related to compensation. Particularly, salary growth effects on turnover were greatest for high performers, that is, high salary growth significantly reduced turnover for high performing employees. Compensation and benefits package are defined in this study as it helps to retain the workers and minimize the turnover rate (Park, Ofori-Dankwa, & Bishop, 1994; Trevor, Barry, & Boudreau, 1997).


1.4.2 To identify the preference of components of compensation and benefits toward the employees.

According to Milkovich and Newman, (2008) the employees contribute their efforts in order to appreciate the compensation and benefits package that offered by the employers. Compensation and benefits include pay received directly as cash (for example: base, merit, incentives, cost-of-living adjustment) and indirectly as benefits (for example: pensions, medical insurance, program to help balance work and life demands, brightly colored uniforms. The employees might have different types of preference based on their requirements. Some of them will prefer to directly as cash but some of them will prefer to indirectly as benefits. The preference of components of compensation and benefits are defined in this study as it helps to distinguish their desired needs and retain the talented workers in an organization.


1.4.3 To identify the significant of the compensation and benefits package toward the employees.

Pay and pay-related variables have a modest effect on turnover (Griffeth et al, 2000). Their investigation also integrated studies that examined the relationship between pay, a person’s performance and turnover. They concluded that when high performers are inadequately rewarded, they will choose to leave an organization. Milkovich and Newman (1999) stated that where collective reward programs substitute individual incentives, their introduction may tend to higher turnover among high performers. The significant of the compensation and benefits package toward the employees is defined in this study as the turnover will definitely incur higher cost expenses if an organization may not be able to retain their workers.


1.4.4 To identify the advantages if the company able to retain their employees.

Employee turnover is a topic of immense importance to public and private sector organizations. In part, this importance reflects the tremendous costs—financial and otherwise—often associated with the turnover (Staw 1980; Balfour & Neff 1993). Financially, turnover may lead to increased personnel expenses—particularly in the areas of recruitment and training (Staw 1980; Balfour & Neff 1993). However, employee turnover can also bring about a loss of organizational knowledge, history, and memory (Staw 1980; Moynihan & Pandey 2008). Therefore, all those consequences will not happen if an organization success to retain their employees. The advantage to retain employees is defined in this study as it guarantees to help the process of development.


1.4.5 To recognize the satisfaction and expectation of employees in diversified industry that may influence the employee turnover.

A theory stated that there are two basic types of needs, which are the need for psychological growth or motivating factors and the need to avoid pain or hygiene factors (Herzberg, 1973). The motivating factors comprise the essentials like achievement and advancement. These are positive elements that contribute towards job satisfaction and motivation. Hygiene factors such as company or organizational policies, quality of supervision, working condition, salary, relationship with peers and subordinates, status and security are negative elements in Hygiene’s factors that could cause dissatisfaction at work. The satisfaction and expectation of employees are defined in this study as it plays a vital role in manipulating the employee turnover.


1.5 Problem Statement

    • How to implement compensation and benefits package in order to minimize employee turnover?


    • How to recognize the preference of employees toward the compensation and benefits package?


    • How the important role of the compensation and benefits package to the employees in their real working environment?


    • What benefits for a particular company if the employee turnover rate is low?


    • How to examine the satisfaction and expectation of customers toward their compensation and benefits package?


1.6 Scope of Studies

The scope of studies is focused on the compensation and benefits package that implemented to the employees at several industries because it is efficiency in minimizing the employee turnover. Besides, this research is a tendency to the theoretical factors but not technological way. Moreover, this research also discussed with the preference of the compensation and benefits package by the employees because everybody has different demands in the real life. This research provides the knowledge about the factors that lead to employee turnover and the significant of implementing compensation and benefits in retaining the employees. Therefore, the employers must take actions in order to prevent the increment of employee turnover.


1.7 Organization of Research

This research is basically divided into three main areas;

    • The first part is literature review and the journals that have been collected will be used. Besides, the journals will assist to identify the role of compensation and benefits to minimize the employee turnover. There are some other independent variables will be examined toward the employee turnover. Moreover, through the reviews, a framework will be developed, a framework will be developed and to understand the variables.


    • Once the framework is being done, a questionnaire will be created to understand the preferences of the compensation and benefits package toward the employees. This questionnaire will then be distributed for results. It will present the significant of the compensation and benefits package in the real working environment.


    • The third part of the research will be analyzed once the collected result of the questionnaire comes with scientifically conclusion and reasons. After that, I will formulate some measures in order to make the situation become more favourable.






2.0 Introduction

This chapter discussed about the relationship between compensation and benefits toward the employee turnover. The literatures of the research relevant to this area of study are explored and the same are organized based on the topic of discussion, compensation and benefits, organization culture, supervisor, Job Analysis and job characteristic, and working condition.


2.1 Employee Turnover

According to Campion, (1991) the turnover principle includes various dimensions with the most obvious being whether it is voluntary or involuntary. Although the turnover decision might be classified, but it seems failed to fully consider because it might hide with several but complexity reasons. Additionally, there are some troubles with turnover dimension and lack of agreement on the explanation of ‘voluntary’ because it depends on who you ask as to why the employee left his or her job. Maertz and Campion (1998) defined the voluntary turnover as the management aspect agrees that the employee had the physical chance to continue employment with the company and at the time of termination as well. There was no impediment to continued employment from physical disability or from corporation management through the conveyed of voluntaries, such as non-mandatory retirement, quitting for family resettlement, or quitting for a self-perceived more desirable job. That is, even though the employee may know to stay is extremely costly but he/she still does the same decision because employee turnover implies with an individual choice. The limitation of article is the further investigation should be carrying out to examine the factors that lead to voluntary turnover because it is extremely incurring more expenses if an organization desire to employ new workers. Besides, this article didn’t list out the main reason of involuntary turnover which is reluctant to workers especially during the recession period. The employees were being informed that their organization encountered with this problem severely and forced to leave the organization eventually. Sometimes the employees could be able to contribute more to an organization, but they couldn’t to do so. This issue supposes to discuss with all the readers as well as the public.


Grifeth and Hom (1994) stated that employee turnover will definitely contribute to the potential benefits and disadvantages for an organization. For instance, dislocation of poor performance, infusion of new knowledge and technology, reducing labor costs when facing stiffer competition, maintaining ties with exiting employees and providing new business ventures, or enhancing promotional opportunities for the remaining staff can be considered as positive ramifications. The negative effects cover economic costs, productivity losses, impaired service quality, lost business opportunities, increased administrative burden and loss of morale among the remaining staff. Employee turnover incurred some influences toward the organization but basically negative effect will definitely more than the positive effect and this is the main reason some organizations are implementing the compensation and benefits package to retain their workers. In addition, employee turnover costs are not only monetary but the company may have also lost the ‘knowledge’ possessed by the departing employee (Gomez-Mejia et al, 2001). Intelligence and knowledgeable workers are really hard to acquire in the market nowadays. Knowledge not only plays the role as the core of competence but is also a value-created device, especially for those organizations that face the global competitive challenges in the market. The knowledge that is embodied in human beings (as human capital) and in technology has always been central to companies’ visibility and economic development. Harnessing new technologies and innovation will be the source of long-term employment and productivity growth for companies and countries in a knowledge-based economy (Noe et al, 2002). The limitation is this article is the negative effect of employee turnover didn’t explain widely and brief. We strongly agree that the negative effect is definitely more than the positive effect because it extremely influenced to the development of particular organization. The negative effect has incurred no matter in monetary or non-monetary aspects. The publics are interesting to know how the negative effects affect an organization if they didn’t retain their talented employees. Hence, the author might list some latest examples to readers about the negative effect toward an organization regard to turnover problems. All the managers of particular organization definitely take some measurements in order to prevent the employee turnover.


According to Abassi and Hollman (2000) turnover is the circle of rotation of workers around the labor market between the firms, jobs and occupations; and between the states of employment and unemployment. This workforce activity can be diversified into two categories which are voluntary and involuntary turnover. Involuntary turnover can be defined as the dismissal of employees, whereas voluntary turnover occurs when employees resign. Voluntary turnover often results in departing employees migrating to competing firms, creating an even more critical situation, since this knowledge can now be used against the organization. In conformity to Kransdorff (1996) voluntary turnover has in fact been accelerating over the past decade, as recent studies have shown that employees on average switch employers every six years. This situation demands senior management to consider the repercussions of voluntary turnover, and immediately create contingency plans. The turnover of best performers will directly cause the senior management been caught unprepared. Johnson et al (2000) said that functional turnover such as bad performers left and good performers stay can help to reduce sub-optimal organizational performance; excessive turnover can be detrimental to the firm’s productivity. This can result in the loss of business and relationships, and can even make vulnerable the realization of the firm’s objectives. To compound the negative side-effects of turnover, not all the departing employees are considered sub-optimal performer. According to Abassi and Hollman (2000) dysfunctional turnover (i.e. good performers leave, bad performers stay) damages the organization through decreased innovation, delayed services, sluggish implementation of new programs, and degenerated into productivity. Such activity can radically affect the firm’s ability to flourish in today’s competitive economy; leaving even the most striving firms unable to succeed due to the inability to retain the right employees. If it is presumed that the smartest and most talented employees are often the most upwardly mobile, then strong organizations may become unable to actualize strategies and complete key business transactions, if they do not proactively manage their turnover. The limitation in this article is it didn’t state out of the measurement to solve the employee turnover. In this study, it just examined to us about the voluntary turnover and sorted as functional and dysfunctional turnover. As what the author mentioned in this article, the managers were caught unprepared once this issue happened to them. Therefore, the author supposes to discuss some measurements to deal with the turnover problem after explain the definition and effect to each turnover.


Employee loyalty is the foundation of customer satisfaction in the organization (Abassi and Hollman, 2000). While employee loyalty has often enabled firms to retain strong employees, senior management cannot be longer relying on relationships to incentive good workers to stay. Abassi and Hollman (2000) said that eroding employee loyalty is highlighting the importance of attracting and maintaining good people as the key to strategic staffing in the modern workplace. This is forcing organizations to revisit their HR practices to meet the diverse needs of the workforce in order to retain strong employees, and therefore, maximize the overall success of the firm. Abassi and Hollman (2000) highlighted five reasons for employee turnover in the organization:

    • Hiring practices;


    • Managerial style;


    • Lack of recognition;


    • Lack of competitive compensation systems; and


    • Toxic workplace environments.


Morrell (2001) examined that turnover means voluntary cessation of membership of an organization by an employee of that organization. Besides on that, turnover intention is broadly defined as attitudinal (thinking of quitting), decisional (intention to leave), and behavioral (searching for a new job) processes proceeding with voluntary turnover (Sager et al., 1998; Khatri, 2001). According to Dess (2001) employee turnover incurs some significant costs, both in terms of direct costs (replacement, recruitment and selection, temporary staff, management time), and also (and perhaps more significantly) in terms of indirect costs (morale, pressure on remaining staff, costs of learning, product/service quality, organizational memory) and the loss of social capital. Apart from that, employee turnover is a major concern for companies in many Asian countries such as Singapore, Hong Kong, South Korea, Malaysia, and Taiwan (Khatri, Chang, & Budhwar, 2001). Global Reporting Initiative (GRI) has recognized the importance of workforce turnover as a sustainability issue, which has included turnover as a core social performance indicator in its Sustainability Reporting Guidelines (GRI 2002). Moreover, employee turnover is giving restless nights to human resource managers in the textile sector of Pakistan. There are two reasons to explain why the textile sector has been selected. Bohla and Hameed (2001) analyzed there is an alarming employee turnover rate i.e. 12%. The textile industry represents Pakistan’s biggest employer as well as the key sector for the economy having almost 68% of total export income is the largest sector of Pakistan. The limitation in this article is the author didn’t list out the employee turnover rate that occurs in Malaysia. The data and statistic are important because it can alert how severely for the case of unemployment that caused by voluntary and involuntary turnover. Besides on that, the author may discuss why the turnover problems occur severely in Asian countries if compare to Europe? Is it the Asian people encounter with certain troublesome? This issue must fully examine in order to minimize until the lowest percentage.


DeBare (2001) examined that one of the major reasons for employee turnover in the retail sector is that stores have established to be a training ground, allowing the employee an opportunity to gain valuable skills. All new hires of employees such as cashier and general manager that stand in different levels are given extensive training at a majority of larger companies in today’s market. Meanwhile, many“mid-career” individuals are less likely to change directions; there has a tendency showed that the criteria such as money, better scheduling, increased or better hours are preferred most by younger employees and experience is their tool to secure a position at elsewhere. Besides on that, there has an outlook which determined that the moving from one job to another is perfectly conducted among the majority of employees especially those younger than 30 if it allows for more pay, and continued growth and development. In addition, the high turnover rate in retail stores attracts potential hires due, mostly to the “revolving door” effect. There are always employees coming and going, which allows for opportunities to exist. The limitation in this article is low-career individuals didn’t discuss by the author regard to their turnover problems. Most of them desire to seek better pay and benefits package if they feel dissatisfied to what they received currently. The young teenagers are not only seeking for better pay in their job, they also desire to get a more challenging job if compare with those who are 40 years old and above.


Lane et.al (1996) discussed that it is interesting to note that even though retail and services consist of 20 percent of U.S. jobs, those same sectors create nearly 50 percent of worker turnover. In addition, Lane, (2000) had analyzed that only 16.6% of cashier jobs are created as new positions, the remaining 82.4% is related to turnover while ” 11 low-skill occupations with 6.5 million job openings per year and only 1million are new jobs”. Jovanovic (1979) examined that some turnover is required under economic theories of job matching. Therefore, some positive turnover must be beneficial, since it is rational for both employers and workers to continue an employment contract only if the workers’ productivity is matched by their pay, while mismatches should separate. Dess and Shaw (2001) noted that no organization-level studies have yet supported the curvilinear, inverted U-shaped, cost-benefit prediction. Much more common is the finding of a negative link between turnover and performance. Glebbeek and Bax (2004) said that the position has some diverse today because it just with having found signs even though not statistically significant ones, of an inverted U-shaped relationship. According to Harris et.al (2006) found a curvilinear relationship, but at an aggregate level in a cross-firm study using Australian data. Moreover, there is an existing of usual negative relationship (Shaw, Gupta, Delery, Duffy, Johnson, and Lockhart, 2005). However, “unobservable” such as the management ability, affect performance and confound the true turnover-performance link are the difficulty of testing these theories empirically. The limitation in this study is the author do failure in testing other theories that influence to turnover. All the level of publics can understand more toward the factors that lead to turnover if the author success to examine it. In addition, the study can’t deliver a clear picture to the public about the U-shaped, cost-benefit prediction and so forth. The public couldn’t catch the real meaning about this if they just simply glance through the article.


According to Gimpelson and Lippoldt (2001) the total turnover rate around the world was 46% in 1998. Besides, the turnover of unskilled workers was high in the mid of 1990s while firms seem that hoarded white-collar labor. Brown and Earle (2003) correspondingly find that labor flows, particularly job destruction and separation in the Russian industrial sector increased in magnitude during the 1990s. The total worker flows were nine percentage points higher in 1999 than in 1990. In addition, the churning rate which defined as the worker flows less the absolute value of employment change was 30-40% during the 1990s. Gimpelson (2004) examined a survey of 304 Russian industrial enterprises in 2003, and he also finds that 77% of firms experienced a deficit of managers and professionals or highly qualified workers or both, indicating tight labor markets. The limitation in this article is the data can’t represent the turnover problem in Russia entirely because it just did the survey through the limited group. The percentage of turnover can’t even get an increase if the author conducts the survey to diversify industries. It can reflect to deeper level of employees through the survey. Unskilled labors are not being examined by the author as well.


2.2 Compensation and Benefits

Murphy and Kevin (1999) has examined that most executive compensation packages are consisted of four basic components, which are base salary, annual bonus tied to the accounting performance, stock option and long term incentive plan such as restricted stock plans and multi-year accounting based performance plan. In addition to that, executive retirement plans and participates in some broad-based employee benefit plans are also considered as one of the compensation ways that offers to employees. According to Milkovich (2005) benefit plans can be referred to that part of the total compensation package (other than the pay for time spent on work) that is provided to the employee in whole or in part by payments from the employer. In addition, benefits are grouping membership rewards that provide security for workers and their family members. Basically, benefit plans are generally conceptualized in two ways. The narrow definitions are the employer provides retirement, health, welfare and fringe benefits of benefit plans to the employees. Moreover, employee benefits should have included with some social insurance programmes in order to fulfill employees’ requirements. In particular, William et al (2002) examined that benefit satisfaction includes not only the types and levels of specific benefits received, but also satisfaction with the way the benefit system operates, especially from the perspective of international justice. Employee benefits protect employees from risks that could endanger their health and monetary security. For instance, the employers may also provide some services or facilities that many employees find valuable. In addition, Gomez-Mejia et al (2001) discussed that benefit plans that are designed to rise in value over time push employees to remain with their employer, consequently, they have a moderating effect on firm productivity, irrespective of industry or firm size. Moreover, Tsai and Wang (2005) analyzed that the effect is greater in small to medium-sized enterprises (SMEs) than in large firms. The limitation in this article is the compensation package is less discussed by the author. We can get the information and knowledge clearly from the author after we read through the article. On the other hand, how the sort of compensation package seldom to discuss at all. The author supposes to deliver some further information about the compensation package because it could enhance the employee’s knowledge toward their compensation and benefits package.


According to Haaparanta (2003) showed the studies about the motivations for providing non-wage benefits have been discussed mostly in the context of developed market economies while a provision of non-wage, or fringe, benefits for workers are a widespread phenomenon. However, industrial firms were also charged with supplying a great diversity of non-wage benefits in the planned Soviet economy. In particular, the supporting social assets such as housing, medical facilities and daycare services were considered by them when they shouldered the obligation. Many firms actively continue to provide social services in spite of a law on transfer of social assets to municipalities in the mid-1990s and generally heavy restructuring of the Russian economy. The shift, instead, has been away from keeping assets within the firm to other forms of employee support. The idea that non-wage benefits can be used by firms to decrease labor turnover is barely new. However, Even and Macpherson, (1996) conducted a survey and said that the attachment device treated in the majority of related papers is specific to the pension plans and health insurance that constitute the bulk of non-wage benefits to workers in developed economies. Besides on that, the pension plan is a form of deferred payment in a framework similar to bonding or efficiency-wage models that imposed a separation penalty on the worker (i.e. all or part of a worker’s contribution is forfeited if they quit before vesting), and hence limits turnover. This can be clarified represent that the employers must implement the compensation and benefits package to their employees if the employees are well-contributed and high performance to productivity line. Moreover, Ippolito (2002) showed that some of the firms were offering pension plans may be seen to attract saver-types who are less likely to quit alternatively. Empirically, Decressin et al (2005) showed on a large US data set that health benefits do indeed reduce worker churning. In contrast, the employers provided and subsidized the service and facilities of non-wage benefits in Russian firms and these include housing, day care, recreation, and medical services. Consumption of these services is instant rather than delayed, though they may still carry a severance penalty. Some of the case is a worker who quits is likely to incur fixed costs for arranging new housing, day care or medical care. According to Oyer (2005) also found that a fact that it is costly for workers to match with firms that offer the benefits they value affects firms’ decisions about which benefits to offer in the United States . These matching costs are the higher the lower the number of alternative providers of these services in the region. The limitation in this article is just limited of benefits are being discussed by the author. Some of the employees will prefer more to learning opportunity, challenging job, and job recognition. The pension fund and healthy plan are strictly considered by every single of an employee but sometimes for those who are more talented and high productivity, they desired to get extra benefits from an organization as well.


Commander and Schankerman (1997) were among the first ones in the Russian perspective to point out that any reformation of firm-provided social benefits depends crucially on the accessibility of alternative providers. In this framework, social benefits represent an in-kind compensating differential for the quality of local social infrastructure. Russia provided a good ground for testing this hypothesis with its huge disparities in the level of expansion of regional labor markets and markets for social services. There has an opinion that voiced out that the addition effect of benefits should be especially imperative because the social sector in the country is still heavily synchronized and subsidized, and thus a difficult market to enter for potential new service providers. According to Grosfeld et al (2001) who demonstrated that the Russian labor market is already segmented into a pool of low-productivity workers and a dynamic segment of mobile, high-productivity workers. They argued that the workers are received contrast benefits as what had contributed by them. For instance, fewer productive workers engage in contractual relationships similar to risk insurance contracts, whereby the employee accepts lower wages in exchange for security and social services. It happened and was widespread in Russian firms during the 1990s whereby risk in this setting may be related to the non-payment of wages. Grosfeld et al (2001) structured a theoretical model in and also incorporates the fixed cost for seeking out new service providers incurred by a worker who quits a benefits-providing firm. Another important feature of the Russian labor market is its high local level concentration due to the high geographic concentration of industrial production inherited from the Soviet period. Friebel and Guriev (2005) analyzed the worker attachment in Russia and argued that non-monetary forms of compensation can construct workers’ ability to migrate and thus tie them to their current location by the combination with an innate monopsonistic or oligopsonistic local labor market structure. The limitation in this article is the case of compensation and benefits are only focused to low-productivity and high-productivity workers. The author can be wider up to the range of employees in order to achieve the more reliable result.


Kahneman and Tversky (1979) have argued that by singling out the fringe benefit component, employees may experience the value as larger than a similar incremental in money wages if diminishing sensitivity is a characteristic human nature. Hwang, Mortensen and Reed (1998) examined that establishments of offering low wages and few fringe benefits experience high worker turnover and low labor supply, while establishments offering high wages and many fringe benefits experience low worker turnover and large labor supply. For these latter establishments lower profit per worker is compensated by having more workers. We can know that the compensation and benefits package already played an important role at a long time ago. It is exactly high demand by the employees nowadays especially when we have to face with the inflation problem in the market. Everybody has desired to earn and get more benefits as their exchange of contribution toward the company. The limitation in this article is the fringe benefit components do not explain briefly at all. The author just stated out one of the benefit packages but without explain clarify to readers. Readers even the employees may not understand what kind of fringe benefits that could get from the employers in working place.


Salary growth had a pronounced effect on turnover in the studies that related to compensation. Particularly, salary growth effects on turnover were greatest for high performers, that is, high salary growth significantly reduced turnover for high performing employees (Park, Ofori-Dankwa, & Bishop, 1994; Trevor, Barry, & Boudreau 1997). Obviously, we can see the people that surrounded us are always discussing with their current payment, salary or benefits that provided by their company respectively. The employees are going to seek the better and higher payment that offered by another company. They are emphasizing toward the compensation and benefits package because they have to guarantee the secure of their income and saving. The high performers will not only great contribute to the company; they will also assist the company to save the costs to hire and train the new workers. Abassi and Hollman (2000) have identified lack of recognition and lack of competitive compensation systems are some reasons for employee turnover in the organization through their study. Some of the company had been facing voluntary turnover when the workers were extremely unsatisfied with the compensation system. For instance, they didn’t receive any allowances or get the low salary after they made a contribution for the development of the particular company. Apart from that, the recession problems have become more severely around the world during 2008. It made the people having the risk of unemployment. Some of the workers were facing involuntary turnover when they get informed by their employers that the company has redundancy of workers currently. They need some compensation and benefits that provided by the company in order to carry on their daily life.


There has a results of micro firm-level research, employee skills, organizational structures, average pay, benefit plans, health assurance practices, benefits as a percentage of payroll, job ladder length, percentage pay growth, importance of seniority for core job filling, high skill emphasis, employee participation in decision making and in teams, incentives such as high relative pay, and employee security are consistently negative and significantly related to voluntary workforce turnover (Huselid, 1995; Shaw et al., 1998; Batt, 2002; Fairris, 2004). However, incentive compensation systems may actually encourage employees with a poor performance to leave a firm (Huselid, 1995). Whereas electronic monitoring, working time (Shaw, 1998), below-average industry or area wage, pension inducement and the skills of the core workforce are very transferable to firms in other industries, internal promotion was very or extremely important and also (Fairris, 2004) positively related to employee turnover. The limitation in this article is the author did not separate between the relationship between compensation and benefits toward the employee turnover. Certain field of employees might leave the organization because they really dissatisfied toward the compensation system but some of them leave the organization because they can’t even get the basic of benefits from their employer. High skill employees desire to get more recognition or upgrade their level in an organization but for those who get the low paid in the working place, they really need more compensation and fringe benefits in order to reduce their burdens.


Lepak and Snell (2002) discussed that transaction cost theory highlights the firms’ focus on securing the most proficient form of organizing employment. Firm-specific investments incur costs of monitoring and securing conformity, so that firms attempt to minimize the ex ante and the ex post costs associated with managing employment. The transaction costs able to be reduced once a firm makes a decision to invest in benefit plans to retain valued employees. Otherwise, some benefit plans such as pension plans are shared responsibilities between employer and employee. Thus, the employees must deliberate over everything before they decide to leave a firm or not because trasaction costs and benefits are considered as well. Pension plans are relied on job investment, an essential basis for commitment and retention. Research on commitment similarly conceives of compliance or calculative commitment as identification based on extrinsic inducements. Mathieu and Zajac (1990) discussed that commitment leads the employees to become bounce to a firm because they have personal investment in it and fear losing those investments. The perceived costs of quitting reduced the number of resignations can be search through the employee turnover studies and there are two types of pension plans, which are defined contribution and defined benefit plans. Defined contribution plans are the most clear-cut type. The firm makes a contribution to the employee’s pension account, which is owned by the worker for each pay period. The money in the account is invested in interest-bearing securities of some sort, sometimes chosen by the worker and sometimes dictated by the employer or some other organization, like a union. The worker is promised a specific benefit, irrespective of the amount that is in the fund for the defined benefit plan. Milkovich (2005) examined that the employer makes up all shortfalls to the fund using some formula. In this study, pay for the retirement fund is the indicator representing pension plans and the practical pension disbursement is also included as well. The practical pension disbursement indicates a firm’s ability to pay which in turn will strengthen the organization’s commitment and trust, although the retirement fund implies future security. In order to reduce the costs of employee turnover (market arrangement costs, transaction costs) some firms adopt retirement funds and pension disbursements (internal management costs, bureaucratic costs). On the other hand, the retirement fund and pension disbursement increase work stability and career security while for the employee, the amount of pension increases with tenure and that is, they reduce employee turnover. Moreover, it is a firm’s favorable financial signal to strengthen employee retention because the practical pension disbursement also represents the firm’s ability to pay. The limitation in this article is the method that accomplished by big organization was unsuitable to small medium enterprise because the employees are the main power to support progression in development stage. Basically small medium enterprise will provide the reasonable benefits to their workers in order to exchange their contribution.


2.3 Organization Culture and Commitments

Tharp (2009) examined that the culture of an organization extremely influences its countless decisions and actions. Employees’ think, feel, and act really quite often unconsciously regarded to a company’s prevailing ideas, values, attitudes, and beliefs. Therefore, understanding culture is fundamental to the description and analysis of organizational phenomena is the initial part to do the understanding of culture. For some, culture can be defined and considered as the “glue” that holds an organization together such as gluing with employees and workers and for others, it is the “compass” that provides direction. Organization culture plays an important role in making influence to employees, whether to retain or leave their company. Sometimes the employees might not be able to adapt some organization culture and this factor may lead them to leave the company. Therefore, some companies have taken some measurement in order to improve their organization culture and retain their talented employees. The limitation in this article is the author just simply explained the definition of organization culture and commitment. The influence of organization culture and commitment should discuss properly because there are a lot of employees leave the company due to this problem nowadays. The deeper discuss will definitely bring the advantages to all the readers.


Despite the unique cultural, social, religious and economic set up, large and capable workforce well versed in English, Pakistan has been ignored in management research (Khilji, 2001). Khilji (2001) argued that Pakistan with its current socio-economic and cultural traditions presents a rich framework to examine turnover and its relationship with HR practices, organizational and demographic factors in the most recent study. Authors disclosed that HR is negatively related to turnover, whereas some demographic factors and performance moderate this relationship significantly based on 508 self-administered questionnaires in 12 different Pakistani organizations. There is a dearth of research studies examining employee turnover in Asian and developing country contexts where this dilemma has given sleepless nights to HR managers, and they put emphasis on the need to carry out research in Asian country contexts (Khatri, Budhwar and Chang, 2001). They further reported that there are a small number of research studies examining the matter of turnover in Asian context and such investigations have used a limited number of variables with small samples, thus this increases concerns of model specification and generalization. Baruch and Budhwar (2006) repeated the call to broaden perspectives of turnover research beyond the limitations of western cultures in a more recent article. The limitation in this article is the author conduct the survey with the limited sample size. It couldn’t deliver the big picture to the readers and the data might not be fully accurate to reflect the viral of this variable. Between, the HR practices in Pakistan might not be same with what have implemented in Malaysia as well. Therefore, it just can take as the reference to all the readers.


Cotton and Tuttle (1986) has made some observation that most of the turnover studies have been carried out in the culture of Western and developed countries’ work settings by neglecting their cross cultural implications in developing countries. Besides on that, they also support the idea and said that findings of these studies may not be appropriate to the organizations in Asian culture due to vast differences in the economic, social, religious and cultural values. This constitutes a serious gap in the presented literature which has ignored the cross cultural implications of turnover studies. According to Mueller, Wallace, & Price (1992) organizational commitment is the degree to which an employee feels loyalty to a particular organization. The employees will show their loyalty to the employers if they have the commitment and retain in an organization. Organizational commitment as an employee’s attitude and as a set of behavioral intentions, the willingness to exert considerable effort on behalf of the organizational and a strong desire to willingly maintain a close relationship and membership with the organizational, (Steers, 1977). The concept of organization commitment has been characterized by three factors in the early studies (Mowday, 1977; Steers and Porter, 1982):

    • A willingness to apply considerable effort on behalf of the organization; and


    • A strong desire to continue in the organization.


These researchers’ description of organizational commitment as the strength of an individual’s classification with the organization’s goals as well as about positive involvement in developing these shared goals and objectives in that organization. As such, organizational commitment can be considered to be affective attitudes or behaviors, which associate or connect an employee to the organization. Boles et al (2007) examined that it reflects the positive feeling towards the organization and its values. Then, there is Three-Component Model of OC with conceptualization of organizational commitment as a three-dimensional construct of affective commitment, continuance commitment and normative commitment, (Meyer and Allen, 1991).

    • Affective commitment refers to the employee’s emotional affection to the organization. According to Meyer and Allen (1991) employees with a strong affective commitment remain with the organization because they want to do so. Besides, Agarwal and Ramaswani (1993) discussed that this state of attachment reflects the strength of an individual’s identification with and involvement in a particular organization.


    • Continuance commitment refers to the degree to which the employee perceives that leaving the organization will be costly. According to Meyer and Allen (1991) employees with a strong continuance commitment remain because they have to do so. On the other hand, Agarwal and Ramaswani (1993) the cost of leaving also is said to reflect on a lack of interchange employment opportunity and / or high personal sacrifice linked with leaving a particular organization.


    • Finally, normative commitment refers to the employee’s feelings of commitment to the organization and the principle that staying is the ‘right thing’ to do. According to Meyer and Allen (1991) employees with a strong normative commitment continue because they feel that they ought to do so.


In summary, the three component-model of commitment attempts to give details about the cumulative strength of individuals associated to an organization because they want to (affective), they need to (continuance), and they ought to (normative) remain in the organization.


Incidentally, Meyer, Stanley, Herscovitch and Topolnytsky, (2002) concluded that affective commitment had a much stronger relationship with desirable outcomes (such as attendance, performance, and organizational citizenship behavior) in a recent meta-analytic review. As such, this research survey is limiting the scope of research to study only affective organizational commitment, the ‘want to’ factor in order to investigate deeper into answering the questions above, as the principle of this study is to understand what factors that influence an employee’s affective organizational commitment, more so as the turnover rate of knowledge workers in Malaysia is worryingly high. The limitation in this article aid the HR practices at western countries are not examined by the author. The readers can make the comparison with the practices and culture between western countries and Malaysia. Besides on that, the author shall analyze how to analyze the workers throughout the three dimensions of commitments. It is significant to an organization because the employers may take some measurements in order to reinforce the commitment of employees.


Lum et al (1998) discussed that many studies have reported a significant association between organizational commitment and turnover intentions. In the study of Tang et al (2000) confirmed the link between commitment and actual turnover and in the analysis of Griffeth al (2000) showed that organizational commitment was a better predictor of turnover than overall job satisfaction. Researchers have recognized that there are different types of organizational commitment. The nature of the link between turnover and the three components of attitudinal commitment: affective commitment refers to employees’ emotional attachment to, identification with and involvement in the organization; continuance commitment refers to commitment base on costs that employees associate with leaving the organization; and normative commitment refers to employees’ feelings of obligation to remain with the organization, (Allen & Meyer 1990). If we defined to more simply, employees with a strong affective commitment retain with an organization because they want, those with the strong continuance commitment retain because they need to, and those with the strong normative commitment retain because they feel they ought to. In general, most research has found affective commitment to be the most decisive variable linked to turnover but Allen and Meyer’s study indicated that all three components of commitment were a negative indicator of turnover. The limitation in this article is the relationship between the independent variable toward the employee turnover does not discuss to clarify at all. The author had stated the link between organization cultures with the employee turnover but the matter is the further information is not sufficient to prove the link. The further information will aid to improve the knowledge of readers.


2.4 Supervisor

Firth, Mellor, Moore, & Loquet (2004) found that emotional support from supervisors and self-esteem mediated the impact of stressors on stress reactions, job satisfaction, commitment to the organization and intention to quit. It is suggested that to ameliorate intention to quit and in turn reduce turnover, managers need to actively monitor workloads and the relationships between supervisors and subordinates. Monitoring workloads and supervisor-subordinate relationships by management may reduce an intention to quit and subsequent turnover, thereby saving organizations the considerable financial cost and effort involved in the recruitment, induction and training of replacement staff.


There are quite a number of studies offered judicious support for a negative relationship between satisfaction with supervision and turnover (i.e. the higher the satisfaction with supervision, the lower the turnover) (Mobley et al, 1979). Nowadays, the most obvious example that we go through is the conflict between employees with Superiors. The employees might choose to leave an organization if there has a conflict in opinions at the workplace. Yet, it seems that a very small percentage of past research has focused on the division between the interpersonal relationships with coworkers and their superiors. This is surprising, as it seems realistic that an individual would relate differently to these two groups. Cotton and Tuttle (1986) analyzed that it has been seen that perceptions of a lack of fairness in management practices and dissatisfaction with supervision lead to higher levels of abrasion. Mor Barak (2001) discussed that if the same line of thought is kept, then interpersonal conflict with superiors and coworkers may be far removed from in their relation to organizational and personal outcomes. The limitation in this article is the author did not share the statistic regard to the employees that leave their organization due to the supervisor problem. The conflict between the employees and superior always happen in everywhere, but it should be discussed because it can help to prevent the employee turnover.


Frone et al (2000) examined that though this kind of supervisor-employee dynamic is necessary for the success of both positions, interpersonal conflict that may take place is liable to negatively affect a subordinate’s outlook and thoughts regarding their job and, subsequently, and employer. In the context of conflict, differentiating between the employee-coworker relationship and the employee-superior relationship is quite vital. The significance lies in the idea that employees recognize those individuals with a higher ranking in the organization’s hierarchy as representatives of the organization. Frone also conducted to test a conceptual model on the basis that conflicts with coworkers’ links to poor personal psychological outcomes while conflict with a superior relates to poor organizational outcomes and the model was held true. Results showed negatively related to job satisfaction, negatively related to organizational commitment, and positively related to turnover intentions if the interpersonal conflicts, specifically with a superior occur. The Workplace Employment Relations study (1998) examined that ninety percent of managers thought that the relations with their employees were very good or good, compared with only 54 percent of employees, and just 2 percent of managers rated relations very poor, compared with 19 percent of employees. The current study focuses on the conflict within this dynamic because obviously, there is a discrepancy in the views between these two groups of individuals. The limitation in this article is the author did not share the prevention to eliminate the conflict between superior and employees. The turnover occurs when the conflict couldn’t able to solve. Therefore, the author shall provide some opinion to solve this problem in order to minimize it to the top.


2.5 Job Analysis and Characteristic

Job Analysis (JA) is the building block for all HRM activities. The job analysis is a process of obtaining information about jobs (McCormick, 1979). Conducting a JA and subsequently providing employees with a job description prevents the situation in which employees do not know what is expected of them to do. JA forms the foundation upon which virtually all other human resource management systems are built, and it brings impacts on employee turnover in general JA subsumes all other HR activities and therefore, has a significant effect on employee turnover in general (Hoon, et al., 2000). The above review indicates that a firm’s HR practices have a significant impact on employee turnover. Given that a firm’s resources are limited, firms may not be able to develop best practices in all of their HR activities in a short span of time. Hence, the purpose of this study is to investigate the impact of HR practices on employee turnover by considering HR practices of selected firms simultaneously. Firms that do not have good HR practices can begin a program of developing HR practices that have the greatest impact on employee turnover in a systematic fashion. Based on the above-mentioned literature, realistic job information, job analysis, work family balance, career development, compensation and supervisor support can be identified as HRM practices that have impacts on employee turnover.


According to Samad (2004) several concepts of job characteristics have been focused by scholars. However, they share a common theme that highlighting the nature of work and their implication on job outcomes. Hackman and Oldman (1975) developed an instrument that among the reliable and valid measure of the various job characteristics. This instrument assesses job characteristics based on five core aspects, mainly skill variety, task identity, task significance, autonomy and feedback. Sager and Johnston (1989) recommended that job satisfaction and job characteristics as well as demographic variables (Cotton & Tuttle, 1986; Morrow, 1983; Gregersen & Black, 1982) apply an important effect on employee turnover intention. Despite several empirical studies among organizational scholars, however, previous empirical findings are still less encouraging and have been unconvincing. Sager and Johnston (1989) this is especially in terms of the nature of the relationships and contributions of job satisfaction and job characteristics on turnover intentions. In relation to this, further investigations are required to establish the differential contribution and effect of job characteristics and job satisfaction on turnover intentions. The employees in certain industries are examined by the studies of the behavioral outcomes of job characteristics (Sager et al, 1998) and job satisfaction (Roznowski & Hulin, 1992). The present study expands the analysis to include a broader spectrum of workers so that helps deal with the issue of imbalance. Examining the turnover intentions among IT professional in the primary telecommunication firm in Malaysia is long awaited. The limitation in this article is the author did not separate the job characteristic and job satisfaction respectively. The ideas will be more clarifying if it explains separately to the readers. Their perception toward the job must explain briefly before it links to the job satisfaction.


2.6 Career Development

Miller and Wheeler (1992) found that the lack of meaningful work and opportunities for promotion significantly affected employees’ intentions to leave an organization. Organizations could improve their employees’ retention rate by adopting job enrichment programs and enhancing their advancement opportunities. Besides promotion opportunities, the evaluation criteria used in the promotion and reward system also had significant effects on employees’ turnover intentions (Quarles, 1994). Ineffective performance appraisal and planning systems contributed to employees’ perceptions of unfairness, and they were more likely to consider leaving the organization (Dailey & Kirk, 1992). The limitation in this article is the factors of career development did not fully support the reason that causes the employee leave the organization. There are some existing reasons such as the employees didn’t satisfy to the expansion of organization; the organization has not enough competence in the market and so forth. All these factors will present a bad image to the employees and lead to seek for another challenging job.


Chew and Chan (2007) discussed that training and development are a common form of human capital investment for individual and organizational improvements. Training and development are one of the important dimensions to give commitments to employees and retain in the organization. The employees might feel their jobs are lack of challenging and it doesn’t assist them to learn more. That training and development can be used to improve job specific skills, correction of deficiencies in job performance and development of employees with abilities the organization might need in the future (Wood & De Menezes 1998; Chew & Chan, 2007). Chew and Chan (2007) analyzed that there have been instances where trained individuals become more profitable and as a result might leave the organization; contemporary studies have demonstrated that training and development affect job attitudes. Detoro and McCabe (1997) showed some studies that training and development had contributed towards organizational commitment. McEvoy (1997) showed some literatures that employee empowerment through training activities not only helped to develop these employees but also help to increase their commitment to the organization. Training is positively associated with an affective organizational commitment in the finding of research (Ansari et al, 2000). Training and development do contribute as an important predictor of organizational commitment (Greenberg 1990; McFarlin &Sweeney 1992; Sweeney & McFarlin 1993). Further to that, it has also been established that when the training and development needs of employees and employers are met, the employees will more likely retain in their organizations (Bassi & Van Buren, 1999; Sheridan, 1992; Wood, 1999).


In the framework of this study, training and development is considered the commitment shown by the organization towards providing training and development for the employees.


There has a complex relationship between turnover and training, (Martin, 2003). He suggested that establishments that improve the skills of existing workers have lower turnover rates. However, the workers who have been multi-skilled may imply that this type of training after the training and this will definitely lead the increase of turnover rate. The workers may seek to other jobs at somewhere else by their new learning knowledge. Martin (2003) proofed this argument with the literature on the link between lower turnover and training has found that off-the-job training is associated with a higher turnover presumably because this type of training imparts more general skills. The limitation in this article is the author did not mention about on-the-job training regard to the employees. On-the-job training is very important to all the employees because it is not enhancing and empowering their knowledge and skill, it also can reinforce their attitude in carry out their tasks. Management support plan vital role in providing on-the-job training to the employees because they are the human capital that made the contribution to an organization. The employees might leave their organization once they notice that the learning opportunity doesn’t offer at all. Therefore, management support must play an active role to transfer the training to employees.


Fitz-enz (2000) discussed that the asset that can be developed is human capital. Employees wish to get continuously updating their skills through the continuous training in their workforce. Fitz-enz (2000) argued that this distinctive attribute of human capital highlights why US industry spends over $62 billion annually on employee development. The scale of this expense emphasizes how senior managers must effectively plan and expand training and development practices to make sure that their investments are yielding high returns. On-the-job or off-the-job training practices are the most common employee training to all organizations. On-the-job training allows employees to work within the firm, while learning about their job and the company, while off-the-job training removes the employee from the company. Off-the-job training can include technology-driven e-learning programs, formal classroom training, and external training conducted by suppliers or formal educational institutions. The results of employee training include higher productivity, enhanced creativity and increased employee confidence. Furthermore, this investment ensures qualified applicants for “hire from within” policies. Training employees can create a superior return-on-investment beyond enhanced productivity in the workplace. Training employee increase employee loyalty, as many workers will recognize that the firm is working to help them attain their career goals (Fit-enz, 2000). The limitation in this article is the evaluation step was ignored by the authors. There are five steps to conduct training, which is analysis, design, development, implementation, and evaluation. The employers must evaluate the employees’ performance and request for their feedback toward the training that have been provided. The employees will definitely stay in the organization if they feel satisfied and uncomfortable with the training session.


Impact of training on mobility

Shah and Burke (2003) reviewed some of the literatures on the relationship between turnover and training. In the aggregate, training has on average no impact on mobility. The impact of training on mobility was examined in a British study (Green et al, 1996). However, training that is entirely sponsored by the individual (or their families) is on balance likely to be an introduction to job search. In contrast, when employers pay for training the downward effect on mobility is more likely. On-the-job and off-the-job training had a significant effect on job mobility (Lynch, 1992). While formal on-the-job training reduces the likelihood of mobility, particularly for young women, off-the-job training raises the likelihood of mobility. Elias (1994) noticed that women who received employer-provided and job-related training had a lower probability of changing employer or making the transition to non-employment, but for men training made no significant difference to this type of turnover in a study of six local labor markets in Britain.


Effect of vocational training

Booth and Satchell (1994) established that completed apprenticeships decreased voluntary job-to-job, job-to-unemployment and involuntary job termination rates in a study examining the effect of apprenticeships on male school leavers in the UK. In contrast, incomplete apprenticeships led to raise the exit rate to these destinations relative to those who did not receive any training. Germany’s apprenticeships and all other types of vocational training reduce labor mobility, although the German apprenticeship training is intended to provide general and thus more transferable training (Winkelman, 1997).


Career commitment

The limitation in this article is lacking of the examples based on these three dimensions. The author shall list out some example on each of these dimensions because it not only provided the knowledge to the readers; it also enhances the ideas of employers as well. For instance, the employers may provide some new training sessions that totally different than before such as outdoor training at beach or jungle. This method can stimulate employees’ thinking and attitude toward their job performance. Between, they might feel satisfied and stay at the organization for their exchange of contribution.






3.1 Introduction

The chapter begins with an introduction that explains the research framework. The intention of this study is to analyze the relationship between compensation and benefits and others independent variables towards the employee turnover. Then, it proceeds about the hypothesis development. The theoretical framework and hypothesis development examine the relationship between dependent variable and independent variables. Next, it goes to data collection methods that consist of primary data and secondary data collection. Next, the size and number of respondents and sampling method will be explained. After that, it goes to the data analysis method for qualitative and quantitative data in this study.


3.2 Research Framework

Since all the variables are being determined, the factors that cause the employee turnover in the working place will be developed through the framework. In this framework, it will consist of dependent variable and independent variables only. The independent variables are compensation and benefits, organization cultures, supervisor, job analysis and characteristics, and career development. On the other hand, the dependent variable is employee turnover that deeply discusses in this research. All the independent variables are being measured with the relationship with the employee turnover.


3.3 Hypothesis Development

In this study, I will be using the null and alternate hypotheses. Null Hypothesis states a definitive and an exact relationship between two variables, whereas it states the population correlation between two variables are equal to zero or that the difference in the means of two groups in the population is equal to zero. In broad-spectrum, the null statement is expressed as no relationship between two variables or no difference between two groups. The alternate hypotheses, however, are expressing a relationship between two variables or indicating the difference between groups (Sekaran, 2003).


3.3.1 Hypothesis 1: Compensation and benefits

The review of literature had provided an insight to us that compensation and benefits may influence to employee turnover in real working environment. Lack of recognition and lack of competitive compensation systems are some reasons for employee turnover in the organization, (Abassi and Hollman, 2000). Hence, the hypothesis of compensation and benefits had been developed in order to determine the relationship between it and turnover among the employees in the real working place. However, we have an expected result of the compensation and benefit no matter for direct cash or non-direct cash do have the significant relationship towards the employee turnover.

H0: The compensation and benefits should positively influence to employee turnover.

H1: The compensation and benefits should negatively influence to employee turnover.


3.3.2 Hypothesis 2: Organization Culture

The review of literature had provided an insight to us that the organization culture may influence to employee turnover in real working environment. Tharp (2009) examined that the culture of an organization extremely influences its countless decisions and actions. Employees think, feel, and act is quite often unconsciously regarded to a company’s prevailing ideas, values, attitudes, and beliefs. Hence, the hypothesis of organization culture had been developed in order to determine the relationship between it and turnover among the employees in the real working place. However, through this research, we have an expected result of the organization culture in terms of different cultural, social, religious and economic set up, large and capable workforce does have a significant relationship towards the employee turnover.

H0: The organization cultures should positively influence to employee turnover.

H1: The organization cultures should negatively influence to employee turnover.


3.3.3 Hypothesis 3: Supervisor

The review of literature had provided an insight to us that the supervisor may influence to employee turnover in real working environment. Emotional support from supervisors and self-esteem mediated the impact of stressors on stress reactions, job satisfaction, commitment to the organization and intention to quit, (Mellor, Moore, & Loquet, 2004). It is recommended that to restructure intention to quit and in turn reduce turnover, managers need to actively keep an eye on workloads and the relationships between supervisors and subordinates. Hence, the hypothesis of a supervisor had been developed in order to determine the relationship between it and turnover among the employees in the real working place. However, through this research, we have an expected result of the supervisor in terms of different supervisor-subordinate relationships do have the significant relationship towards the employee turnover.

H0: The supervisors should positively influence to employee turnover.

H1: The supervisors should negatively influence to employee turnover.


3.3.3 Hypothesis 4: Job Analysis and Characteristic

The review of literature had provided an insight to us that the job analysis and characteristic may influence to employee turnover in real working environment. According to McCormick, 1979, the job analysis is a process of obtaining information about jobs. The employees will do observation in order to obtain some information based on their job characteristic. Hence, the hypothesis of job analysis and characteristic had been developed in order to determine the relationship between it and turnover among the employees in the real working place. However, through this research, we have an expected result of the job analysis and characteristic in terms of different information that observe based on their job characteristic respectively do have the significant relationship towards the employee turnover.

H0: The job analysis and characteristics should positively influence to employee turnover.

H1: The job analysis and characteristics should negatively influence to employee turnover.


3.3.3 Hypothesis 5: Career Development

The review of literature had provided an insight to us that the career development may influence to employee turnover in real working environment. Lack of meaningful work and opportunities for promotion significantly affected employees’ intentions to leave an organization, (Miller & wheeler, 1992). Hence, the hypothesis of career development had been developed in order to determine the relationship between it and turnover among the employees in the real working place. However, through this research, we have an expected result of the career development in terms of different opinions to the job position and opportunities that been offered do have the significant relationship towards the employee turnover.

H0: The career developments should positively influence to employee turnover.

H1: The career developments should negatively influence to employee turnover.


3.4 Data Collection

According to Sekaran (2003) data can be composed in a diversity of ways, in different setting-filed or lab and from different sources such as primary and secondary. Data collection methods can be comprised as interviews- faces to face interview, telephone interview, computer-assisted interview and interview through the electronic media; questionnaire that is either personally administrated send through the mail or electronically administrated; observation of individuals and proceedings with or without videotaping or audio recording and multiplicity of other motivational techniques such as the projective test. Interviewing, administrating questionnaire and observing people and phenomena are the three main data collection methods in investigation research.


Based on the study of Sekaran (2003) a questionnaire is a pre-formulated written set of questions to which respondents record their answers, usually within rather closely defined alternatives. However, questionnaire can be administrated personally, mailed to the respondents or electronically distributed. Therefore, I will focus in administrating questionnaire in collecting my data during my study.


Sekaran (2003) stated that the main motive of using personally administrated questionnaire is it collects all the accomplished feedbacks with a short period of time and any uncertainties that the respondents might have or any matter could be clarified on the spot. Apart from that, administrated personally questionnaire is the best device in collecting data from a large group of people in comparison to other tools. Therefore, personally administrated questionnaire will be utilized through my study because it is extremely efficiency in making the data collection.


Furthermore, questionnaire can be arranged in open-ended or closed ended question when distribute to the employees. Sekaran (2003) stated that open-ended questions allocate respondents to answer them in any way they prefer. On the other hand, the close-ended questions would request the respondents to answer their choices among a set of alternatives given. In this project, close-ended questionnaire will be selected in getting opinions from all the employees regarding my study topic. It is been preferred is due to it assisting the respondents to make fast decisions to choose one of the several alternatives before them. Yet, it also assists to code the information easily for the following analysis later.


Other than that, scale is also one of the vital issues in the data collection section. Sekaran (2003) stated that scale is a device or instrument by which individuals are distinguished as to how they diverge from one another on the variables of interest to my study. Besides, there are four essential types of scales such as nominal, ordinal, internal and ratio and each form have their own rating technique. There is dichotomous scale, category scale, likert scale, nominal scale and so on.


Moreover, after bearing in mind and analyzed the purpose of my study, likert scale is chosen to scrutinize how strongly subjects to agree or disagree with a statement on a 5 point scale with the successive anchor such as strong disagree represented by number 1, disagree represented by number 2 and so on. Sekaran (2003) stated that the responses over a number of items tapping a particular concept on variable are then summated for every respondent and this is one of the ratings in the interval scale.


However, the questionnaires will cover some aspects to analyze the respondents’ opinion. The section was considered to construct the portfolio of the respondents; those included their gender, age, education level, company name, and year and so on. Nevertheless, the questionnaire also will be reviewed the general factors which are the independent variables such as compensation and benefits, organization culture, supervisor, job analysis and characteristic and career development as demonstrated in Figure 3.1. However, English language will be selected to distribute questions in the questionnaire sheet due to the basis of it is the international language for local and foreigner employees.


3.5 Sources of Data

All data can be attained from primary or secondary sources. Sekaran (2003) examined that primary data defined as information that attained first hand by a researcher on the variable of concern for the specific purpose of the study. In contrast, secondary data can be referred to information gathered from the sources that already subsisted.


3.5.1 Primary Data

The primary data can be gained through the respondents in this study when they were contributing their opinions towards factors in influencing the turnover rate in their real working place. Besides on that, all the data that gained through the survey are considered as primary data such as the questions and any doubts that ask by respondents during their answering period towards the personally administrative questionnaire session. All the queries that ask by respondents are categorized to first hand data. Therefore, all the collecting data can be sent and use as data analysis and aid to make the conclusion in following part.


3.5.2 Secondary Data

Sekaran (2003) has stated that secondary data can be used as an instruction for us in assisting my research towards the study topic. The secondary data always been taken by somebody in order to do as a new purpose. The secondary data can be categorized as several sources in our study such as books, periodicals, government publication, abstract, the media, article, magazine and reports as well as journals that regarding the issue of how the compensation and benefits ways in minimizing the employee turnover. Hence, saving time and cost acquiring information are the fundamental and advantages in using secondary data. Thus, it is significant to refer to the sources that offer current up-to-date information.


3.6 Population

According to Sekaran (2003) population can be defined as the entire group of people, events or things of interest that researcher desires to examine. The population of this research covered the employees in diversified industries and we interested in explaining and drawn a conclusion of the factors that cause the turnover among the employees that work in different industries.


3.7 Sampling Method

Sekaran (2003) examined that sampling is the procedure of selecting an adequate number of elements from the population, so that the properties can be created to be more clarify. Self-evident is the main reason to facilitate in using a sample rather than collecting data from the entire. There are hundred even thousand numbers of elements during the investigation. Therefore, it would be practically impossible to collect all the data and examine every single of elements in the research. The time, cost and other human resources are extremely constraint, even if it were possible. Study of sample rather than the entire population is also sometimes likely to create a more reliable result.


Sekaran (2003) discussed that there are two major types of sampling designs, which are probability and non-probability sampling. The fundamentals in the population have some known chance or probability of being selected as sample subjects in probability sampling. Meanwhile, the elements do not have a known pre-determined chance of being selected as subject in non-probability sampling. Probability sampling designs are conducted when the representativeness of the sample is vital in the interests of wider generalization. Besides, when time or other factors, rather than generalization are become critical, non-probability sampling is commonly being used.


Moreover, probability sampling will be focused in designing our sampling in order to deal with the motive of interests of wider generalization towards the employee turnover issue. Sekaran (2003) stated that probability sampling can be categorized into a simple random sampling, complex probability sampling, systematic sampling, cluster sampling, single stage and multistage clusters sampling, area sampling and also double sampling.


Nevertheless, there are some advantages and disadvantages in every sampling method. Therefore, we decided to choose a cluster sampling as our sampling method in this research project. In this study, Sekaran (2003) discussed that cluster sampling can be explained as grouping the members at random chosen group. When some of the groups with intra-group heterogeneity and inter-group homogeneity are established, then a random sampling of the cluster or groups can ideally be done and information gathered from each of the members in the randomly chosen clusters.


It has its own advantages and disadvantages as well. The advantages are reduced costs, simplified the file work and the administration is more convenient. In contrast, since subsets of the clusters are more homogeneous than heterogeneous so its disadvantages are the least reliable and efficient among all probabilities sampling designs. Nevertheless, in conducting a cluster sampling toward the employee turnover, all the employees will be clustered into the different industry, level of seniority as well as their department. Therefore, by randomly sampling the cluster, we would be able to draw a conclusion in our study.


3.8 Pilot Testing

The first round was conducted on two employees in certain industry (one male and one female). Based on that feedback from this first round, some questions were rephrased to be more clarify. The second round of pre-testing was conducted with three other employees (two females and one male). They found the questions generally clear, thus, the questionnaire was deemed ready for data collection and analysis process.


A pilot test was conducted on the preliminary questionnaire to confirm the factors that lead to employee turnover. The questionnaire was distributed to several people in order to get their feedback. Two rounds of pre-testing were conducted in the study.


3.9 Data Analysis

As we have mentioned before, the data was collected through personally administrated questionnaires. There are 100% results in the collection of the questionnaires while it was filled and collected with the presence of the researcher. After collecting the questionnaires, the data will be analyzed after being transmitted to Microsoft Excel spreadsheet. The following step is the data in Microsoft Excel spreadsheet will import into Statistical Package for Social Science (SPSS). In this method, we will be able to derive a result or priority of the respondents place on each factor after the data organized and analyzed by the SPSS software.


Yet, reliability testing will be conducted in testing the consistency and stability of the responses that had been collected. Moreover, demographic profile analysis will be examined as well. In addition, description statistic analysis such as means, standard deviations and variance were gained for the interval scale independent and dependent variables will be conducted and as well as setting up a ranking table for the independent variables by allocating the sequences of highest to the lowest mean value.


Furthermore, the call for the use of Pearson Correlation analysis has been using in testing the hypothesis part to investigate the relationship between the independent variables and dependent variable. Besides that, the linear regression analysis also will be conducted in order to model the function of the independent variables, corresponding parameters and an error term through equation.

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