Impact Of Hr Practices On Turnover Intention Management Essay

This final chapter summarizes and argues the findings of this research. It presents discussion of findings, implications, limitations of this study and recommendation for future research. This study examined the effect of HR practices (training and development, compensation and pay, job security, recruitment and selection, teamwork, performance appraisal) on employee turnover intention in Renewable Energy industry in Tehran in which organizational commitment and job satisfaction are playing mediation role in this respect. The research findings confirm some of the theoretical arguments presented in the literature.

5.2 Discussion of findings

Based on the findings of this study, the five research questions presented in chapter one are discussed as follow:

Question 1: What is the impact of HR practices on Turnover Intention?

The purpose of this question was to determine how employee’s intention to turnover affected by all dimensions of HR practices within the Renewable Energy organizations. The prior studies suggested that the actual employee turnover will be reduced in term of well using of HR practices (Guthrie, 2001; Kacmar, Andrews, Rooy, Steilberg, & Cerrone, 2006; Hom, Roberson, & Ellis, 2008). It means that increase in use of HR practices will cause to significant reduction in the level of employee’s intention to quit. Based on the earlier findings, this study tried to scrutinize the HR practices as predictors of turnover intention. The finding of this study is consistent with the prior researches (Batt & valcour, 2003; Koh & yer, 2000; Tsui et al., 1997; Huselid 1995, Arthur 1994). Therefore, there is a significant indirect effect between HR practices and employee turnover intention. Besides, following a review of the relevant prior literatures, this study focused on the six dimensions of HR practices which are training and development, pay and compensation, job security, recruitment and selection, teamwork, and performance appraisal. The outcomes of this study could be helpful for Renewable Energy managers to implementing the HR practices related to turnover intention experts and knowledgeable workers.

According to Arthur (1994) and Fey et al. (1999), the organizations with advanced training programs are likely to face the lower employee turnover. Further studies showed that employee turnover intention is negatively affected by training and development programs (Harel and Tzafrir, 1996; Lee and Bruvold, 2003; Arago et al., 2003). Following the previous studies, the findings of this study demonstrated that training and development opportunity of HR practices had the most significant indirect effect on turnover intention. Thus, the training and development opportunity emerged as the main predictors of turnover intention in RE industry in Tehran. It seems that the RE’s employees in Tehran are unhappy with the training programs and development opportunities provided to them.

Lack of the fair compensation and pay structure are the important factors that affect the employees’ tendency to leave the organization. In this study, pay and compensation was found as the negative predictor of turnover among knowledgeable employees of Tehran’s Renewable Energy industry. The result supports the studies of Batt and Valcour (2003), Shahzad et al. (2008), Ovadje (2009), which found a significant and negative influence of pay and compensation structure on turnover intention especially for underdeveloped countries. In addition, Rousan and Henderson (1996) demonstrated that low level of pay was a basis that Extension staffs left the firm. Therefore, those employees who feel that are compensated and rewarded fairly, have less intention to turnover. This demonstrated that RE’s experts in Tehran are not satisfy with the level of their benefits and pay received through these four RE organizations. However, the finding of this study is in the contrast with Khatri et al. (2001) and Iverson and Deery (1997), who stated an insignificant effect of compensation on intention to leave.

Consistent with former researched, job security was found to be a negative predictor of employee’s intention to quit job. The result supports the studies of Wong et al. (2002), which stated that provided high assurances of security by an organization will make the employee more committed, whereby; turnover intention will reduces. Thus, the findings of previous studies reported a significant and negative influence of job security on turnover intention (Samuel and Chipunza, 2009; Conklin and Desselle, 2007; Chughtai & Zafar, 2006; Boella and Turner, 2005; Zhou and Volkwein, 2004; Batt and Valcour, 2003). Therefore, those RE’s knowledgeable workers who feel that are secured of continued employment are willing to put more efforts and have less intention to turnover (Buitendach and De Witte, 2005). For experts in Tehran, departing the four RE organizations would result in the loss of secure profession.

The result supports the studies of Robbins et al. (1998) which stated that implementing the mistaken recruitment process will creates additional cost and increased the turnover intention. A significant indirect effect of recruitment and hiring process on employee’s turnover intention was found in this study. Therefore, assessing and evaluating the specifications and skills required and comprehensible explanation of the tasks required for a job in RE organization through the recruitment and hiring process would decreased the employee’s intention to turnover.

According to Boselie and Wiele (2002), job accomplishment can be more easily done by teamwork which it caused to a decrease in the level of employee’s turnover intention. This result is supported by current study which it means the increase in use of teamwork and frequent communication among team members will make the employee more intended to stay with the organization in RE industry in Tehran (lower turnover intention). The RE experts might felt that they are trusted and valued for the organization, whether they involved in the teams and also the information related to the projects shared openly by all team members. Well use of teamwork through the HR practices could delivers a message to the RE knowledgeable workers that they are supported by organization. Consequently, they are less likely to quit their job.

Fair accurate evaluation and appraisal procedures of an employee’s performances play an important role in voluntary turnover (Zimmerman and Darnold, 2009). Performance appraisal and evaluation which is used to establish employee’s benefits could encourage them to enhance their level of endeavors to their organizations (Paul and Anantharaman, 2003). The finding of this study is consistent with the findings of the study of Poon (2004) who pointed out that the actual turnover intention is mainly due to the dissatisfaction with the performance appraisal structure implemented by the firm. It seems that experts in these four leading RE companies are not happy with monitoring their successes and performances during the evaluation process. The problem is they feel that their successes are not appraised by appraisers and their performances are neglected. Subsequently, when they found that their performances and successes are not appraised and evaluated as fair as possible, they are willing to quit their current job.

Question 2: What is the impact of HR practices on Job Satisfaction?

The second question of current research was to determine how employee’s level of job satisfaction is affected by the bundle of HR practices within the Renewable Energy organizations. The earlier studies suggested that the employee’s job satisfaction will be increased in term of well exploiting of HR practices (Jackson and Schuler, 1992; Eskildsen and Nussier, 2000; Boselie and Wieles, 2002). It means that increase in use of HR practices will cause to significant raise in the level of employee’s job satisfaction. Based on the past findings, this study tried to test the HR practices as predictors of satisfaction of the employee. The finding of this study is consistent with the result of most recently study conducted by Seston, Hassel, Ferguson and Hann (2009) which cited that HRM practices were proper predictor for both employees’ proclivity to quit and job satisfaction. Therefore, it is so important for RE managers to exploit suitable HR practices to make the experts more satisfy, since; it was found a significant direct effect between HR practices and employee’s level of satisfaction. In this study, RE experts are dissatisfy with the implemented HR practices. The level of dissatisfaction showed by respondents could lead them to think about turnover issue.

According to Kimberly et al. (2002), those employees who participated more in training programs gained more job satisfaction. Further studies showed that employee job satisfaction is positively affected by training and development programs (Schmidt, 2007; Phillips and Phillips, 2001). Following the previous studies, the findings of this study demonstrated that training and development opportunity of HR practices had the most significant direct effect on job satisfaction. Thus, the training and development opportunity emerged as the main predictors of employee’s job satisfaction in RE industry in Tehran. It seems that the RE’s employees in Tehran are not satisfy with the training programs and development opportunities provided to them. The RE’s specialists could be more satisfied whether the organizations considered more on preparing the opportunities for their human capital in order to enhance their skills and knowledge. However, the finding of this study and past studies are in contrary to the study of Ofuani (2010), who cited that there is no correlation between training programs and job satisfaction in Benin City.

Pay and compensation is one of the important factors of HR practices which have a significant direct influence on employee job satisfaction (Taylor, Nguyen, and Bradley, 2003). According to Currall, Towler, Judge, and Kohn (2005), pay is significantly associated with employee’s satisfaction which will leads to lower tendency to leave the organization. In the current study, it was found as the positive predictor of satisfaction of job among knowledgeable employees of Tehran’s Renewable Energy industry. The result supports the study conducted by Stedham, Yamamura and Satoh (2003) on female managers, which found that the overall level of satisfaction of those managers who obtained less pay and rewards were considerably less. Therefore, lack of fair compensation and reward system in these four RE organizations, caused to experts’ dissatisfaction. Sound benefit packages and pay structured implemented by RE’s organizations in Tehran could make knowledgeable employees more satisfy to the organization. However, Judge and Church (2000) reported that the level of pay and fair compensation is not as effective as compared to other HR practices’ elements on employee’s satisfaction.

Consistent with former researched, job security was found to be a positive predictor of employee’s job satisfaction. The result supports the studies of Yousef (1998), who illustrated that job satisfaction is positively affected by the feel of job security. Thus, the findings of previous studies reported that job security can make the feel of more satisfaction to the employee. (Ashford, 1989). Therefore, we can say that RE’s knowledgeable workers, feel that are not ensured of continued employment in this four leading RE companies.

The result supports the studies of Robbins et al. (1998) which stated that implementing the mistaken recruitment process will creates additional cost and increased the turnover intention. Besides that, Burack, (1985) found that employee’s job satisfaction and performances are affected by recruitment sources. Therefore, recognize the skills required for a job and also clear explanation of the tasks required for a job to the employees through the recruitment and hiring process in the RE organization will caused to more employees’ job satisfaction to the organization.

Earlier studies revealed that teamwork is directly linked with job satisfaction (Ooi, Arumugam, Teh and Chong, 2008; Valmohammadi & Khodapanahi, 2011). The finding of this study is in line with the study conducted by Dean and Bowen (1994) on employees who working in large mid western company. It suggested that teamwork is positively related to employee’s level of job satisfaction. Based on the outcome of this research we can say that use of joined actions of a group can caused to higher level of job satisfaction. However, the research conducted by European Foundation in UK steel company on Living and Working Conditions (2007), found that not every individual is eager to work in a team as they recognized that the teamwork has only the benefit for managers.

Based on the previous studies, performance appraisal and evaluation found as a positive predictor of job satisfaction (Huselid, 1995; Poon, 2004). Besides, Pettijohn et al. (2000) pointed out that the performance appraisal has a positive influence on employee job satisfaction when the employees found that they are being evaluated as fair as possible. Based on the Nurse and Devonish (2007), the use of unfair appraisal and evaluation process by organization can make dissatisfaction to the employee. The finding of this study is consistent with the prior findings, therefore; It seems that specialists and experts in these four leading RE companies are dissatisfy with appraising their successes and performances during the evaluation process. They perceived that their performances are neglected and their successes are not appraised by appraisers, consequently, they are dissatisfied to the organization.

Question 3: What is the impact of HR practices on Organizational Commitment?

The purpose of the third question of this study was to discover how the HR practices affected organizational commitment among experts in four Renewable Energy organizations in Tehran. The previous studies reported that the employee’s organizational commitment will be increased in term of exploiting sound HR practices (Oglivie, 1986; Gaertner and Nollen, 1989; Meyer & Smith, 2000; McElroy, 2001). It means that increase in use of most appropriated HR practices will cause to significant raise in the level of employee’s organizational commitment (Guest, 2002). Based on the past findings, this study tried to test the HR practices as predictors of commitment. The finding of this study is consistent with the result of most recently study conducted by Nasurdin, Su & Yeganeh, (2008) which cited that HRM practices were proper predictor organizational commitment. Therefore, it is so important for RE managers to exploit suitable HR practices to make the experts more committed to the organization. Whether RE’s experts and knowledgeable workers perceive that selected HR practices by RE organization is for their benefits, they would be more committed to the organization. Besides, Edgar and Geare (2005) found a significant direct effect of four dimensions of HR practices on organizational commitment.

The finding is consistent with the study of Bartlett (2001) which demonstrated a significant direct contribution among training and organizational commitment. In addition, an employee’s perception of training opportunity as a support from the organization could makes him more committed to the firm (Bartlett, 2001). Following the previous studies, the findings of this study demonstrated that training and development opportunity of HR practices had the most significant direct effect on experts’ organizational commitment. Thus, the training and development opportunity emerged as the main predictors of knowledgeable workers’ commitment in RE industry in Tehran. Therefore, HR managers in RE industry should be focused on providing training programs for their expert employees in order to make them more committed to the organization. The RE’s experts who are working in these four top leading organizations are not happy with the training programs and development opportunities provided to them. In the similar vein, the RE’s specialists could be more committed whether the organizations considered more on preparing the opportunities for their staffs in order to enhance their skills and knowledge.

Compensation is a critical element of HR practices that have an undeniable impact on employee’s commitment (Whitener, 2001). According to Bhagat and Chassie, 1981, pay is significantly associated with employee’s commitment. The result supports the study conducted by Shore and Barksdale (1998) which found well use of pay and compensation structure will make an employee more committed to the organization. In the current study, it was found as the positive predictor of commitment of job among knowledgeable employees of Tehran’s Renewable Energy industry. Therefore, lack of fair compensation and reward system in these four RE organizations, caused to lower commitment level among the experts. So, RE’s managers should be focused on providing benefit packages and pay structured to avoid the employee’s low commitment.

Consistent with former researched, job security was found to be a positive predictor of employee’s organizational commitment. The result supports the studies of Ashford (1989) who illustrated that job insecurity would indirectly influenced the employee’s outcomes such as lower employee’s commitment, job dissatisfaction, and enhance more turnover intention. Therefore, based on the importance of job security, RE’s employers should be concentrated on it until the experts feel that are ensured of continued career. However, Mulinge (2000) cited that job security has negatively affected the level of employees’ commitment in the public universities.

Recruitment and hiring have a significant positive effect on organizational commitment (Edgar and Geare, 2005). Moreover, Burack, (1985) found that employee’s performances such as job satisfaction and organizational commitment are affected by recruitment sources. Therefore, recognize the skills required for a job and also unclear description of the tasks required for a job to the employees through the recruitment and hiring process in the RE organization will make experts more committed to the RE organizations.

Earlier studies revealed that the organization which accurately used teamwork was experienced a significant increase in the level of employee’s OC (Karia and Ahmad, 2000). In addition, Silos (1999) found that teamwork will make more committed employee. The finding of this study is in line with previous studies which suggested that the concept of teamwork is extremely important to organizational commitment (Adebanjo and Kehoe, 2001; Stough et al., 2000). Based on the importance of teamwork, RE’s managers should encourage employees to use of joined actions of a group in order to make them more committed. However, Harley’s (2001) findings on the 1998 employees reported that there is no significant correlation between teamwork and organizational commitment.

Based on the previous studies, performance appraisal and evaluation found as a positive predictor of organizational commitment (Poon, 2004; Chang (2005). Besides, Brown and Benson (2003) pointed out that the performance appraisal could have direct affect on organizational commitment when the employees found that they are being evaluated as fair as possible. The finding of this study is consistent with the former findings, therefore; It seems that specialists and experts in these four leading RE companies are not satisfied with the assessment on their successes and performances during the evaluation process. They perceived that their performances are neglected and their successes are not appraised by appraisers, consequently, their level of commitment is not very to their organizations as well.

Question 4: Is there a correspondence between organizational commitment and job satisfaction on employees’ intention to quit?

The purpose of the fourth question of the study was to discover how the organizational commitment and job satisfaction affected turnover intention among experts in four Renewable Energy organizations in Tehran. The result supported the outcomes of previous researches which reported that employee’s job satisfaction and organizational commitment have indirect effects on inclination to leave the organization (Meyer and Allen, 1991; Jaros, Jermier, Koehler and Sincich, 1993; Jaros et al., 1993; Cohen, 1993; Somers, 1995; Meyer and Herscovitch, 2001; Goulet and Frank, 2002; Obeng and Ugboro, 2003). Separately, Allen and Meyer (1990) and Samad (2006) found a significant and negative influence of organizational commitment on turnover intention and Naqvi, Rahman, and Ramay (2008) revealed that turnover intention of the employee is negatively affected by job satisfaction. Therefore, it is so critical for RE’s managers to anticipate the attitudes of their experts and knowledgeable employees (commitment, satisfaction, and inclination to quit) to remain profitable (Cooper-Hakim and Viswesvaran, 2005). In this regards, the findings of this study showed that experts’ intention to leave the RE’s organization is negatively affected by organizational commitment and job satisfaction. It means that those knowledgeable workers who feel strong commitment and satisfaction to their organization have less intention to leave their job.

Question 5: How do organizational commitment and job satisfaction mediate the relationship between HR practices and turnover intention?

The purpose of fifth question was to determine how organizational commitment and job satisfaction mediate the relationship between HR practices and turnover intention. According to Guzzo and Noonan (1994), when employees recognize HRM practices as the sign of the organization’s commitment to them, they could be more satisfy with these practices, thus; such this attitudes leads them to show less intention to leave the organization (Gould-Williams and Davies, 2005). The finding of this study revealed that the direct effect of mediating variables is not significant. Therefore, this study could not confirm that the job satisfaction and organizational commitment are able to mediate the contribution between HR practices and turnover intention. The finding of this study is not consistent with the study of Lee and heard (2000) who found that one of the important factors that is relates to employees attitudes such as level of employee’s satisfaction, commitment, and turnover intention is HR practices. However, Lee & Bruvold (2003) cited that HR practices did not have a direct impact on employees’ tendency to quit, but rather the relationship was fully mediated by OC and JS. In general, it is so difficult to compare the result of the current study with others because there are very little studies that examine the effect of HR practices on turnover intention through job satisfaction and organizational commitment. Regardless of the simultaneous effect of expert’s satisfaction and commitment on the relationship between HR practices and turnover intention which was not supported by the current study, all separate relationship between the proposed variables was proved in the four top RE organizations in Tehran. Thus, RE’s managers needs to focus on the effect of HR practices on job satisfaction and organizational commitment, HR practices on turnover intention, and finally job satisfaction and organizational commitment on turnover intention. Furthermore, training and development opportunities was emerged as the most significant dimension of HR practices among RE’s experts which has the strongest effect on turnover intention, organizational commitment, and job satisfaction. It showed that knowledgeable employees are not satisfied with the training programs and development opportunities provided by organization. Apparently, this is a new finding as it has not been examined by any other researchers in the Renewable Energy industry. Consequently, the reported outcome in this study is able to make new insight for future examiners who are involved in exploring analogous area.

5.3. Implications

The outcomes of the current study provided implications for Renewable Energy Industry in Tehran. In this study the effect of HR practices (training and development, pay and compensation, job security, recruitment and selection, teamwork, and performance appraisal and evaluation) on turnover intention with the mediating role of job satisfaction and organizational commitment was tested. According to Pfeffer (1998), HRM practices are the foundation of any type of organization. It is most logical for organizations to concentrate on build and maintain their specialists and experts instead of hiring the new employees through the HRM (Beechler, Bird & Raghuram 1993).

In the area of HR practices, this study examined the effects of (a) HR practices on turnover intention, (b) HR practices on organizational commitment, and (c) HR practices on jab satisfaction. The findings of this study revealed that the bundle of HR practices have significant indirect effect on turnover intention. However, all dimensions of HR practices separately have significant negative effect on turnover intention; the training and development opportunity was emerged as the most significant and dominant element in reducing the employee’s intention to leave the organization. Besides that, it was found that the bundle of HR practices and also each specific dimension of HR practices have significant positive effect on organizational commitment and job satisfaction. The outcomes of this study showed that both training and development opportunities, and pay and compensation structure was found as the two significant components of HR practices in the relationship with organizational commitment. Moreover, again training and development opportunities emerged as the prior component of HR practices in the relationship with job satisfaction. The reason is, Iran’s Renewable Energy field does not currently have any domestic scheduled training programs for employees due to the lack of RE knowledge. Only once or twice a year, the solar and wind instructors from the advanced countries in the RE industry come to Iran to raise the level of RE’ knowledge which these sessions are held in the form of general conferences. Therefore, fundamental approaches is necessary in this respect, and first of all the Renewable Energy’s syndicate of Iran should be focused on educating the domestic RE instructors, until organizations do not suffer from a lack of knowledge and training programs. And then, RE managers should be ensuring that their employees attain appropriate level of skills for their basis duties. Therefore, management in Renewable Energy industry in order to decrease employee’s actual turnover and enhance employee’s commitment and satisfaction should focus on providing the training programs and development opportunities frequently and must considers it as the daily task, since it distinguished as the most significant and dominant HR practices’ factor on turnover intention, organizational commitment, and job satisfaction. More to the point, the pay and compensation structure was found as the second important HR practices’ element which has a significant direct effect on organizational commitment. Therefore, it is suggested that the RE’s managers should concentrate to revise and modify their current pay structure. Moreover, RE’s managers must try to build a reward packages in both financial and non-financial forms.

In addition, the findings of this study found that both organizational commitment and job satisfaction have significant negative effect of on turnover intention. The RE’s managers can apply the outcomes of this study, since it was found that the employee’s tendency to leave the organization is principally determine by an employee’s level of organizational commitment and how he/she is satisfies to the organization. Therefore, in consider to the positive effects of HR practice on organizational commitment and job satisfaction, it is suggested that management should implement several suitable HR practices to enhance the individual’s level of JS and OC due to decrease the employee’s turnover intention. However, managers should notice that all HR practices do not work for all firms, hence; it is so important for RE’s managers to distinguish what HR practices are helpful and what are not.

Surprisingly, in this study among the Renewable Energy’s experts and knowledgeable employees in Tehran, the simultaneous effect of HR practices on turnover intention with the mediating role of organizational commitment and job satisfaction was not found. However, the effect of each variable on others was reported in this study. Therefore, managers need to be focus on the effect of each proposed constructs in order to reduce turnover intention among the employees. Besides, employee’s perceptions of HR practices could be different thus; management should be aware of the employee’s perception of implemented HR practices and they should exploit those dimensions of HR practices which make the employee more committed, more satisfy and whereby less intention to quit. In this area, RE’ employers should displaying that they are using the HR practices for employee’s benefits; subsequently the employees recognize the HR practices as support from the firm.

5. 4. Limitations of this Study and Recommendation for Future Research

The present study has several inevitable constraints which must be noted for future investigations. First, as the Renewable Energy is a new coming field in Iran, so there are not plenty of organizations (only four organizations are known as the Iranian RE industry). Therefore, the population size of this study which examined all experts and knowledgeable employees who are working in these organizations (90 employees), is small and only meets the minimum requirement for conducting the correlation and regression analysis. Therefore, the outcomes of this study may not be helpful for future of Iran’s RE industry and also countries which currently have an extensive RE industry with lot organizations. Hence, in order to generalize the findings, there is a need to re-test the prepared conceptual framework in this study with a large sample size for future investigations.

Second, based on the type of analysis and time period of data collection process of this study, the cross-sectional research design was used (data was collected at particular point of time). Therefore, the outcomes of this study were not able to examine the long-term effect of the variables. Due to the collecting data at one point in time, the findings of this study could be different over a period of time. Therefore, future researches in this area could use of longitudinal researches (collecting data over a long period of time) in order to validate the direction of causality involved in this study and form a more trend across the time.

Third, based on the novelty of RE field in Iran, the number of experts and knowledgeable employees is not many. Therefore, the actual turnover of this level of employee (RE’s experts) was the main purpose of this study. In this respect, all data were collected only from the experts and the rest levels of employees were eliminated. Hence, the findings of this study might be reflected from potential for bias. Therefore, future studies in this area could consider different level of employees and sources such as managers, appraisers or employees’ supervisors in order to gathering data.