MS Research Survey

[High Turnover in IT Industry]

Submitted To:

Research Supervisor: Mr. Ubaid Aftab

Submitted On:

15th June, 2008

Submitted By:

Mudassir Shahabuddin – (MS – SPM) 06-808

___________________ ____________________

Ubaid Aftab Mudassir Shahabuddin Supervisor Student

HIGH TURNOVER IN IT INDUSTRY

Mudassir Shahabuddin

m06.808

Masters of Science in Software Project Management

National University of Computer and Emerging Sciences

The field of Information Technology has faced a revolution in past decades and has opened new areas

of success and opportunities for entrepreneur globally. However, this has also become a distressed situation when it comes to retain skilled employees. High turnover has become a trend in IT and is

increasing exponentially. This study will provide in depth analysis of research so far done on High

Turnover in IT and provide possible strategic solution to it.

1. Introduction

Turnover has always proven itself disruptive and dysfunctional for all sizes of IT organizations. Organizations made effort to retain their employees by increasing salaries, offering fringe benefits, better work environment and job

security. Turnover of highly skilled staff can jeopardize organizational sustenance and even can lose customers also.

Cases have been found where employee pulled potential customers and information along with him while exiting.

Moreover, high training cost incurs to prepare incoming employees and delays in customer deliverables have been

noticed.

Here we wish to highlight some important factors and reasons that provide fuel to high turnover and will than

provide strategic road map to cater high turnover in IT.

2. Internet Revolution

The world has seen devastating revolution in the field of IT with past few decades. The IT revolution, both at its peak and decline, has changed the expectations and norms of this population of workers considerably. During the

mid 90s, demand for IT workers increased exponentially, for many reasons, out of which Y2K compliance is

prominent. However this demand decreased after 2000. Specifically, years 1996-1999, the period of Internet

Revolution, faced a severe shortage of IT workers having specific skills in new technologies that resulted in supply

demand asymmetry. This was the point where ―careerist‖ mindset among IT workers was experienced [1]. IT

workers start focusing on financial gains that eventually inspired them to switch employers frequently. But the

situation gets more agitated when century turn and economic slowdown, shut the doors of opportunities resulting an

oversupply of high tech professionals. The US department of labor posted that oversupply of IT workers would be

temporary. Nonetheless, since than the situation improved and now it enjoys quite healthy breath.

3. Individual and Situational Factors

Researchers have found that individual as well as situational factors play an important role in describing turnover

intentions. Not only individuals but organizations also have their own individual and situational factor that empower

or dampens their role in participating turnover intentions.

From organization point of view, individual factor might be the implicit risk present in the business model or

environment when entrepreneurs take initiatives to start a new business. Here, situational factors also play an

important role. In today‘s competitive and tight market , to what extent an employer provide variety among its IT

jobs that he offers and to what extent does his position differentiates him from others.

Research done by agarwal posted that effect of situational risk on turnover intentions is moderated by individual

preference for risk. Returns associated with a particular employment situation are likely to be evaluated in the

context of the risks that the employer embodies. The DOT COM revolution has changed the way organizations think

before and young entrepreneurial ventures emerged in the latter half of 1990s. Thus IT enabled business innovation

offers an opportunity for reward; these rewards are not without risk.

Situational Risk is positively related to turnover intentions. Two identical individuals, in terms of salary, work criteria and incentives, the one in the situation of higher risk is likely to have the higher turnover intentions. When

individuals see their preferences aligned with situation, their attachment and commitment increases with the

organization. Whereas facing unsatisfactory outcome from job, one might develop intentions to leave organization.

Evaluation of employment opportunities doesn‘t ends here. A second dimension, that IT professionals also consider

is the range of technologies and experiences that are potentially available with a given employer. High quality of

work, variety among work, interesting work are few norms that individuals usually foresee and that eventually

moderate intentions to stay. Surveys of ―Best places of work‖ highlight the nature of the work (e.g., leading edge

technologies, interesting tasks/projects) as an important driver of IT professionals ‗ attitudes and work behaviors. Thus agarwal posted that Effect of variety offered by the employer (or the situation) is moderated by individual

preferences for variety. Organizations that provide such incentives, face low turnover rates as compared to

organizations that have some rigidity in this regard.

4. Decision Paths

Researchers have extensively studied the decision paths that IT professionals take under different circumstances. However, diversification in results has made this issue controversial. What are the factors that an individual

considers while planning to switch employee. Factors such as job satisfaction, organizational commitment, attitude

etc were pull into concentration while analyzing decision path that affect turnover and considerable outcomes were

viewed.

Job satisfaction and organizational commitment each contribute independently to the prediction of intention of

turnover. ―In short, over 17 years of research on the traditional turnover models suggest that many employees may

leave organizations in ways not specified by traditional models…Lee & Mitchell (1994). It clearly reflects that there

are some factors that are prominent to the IT Industry and IT professionals consider something else while being in a

job as well as while searching a new job.

The ever glimpse and charm of IT that has attracted intellectuals towards itself, not only enjoys their worthy services

but also facing their controversial attitudes, diversified demands and off course their mystified decisions. While

discussing the same issue of Decision Path mystery Lee et al (1999) proposed a alternative view that adds new attitudinal measures such as a shock, a jarring event such as an unsolicited job offer or significant change in family

circumstances, and availability of alternatives to extend the set of variables considered as potential turnover

influences. In a series of studies, they have tested and refined their theory examining varied groups of respondents

including nurses and accountants (Lee et al., 1999). They have further tested differences in characteristics of those

following the various paths.

Researchers have found that job satisfaction, higher salaries, managerial problems are not always the reason of

leaving job. In this analysis turnover is influenced by a variety of variables like shock (an unexpected job offer, major life events etc), the following of scripts, image violation etc. however, it doesn‘t neglect the factor of job

satisfaction but rather sees it as small part of overall picture.

A shock is a jarring event such as an unexpected job offer, a drastic change in family life, or any such event has an

aggressive effect on mind [2]. Such events might have or might not have engaged scripts. Engaged scripts are pre

existing plan of actions that one has brought in his mind with the passage of time like how to react, what to do if any

particular event occurred. This can also develop from previous experiences, social learning, behavior of people

around like colleagues, friends etc. Image violation occurs when one‘s goals, objectives are not synchronizing with

the current job or what he is doing. An employee not getting intellectual, financial or moral benefits from his

employee can feel his image being violated. This is intern pressurize personnel to look for alternatives that might

also be intention of job switch.

There can be several decision paths when an individual decides to leave an organization. Lee and Mitchell (1994)

described it as follows. Consider path 1 where individual‘s intention towards turnover starts with a shock. Employee

leaves without considering his attachment to the current organization or without considering job alternatives; job

satisfaction is not relevant. This is termed as ―script-driven‖ decision. There was some pre engaged script created in

his mind that insists him to immediately leave the job without considering alternatives. Here job satisfaction is not

relevant because his attachment to the organization wasn‘t that deep and his attitude has become so much agitated

with time that insists him to switch without considering anything.

Path 2 also starts with a shock but employee reconsiders his attachment with the organization because image

violation has occurred, and the employee leaves without searching for alternatives. This is termed as ―push‖

decision. In path 3, that also starts with a shock, an employee experiences image violations that in turn prompt the

evaluation of both the current job and alternatives. This is termed as a ― pull ― decision .

It is not necessary that there should always be a shock that impact individuals to see alternatives but there may be some other reasons as well. Suppose we have path 4a and 4b. In such path where turnover intentions start without a

shock is called ―gradual withdrawal‖. Usually this has been noticed because of lower job satisfaction among

individuals. In path 4a lower job satisfaction becomes so prominent that an individual leaves organization without

considering alternatives where as in 4b employees search and evaluate different alternatives.

4.1 Decision Path Speed

While studying the nature of this study and the speed through which individual‘s leave organization depends upon three factors. One is off course shock; other two are amount of mental forethought and the availability of

information. Since path 1 and 2 faces fewer mental deliberations, therefore take less time to decide as compared to

path 3, where individual need to consider alternatives. However, mental forethoughts are more in path 4a and 4b as

compared to other paths, decision making here take more time. Secondly, availability of information also affects

decision speed. In path 3 and 4b, information about the alternatives, options and jobs predict that it will take more

time than path 1, 2 and 4a.

5. Turnover: As Culture

Culture is defined as the values commonly held among a group of people. Organizational culture is the set of values, norms, and beliefs shared by members of an organization. Being a part of same culture, co-workers get inspired

from each other that also moderate intention when we talk about turnover.

Turnover in IT has come to be so accepted that an IT Manager recently confided that his subordinates ―look at my

career and think I‘m a loser because I‘ve pretty much stayed in one place‖ [3]. Said more clearly, a high turnover

culture reflects the acceptance of turnover as part of work group norms. That is an employee under this environment

likely believes that turnover is necessary and perhaps even expected.

While understanding turnover culture, much can be understood by literature and research done on Organizational

Culture. Different groups, siblings, casts and friends exist in an organization. Some are highly attached and some are

loosely coupled according to their work norms and ethical attitudes. In both the cases every individual take inspiration from others constantly.

Researchers have identified two key dimensions of organizational culture construct: direction and intensity [4].

Direction refers to the kind of culture being developed in the organization. It could be the implicit thoughts among

individuals or norms developed organization wide. Intensity is the strength of these norms or thoughts.

Organizations can lead to a significant outcome for their future plans by controlling the ratio of these two factors.

Equalizing these switches and creating a good balance is a pretty good art than science.

As we have mentioned earlier, turnover culture has deep resemblance with organizational culture as gossips,

customs, information flows, hierarchy and structure are few prominent features that relate both. Therefore, these

artifacts ultimately moderate assumptions and beliefs that in turn effect turnover intentions. If colleagues make

positive comments about their work, environment and management, then there is a higher degree of chance that

favorable aspects of the job and commitment to work and organization increases. On the other hand if co-workers

have some negative views about work, then there is a higher chance that these effect individual negatively i.e.; his

own perceptions and views become negative. Researchers have noted that more similar colleagues or siblings that

have almost same position or work assignments will come to a similar decision more quickly. Their attitude towards

staying or leaving will be more or less similar.

It is not necessary that turnover all happen among individuals. It can exist at industry, organizational, and

workgroup levels [5]. At industry level, it depicts that turnover, low or high, is present in a particular industry. That

industry faces shortage of specified skill set people and is common across companies belonging to that industry.

These companies however can create a firm strategy to cope with this problem. Turnover at organizational level at

organizational level refers to the beliefs and custom developed within an organization with a passage of time. Co-

workers share their views and perceptions that in turn reflect in their actions. That is why turnover most of the times

differ from organization to organization. Companies make similar strategies to retain employees and perform different operations accordingly. Turnover at workgroup level refers to a department or unit within an organization

that more or less contain similar beliefs. Since the nature of work and functional operations are similar with a

workgroup, therefore their demands and problems are similar. We argue that turnover culture can also exist at

occupational level. IT occupation for example refers to a particular industry that can be shared among many

individuals working in different organizations. Such kind of occupational group where communication ways are

easily available and accessible (internet, news, seminars, academic groups, e social circles, alumni etc ) creates a

strong network where information flows rapidly and accurately. Therefore any labor market containing an

occupational group can contribute to high turnover. IT occupational group could be the best fit. For example there is

a strong demand of IT professionals in the market their shortage as well can inspire them to work for more pennies

and therefore job switch will become a trend.

As we move further we need to insight an important question. Are all IT professionals similar according to demand

and turnover ratio? The marketability of particular job skills highly contributes to turnover culture within an

occupational group. For example, J2EE developers are in a greater demand in local industry. Professional DBA‘s

having a good knowledge of Oracle is in high demand and fortunately or unfortunately there is a shortage of

professionals having expertise in the said area. In one way or other, management practices also contribute to

turnover. Since organizations face shortage of skilled employees, they offer handsome packages and incentives in

order to attract professionals towards them. Paying top dollars to require personnel provide message to others that

there are higher wages available in the market and that they are working for small pennies. Such actions create hype

in the market that fuels higher turnover. IT professionals judge themselves by looking for head hunter calls. If

professionals at all level are not getting head hunter calls than they conclude that there is some problem with their skills and abilities.

There are several strategies followed by organizations to cope with this situation. Most of the time, mid career

professionals are at a highest demand or we can say mid career IT professionals hold a larger part of job percentage.

Organization usually move aside mid career IT workers and bring fresh graduates to work. Fresh graduates tend to

work on lower salaries as compared to experienced workers. Their intention to learn and enthusiasm can lead

organization to a significant outcome and success. Fresh graduates are usually single and can even work happily

under sufficient work load. They had no issues in late sittings as their primary focus is to learn. Family responsibilities are near to none. Such an IT Human Resource strategy was acknowledged recently by hiring a

manager in Silicon Valley firm: ―You work the young ones for five years and then replace them‖ [6].

Along the same line, persistently overloading IT professionals with work (at any stage of their careers) is likely to

contribute to a high turnover culture in IT workgroups. Research shows that IT professionals experiencing work

exhaustion report significantly stronger intentions to leave their jobs [10]. Exhausted professionals have described

work environments in which ―management places unrealistic and arbitrary goals on us, then refuses to hire anyone

to help‖ [7]. If work overload and exhaustion are common within the workgroup, IT professionals are likely to have

observed others experiencing the problem and successfully resolving it by leaving their jobs. Work overload and

exhaustion can therefore contribute to a high turnover culture in IT workgroups.

As we have discussed that culture plays an important role and that people attract people in a sense that they get

inspired from each other easily. Over glorification of this act or as termed by Moore, Romance of turnover can

become a usual thing at occupational level. Departing employees are treated as heroes, because they have found a

way out of the organization. Most of the time only positive aspects of the new job are discussed among co workers

and those aspects negative of the current employer. Actual consequences and fair judgment is very keep in to

consideration thus assuming that turnover is the only solution to their problems.

Implications of the above mentioned problems are always depicted as a serious issue and none could a single

positive aspect out of it. Consider a scenario where an individual have multiple job options and he can easily ―exit‖

without ―voice‖. Over 30 years ago, political and social economist Albert O. Hirschman, in his classic treatise on

―exit‖ and ―voice,‖ noted that when exit is an easy alternative, the use of voice to right problems in an organization

tends to atrophy [8]. By executing such a path, organization loses valuable comments and suggestion, departing

employee has in his mind. How often we have seen or heard that exit interviews are conducted while an employee

leaves. This is because why one should use voice and might become part of any controversy, instead exit safely.

6. Turnover and Internal Market Strategies

Much of the research has been conducted to study the individual level evaluation of turnover. Till now research

focus was on individual perceptions, what an individual thinks about his career, his future plans, his problems and

his turnover intentions. However, lesser work is done to analyze this issue from a labor market perspective. Doing so

we can better analyze the problem as a whole, and internal labor market strategies could be evolved that will surely

help analyzing turnover problem as a whole and designing a firm strategy. A labor market perspective

conceptualized a problem as a whole and induce attention towards major and most occurring problems rather than prominent but few occurrences of a problem. This can help organizations to develop strategies market wide and let

them fuse at a single consensus, thus building a more flexible and robust strategy. By having a clearer picture of the

overall market, they can easily control the most disputing factors and can easily float their ideas and plans that

would eventually become requirement of the market.

Researchers have classified Internal Labor Market strategies (ILM) in to two categories [9].

Industrial ILM strategies

Craft ILM strategies

Industrial ILM refers to the organizations where an individual has limited options to enter an organization. Jobs are not frequently available in these organizational positions and even entry points are limited and promotion is usually

happens gradually. Employees do progress and climb organizational stairs but rather at a firm and slow pace.

However, these organizations offer job security because their rules and regulations are well defined and clearly

stated. These create a sense of satisfaction to employees how are really conscious about job security and long term

plans. These sort of companies paid a reasonable attention towards Human Resource management because they

consider human skills as their primary source of success. Skills and knowledge are prominent to the firm. Since,

employees are old retainers; they have firm specific knowledge that drives their value. Domain understanding is

clear as crystal to these employees and not much problem is faced when it comes to domain understanding. One

more positive aspect of Industrial ILM is that organization focuses on training and in house courses that favor

employees to get themselves abreast of latest technologies and trends and further motivate them to sustain. Since,

making an entry to organization is limited, it helps retaining more employees, thus moderating low turnover ratio.

On the other hand, Craft ILM refers to the situation where greater loyalty is found towards specific skills or

education rather than organization. Organizations faces high turnover as far as craft ILM strategy is concerned

because skills are not according to organization‘s domain or business specifics. Therefore, individuals having their

own mobilized skills and had a strong market hold and eventually they mould market cost easily. Organizations do

need these kind of personnel, but both the parties are not as much dependant on each other, or we can say , they

don‘t need to stay together for a very long period of time. Individual focuses on enhancing their technical abilities rather than grasping any particular domain knowledge. Such a situation automatically creates higher demand of such

individuals and that in turn increases mobility of inter firm movement.

6.1 IT and ILM Strategies

Many researchers have come to a consensus that IT employee‘s career orientations are of two types, Managerial and Technical [11]. It could be easily judged that Managerial positions such as Chief Technology Officer, Project

Manager, Chief Information Officer etc are positions that require firm specific knowledge, domain expertise,

organization‘s history and future plans. Thus, employees that have spend a considerable time in an organization can

have a better understanding of these mentioned areas rather than a newly hired executive. Therefore, organizations

always try to promote employees within the organization to come up and take these responsibilities and encourage

people to come a head from the older pool of employees. Now on the other hand if we see technical positions to be

filled from within an organization or to hire employees from outside, we can easily judge the difference. For

technical perspective organizations required people who have strong technical skills and command on required or latest technologies, despite they have firm specific knowledge or not. Their skills are required for a limited period of

time might be for longer, but their mobility does not affect as such the progress of running project or task.

Therefore, we conclude this part of our discussion by stating that since in Managerial ILM entry from outside the

company is low, there is less inter firm mobility and lower turnover is expected from the employees. However,

reverse is the case with craft ILM. Technical personnel focus more on learning and keeping themselves abreast with

the latest trends and technologies. Thus focusing more on skill development rather than organization commitment,

they intend to switch employer more frequently.

Implicitly, we have come to a conclusion that occupational attributes are the driving force behind the classification

of an ILM strategy for an IT occupation. Now since we know that Technical IT occupation will always generate

higher turnover as compared to Managerial IT occupation. We need to cope with this situation and one way or the

other should make any strategy that may dampen the rate of turnover. Organizations can shuffle between their

strategies in order to mould down technical IT occupation from craft ILM strategy towards industrial ILM strategy.

An example is the creation of ―technical career paths‖ [9] in organizations that enable programmers to achieve high

promotion, pay and status while remaining in a technical, non-managerial role.

According to Osterman [20], predictability, flexibility and cost minimization drive ILM strategies, and these differ

across organizations. For non profit or public organizations predictability is more important than cost minimization

and its more better if flexibility lies in that predictability. Therefore such organizations focus more on stability that

in turn enjoys lower turnover because they industrialize their Technical IT occupation and focus more on

predictability. In private sector, we can see more or less, the same behavior. It producers may also focus on

predictability as their core objective, even if the final gal is cost minimization. This is because the core competencies

and backbone reside with the technical abilities of IT workers present in that organization. This concludes that such

organizations tends to focus on retaining skilled employees because revenue generation is deeply associated with

them. Therefore, such organizations industrialize their technical IT occupation.

7. Behavioral and Organizational Factors

Today organizations are facing critical situation as far as turnover is concerned and keeping IT workers satisfied, is one of the most challenging tasks for them. Even slowing down the pace of high turnover is getting difficult. Not

only retention is a problem, the availability of highly skilled employees is very short and organizations need to face

this challenging situation with increase in intensity day by day. At the same time IT workers enjoys a high demand

market where they can put high demands in front of organizations and also ask them to create a good working

environment for them. The managerial problem is to know what are the critical organizational and job features that

affect the desire to stay in or leave a company.

One of the most critical issues facing managers of high tech companies is keeping their technical employees

satisfied and trying to prevent a rapid staff turnover. The shortage of good quality technical people in high tech

companies creates a high demand for their skills. This makes it easy for them to change employers and more important for companies to provide working conditions which are attractive enough to keep their technical staff.

While relating individual behavior with organizational factors two main areas are covered; the first is the reasons

why technical employees would leave their present company; the second looks at factors influencing the length of

time they expect to stay in their present company.

A research done by Anna-Maria Garden from London Business School, a study done on motivation of high tech

software professionals [10]. Preliminary questionnaire results of 302 people from 7 high tech software companies, 3

small companies with less than 50 employees, 3 medium size companies with between 150-200 employees and 1

large company with over 2,000 employees in total. As a result professionals listed the following factors according to

higher priority to lower priority.

TABLE I

Rankings of Potential Reasons to

Leave Present Company

Org behavior paper.

(Table copied from [10])

Ranking Factor

1st Higher salary

2nd More experience

3rd More interesting work

4th Need for a change

5th More challenge

6th Greater chance of promotion

7th Better location

8th Present Company getting too large

9th More control over own work

10th Keep up'with technical knowledge

11th Run own company

12th More flexible working arrangements

13th Greater structure in work

14th Go to more successful company

15th Difficulties with immediate boss

16th Friendlier company

17th Opportunity for equity stake

18th Go to less commercial company

19th Go to more commercial company

As we can see, above rankings are distributed in to three groups for better understandability. These groups are set

according to the intensity and demand highlighted by professionals at the most. At number one, we can see higher

salary, the most required and irresistible demand by professionals. IT workers might compromise at anything except

salary because they tend to believe that the expertise and knowledge they hold, is hard to difficult and execute.

Therefore, demanding a higher salary comes first beside everything else. Since the charm and life line of IT

profession is keeping yourself updated technology wise, IT professionals demand more experience and more

interesting work after high salaries. They always try to gain more and more experience in order to gain more expertise and require more challenging and interesting work. IT profession is all about creativity and imagination.

Professionals, who take it as a career, always look forward for more creative and interesting stuff. This generates an

implicit demand to having good quality and challenging work.

As we can see the factors mentioned above tends to move from more personal to environmental or less personal

demands. Professionals always look forward for more and more improvement to their life style and environment that

surrounds. Better location lies in the middle of all and the first point of the second group. The final eight factors

were given such relatively low rankings they could be considered to be merely idiosyncratic. The priority given to

salary is unusually high for individuals with a technical or professional orientation; it is more common where

individuals take a more detached approach to

their job (e.g., process workers). The next 5 highest-ranked factors indicate the importance of

interesting and challenging work. The predicament with IT organizations is that their employees expect an interesting and quality work job and also demand higher salaries explicitly. Maintaining such an environment and

fulfilling employee‘s demand is a big challenge for employers."More flexible working arrangements," and "more

control over own work," for example, tends to be less important but do not appear as reasons for leaving job rather it

has a small implication on leaving intentions.

7.1 Small and Large Companies

According to this study, a issue has been discussed is that it is getting more difficult day by day to satisfy and retain

independent type of people as structure, rules and regulations as the company grows in size. Researchers are trying

to answer the question whether every small and large size of companies have different employees and does size of

the company matters on identifying the nature of employees. As a study done to compare small size companies with

medium and large companies several conclusions were drawn.

1. A major difference found between small companies and middle or large companies is that employees in

smaller companies have a higher intention to leave because they rather want to start their own company or

tends to join a more successful company.

2. In smaller companies, technical staff tends to focus on start new business, as compared to looking for a

larger company. Both factors are there but differ in intensity.

3. Employees in medium and large companies differ from those in smaller companies in way that they focus

more on ―promotion‖ as compared to employees in smaller organizations. this is because of two reasons.

Employees in larger companies tend to ladder faster and rate in promotion is higher. Secondly, employees

in smaller companies assume that there career growth and advancement is dependent upon the growth of

company, but in larger companies it happens alternatively. Employee there doesn‘t advance themselves

accordingly as companies grows but still enjoys different incentives as company advances

8. Relationship between Nature of Work Selection and Organizational Commitment of

IT Professionals

Tim Klaus from University of South Florida [20] did a research on Select Nature of Work Characteristics and

Organizational Commitment of IT Professionals. The study explores the nature of work context within the IT

context and asserts that nature of work as contextually specified contributes to an IT professional‘s commitment to the organization. Nature of work in the IT context is expressed as core job characteristics, the level of group

cohesion, and the level of role stress. IT managers and organizations can use this information to guide project

assignment job decisions and improve job and work design to increase organizational commitment and ultimately to

increase retention.

IT research has shown that job performance is related to the IT professional‘s commitment to the organization

with higher levels of commitment related to better retention of IT professionals [11]. Management literature has

indicated that nature of work is an antecedent to employee work-related attitudes. The connection between

nature of work and organizational commitment is particularly promising as corrective action may be within

the capabilities of the IT manager or organization. In situations where the nature of work negatively

influences organizational commitment, management may have the ability to enact job redesign remedies (e.g. job enrichment, job rotation). Through better job assignment or work design, employees may have higher

commitment, leading to a higher job performance. Such remedies may be particularly viable in an IT context where

project work is prevalent.

Study done by Tim Klaus introduces a model of the relationship between the nature of work and organizational

commitment in the IT context. The proposed model recognizes past job characteristics literature and the nuances of

the IT context by explicating nature of work to include role stress, group cohesion and job characteristics.

8.1 Core Job Characteristics

One job enrichment model that has garnered much interest and support is the Job Characteristics Model

[12]. This model postulates there are five core dimensions that affect the psychological state of employees, leading to certain personal and work outcomes [13]. The Job Characteristics Model has been studied using

organizations of all sizes and cultures. However, few if any studies have used this model to study the

relationship between IT workers and organizational commitment. This context is inviting since historically the

IT industry is one plagued with high turnover. The Job Characteristics Model operationalizes the motivating

potential of a job as a summative measure based upon the weighting of various core job characteristics.

Although this model originally was developed to explain three psychological states, it has widely been used to

determine work outcomes.

8.2 Group Cohesion

Group cohesion addresses how well the participant has bonded with a work group or others in the epartment.

Given the proliferation of projects requiring teamwork in IS, the workers perception of group cohesion was

selected as a likely variable that may influence the commitment of workers to the organization. It is implicit in the

work group cohesion literature to note that employees that have close friends at work rated higher on work group cohesion and were more inclined to stay at the company than leave [14]. This study also noted that

employees with close friends at work will more likely stay with the organization. Granovetter further explains

this concept, nothing that within companies there are social networks [6]. One conclusion was that employees

that have strong ties with other employees are less likely to leave the organization.

8.3 Role Stress

Role stress is selected as a Nature of Work factor as IT employees generally move from one project to another,

engaging in many types of activities, project assignments, and requirements. Therefore, role ambiguity and

role conflict are more likely to occur for these IT workers, affecting commitment to the organization.

Some research views role stress from a transactional perspective [15]. This perspective asserts that role stress

is an individualized process that increases or decreases due to stimuli and then affects responses (e.g. commitment).

Role stress is a complex construct when viewed from the individual transaction level rather than a more objective environmental approach. Research indicates the dimensions of this complex construct include role

ambiguity and role conflict [16]. This study acknowledges both role stress dimensions.

8.4 Organizational Commitment

Organizational commitment is a common construct used in management, marketing, psychology, and other disciplines as an antecedent of job involvement, job satisfaction, turnover, and absenteeism [17]. Like role

stress, commitment is a multi dimensional construct. Prevalent dimensions of this construct explored in

research include continuance commitment, normative commitment, and general feelings of organizational

loyalty and pride. The continuance commitment perspective views commitment from the position of loss;

employees remain with an organization because they will lose existing benefits if they leave [18]. Normative

commitment refers to the commitment to an organization based upon a feeling of obligation [19]. This study will look at both continuance and normative commitment to the organization as well as the loyalty

and pride participants have towards their employers.

9. Is Turnover Always Disruptive

So far we have discussed that turnover has always been found disruptive for organizations. Employers tend to

introduce new ideas, strategies, offers and facilities to employees in order to keep them attracted. However, there are people who consider turnover as a strategic facilitator and suggests that turnover is helpful and functional.

Here we will discuss a research done Havard Meland from Agder University College, Norway [21]. The paper

discusses different perspective and argues that turnover is a possible strategic facilitator for organizational

development.

“All those who pass through this door bring joy to this office,

some by coming in and some by going out”

Sign on the office door of famous US college basketball coach Bob Knight]

The author has proposed a model which is called Strategic Turnover Management Process (STMP) using theory of

planned behavior, theory of Psychological contracts and conclusion drawn from prior research on turnover.

STMP has three stages consisting of:

i. Continually assessing the staying or leaving intentions of the employees

ii. Deciding whether to retain him, and

iii. Re-recruiting in case the decision is to retain.

Human resource literature has always stressed to design a HR system persistently that fit with the goals, strategies

and future road maps of the organizations and also offers a goof person organization fit. Therefore there should exist

a balanced system that understands organization needs and at the same time also provide a balanced equity of the

employees of that organization. For example, if an organization has some vacant positions available than internal

candidates should be placed in those places. This would help organizations gain benefit from employees with cross-

competency skills and knowledge. Employees being there for a longer period of time can also be risky for

organizations. many important knowledge and news that should be known to management timely, are acknowledged when an employee leaves out. There might be in justice happening to sub ordinates by their senior, but since he has

been there for a long time no one is about to know. This might create bad feelings among sub ordinates and instead

of being capable enough to do their job, they leave the organization. Turnover in the company can also open paths

for career development, which is necessary when people seek to fulfill their career goals or accommodate career

anchors [22]. It may also open the way for previous employees to come back with experience from other companies

as part of their career paths [23].

If a company faces low turnover, this might be good for an external views about that organizations in terms of HR

policies, but might be disruptive for continuous growth and stability. Organizations need bright and creative ideas

every time. In fact this happens that organizations needs some employees to leave organizations for strategic

reasons. They might fire, transfer or laid off employees but it‘s better suggested that a firm strategy should be developed

STMP Step 1: Assessing employees’ staying intentions

“The theoretical premise for assessing an employee’s intention to stay or leave is the theory of planned behavior or TPB [22]. According to TPB, human behavior is guided by three kinds of considerations: Beliefs about the likely

outcomes of the behavior, beliefs about the normative expectations of others, and beliefs about the presence of

factors that may facilitate or impede the behavior. A combination of these leads to the formation of a behavioral

intention, which is assumed to be the immediate antecedent of behavior [22]. TPB has previously been used in

career choice investigations [23] and employment status choice intentions investigations [24] and has found strong

support. TPB has also been used to predict women's intentions to pursue a career versus intentions to become a

homemaker [25] and the career intentions of army officers [26]. Adapting to the context of turnover, the behavior in

question is

either staying or leaving. One can argue whether they are the two ends of the same bipolar construct, or whether

staying and leaving constructs are distinct and may be present in the same individual. To empirically derive the

intentions, we sought the advice of Ajzen [27] response was “Ask about both staying and leaving intentions and when deriving the higher order construct, recode and combine those into one construct”. This implied a bipolar

construct.” [21]

STMP Step 2: The Intervention decision

While dealing with turnover organizations feels themselves very confused sometimes. The decision whether

turnover is obstructing organization goals and its overall strength or it‘s a good time to entertain turnover at its

notion is a crucial decision to take. STMP offers a simple solution of recognizing each individual separately. The

identification of company needs and comparison with individual skills and strength can easily notify whether the

individual is replaceable or not.

Acceptable turnover would be a case where organization can easily replace the employee and acquiring a new

person with same capabilities or skills. However this might not always be the case. The competencies of the

departing employee may have been outdated i.e.; no more required by the company. As an effect of this market

decline, the company may have changed their corporate business strategies, focusing on other areas of competencies and service offerings. Even though the employee‘s role may not need to be filled, a replace-ability analysis should

be conducted in order to uncover aspects of the employee, the corporate business strategies or the market place not

initially anticipated. The replace-ability of an employee then depends on the fit or match between three dimensions:

company dimension, employee dimension and market dimension.

The company dimensions are the requirements which the company should fulfill to run its business successfully.

Particulars like domain expertise, technology adaption, infrastructure setup etc could be the prime focus. Company

culture, trends, values and norms are few particulars that plays an important role in structuring and maintaining

required environment. Demands could be also its business strategies, such as areas of growth and service/knowledge focus of the consulting company as well as the culture of the company, and the ethics and standard the company

wants to be identified with. Such values and norms may be honesty, courage, freedom, team spirit, and confidence

among others.

The employee dimension refers to the abilities, skills, knowledge and to what extent the person organization fit tends

to make him more worthy. His competencies and requirement of his skills within the job market is a complex

comparison. Competencies tend to be described as substantive content because they could be one‘s own competency

or the one required by the market.

The market dimension refers to the availability of skills and competencies in the market. Organizations effort and

willingness always affect the efficacy of market dimension. Usually business requirements of organizations create market demands that in turn attract individuals to decide their career accordingly. Since, the shortage of skill and

competencies are always a challenge for organizations, the use of fringe benefits, trainings, incentives and other

offers by companies accelerate market demands. The market dimension may also affect the company dimension,

since company goals and strategy change with the market dynamics. The availability of projects will affect the

company dimension, the business strategies and needs for competency within the company. Evaluating the replace-

ability implies analysis of compatibility and fit between these dimensions.

STMP Step 3: Intervention by re-recruitment

The theoretical premise of this step is psychological contract which is defined as: ―Individual beliefs, shaped by the

organization, regarding terms of an exchange agreement between individuals and their organizations.‖ [21, p. 9]. The effects of changing psychological contracts in employment have been subject to several studies [8, 20, 21].

Psychological contract refers to the moral and mental agreement between the employee and the employer. In

organizational settings, contracts can be social [shared by the larger society, e.g., in this context employees in the

industry] and organizational [21]. Ideally, a psychological contract should consist of the detailed expectations of

employee and employer. But typical contracts are not complete due to bounded rationality [24], and the ever

changing environment of an organization making all conditions impossible to specify up front [22]. This results in

gaps in the contract, which is filled in by both employee and employer, and is done in somewhat unpredictable

ways. Therefore, contracts become self-organizing and change over time.

10. Survey

On the basis of argument done in this paper, we conducted a survey to substantiate the above discussion. People related to technical and managerial positions were focused in different size and type of IT organizations. We

categorized companies as small, medium and large as size of 10-20, 21-50 and >50 respectively. Technical

personnel were asked questions as what are their highest demands from their employer, why did they left previous

organization, which IT segment they belong to, how many times they have switched job etc. similar questions with

respect to management were asked from people at managerial positions as to what are their expectations from

employees, what problems are they facing while running an IT business, what strategy do they follow.

10.1 Technical Personnel Results

In Technical survey, we asked 100 technical personnel, out of which 30 (30%) respondent to the survey. Following are the findings from these results.

1. 23% each belong to small and medium size organizations while 53% belong to large organizations.

2. 26% were married or have dependants while 76% were unmarried or have no dependants.

3. 43% have 1 to 3 years of experience and 57% have more than 3 yrs of experience.

4. 40% have switched one job at least, 30% switched two jobs, 23% switched 3 jobs and 6% switched 4 jobs

so far.

5. 80% told that their highest demand is greater salary, 66% said that they focus on career growth, 30% said

job security matters them more, 46% said piece of mind and 6% said they want flexible timings. Many of

them also selected multiple choices.

6. While asking why did they left their previous employee, 50% said they left because of career growth, 43%

said because of less salary,20% said they left because of bad management relationship, 26% said they left

because of peace of mind or late sittings , 6% said that there was no job security and 3% said they need a

change.

7. While asking a question that what you think is the reason of high turnover in IT Industry, 50% told that this

is because opportunities are greater. There is always a better option available in the market in terms of

salaries, work quality, incentives etc. The environment is very flexible and moderated towards the

demands and expectations of technical personnel. However, 20% of the respondents told that this has

become a trend in the market. People get inspired by others and feel turnover as their strategic need as to

keep themselves laddering up. Only 6% said that people want themselves to be updated with latest

technologies and trends in the market, therefore, they intent to switch the job. 2% each told that high

turnover happens because of bad management practices or immature industry standards. Lastly 3% said that

they don‘t know why there is high turnover in IT industry.

10.2 Managerial Personnel Results

We reached 50 managerial positions, out of which unfortunately only 8 (16%) people replied to the survey. Following are the results obtained.

1. 12% belong to small organizations, 37% belong to medium size organizations and 50% belong to large

organizations.

2. 75% personnel had less than five years of managerial experience while 12% each have less than ten years

of experience and less than 20 years of experience.

3. 62% managers admitted that their organization faces high turnover problem and retention has become a

predicament for them while 37% told that their organization is not facing any turnover problem and

retention is not an issue for them.

4. When asked from the executives that what are the expectations of your employees from your company,

100% told that their demands are higher salaries and career growth. They tend to focus on these two factors

more than others. However, 62% said that job security is also a major demand of employees.

5. When asked about the incentives and benefits, management provide to their employees to retain maximum,

87% told that they try to provide higher, better or competitive salaries to their employees. 75% told that

they insure career growth to the employees and try to convince them on providing better work according to

eminent trend and technologies. 50% told that they ensure job security while only 37% said that they

provide other financial benefits, bonuses and performance based rewards.

6. While asking that what are managers expectations from their employees, 87% told that they want their

employees to be committed towards the organizations and work with full dedication. 12% told they want their employee to negotiate on complaints rather than taking rash actions, be a team player, be reasonable

when negotiate, honesty and transparency and productivity.

7. While asking the question as to what managers think are the reasons about high turnover in IT Industry,

87% managers told that increasing opportunities, rapid growth in IT industry and good offers are the major

reasons of high turnover.

8. When asked about the number of employees retained successfully after their resignation, 62% told that they

retained only a few number of employees, most of them joined other company. 12% also told that they

have successfully retained all the employees after their resignation and 12% told that they have no retention

policy.

11. Conclusion

As per our discussion, survey and analysis there is no doubt putting this paper in one statement that is Turnover is inevitable. Organizations will continue to face such situation, at least for some time and has to find some workout

under the same situation. However, since we can‘t stop water flowing down the steam, we can control its frequency

and direction.

Organizations need to build an environment where they can maximize retention of employees by continuous

improvement and firm strategies. Employer should have something on plate to attract employees at every point in

time. Understanding their financial needs, their worth in the market, their lust to learn and keep themselves updated,

competitor‘s high offers, controlling their mind sets and even justifying and satisfying their unreasonable comments

are simultaneous challenges that need to be faced continuously. By providing effective training slowly and step wise

could be a better option to keep them attracted. However, there should always be a good backup plan if any

employee leaves. This could be achieved by keeping all the team members up to date so that there is always a

backup or alternative available when somebody leaves.

12. References

1. Agarwal, R., De, P., and Ferratt, T.W. (2001). ―An Experimental Investigation of Turnover Intentions Among New Entrants in IT‖.

2. Fred Niederman and Marry Summer. ―Decision Paths Affecting Turnover among Information Technology

Professionals.

3. Hymowitz, C. On the job: Coping with youth—and impatience. St.

Louis Post-Dispatch (Dec. 19, 1999), E3.

4. Cooke, R. and Rousseau, D. Behavioral norms and expectations: A quantitative approach to the assessment

of organizational culture.

5. Moore and Burke. ―How to Turn Around ‗TURNOVER CULTURE‘ in IT‖.

6. Matloff, N. Debunking the myth of a desperate software labor shortage. Testimony presented to the U.S.

House Judiciary Committee on Immigration, Apr. 21, 1998.

7. Moore, J. One road to turnover: An examination of work exhaustion in technology professionals. MIS Quart. 24, 1 (2000), 141–168.

8. Hirschman, A. Exit, Voice, and Loyalty. Harvard University Press, Cambridge, MA, 1970.

9. Sandra Slaughter and Soon Ang. ―Internal labor market strategies and turnover of Information Technology Prefessionals‖.

10. Anna Maria Garden. ―BEHAVIOURAL AND ORGANISATIONAL FACTORS INVOLVED IN THE

TURNOVER OFHIGH TECH PROFESSIONALS‖.

11. Mowday, R., Steers, R., and Porter, L. .The Measurement Of Organizational Commitment.. Journal of

Vocational Behavior. V. 14, 1979, p. 224-247.

12. Fried, Y., and Ferris, G. .The Validity of the Job Characteristics Model: A Review and Meta-Analysis..

Personnel Psychology. V. 40, 1987: p. 287-322.

13. Hackman, J. R., and Oldham, G. R. "Motivation through the design of work: A test of a theory".

Organizational Behaviour and Human Performance, Vol. 16, No. 2, August, 1976, pp. 250-279.

14. Iveron, Roderick and Parimal Roy. .A Causal Model of Behavioral Commitment: Evidence from a Study of Australian Blue-Collar Employees. Journal of Management. 20:1, Spring 1994: 15-42.

15. Cooper, C., Dewe, M., and O.Driscoll, M. .Organizational Stress: A Review and Critique of Theory,

Research, and Applications.. Sage Publications, 2001, Thousand Oaks, CA.

16. Moore, J.E. .One Road to Turnover: An Examination of Work Exhaustion in Technology Professionals.. MIS Quarterly. March 2000, v. 24 i.1: p. 141-168.

17. Eby, L., Freeman, D., Rush M., and Lance, C. .Motivational Bases of Affective Organizational

Commitment: A Partial Test of an Integrative Theoretical Model.. Journal of Occupational and

Organizational Psychology. (72:4) 1999, p. 463.

18. Meyer, J.P., and Allen, N.J. .A Three Component Conceptualization of Organizational Commitment.. Human Resource Management Review. v. 1, p. 61-89.

19. Hackett, R. Bycio, P., and Hausdorf, P. .Further Assessments of Meyer and Allen.s (1991) Three

Component Model of Organizational Commitment.. Journal of Applied Psychology, v.79, p. 15-23.

20. Tim Klaus. ―An Examination of the Relationships between Select Nature of Work Characteristics and

Organizational Commitment of IT Professionals ‖.

21. Harvard Meland. ―The Other Side of Turnover: Managing IT Personnel Strategically‖.

22. Schein, E. H.. Career anchors revised: implications for career development in the 21st century. Academy of

Management Executive, 10, 4, 1996, 80-88.

23. Giles, M. and Rea, A. Career self-efficacy: an application of the theory of planned behavior. Journal of Occupational & Organizational Psychology, 72, 3, 1999, 393-399.

24. Kolvereid, L. Prediction of employment status choice intentions. Entrepreneurship Theory & Practice, 21,

1, 1996, 47-58.

25. Ajzen, I. and Fishbein, M. Understanding Attitudes and Predicting Social Behavior. Prentice-Hall, Englewood Cliffs, NJ., 1980

26. Guthrie, T. A. [1992]. Career intentions and behavior of army officers: a model testing approach. [Online:

http://www.stormingmedia.us/19/1926/A192642.html] Accessed: [2005, February 4].

27. Ajzen, I. Personal communication, 2002.

Appendix “A” – Research Survey Proposal

MS Research Survey

[High Turnover in IT Industry]

Submitted To:

Research Supervisor: Mr. Ubaid Aftab

Submitted On:

23rd March, 2008

Submitted By:

Mudassir Shahabuddin – (MS – SPM) 06-808

Introduction

Turnover of highly skilled employees can be very expensive and disruptive for firms. Losing highly skilled staff

members may incur substantial cost associated with recruiting, re-skilling, and hidden costs associated with

difficulties completing projects and disruptions in team based work environments.

This paper provides a detailed survey on the research carried out by different researchers on High Turnover in IT

Industry. Identification of turnover factors, situational risks, and situation variety along with retention policies will

be covered. What factors are under consideration while an individual plans to change employer and what fringe

benefits can be given to retain employees?

So far following papers are been selected for this research. More papers may be included/excluded if found

necessary.

An Experimental Investigation of Turnover Intentions Among New Entrants in IT

Ritu Agarwal [University of Maryland]

Thomas W. Ferratt [University of Dayton]

Prabuddha De [Purdue University]

The Other Side of Turnover: Managing IT Personnel Strategically

Havard Meland [Agder University College] Rolf Petter Waage [Agder University College]

Decision Paths Affecting Turnover Among Information Technology Professionals

Fred Niederman [Saint Louis University]

BEHAVIOURAL AND ORGANISATIONAL FACTORS INVOLVED IN THE TURNOVER OF

HIGH TECH PROFESSIONALS

Anna-Maria Garden [London Business School]

The Shadow Knows: Performance Expectations of New Hires in an IT Organization

Diane Bandow [Troy State University]

How to Turn Around „TURNOVER CULTURE‟ in IT

Jo Ellen Moore and Lisa A. Burke

Appendix “B” – Meeting Log

Date/Time Venue Agenda Outcome/ future work

19th March 2008 Fast-NU City Campus Discussion and Sign off Initial work need to be

sarted

26th March 2008 At Teachers Home Review selected papers Few papers were rejected.

need to select 2 more

papers

3rd April 2008 Fast-NU City Campus Papers finalized Reed all papers

thoroughly.

10th April 2008 Fast-Nu City Campus Detailed discussion on the

content of read papers.

Initial draft need to be

created and direction of

our research need to be

identified.

20th April 2008 At Teachers Home Understanding of few

papers and terminology

cleared.

Extend the draft and start

writing report

2nd May 2008 Fast Main Campus Questionnaire discussion Identify questions and

areas to be covered in the

questioners.

10th May 2008 At Teachers Home Analyzed questionnaire

results

Create statistics of the

Survey results

17th May 2008 At Teachers Home Initial report review Changes required.

30th May 2008 At Teachers Home Report review Finalized.

Appendix “C” – Managerial Questionnaire

High Turnover in IT Industry

Survey Questionnaire

Note: Kindly fill in the options you feel are appropriate. You can select more than one option also and can also add additional remarks/suggestions/views.

1. Name (Optional):

2. Organization(Optional) :

3. Industry

a. Software

b. Telecommunication

c. Infrastructure

d. Implementation

e. Out sourcing

f. Other _____________________

4. Designation

a. CEO

b. CTO

c. CIO

d. Project Manager

e. Team Lead

f. Other ________________________

5. Managerial Experience:

a. < 5

b. < 10

c. <20

d. >20

6. Are you or your company facing High Turnover among your employees?

a. Yes

b. No

Remarks:

7. Do you feel retention of employees is a problem for you?

a. Yes

b. No

Remarks:

8. What do you think your employees expect from you or your company:

a. Higher salaries

b. Good quality of work. (Work on cutting edge technologies, challenging work etc). c. Job security.

d. Other __________________

Remarks:

9. What benefits do you usually give employees in order to retain higher number of employees

a. Higher salaries b. Good quality of work. (Work on cutting edge technologies, challenging work etc).

c. Job security.

d. Other __________________

Remarks:

10. What do you think are the reasons of high turnover in IT Industry? Elaborate.

Answer:

11. What are the major complaints you have from your employees?

Answer:

12. What strategy do you follow in order to retain employees?

Answer:

13. What is your biggest demand from current employee or whom you are looking for

Answer:

14. Any additional thing you would like to tell

Answer:

Appendix “D” – Technical Personnel Questionnaire

High Turnover in IT Industry

Survey Questionnaire

Note: Kindly fill in the options you feel are appropriate. You can select more than one option also and can

also add additional remarks/suggestions/views. Your provided information will be kept confidential.

15. Name (Optional):

16. Organization(Optional) :

17. Are you married

a. Yes

b. No

18. Industry

a. Software b. Telecommunication

c. Infrastructure

d. Implementation

e. Other _________________

19. Designation ___________________

20. Technical Experience:

a. 1-3 yrs

b. 3-6 yrs

c. More than 6 yrs

21. How many times do you have switch job till your current employment.

a. 1

b. 2

c. 3

d. 4

e. 5

f. More than 5

22. What is your highest demand/expectation from your current employment or whom you are looking for:

a. Higher Salary

b. Job Satisfaction (Quality work).

c. Job security

d. Peace of mind

e. Other ______________

Remarks:

23. Why did you left your last employment. a. Felt saturated (learning was not up to your expectations)

b. Less salary

c. Bad Managerial relation

d. Other_______________

Remarks:

24. Was there any negotiation when you left your last job? If yes. Did you retained or left?

Answer:

25. Was there any Exit Interview when you left your last job? If yes. What was the outcome of that meeting?

Answer:

26. Do you have any complaints from your current employment? If yes. What are they?

Answer:

27. Do you think is there any specific reason of high turnover in IT Industry? Answer: