A Revisit on Impact of Job attitudes on Employee Turnover: An Empirical Study in

Indian IT Industry

Dr. Niharika Gaan1

Abstract

This study reexamines the relationship between the job satisfaction, organizational

commitment and turnover empirically with sample size of 308 information system

professionals from giant companies of Indian software and BPO sectors. It views

turnover from attitudinal perspective. Results reveal that the relationship between

organizational commitment and turnover is inconsistent with the earlier literature.

However, job satisfaction seems to be explaining significant amount of incremental

variance in turnover intention. Further, it is suggested for future study that the

turnover model should try to investigate the precursors to turnover intention by

taking occupational commitment, job satisfaction and non-attitudinal aspects of it as

independent variables.

Key words: Employee turnover, Organizational commitment, Job satisfaction,

Information system professionals

1.0 Introduction:

Turnover has been a major issue pertaining to IT personnel since the very early days of

computing and continuing to the present. It has been noted frequently that IT personnel

have a stronger than average tendency to leave a current employer to work for another

organization. Therefore, high turnover is a general trend found especially in IT industry

1. Dr. Niharika Gaan is working as an Assistant Professor in Center for Management studies, which is

affiliated to Biju Pattnaik University of Technology.

which has also been subject of considerable research. It is so because turnover of highly

skilled employees can be very expensive and disruptive for firms (Reichheld, 1996).

Losing highly skilled staff members may incur substantial costs associated with

recruiting, re-skilling, and hidden costs associated with difficulties completing projects

and disruptions in team-based work environments. Information technology (IT) personnel

exemplify highly skilled professionals and called as knowledge worker (Reed, 1996;

Frenkel & Korezgynski, 2002).

India’s abundant, high quality and cost effective services and its vast resource of skilled

software human power have made it an attractive location for global software clients.

There has been a steady growth in the number of India’s IT professionals over the last

decade. From a base of 6,800 knowledge workers in 1985-86, the number increased to

522,000 software and services professionals by the end of 2001-02. It is estimated that

out of these 522,000 knowledge workers, almost 170,000 are working in the IT software

and services export industry; nearly 106,000 are working in the IT enabled services and

over 220,000 in user organizations. According to NASSCOM-McKinsey Report 2005 the

offshore IT and BPO industries directly employ around 700,000 professionals and

provide indirect employment to approximately 2.5 million workers. With the steady gains

of females at both software companies prompting NASSCOM to believe that women’s

involvement in IT services will climb a further 10% per cent by 2007.

The critical issue is also revolving around procuring an adequate pool of well trained

applicants from which to hire new employees from. Yet, while the number of qualified

employees is dwindling, there is an increasing need to retain well-trained employees and

to lower search, hire, training and general turnover costs, to boost employee loyalty and

morale, and to maintain a highly productive and creative workforce.

Thus objective of the study is to reconsider the employee turnover model from

psychological perspectives. This is investigated by examining the relationship between

the job satisfaction, organizational commitment and turnover intention. It also tries to

redefine the relationship between the job satisfaction, organizational commitment and

turnover intention. This is examined by finding the mediating effect of organizational

commitment on the relationship between the job satisfaction and turnover intention.

2.0 Background and hypotheses:

Researchers have extensively studied precursors to employee turnover in an effort to

develop understanding of the attitudes that stimulate employees to leave employment

with a specific organization. In an attempt to clarify the relationships among various

attitudinal antecedents of turnover, Tett and Meyer (1993) performed meta-analysis on

178 independent samples from 135 studies. They estimated the relationships among job

satisfaction, organizational commitment, turnover intention, and actual turnover (Tett and

Meyer, 1993). Their examination concluded that job satisfaction and organizational

commitment each contribute independently to the prediction of intention to turnover, and

that such intentions are predicted more strongly by job satisfaction than by organizational

commitment. Lee, Mitchell, Holtom, McDaniel, and Hill (1999) argue strongly that

attitudinal findings alone are not sufficient to explain the full range of issues involved

with turnover. Lee and Mitchell (1994) go so far as to state: .In short, over 17 years of

research on the traditional turnover models suggests that many employees may leave

organizations in ways not specified by traditional models.. Supporting this position, Hom,

Caranikas-Walker, Prussia, and Griffeth (1992) found in a meta-analysis of turnover

studies that the effects of precursors to turnover, such as job satisfaction, are moderated

by external economic issues, such as employment rates. While existing theory generally

ties turnover to low job satisfaction, Lee et al. (1999) argues that new theories are needed

to explain the varied conditions under which people leave organizations.

Jiang and Klein (1999), for example, report a 25- 35% turnover rate for IT employees in

Fortune 500 firms. Moreover, a series of studies of the key issues facing senior IT

practitioners have consistently listed human resource management as a leading key issue

(e.g. Niederman, Brancheau, and Wetherbe, 1991). Prior research on turnover among IT

employees has focused on attitudes leading to intent to turnover with much the same

findings as those reported by Tett and Meyer (1993) (e.g. Guimaraes and Igbaria, 1992;

Igbaria, and Baroudi, 1995; Igbaria, Greenhaus, and Parasuraman, 1991; Igbaria, and

Guimaraes, 1999; Igbaria, Parasuraman, and Badawy, 1994; and Igbaria, and Wormley,

1992).

From this psychological perspective, intent to turnover is a result of individual factors

such as employee demography, job dissatisfaction, or lack of organizational commitment

(e.g., Ryan, 1989; Discenza & Gardner, 1992; Igbaria & Siegel, 1992; Igbaria &

Greenhaus, 1992; Igbaria, Meredith, & Smith, 1994; Joseph & Ang, 2003). This research

has provided valuable insights into why IT professionals intend to leave their jobs.

However, it does not explain actual turnover patterns. Longitudinal studies of turnover in

non-IT contexts (Farkas & Tetrick, 1989; Johnston et al., 1993; Kirschenbaum &

Weisberg, 1990; Vandenberg & Nelson, 1999) suggest that intent to turnover does not

always predict actual turnover behavior. Recent research in psychology and

organizational behavior implies that actual turnover is strongly influenced by internal

labor market attributes such as promotability, wage levels, skills demand, and external

labor market attributes such as mobility, and availability of jobs (Hom & Kinicki, 2001;

Trevor, 2001; Kirschenbaum & Mano- Negrin, 1999).

Retaining information technology (IT) professionals is important for organizations, given

the challenges in sourcing for IT talent. Prior research has largely focused on

understanding employee turnover from an intra-individual perspective. In the “Turnover

of information technology professionals: the effects of internal labor market strategies”

by Slaughter and Ang (2004) study, the researchers have examined employee turnover

from a structural perspective. They investigate the impact of Internal Labor Market

(ILM) strategies IT turnover of organizations. ILM strategies include human resource

rules, practices, and policies including hiring an employee.

The research study on “Job turnover among MIS professionals: an exploratory study of

employee turnover” by Neiderman and Summer (2001) addresses the issue of IT worker

turnover. It reports on a survey IT workers who graduated over the past decade (1990-

1999) from Saint Louis University. Research questions target IT worker demographics,

such as age and gender and Job satisfaction, salary, job tasks, and opportunity factors for

both prior and current employment. Results included ranking of different factors

comprising Job satisfaction (satisfaction with financial compensation was high and with

fringe benefits was low).

Further there is another research study where they have identified a multidimensional set

of HR practices likely to increase retention among IT employees and considered

citizenship behaviors as well as two distinct types of organizational commitment as key

antecedents of turnover intentions. Thus the authors Pare, Tremblay, and Lalonde (2001)

in their research study “Workforce retention: what do IT employees really want?” have

presented and tested an integrated model of turnover intentions that addresses the unique

nature of the IT profession.

This study “IT Retention: The social context of turnover among information technology

professionals Lee (2002)” focuses on the role played by social support from supervisors

and colleagues in helping to minimize turnover intentions among computer professionals.

Although the concept of social support has been widely used in the occupational stress

literature, it has rarely been applied in turnover research. This study explains why social

support is particularly salient to computer professionals' turnover. It develops a model

that posits that (i) social support is positively related to job satisfaction and negatively

related to turnover intention.

Career plateau is a popular construct that has been associated with a number of work

outcomes. This study introduced a related construct called professional plateau. It is

defined as the point where employees find their job unchallenging and it provides few

opportunities for professional development and future employability. The research study

by Lee (2002) “Career plateau and professional plateau: impact on work outcomes of

information technology professionals” have proposed that career plateau and professional

plateau are related to three work outcomes: namely, career satisfaction, Job satisfaction,

and turnover intentions.

The aforementioned literature survey provides a complete picture of turnover intention

being studied from diverse perspective: psychological perspectives, intra-individual

perspectives and structural perspectives. Due to scanty availability of research on

employee turnover in Indian context, buzzing and growing issue of turnover in Indian IT

organizations, this study makes an attempt to reconsider employee turnover from

attitudinal perspectives. Thus looking at the background the hypothesis framed are as

follows:

H1: Job satisfaction is positively related to organizational commitment.

H2: Job satisfaction is negatively related to turnover intention.

H3: Organizational commitment will be negatively related to turnover intention. In other

words organizational commitment mediates the relationship between job satisfaction and

turnover intention.

3.0 Method:

3.1 Overview

A pilot study was undertaken in local IT companies in Ahmedabad before undertaking

the final survey. The purpose to undertake pilot study was to understand the set up both

holistically and to collect preliminary data about the Software and BPO organizations. An

open-ended interview was taken to find out the effect of attitudinal aspects of job

satisfaction on turnover intention. The open-ended questionnaire contained eight

questions which involve all the three variables and their effect on each other. About 25

interviews were conducted in four IT companies of Ahmedabad to confirm the objectives

of the study.

3.2 Sample

After undertaking pilot study, the final survey was decided and the author immediately

went to places which were considered to be hub of It industry. Bangalore is considered to

be the Silicon Valley of India and home of the corporate giants in IT namely, Infosys,

Wipro, Satyam, IBM, Compaq and so on. So to get an easy access to different IT

companies and captures the sample size of 300 respondents, it was advised to choose

Bangalore for the field study. Out of 308 sample size of IS professionals, data of 68 in

number was collected from IT division of BPO companies. The rest 240 respondents

were covered in software companies and categorically 60 respondents from each group of

professionals like programmers, system analysts, test engineers, and system

administrator. Thus sample represented wide range of roles performed by information

system professionals and also involved diversity in terms of gender and educational

background.

3.3 Procedures

The initial stage of data collection involved briefing about the study to Vice President

(HR) and also its impacts on the respondents and organization in terms of benefits. This

was the prerequisites to get access to the organization they belong to. These authorized

persons were either personally approached or requested through mail.

After getting permission from the Vice President (HR) of the companies like Satyam,

Wipro, Honeywell, and Seimens, the survey was conducted with the help of

questionnaire accompanied by the covering letter carrying the explanation of the purpose

of the study. The structured questionnaire was used for survey purpose, which was

running for 2 pages, consisting of items measuring job satisfaction, organizational

commitment and turnover intention. The respondents were assured the confidentiality of

information. Towards the end of the April 2004, the questionnaires were distributed in all

software companies. The questionnaires were returned on an average after 6 weeks of the

administration. Some of the respondents had returned the filled questionnaire within four

days or a week. The total number of usable questionnaires received was 69, 55, 54, and

62 from Wipro Technology, Seimens, Satyam and Honeywell, respectively. Two hundred

and forty usable questionnaires were returned out of 458 respondents approached from

software companies, representing a return rate of 52.4%. Similarly the response rate in

BPO was much higher. The total number of questionnaires returned was 17, 21, 15 and

15 from Wipro Spectramind, Daksh, Exl services and Nipuna services, respectively. Out

of 90 respondent approached, 68 usable questionnaires were returned in BPO companies

representing a return rate of 75.6%. Demographic characteristics like age, gender, total

experience, experience with the current organization, education and finally designation

was gathered along with the questionnaire. The full time employers with a tenure

experience of 2 years and more than that were considered. The descriptive statistics on

frequency and percentage of sex by different groups has been depicted in the Table 1 and

2 respectably. The returned responses 68 in number from BPO represent BPO IT

professionals. Out of 240 respondents 62 are females and rest 178 respondents are males

in software sector. Similarly, 11 females respondents from BPO IT professionals had

returned the filled questionnaire and rest 57 were males. The trainees and those who were

holding post above project manager in hierarchy were excluded from the present study as

they do more of generalist role than the specialist role like programming, analyst, test

engineer or system administrator job. The average age of the respondents after

calculation showed 27 years and 4 months carrying standard deviation 2.3713. About

38.6% of IS professionals are carrying educational background of B.E in computer

science. Majority of them have been in this occupation for 3 to 4 years. The distribution

in terms of company tenure is slightly skewed towards employees serving for 2-3 years.

The percentage of such employees has come out to be 87% having standard deviation of

1.07.

Table 1: Frequency and Percentage of Sex by Different Groups (N=308)

Total Male 246 79.87

Female 62 20.13

Software Male (Software) 189 78.75

Female (Software) 51 21.25

BPO Male (BPO) 57 83.8

Female (BPO) 11 16.2

Total 308 100

3.4 Scales:

The established scales for all the variables were taken for the present study. The

Cronbanch Alpha reliability measures were computed to test their internal consistency.

The internal consistency reliability has been evaluated by computing the Cronbach’s

alpha coefficients for each scale which has been shown in Table 5.

Job satisfaction: Overall job satisfaction was measured using items drawn from Job

satisfaction Survey developed by Specter (facet- specific level job satisfaction, 1997).

The reliability and validity of the scales as demonstrated by Spector (1985) ranges

from .60 to .91. Cronbach’s alpha of the scale in this study is .87. Different items were

measured using a 5-point Likert type scale.

Organizational Commitment: There were four items to measure the above variable and

were taken from the scales developed by Mowday & Porter (1982) showing reliability

of .82. Cronbach’s alpha of the scale in this study is.70. Items were measured using a 5-

point Likert type scale.

Turnover intention: This was measured by 3 items developed by Thatcher (2002)

showing .99 reliability. Cronbach’s alpha of the scale in this study is.86. Items were

measured using a 5-point Likert type scale.

The Cronbach’s alpha ranges from .63 onwards indicating that each measure

demonstrated acceptable internal consistency.

Table 2: Cronbach’s Alpha Reliability Coefficients

for Different Scales (N=308)

Sl.No Variables No. of Items

CronbanchAlpha

1 Organizational Commitment 4 .702 Turnover Intention 3 .863 Job Satisfaction 36 .87

4.0 Data analysis

The author tested the hypotheses using regression analysis and Baron and Kenny’s (1986)

procedures for testing mediation. According to Baron and Kenny, to demonstrate

mediation, it was first necessary to show that the independent variable is related to both

the proposed mediator and dependent variable. Next, a link between the proposed

mediator and dependent variable must be established. Finally, the effect of the

independent variable on the dependent variable must be shown to be eliminated or

significantly reduced after controlling the potential mediator.

4.1 Results

Table 3 presents the means, standard deviations, zero-order correlations, and reliability

coefficients (Cronbach α) of the study variables. Respondents reported a mean level of

job satisfaction of ( 3.2 ) and a mean intention to quit score of ( 2.7 ) (3 is the midpoint

on the 5 point scale used).

As expected, organizational commitment was negatively and significantly related to

intention to quit (r = - .35 ; p < .000 ). Job satisfaction is positively and significantly

related to Organizational commitment ( r= .42 ; p<. 000) and negatively and significantly

related to turnover intention (r= -.52; p<.000 ). Recall that Baron and Kenny’s (1986)

procedures for demonstrating mediation require first showing that the independent

variable be related to both the proposed mediator and dependent variable. Therefore

further analyses were conducted by adopting Baron and Kenny’s procedures of

regression.

Table3: Descriptive statistics, reliabilities and intercorrelations for study variables

Variable Mean SD 1 2 3

1 Job Satisfaction 3.20 4.19 (.87 )

2 Organizational Commitment 3..88 2.68 .42** (.70 )

3 Turnover Intention 2..70 3.51 - .52** -.35 * (.86 )

Notes: N=308, α reliabilities for multiple measure are in parentheses, p< .001-.005

H1 predicted a positive relationship between job satisfaction and organizational

commitment, H2 predicted a negative relationship between organizational commitment

and turnover intention and H3 predicted that organizational commitment mediates the

relationship between job satisfaction and turnover intention. Applying the

procedures outlined by Baron and Kenny (1986), organizational

commitment was regressed on job satisfaction variable. As depicted by

Table 4 the results indicated that this variable significantly and positively predicted

organizational commitment, β= .42, t (308)= 8.13, p<.01. Job Satisfaction is predicting

18% of the variance in Organizational Commitment as indicated in Table2. It also

presents that job satisfaction is positively and significantly related to organizational

commitment. Therefore, H1 was accepted. Next with the use of Hierarchical regression,

turnover intention was regressed first on job satisfaction followed by organizational

commitment. The results indicated in Table5 shows that a significant and negative

relationship between job satisfaction and turnover intention, β= .-.52, t (308)=-8.55 ,

p< .001, thereby supporting H2. Organizational commitment was found to explain only

11% of variance in turnover intention which is less than explained by Job satisfaction.

Finally to test mediation turnover intention was regressed on organizational commitment

followed by job satisfaction. The results as indicated in Table 3 show that when the

organizational commitment was partialled out the effect of job satisfaction on turnover

intention was significant. Job satisfaction was found to explain a significant amount of

incremental variance in turnover intention. Thus organizational commitment cannot be

said to mediate the relationship between job satisfaction and turnover intention, thereby

resulting in rejection of H3.

Table4: Results of Regression Analysis of Organizational Commitment on Job Satisfaction (N=308)

Variable R2 R2 change t β

Job Satisfaction .18 8.13** .42

Note: * *p< 0.01

Table5: Results of regression analysis on Intention to Quit (N=308)

Variable R2 R2 change t β

Effect of Job satisfaction before partialling out Organizational commitment

Step1: Job Satisfaction .27 -8.55** -.52

Step2: Organizational Commitment .11 -.16 -3.13* -.31

Effect of job satisfaction after partialling out organizational commitment

Step 1: Organizational Commitment .10 -6.70* -.16

Step2: Job Satisfaction .30 .20 -8.55** -.45

Note: * *p< 0.01, *p< 0.02

5.0 Discussion on the findings:

Job Satisfaction and Organizational Commitment:

The findings of the present study show that Job satisfaction is positively related to

organizational commitment, it confirms the established findings (Baroudi, 1985; Bartol,

1983; Dougherty, et.al., 1985; Michaeles & Spector, 1982; Griffeth, et. al., 2000; Lee, et.

al. 2000; Joseph and Ang, 2003). Organizational commitment is commonly viewed as

intervening variables in the turnover process (e.g., Hom & Griffeth, 1995; Mowday et al.,

1982; Price & Mueller, 1986). Those two variables are viewed as an essential component

of turnover models because their empirical relationship with voluntary turnover has been

firmly established through numerous meta-analyses (e.g., Cohen, 1993; Cohen &

Hudecek, 1993; Cotton & Tuttle, 1986; Hom & Griffeth, 1995; Hom, Caranikas-Walker,

Prussia, & Griffeth, 1992; Steel & Ovalle, 1984; Tett & Meyer, 1993).

Organizational Commitment and Turnover Intention:

This study attempted to examine the effects of job satisfaction on organizational

commitment and turnover intention. Further it also investigated the former empirical

study which advocated that the relationship between job satisfaction and intention to quit

is mediated by Organizational commitment. Consistent with the expectations the results

of the study show that organizational commitment is inversely related to the Intention to

leave. The findings confirm the earlier studies (Baroudi, 1985; Bartol, 1983; Dougherty,

et.al., 1985; Michaeles & Spector, 1982; Griffeth, et. al., 2000; Lee, et. al. 2000; Joseph

and Ang, 2003). But the power of explaining the turnover intention in this study is less

that of job satisfaction. The underlying thesis posits that organizational commitment

impact on turnover intention is conspicuously missing out from IT turnover research. The

impetus provided by organizational commitment for IT professionals to leave the

organization has diminished and it is very closely related to the findings of Joseph and

Ang ( 2003). On the contrary, the weak relationship between Job satisfaction and

Turnover intention in the earlier research is not supported in these findings. The pattern,

which emerges from these particular findings, states implicitly that Organizational

commitment is mediating the relationship between the job satisfaction and turnover

intention. The results probably would have been different if all three dimensions

(affective, continuance and normative components), as discovered by Meyers and Allen

(1990), were considered to measure the organizational commitment and its impact on the

organization. Probably Job satisfaction is the intervening variable between organizational

commitment and turnover intention. Researchers often propose Job satisfaction and

organizational commitment as intervening variables between other determinants (e.g.,

structural and individual variables) and outcomes like stay intentions and employee

turnover (Iverson, 1992; Mueller et al., 1992; Price & Mueller, 1986a). A substantial

body of empirical evidence links greater commitment to greater intent to stay and,

consequently, lower turnover (DeCotiis & Summers, 1987; Hom & Griffeth, 1995;

Kalleberg, 1987; Lee et al., 1992; Lincoln & Kalleberg, 1996; Mathieu & Zajac, 1990;

Mowday et al., 1982; Mueller et al., 1992; Price & Mueller, 1986a; Randall, 1990;

Somers, 1995). Fewer studies support a direct link between Job satisfaction and turnover

(Mueller et al., 1994), yet several support an indirect influence through commitment

(Lincoln & Kalleberg, 1985, 1990; Mowday et al., 1982; Mueller et al., 1994; Price &

Mueller, 1986a; Wallace, 1995). This particular study has been able to produce a direct

link between Job satisfaction and turnover intention and confirming some earlier studies (

Agarwal & Ferrat, 1999, Gomolski, 2000; Schwochau et al., 1997; Tsui et. al., 1995).

Probably the concept of the organizational commitment is less relevant to Indian IT

industry. The findings support and confirm the earlier studies on knowledge worker by

Reed (1996) and Frenkel &Korezgynski (2002). They stated that as organizations when

move towards adopting flat structure neither employees nor management expect long-

term relationship. So it depends upon the marketability of knowledge worker on skill and

knowledge in the external labour market. Secondly the occupational commitment is more

important to knowledge worker than the organizational commitment (Reed, 1996;

Frenkel & Korezgynski, 2002). Therefore, the management should try to satisfy them by

keeping up their job expectations.

6.0 Limitation of the study:

The data collection was restricted to a major city and two cosmopolitan cities in India

where talent is abundant. The replication of the study at different geographical locations

and culture would throw a light on this study. The sample drawn for the present study

consisted of 308 IS professionals working in various Software and ITES throughout India

cannot generalize the results. Hence, the research involving additional samples may be

needed to ensure appropriate generalization of the results and calls for greater research to

confirm the pattern seen in these results. The firm size should be controlled here so that

the results represent a certain class of firm of specific size. Though the organizations

were larger in size the findings cannot be generalized to medium and small size

organizations. Most of the successful large size organizations are either foreign or Indian

based multinational companies. The work culture generally differs depending upon the

type of IT industry: Indian based or foreign based multinational companies. The study

should be careful while making selection of either of the multinational companies for

data collection. This study has not taken this specific issue while collecting data.

7.0 Future research:

The greatest contribution of the present study to the theoretical world has come from the

explanatory power of job satisfaction towards turnover intention as observed from the

findings. The correlation between the job satisfaction and turnover intention is higher

than the correlation between the organizational commitment and turnover intention. It is

suggested that occupational preferences tap the rationalized outcome of the individual

decision making (Long et al, 1988). Understanding how occupational preferences affect

turnover decisions will clarify the link between the job satisfaction and turnover

intention. As per the contemporary literature studied by Reed (1996) and Frenkel &

Korezgynski (2002), the important proposition can be made here that

Proposition1: IS professional are more committed to the occupation than to the

organization in Indian context.

Proposition2: IS professional occupational commitment mediates the relationship

between their job satisfaction and intention to quit in Indian context.

Further the study should also try to investigate the precursors to occupational

commitment and turnover intention. This would provide remedies to reduce mobility and

job shifting of the knowledge worker in the organization. The study also indicates future

effort towards investigating the non-attitudinal dimensions and determinates to job

outcomes. This is a clue which can be interpreted from the present finding stating that the

attitudinal dimension exhibits only 30%of variance in Job satisfaction. Henceforth, the

future study should also consider the effects of non-attitudinal dimensions of turnover

intention which can provide better insight to turnover model.

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