journal of maharaja agrasen college of higher education ... of employee turnover … · influence...

Journal of Maharaja Agrasen College of Higher Education Volume-4, Issue-1, June 2017

Online ISSN 2394 -4390

INFLUENCE OF EMPLOYEE TURNOVER ON THEIR PERFORMANCE AND ORGANISATIONAL

EFFECTIVENESS OF NATIONAL TOBACCO ENTERPRISE, ETHIOPIA PAGE 1

INFLUENCE OF EMPLOYEE TURNOVER ON THEIR

PERFORMANCE AND ORGANISATIONAL EFFECTIVENESS OF

NATIONAL TOBACCO ENTERPRISE, ETHIOPIA

AUTHORS

Dr. G. Sudhakari Professor, Department of Management,

Wolaita Sodo University, Ethiopia

E-Mail: [email protected]

Alemayehu Manayeii

Manager, National Tobacco Enterprise, Boditi, Ethiopia


Dr. P. K. Agarwaliii Professor, Department of Management,

Wolaita Sodo University, Ethiopia


ABSTRACT

Productivity is very important issue for an organization. There are several factors on which

productivity of an organization depends upon. Employee’s turnover is one of these factors.

Staff turnover may cause serious problems in the effectiveness of the organisation if it is not

addressed by top management. High staff turnover rate may jeopardize efforts to attain

organisational objectives. When an employee leaves the organization the present employees

have to fill the gap until a new employee is appointed. Employees’ turnover impacts on

employee performance and organizational effectiveness because they get disrupted on their

daily work performance. National tobacco enterprise (Eth.) is faced with a high rate of staff

turnover each year and this leads to poor employee performance which in turn impacts on

organizational effectiveness. This research focuses on the impact of employee turnover factors

on employee performance and organisational effectiveness at National Tobacco Enterprise -

Ethiopia. The research was conducted between Jan – May 2017. The research design used in

his study was causal. The survey method was used with questionnaire as instrument, using 5

point Likert scale with responses desired at continuous variable scale, collecting data from 385

mailto:[email protected]




EFFECTIVENESS OF NATIONAL TOBACCO ENTERPRISE, ETHIOPIA

employees of National Tobacco Enterprise taking a sample. The conclusion of the research

was that Poor opportunity for advancement, Job dissatisfaction, Disproportionate salary,

Lack of recognition, Unfair treatment, Working conditions as employee turnover factors were

having significant impact on employee performance while Conflict With Superior as employee

turnover factor was found to be not significantly affecting employee performance of National

Tobacco Enterprise, Ethiopia. Poor working conditions were found to be having greatest

impact followed by Disproportionate salary. Job dissatisfaction, Disproportionate salary, Lack

of recognition, Unfair treatment, Poor working conditions as employee turnover factors have

significant impact on organisational effectiveness while Poor opportunity for advancement

and Conflict with superior were found to be not significantly affecting organisational

effectiveness of National Tobacco Enterprise, Ethiopia. Job dissatisfaction was found to be

having greatest impact followed by Disproportionate salary. Five employee turnover factors

namely Job dissatisfaction, Disproportionate salary, Lack of recognition, Unfair treatment

and Poor working conditions have significantly affect the employee performance and

subsequently organisational effectiveness. The recommendations extended to Top

management include improving working conditions within the organisation by improving the

working environment, making job description more interesting by adding some challenge job

tasks, boredom free and conducive to work for long hours. Top management should look into

the matter of salary and other benefits as this is major significant factor for employee turnover

and significantly affecting employee performance and organisational effectiveness.

Keywords: Employee turnover, employee performance, Organisational effectiveness

INTRODUCTION

Staff turnover may cause serious

problems in the effectiveness of the

organisation if top management does not

address it. According to Hamermesh (2001),

staff turnover may affect service rendered by

the organisation and it may cause delays in

meeting customer demand. Porter and Steers

(1973) compiled ‘expectation set’ to divide

the causes of turnover into four groups of

factors, namely personal, organization-wide,

work environmental and job related factors.

They made use of the concept of ‘met

expectations’ to explain employee turnover.

According to Long, Ajagbe, Nor and

Suleiman (2012) , the concept of met





expectations was defined as a discrepancy

between what a person encounters on a job in

the form of positive and negative experiences

and what he or she expects to encounter. A

person will be inclined to leave when his or

her expectations are not being met. An

individual’s job satisfaction or dissatisfaction

also depends upon the extent to which one

perceives that one’s needs are being met.

According to Allen (2008),

organization wide causes of employee

turnover include Herzberg’s hygiene factors

such as development/ training and promotion

policies, compensation, working conditions,

working hours and job security. Previous

research findings have indicated that

dissatisfaction with human resource policies,

career advancement opportunities, and

compensation packages (pay and benefits) are

negatively associated with employee turnover.

Job related causes of low job satisfaction and

employee turnover include intrinsic

motivators (the nature of job requirements,

autonomy, challenging work and a sense of

achievement), as well as job stress and

feedback (Kasimati, 2011; Sulaiman &

Ogunsina, 2011). According to Houkes and

Bakker (2003), employees will leave when

better growth opportunities and more

challenging jobs are offered by other

organizations.

However, most turnover actions have

negative impact on organizations. According

to Swanson (1979), high performance is the

eventual goal of any organization’s

stakeholders and it is a key measurement of

progress. The performance of any

organization is contingent upon the quality of

its human capital, and institutions should

invest and retain their employees. This can be

achieved through executive coaching and

education, training, mentoring, and closely

monitoring the benefits that accrue from these

interventions.

STATEMENT OF THE PROBLEM

Among employee turnover factors,

some are external factors mainly the labor

markets and institutional factors such as

physical working conditions, pay, job skills,

supervision and so on and others are employee

personal characteristics such as intelligence

and aptitude, personal history, sex, interests,

age, length of service and may more. There

are also factors related to employee’s reaction

to job, including aspects as job satisfaction,

job involvement and job expectations. When

an employee leaves the organization the

present employees have to fill the gap until a





new employee is appointed. Employees’

turnover impacts on employee performance

because they get disrupted on their daily work

performance. The organizations spend lot of

money on the recruitment and training of new

staff members each year due to high turnover

rates (Dlamini-Zuma, 2009).

In Ethiopia, there are similar

challenges too. Researchers have identified

three published researches conducted on

employee turnover. Fursso , Aman Racho

(2015) researched on the causes and effects of

Employees’ turnover: The case of Oromia

water works design and supervision enterprise

; Melaku ,Yohannes (2014) researched on

Factors affecting employee turnover and its

impact on Ethiopian Evangelical Church

Mekane Yesus ; Wallelegn, Beruk(2013),

assessment of professional employees

turnover causes at bank of Abyssinia but no

research has been conducted on the effects of

employee turnover on employee performance

and subsequently organizational effectiveness.

The purpose of this research is therefore, to

find out the employee turnover factors that

affect the employee performance and

subsequently National Tobacco Enterprise

(Eth.) effectiveness. National tobacco

enterprise (Eth.) is faced with a high rate of

staff turnover each year and this leads to poor

employee performance which in turn impacts

on organizational effectiveness. When an

employee leaves the organization the current

employees have to fill the gap until a new

employee is fixed.

RESEARCH OBJECTIVES

The main aim of this study is to

investigate the effects of staff turnover on

employee performance and organizational

effectiveness at National tobacco Enterprise -

Ethiopia.

SIGNIFICANCE & SCOPE OF THE

STUDY

The findings of this study will make

concrete recommendations to National

Tobacco Enterprise (Eth.) about the causative

factors of employee turnover which affect the

employee performance and subsequently the

Organisational effectiveness. The research

will throw light on those factors which are

instrumental to degrade employee

performance and subsequently organizational

performance. The organization can take

measures to improve these factors which

ultimately reduce staff turnover. This study

will also benefit other organizations which are

facing the problem of employee turnover. The

study will be applicable to all such public





sector enterprises in particular and all

enterprises in general in Ethiopia.

LITERATURE REVIEW

According tomMathis and Jackson

(2007), staff turnover can be broken down into

internal and external types. Internal staff

turnover strategies involve promoting current

employees, adding new responsibilities to job

titles and bringing in entry-level employees

due to company growth. External staff

turnover implies that employees are leaving

the company to seek new jobs, raise families

or enter retirement.

Mboya Deogratius (2009) research on

impact of labour turnover in Public

organizations, in which he concluded that

differences in payment of salaries and

provision of fringe benefits forced those who

are lowly paid to seek for greener pastures in

other organizations, also lack of working

facilities and equipment leads to turnover, for

example, lack of teaching and learning

facilities in school forced teachers to seek for

alternative jobs.

Mullins (2005) assessed the causes and

effects of labour turnover on banking industry.

The result show that the turnover was mainly

caused by low remuneration packages,

unequal treatment among employees and lack

of communication between the management

and staff of other department. Although it may

be challenging to improve worker

performance and reduce staff turnover, Crow

and Hartman (2007), suggest that management

should at least focus on the tangible aspects of

work that create frustration and distract

employees from the duties at hand. These

aspects may include pay inequities, abusive

supervision, favouritism, poor working

conditions and poor communications.

A Study conducted by Taylor PJ,

(2007) explains that there exists a positive

relation between bonuses, reward systems,

other financial benefits and organizational

effectiveness. High rate of employee turnover

decreases the organization’s incentives for

providing employee training programs and

hence reduces productivity. Job matching

theory on the other hand, states that employee

turnover can be helpful for employees and

employers to stay away from being locked in

matches of sub optimal permanently, which as

a result increases productivity (Manning 2002)

Page (2001) by his research concluded

that the escalation in the rate of labour

turnover is a major concern for businesses and

is clearly impacting on organisational

performance. Clients begin to doubt the





management of such an organisation and

unsure whether they should continue to do

business with an organisation with higher staff

turnover.

Dlamini-Zuma (2009) states that staff

turnover places unnecessary pressure on staff

members who are at work. The remaining

staff experiences an increased workload

leading to low morale, high levels of stress

and therefore absenteeism. Employees also

have to work extra hours to compensate for

the work of those who resigned which leads to

organisational effectiveness (Robbins and

Decenzo, 2001).

Johnson (2006) said employee

turnover is very expensive. When employee

leave an organization, it has become

imperative for that specific organization to

make a costly replacement as soon as possible.

Gardner (2009) asserts that staff turnover may

have devastating effects on service rendered

by the organisation and these may bring

deficits in meeting customer demand. This

leads to customer irritation and increase in

complaints.

CONCEPTUAL FRAMEWORK

A conceptual framework for this study

is based on the literature review. Seven

employee turnover factors namely

Disproportionate salary , Job dissatisfaction ,

Lack of recognition, Conflict with superior,

Poor working conditions, Unfair treatment and

Poor opportunity for advancement while

Employee performance and Organisational

effectiveness.(fig1)

MATHEMATICAL FRAMEWORK

The mathematical model for this study

purposes are:

EP = β0 + β1 DS + β2 JDS + β LR + β4 CS

+ β5 PWC + β6 UT + β7 POA + µ1

OE = β0 + β1 DS + β2 JDS + β LR + β4 CS

+ β5 PWC + β6 UT + β7 POA + µ2

Where,

EP = Employee Performance

OE = Organisational Effectiveness

DS = Disproportionate salary

JDS = Job dissatisfaction

LR = Lack of recognition

CS = Conflict with superior

PWC = Poor working conditions

UT = Unfair Treatment

POA = Poor opportunity for Advancement

µ = The stochastic disturbance term or a

random error that may represent all those

challenging factors and it is statistical noise

term.





Fig 1: Conceptual framework

1.8. Hypothesis of the Study

H1: Disproportionate salary has a significant

impact on employee performance in National

Tobacco Enterprise


impact on Organisational effectiveness in

National Tobacco Enterprise

H3: Job dissatisfaction has a significant


Tobacco Enterprise




H5: Lack of recognition has a significant


Tobacco Enterprise




H7: Conflict with superior has a significant


Tobacco Enterprise




H9: Poor working conditions has a significant


Tobacco Enterprise

H10: Poor working conditions has a significant



H11: Unfair treatment has a significant impact

on employee performance in National

Tobacco Enterprise


on Organisational effectiveness in National

Tobacco Enterprise

H13: Poor opportunity for advancement has a

significant impact on employee performance

in National Tobacco Enterprise


significant impact on Organisational

effectiveness in National Tobacco Enterprise





RESEARCH METHODOLOGY

The target population of this study is

all the employees (944) who are working in

National Tobacco Enterprise Ethiopia out of

which 336 employees were selected as a

sample of the study. The research design used

is causal research design with the objective of

identifying the impact of seven independent

variables on employee performance and

organisational effectiveness (dependent

variables). Data was collected from the

employees through primary sources using

questionnaire as instrument. A survey

questionnaire was prepared using five point

Likert scale (1 = strongly disagree, 5=

strongly agree) to measure the response on

continuous scale. The employees were

selected using Systematic random sampling

with the total sample size of 336. Descriptive

and inferential statistics was used as data

analysis tool. Pilot study was conducted on 25

employees to check the reliability and validity

of the questionnaire. Reliability was checked

by used using Cronbach alpha to understand

how closely the set of items are related as a

group or factor which ranged from 0.81 to

0.93 which shows that the questionnaire is

highly reliable.

DATA ANALYSIS AND DISCUSSION

Table 1: Descriptive statistics of variables

N Mean Std.

Deviatio

n

Skewness Kurtosis

Statistic Statistic Statistic Statisti

c

Std.

Error

Statisti

c

Std.

Error

Disproportion

ate salary

336 3.8204 .91269 -.209 .133 -.104 .265

Job

dissatisfactio

n

336 3.4077 1.11365 .236 .133 .329 .265

Lack of

recognition 336 3.3399 .90943 -.216 .133 -.595 .265

Conflict

With

Superior

336 2.8919 .95289 .056 .133 -.424 .265

Poor working

conditions 336 3.5052 .91391 -.254 .133 -.576 .265

Unfair

Treatment 336 3.3155 .96244 -.262 .133 -.512 .265

Poor

opportunity

for

advancement

336 3.8562 .97811 -.273 .133 -.520 .265

Organisation

al

Effectiveness

336 3.5310 .95123 -.238 .133 -.597 .265

Employee

Performance 336 3.7455 .90995 -.249 .133 -.508 .265

Valid N (list

wise) 336

Table 1 displays the descriptive

statistics of independent and dependent

variables. From the table we see that the most

important factor of employee turnover on

National Tobacco Enterprise is

disproportionate salary followed by poor

opportunity for advancement while conflict

with superior was found to be least important

factor with mean 2.89. Level of employee





performance and organizational effectiveness

was found to be medium with mean value 3.75

and 3.53.

In order to determine the extent to

which the predictor variables explain the

variance in the outcome, multiple regression

analysis was performed. Normality of data

was ensured by seeing the skewness and

kurtosis level which was found under

acceptable level 2 (skewness / standard error =

< 2). By viewing the correlation matrix we

can check the multi-collinearity among the

independent variables.

Table 2: Model summary (dependent variable

employee performance)

R R Square Adjusted R

Square

Std. Error of the

Estimate

.712 .507 .496 .62667

Table 2, R shows the value of the

multiple correlation coefficients between the

dependent( employee performance) and the

independent variables ( R = .712) which

represents strong correlation. Next column

shows the coefficient of determination (R2)

which is the proportion of variation in the

dependent variable that is explained by the

seven independent variables. So 50.7% of the

variation in employee performance can be

explained by seven independent employee

turnover factors in the model. Thus it can be

concluded that the above mentioned employee

turnover factors share 50.7% of the influence


Tobacco Enterprise.

Table 3: Model summary (dependent variable

organizational effectiveness)

R R Square Adjusted R Square Std. Error of the

Estimate

.659 .435 .422 .68947

Table 3, R shows the value of the

multiple correlation coefficients between the

dependent (organizational effectiveness) and

the independent variables (R = .659) which

represents strong correlation. The coefficient

of determination (R2) is 43.5 which denote

that 43.5% of the variation in organisational

effectiveness can be explained by seven

independent employee turnover factors in the

model. Thus it can be concluded that the

above mentioned employee turnover factors

share 43.5% of the influence on organisational

effectiveness in National Tobacco Enterprise.

Table 4: ANOVA (Dependent variable: Employee

performance)

Sum of

Squares

Df Mean

Square

F Sig.

Regression 110.486 7 15.784 31.02 .000

Residual 166.896 328 0.509

Total 277.382 335

Table 4 shows whether the proportion

of variance explained in the model summary is





significant. It also tells whether the overall

effect of the seven independent variables on

employee performance is significant. It shows

the value of F statistics 31.020 at 7 and 328

degrees of freedom is statistically significant

at 95% confidence which means that model is

statistically significant.

Table 5: ANOVA (Dependent variable: Organisational

effectiveness)

Sum of

Squares

Df Mean

Square

F Sig.

Regression 101.31 7 14.473 23.523 .000

Residual 201.808 328 0.615

Total 303.118 335

Table 5 shows the result of analysis of

variance by seven independent variables on

dependent variable. It shows the value of F

statistics 23.523 at 7 and 328 degrees of

freedom is statistically significant at 95%

confidence which means that model is

statistically significant which means that

seven employee turnover factors (independent

variables) significantly affects the

organizational effectiveness.

Table 6: Regression Coefficients (Dependent Variable:

Employee Performance)

Unstandardized

Coefficients

Standardized

Coefficients

T Sig.

B Std.

Error

Beta

(Constant) 0.87 0.197 4.41 0.000

Disproportionate

salary 0.225 0.044 0.234 5.052 0.000

Job

dissatisfaction 0.093 0.033 0.118 2.806 0.005

Lack of

recognition 0.124 0.051 0.128 2.41 0.016

Conflict With

Superior 0.023 0.048 0.024 0.472 0.637

Poor working

conditions 0.326 0.055 0.34 5.922 0.000

Unfair

Treatment 0.173 0.052 0.188 3.307 0.001

Poor

opportunity for

advancement 0.218 0.051 0.24 4.266 0.000

Table 6 shows the beta coefficients of

independent variables. The B - values tells to

what degree each predictor affects the

outcome if the effects of all other predictors

are held constant. The regression coefficient B

represent the change in the outcome resulting

from a unit change in the predictor and that if

a predictor is having a significant impact to

predict the outcome then this B should be

different from 0 (and big relative to its

standard error).

The p-value is less than 0.05 for all the

variables except conflict with superiors.

Hence, it indicates that the six employee

turnover related independent variables

(Disproportionate salary , Job dissatisfaction ,

Lack of recognition , Poor working conditions

, Unfair Treatment , Poor opportunity for

advancement are significant to predict





employee performance (dependent variable)

and conflict with superiors is not significant to

predict it. To know the impact and

relationship of independent variables on the

dependent variable (employee performance),

the regression function is in the form of

EP = β0 + β1 DS + β2 JDS + β LR + β4 CS +

β5 PWC + β6 UT + β7 POA + µ1

EP=.870+.225 DS+.093 JDS+.124 LR+.326

PWC+-.173 UT+.218 POA

Table 7: Regression Coefficients (Dependent variable:

Organisational effectiveness)

Unstandardized

Coefficients

Standardi

zed

Coefficien

ts

T Sig.

B Std.

Error

Beta

(Constant) 0.381 0.218

1.75 0.081

Disproportionat

e salary 0.213 0.05 0.217 4.268 0.000

Job

dissatisfaction 0.173 0.037 0.213 4.668 0.000

Lack of

recognition 0.152 0.057 0.15 2.682 0.008

Conflict With

Superior -0.047 0.055 -0.05 -0.85 0.396

Poor working

conditions 0.25 0.064 0.247 3.885 0.000

Unfair

Treatment 0.151 0.054 0.158 2.815 0.005

Poor

opportunity for

advancement

0.042 0.056 0.045 0.741 0.46

Table 7 shows the regression

coefficients of employee turnover factors that

have an effect on organizational effectiveness.

Table shows that five independent variables

namely disproportionate salary, job

dissatisfaction, lack of recognition, poor

working conditions and unfair treatment

positively and significantly affect

organizational effectiveness as the p-value is

less than 0.05 while variables conflict with

superiors and poor opportunity for

advancement were found insignificant impact

on organizational effectiveness. The

regression equation can be stated as:

OE = β0 + β1 DS + β2 JDS + β LR + β4 CS +

β5 PWC + β6 UT + β7 POA + µ2

OE=.381+.213 DS +.173 JDS+.152 LR+.250

PWC+.151 UT

TEST OF HYPOTHESIS

By using Regression Model, hypothesis

of the study is tested as follows:



Tobacco Enterprise. As p = .000 which is <

.05. Hypothesis is accepted.



National Tobacco Enterprise. As p = .000

which is < .05. Hypothesis is accepted.























Tobacco Enterprise. As p = .637 which is >

.05. Hypothesis is rejected.




which is > .05. Hypothesis is rejected.

H9: Poor working conditions have a


in National Tobacco Enterprise. As p = .000


H10: Poor working conditions have a



As p = .000 which is < .05. Hypothesis is

accepted.






on Organisational effectiveness in National





in National Tobacco Enterprise. As p = .000





As p = .460 which is > .05. Hypothesis is

rejected.

FINDINGS, CONCLUSION AND

RECOMMENDATIONS

This study was aimed at investigating

the influence of employee turnover factors on

their performance and organisational

effectiveness at National Tobacco Enterprise,

Ethiopia. The research reveals that 50.7% of

the variation in employee performance can be

significantly explained by seven independent

employee turnover factors in the model.





49.3% of unexplained variance is the scope of

further research. Regression coefficient table

indicates that Poor opportunity for

advancement, Job dissatisfaction,

Disproportionate salary, Lack of recognition,

Unfair treatment, Poor working conditions as

employee turnover factors have significant

impact on employee performance while

Conflict with superior as employee turnover

factor was found to be not significantly

affecting employee performance of National

Tobacco Enterprise, Ethiopia. Out of 6

significantly employee performance affecting

factors Poor working conditions was found to

be having greatest impact followed by less

salary. The research further reveals that 43.5%

of the variation in organisational effectiveness

can be explained by seven independent

employee turnover factors in the model.

56.5% of unexplained variance is the scope of

further research. Regression coefficient table

indicates that Job dissatisfaction,

Disproportionate salary, Lack of recognition,

unfair treatment, and Poor working conditions

as employee turnover factors have significant

impact on organisational effectiveness while

Poor opportunity for advancement and conflict

with superior were found to be not

significantly affecting organisational

effectiveness of National Tobacco Enterprise,

Ethiopia. Out of 5 significantly employee

performance affecting factors Job

dissatisfaction was found to be having greatest

impact followed by less salary. The research

shows that 5 employee turnover factors

namely Job dissatisfaction, Less salary, Lack

of recognition, Unfair treatment and Poor

working conditions have significantly affect

the employee performance and subsequently

organisational effectiveness.

Based on the findings and conclusions of

the study, It is recommended that Top

management of National Tobacco Enterprise

should improve working conditions within the

organisation, look into the matter of salary and

other benefits as most of the employees feel

that their salary is low as compared to other

organisations, it is disproportionate with

workload and were dissatisfied with it, should

involve employees in the decision making

process and should try to utilize their skill to

the optimum, should create opportunities for

career advancement, should give due

recognition to its internal employees when

there are new positions within the organisation

and should also appreciate employee’s input

in the organisation when they meet

organisational goals.





DIRECTIONS FOR FURTHER

RESEARCH

This study included only seven dimensions

of employee turnover factors that affect

employee performance and organizational

effectiveness, there could be some other

relevant dimensions that may be perceived as

important by organizations and employees,

but those were excluded from this study.

Future researchers, therefore, may consider

more and other dimensions of employee

turnover factors that affect employee

performance and organizational effectiveness.

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http://etd.aau.edu.et/browse?type=author&value=Dr.+Zenebe+Baraki

http://etd.aau.edu.et/browse?type=author&value=YOHANNES%2C+MELAKU

http://hdl.handle.net/123456789/7428

http://opendocs.ids.ac.uk/opendocs/handle/123456789/7898

http://opendocs.ids.ac.uk/opendocs/handle/123456789/7898

journal of maharaja agrasen college of higher education ... of employee turnover … · influence...

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