This study aims to suggest research implications that may contribute to preventing turnover of personnel in small and medium sized software companies. In order to accomplish the research goal, this study analyzes human resource management (HRM) pract...
This study aims to suggest research implications that may contribute to preventing turnover of personnel in small and medium sized software companies. In order to accomplish the research goal, this study analyzes human resource management (HRM) practices, job satisfaction, job embeddedness and turnover intention of IS developers and operators in IT service companies having less than 100 employees.
A research model is developed based on the Bergiel, et al (2009) and Woo and Hwang (2010). This model describes how the HRM practices (compensation, recognition, job autonomy, technical capability development, work-life conflict) affect turnover intention, through the mediating effects of job satisfaction and job embeddedness.
177 questionnaires are collected and analyzed. Validity and reliability of measures, and appropriateness of the structural model are verified.
Results of the hypotheses testing are somewhat different from the expected ones: Only compensation and technical capability development are significant, but the remaining variables are not significant to affect job satisfaction and job embeddedness.
Major reason for the results may attribute to the characteristics of the respondents. Most of the respondents are so called road warriors who go to client’s site and develop/operate its systems. Accordingly, the most important factors affecting their intention to stay or leave the organization are more visible and direct factors such as compensation and technical capability development.
Research implications derived from the analyses of data, subsequent interview with several respondents and additional data analyses are as follows:
First, monetary compensation affects both job satisfaction and job embeddedness. Therefore, it is regarded as a most decisive factor to retain employees in a small IT service companies. Small companies inherently do not have a good condition to provide high level of compensation. In this situation, even though they cannot pay absolutely high level of salary, they should strive to ensure reasonable compensation is provided across the organization at minimum.
Recognition by management and non-monetary compensation do not significantly affect both job satisfaction and job embeddedness. The result implies that just recognition not connected with monetary compensation and/or promotion does not play a role in increasing job satisfaction and job embeddedness. Therefore, small IT companies should provide opportunity for training and more monetary compensation rather than spending one-time, non-monetary compensation such as movie ticket or gift certificate.
In case of job autonomy, the results differ between managers and non-managers. For managers, the result is contrary to the traditional belief: the higher job autonomy is, the less job embeddedness is. It can be interpreted that even though job autonomy is granted, usually management process or methods are not well established and proper training on this aspect is not provided. Consequently, managers feel negatively that possibility of project success might decrease. However, since job autonomy will definitely affect job embeddedness and satisfaction positively, companies should utilize the resource provided by the government to establish management procedures and rules, and to train the managers on this.
In case of non-managers, the result shows that if the job autonomy is low, then job satisfaction level can decrease. Therefore, it is necessary to grant job autonomy to increase job satisfaction among non-managers. It is not easy to grant job autonomy for personnel who are dispatched to client site and develop/operate systems. However, through job enrichment, autonomy and accountability might be provided.
Technical capability development is proved to affect both job embeddedness and job satisfaction significantly. This result is attributed to the characteristic of IT personnel who are very growth and technology oriented(Carayon, et al, 2006; Joseph, et al, 2007). Consequently, companies should provide various ways to satisfy the technical needs of their employees.
The results for work-life conflict show that managers would be dissatisfied if there exists the conflict. 90% of the managers in the sample are married and it can be expected that they need the balance between work and family life. In case of female, work-life conflict affects both job embeddedness and job satisfaction. This results implies that female employees are more sensitive to work-life balance.
Therefore, in order to retain and increase satisfaction of female employees, it is necessary to provide time to take care of family and for managers to pay favorable attention to the personal matters. For example, select a day in a week as a family day and have them leave the office at 5 to take care of family matters.
As for turnover intention, job embeddedness and job satisfaction are proved to be significant predictors. However, in case of managers, job embeddedness rather than job satisfaction is the significant predictor of turnover intention. Therefore, to retain managers, it is necessary to not only provide short term compensation and training, but also show long term strategy and potential of the company.
The degree to which the HRM practices included in the research model explain job embeddedness and job satisfaction is quite high (job embeddedness: R2=0.417, and job satisfaction: R2=0.397). The degree to which job embeddedness and job satisfaction explain turnover intention is even higher (R2=0.605). It is empirically proved that HRM practices affect turnover intention, through the mediating effects of job embeddedness and job satisfaction. Based on the results, several practical implications are drawn.
However, this study has the following limitations: First, respondents are originally targeted to employees of the small and medium sized IT service companies. But in the process of collecting data, the scope has been reduced to so called road warriers who work at the client site. Accordingly, unexpected results are obtained with the several variables (recognition, job autonomy, work-life conflict) not accepted to affect job embeddedness and job satisfaction. Even though the degree to which the remaining two variables (compensation and technical capability development) explain job embeddedness and job satisfaction is quite high, the study is limited not including more diverse variables that might affect job embeddedness and job satisfaction.
Next, the study performed additional analyses utilizing the demographic factors (sex and job position) to find the reason for rejected hypotheses. By the analyses, a few interesting results are derived. However, since the factors are not intentionally designed in the model and sample size of female and manager level respondents is small, there is a limitation to draw more definite conclusions from the analyses.