Employee Turnover

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To Be Or Not To Be? A Study of Employee Turnover
To Be Or Not To Be? A Study of Employee Turnover
Topic Area of Submission: Psychology (Organizational Psychology) Key words: Employee turnover, retention, software industry
Author: Prof. (Ms.) Meenakshi Gupta
Professor of Psychology
Department of Humanities & Social Sciences
Indian Institute Of Technology
Powai , Bombay 400076
Email: meena@hss.iitb.ac.in
Telephone: 91 22 25767360 (Office)
91 22 25706964 (Residence)
Fax : 91 22 25723480
Abstract: Employee turnover has been defined as a permanent movement of the employee beyond the boundary of the organization. Interest in the topic has gained momentum in the recent past among organizational psychologists, economists, and sociologists with different perspectives being adopted to study the phenomenon. Data was collected from 71 employees of a well-known software company (Organization 1) and 36 employees from a finance company (Organization 2). A 30-item questionnaire was developed to study the relationship of company image, pay satisfaction, nature of work, nature of peer group, comparison to peer group, inside career opportunities, expectations-reality match and turnover perceptions with intentions to stay. A stepwise regression analysis showed that expectation reality match, length of service, turnover perception and outside career opportunity were responsible for causing intention to stay/quit in Organization 1. In Organization 2 the predictor variables identified were nature of work, age, turnover perceptions and peer comparison. The only common predictor identified for the two organizations is turnover perception indicating that employee’s perception of manpower stability in the organization causes intentions to stay. The findings have implications for redesigning work settings to attract, motivate and retain the best employees. The relationships of some demographic variables like sex, marital status, length of service and designation were also put to test.

To Be Or Not To Be? A Study of Employee Turnover
Beginning 1990s, the Indian business environment has undergone remarkable changes. Most organizations viewed the presence of a long serving group of employees as an indication of internal efficiency. However, with economic liberalization opening up new career horizons for professionals in most industries, and thereby tremendously enhancing their prospects for mobility from one organization to another, turnover has come to be understood as a negative ‘spill over’ effect of industrial growth. This phenomenon commonly called turnover had been of secondary interest to most researchers but increasingly more and more attention is beginning to pour in this direction. As the paradigm of lifetime employment becomes unrealistic, the question ‘who stays with you?’ has assumed great importance in organizations today. Simultaneously, there has been an increasing tendency to ‘buy in’ the talents of professionals with crossfunctional skills in order to create a competitive advantage. One visible effect of this has been a consistent rise in the pay packages of most organizations so as to attract and retain the most desirable employees. Such a trend over the last few years has resulted in an unstable labor market, especially for industries such as marketing, advertising, finance and software where the skills are by and large transferable, from one work environment to another.

This paper is an attempt to identify the causes of employee turnover in a software firm and a finance company. The software industry has been the sunrise industry in India. As Bill Gates mentioned: “The software industry will create millions of new jobs in the years ahead. India more than any other developing nation, is seizing this opportunity, and will become a huge exporter of software expertise. In fact, India is likely to be a software superpower…” (Gates, 1997).

To Be Or Not To Be? A Study of Employee Turnover
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