The impact of employees satisfaction, organization commitment and work commitment to turnover intention: A case study of IT outsourcing company

in Thailand
Tibrat Sangroengrob, Department of Technology Management, Assumption University, 592/3 Ramkhamhaeng 24, Hua Mak, Bangkok Thailand 10240 [email protected] Teerawut Techachaicherdchoo, Department of Business Data Analysis, Assumption University, 592/3 Ramkhamhaeng 24, Hua Mak, Bangkok Thailand 10240 [email protected]

ABSTRACT Nowadays information technology plays important role in business which leads to increase the number of IT outsourcing companies. As a result of those growing, there are increasing the competitive of finding the well-trained IT professional. This make the IT companies, which are provide the external IT professional for the IT service, have increase the number of turnover. It could be one of the good reason that because they always sit and work in the clients office. Therefore, those IT service providers have worried about the employees quite their jobs and start to work with their clients. The purpose of this study is to find out the relationships of employees job satisfaction, organization commitment and work commitment on the turnover intention. The results were shown that employees agree that job satisfaction and organizational commitment have no effect on their turnover intention, except only work commitment that effect on their turnover intention decision. Keyword: Job satisfaction, Organizational commitment, Work commitment, Turnover intention

INTRODUCTION

Employees turnover become a high cost for many highly skill employees (Niedeman and Sumner, 2003) especially in IT professional. As it become extensively serious as 35% (Moore and Burke, 2002) while it shown as high as 8% per month or 96% per year for technical employees in Bangalore (Kwantes, 2009) and 100% in India (Lacity, 2008) This shows an increasing the number of IT outsourcing around the globe in order to solve the company training and recruiting issues as the outsourcing will help to reduce the cost of those and increase the organization profit (Hewitt-Dundas, 2001).

hailand-enter-gartner-top-30-off-shore-serviceproviders). However, the companies who provide the IT outsourcing also cannot avoid the high turnover issue as well.

2. LITERATURE REVIEW 2.1 JOB SATISFACTION Job satisfaction is a collection of numerous attitudes of individual toward various aspects of job with represent a general attitude (Gibson et al., 1994; Hellriegel and Slocum, 2004; Robbins, 2005; Boles, et al., 2007). Attitude may be positive (satisfaction) or negative (dissatisfaction) (Gibson et al., 1994). There are many researchers found Herzbergs Twofactor motivation Theory is related with employees job satisfaction when apply intrinsic motivator (Cesare and Sadri, 2003;

According to Gartner IT consulting, Thailand has been one of the Top 30 as offshore IT outsourcing service in 2008 (www.bangkokpost.com/tech/technews/9284/t

Hellriegel and Slocum, 1998; Slocum and Helliegel, 2009). The intrinsic or motivator factors consist of responsibility, recognition, advancement, achievement, and work itself (Slocum and Helliegel, 2009; Furnham et al., 2009). Intrinsic motivator factor is one of the variable that use to find out the positive relationship with job satisfaction (Bhuian and Mengue, 2002). Shaffer et al. (2000) suggested that the satisfaction of work itself relate with job satisfaction while see job satisfactions itself as an individual enjoys on their job which is very much related on the classification of nature of work itself (Pool and Pool, 2006; Couger, 1988 cited in Thatcher, et al., 2002).

(1968) on classifying the organizational commitment with the Mayer and Allen (1991) organizational commitment model as it classify in terms of continuance, affective and normative commitment.

2.3 WORK COMMITMENT When mention on the word work commitment, it is hardly to clarify as many authors have been using the word as career commitment, job commitment. However, Morrow (1983, p. 488) defined work commitment as an extent to which a person feels that personal worth results only from self-sacrificing work or occupational achievement; the importance of work and a career in ones total life and the degree to which a person is identified psychologically with his work; degree to which work performance affect self-esteem. Fink (1992) defined it as a willingness to exert considerable effort on behalf of ones work and classifies work commitment as one of three commitments which are organization, coworker and work commitment. While, Saros and Santona (2001) see the person who commit to work as the person see the work as the central of interesting in their life. Some refer it as the way people pushing their effort into ones work (Gallie and White, 1993) or involvement or commitment in ones occupation (Mueller et al., 1992; Meyer, 1993)

2.2 ORGANIZATIONAL COMMITMENT Organizational commitment has been defined more pragmatically by Porter (1968), who holds that it consists of (a) a willingness of employees to exert high levels of effort on behalf of the organization, (b) a strong desire to remain in the organization, and (c) an acceptance of the organizations major goals and values. Boles, et al. (2007, p. 312), defined the organizational commitment as the feeling towards organization and its values. Similarity in some context between Porter

3. RESEARCH MODEL

Figure 1: Research model

3.1 The relationship between the variables Job satisfaction Commitment Job satisfaction has been associated with organizational commitment (Boles, et al., 2007; Pool and Pool, 2007; Brown and Peterson, 1993), which is broadly defined as the psychological bond between people and organizations (Buchanan 1974; Tett and Meyer, 1993). The study of Klaus, et al., (2003) found that there is an effect of work challenging (intrinsic motivation) as a work nature which can impact on affective organizational commitment. However, this study found that the employees with continuance commitment be partially to stay with organization. This can be seen in some literature review that work itself (intrinsic motivation) has direct effect on job satisfaction and organizational commitment (Eby et al., 1999) Job satisfaction Turnover intention Meland et al., (2005) pointed out that there is a relationship between turnover and employees job satisfaction. The greater opportunities for finding the new job in the industries means the low opportunity on career development in the organization can cause the employees turnover (Sumner and Niederman, 2002). Some studies suggested that the job satisfaction can be better predicted variable toward turnover intention than organizational commitment (Niederman and Sumner, 2003; Falkenburg and Schyns, 2007). Tan and Igbaria (1994) cited in Thatcher et al., 2002) that IT workers turnover also depend on the level of pay and advancement opportunities. This can be seen the transferring of intrinsic motivation through the job satisfaction and impact on turnover intention as indirect effect. However, Lawler and Porter, (1967) cited in Zimmerman and Darnold (2009) that job satisfaction has partially effect on intention to turnover. Furthermore, job satisfaction may have the causal relationship with organizational commitment but not related with turnover models (Farkas and Tetrick, 1989 cited in Elangovan, 2001).

Organizational commitment Turnover intention Large numbers of research support the idea that organizational commitment has strongly associated with turnover (Dunham et al., 1994; McFarlane et al., 1993; Somers, 1995; Newton, et al., 2004). Lacity et al. (2008) concluded in the study that organization commitment is one of the significant factor impacts on turnover intention. Researchers have linked organizational commitment to high performance levels, low turnover (commitment is thought to be even more perdictive of turnover than job satisfaction), and other measures of organizational effectiveness (Angle and Perry 1983, Verma and McKersie 1987, Morris and Steers 1980, Goodman 1980, Straw and Heckscher 1984, Steers 1977). Work commitment Turnover intention Many researchers confirm on the impact of work commitment toward employees turnover, their turnover intention, job satisfaction and job performance (Becker, 1992; Blau, 1986; Cohen, 1993; Allen et al., 2003; Carmeli and Gefen, 2005). The level of work commitment can be one of predictor for turnover (Reilly and Orsak, 1991; Mueller et al., 1992) turnover intention (Blau et al, 2003) absenteeism (Reilly and Orsak, 1991).

Hypotheses This study investigates the job satisfaction has direct effect to organizational commitment, work commitment and turnover intention. Meanwhile, job satisfaction has indirect effect toward turnover intention by using organizational commitment and work commitment as mediating variables. In this study had main five hypotheses as followed: Hypothesis 1: Job satisfaction has effect to organizational commitment The job satisfaction contains five criteria as work itself, achievement, responsibility, recognition and opportunity for advancement (Slocum and Helliegel, 2009; Furnham et al., 2009). Our study expects a job satisfaction of outsourcing employees have positive relationship with organizational commitment.

Hypothesis 2: Job satisfaction has effect to work commitment McKeown (2003) mentioned the relationship of contractors between work commitment and job satisfaction. Then we are also expects that job satisfaction have positive effect to work commitment. Hypothesis 3: Job satisfaction has effect to turnover intention Many researchers (Tan and Igbaria 1994 cited in Thatche et al., 2002; Niederman and Sumner, 2003; Falkenburg and Scyns, 2007) commented that the relationship between job satisfaction and turnover intention are related in negative. Then we expect that the job satisfaction have effect to turnover intention. Arocas and Camps (2007) commented that the relationship between job satisfaction and turnover intention is mediated by work commitment. Hypothesis 4: Organizational commitment has effect to turnover intention The decreasing of organizational commitment was effect to the level of turnover intention increasing (Davis and Uzzi 1993 cited in McKeown 2003). We are expected that organizational commitment has negative effect to turnover intention. Hypothesis 5: Work commitment has effect to turnover intention Zimmerman and Darnold (2009) suggested that work commitment have negative effect to turnover intention. Hence, we are assumed that work commitment has negative effect to turnover intention. All of these hypotheses will be tested. Methodology Research design To examine our hypotheses, we applied expost facto research design for surveying. The census sampling survey is the suitable method for this study because we are collect all outsourcing employees from IT outsourcing company in Thailand.

A pilot study use to evaluate the reliability of the questionnaires was carries out with 10 outsourcing employees from IT outsourcing company. The questionnaires were structured into four sections. Job satisfaction is the first section in questionnaires. The second section is organizational commitment and work commitment whereas the turnover intention is the third section. Demographic information (gender, age, education level, job tenure and marital status) is the last section in questionnaires. A Likert scale was employed using a seven number scale ranging from 1 7 (1 represent as strong disagree and 7 represent as strongly agree). The reliability for all scales was assessed by Cronbachs alpha method. In this study, use both techniques of the Cronbachs Alpha if item deleted and Corrected item-total correlation methods. All of these methods were reduced to a set of highly reliable items. All reliabilities were attained the minimum level of 0.70 for acceptable (Zikmund, 2003; Hair et, al., 2010). The result of reliability at the pilot test is 0.917. It means that the questionnaires are reliable for collecting the data. The sample for the main study consists of 122 outsourcing employees from IT outsourcing company located in Bangkok and metropolitan area. All of them are collected by selfadministered survey. The pre-analytical found that the data was nonnormality. Then we had to solve the problem of non-normality by removed the outlier of data. There are 23 cases will be removed from the original data. There are only 99 cases that suitable for analyzing the structural equation modeling. The reliability of post-test is 0.901, which is reliable for analyzing. The demographic information will be shown at the following table:

Gender Male Female

Percent 63.6% 36.4%

Age Below 25 years 25 - 30 years 31 - 35 years 36 - 40 years 41 - 45 years Above 45 years Education Bachelor degree Master degree Job tenure Less than 6 months 6 months - 1 year 1 - 2 years 2 - 3 years 3 - 4 years More than 4 years
Table 1: Demographic information

Percent 18.2% 40.4% 28.3% 9.1% 2.0% 2.0% Percent 61.6% 38.4% Percent 2.0% 10.1% 21.2% 18.2% 5.1% 43.4%

At the research model in figure 1 was tested with structural equation analysis using the software package AMOS version 7. The sample size is quite enough sample size requirements for analyzing. The structural equation modeling (SEM) is particularly effective when testing models that are path analysis with mediating variables and latent variables that are being measured with multiple indicators. Then our model contains several latent variables and mediating variables as organizational commitment and work commitment. Then SEM is considered appropriate technique. Analysis and results The 15 items comprising the five constructs were subjected to a confirmatory factor analysis (CFA) with the actual data input. A CFA allows for a simultaneous assessment of overall and specific elements of measurement validity. The CFA in this study will be shown in the following figure.

Figure 2: Confirmatory Factor Analysis (CFA)

We were analyzed the Confirmatory Factor Analysis (CFA) by AMOS version 7. The results of the overall fit statistics are: CMIN/DF = 1.200, GFI = 0.939, TLI = 0.976, CFI = 0.987, RMR = 0.039, RMSEA = 0.045. It means that the model was fit the data well and all the indices were within the recommend ranges (i.e. RMR < 0.08, RMSEA < 0.08, GFI > 0.9, TLI > 0.9, CFI > 0.9 and CMIN/DF < 3; Tabachnick and Fidell, 2001; Hair et,al., 2010). Hypotheses testing We were analyzed the structural regression modeling. The estimates result will be shown in the table 2:
Estimate .813 .306 .704 .027 -.354 -.550 C.R. 3.095 2.953 3.043 .095 -.621 -2.115 P .002 .003 .002 .924 .535 .034

Hypothesis 4 (H0#4): Organizational commitment has no effect to turnover intention From this hypothesis is not significance because the significance value at table 2, are higher than 0.05 (5%). Then the organizational commitment has no effect to turnover intention. Hypothesis 5 (H0#5): Work commitment has no effect to turnover intention According to table 2, the significance value of work commitment to turnover intention is lower than 5% (0.034 < 0.05). It means that this hypothesis will be rejected or work commitment has effect to turnover intention. Hypothesis commitment commitment 6 (H0#6): Organizational has no effect to work

OC WC WC TI TI TI

<--<--<--<--<--<---

JS OC JS OC JS WC

Table 2: Table of estimates

After we analyzed the structural equation modeling (SEM), the result will shown the new path from organizational commitment to work commitment which the significance value of this path is less than 5%. Then it means that organizational commitment has effect to work commitment. Structure model Figure 3 shows the structural theoretical model that we tested and includes the standardized parameter values for the various linkages. The exogenous latent variables were allowed to correlate freely. The model fit the data quite well. The measurement indices are CMIN/DF = 1.279, GFI = 0.906, TLI = 0.948, RMR = 0.060 and RMSEA = 0.053. Additionally, some of the path estimates were significant and in the expected direction. The standardized total effect from job satisfaction, organizational commitment and work commitment to turnover intention will be shown as the next table:
JS OC WC TI -.161 -.089 -.230 Table 3: Standardized total effect

Hypothesis 1 (H0#1): Job satisfaction has no effect to organizational commitment. After we analyzed by AMOS version 7, the program shown the significance value is lower than 0.05 or 5%. Then the hypothesis 1 is rejected. Hypothesis 2 (H0#2): Job satisfaction has no effect to work commitment. Refer to the table 2, the significance value of job satisfaction to work commitment is lower than 0.05 (0.02 < 0.05). Then this hypothesis will be rejected. Hypothesis 3 (H0#3): Job satisfaction has no effect to turnover intention Refer to the analysis from the program, it shown that the estimate is not significance (0.535 > 0.05). It meant that job satisfaction has no effect to turnover intention

Figure 3: Structural model results

From the figure 3, a direct path was specified from job satisfaction to organizational commitment and job satisfaction to work commitment. The additional path was specified from organizational commitment to work commitment. According to the research model, the direct paths were specified by job satisfaction to turnover intention and organization commitment to turnover intention did not significance for model fit. After the analysis, the relationships between job satisfaction and organizational commitment to turnover intention have mediating variable by work commitment. The final direct path from work commitment to turnover intention did the significance for model fit, or it means that the work commitment has direct effect to turnover intention but this path was estimated in the negative direction. Conclusion The results of this study supported that job satisfaction has causal relationship to organizational commitment and work commitment in the positive way. Although, the job satisfaction and organizational commitment has no directly effect on turnover intention, those factors still shown the negatively indirect effect via work commitment to turnover intention at -0.161 and -0.089. This could be said that if the job satisfaction decreases it could cause the work commitment decrease as both factors go positively on each other, but it will lead to increase on turnover intention as the negative

effect from indirect effect of job satisfaction and negative direct effect of work commitment Meanwhile, when the organizational commitment increase work commitment also increase which leads to decrease on turnover intention. Nevertheless, work commitment is the most significant effect on outsourcing employees who are working at the clients office to decide on their turnover intention.

Recommendations and future research Some of Human Resource Development plan may require for increasing the employees job satisfaction, organizational commitment and working commitment even though only work commitment has the direct effect but both of them also have indirect effect on employees turnover intention. It could be done by making the job more interesting or relocate new job for them to learn the new knowledge and skills. Furthermore, it can be done by relocating them back to the head office from time to time which help them to think that they are belonging to the organization. One of the issue need to be considered for future research is that the sampling unit have been worked in the clients office for so long it may or may not impact on the level of organizational commitment. Therefore, it is necessary to do some further research to compare between the level of employees who are working with clients office and employees who work in the head office to find out that the working location can make the difference on their job satisfaction, work and organizational commitment.

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