CHAPTER ONE: INTRODUCTION

1.1 INTRODUCTION 

This chapter describes a brief background of the research. It discovers

the problem statement, research questions of the study, objectives of the

study, the significance of the study and scope of the study. Definition of

key terms and organization of the thesis is also provided at the end of

the chapter. 

1.2 BACKGROUND OF THE STUDY

In human resource strategy, high turnover rates are the key issues that

will always being highlighted (Foreman, 2009).  Employee turnover can

be described in the general definition as claimed by Mobley (1982) as

“the cessation of membership in an organization by an individual who

received monetary compensation from the organization “. The

companies have to put some effort on reducing the unnecessary

turnover and to find out the explanation for this phenomena (Udo et.al,

1999) because those employees with high skilled and knowledgeable

that engaged with turnover may leave the high replacement cost and

disruptive for firms. In addition, the substantial costs related with

recruiting, re-skilling, and hidden costs such as the difficulties in

completing projects and disruptive in team-based work environments

may incur for losing the highly skilled staff member (Niederman and

Sumner, 2003).  On the other hand, employee’s turnover also will give

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some positive implication to the organizations as stated by Mobley

(1982), the turnover will “create opportunities for promotion, infusing new

ideas and technology, and displace poor performers”. In addition, Mobley

(1982) also noted that the blocking career development paths,

entrenching dated methods, and accumulating poor performers are some

of problems created from the lack of turnover. Generally, turnover can be

classified in two types which are voluntary and involuntary turnover. The

voluntary turnover can be described as an action of quit or resignation

(Ukwendu, 1997) such a quit for the reason of dissatisfaction on the

current job or work environment. In contrast, involuntary turnover is the

action that happened because of the reasons such as dismissed for

cause as well as unacceptable performance, insubordination, theft and

incapable in fulfilling the job aspects (Stumpf & Dawley, 1981). This

study will focus the voluntary turnover among the employees in the

manufacturing sector in the Malaysia context. According to Mobley

(1982) the best predictor for the actual voluntary turnover is turnover

intention. The turnover intention will be a main issue that will be

discovered for this research. Furthermore, a consistent predictor towards

turnover behaviour is the turnover intention (Ajzen and Fishbein, 1980).

The turnover intention can be illustrated as the perceived in probability of

staying or leaving on their current employer organization by the

employees (Bigliardi et. al., 2009).In this study, the job characteristic and

leadership styles are chosen to be the predictors for the turnover

intention. Job characteristic consists of five dimensions namely

autonomy; task variety; task identity; task significant; and job feedback.

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These dimensions can be described as an inherent property for a

particular job that holds by the employees (Yang & Long, 2009).

Additionally, the job characteristic was found to be negatively related and

significant on the turnover intention (Sarminah, 2006). In addition to job

characteristic, leadership style, as stated by Mobley (1982), the method

of the supervision could provide some effect on influencing the employee

for the turnover decisions. In this research, transformational and

transactional leadership style will be examined in determining the

relationship on the turnover intention.  To sum, these variables will be

used in this research to identify their relationship with turnover intention.  

1.2.1 Manufacturing Sector In Malaysia

Manufacturing sector is the important sector in economic contribution

especially in United States and Japan these days .In fact, in Malaysia,

this sector has been the second largest supporter with the share of

29.2% in Gross Domestic Product (GDP) after the services sectors that

contribute to economic development (Economy Report, 2008). The

manufacturing sector had given significant contribution to the Malaysian

economic based on the well and fast growth.  Manufacturing contributes

about RM 6.5 billion of the GDP and providing a lot of job opportunities

for Malaysian (Economic Report, 2009). The Report of Economic in 2009

stated that manufacturing will be the sector that will develops strongly in

2010. Based on a survey conducted by Bank Negara Malaysia,

companies in the manufacturing sector plan to raise employment and a

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higher salary growth in 2010. Generally, manufacturing sector can be

categorized into nineteen industries as stated on the Table 1 below.  

Industry
Food Manufacturing Beverages and Tobacco

Textiles and Textile Products Leather and Leather Products

Wood and Woods Product Furniture and Fixtures

Paper, Printing and Publishing Chemical and Chemicals Products

Petroleum Products Rubber Products

Plastic Product Non-Metallic Mineral Products

Basic Metal Products Fabricated Metal Products

Machinery & Equipment Products Electronics & Electrical Products

Transport Equipment Scientific and Measuring Equipment

Miscellaneous

Source: Malaysia Industrial Development Authority p9 Malaysia

Manufacturer’s Digest.

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 1.2.2 Electronics & Electrical Industry

In early 1970’s, the electrical and electronics has started due to the

initiatives taken by the government in encouraging the labour-intensive

and export-oriented industries. There are four sub-sectors in the E&E

industry namely; electronics component, industrial electronics, consumer

electronics and electrical products. The electrical and electronics

manufacturing industry will be the scope for this study due to the E&E as

a main contributor to the Malaysian economic and the biggest industry

within the manufacturing sector (Federation of Malaysia Manufacturers,

2008).In addition, on the first quarter in 2007, when the E&E industry has

been as the main contributor to manufacturing exports even has been

declined in demand (Economic Annual Report, 2007). In fact, the

investment in this sector has provided the opportunity to develop other

clusters as reported by Bernama (2009).  

Source:Sectors in Manufacturing 2008 2009

“Perfo rm
ance Export-oriented industries -1.2 -9.3 of
the
Electronics & electrical product
cluster:
Electronics -5.4 -24.6
Electrical products 0.9 -18.8
Primary-related cluster
Chemicals and chemical products -3.5 -1.7
Petroleum products 5.9 -0.8
Rubber products 4.7 -3.0
Off-estate processing 9.4 -2.1

Manufacturing Sector” Department of

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 Statistics, Malaysia

Based on the Table 2 above, the industry in electrical and electronic

products has given the major affects on the performance of the

manufacturing sector for 2008 and 2009. Based on the Bank Negara

Malaysia Annual Report (2009), after the global depression, the

electronics and electrical products (E&E) cluster was the most effected

industries especially in the export-oriented industries. In fact, although

the economic is unstable nowadays, the turnover problem keeps on

occurrence in the company particularly in operator position (interview

with Human Resource Manager, NXP Semiconductor Manufacturing).

The turnover problems that occurred are commonly among operators.

Hence, this study will investigates the factors that contribute to the

turnover intention in the electrical and electronics manufacturing

industry. 

1.3 STATEMENT OF PROBLEM

Turnover in one of the widely studied topics because of the labour

productivity and the success of the organization has a significant

relationship with the employee turnover (Min, 2007). Nowadays, due to

the expansion in manufacturing sectors along with the high competition

and the shortage of labour the increasing in labour turnover makes the

firms extremely struggle for skilful and knowledgably employees

(Normala, 2006).   As stated by Lambert et al., (2001), actual turnover

and turnover intention have the significant relationship to one another

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based on the prior research. In that case, the examining of turnover

intention will reflect in measuring actual turnover (Price, 2001).

Turnover and turnover intention is differently considered, but the

essential cognitive variable that is having the immediate causal affect

of the turnover is turnover intention (Bigliardi et.al, 2005). Nowadays,

there is still limited study on the researches in turnover intention in the

Malaysian working environment (Idrus et al., 2009) .According to the

study has done by Idrus et al.,(2009) on the relationship between

occupational content and turnover intention among employees in Small

and Medium Enterprise sectors, the turnover intention and the

organizational content has a significant relationship. It is because of the

high rates of turnover are correlate with turnover intention compares to

those who stated a plan to stay by the employees (Foreman, 2009).

Mohamad Abdullah Hemdi (2006) has mentioned that there are only

few studies that discovered the processes of thoughts that influence

the decisions for the turnover intention. Idrus et. .al., (2009) claimed

that in order to improving business performance in Malaysia, the

factors that influenced the turnover intention must be understood well.  

In almost 30 years, the manufacturing companies are still facing the

high turnover rates even in the strong economy and the lowest

unemployment (Lowe, 2004; Williamson, 1999). The layoffs and

discharges became the larger contributor to total turnover rate in

America on 2008. The turnover rate is estimated to be at 29% in USA

by 2020 (HSM Group 2002). In February 2010, the relative contribution

reversed again with the proportion of quits slightly exceeding the

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proportion of layoffs and discharges (Bureau of Labour Statistics,

2010).  The turnover phenomenon is very widely discussed these days.

Furthermore, the high turnover rate including unskilled workers is

showing a large concern in many companies (Smyth, 2008). The

turnover rate in manufacturing industry always is highlighted because

of the increasing number of voluntary turnover by the workers. From

May 2009 until May 2010, the manufacturing sector has shown a

number of 91,000 thousands to 95,000 thousand of employees that quit

from the jobs in United Stated (U.S. Bureau of Labour Statistics, 2010).

In fact the voluntary turnover has a negative effect on the labour

productivity (Smyth et.al, 2008).  In Malaysia, manufacturing sector is a

sector that contributes the highest number of the employee turnover.

According to the Retrenchment Monitoring Report in 2010 has shown

that there were 36,392 of employees in the manufacturing sector

involved in the job turnover from October of 2008 until March of 2010. It

represents 75 % of the turnover rate from all sectors in Malaysia.

Based on the Table 3 below, the involuntary and voluntary turnover in

manufacturing sector has demonstrated to be the highest among other

sectors in Malaysia. It shows that the turnover issues in this sector

should be highlighted.  In 2009, the number of retrenchments was

considerably higher compared to prior year. Total of 25,064 workers

being retrenched by the employers and it has increased of 52% from

last year (Economy Report, 2009). Overall, the manufacturing sector

has contributed 71% of the total retrenchments in workforce. The

information from The Economic Planning Unit and Ministry of Human

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Resource have showered that there are 1,058,980 job vacancies

available in 2008. From this figure, 327,798 of the job opportunities

come from the manufacturing sector. In 2009, as the economic crisis

crash in most countries, the manufacturing companies reduced their

operation based on the weakened labour market conditions (Economic

Report, 2009). The unstable economic conditions it has contributed to

the turnover effect in the manufacturing industry. Moreover, Malaysia

Government has introduced the strategies to reducing dependence on

foreign workers (FMM HR Conference, 2010). It is important to retain

employees and minimize the turnover among the manufacturing

workers.  Moreover, 45% of the total retrenchment overall was

represented by the electrical and electronic cluster. During the high

retrenchment in the manufacturing sector recorded in recent years,

there was still high number of employee who quit from their current

jobs. Even though the unemployment rate keeps on rising, the Jabatan

Tenaga Kerja Semenanjung Malaysia has reported that 11,957

employees left their organizations voluntarily from October of 2008 until

March of 2010.  To sum, the turnover issue on the manufacturing

sector will be the main concern for this study because of high turnover

rate portrayed in the industry, hence this study intent to explore the

influence of leadership style and job characteristic factors on the

turnover intention. The next page will show the statistic on the voluntary

turnover in Malaysia in from 2008 until 2010.    

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 SECTOR INVOLUNTARY VOLUNTARY
NO OF NO OF
WORKERS WORKERS
Real Estate, Renting & Business 2,274 336
Services
Community, Social And Personal Service 1,496 209
Activities
Electricity, Gas & Water Supply 156 5
Hotels & Restaurants 796 26
Health & Social Work 125 0
Finance 568 196
Construction 775 150
Manufacturing 26,071 10,321
Education 22 0
Transport, Storage & Communication 880 359
Public Administration, Defence And 179 27
Compulsory
Social Security
Wholesale & Retail Trade, Motor Vehicle, 2,080 296
Motorcycle,
Household
Mining & Quarrying 210 32
Agriculture, Hunting & Forestry 996 0

TOTAL 36,628 11,957

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 Figure 1: Statistic on Employee Retrenchment from October 2008
until March 2010

Source: Jabatan Tenaga Kerja Semenanjung Malaysia (2010).

Retrenchment Monitoring Report. Malaysia: Kementerian
Sumber Manusia.

In this context, according to Sarminah (2006), a job characteristic is

one aspect that needs to be prioritizing by the management in

organization in measuring the employee’s turnover intention. Hence,

this study will explore the impact of job characteristic towards turnover

intention in Malaysian perspective. Moreover, the relationship between

leadership factor and turnover intention will be examine as well. The

future investigation on the effects of leadership style on employee

turnover intention is needed because of the important in gaining the

competitive advantage. (Westlund, 2007). Hence, the job characteristic

and leadership styles are the factors that will be explore in this study. 

1.4 RESEARCH QUESTIONS

i. Does Job characteristic associate with employee turnover

intention?

ii. Does leadership style associate with employee turnover

intention?

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1.5 RESEARCH OBJECTIVES

i. To determine the relationship between job characteristic and

turnover intention.

ii. To determine the relationship between leadership style and

turnover intention

1.6 SIGNIFICANCE OF STUDY

This research seeks to broaden the issue of turnover intention in

Malaysia context by addressing the gaps in the literature of turnover.

This research will investigates the effect of two predictors namely job

characteristic, leadership style and turnover intention. Besides,

interrelationship among job characteristic and leadership style on

turnover intention will be examined.  The turnover among the

manufacturing employees should be put on the interest nowadays, Udo

et.al., (1997) declared that the turnover and its antecedents which

attached with manufacturing employees are still has a little attention

Practically, results from this study may assist manufacturing

management and strategic in gaining the high job characteristic and

suitable leadership style practices so that the employees are less likely

to leave the organizations. In addition, managers or supervisors of

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 manufacturing industry in Peninsular Malaysia will have a greater

understanding on the job characteristic and leadership style factors that

will influence the turnover intention among the operators. Hence, the

understanding may provide more effort. It is hoped that the research

finding for this study can be used to the managers and supervisors to

develop approaches that can has an effective effect for the employee’s

retention. In term of theoretical contribution, this study intends to

contribute to the existing body of knowledge with respect to turnover

intention. Based on the literature survey explored, there is lack of

research on the turnover intention in the Malaysia context covers

operators in manufacturing sector. Most of the study had only

contributed to the hotel industry in Malaysia (e.g., Khalid, 2009;

Mohammad, 2008 Radzi et. al., 2009; Yin & Sai, 2008). To simplify, this

research will contributes to the theoretical significant by exploring the

direct relationship between job characteristic and leadership style on

turnover intention among Malaysian machine operators in

manufacturing industry. 

1.7 SCOPE OF LIMITATION

This study will examines the effect of the job characteristic and

leadership style on the turnover intention in manufacturing industry. The

respondents will be the Malaysian machine operators that work as full

time workers in the electrical and electronic manufacturing. The

electrical and electronic industry is chosen because of its main

contribution on the Malaysia economic compared to other industries in

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 manufacturing sector as mention before. In fact, recent previous

research has explored turnover intention in Hotel industry in Malaysia

(e.g., Khalid, 2009; Mohammad, 2008 Radzi et. al., 2009; Yin & Sai,

2008).    The scope of this study will cover of the area that employed

the highest number of operator population in each of including of

Southern area, Western area, and East Coast area and Northern area

Johor, Selangor, Pahang, Penang and Kedah are the chosen city to

conduct the data collection based on the areas respectively.  

1.8 DEFINITION OF KEY TERMS

1.8.1 Turnover

A cessation of membership in an organization by and individual who

received monetary compensation from the organization. (Mobley,
1982,p.10).

1.8.2 Turnover Intention

Refers to an individual’s perceived probability of leaving an

employing organization, or the willingness of an individual to
voluntarily permanently withdraw from the organization.(Salleh,2009)

1.8.3 Job Characteristic

It is inherent property of a job or task and any work-related factors

that can be deemed as job characteristic (Yang & Long, 2009).

1.8.4 Task Variety

The degree to which a job requires a variety of different activities in

carrying work, which involve the use of a number of different skills
and talent of the employees (Dawal & Tawa, 2009).

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1.8.5 Task Identity

The degree to which a job requires completion of a whole and

identifiable piece of work McShane & Glinow, 2008).

1.8.6 Task Significance

The degree of job’s impact on the lives of other people, whether

within or outside of the organization (Muchinsky, 2006).

1.8.7 Autonomy

The degree to which job provides substantial freedom, independence

and discretion of the employee in scheduling the work and in
determining the procedures to be used in carrying it out (Dawal &
Tawa, 2009).

1.8.8 Feedback

The degree to which carrying out the work activities required by the
job results in the employee obtaining direct and clear information
about the effectiveness of his or her performance (Dawal & Tawa,
2009).

1.8.9 Transformational Leadership

A conception that the leadership is the process of inspiring the group
to pursue goals and attain results (Muchinsky, 2006).

1.8.10 Idealized influence leadership behavior

The leader will provides vision and sense of mission, instills pride,
gain respect and trust (Robbins, 1993).

1.8.11 Inspirational leadership

The leader will communicates high expectations, uses symbol to

focus efforts, and expresses important purpose in simple way
(Robbins, 1993).

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 1.8.12 Intellectual stimulation leadership

The leader will promotes intelligence, rationality, and careful problem

solving (Robbins, 1993).

1.8.11 Individualized consideration leadership behaviour

The leader will promotes intelligence, rationality, and careful problem

solving (Robbins, 1993).

1.8.12 Transactional Leadership

Leadership that helps organization achieve their current objective

more efficiently, such as linking job performances to valued rewards
and ensuring that employees have the resources needed to get the
job done (Mcshane & Glinow, 2008).

1.8.13 Contingent rewards leadership behaviour

Contracts exchange of rewards for effort, promises rewards for good

performance recognizes accomplishments (Robbins, 1993).

1.8.14 Active management

The leader will watch and searches for deviations from rules and
standards, takes corrective action (Robbins, 1993).

1.8.15 Passive management

The leader will intervene only if the standards are not made
(Robbins, 1993) .

1.9 ORGANIZATION OF THE THESIS

On this research, it will consist of five major chapters that will be

discussed in depth. The first chapter in this study will be covering on the

whole purpose of doing this research such as problem statement,

research questions and research objective of the study. In the Chapter

2, it will be highlighted on the review of the related literature, theories

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associated and to the problem being discovered. For the Chapter 3, it

will be focusing on the method and procedure that will be using on thins

research. Chapter 4 will be on the result and the analysis of the

research finding of the study. Lastly, in the final chapter will be illustrate

the discussion, conclusion, recommendation and for further research in

the area.

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