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PREDICTORS OF EMPLOYEE TURNOVER INTENTION IN THE IT SERVICE INDUSTRY
IN CAGAYAN DE ORO CITY


ABSTRACT

Title: Predictors of Employee Turnover Intention in the IT Service Industry in Cagayan de Oro City

1. Author: Valdehueza – Caragos, Odette Leh____Chan____
(Last Name) (First Name) (Middle Name)

2. Type of Document: Dissertation
3. Type of Publication: Unpublished
4. Institution: Capitol University, Cagayan de Oro City
5. Sponsor for Funded Research: None
6. Keywords: Predictors, Employee Turn-over Intention, IT Service Industry, Cagayan de Oro City
7. Abstract

Turnover has been a major issue pertaining to Information Technology (IT) personnel since the very
early days of computing and continuing in the present (Moore, 2000; Niedermann & Sumner, 2003).
Besides experiencing a lack of qualified workers, the industry is having a difficult time retaining those
already hired (Silva, 2008). IT personnel have a strong tendency to leave a current employer to work for
another organization. Determining the causes of turnover within the IT work force and controlling it
through human resource practices is imperative for organizations (Igbaria & Greenhaus, 1992). It was
suggested that IT companies review their compensation packages regularly and study industry
benchmarks. It would also help if they can independently monitor employee perception and behavior to
accurately gauge employee sentiments towards the organization (Silva, 2008). According to a study on
“The Global Financial Crisis and Business Process Outsourcing in the Philippines” by Patrick Louie E.
Bonifacio, some companies in the BPO Industry operating in the Philippines are expanding despite the
financial crisis. Although a boon to the economy, the business process outsourcing industry has its share
of difficulties. To cite, the 24/7 operations in the call center industry have higher turnover rates
compared to most other industries in the Philippines. Beyond this, the industry has difficulty attracting
the kind of talent it needs to take advantage of the boom in business (http://www.tucp.org.ph/news).

In this study, we examined the predictors of employees’ turn-over intention in the IT Service Industry in
Cagayan de Oro City.

It is important to note that this study has certain limitations. First, the study focused mainly on the
predictors of employees’ turnover intention in the IT Service Industry in Cagayan de Oro City. The result
of the study is greatly dependent on the response rate of the respondents. Although conducting the
study allowed the researcher to examine the issues in-depth, it cannot be generalized to other IT Service
Establishments in a national level. Second, the sample drawn for the present study consisted of 273
respondents working in the IT Service Industry in Cagayan de Oro City. Hence, the research involving
additional samples may be needed to ensure appropriate generalization of the results and calls for
greater research to confirm the pattern seen in these results. Third, the study was conducted in 2008
and the data collected were for a specific period only, from January 2008 to June 2008. The results were
valid for that time period and the circumstances of the respondents at that time. However, since then






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there has been an economic change. It is possible if the survey was conducted today, results might be
different.

The independent variables in this study are: socio-demographic characteristics that include the
respondents’ age, sex, civil status, number of dependents, type of IT Service Industry, educational
attainment, employment status, rank, monthly salary, and length of service with the present company;
job satisfaction factors as motivation items that include promotion, challenging assignments,
recognition, achievement, responsibility, professional growth, work itself and use of best abilities; and,
job dissatisfaction factors as hygiene items that include relations with co-workers, technical supervision,
merit increases, working conditions, security of tenure, employee benefits, home life, workgroup and
management policies. Turn-over intention is the dependent variable.


SUMMARY

The Problem

The study has nine research problems:

1. What is the socio-economic and demographic profile of the respondents in terms of age, sex, civil
status, number of dependents, type of IT Service or BPO Company, educational attainment, rank,
monthly salary, and length of service with the present company?

2. What is the employee turn-over rate of IT Service Industry in Cagayan de Oro City from January 2008
to June 2008?

3. What is the job satisfaction level of the employees in the IT Service Industry in Cagayan de Oro City in
terms of the following motivation variables?
a. Promotion,
b. Challenging assignments,
c. Recognition,
d. Achievement,
e. Responsibility,
f. Professional Growth,
g. Work itself and
h. Use of best abilities.

4. What is the job dissatisfaction level of the employees in the IT Service Industry in Cagayan de Oro
City in terms of the following hygiene variables?

a. Relations with supervisor,
b. Relations with co-workers,
c. Technical supervision,
d. Merit increases,
e. Working conditions,
f. Security of tenure,
g. Employee benefits,






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h. Home life,
i. Workgroup and
j. Management policies.


5. What is the level of employees’ turn-over intention in the IT Service Industry in Cagayan de Oro City?

6. Is there a significant relationship between the employee turn-over intention and the socio-economic
and demographic characteristics of the respondents?

7. Is there a significant relationship between the employees’ turnover Intention in the IT Service
Industry in Cagayan de Oro City and the following motivation variables?

a. Promotion,
b. Challenging assignments,
c. Recognition,
d. Achievement,
e. Responsibility,
f. Professional Growth,
g. Work itself and
h. Use of best abilities.

8. Is there a significant relationship between the employees’ turnover Intention in the IT Service
Industry in Cagayan de Oro City and the following hygiene variables?
a. Relations with supervisor,
b. Relations with co-workers,
c. Technical supervision,
d. Merit increases,
e. Working conditions,
f. Security of tenure,
g. Employee benefits,
h. Home life,
i. Workgroup and
j. Management policies.

9. Based on the findings, what action plan can be formulated to minimize employee turnover of IT
Service Industry in Cagayan de Oro City?


Review of Related Literature and Studies

Chapter 2 discusses the recent literature and studies surrounding the theoretical framework as well as
other defining characteristics of the study. The framework as discussed is the Herzberg Two Factor
Theory. Other related areas of the study are also discussed. It first discusses turnover, the cost and the
causes of high or low turnover. Then discussed the psychological and management theories exist
regarding the types of job content which is intrinsically satisfying to employees and which, in turn,
should minimise external voluntary turnover that includes Herzberg’s Two factor theory, McClelland’s






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Theory of Needs, and Hackman & Oldham’s Job Characteristics Model (Hackman, 1980). It further
discusses the Philippine IT Action Agenda for the 21st Century and some IT-related studies on Cagayan
de Oro City.


Research Methodology

Chapter 3 describes the methodology used to determine the employees’ turnover intention in the IT
Service Industry in Cagayan de Oro City. The structure of this chapter will begin with the design of the
study, and then discusses the location of the research and respondents, the instrumentation, the survey
administration, the variables, the data collection procedures, and finally the data analysis procedures.

The study is an example of descriptive research. The design will include elements of both a quantitative
and qualitative nature and triangulation. This study employs self-administered questionnaires and
interviews.

The results will be presented in tabular and in graphical form for readability and easy comprehension.
This research utilized the qualitative and quantitative interpretation of data. The qualitative
interpretation involves the ranking of the two factor items and the turnover intention from the
questionnaire. The quantitative interpretation utilizes the Frequency, Percentages and Regression as
statistical tools.


Presentation, Analysis and Interpretation of Data

Chapter 4 presents the data on the stated problems in the study. The researcher utilized survey
questionnaires and focus group discussions to appraise the predictors of turnover intentions in the IT
Service Industry in Cagayan de Oro. In this study, the independent variables were presumed to have
relationship with the employees’ turnover intention. The sequence of the presentation, analysis and
interpretation of results were organized according to the specific problems stated in Chapter 1.


Summary of Findings, Conclusion and Recommendation

Chapter 5 presents a summary of findings, based on the data collected which were subjected to
statistical treatment and analysis. Conclusions, insights, management implications were drawn in the
light of findings and corresponding recommendations were given.

Preliminary information revealed that 64% of the respondents are from below 25 years old followed by
age bracket from 26 to 35 years old that accounted to 30.77% and the least was from above 35 years old
that accounted 14% of the total respondents. Of the 273 respondents surveyed, there were more female
respondents (52.01%) than male respondents (47.99%). Majority of the respondents were single
accounting to 79.85% of the total respondents surveyed while there were 19.05% of the respondents
were married, there were 1.10% of the respondents separated and none of the respondents were
divorced. A large percentage of the respondents, 84.62%, indicated that they have none or only one
dependent, 12.45% of the respondents have 2 – 3 dependents, 2.56% of the respondents have 4 – 5
dependents and the least percentage, 0.37% indicated that one respondent have 6 – 7 dependents. Most






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of the respondents, 91.94% belong to the Call Center IT Service Industry, 3.30% of the respondents from
the Medical Transcription and 4.76% of the respondents from the Software Development. Most of the
respondents are Bachelor’s degree holder, accounting to 48.35% of the total respondents surveyed
while 46.89% of the respondents are College level, 4.75% of the respondents are postgraduate level and
none of the respondents are postgraduate degree holder. Most of the respondents are in the non-
supervisory level, 77.29%, while only 22.71% of the respondents are in the supervisory position. Most
of the respondents, 61.54%, received a monthly salary ranging from 7,001 – 10,000 pesos, followed by
respondents receiving below 7,000 pesos monthly salary at 20.15% then respondents receiving monthly
salaries ranging from 13,001 – 15,000 pesos at 7.69%, 7.33% of the respondents received monthly
salary ranging from 10,001 – 13, 000 pesos and 3.30% of the respondents received monthly salaries
above 15,000 pesos. Most of the respondents, 53.85%, are with the present company for less than a
year, followed by 45.79% respondents that are with their company for 1 – 3 years already. Only 0.37%
of the respondents are with their company for 4 – 6 years and none of the respondents answered that
they are working for more than 6 years with their present company. This implies that majority of the
respondents were newly hired in the IT Service Industry.

The data also revealed that there is a high turnover rate in the call center industry as compared to
medical transcription and software development. The Call Center IT Service Industry has 42.96% of
employee turnover rate while Software Development IT Service Industry has 31.65% and Medical
Transcription IT Service Industry has 13.51%. Exit interviews by Human Resources Manager in the IT
Service Industry were done to all workers that quit from their job and the reasons cited are bad training
design, oppressive trainors, too much stress, too much pressure, wanted to work where one can move
freely in the workplace, pay not worth the effort, wanted to work in a standard working hours, offered
another job and wanted to practice their profession or bachelor’s degree graduated.

The results revealed further that all the respondents have high level of motivation or job satisfaction in
terms of promotion, challenging assignments, recognition, achievement, responsibility, professional
growth, work itself and use of best abilities in the IT Service Industry in Cagayan de Oro City. Likewise,
in rating the responses from strongly agree as very highly job dissatisfied to strongly disagree as very
low job dissatisfied, the result showed that the respondents indicated low job dissatisfaction on
relations with supervisor relations with co-workers, merit increases, working conditions, security of
tenure, employee benefits, home life, workgroup and technical supervision and indicated moderate job
dissatisfaction on management policies. This implies that most of the employees were not totally
dissatisfied with the aspect aforementioned.

The results also indicated a moderate turnover intention level of the respondents. The reasons cited
were lack of break time because of time pressure; the unholy hours in the morning; rigid training and
trainers; inflexible work conditions for personal necessities; and pay not worth the effort. The
respondents also mentioned inaccurate descriptions of the job; training does not correspond to the
realities of the job; heavy workloads because respondents were forced to assume the jobs of the
departing workers; burnout, supervisors do not provide mentoring and coaching; lack of respect that
deny a sense of professionalism in the workplace; absence of career ladders; continue studies; and their
work do not fit with their personal lives.

The results further revealed that all of the socio-demographic characteristics of the respondents showed
significant relationships with their turnover intention and, of the eight job satisfaction variables, only
four (challenging assignments, recognition, professional growth and use of best abilities) had significant






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relationship with turnover intention while there were seven of the ten job dissatisfaction variables
(relations with supervisor, relations with co-workers, technical supervision, security of tenure,
employee benefits, home life and workgroup ) showed significant relationships with turnover intention.

In order to address issues on high turnover in the IT Service Industry in Cagayan de Oro City, an action
plan to minimize employee turnover was formulated. The goal is to improve retention of workers in the
IT Service Industry in Cagayan de Oro City. The action plan addresses three issues, to name: the socio-
demographic characteristics, the job satisfaction variables and the job dissatisfaction variables.

The researcher therefore concludes that of the eight job satisfaction characteristics identified in
Herzberg’s Motivation-Hygiene Theory, the results of this study indicated that only four job
characteristics evidently have the capacity to gratify the respondents’ needs, to name: challenging
assignments, recognition, professional growth and the use of best abilities, thus influenced their
intentions to stay or leave the company. In the same way, of the ten hygiene or job dissatisfaction
variables mentioned by Herzberg, only seven significant factors influenced respondents’ preference to
stay or quit, to wit: relations with supervisor, relations with co-worker, technical supervision, and
security of tenure, employee benefits, home life and workgroup. This study has also tested the
relationship of the socio-demographic characteristics of the respondents to that of their turnover
intention and it is clear that the respondents’ decision to stay (or leave) the IT Service Industry were
also significantly influenced by their age, sex, civil status, number of dependents, type of IT Service or
BPO Industry, educational attainment, rank, monthly salary and length of service with their present
company. Three overarching deductions can be drawn from the results. First, by carefully reviewing the
profile of the applicants in the recruitment and selection process, the establishment can hire employees
who will be more likely to stay in their company. Second, by increasing job satisfaction in terms of
challenging assignments, recognition, professional growth and the use of best abilities, respondents will
be more apt to stay in their organization. And third, by lessening the level of job dissatisfaction in terms
of relations with supervisor, relations with co-worker, technical supervision, and security of tenure,
employee benefits, home life and workgroup, retention should improve.

In minimizing the issues on employee turnover, an action plan was proposed. The following were the
action plan’s objectives: Objective One addresses socio-demographic issues; Objectives Two, Three,
Four and Five deal with job satisfaction issues; and Objective Six, Seven, Eight, Nine, Ten and Eleven
tackle job dissatisfaction issues.

This study has straightforward but profound management implications with respect to the cost of
employee turnover and the prevention of future employee turnover. Based on the findings and
conclusion of the study, the researcher recommended the following: In improving the retention of
workers in the IT Service Industry in Cagayan de Oro City, managers could apply the action plan
proposed in this study to minimize turnover. Additionally, a study made by a BPO Industry in India
suggested that exit interviews can be conducted to know the reasons for employees’ resignations. The
study also proposed that at the time of recruitment, IT Service Industry could do the following: (1) select
the right people through competency screening; (2) use psychometric tests to get people who can work
at night and handle the monotony; (3) offer an attractive, competitive, benefits package; (4) make clear
of performance enhanced incentives and other benefits and keep these promises later; and, (5) IT
Service Industry can set up offices in smaller towns, or recruit from there, where opportunities are few.
When at the office, (1) ensure that an employee’s work is communicated clearly and thoroughly
including the details of the job, its importance, the process and the maximum time that can be allotted to






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complete it; (2) give the employees necessary tools, time and training for them to do their job well; (3)
have a person to talk to each employee at regular intervals; (4) the quality of the supervision an
employee receives is critical to employee retention; (5) provide the employees a stress free work
environment; (6) ensure that employees know that their work is important for the organization; (7)
provide employees’ reward, recognition and appreciation; (8) offer excellent career growth prospects;
(9) home-work life balance initiatives are important; and (10) implement proficiency models, which are
well integrated, with HR processes like selection and recruitments, training, performance appraisal and
potential appraisal. As regards the night shifts schedule of the industry, the following were also
proposed: (1) have doctors advise them about health problems and the ways and means to deal with
them; (2) organise programmes where people from other professions, who have night shifts talk to
employees about their experiences; (3) organise training, counselling and development programmes for
employees; (4) if needed, provide special lights in the workplace to ensure that their bodies get
sufficient vitamin D; and (5) one distinct disadvantage of night shifts is the sense of disorientation with
friends and family members (http://www.bpoindia.org/research).

The researcher also recommended for further studies on the following: A replication of the study at
different geographical locations and culture would throw a light on this study. A further study may be
conducted separately for the socio-demographic characteristics, job satisfaction and job dissatisfaction
so that more detailed and appropriate solutions could be provided for it. Also, in the light of the Global
Financial Crisis, a study on the trend of the staff attrition in the IT Service Industry is also recommended.
It is also recommended that a separate study for each type of IT Service Industry, call centers, medical
transcription and software development by firm size could be made to have a complete assessment on
employees’ turnover intention. A cost and benefit analysis may also be done for employees’ turnover
and another area for recommended research is to investigate the preferences of recently separated
employees in order to draw comparisons between the one they left and the one they prefer. The
researcher also recommends further studies to examine employees’ perception to actual decisions.
Research into these areas could provide managers with a better idea of what strategies to use to attract
and retain employees.


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