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Talent Management Practices, Perceived Organizational Support and Employee

Retention: Evidence From Malaysian Government-Linked Companies

Article  in  Global Business and Management Research: An International Journal · December 2018

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 Global Business and Management Research: An International Journal
Vol. 10, No. 3 (2018, Special Issue)

Talent Management Practices, Perceived

Organizational Support and Employee Retention:
Evidence From Malaysian Government-Linked
Companies
Aerni Isa *
School of Management, Universiti Sains Malaysia, Malaysia
Email: anneisa@yahoo.com

Hazril Izwar Ibrahim

School of Management, Universiti Sains Malaysia, Malaysia

Amar Hisham Jaaffar

College of Business Management and Accounting, Universiti Tenaga Nasional, Malaysia

Nur Lyana Baharin

College of Business Management and Accounting, Universiti Tenaga Nasional, Malaysia

* Corresponding Author

Abstract
Purpose: To investigate the relationship between talent management practices, perceived
organizational support and employee retention.
Design/methodology/approach: Quantitative using survey instrument; 143 responses collected.
Findings: Perceived organizational is significant as a mediator for talent identification and talent
development.
Research limitations/implications: Limited responses from GLCs to participate in the surveys
restricting the sample size of the study.
Practical implications: This study provides an in-depth understanding on the implementation of
talent management practices and the role of perceived organizational support in retaining a
talent.
Originality/value: There is lack of empirical evidences with regard to talent management
practices in the local context. This study proves the significance of talent management practices
for GLCs.

Keywords: Talent Management Practices, Perceived Organizational Support, Employee

Retention, GLCs.

Introduction
Globally, business entities where the government has a dominant financial interest are known as
government linked companies (GLCs). GLCs are actively involved in the national economic
agenda by providing essential services to the country, however, GLCs role is not only limited to

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economic activities as they are also endowed with the responsibility to carry out economic and
social agenda formulated by the government, such as attracting new investments and indirectly,
creating new employment activities. GLCs are involved in various economic sectors, opening up
employment opportunities for 400,000 employees, 36 per cent market capitalization in Bursa
Malaysia and 54 per cent trading in the Kuala Lumpur Composite Index. Thus, this research is
significant, taking into account GLCs importance in the creation of employment for 5 per cent of
the national workforce (Ministry of Finance, 2010; Abdullah, 2005; Norhayati and Siti Nabiha,
2009).
However, the major issue that impedes GLCs performance is talent shortage. According to
Malaysian Standard Classification of Occupations (2016), this is an issue commonly faced by
most organizations, which includes lack of capable managers, professionals, technical support
and other skill related positions. Similar to other countries, Malaysia is dependent on human
capital to help aid the developments of its ever growing economy. The human capital needs of
GLCs must be well governed in order to remain competitive nationally and internationally.
According to Jauhar and Mohd Yusoff (2011) massive brain drain is an ongoing problem for
organizations in the country and this scenario has caused shortage of professionals in Malaysia,
as the country faces stiff competition from firms in developed countries, as they prefer to recruit
the local Malaysian talents. An organization’s failure to retain employees is an indicator that the
organization lacks the capability to manage its talents, resulting in them leaving the organization
(Osman, Omar, Mahphoth and Hashim, 2013). In order to minimize employee turnover,
organizations require the implementation of an employee policy that is able to influence
employee-level outcomes (Grissom, 2012). According to Bode, Singh and Rogan (2015)
retaining talented employees is highly important for long- term organizational growth as the
failure to do so is often associated with costs related to new recruitment and training, lower
morale and lower outputs (Grissom, 2012). Attracting and retaining the best talent depends on a
variety of elements like the individual’s age, the family situation, career mentoring and learning
opportunities, fringe benefits, networking and job title (Haider et. al., 2015; Yusoff et. al., 2013).
The current study proposes that talent management practices implemented in the GLCs will
influence the employee’s retention intention and this relationship is further influenced by the
perception of organizational support.

Literature Review
Talent Identification
Talent identification is a process of acquiring talents by internal and external recruitment or any
special activity to attract talents. In talent identification process, systematic identification of
potential talent involved the identification of key personnel who are able to create and deliver
towards the accomplishment of the organizational objectives (Davies and Davies, 2010). The
identification of potential talent at organization helps to improve organizational performance as
well as contributes to the sustainable competitive advantage by mobilizing the most appropriate
talent (Jyoti and Rani, 2014). Talents are crucial assets for an organization, identification of these
talents is important for the purpose of their future development. Identification of the potential
candidates can be conducted through the process of internal recruitment such as transfer, and
promotion of current employees (Tabassum, 2011). Categorization of talents found throughout
the organization can be categorized as administrative talents, professional talents or innovative
talents. Talent comprises of individual characteristics that flows from natural ability, which are
enhanced through the opportunities to learn, grow and systematic development of skills,

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competencies, and knowledge (Jyoti and Rani, 2014). Talent is crucial to meet the demand of the
business in organizations. Therefore, the processes involved in talent identification are to bridge
the gap between talent demand and talent supply. This will motivate GLCs to focus and predict
what skills, attitudes and behaviours they will need to drive the organization’s future success
(Khazanah Nasional, 2016). It is a crucial for GLCs to attract, develop and retain talents to
conserve their talent pool for filling position as senior employees resign or retire and this is
crucial in sustaining business performance (Dahlan, 2009).

Talent Development
Every talent should have the opportunity for growth and development, as the process of
developing talent requires the talent to acquire and enhance the skills and competencies to
perform their designated jobs. Based on the survey by the Chartered Institute of Personnel
Development (CIPD) (2009), the two most effective talent development activities are in-house
development programs and coaching. By focusing on talent development, employees will be able
to improve their job qualities and enhance their performance. Talent development is associated
with extending knowledge, abilities, skills and competencies and these are essential factors for
retention and engagement of employees. Employees’ learning and development is part of
important aspect in their career path in developing the required competencies for the assigned job
(Mehdiabadi and Li, 2016). Training and development for an employee is essential for the career
growth of the talent and it can provide them with the necessary support to face the on-going
challenges related to their work (Garavan, Carbery and Rock, 2012). Among the talent
development practices implemented by organizations include on-the- job training, mentoring, job
instruction training, professional courses and other forms of skill enhancement training
(Sheokand and Verma, 2014). Talent development encourages both vertical and horizontal
movement across the organization, in forms of employees given the roles that they prefer or as
part of promotion exercise and this helps in reducing turnover of employees. Throughout the
whole process, the talents perceive that their careers are growing and developing within the
organization, and possibly, they will be more committed towards their employment and the
organization for a lengthier duration (Jyotti and Rani, 2014). Thus, talent development can be
described as a social process for the purpose of sharing and acquiring information necessary to
the developmental experience of talented individuals within the organization.

Talent Culture
The integration of talent management practices in the culture of the organization will create
differences in the organization. There are two main functions of organizational culture, internal
integration and coordination; both of these functions create the sense of belonging and
commitment and creation of a competitive ground and development of social glue that holds an
organization together (Martins and Terblanche, 2003). Strong organizational culture will bond
the employees and employers to achieve a common goal in an organization. Furthermore, if the
present and desired cultures are aligned with employee’s values, it will lead to more intrinsic
aspects and job satisfaction (Belias and Koustelios, 2014). Organizational members are
responsible in generating, preserving and molding the prevailing culture of an organization. A
capable leader is able to differentiate the work culture from the competitor’s organizational
culture and indirectly provides competitive advantage to the organization (Madu, 2011).
Therefore, they need to foster a strong talent for sustaining the organization’s competitive
advantage and within this context an organization obtains superiority over their competitors if

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the organization’s leaders are able to focus on cost efficiency and cultivate creativity among their
subordinates (Thompson, Strickland and Gamble, 2005). Cultures of an organization play
significant roles in achieving success for the company and dysfunctional cultures should be
minimized in an organization. The culture of an organization also influences the level of
implementation of talent management used in the business entity.

Perceived Organizational Support

Employees view the orientation of their superiors towards them as an indication of
organizational support, as superiors are agents of the organization and responsible for directing
and evaluating the performance of their subordinates (Eisenberger et al., 1986). According to
Hur, Moon and Jun (2013), when employees perceive there sis support from their organization, it
will result in higher level of dedication towards their work and the organization. Employees will
exhibit positive behavior and consequently this will result in accomplishment of organizational
objectives (Eisenberger et al., 1986). Specifically, employees are immersed in norm of
reciprocity, as they become more committed towards their work. The employees are returning
the favour to the organization by attaining organizational goals through their job performance
(Rhoades et al., 2001). According to Lee (2004) norm of reciprocity are more relevant in the
current work environment as technology and globalization has changed work norms. Nowadays,
workers are involved in higher level of teamwork, complex assignments and longer work hours.
Thus, workers need to be constantly encouraged and motivated, to provide them with a sense of
support, in order for the employees to produce better work outcomes. Within this context, the
management’s representatives, the supervisors, are crucial as they are in the frontline. Their daily
tasks include the management of employees and they provide useful performance feedback and
empowerment to the employees. According to Eisenberger et al. (2002) and Allen et al. (2003)
the study of the determinants and outcomes of POS have empirically proven in the Western
hemisphere, however, such studies in the Asian context especially among Malaysian employees
in the GLCs are scarce. Therefore, this study is relevant to address the issue POS and employee
retention in the GLCs as they one of the main creator of job opportunities in Malaysia.

Hypothesis Development
The following hypotheses are generated based on literature review above:
H1: There is a significant and positive relationship between Talent Identification (TI) and
Perceived Organizational Support (POS)
H2: There is a significant and positive relationship between Talent Development (TD) and
Perceived Organizational Support (POS)
H3: There is a significant and positive relationship between Talent Culture (TC) and Perceived
Organizational Support (POS)
H4: There is a significant and positive relationship between Perceived Organizational Support
(POS) and Employee Retention (ER)
H5: Perceived Organizational Support (POS) will significantly and positively mediate the
relationship between Talent Identification (TI) and Employee Retention (ER)
H6: Perceived Organizational Support (POS) will significantly and positively mediate the
relationship between Talent Development (TD) and Employee Retention (ER)
H7: Perceived Organizational Support (POS) will significantly and positively mediate the
relationship between Talent Culture (TC) and Employee Retention (ER)

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Method
The study utilizes non- probability sampling design, which is purposive sampling. Through
purposive sampling, it is necessary to obtain from the specific target groups and it confined to
specific types of people who can provide the desired information (Sekaran, 2013). For instance,
employees that categorized as those under the talent pool were chosen because they are in
program and able to provide the information required.
For this study, the target populations (N) are the GLCs and the unit of analysis is the number of
employees participating in the survey with a bachelor degree or diploma qualification or higher.
The process of sample selection will involve 47 GLCs which are listed in Bursa Malaysia stock
exchange (Khazanah Research Institute, 2015). The target respondents for this study are the
employees selected under talent pools at GLCs because they can provide relevant and reliable
information to the researcher in studying the relationship of talent management practices, and
roles of perceived organizational support in retaining a talent at GLCs. A total of 143 responses
were collected.

Instruments
The questionnaires under talent management practices are divided into three categories (talent
development, talent identification and talent culture) while perceived organizational support and
employee retention have only one subcategory. For talent management practices, the measures
are adopted from Davies and Davies (2010), Colling and Mellahi (2009), Kabwe (2011), Shuler
and Jackson, (2005), Koranteng (2014), Tarique and Schular (2010) and Cheese (2008), the
measurement instrument for POS is adopted from Eisenberger et al.’s (1986) scale and it
contains seven items; and the study adopted Kyndt et al.’s (2009) measurement for employee
retention, the measurement contains 11 items. All the items are measured with seven points
Likert scale ranging from (1) for strongly disagree until (7) for strongly agree.

Findings
Discriminant Validity
For the purpose of this study, the principle by Fornell and Larcker (1981) was used to determine
the discriminant validity of the dimensions, where, the correlation of the various dimensions is
compared against the AVE values square roots of the dimension. If the dimension of AVE
values’ square roots is greater than the highest correlation, this will provide evidence of
discriminant validity (Hair et al., 2013). According to Hair et al (2013) if the correlation matric
exhibits a higher AVE, this is proof of a strong correlation between the dimension and its’ own
index rather than with other dimensions. A shown in table 2, the AVE’s square roots as
embodied in the matrix diagonals, were higher in relation to the off-diagonal cases of the other
dimensions. Therefore, the outcome of the analysis proved that there was discriminant validity
and the dimensions are distinguishable from each other.

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Table 1: Discriminant Validity

ER POS TC TD TI
Employee Retention (ER) 0.749 - - - -
Perceived Organizational Support (POS) 0.566 0.797 - - -
Talent Culture (TC) 0.396 0.425 0.78 - -
Talent Development (TD) 0.545 0.622 0.556 0.761 -
Talent Identification (TI) 0.497 0.635 0.553 0.632 0.729

The outcome of the hypotheses based on the analysis of the direct relationship of the variables is
as shown in the table below. Based on the previous studies, according to Hair, Ringle and
Sarstedt (2011) impact in the model is indicated when path coefficient exceeds 0.100 and 0.05
is the indicator for the level of significance. All the direct effects in Table 2 are significant,
except for talent culture.

Table 2: Hypothesis Testing (Direct Effects)

Hypothesis Relationship β Std. Error t-values Decision
H1 TI → POS 0.406 0.077 5.245 Supported
H2 TD → POS 0.372 0.090 4.136 Supported
H3 TC → POS -0.01 0.088 0.112 Not Supported
H4 POS → ER 0.566 0.068 8.370 Supported

Furthermore, the objective of the current research is also to investigate POS as a mediator,
between TMP and employee retention intention. According to Helm et al. (2010), in order to
prove the existence of an intervener as represented by POS, it is recommended that the outcome
of the analysis must establish the significance between TMP and POS and between POS and
employee retention. This result is reflected in the outcome of the bootstrapping analysis. If the t-
value is more than 1.96, the hypotheses were considered as supported. Table 3 below presents
the results of indirect relationship between talent management practices (talent identification,
talent development and talent culture) and employee retention: the mediating role of perceived
organizational support. The output from the mediation analysis confirmed the significant role of
POS as a mediator in indirectly affecting two dimensions of TMP, namely talent identification
and talent development’s relationship with employee retention. However, mediating effect was
insignificant between talent culture and employee retention.

Table 3: Hypothesis Testing (Indirect Effects)

Hypothesis Relationship β Std. Error t-values Decision
H5 TI → POS → ER 0.23 0.057 4.031 Supported
H6 TD → POS → ER 0.21 0.062 3.326 Supported
H7 TC → POS → ER -0.006 0.050 0.110 Not Supported

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Discussion and Conclusion

The findings from present study shows that talent development has the strongest direct effect on
perceived organizational support. Through talent development process, talents are given
opportunities by the organization to develop further their technical, management or other soft
skills, by undergoing courses or by assigning specific position in a project; such opportunities are
usually granted based on the employees’ performance in the organization. The talents will feel
that they are appreciated by the organization and are given the trust and support to handle
challenging and important tasks for the organization.
On contrary, the analysis of the results also indicated that talent culture have a non-significant
effect on perceived organizational support. This contradicts with hypothesis H3 presented earlier
in the paper, as well as with findings from previous study by Beheshtifar and Herat (2013). The
study also found significant and positive relationship between perceived organizational support
and employee retention. This is supported by findings by Wahab, Hong, Shamsuddin and
Abdullah (2014), stating that there is a negative relationship between perceived organizational
support and turnover intention; the higher the level of perceived organizational support felt by
the employees, the lesser likelihood for the employees to have the intention of quitting their jobs.
Similar findings by Godfrey (2011) noted that if organization shows appreciation on the efforts
and contribution by employees, the employees will feel a sense of gratitude and form attachment
to their organization. The recognition from the company based on the performance by the talents
will give assurance with regard to their job securities, as talent will not leave the organization as
long as they feel they are needed by the their respective organizations.
This study also analyzed the mediating effect of perceived organizational support between the
dimensions of talent management practices and employee retention. The result indicates that
while perceived organizational support significantly mediates between talent identification and
talent development against employee retention, it does not mediate the relationship between
talent culture and retention of employees.
Each individual in an organization have their own values and beliefs. Ideally at a workplace,
individual values should be aligned with a set of shared values set by the company in order to
achieve common objectives and also to promote loyalty as part of its organizational culture.
Sense of loyalty should be instilled among the company’s talent pool in order to prevent them
from leaving the organization, and loyalty usually grows proportionately with the duration of
working experience within the same organization. However, in a competitive workplace setting
and challenging economic conditions, personal objectives and individual needs will supersede
the organization’s aspirations. Despite high job satisfaction and support from management, there
is still strong desire for a talent to leave the company and join new organization in order to have
better employment terms such as job scopes, remuneration and benefits. In this case, talent
culture will no longer have significant impact on retention of employees. It can be concluded that
talent management practices, except for talent culture, contribute in retaining and building a
positive image of organization through the mediating factor of perceived organizational support
which in turn, affect employee retention.

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