Abstract
Orientation: Effective human resource practices (HRP) that include recruitment, orientation, training, career development, compensation and industrial relations that suit the needs of employees can improve the psychological aspects of organisational support and employee engagement (EE) that have an impact on minimising employees’ turnover intention (TI).
Research purpose: To analyse the effect of human resources practices, perceived organisational support and EE in minimising employees’ TI in a state-owned transportation company.
Motivation for the study: This study provides an in-depth analysis of factors affecting employees’ intention to leave and recommends solutions to develop a conductive, productive working atmosphere. Identifying the employee’s intention to leave is important in controlling turnover.
Research approach/design and method: The study was conducted based on the social exchange theory. The researcher used a nonprobability, convenience sampling method and distributed 450 questionnaires to respondents with the help of the HR department. About 377 questionnaires were returned and met the criteria for data processing. The study uses a quantitative approach; data processing uses SEM procedures.
Main findings: This research found that effective HRP in accordance with the needs of employees have a direct and significant influence on the increased perceived organisational support and EE. However, HRP was found not to affect TI. Further analysis shows that perceived organisational support and EE simultaneously act as mediating variables that link HRP and TI.
Practical/managerial implications: The positive behaviour of employees can be developed through the company’s effort of establishing a conducive, supportive work environment for employees.
Contribution/value-add: Studies related to work behaviour in State-owned Enterprise (SOEs) are important so that human resource leaders or managers and other policymakers have a broader point of view when putting together HR programmes, considering that they have a big impact on employees and enterprises. However, cross-sectional data collection makes the generalisation rate of the findings should be carefully observed.
Keywords: HR practices; perceived organisation support; employee engagement; turnover intention; state-owned enterprise.
Introduction
A reliable, experienced human resource is amongst the most fundamental assets of a company, particularly the public transport company. Failure to obtain such resources is likely to result in suboptimal products and service delivery. Companies are necessary to provide developmental programmes to keep employees’ skills updated. In addition, it is also pivotal to establish a conducive, supportive work environment to make employees feel comfortable and eventually contribute to the company’s competitive advantage. One of the challenges companies face is related to turnover issues. An excessive turnover rate can potentially hinder the company’s operation and cause losses. Hence, retaining well-performed employees and maintaining turnover rates at a healthy level can bring positive expected results such as better efficiency, effectiveness, productivity, and higher company profits (Hur & Hawley, 2019; Ogony & Majola, 2018). In contrast, failure to perform proper management is likely to adversely affect the company (Palesciuc, 2019).
Turnover issues are currently faced by both private and government owned companies in Indonesia. However, studies in the Indonesian context investigating turnover are still limited. In general, employees in state-owned transportation enterprise rarely leave their organisation as they have clear compensation and pension guarantees. However, the leaving of an employee with central roles may significantly affect the company. It should also be emphasised that today’s employee composition comprises individuals from different generations such as baby boomers, generation X, generation Y and millennials. This diversity can affect the company’s work condition and lead to a high turnover rate when improperly managed (Prahadi, 2015). In this regard, the present study aims to analyse the turnover rate and its underlying factors amongst employees in a SOE.
Employee’s intention to leave indicates the future possibility that employees may leave. Intention to leave refers to an employee’s attitude, whilst the action of leaving the company is often called turnover. This study particularly focuses on the resignation submitted by employees. The term intention to leave refers to the state in which employees are planning their leave but have not realised it (Chen et al., 2014). Studies in the Indonesian setting have reported a range of factors causing employees’ turnover, such as the compensation system (Permana, Mukzam, & Ruhana, 2015), organisational support (Kusuma & Mujiati, 2017), stress levels (Yuda & Ardana, 2017), job satisfaction (Pawesti & Wikansari, 2016), organisational commitment (Irbayuni, 2012), career development (Bibowo & Masdupi, 2015) and employee engagement (EE) (Artiningrum & Satrya, 2016). To analyse the employees’ turnover rate, it is necessary to identify the employees’ intention to leave.
Research purpose and objectives
Identifying the employee’s intention to leave is important in controlling turnover. By knowing the intention, the company can take concrete steps to prevent it whilst improving the internal conditions to minimise employees’ intention to leave in the future. This study used human resource practices (HRP) as the independent variable and perceived organisation support (POS) and engagement employees (EE) as the mediating variable. The study applied the theory of social exchange (Cook & Rice, 2006), which believes that individuals who receive positive treatment are likely to provide similar feedback. The present study provides an in-depth analysis of factors affecting employees’ intention to leave and recommends solutions to develop a conducive, productive working atmosphere.
Literature review
Human resource practice and turnover intention
Enterprises with effective HR management practices indicate their serious investment in employees. Such practice can improve employees’ work–life quality as they have a pleasant job, a promising opportunity to develop and a promising career path, in addition to an enjoyable work atmosphere. Effective human resources management contributes to the formation of positive attitudes and behaviours of employees, amongst others; improving work–life and family balance (Singh, Nandan, & Chawla, 2015), increasing the intention to stay (Kehoe & Wright, 2013), increasing the tendency of productive behaviour (Kura, Shamsudin, Umrani, & Saleh, 2019), affective commitment (Naeem, Mirza, Ayyub, & Lodhi, 2017), lowering absenteeism (Vermeeren et al., 2014), and also lowering the turnover rate (Alfes, Shantz, Truss, & Soane, 2013). Studies on the effect of effective human resources management on turnover rates have been conducted worldwide, including Australia (Ang, Bartram, McNeil, Leggat, & Stanton, 2013), Belgia (Marescaux, Winne, & Sels, 2013), China (Zhong, Wayne, & Liden, 2015), India (Guchait & Cho, 2010), Iran (Karatepe & Vatankhah, 2014) and Italy (Russo & Buonocore, 2012). Different findings reported by these studies imply that the practice may vary from one organisation to another.
Perceived organisation support, engagement and turnover intention
Previous studies report that POS positively affects engagement whilst negatively affecting turnover (Park, Newman, Zhang, Wu, & Hooke, 2015). Based on the social exchange theory, an enterprise with policies showing support to employees may develop their positive feelings and minimise their turnover intention (TI). The reciprocal principle holds that individuals tend to feel obliged to help or reciprocate kindness to others who have helped them (Gouldner, 1960). The individuals or employees who feel the support from their organisation are likely to develop a feeling of obligation to reciprocate the ‘goodness’ with positive attitudes and behaviours (Eisenberger, Armeli, Rexwinkel, Lynch, & Rhoades, 2001). Individuals with sufficient support from their organisation are likely to exhibit more engagement with their job and stay. Table 1 shows the findings of previous studies on the effect of POS on TI. Table 2 displays findings on POS-to-engagement relationships, and Table 3 summarises the relationship between engagement and TI.
| TABLE 1: Relationship between perceived organisation support and turnover intention. |
| TABLE 2: Relationship between perceived organisation support and engagement. |
| TABLE 3: Relationship between engagement and turnover intention. |
Mediation role of perceived organisation support and engagement
Before developing a hypothesis for this study, it is necessary to first understand whether POS and employees’ engagement have a role in mediating the relationship between HRP and TI. Tables 4 and 5 present the findings of mediation analysis that has been conducted in several countries using samples from diverse industries. It appears from these results that POS can act as mediation in the relationship between HRP and TI as well as between HRP and EE. However, engagement also performs the same function in the relationship between HRP with TI and POS with TI.
| TABLE 4: Mediation of perceived organisation support on turnover intention. |
| TABLE 5: Mediation of engagement on turnover intention. |
Hypotheses development
Based on the study of the article discussed, this study will determine six direct relationship hypotheses and three hypotheses related to mediation testing. Here are each of these hypotheses:
Hypothesis 1 (H1): HRP will have a significant negative effect on turnover intention (TI).
Hypothesis 2 (H2): HRP will have a significant positive effect on POS.
Hypothesis 3 (H3): HRP will have a significant negative effect on Engagement.
Hypothesis 4 (H4): POS will have a significant negative effect on turnover intention (TI).
Hypothesis 5 (H5): POS will have a significant positive effect on Engagement.
Hypothesis 6 (H6): Engagement will have a significant negative effect on turnover intention (TI).
Hypothesis 7 (H7): POS will play a significant role as mediation in the relationship between HRP and turnover intention (TI).
Hypothesis 8 (H8): Engagement will play a significant role as mediation in the relationship between HRP and turnover intention (TI).
Hypothesis 9 (H9): POS and Engagement will simultaneously play a significant role as mediation in the relationship between HRP and turnover intention (TI).
Research method
Participants and procedures
The present study was conducted in a SOE in Bandung, Indonesia. This was a branch office of a public transportation company. The researcher applied nonprobability convenience sampling methods and distributed 450 questionnaires to employees through the HR department. Of 450 questionnaires, 377 questionnaires were returned (response rate 83.78%). Table 6 displays the demographic data of respondents in this study.
Measurement
Questionnaire as a research instrument used in this study comprised 59 items. Thirty-three items were used to measure HRP, six items to measure POS and six items to measure TI and 14 items to measure EE. The question for measuring HRP is developed based on the concept of Tessema and Soeters (2006) with examples of items as follows; ‘Management has a strong commitment to the training programs’ and ‘The results of performance assessment are used as the basis for decisions on training and career development’. The Cronbach’s alpha of this variable was 0.980. Questions for POS and TI using items contained in the article Prasetio, Luturlean, Anggadwita and Prameswari (2020). There are six question items for POS with examples of ‘The enterprise cares about my welfare’ and ‘The enterprise respects and value my contribution’. Cronbach’s alpha is 0.961. Examples of questions for TI are ‘Often thinking of quitting from work’ and ‘Actively look for better employment opportunities’. Cronbach’s alpha is 0.925. To measure EE, researchers used items developed by Schaufeli, Salanova, Gonzals-Roma and Bakker (2002) consisting of 14 questions. Examples for the question are ‘Proud of the work that I do’ and ‘My work is full of meaning and purpose’ with Cronbach’s alpha 0.956. The whole question has six alternative answer options from 1 (strongly disagree) to 6 (strongly agree).
Ethical considerations
This article followed all ethical standards for research without direct contact with human or animal subjects.
Results
Relationship between variables
Table 7 shows the relationships between variables. The direction and significance of the relationship are in accordance with the researchers’ guesses. It appears that the correlation between HRP and POS is relatively very strong. Whilst the correlation between HRP with engagement and POS with engagement includes medium. Correlations between HRP, POS, and engagement with TI show negative (opposite) directions with relatively weak values.
| TABLE 7: Mean, standard deviation, correlation. |
Hypotheses testing
To examine the hypotheses of the direct effect of HRP on TI and the indirect effect through POS and engagement, we use SPSS with Macro Process from Hayes (2018). The process is performed to investigate whether there is any mediation. The first step is to present the regression result, showed in Table 8 that is also used to answer hypotheses H1–H6. There are two hypotheses that do not support. H1 does not support, which means there is no direct effect of HRP on TI (p-value > 0.05), and H4 does not support, which reveals there is no direct effect of POS on TI (p > 0.05). H2, H3, H5, and H6 are all, respectively, supported.
The next step is to examine the possibility of mediation by POS and engagement. Based on the work of Hayes (2018), a variable is said to have a mediating role if the bootstrap result shows that the upper level and lower level confidence interval (ULCI and LLCI) values do not contain zero (0). Table 9 provides the result. As mentioned earlier, HRP does not have a direct effect on TI. Regarding the role of POS as mediation, we also have no evidence that supports the idea (ULCI and LLCI contain zero). Perceived organisation support will not play a significant role as mediation in the relationship between HRP and TI. Hypothesis H7 is not supported. However, the H8 hypothesis is supported; engagement has a mediation role as ULCI and LLCI do not contain zero. The interesting things are when POS is combined with engagement, then they both play a significant role in mediation; thus H9 was supported. We can safely mention that the intervention of POS and engagement can change the relationship model between HRP and TI.
| TABLE 9: Effect of human resource practice on turnover intention. |
Discussion
It is quite surprising that HRP and POS do not have a significant effect on TI. The finding of the present study is different from previous studies. Respondents in this study viewed that HRP alone is insufficient to make them stay in the organisation. This finding supports previous studies reporting the insignificant effect of HRP on TI (Russo & Buonocore, 2012; Zhong et al., 2015). When measuring the effect of POS on IT, we found at least two articles that provide the same result with our study. They were studies conducted by Wilson and Chaudhry (2017) at the IT industry in India and Maertz, Griffith, Campbell and Allen (2007) on social workers in the United States, reporting no significant relationship between POS and TI. The contribution of this research is to strengthen the findings of previous research, which examined the public transportation industry sector in Indonesia. These results prove to HR managers that HR practice hardly brings the same result all the time. Therefore, a variety of methods should be done to handle the problems and conditions of each company.
The result of this study supports the findings of the previous study whilst contradicting others. We have proven that HRP has a significant and positive effect on POS and engagement, consistent with findings from Pohl, Vonthron and Closon (2017). Alfes et al. (2013), and Kura et al. (2019). In terms of the effect of POS on engagement, this study also supports the findings of Al-Omar et al. (2019) and Ott et al. (2018). Finally, we also have similar findings with Boakye et al. (2019), Wang et al. (2020), and Memon et al. (2020) who report the negative effect of engagement on TI.
The result regarding the mediation role also contradicts some previous studies. Kuvaas (2008) reports that POS does not mediate the relationship between HRP and TI, whilst Allen et al. (2003), in contrast, report the significant result. Our study seems to support the finding of Kuvaas (2008). Employees in the SOEs stated that the combination of effective HRP and adequate POS does not necessarily make them stay. However, employees with strong engagement tend to consider staying and helping the organisation achieve its goals. Our finding on the mediating role of engagement in the relationship between HRP and TI is consistent with Memon et al. (2020) and Alfes et al. (2013). Our model exhibits a smaller deviation compared to models in previous studies.
Implications and future study
Despite its contribution to the field of HR and organisational behaviour, some limitations of this study were noticed. The first limitation relates to the sampling method. Samples of the study were employees of SOEs in Bandung and did not represent all SOE employees in Indonesia, thus limiting the generalisability of the study. Future studies are suggested to involve employees in several cities, at least in Java Island as Indonesia’s most populated island.
The second limitation relates to the data collection procedure. Researchers were assisted by the HR department in distributing and collecting questionnaires. Researchers used a nonprobability method with convenience sampling. This method was selected by considering the employees’ tight schedule that the presence of researchers to perform probability methods can interfere with the enterprise’s operations. Ideally, researchers can determine samples more accurately so that the results of the study are stronger. However, when it comes to interactions with employees in the enterprise, it is relatively difficult to realise. To minimise irregularities, it is recommended that samples be taken above 50% of the population in one office.
The third limitation lies in the nature of data collection that uses a self-report questionnaire. Although participants have been ensured with confidentiality and the instrument has met the reliability and validity, self-reporting is prone to a deviation that may fail to represent the respondents’ condition. However, researchers have tried several ways to minimise bias in each respondent’s answer. A qualitative study can provide broader and deeper insights from employees’ lens.
Conclusion
Human resources practices in Indonesia still vary. Whilst some companies put serious attention on their employees, other companies just simply have HR programmes. This condition happens both in private- and state-owned enterprises. The SOE where the present study was conducted was considered to have effective HR practices. Further studies are also required to improve human resources management in other SOEs. Further research can explore the application of Human Resource Practices in private and SOEs in Indonesia at various degrees with more samples to depict human resources management in Indonesia both in terms of recruitment, training and development, compensation, job assessment, career development, industrial relations management, as well as the provision of occupational safety and health guarantees. Furthermore, it is also necessary to examine the impact of the implementation of human resources practices on performance.
Acknowledgements
Competing interests
The authors have declared that no competing interests exist.
Authors’ contributions
All the authors contributed equally to this work.
Funding information
This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.
Data availability
The data that support the findings of this study are available from the corresponding author (A.W.) upon reasonable request.
Disclaimer
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors.
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