In Organizations productivity is a very important issue. There are several factors that determine productivity of an organization. Nowadays Employee turnover in small and medium enterprises is one of those who are considered to be one of the difficult issues in business. The effect of employees turnover in small and medium enterprises has received huge attention from top management(senior executives), human resource professionals and other industrial psychologists has proven it to be one of the most costly and apparently difficult human resource challenges faced globally by different organizations in the whole world. The main purpose of this research is to discover the real causes behind the turnover and its harmful effects on the productivity of many industries. We (the authors) of this document have studied and visited numerous local organizations in both government and private sectors in Bahawalpur, Punjab, Pakistan, and observed the causes of turnover in small and medium enterprises. The real aim of this research paper was to discover the existing reasons of turnover, adverse affects, and possible results that could be useful for their productivity and market shares for local industries.
INTRODUCTION
Employee’s turnover in small and medium enterprises is a serious issue, especially in the field of human resource management. The rate at which employees leave a workforce and are replaced in organizations is called the employee turnover. This focuses on the market analysis and the costs occurring due to high labor turnover in small and medium enterprises There are various ways to define SMEs, with the most definitions based on the size of the firm or, more specifically, on the number of employees (Beck, Wigand, & Kong, 2005), SMEs also can be measured by the annual sales turnover. Generally, SMEs can be defined into two broad categories, that is manufacturing and services. In the category manufacturing, SMEs can be define as the enterprises that have annual sales turnover not exceeding RM25 million and full time employees and less than 50. In the categories services, SMEs are enterprises that have or the annual sales turnover not exceeding 25 million and full time employees less than 50.SMEs can contribute the big opportunities to public and wealth creation. In Pakistan company is considered SME when it has employees up to 250, paid up capital of Rs. 25 million and annual sales of Rs. 250 million (SME Policy, 2007). Despite of its entire growth still SMEs are not giving their maximum and the rate of failure is very high (Hussain et al., 2010). Most of the SMEs in Pakistan are in low growth trap and in fact 19% of the SMEs are less than 5 years old and only 4% survive beyond 25 years (Khawaja, 2006).
An enterprise is considered to be any organized effort intended to return a profit or economic outcome through the provision of services or products to an outside group (Carland, Hoy, Boulton & Carland, 1983). The operation of an enterprise traditionally requires the investment of capital and time in creating, expanding or improving the operations of a business.(Meredith,2001). Small to medium enterprises are considered those enterprises which have fewer than 250 employees. In distinguishing between small and medium sized enterprises, the small enterprise is defined as an enterprise which has fewer than 50 employees. These businesses are often referred to as SMEs and are associated with owner proprietors (Meredith 2001; Schaper & Volery 2004) According to Carland et al. (1983), an SME owner is an individual who establishes and manages a business for the principle purpose of furthering personal goals. The business is their primary source of income and will consume a majority of the owner’s time and resources. The owners perceive the business as an extension of their identity and are intricately bound with family needs and desires. In many countries employee turnover is giving sleepless nights to human resource managers. A widespread belief in many countries is that due to lack of manpower employees have developed bad behaviors. Unfortunately, despite the turnover of employees in small and medium enterprises is such a serious problem around the world, there are many studies to investigate this, but the employee turnover in small and medium enterprises has not decreased. There are three sets of previous experiences of turnover intentions in companies, i.e., controlled, uncontrolled and demographic. The results proposed that the extent of controlled turnover is much greater than uncontrolled turnover and main sources of employee turnover in small and medium enterprises are the poor management practices. Voluntary turnover is a major problem for businesses almost all over the world. According to the report on job-hopping by the Task Force, over two-thirds of the organizations indicated that they had suffered a loss of productivity greater than 10%, as a result of high employee turnover in small and medium enterprises. Apart from low level of productivity, the survey reported poor quality of products and services because of the high turnover and high cost of recruitment. Even more importantly, high turnover found to be one of the main sources of poor morale in many Organizations.
Industrialization has undergone profound changes, including in particular economic deregulation almost past 80 decades. These measures have led to fierce competition among carriers. Moreover, industrialization faced repeated challenges in recruiting and retaining qualified personnel. And during the past few years, conservation has become a very real problem across the industry worldwide. Intention to leave is affected by many variables such as job satisfaction, work stress, alternative Labor right person Agency Commitment to the organization, and last one is compensation etc.
If the misunderstandings of management are constant then distrust among employees would reduce the term of employment, increased turnover and intention to quit. The intention to leave can be categorized into unpreventable or unavoidable turnover desired turnover and undesirable turnover. Unpreventable turnover is due to the issues of family, personal illness or retirement. Additionally, the desired turnover is due to the inability of the employee himself. Last but not least, the Undesirable turnover consists of skilled and trained workers leaving due to organizational issue such as poor support, role conflict and lack of supervision. These issues affect the customer service, quality of products and service and organizational effectiveness.
The high turnover rates do not always mean that you have bad managers, or that it is a great place to work. Mostly Companies with famous brands and the visibility of the industry are the target of recruitment. Actually, it is not uncommon for hiring managers for recruitment to employee’s objectives of the five leading companies in the industry. In that case, you should consider only the reverse workers can stay because they have small number of opportunities to leave. Companies often take deep interest in rates of employee turnover in SMEs because they replace an employee which is a costly part of doing business. When a company needs to replace a worker it suffers the indirect and direct costs. All work to be carried out during the process cost money, take a year or two. Furthermore, there can be a loss of productivity during the time after the former leaves the workers and the new employee is fully trained. For some companies, the replacement of workers also could make it difficult to retain customers or clients with whom the employees worked.
The main objective of this research paper is to know about the factors that affect the employee’s turnover in small and medium enterprises and how the body is affected by this employee behavior. It is predictable that when few employees leave the company then high turnover rates lead to low productivity and high costs. Therefore, companies must aim to provide good working environment for employees to get low turnover rate for this purpose they should focus on all the variables that intentionally or unintentionally affect the willingness of turnover in employees. For example:
The opportunities for women to enter the upper ranks of management is limited by many factors, such as dual labor markets for men and women, while the male dominance, lack of support and widespread discrimination. It is not surprising that many women directors, frustrated in their efforts to move to ranks executive, have moved from the organization. Research shows that people who feel disadvantaged compared with others are more satisfied with their job Level of job satisfaction and alternative job is affected by demographic variables (gender, age and educational level), job-related variable (skill level, experience and tenure), organizational variables (firm size, industry, contact work, work environment) personality variables (salary scale, job security, pay, job involvement). If the person is satisfied with his work, then he will not intend to leave, but if he is not so intent to withdraw will increase, which will eventually lead to employee turnover in smes.
Organizational commitment is a commitment or obligation that restricts freedom of action (lien or enterprise). It also means how much a person is emotionally attached to the place where he works. Employee engagement is the key variable of research on the actual turnover or intention to leave. Organizational commitment is generally defined as an attachment or identification with the body. In psychological context affects employee attitudes towards the organization, such as trust, loyalty and results in achieving organizational goals. There are three types of Organizational Commitment. Following are the types of Organizational Commitment, Affective Commitment, Continuance Commitment and last one is Normative Commitment.
Perceptions of support were related to turnover intentions in SMEs. Employee satisfaction fully mediated the relationship between support and turnover intentions and had a stronger effect on turnover intentions in SMEs. Women have less intention to leave then men. Females in each country remain in a small fraction of senior positions. Although women in management positions have high levels of education and a desire to move on with their careers, the fact remains that few achieve the same status Second, we introduce a new structure, the satisfaction of employees and assume that the satisfaction of the employees will be more closely related to turnover intentions than job satisfaction, and employer satisfaction will mediate the relationship support turnover more strongly than job satisfaction. When a person realizes that he or she does not provide desirable and unique resources or skills in an organization, the adaptive response is to find another place to understand from looking for another job.
Person organization fit addressed the compatibility between people and entire organization. There are few major ingredients in organizational application that are suitable person environment and proper person working etc. Organizational culture can also receive significant to influence organization specific area, such as performance and commitment. A perceived alternative employment opportunity refers to a person’s perception of the availability of alternative jobs in the environment of the organization, and is a function of labor market conditions.
According to Milkovich et al. (2005), compensation refers to ‘all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship’ (p. 602). Concerning compensation, there are two components: direct financial payments and indirect payment (Dessler, 2000). Direct financial payments include ‘wages, salaries, incentives, commissions, and bonuses’ (Dessler, 2000, p. 396) and these are paid to employees based on increments of time or on performance. Indirect payments include financial benefits and will be discussed under Employee Benefits. Dessler (2000) stated that legal, union, policy, and equity factors influence the design of organizational pay plans. Without these factors, compensation plans may be perceived as unfair. Legal and equity factors will be discussed. There are many legal factors that influence the design of organizational pay plans and its administration. Across the last 76 years, the United States Congress has passed many acts standardizing wages and making salaries fair. This is primarily due to four concepts of comparable job worth used in the U.S.: ‘(1) equal pay for equal work, (2) equal pay for similar work, (3) equal pay for equal worth, and (4) pay parity’ (Patten, 1988, p. 4).
Research Background
Employees Turnover
Employees turnover can be define as employer gains or losses their employees. Turnover is measured for individual companies and for their industry as a whole. If an employer is said to have a high turnover relative to its competitors, it means that employees of that company have a shorter average tenure than those of other companies in the same industry. Existing literature suggests that employees’ organizational commitment and intention to leave are two important predictors of employee turnover (Griffeth & Hom, 1995; Griffeth, Hom, & Gaertner, 2000). Employees’ intentions to leave are consistently related to turnover behavior and explain more variance in turnover than other affective or emotional responses such as job satisfaction. Employee’s turnover is defined as an employee’s plan for intention to quit the present job and look forward to find another job in the near future (Purani&Sahadev, 2007; Weisberg, 1994) .An individual’s intention to leave their organization has been included in numerous stress models (Ivancevich, Matteson, & Preston, 1982; Kemery, Moss holder, & Bedian, 1987). In particular, intention to leave has been considered as a proximal antecedent since it captures employees’ perceptions and evaluations of job alternatives (Allen, Shore, & Griffeth, 2003; Mobley, Griffeth, Hand, & Meglino, 1979). Past research has demonstrated that intention to leave is one of the strongest predictors and an immediate precursor of employee turnover (Griffeth et al., 2000; Porter & Steers, 1973).
PROBLEM STATEMENT
The problem of labor shortage which was reported in mass media recently, has lead to an alarming issue of increased employee’s turnover rates in SMEs. Commentators have recommended that SMEs may have particular complicated in retaining employees because SMEs are likely to have lower levels of perceived employee’s authority than larger firms (Williamson 2000).So, we need to conduct this research. Another reason that motivates us to conduct this research is because there have no known research that anyone has conduct research study about the intention to leave and employee’s turnover among employees in small and medium enterprises. Moreover, it is hoped that by this research, it can help the SMEs in the manufacturing sector to understand the factor will cause high employees turnover rate in their organizations. Finally, this research also intends to help SMEs to decrease the number of employee’s turnover rate and retain their capable employees and hopefully these retained capable employees will put more effort to the growth of their organizations. Besides that, literature has suggested several factors that will effect on the relationship between intention to leave and employee’s turnover job satisfaction, organization commitment, person organization fit, job stress and Compensation. Thus we will carry out three research questions for this:
1) What are the factors that will affect an intention to leave?
2) Is there a significant positive relationship between job satisfaction, organization commitment; person organization fit, job stress, Compensation and intention to leave?
3) What is the relationship between intention to leave, job satisfaction, organization commitment; person organization fit, job stress and Compensation?
RESEARCH OBJECTIVE
First objective is to investigate factors that will affect an intention to leave among employees in small and medium enterprises. Second objective is to understand the relationship between intention to leave and employee’s turnover. The final objective is to understand the relationship between job satisfaction and intention to leave.
SIGNIFICANCE OF STUDY
Through this research proposal, we can determine the factor that will affect employee’s intention to leave. Besides that, we are managing to understand why intention to leave is able to influence an employee’s turnover rate in the small and medium enterprises. Therefore, by identifying the factors that affecting employees to leave are able to look into matter so as to implement and improve the satisfaction of employees and reduce employee’s turnover rate in SMEs.
Literature Review
Employees Turnover
Employees turnover can be define as employer gains or losses their employees. Turnover is measured for individual companies and for their industry as a whole. If an employer is said to have a high turnover relative to its competitors, it means that employees of that company have a shorter average tenure than those of other companies in the same industry. Existing literature suggests that employees’ organizational commitment and intention to leave are two important predictors of employee turnover (Griffeth & Hom, 1995; Griffeth, Hom, & Gaertner, 2000). Employees’ intentions to leave are consistently related to turnover behavior and explain more variance in turnover than other affective or emotional responses such as job satisfaction.
Employee’s turnover is also defined as an employee’s plan for intention to leave the current job and look onwards to find another job in the near future (Purani&Sahadev, 2007; Weisbeg, 1994) .An individual’s intention to leave its organizations has been included in many stress models (Ivancevich, Matteson, & Preston, 1982; Kemery, Mossholder, & Bedian, 1987). Particularly intention to leave captures employees evaluation and perceptions of job alternatives.(Allen, Shore, & Griffeth, 2003; Mobley, Griffeth, Hand, & Meglino, 1979) . Past research had explained that intention to leave is one of the biggest predictors and an immediate sign of employee’s turnover (Griffeth et al., 2000; Porter & Steers, 1973). The resignation of experienced worker has a negative impact on the success of a company. The organizations bear the costs of hiring and training of the new employees for the replacement of the employees who leave the job. This research results prove that employee’s turnover is affected by the job stress, Job satisfaction, organization commitment; person organization fit and compensation with organization decreases due to the increase in stress .And if organizational commitment and job satisfaction is low then it will increase the propensity to leave (Hellman, 1997; McBey and Karakowsky, 2001; Ghiselli et al., 2001). Moore, (2002) stated that a factor greatly effects people’s intention to leave their jobs which is job satisfaction. According to Barak et al. (2001), job satisfaction has been found as the key reason due to which employees leave their jobs. There is a significant negative association between turnover intention and job satisfaction (Chan and Morrison, 2000; Ghiselli et al., 2001; McBey and Karakowsky, 2001). In contrast of the other employment opportunities available, job satisfaction is the good predictor of turnover intention (Purani & Sahadev, 2007; Shields Ward, 2001). El-Jardali et al. (2007) stated that there is a negative relationship among job satisfaction and turnover intention. Various studies results confirm the strong negative correlation of job satisfaction and intention to leave (Abraham, 1999; Mannheim et al., 1997). Therefore, we imagine a negative relationship among job satisfaction and turnover intention.
Stress occurs when individuals identify that the pressures or requirements of the job are better than their abilities to manage with them. At work, stress may be an insight pointed out by role ambiguity, role conflict, or work overload which arises from the working environment and individual characteristics. Eustress and distress are the kinds of stress. Eustress helps initiate goal-striving and is not negative necessarily. If eustress is low from the moderate levels then it may motivate people to excel and boost performance. Eustress is combined with disruptive pleasure to support performance while demanding the true combination of challenge. To decrease dullness and to persuade higher work performance it is necessary to create association between these elements inside a role. Distress is a state, which takes place when an individual identify a risk, challenge, or loss. When the level of stress increases from the resources and coping abilities possessing by someone then results can be unfavorable both for employees and organization because stress is a crucial factor influencing both performance and work in organizations. The negative impact of distress on several job-related outcomes has been extensively acknowledged.
Increased absenteeism high turnover, deteriorating personal health, emotional exhaustion, reduced organizational commitment, and lower job performances are the examples of stress. Finally, in various studies stress has been associated with career change intention. When the pressures frequently faced by the worker in his field increases then for the purpose of reducing this stress the worker will change careers. On the basis of this evidence it is predicted that overstressed employees will follow suit and change careers. Thus, we propose:
When distress reaches at that level where someone cannot cope with it then distress positively influence the intention to leave.
Organizational commitment
Organizational commitment is defined as potential of connection among employees and the organization (Upchurch, Dipietro, Curtis, & Hahm, 2010). In other terms, if the relationship is strong then the commitment will be high and if it is weak then the commitment will be low. The relationship demonstrates that that how much employees trust and accepts the target and the worth of the organization (Mowday, Porter, & Steers, 1982), and how eagerly the input efforts for the organization are ready to be done (Meyer & Allen, 1991).
When employees of the organization assume that their loyalty is admired and he/she is motivated then they will continue in the firm. Promotion through course of action can cretin that the level of management are well aware about the culture and structure for the company, but if the competition for promotion is too hard can lead to unethical or morally wrong incident. Many issues were found to correlate with the size of organizational commitment. Maxwell and Steele (2003) discovered that the reward expectation, recognition, interpersonal relationships and workload have a great impact on the level of commitments For example, the more collisions and interpersonal relationships are worse, lower organizational employee engagement procedures. If organizational the engagement is greater than the intention to abandon less. Rate on the other hand, if the freezing organizational is less than the rate of intention to leave will be greater. There are further three types of organizational commitment following are the three types of organizational commitment. Affective commitment, continuance commitment and last one is normative commitment.
1) Affective Commitment:
Affective Commitment is defined as the employee’s positive emotional correlation to the organization. An affectively committed employee is an employee that strongly supports with the goals and objective of the organization and wish to remain a part of the organization. This employee support to the organization because they ‘wants to". In developing this concept, Meyer and Allen drew largely on Mowday, Porter, and Steers’ (1982) concept of commitment, which in turn drew on earlier work by Kantar (1968).
2) Continuance Commitment:
The employees commits to the organization because he/she know the high costs of leaving or losing respective organizational membership (cf. Becker’s 1960 "side bet theory"), these cost can be financial and non- financial such as pension accruals and friendship ties with co-workers that would be incurred. The employee remains as a member of the organization because they "have to".
3) Normative Commitment:
The employee commits to an organization because of feelings of obligation. These feelings of obligation may come from many sources. For the example, the organization may have put many resources and money in training an employee, after that the employees feels a ‘moral’ obligation to put more effort on the job and stay with the organization because they think there are their responsibility.’ It may also reflect an internalized norm, developed bef ore the person joins the organization through family or other socialization processes, that one should be loyal to one’s organization.
Job Satisfaction:
The other topic that has extensively been examined in the employee turnover intention research is job satisfaction. Truly speaking, job satisfaction demonstrates the number of satisfied individuals with their jobs. In general, job satisfaction was found to be negatively related to turnover (Griffeth et al, 2000; Khatri et al, 2001; Tett & Meyer, 1993; Vong, 2003).
In efficient compensation programs worker should intend to raise the stage of satisfaction with motivation and reward workers for their share to the improvement of productivity. Most of the studies concluded that employee satisfaction is the most forecasting aspect in turnover. Griffeth et al (2000) defined remuneration association with supervisor, working conditions and job content as different cause in employee’s satisfaction. When the job satisfaction and turnover considered in the future, special interest is required as a different idea of job satisfaction, the terminology and the difference in research settings can cause different results. If the employee is dissatisfied with the job, then the intention of leaving rate is high. On the other hand, if the employee is satisfied with its job, then the proportion of the license is longer. Psychology, sociology, economics and management sciences, had investigated that job satisfaction is a generally studied subject in work and organizational literature. Job satisfaction is simply how people feel about their jobs and different aspects of their jobs. There are important reasons why organizations should be concerned with job satisfaction, which can be classified according to the focus on the employee or the organization. First, the humanitarian perspective is that people deserve to be treated fairly and with respect. Job satisfaction is to some extent a reaction of good treatment. It also can be considered an indicator of emotional well-being or psychological health (Haccoun and Jeanrie 1995). Second, the utilitarian perspective is that job satisfaction can lead to behavior by employees that affect organizational functioning, as well as a reaction on organizational functioning. Differences among organizational units in job satisfaction can be diagnostic of potential trouble spots (Beatty 1996). Each reason is sufficient to justify concern with job satisfaction. Combined, they explain and justify the attention that is paid to this important variable. This is because many experts believe that job satisfaction can have effect to the workplace, for example job satisfaction will affect labour market behaviour and influence work productivity, employee’s intention to leave, employee absenteeism and employees turnover. Furthermore, job satisfaction considered as a strong predictor of overall individual well-being (Diaz-Serrano and Cabral Vieira, 2005), as well as a good predictor of intentions or decisions of employees to leave a job (Gazioglu and Tansel, 2002). Other theorists (e.g. Rose, 2001) have viewed job satisfaction as a bi-dimensional concept, in the bi-dimensional concept, they consist of intrinsic and extrinsic satisfaction dimensions. In the Intrinsic dimension, the sources of satisfaction depend on the individual characteristics of the employees, such as the ability to use the creativity, initiative, relationship with supervisors, or the work that the person actually performs; these are representative or qualitative facets of the job. Satisfactions can also depend on the environment, such as revenue, working condition, working hour, promotion, or job safety; these are financial and extrinsic sources of other material rewards or advantages of a job. Both extrinsic and intrinsic job facets should be represented, as equally as possible, in a combined measure of overall job satisfaction(Hirschfield, 2000).Buitendach and de Witte (2005) suggest that job satisfaction relates to how an individual’s view and evaluation of a job, and this view then will influenced by their conditions, including their needs, wants, values and expectations. Individuals will evaluate or view their jobs based on the basis factors which they consider as being important to them (Sempane, Rieger & Roodt, 2002). Locke (cited in Sempane et al., 2002, p. 23) defines job satisfaction "an enjoyable or a positive emotional state resulting from the evaluation of one’s job or job experience." Job satisfaction can be viewed as an employee’s observation of how well their work presents those things which are important to them. Simply put, job satisfaction is an attitude that the people have about their jobs (Chelladurai, 1999, p. 230). Balzer, (1997, p. 10) 25 define job satisfaction as ” the feelings a worker has about his or her job or job experiences in relation to previous experiences, current expectations, or available alternatives.’ Job satisfaction is described as the feelings an employee has about their job in general (Smith et al, 1989). Before that Kalleberg(1977) described it as a worker’s overall evaluation of his or her job or the perceived work experience. Also, (Schneider and Snyder1975) define job satisfaction as a personal evaluation of conditions present in the job or outcomes that arise as a result of having a job. According to Cranny, Smith & Stone (1992) job satisfaction is an affective or emotional reaction to the job, resulting from the incumbent’s comparison of actual outcomes with the required outcomes and in general is the extent to which people like their jobs, (Hirschfeld, 2000). Other theorists (e.g. Rose, 2001) see job satisfaction as an idea with two dimensions: intrinsic and extrinsic dimension. This distinction, according to Rose (2001) exists due to the bidimensional meaning of the word job, the work tasks performed and the post occupied by the person performing those tasks. Workers’ decisions about whether to work or not, what kind of job to accept or stay in, and how hard to work are all likely to depend in part upon the worker’s subjective evaluation of their work, in other words on their job satisfaction, (Clark, 1998.) Job satisfaction is the combination of feelings and beliefs that workers hold in relation to their current jobs. Someone with a high level of satisfaction will generally like their job; they feel that they are being fairly treated and believe that the job has many desirable facets (Jones et al. 1999). Studies show that there are many factors which affect the level of job satisfaction (Mitchell and Larson 1987).
Person Organization Fit
The extent to which job suits the individuals and his environmental characteristics (Kristof-Brown, Zimmerman, & Johnson, 2005). Personal characteristics may include biological or psychological needs, values one’s goals, abilities or personality. Person-organization Fit involve measuring what is frequently referred to as hard information about the applicant fitness for the tasks necessary for the good performance of a certain task. Person-organization fit has been shown to be associated with a number of positive outcomes related to work. It is least common for this type of adjustment to be statistically calculated during the appointing process with scientifically planned tools. In its place, this type of suit is frequently talked about in hiring art. Person-organization Fit is most often considered in terms of compatibility among a range of tasks associated with the values held by a candidate and the culture of an organization. While it may be easy to think of all sorts of prices that work can be important, research conducted by psychologists suggests that Fit organization Person can be decomposed into some very specific dimensions. Demand for skills perspective, it is proposed that fits happens when a person has the skills needed to meet organizational requirements.
Job Stress
Stress is a very broad term which is used for different type of physiological and psychological (mental) pressures felt and handle by people in their lives. Stress is a condition of physiological and psychological unbalances which arises from the discrepancy between situational demand and capability or enthusiasm that the individuals have to cope with those demands. It may be positive or negative. When the situation provides a chance to get something valuable to someone then stress is positive and it acts as an incentive for better performance. When an individual faces emotional, physical, social and organizational troubles then the stress is negative. In 1989, Hobful stated that human resources bring about a fundamental idea that when the outside forces act upon people then they try to oppose them as physical materials and bodies do. Nowadays stress has become a controversial term though it has a broader view and needs to be defined in multiple ways (Keinan, 1997) Anxiety is a vague term in the sense that it is hard to quantify. Specter (2003) commented that work stress is associated with various effects such as decreased productivity, absenteeism and, ultimately, employee turnover. Keeping balance between work and personal life is another source of stress. Cartwright and Cooper (1997) recognized several environmental sources.
. In the organization it is very important to understanding job stress because it seriously affects the key attitudes associated with job like job satisfaction, organizational commitment etc. and it also affects the behaviors of people like turnover intentions (Sager, 1994). In developing and developed countries job stress is among the most serious workplace health exploits for workers (Paul, 2002; Danna and Griffin, 2002).Furthermore, Eckles in 1987 said, that stress is the cause of corporeal sickness and inveterate diseases like mental ill-health, gloominess, heart diseases etc. In 1988 Patton stated, that job stress can be the cause of excessive use of drug. Due to stress there is excessive intake of alcoholic drinks which leads to the breakdown in health (Patton and Questell, 1988; Scanlon, 1986). Tubbs in 1993 assume that the environment in which work is done and the response to it extensively contributes to high stress. Increasing long faced effects of doing work in a condition where someone thinks that he is immobilized and spellbound to any change for the improvement, in fact causes stress death. Montgomery et al. (1996) stated that job stress to a great extent is a reaction by an individual and is too much distinct from general stress although it is also related to job and organizationIn the model the antecedents of job stress are role ambiguity, role conflict and work overload and the consequences are turnover intention and job satisfaction.
Stress at work, including the factors of labor, role ambiguity in organization, work-home interface and role are also a sources of stress. The role of employees in the company creates stress. To establish satisfactory guest experience, frontline workers are expected to be polite, friendly, and empathetic and positive throughout shift. Although studies demonstrated the link between turnover and stress, Lo and Lamm (2005) recommended that job stress is not the main reasons to employee turnover. Other causes of turnover are needed to understand by human recourse managers for a better picture. If job stress is greater than the intention to leave will also be greater and vice versa.
Compensation:
According to Milkovich et al. (2005), compensation refers to ‘all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship’ (p. 602). Concerning compensation, there are two components: direct financial payments and indirect payment (Dessler, 2000). Direct financial payments include ‘wages, salaries, incentives, commissions, and bonuses’ (Dessler, 2000, p. 396) and these are paid to employees based on increments of time or on performance. Indirect payments include financial benefits and will be discussed under Employee Benefits. Dessler (2000) stated that legal, union, policy, and equity factors influence the design of organizational pay plans. Without these factors, compensation plans may be perceived as unfair. Legal and equity factors will be discussed. There are many legal factors that influence the design of organizational pay plans and its administration. Across the last 76 years, the United States Congress has passed many acts standardizing wages and making salaries ‘fair.’ This is primarily due to four concepts of comparable job worth used in the U.S.: ‘(1) equal pay for equal work, (2) equal pay for similar work, (3) equal pay for equal worth, and (4) pay parity’ (Patten, 1988, p. 4). There are several legal acts that have been instrumental in changing the shape of compensation as it is regarded today. The Davis-Bacon Act of 1931 allowed the Secretary of Labor to set wage rates for individuals employed by contractors working for the federal government (McGregor, 2005). The Walsh-Healey Public Contract Act of 1936 set labor standards for employees working on government contracts totaling more than $10,000 (Schwartz, 1983). The Fair Labor Standards Act of 1938 provided for minimum wage, maximum hours, pay for overtime, and child labor protection (SHRM Research, 2003; Irwin, 2007). The Equal Pay Act of 1963 required that women be paid equally for doing the same work as men (Lax, 2007). The Civil Rights Act of 1964 made it illegal to discriminate in employment based on race, color, religion, sex, or national origin. Title VII is also known as the Equal Employment Opportunity Act and established the Equal Opportunity Employment Commission (Tomascovic-Devey & Stainback, 2007). The Employee Retirement Income Security Act (ERISA) of 1974 provided for government protection of employee pensions as well as regulated vesting rights (Gerbasi, 2003). Finally, the Tax Reform Act of 1986 overhauled the tax code and affected compensation by changing the tax rates to three brackets (15%, 28%, and 31%) and the distribution of benefits (Shulz, McGraw, & Steenbergen, 1992).
In addition to legal issues, specifically ones that govern equality for those of different races, colors, religions, sexes, or national origins (e.g., The Equal Employment Opportunity Act), the perception of equity is also a critical issue in the determination of pay (Dessler, 2000). Pay should have both externa equity (e.g., pay is considered equitable to those doing similar work outside the organization) and internal equity (e.g., pay is considered equitable to those doing similar work within the organization). Without external equity, employers will find it difficult to attract and retain qualified employees (Dessler, 2000). Without internal equity, employers will likely face difficult situations with employees. It is important that employees perceive equity in their pay. Without this perception of equity, employees may solicit employers for more pay or less work, reduce the amount of their work to an amount they feel is ‘fair,’ or leave (Pritchard, 1969). Employers (specifically human resources) can be instrumental in determining how employees feel about pay equity through frequent surveys addressing the employees’ satisfaction with their pay (Dessler, 2000).
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