Managing employee terminations and retentions

Managing employee terminations and retentions

1. Introduction

High turnover rates not only affects employee morale but also have an influence on the financial performance of the company in a way that it loses its valuable workforce. Large multinational companies (such as Intel, Big data, Microsoft, etc.) need to focus on employee retention as hiring the new workforce increases the company’s cost of training fresh workforce (Brown, Thomas, & Bosselman, 2015). One of the greatest challenges is to manage the worldwide employee termination and retention issues in multinational corporations in the dynamic environment. The main objective of this paper is to investigate how employer can develop strategies that can enhance employee retention and prevent termination rates.

In the prior literature human resource practices in the form of internal marketing have been found to have a significant influence on employees’ work attitudes (To, Martin, & Yu, 2015), employee commitment (Bermúdez-González, Sasaki, & Tous-Zamora, 2016), work engagement (Yildiz, 2016), job satisfaction (Shiu & Yu, 2009), and lowered turnover (Kim, Song, & Lee, 2016). More explicitly, these human resource practices stimulate job satisfaction among employees, enhance their commitment with the organization and sanguinely influence their intentions to remain the part of organization (Frye, Kang, Huh, & Lee, 2019). Such practices might be in the form of pay structures, vision, employee relations with supervisor, work environment, empowerment, training etc.  However, there is still a need to identify what practices influence these relationships in the perspective of Generation Y (ranging from the birth year of 1980 to 2000) specifically. For technology oriented companies, this generation contributes considerably in the success of an organization as people of this generation are quick learners and technology adopters. There has been varying results on the influence of HRM practices in terms of Generation X and Generation Y in a way that Generation Y is likely to be more attracted towards money (Josiam et al., 2009) and are more influenced by the work environment, relationship with supervisors, empowerment and challenges compared with Generation X. These factors need to be considered by such technology oriented companies in order to satisfy employees and enhance their retention.

Intel Corporation is chosen to investigate that how management can tackle employee terminations and retention issues because in recent years, Intel has been facing some employee retention problems (Vasel, 2019). Intel is a global corporation that is renowned for its technology since its inception in 1968. Since then, the company has been struggling to maintain its position in the market but it faced several issues due to re-organizational cycles to retain its value as the second largest and highest valued semiconductor chip producer and the father of all microprocessors in the market (Intel, 2019). However, as the company has been going through several reorganizational strategies that involve the assigning of different projects to different work teams, and also results in the change of supervisors time to time, this may cause frustration and dissatisfaction among its employees. Besides, Intel has a history of such reorganizational practices (Cutress, 2019) for years but in 2016, the employee retention problems prevailed. However, the company seems proud of its Human Resource Management practices (HRM) for managing its workforce (Intel, 2019). Still, based on uncertainties in the business environment, insights needs to be given in order to find out how Intel can manage such issues in future in terms of generation Y.

At first, this paper contributes to the literature on employee retention by debating on the challenges that occur in Intel Corporation for managing employee retention. Secondly, it brings together the human resource management and internal marketing literature to examine how these problems in Intel Corporations can be tackled in future. This study can give feedback to provide leverage to Intel Corporation to compete globally with more excellence and build competitive advantage. The theoretical discussion is explained with the underpinning job demands resources theory to examine the relationship of HRM and internal marketing practices with reduced employee terminations and enhance employee retention. To the best of authors’ knowledge, no study has examined this relationship in Intel Corporation’s perspective.

2. Literature Review
   • An overview of employee retention issues in Intel

Since, 2016 Intel Corporation has been facing some serious employee turnover issues and mostly women and minorities were becoming its major cause (Vasel, 2019). Vasel (2019) also discussed in the article that the company launched a confidential hotline to outreach employees in order to resolve issues between employee and the supervisor in terms of concerns related with employee leaving the organization.  The company was struggling to retain its workforce by making efforts to find the root cause that has been spreading discontent among diverse staff. This strategy of Intel through hotline saved the company from losing several valuable employees who filed complaints but did not leave. However, this strategy was bound by the confidentiality agreement by employee and the case manager required employee’s approval before reaching out to anyone for case discussion. The retention rates improved, but Intel still needs to take practical steps to build satisfaction among its employees prior to the stage where employees develops and intention to leave the organization. This study identifies what factors can help Intel to build employee satisfaction which causes employee retention in its Generation Y employees.

• Job Demands Resources Theory

Job Demands Resources theory has been used in this study to discuss the relationships drawn. Since its inception, this theory gained attention from scholars and practitioners due to its flexibility (Bakker & Demerouti, 2007, 2016; Breevaart et al., 2014). This theory is known to have a multiplicative effect on employee job stress and motivation through two particular phenomena, namely job demand and job resources respectively by altering the work conditions and comfort levels of employee in work. This further asserts that Job Demands Resources theory associates job demands that causes health impairment and job resources that triggers motivation through independent processes (Schaufeli & Taris, 2014). However, this study only applies job resources perspective to identify how HRM practices stimulate job satisfaction among employees which further enhances employee retention.

In this perspective, job resources refer to all those physical, social, or organizational factors of the job that are fruitful for achieving work goals. Whereas, it also reduces job demands and the physiological and psychological costs associated with it that stops personal growth (Bakker & Demerouti, 2007). More explicitly, job resources results in developing a positive work related state of mind that results in employees’ goal achievement, commitment, satisfaction and performance and those later influence organizational outcomes. Consequently, employees exhibit a self motivated approach through high energy and mental resilience, dedication, eagerness, and ability to take challenge while being happily engrossed in the work (Schaufeli & Taris, 2014). Therefore, this study aims to link with the job resources notion to identify its motivational role to enhance willingness of employees in Intel to increase their compensatory efforts in job and increase commitment through satisfaction.

• HRM practices and employee satisfaction

Job satisfaction has been widely studies by several scholars and this concept not only influences the employee commitment with the organization but also impacts its performance and effectiveness (Judge, Weiss, Kammeyer-Mueller, & Hulin, 2017; MacDonald & MacIntyre, 1997; Machado-Taylor et al., 2016). It is well established in literature that applying HRM practices towards internal customers (i.e. employees) the top management can stimulate job satisfaction amongst workforce (Back, Lee, & Abbott, 2011). Therefore, it is necessary of Intel Corporation to enhance its HRM practices, majorly those practices that can influence generation Y, which can foster their employees’ job satisfaction.

• Employee relations and employee satisfaction

Employee relations with the manager are taken as the first element in this study to identify its influence of the job satisfaction of Intel employees. This notion is effective in building a pleasant work environment (To et al., 2015). It also helps employees to understand their responsibilities associated with the organization and increases their confidence which later results in their job satisfaction (Hong, Liao, Hu, & Jiang, 2013). By accumulating the job demands resources perspective, it can be deduced that job resources can modify the way employees perceive their immediate supervisor and results in increased satisfaction and motivation for work. This is because such job resources influence employees’ psychological and physiological effort and by changing their attitudes and behaviors (Bakker & Demerouti, 2007). Generation Y is specifically more focused on their relations with the supervisor that has multiplicative effect of their job satisfaction (Frye et al., 2019). Thus, we deduce the following proposition

Proposition 1: Employee relations positively influence job satisfaction

• Training and employee satisfaction

Training is also an influential factor among HRM practices that can help to modify the behavior of employees and develop their job satisfaction (Back et al., 2011). However, satisfaction also depends on the importance of degree assigned to the training elements (Wick & Leon, 1993). Training enhances the knowledge of employees and enhances their skills and abilities to improve business development, sales and competencies (Kim et al., 2016). Job resources perspective of Job Demands Resources theory demonstrates that training strengthens the self-esteem, and self-reliance of employees through positive distinctiveness. In this way, training also helps in the attainment of occupational work goals of employees and enhances their personal growth. In the perspective of this study, training from the notion of job resources fulfils basic employees’ intellectual needs of Intel employees of Generation Y and increase their job satisfaction. This is because; training helps to develop professional competencies, develop skills, and strengthens employees’ willingness to dedicate their efforts and abilities towards work tasks. This will further stimulate their satisfaction with the Intel Corporation. Thus, we construct the following proposition

Proposition 2: Training positively influence job satisfaction

• Empowerment and employee satisfaction

Another element of HRM that is employed in this study is empowerment. An empowered employee is likely to provide a more exceptional service to external customers as he/she is more engaged in the work. Managers need build awareness about what empowerment is, modify their behaviour in order to build an empowering environment, choose and train the right employees to empower, tell them what you expect from them, give return based on performance, deal with patience and expect the problems that might generate in future (Kotler, Bowen, Makens, & Baloglu, 2017). Empowerment can result in more employee retention and job satisfaction among generation Y (Frye et al., 2019). By integrating the job resources, empowerment in Intel Corporation can result it changing attitudes and behaviours of employees towards work by building positive state of mind regarding employers. Hence, the following proposition is formulated

Proposition 3: Empowerment positively influence job satisfaction

• Motivational leadership and employee satisfaction

Motivational leadership is the last dimension that we incorporate to identify its relationship with the job satisfaction of employees. Leader portrays a well defined vision to motivate employees which creates unique image of an organization to provide a future direction to what they want to achieve (Foreman & Money, 1995; Tannock, 2015). A well communicated vision by leader can inspire the employees to achieve goals and increase their job satisfaction in this manner (Testa, 1999). By incorporating the Job Demands Resources theory, this study aims to identify how a well communicated vision can influence job satisfaction among Intel employees.  As job resources are those psychological and physiological factors of work that enhances support with personal development; therefore, clarity in understanding of vision by the leader can intrinsically motivate and satisfy the Intel employees. By a clearly communicated vision, employees will be able to monitor their progress and perform better in the work which will lead to increase their satisfaction with the organization (Tannock, 2015). Therefore, we expect that a clearly communicated vision by leader can inspire the Intel employees of Generation Y and increase their satisfaction with the organization. Hence, the following proposition is formed

Proposition 4: Leadership positively influence job satisfaction

• Job satisfaction and employee retention

As employee job satisfaction has multiplicative effects on exceptional service delivery, this further also leads towards customer retention, increase positive word of mouth and purchase intention of customers through exhibition of employees’ positive service behaviours (J. H. Park & Tran, 2018). Several studies indicate a negative relationship between employee job satisfaction and intention to leave. A study found a negative relationship between job satisfaction and turnover intention (Yang, 2008). Job satisfaction sanguinely influences employee commitment with the organization which results in the employee retention and increased performance (Back et al., 2011; Yang, 2008). Along these lines, increased job satisfaction lowers the turnover rates as well (Back et al., 2011). In terms of Generation Y, there was a positive relationship found between job satisfaction and commitment in a way that people from Generation Y were more committed with the organizations that they are associated with (Park & Gursoy, 2012). In addition to the above discussion, research also posits that employee commitment negatively influence the employees intention to leave (Back et al., 2011). These studies indicate that more committed employees have less intention to leave the organizations. Generation Y is also more likely to be committed with their employees and they tend to have higher retention than those of generation X. Also, Heskett, Jones, Loveman, Sasser, and Schlesinger (1994) also infer that job satisfaction results in higher employee retention which further leads to improved organizational progressive outcomes. By integrating the above views, it can be concluded that when employees in Intel Corporation will be satisfied, they will be more willing to stay in the organization which will positively influence the employee retention rate. Thus, we form the following proposition

Proposition 5: Job satisfaction positively influence employee retention

3. Discussion

The first proposition in this study claims that employee relationship with the supervisor positively influences employee job satisfaction. A study by Hong et al. (2013)indicated that employees’ relationship with the immediate supervisor helps the employee to understand his/her responsibility associated with the organization. This study further asserts that employee relationship with its manager can also boost the confidence of employees and result in the job satisfaction. Moreover, study by Frye et al. (2019) also indicates a positive correlation between employee relation and job satisfaction of Generation Y specifically. Also, a case presented by Vasel (2019) also highlights the role of manager in sustaining retention of employee and their job satisfaction. For instance, Intel highly encourages the leadership skills of its management. The Chief diversity of Intel, Barbara Whye stated in the interview that

“If you are leading at Intel, yes, you need the technical chops, but you also have to have leadership chops…”

Training is another determinant of job satisfaction that is discussed in this study. Intel highly focuses on the training of its employees. Training is one of the most valuable components of the HRM practices that is useful in modifying the attitudes and behaviours of employees. A similar study was found in case of Casino employees where training helped in modifying behaviours and developing job satisfaction (Back et al., 2011). This study found a positive correlation of training with job satisfaction and employee commitment.

Empowerment is also influential in increasing job satisfaction and reduced turnover intention. A study on Generation Y employees found a positive correlation between empowerment and job satisfaction (Frye et al., 2019). This study also revealed that job satisfaction influence employee retention positively. Another study reveals a negative correlation between high empowerment and turnover intention (Gill, Mathur, Sharma, & Bhutani, 2011).

Leadership after developing a sense of purpose can modify employee attitudes. In a similar way, a study revealed significant positive correlation between leadership and job satisfaction (Tannock, 2015). This study reveals that vision provided by a leader can help employees to monitor their own progress and helps them to develop which further causes stimulation of satisfaction. Henceforth, with the above discussion it can be seen clearly that the HRM practices such as employee relations with the supervisor, training, empowerment and motivational leadership can stimulate job satisfaction of employees working in Intel Corporation. More specifically those employees who belong from Generation Y. However, more empirical evidence is required to prove its relationship on practical grounds.

Job satisfaction later on leads towards employee retention which is the main agenda of this study. An empirical study found a negative correlation between job satisfaction and turnover intension of the organization (Yang, 2008). Another study indicates a positive relationship between job satisfaction and employee commitment with the organization (Back et al., 2011). Since employee commitment and retention are highly related notions, it can be said that commitment leads to higher retention rates. Another empirical study also indicates a negative correlation between organizational commitment and turnover intension of employees in the organization (Labatmediene, Endriulaitiene, & Gustainiene, 2007). Frye et al. (2019) also found a positive correlation between employee job satisfaction and employee retention specifically in the context of Generation Y employees. Thus, from the above discussion, it is safe to say that employee job satisfaction in Intel Corporation will increase employee job retention.

4. Recommendations

Given the employee retention problems that Intel Corporation is going through, this study provides feedback for how management at Intel can reduce turnover by satisfying employees through HRM practices. As Generation Y is holding the future of Intel Corporation currently, this study suggests that four dimensions of HRM can be fruitful to stimulate satisfaction among this workforce. These dimensions include employee relations with the manager/supervisor, training, motivational leadership and empowerment. These facets positively influence employee job satisfaction when they feel the management’s support towards them. Job satisfaction further leads towards increased employee retention rates. If Intel Corporation starts focusing on these HRM aspects, this can prevent employees from stimulating intensions to leave in the first place. Moreover, Intel needs to find out more practices that can cause satisfaction among employees which will later reduce the employee turnover rates. However, although the findings of this study are fruitful, more empirical evidence is needed to support the assertions. This study is based on the secondary data, and future studies can utilize primary data to build confidence in the established relationships drawn in this study.