THE RELATIONSHIP BETWEEN HUMAN RESOURCES MANAGEMENT AND TURNOVER

THE RELATIONSHIP BETWEEN HUMAN RESOURCES MANAGEMENT AND TURNOVER

INTENTION AMONG GENERATION Y EMPLOYEES IN MALAYSIA

By

OWODUNNI OLUWAKEMI TANWA

Project Paper Submitted In Partial Fulfilment of the Requirement For The Degree of Master of Management

Graduate School Of Management ln International Islamic University Malaysia

SEPTEMBER 2014

APPROVAL PAGE

l certify that l have supervised and read this Project Paper and that in my opinion it conforms to acceptable standards of scholarly presentation and is fully adequate, in scope and quality. as a Project Paper for the degree Master of Management.

Supervisor

This Project Paper was submitted to the Graduate School of Management. IIUM and is accepted as partial fulfilment of the requirements for the degree Master of

Management "

fifL r., ^,,J

Asst.

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This Project Paper was submitted to the Graduate School of Management, IIUM, and is accepted as partial fulfilment of the requirements for the degree of Master of Management

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Asst. Prof. Dr. Zabeda Abdul Hamid Chaiqkrson

Project Paper Committee

Graduate School of Management.

IIUM

DECLARATION AND COPYRIGHT

Name : Owodum1i Oluwakemi Tanwa

Matric Number: G1214932

I hereby declare that this research is the result of my own inYestigations, except where otherwise stated. Other sources are acknowledged by footnotes giving explicit references and a bibliography is appended.

©

iii

DEDICATION

I dedicate this work to Allah and His messenger Prophet Mohammed (S.A. W) To my mother and all the Muslim Ummah

ACKNOWLEDGEMENTS

All adoration is due to Allah, the continued nourisher of my soul from the cradle up to my academic pursuit in international Islamic university Malaysia. His blessings showered upon the beloved Prophet Mohammed (S.A.W) a leader and guidance for the world.

With due regard, I acknowledge the intellectual contribution of my supervisor. Asst.

Prof. Dr Nurita Juhdi for her valuable guidance. support. patience and kindness. It is not gainsaying that this work might not have seen the light of the day if she had not taken me under her wings for the possibility of this work. Thank you Dr. for your amazing supervision during the course of this work and always being available whenever I needed your help even during inopportune time.

I equally express my deep appreciation to Asst. Prof. Dr .Zabade Abdul Hamid for her thoughtful comment support and help to enhance the quality of this thesis.My gratitude is also extended to the staff of the Management Centre for their assistance in accessing to useful document during the research.

I will eternally be grateful to my parent Alhaji and Alhaja N.M Owodunni and my siblings for their moral support towards the success of this study.

My special thanks goes to Sis 'v1osurat Salami my academic mentor for the great encouragement role she played towards the success of the study. Also to Sis Maryam Rotinwa (RIP). Sis karamat. .Dunu-rahin's family for their loving care for my family while am not around.

My special gratitude goes to the O\\Tier of my crown, my loving husband Bakare Kayode Kazeem for his understanding. perseverance. financially, morally, and his academic support during the process of this study and my sincere regards to my boys Abdurrah.man and Abdullah for their understanding. My little jewel Maryam. Am so sorry for the stress on you.

I say 14ZAKUMLLAH[; KHAERAN to all who have directly and indirectly contributed to the success of this thesis. May Almighty Allah bless you all Am in.

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TABLE OF CONTENT

Approval Page ... .ii

Declaration ... .... .iii

Dedication ... .iv

Acknowledgement ... v

Table ofContents ... vi

Abstract. ... viii

CHAPTER ONE ... 1

1.0 Introduction ... 1

1.1 Problem Statement ... 2

1.2 Research ObjcctiYCs ... 5

1.3 Research Question ... 5

1.4 Signilicance of the Study ... 5

CHAPTER TWO ... 6

Literature ReYiew ... 6

2.0 Introduction ... 7

2.1 Human Resource "vlanagement ... 7

2.2 Tunwwr Intention ... II 2.3 Generation Y ... 12

2.4 Underlying Theory for the Research ... 15

2.5 Relationship Betv\een Training and Development and Employee Turnmer Intention ... 16

2.6 Relationship Between Compensation and Employee Tumover Intention ... 17

2. 7 Relationship Between Perf(mnance Appraisal and Employee Turnover Intention ··· 18

CHAPTER TIIREE ... 20

Research Methodology ... 20

3.0 Introduction ... 20

3.1 Data Collection ... 20

3.2 Research Instrument ... 21

3.3 Validity and Reliability ... 22

3.4 Data Analysis Procedure ... 22

CHAPTER FOlR ... 23

Analysis on Findings ... 23

4.0 Introduction ... 23

4.1 Part One: Demographic Charatcristics ... 23

4.2 Part Two: Factor Analysis ... 25

4.3 Pa11 Three: Data Analysis ... 27

4.4 Summary ... 28

CHAPTER FIVE ... 30

Discussions. Conclusions and Recommendations ... 30

5.0 Introduction ... 30

5.1 Discussions ... 31

5.1.1 The rclationsbi p between tumowr intention and HRiv1 practices among Generation Y in an organization ... 31

5.2 Co11clusion ... 32

5.3 Implications to Human Resource Managers ... 33

5.4 Recommendations ... 34

References ... 36

Appendix ... 40

VII

ABSTRACT

This study examines the relationship between human resource (HR) management practices and turnover intention among generation Y employees in Malaysia. The HR management practices studied include training and development (T &D), compensation and performance appraisal (PA). Turnover intention among Gen Y has been found to be increasing over time. The study used primary data by conducting a survey on Gen Y employees in Malaysia especially in Klang Valley area. A sample of one hundred and ninety-nine (199) Gen Y employees was drawn using purposive sampling techniques. Pearson Correlation Coefficient was used to determine the relationship between Gen Y turnover intention and all the three HRM practices. The implication of this study gives some insights to the HR managers on the specific HRM practices or strategies that can be used to cater for Gen Y in employees, which will subsequently reduce the turnover intention.

CHAPTER ONE INTRODUCTION

1.0 INTRODUCTION

An organization does not only consist of buildings. machines or imentories but.

also of the people who take care of all the equipments that makes an organization.

The success of any organization is a factor of many variables. which constitute the basis for taking strategic decisions and guarantee continuity and survival. Human resource management (HR..\1) constitutes one of the most valuable resources in any organization.

In addition. it also influences the production quality and productivity of any institution. For any organization to expand, it must provide ample opportunities to each individual worker to develop and grow for an organization to combine employees· potentials to a profitable outcome there is need for Human Resource Management (HRM).

HRM is a function of management. concerned with hiring. training.

developing. motivating and maintaining people in an organization. It focuses on organizational em ironment and how to cater for people who actually perform their roles to ensure an organization is functioning (Rai. 2014). HRM applies management principles in acquiring. developing and maintaining people in the organization. an integrated decision making aimed at ensuring result on different aspects of employees is balanced with organization goals.

1

HR decisions influence the effectiveness of the organization input for better service to customers through efficient employee selections in order to come up with high quality products and services at reasonable prices for organisations. However.

HR is not narrowed to business establishments only; rather it is also relevant to the non-business organizations. like government departments, education. health care etc.

According to Scott. Clothier and Spriegel (20 12), human resource is a branch of management that is responsible for staff, it also concentrates on an operation system which merges simultaneously. the relationship between management and employees and employees to employees' relationship.

Human resource management is defined as a system of activities and strategies that focus on successfully managing employees at all levels to achieve organizational goals (Byars and Rue, 2006). Employees are the human resources of any organization and its most valuable asset. I o be successfuL an organization must make employee productivity a major goal. The level of productivity can vary depending on the level of skills demonstrated by the employees in their jobs and the satisfaction levels of the employees with the organization and their jobs.

Hence. based on the various views cited above, to develop a high- performance and effective workforce, an organization should use human resource management inputs such as training and development. compensation and performance appraisal to reduce turnover intention in an organisation.

1.1

PROBLEM STATEMENT

In a survey conducted on Gen Y research, consulting firm Millennia! Branding and professional networking company Beyond.com in 2013. 45% of companies