Impact of Organizational Culture on Employee Turnover Intention

                                                                             

 Disclaimer: This article is a thesis writing/ review on the topic, "Organizational Culture And Turnover Intention Among Employees Of A Telecommunication Company In Ghana".

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Researcher:  O. A.

1.      Introduction

In a knowledge economy, information is gold, literally (Boateng, 2015) and this information, in the form of implicit and explicit knowledge, is contained largely in a firm’s skilled resources. Failure to retain skilled employees means loss of valuable resource for the organization. In fact, the degree of success of any firm is highly dependent on the quality of human resource that firm has at its disposal. Any wonder, Eckerson (2002) observed that the bottom line is in the information (Eckerson, 2002), suggesting that a firm’s profitability is a function of the quality of knowledge it commands as found in their skilled resources. This assertion is re-echoed in the words of the Director of Education and Research at the Data Warehousing Institute, “Data and information are now as vital to an organization’s well-being and future success as oxygen is to humans. And without a fresh supply of clean unpolluted data, companies will struggle to survive”(Eckerson, 2002). Even when clean unpolluted data is available, organizations will need skilled human resource to make sense of that data for the benefit of that organization. However, information and technology (IT) firms seem to have high rates of turnover (Hassan, 2014). This situation poses a threat to their survival.

What would make an employee want to leave his firm and move to another firm within the same industry? This begs the question of whether the factors that account for employee turnover intention can be classified as either internal or external to the organization, considering the fact those skilled employees choose to remain within the same industry even when they leave their firms. Now one may argue that they do not remain within the same industry; probably true, but then one cannot discount the fact that such skilled employees have core competencies which tend to be scarce especially in the IT industry, making them attractive targets for poaching by competing firms. The rarity of their skills therefore makes them remain within the same industry. Indeed, it has been observed that skilled human resource in the telecommunication industry is hard to find (Hassan, 2014).

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There are a number of factors that account for employee turnover as evidenced by the vast amount of theoretical and empirical literature on the subject  (Hassan, 2014). There are certain variables such as organizational culture, person organization fit, level of organizational commitment, job satisfaction and unrealized expectations that influence turnover intentions, to mention a few. A critical assessment of these factors reveal a common thread which points to the observation that virtually all the factors that account for turnover intention may be more internal to the organization than external.

What makes an organization unique from another organization within the same industry basically lies in how the internal environment of that organization is molded and continues to be molded by management. What’s more? It is within this same environment that employees spend almost all of their working hours. Theinternal environment of an organization consists of the firm’s vision, mission statement, core values, beliefs, products, core competencies and the like. The interplay of all these various components, together with the way the firm responds to constraints within the external environment represents the firm’s organizational culture. Broadly speaking, organizational culture can be defined as the way an organization relates to its internal environment (inclusive of employees) and external environment. After all, according to Hofstede (1994), Culture is the collective programming of the mind which distinguishes the members of one group or category of people from another; and this programming of mind influences how decision makers of a firm respond to situations within and without the organizational environment. Sokro (2012) lends further credence to the foregoing when he defined culture as “the way things are done within a group” (Sokro, 2012).While not always easy to capture, culture is an observable, powerful force in any organization and results in a potent effect on a company’s well-being and success (Haworth, 2012).

 

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In a study by Aldhuwaihi (2013), four types of organizational culture were identified and they were assessed in relation to employee turnover intentions. They were clan culture, adhocracy culture, market culture and hierarchy culture. All the other types of organizational culture with the exception of market culture registered a relationship with turnover intentions.

In assessing the effect of organizational culture together with organizational commitment and person organization fit on turnover intention, Kumar et al. (2012) found that the variables under investigation accounted for 54 % of the variability in the turnover intention. Furthermore, organizational culture was found to significantly account for turnover intention of employees. 

In the Telco industry turnover rate is high. For example in Malaysia, information technology and information systems (i.e. IT/IS) firms have been found to have a turnover rate as high as 75.72 % (Hassan, 2014); whilst IT/IS firms in India registered a record turnover rate of 100 % every single year! (Lacity, Iyer and Rudramuniyaiah, 2008). Clearly, poaching seems to be quite rampant in the technology industry. That is why it’s important for a firm to have an idea of employee’s turnover intention and the range of factors that account for it.

2.  Problem Statement

Studies on the influence of organizational culture on turnover intention are very limited especially in the context of a Telecommunication company operating in an African terrain such as Ghana. Although, elsewhere a number of studies have been conducted, findings from those studies may not be applicable to organizations in Africa by virtue of huge variations in the social, economic and cultural milieu (Cotton & Tuttle, 1986).

Moreover, most research into organizational culture and turnover intention is situated within the context of Anglo-American societies. Seeing business is these days more global than local in nature, there is the need therefore to widen the study of organizationally important phenomena to include countries outside the Anglo-American context (Aldhuwaihi, 2013). Africa is on the rise and it is important to understand how organizational culture influences turnover intention in a technology firm in Ghana and Africa for that matter; more so, because the telecommunication sector is a major contributor of Ghana’s GDP.

Staff turnover is expensive due to the fact that highly skilled human resource in the telecommunication industry is hard to find (Hassan, 2014). There is therefore the need to ascertain the influence of organizational culture on employee turnover intentions in the Telco firm before the incidence of actual turnover so that the appropriate measures can be put in place.

Against the background of increasing local and global competitiveness, it is crucial for any organisation, particularly for those in developing countries with limited skilled resources such as Ghana, to understand the impact of organizational culture on employee turnover intention (Aldhuwaihi, 2013). Cost of recruitment and selection of new employees is higher than the cost associated with retaining old employees. It is therefore important to determine how organizational culture influence turnover intention (Kumar et al., 2012).

3. Objectives

The main objective of the study is to assess the impact of organizational culture on employee turnover intentions within the context of the telecommunication company in Ghana.

4. Key Findings

Clan culture was found to be the most dominant organizational culture type, followed by Adhocracy. However, the Clan culture was not significantly different from the rest of the other organizational culture types. There appears to be a lack of a clear cut organizational culture within the Telcocompany.

There exist a significant negative relationship between turnover intention and adhocracy organizational culture, and turnover intention and hierarchy organizational culture.

Only Hierarchy organizational culture was found to have significantly accounted for turnover intention amongst employees of the Telco company. It was able to explain 22 % of the variation in turnover intention amongst the respondent employees the case study company.

Responses of study participants on how the case study company can reduce employee turnover centred around three major areas: Employees, Management and the organization itself. Respondents were concerned about delays in the payment of salaries (Employees-centric); level of commitment and the examples being set by management of Case study Telco firm (Management-centric); and, how the organization carries out its operations (Organization-centric).

5. Recommendation

A clear-cut organizational culture for the case study firm should be formulated, adopted and clearly communicated to every member of the organization to enhance rate of diffusion. In addition, management must strive to be more purposeful in the building of this adopted organizational culture. It is important to beware that the organizational culture type adopted and developed by the firm under study not be hierarchical in nature as it significantly accounts for employee turnover intentions.

6. Summary and Conclusion

Organizational culture plays a very vital role within every organization and should planned into the organization from the start. One cannot afford to treat it as an afterthought. For a firm to draw the greatest of dividends from its organizational culture, it has to engineer its culture in such a way as to benefit a large proportion of its employees. In other words, an organizational culture should be liberating not limiting to the potential of its staff. When employees find the culture of their organization limiting to their potential and performance, they have but two options: fight it or turnover; as no human being would like to fight a losing battle, most generally would choose turnover.

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