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This chapter describes a brief background of the research. It discovers the problem

statement, research questions of the study, objectives of the study, the significance

of the study and scope of the study. Definition of key terms and summarize of the

thesis are also is provided at the end of the chapter.


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In human resource strategy, high turnover rates are the key issues that will always

being highlighted (Foreman, 2009). Employee turnover can be described in the

general definition as claimed by Mobley (1982) as ³the cessation of membership in

an organization by an individual who received monetary compensation from the

organization ³. Nowadays, those employees with high skilled and knowledgeable

that engaged with turnover may leave the high replacement cost and disruptive for

firms. In addition, the substantial costs related with recruiting, re-skilling, and hidden

costs such as the difficulties in completing projects and disruptive in team-based

work environments may incur for losing the highly skilled staff member (Niederman

and Sumner, 2003). On the other hand, employee¶s turnover also will give some

positive implication to the organizations as stated by Mobley (1982), the turnover will

³create opportunities for promotion, infusing new ideas and technology, and displace
poor performers´. The blocking career development paths, entrenching dated

methods, and accumulating poor performers are some of problems created from the

lack of turnover. Turnover can be classified in two types which are voluntary and

involuntary turnover. The voluntary turnover can be described as an action of quit or

resignation (Ukwendu, 1997). In contrast, involuntary turnover is the action that

happened because of the reasons such as dismissed for cause as well as

unacceptable performance, insubordination, theft and incapable in fulfilling the job

aspects (Stumpf & Dawley, 1981).

These days, manufacturing sector is one of the important sectors in economic

contribution especially in United States and Japana In almost 30 years, the

manufacturing companies still are facing the high turnover rate even in the strong

economy and the lowest unemployment (Lowe, 2004; Williamson, 1999). The

layoffs and discharges became the larger contributor to total turnover rate in

America on 2008. The turnover rate is estimated to be at 29% in USA by 2020

(HSM Group 2002). In February 2010, the relative contribution reversed again with

the proportion of quits slightly exceeding the proportion of layoffs and discharges

(Bureau of Labor Statistics, 2010). The turnover phenomenon is very widely

discussed these days. Furthermore, the high turnover rate including unskilled

workers is showing a large concern in many companies (Smyth, 2008). The turnover

rate in manufacturing industry always is highlighted because of the increasing

number of voluntary turnover by the workers. In fact the voluntary turnover has a

negative effect on the labor productivity (Smyth
aa 2008). p

In Malaysia, there are over 2,000 manufacturing and industrial service companies

available in all over the country. The manufacturing sector had given the big

opportunity to the Malaysian economic based on the well and fast growth.

Manufacturing contributes about RM 6.5 billion of the GDP and providing a lot of job

opportunities for Malaysian (Economic Report, 2009). Furthermore, in the first

quarter of this year, the economies of Malaysia recorded a strong growth of 10.1%.

The Report of Economic in 2009 stated that manufacturing will be the sectors that

will develop strongly in 2010. Based on a survey conducted by Bank Negara

Malaysia, the firms in the manufacturing sectors plan to raise employment and a

higher salary growth will be provided in 2010. This will be a great opportunity to

unemployment worker and the fresh graduate to get in the industry. Economic

Planning Unit and Ministry of Human Resource shown there are 1,058,980 of

vacancies that are available in 2008. It also stated that 327,798 of the job

opportunities are came from the manufacturing sector. In 2009, as the economic

crisis crash in most country, the manufacturing company were reduced their

operation affected on the weakened in labor market conditions (Economic Report,

2009). The unstable conditions in economic has contributed to the turnover effect in

the manufacturing industry. Moreover, Malaysia Government has introduced the

strategies regarding to reducing dependence on foreign workers (FMM HR

Conference, 2010). It is important to retain employees and minimize the turnover

among the manufacturing workers.

The electrical and electronics manufacturing industry will be the scope for this study.

Based on the BNM Annual Report (2009), after the global depression, the

electronics and electrical products (E&E) cluster was the most affected industries

especially in the export-oriented. In fact, as stated by Mr.Mazlan from the Human

Resource Department in NXP Semiconductors Manufacturing , even thought the

economic is downturned nowadays, the turnover problem keep on occurrence in the

company particularly in operator position. In that case, this study will investigate the

factors that contribute to the turnover in the electrical and electronics manufacturing

industry while in the unstable economic conditions.

Next, the competitive between all of the unemployed workers in the labor market

also tend to be higher when there is surplus in the labor market. Even thought the

unemployment rate keep on rising , the Jabatan Tenaga Kerja Semenanjung

Malaysia has reported that there are 11,957 employees has been leaving from the

organization voluntarily from October of 2008 until March of 2010. Manufacturing

sector is a sector that contributes the highest number of the employee turnover.

Retrenchment Monitoring Report in 2009 has shown that there are 36,392 of

employees in the manufacturing sector is involved in the job turnover from October

of 2008 until March of 2009. It represents of 75 percent of the turnover rate from all

sectors in Malaysia. This study will investigate the factors that are cause to the

turnover among the employees while in a slow down economic situation. Figure

below shows the statistic of employee retrenchment in 2010.

Figure 1: Statistic on Employee Retrenchment from October 2008 until March 2010

Turnover Employers Local Employees Foreign Employees Total

Involuntary ÷
   


p

Turnoverp

Voluntary
 ÷÷ ÷  p

Turnoverp

Total 

p  p  p p

Source: Y
  
 


Y  
 
    

  

 



 

Turnover in one of the widely studied topics because of the labor productivity and

the success of the organization has a significant relationship with the employee

turnover (Min, 2007). Nowadays, due to the expansion in manufacturing sectors

along with the high competition and the shortage of labor also the increasing in labor

turnover makes the firms extremely compete for skillful and knowledgably

employees (Normala, 2006), therefore, this study will be investigate the turnover

intention issues in the electrical and electronics manufacturing industry. As stated

by Lambert
 a (2001), actual turnover and turnover intention have the significant

relationship to each other based on the prior research. In that case, the examining

of turnover intention will reflect in measuring actual turnover (Price, 2001). Turnover

and turnover intention is differently considered, but the essential cognitive variable
that is having the immediate causal effect of the turnover is turnover intention

(Bigliardi
a 2005). Nowadays, there is still limited study on the researches in

turnover intention in the Malaysian working environment (Idrus et al.,2009). The

importance of studying the turnover intention may help the managers in reducing the

total number of actual turnover. It is because of the high rates of turnover are

correlate with turnover intention compare to those who stated a plan to stay by the

employees (Foreman, 2009). Mohamad Abdullah Hemdi (2006) has mentioned that

there are only slight of study in discovering the processes of thought that will

influence the decisions for the turnover intention. Idrus
 aa (2009), claimed that in

order to improving business performance in Malaysia, the factors that influenced to

the turnover intention must be understood well. Most of the researches that have

been done in Malaysia workplaces have found that there are numerous unmeasured

variables that can put in to turnover intention at the workplace in the Malaysian

context.

Job characteristic is one of the factors that will be test on this study. Job

characteristic has a direct impact on the turnover intention (Harrison
 a 2009).

According to Sarminah (2006), a job characteristic is one of the aspects that need to

be prioritizing by the management in organization in measuring the employee¶s

turnover intention. Additionally, there is still little concern the impact of job

characteristic towards turnover intention in Malaysian perspective. Therefore, the

additional investigations are essential to find out the contribution and consequence

of job characteristics on turnover intention. The relationship between leadership

 factor and turnover intention will be examine as well. There investigation on the

effects of leadership style on employee turnover intention is needed (Westlund,

2007). The leadership style has a strong relationship on the employees outcomes

since (Chen & Silverthorne, 2004; Vries
a., 1998) the leaders are persuading the

outcomes of employees and organizational as well. Based on Epstein (2005),

turnover intention is a good predictor for the actual turnover there seems to be a

require for discover the correlation between leadership style and turnover intention.

Regarding of these issue, the job characteristic and leadership style are the factors

that will be study on this research.


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The current study examines the relationship between turnover intentions with two

important organizational variables, namely Job Characteristic and Leadership Style

among operator workforce in the manufacturing company in Malaysia.

i. Is there any significance relationship between Job Characteristic on

the employee turnover intention?

ii. Is there any significance relationship between Leadership Styles on

the employee turnover intention?

 
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i. To determine the relationship between job characteristic and

turnover intention.

ii. To determine the relationship between leadership style and

turnover intention




c
c

This study will evaluate the impact of job characteristic and leadership style can

influence employee turnover intention is significant because of a few reasons. First,

there is studies done show that there is correlation linked between employee

turnover intentions to actual employee turnover.

Secondly, this study is focusing in the turnover and it¶s covering the voluntary

turnover among the employees in the manufacturing industry. Even thought the high

retrenchment in this manufacturing is still happen, the voluntary turnover is still

occurring among the employees. This study will investigate the factors that influence

the voluntary turnover in the economic crisis situation nowadays.

Thirdly, there are a few studies regarding to turnover intention in Malaysia, but there

is no study found on the leadership style as a factor in influencing turnover intention

towards manufacturing employee in Malaysia. Thus, this study will provide the

manager in manufacturing industry in managing their subordinates well and can

decrease the rate of involuntary turnover. In addition, the results of the study offers
 can facilitate manufacturing sector in Malaysia of understanding about the causes of

high turnover in the sectors.

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The scope of this study will be on the manufacturing company in Negeri Sembilan in

Malaysia. On the previous research done regarding to turnover intention is only

focusing in SME¶s industry and Hotel industry. This research will take place during

an economic slowdown that is due to the world economic crisis nowadays.

For the limitation, the generalization the research result to the other country may be

difficult because of the research scope only focusing on the manufacturing industry.

In fact, due to limit of money resources and research time, this research only

covered manufacturing company on the Negeri Sembilan in Malaysia.

 

!

  


On this research, it will consist of five major chapters that will be discussed in

depth. The first chapter in this study will be covering on the whole purpose of

doing this research such as problem statement, research questions and research

objective of the study. In the Chapter 2, it will be highlighted on the review of the

related literature, theories associated and to the problem being discovered. For

the Chapter 3, it will be focusing on the method and procedure that will be using

on thins research. Chapter four will be on the result and finding of the study. The
 final chapter will be illustrate the discussion, conclusion, recommendation and for

further research in the area.

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i. Turnover
ii. Turnover Intention
iii. Job Characteristic
iv. Skill Variety
v. Task Identity
vi. Task Significance
vii. Autonomy
viii. Feedback
ix. Leadership Style
x. Transformational Leadership
xi. Idealized influence leadership behavior
xii. Inspirational leadership
xiii. Intellectual stimulation leadership
xiv. Individualized consideration leadership behavior
xv. Transactional Leadership
xvi. Contingent rewards leadership behavior
xvii. Active management
xviii. Passive management