Academic journal article Global Business and Management Research: An International Journal

Linking Organizational Climate, Psychological Ownership, and Intention to Stay: A Proposed Model

Academic journal article Global Business and Management Research: An International Journal

Linking Organizational Climate, Psychological Ownership, and Intention to Stay: A Proposed Model

Article excerpt

Introduction

In today's competitive business world, most organizations are paying greater attention to retaining employees and strategizing to increase employee intention to stay. Retention of high-quality employees is critical because turnover of these employees will bring deleterious consequences to the organization's operations and performance. Every organization wants to have, committed, loyal and hardworking employees who are willing to stay with the organization for a long time period. Turnover is costly. The real costs of employee turnover relate to lower morale among the remaining employees who must carry the workload of those who have left; lost revenue from sales; and loss of customers who fled to competitors for better products, services, and price (Grobler, Warnich, Carrell, Elbert and Hartfield, 2002).

The turnover phenomenon is prevalent in all industries especially within the pharmaceutical industry where the attrition rate is above the acceptable level. For example, statistics indicate that turnover rate in the Malaysian pharmaceutical industry have increased sharply from 14.2% in 2013 to 23.1% in March, 2016 (refer to Table 1).

Turnover rate is often relatively high among certain groups of professionals such as engineers who are involved in research and development activities particularly among generation Y (Queiri, Yusoff and Dwaikat, 2015). As Malaysia's pharmaceutical manufacturing business continues to expand, there is a high demand for RandD engineers by companies in this industry. Thus, it is vital for the pharmaceutical companies to retain their RandD engineers since this category of personnel is critical in facilitating the transition between drug development handled by the scientists and researchers and full production of the drugs. When RandD engineers leave an organization, it can lead to discontinuity in a development project and a loss of tacit knowledge that cannot be promptly substituted with new recruits. According to Kochanski and Ledford (2001), the estimated cost of losing RandD engineers is three to six times the cost of the turnover of an administrative worker. Therefore, to support product and service growth, the retention strategies of RandD engineers becomes a top priority for human capital in organizations (Ang, Slaughter and Ng, 2002; Evans, Gonzalez, Popiel and Walker, 2000; Kochanski, Mastropolo and Ledford, 2003). A review of the literature highlights the critical role of organizational climate in encouraging employees to stay in their organizations (Shanker, 2013). Moreover, psychological ownership has been argued to act as a mediator in the climate-intention to stay relationship. Since the issue of intention to stay is fundamental in addressing the high attrition trend in Malaysia's pharmaceutical industry, the objective of this study is to conduct a review and synthesis of the literature and propose a model connecting organizational climate, psychological ownership, and intention to stay. Four dimensions of organizational climate (autonomy, structure, rewards and considerations, and warmth and support) are posited as determinants of intention to stay. In addition, psychological ownership is envisaged as a mediator in the relationship between organizational climate and intention to stay.

Many antecedents of employees' intention to stay have been discussed in the past. One category of antecedents relates to organizational factors which include profitability, efficiency, adaptation, technical core dominance, organizational structure, organizational policies and practices, and governance (Milman, 2003; Milman, and Ricci, 2004). In addition, job factors such as job security, and monetary benefits have been known to promote employee commitment, leading to the creation of a conducive workplace that would trigger employees' retention to stay (Milman, 2003; Milman, and Ricci, 2004). Moreover, Milman, Milman and Ricci (2003, 2004) asserted that working conditions rather than monetary rewards represent the most significant predictor for intention to stay include working conditions rather than monetary rewards. …

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