This chapter covers background of the study, statement of the problem, research purposes, research questions, definition of key terms, and significance of the study.
Background of the Study
In this global, competitive, and technological advancement business world, organizations put more stress on employee’s productivity that follows the principal of
“doing things better, but less expensively” (Dessler, 2009, p7). Economic changes are also transforming the way how organizations create values and conduct business.
Since the flattening of organizational hierarchies, organizational restructuring, downsizing, outsourcing and related factors have reduced or eliminated layers of middle management. Hence, these changes had decreased a number of promotional opportunities, and experiencing difficulty of upward hierarchically movement has become a normal experience among employees in any kind of industries in this competitive business world (Chao, 1990).
Take banking industry for example. In Taiwan, there are 16 main financial holdings, 38 domestic banks and 30 local branches of foreign banks, which is a quite competitive business environment. There are approximately 140,562 banking employees so far from 2012 in Taiwan (Directorate-General Budget, 2012). After the financial crisis in 2008, it has been very difficult for financial holdings to reach their goals and performance. Since the economic recession, a number of people were laid off and it is harder to find a job. Hence, how to manage career path becomes a critical concern for employees in Taiwan.
Based on the study of Bennett and Bell (2004), the organization offered more
Psychological contract is an intangible and unwritten contract which is likely to make the commitment in the mind between employers and employees. Wellin (2007) emphasized that psychological contract added value not only to the employees but also to the organization. If there was a clear and positive psychological contract between employers and employees, it helped organizations support their employees and also increased employees’ engagement and commitment to the organization.
However, the previous researches also pointed out that psychological contract breach have been demonstrated to have a positive relationship with the intention to leave and actual quit (Buderson, 2001).
Therefore, the issue of the career plateau has begun to receive considerable attention by a large number of researchers and practitioners trying to help organization to solve these possible problems. Career plateau was as the likelihood of not receiving further assignments of increased responsibility (Feldman & Weitz, 1988). Unfortunately, employees with career plateau were more likely to exhibit feeling of frustration and career failure. Therefore, the career plateau had impact on plenty of negative work outcomes (Bardwick, 1986). Heilmann, Holt and Rilvoick (2008) and Lemire, Saba and Gagnon (1999) stated that many employees with career plateau had higher tendency to leave the company, which resulted in higher employee turnover in the organization
Porter and Steers (1973) indicated that intention to leave was the first reflection naturally when employees experienced any dissatisfaction in the organization. Some of them actually take actions to quit the job or called turnover. Hence, intention to leave is one of the direct antecedents to turnover. Besides, Dalton and Todor (1979) pointed out that the organizations benefited from proper employee turnover rate, which prevented organization from aging and lacking of competency. On the other hand, higher turnover causes lower organizational effectiveness, poor employee
morale and worse productivity. Moreover, hiring new-skilled employees to become professional was costly and time-consuming, and also affected the operation and effectiveness of the organization (Bingley & Westergaad-Nieksen, 2004).
Consequently, employee career plateaus were likely to be negative to the operating activities of organization, and reversing employee career plateau became an important concern for companies (Lee, 2003). Therefore, it is vital not only for organizations to make career management strategy but also for employee himself or herself to identify what kinds of cause and effect of the career plateau. Moreover, human resource professional should take proactive actions to support these employees with career plateau. Human resource professionals play an important role in the employees’ career development since they are in charge of maintaining and improving the employee’s competence and motivation as well.
Statement of the Problem
The global competition and fast-changing environment will be an extremely tough challenge for most organizations now. Therefore, most enterprises increasingly focus on the challenges and opportunities related to human capital. According to a survey of 2012 Global Employee Satisfaction by Towers Watons (2012), this survey included 29 countries from Europe, America and Asia. More than 32,000 employees participated in this survey. This survey indicated that there were top five main factors affecting the employees to leave their organizations, which are (1) career development concerns, (2) salaries, (3) the support and trust of supervisor, (4) the relationship with supervisor and (5) the quality of coworkers. Hence, the career development becomes a vital concern for employees now.
However, a survey of General Industry Compensation Report- Taiwan conducted
new employees to fulfill the high personnel flow. Besides, through the well-known human resource agencies like 104, 1111 human resource agency and the official website of each bank, it is easily to find there are plenty of openings in the banking.
Hence, this study intends to investigate what factors resulted in high personnel flow in the banking industry.
In the past, long-term employment relationship was very common in the organization. Nowadays, it was hard to find employers who offer the life-long employment guarantee to employees (Lee, 2003). If there was a positive psychological contract relationship, it resulted in higher satisfaction, solid commitment and lower turnover rate in the organization (Wellin, 2007). Hence, the psychological contract plays a significant role in the relationship between employer and employees in this competitive and human capital oriented business world.
Therefore, how the psychological contract affects the relationship of employment in the workplace should be known more.
A number of related empirical findings reinforce the contention that career plateau positively increases employee intention to leave. Burke (1989) pointed out an individual who perceived hierarchical plateau had greater intention to leave the organization. As for the job content plateau, Davenport and Russell (1994) identified that the job content career plateau led an individual to lower job satisfaction, organization commitment and higher level of intention to leave the organization.
Recently, however, there were only fewer empirical studies conducted to investigate on the roles of moderators on the relationship between career plateau and job-related results (Ettington, 1988). Furthermore, few empirical studies investigated the moderating role of career plateau in the relationship between psychological contract breach and intention to leave.
Based on the present work context, it was very crucial to explore whether career
plateau had an effect on employees with psychological contract breach or not. Hence, this study tried to conduct an empirical study to investigate the relationship between psychological contract breach and intention to leave as well as how moderating role of career plateau affect the relationship between psychological contract breach and the intention to leave.
Research Purpose
In this study, the researcher aimed to analyze how psychological contract breach affects intention to leave and the moderating role of career plateau in the relationship between psychological contract breach and intention to leave. Besides, the researcher also wanted to find out what factors resulting in this phenomenon and to investigate what difficulties employees encounter in the workplace. The purpose of this research was to fulfill the following tasks:
1. To explore the impact of psychological contract breach affecting intention to leave.
2. To identify the impact of moderator of career plateau on the relationship between psychological contract breach and intention to leave.
Research Questions
Based on the research purposes, this study attempts to answer the following questions:
1. Is the psychological contract breach associated with the intention to leave?
2. Does the career plateau moderate the relationship between the psychological contract breach and the intention to leave?
Definitions of Key Terms
This section provides the general definitions of key terms in this study, which are:
career plateau, intention to leave, and psychological contract breach.
Psychological Contract Breach
It was defined that psychological contract breach referred to individuals
discovering there is unfairness in the social exchange process, and individuals did not receive expected outcomes for achieving his or her obligations from an organization (Morrison & Robinson, 1997).
Career Plateau
Individuals may experience two forms of career related plateauing: hierarchical and job content. Hierarchical plateauing is that when an individual has little chance of further vertical movement within an organization. Job content plateauing is that when an individual is no longer challenged by his or her work or job responsibilities
(Bardwick, 1986).
Intention to Leave
An individual with the voluntary decision intends to quit the job and thinking of quitting is the next logical step prior to actual quitting in the withdrawal process (Mobley, 1997).
Significance of the Study
This study contributes to both practical and theoretical parts. The significances of this study are listed below:
Contribution to organizational management:
This study provides organizations new insights into identifying strategies to help employees who perceived the career plateau. Hence, for understanding the banking employees’ current working situation, organization could retain young knowledge employees and make lower turnover rate.
Contribution to HR practitioner:
Mohrman and Lawler (1993) stated that human resource played a more major role in the corporate strategy formulation and implementation. Through this study, HR practitioners could strengthen their own career development knowledge to design or plan the effective strategies and methods to help the employees with career plateau before employees have intention to leave the present organization.
Contribution to career development theoretical research:
In the previous literatures, there are plenty of researchers analyzing the relationship between psychological contract breach and intention to leave. However, few researchers investigate the linkage of career plateau on the relationship between career plateau and intention to leave in the career development research field. Hence this research examined the moderating effect of career plateau on the relationship between psychological contract breach and intention to leave. This study provided the evidence to fill in the literatures of career development research field.
Research Procedure
The procedure of this study is shown below. Please see the Figure 1.1.
Figure 1.1. Research procedure
Research background and purpose
Literature review
Hypotheses formation
Research framework construction
Questionnaire selection and process
Data collection
Results and conclusions Hypotheses testing Questionnaire selection