This section introduces the concept of this academic work and provided the foundation upon which the study was conducted. The chapter contained the background to the study, an overview of the service industry in The Gambia, problem statement, importance of the study, purpose of the research, research questions, and the operational definition of the key terms in the study as well as the delimitation of the study.
Background of the Study
In managing any sort of organization that employs people required both skills and knowledge to be able to keep the team or workforce focused, motivated and committed to attain the organizational mission and goals while meeting their needs. Therefore, issues bordering organizational culture, compensation as well as job satisfaction are key factors that cannot be ignored in running and maintaining any modern business or institution. Studies showed that these factors are interconnected and have various effects on employee behaviours in the work place (Gupta & Shaw, 2001). They have been studied in various forms and at various levels in many parts of the world for sometime now.
However, the same is not true for most developing countries such as The Gambia where the rate of employee turnover is becoming unbearable (Proceedings of National Educational Statistical Information Systems meeting, 2005). Therefore, this study was conducted in The Gambia, the smallest country on the African mainland, located on the West Coast of Africa. The country with a population of 1.8 million (United Nations [UN], 2012) has a vibrant service industry prominently among these are the hospitality, financial and telecommunication industries.
The sector is witnessing some of the biggest movement of its employees from one institution to the other at an unprecedented level in the history of the nation which has some serious consequences to the sector and the nation as a whole (International Monetary Fund country report [IMF], 2011). High turnover rates in any sector are not only a waste of money and quality time in terms of recruiting and training; they also affect the quality of effective service delivery (Kramer & Schmalenberg, 2004; Newman, Maylor, & Chansarkar, 2002). In addition to the high
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cost implications it leaves institutions to grapple with, high turnover can adversely affect operational efficiency, especially for complex processes that require close teamwork and high amounts of assumed knowledge. Where there is continuing instability in the workforce, consequences can include increased stress and tension amongst those remaining employees who have to fill the gaps left by departing employees. It also leads to declining employee morale and decreased productivity due to loss of work group synergy (Battery, 2008; Wai Chi Tai &
Robinson, 1998). Therefore, reducing employee turnover in an underdeveloped economy like The Gambia in a period of budget tightening not only in the service industry but across all sectors of the economy and expanding all forms of expectations is a top priority for all serious business leaders.
Turnover occurs for many different reasons. Sometimes new jobs attract employees and pull them to leave the old jobs. The situation in The Gambia might also have to do with the unavailability of the human resource to adequately staff the growing amounts of emerging business establishments. The numbers of service industries operating in the country is growing and according to Rankin (2006), the highest rates of turnover are found were unemployment rates is lower and where it is easy for people to get alternative employment. This appears to hold at least for now in the case of The Gambia as individuals who change jobs usually end up been place in better and higher positions in their new organizations.
Despite these entire occurrences in the country, there is limited or no extant scholarly and professional literature on this topic on the service industry in The Gambia. That being the case, it would be improper and misleading to assume that what had been found elsewhere especially in the developed economies to be responsible for employee turnover, might not turn out to be the case for The Gambia. The reasons been there exist vast differences in the economic situation and sociocultural beliefs as well as patterns of life and values of the peoples. Against this backdrop, this empirical study is timely and attempts to unveil the real issues at play in The Gambia service industry causing the unprecedented high employee turnover.
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An Overview of The Gambia Service Industry
The Service industry pertains to an industry comprised of companies that primarily earn revenue through the provision of intangible products and services. Retrieved from: Encyclopedia, (2011): http://www.britannica.com. They specifically produced no goods but render services to consumers. The Gambia service industry is widely seen as the engine of growth and development in the nation’s development blue-print “Vision 2020”. It is characterized by several key players partly due to the country’s stability and favorable investment opportunities. Unlike most of its neighbors’, The Gambia continued to enjoy stability since its independence in 1965 from British colonial rule (British Broadcasting Corporation [BBC], 2012). It is also a democratic republic with elections held every five years since independence.
The service industry in the country is vast and well-established. Some of the key players include the well-established and vibrant financial industry, the telecommunication industry, the hospitality industry, parastatals, amongst others. It contributes 64% to The Gambian Gross Domestic Product (GDP), thus contributing more than any other sector. The industry also employs 25% of the Gambian labor force, 6% being employed by the government (Afrol, 2011).
Since the service industry in the country is vast like in most other countries around the world, this study is restricted to one of the top player of the industry - the financial services industry which also happens to be a key sector facing this present phenomenon under study. The financial services is under the supervision of the Central Bank of The Gambia (CBG) and are made up of 13 commercial banks, over 20 FOREX bureaus and a substantial number of microfinance institutions operating across the length and breadth of the country. The ownership of these banks largely reside with foreign investors with the British owned bank, Standard Chartered Bank (Gambia) Limited and a number of Nigerian international banks playing dominant roles (Preliminary Country Paper - The Gambia, 2008).
Due to the size of the market, the business atmosphere in the service industry is very tense due to stiff competition amongst players. This is partly precipitated by the size of the market - a population of less than 2 million inhabitants with 13 key players working to increase their market share and their profitability at all costs. In additional, not only does employees in these institutions work under tight regulations and pressure, lengthy hours but must upheld very high professional standards.
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Problem Statement
The regular and frequent movement of individuals from one institution to the other in the service industry especially on a high scale is a cause for concern as it leads to serious financial burden and needs to be examined. Losing a single key worker can decrease the likelihood of a project’s success and can reduce investor’s confidence in the firm (Lee & Mitchell, 2000). In additional, the continuous loss of talents pose a serious threat to the efficiency and service quality of the service industry posing a lot of delay and inconveniences to numerous customers and could undermined public confident in the sector. Moreover, a high employee turnover serves as negative publicity and could be a source of instability in the minds of the general public as well as the business community on an institution’s viability and state of affairs. Finally, a high level of employee turnover in any organization has potentials to seriously impact the performance of those left behind causing low staff morale, gossips, and ineffectiveness of employees, reduce productivity and ultimately resulting in loss of market share (Battery, 2008;
Bingley & Westergaard- Nielsen, 2004; Wai Chi Tai & Robinson, 1998).
Importance of the Study
The study adds to the body of knowledge organizational culture, job satisfaction and compensation play in connection to employee turnover especially in the service industry in The Gambia whereby business leaders will get a more accurate picture of the reasons they are losing their employees. In addition, the study is envisaged to create awareness on the issues of employee turnover to management and shareholders in the service industry as well as to the academic community to brainstorm on ways to better address the situation. Finally, the study will enable institutions in the sector to increase their efficiency and overall profitability by reducing the costs associated with recruitment and selection of new employees (Kramer et al., 2004).
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Research Purposes
The purpose of this research was to fulfill the followings tasks:
1. To establish the extent organizational culture, compensation as well as job satisfaction contributes to employee turnover.
2. To provide management a more accurate and reflective picture of the causes of employee turnover in the service industry so that better mechanisms are put in place to address the alarming situation. In addition, such information will help institutions to retain and keep their employees productive and committed to attaining their organizational goals.
3. To provide information on the core factors responsible for employee turnover in the developing world where literature on the area is scanty and hard to come by while the problem continues to undermine the region’s development objectives (Proceedings of NESIS meeting, 2005).
Research Questions
The research attempts to answer the following questions:
1. In what ways does a positive relationship exist among organizational culture, compensation and turnover intention?
2. Is organizational culture and compensation positively correlated to job satisfaction?
3. In what ways does job satisfaction pose a negative correlation to turnover intention?
4. What mediating roles do job satisfaction play in the relationship between organizational culture, compensation and turnover intention?
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Operational Definition of Key Terms
Turnover: This refers to the rate at which an employer losses an employee (Newman et al., 2002). Simply put is how long employees tend to stay in their various work places.
Another definition appropriate for this study was the one given by Rossano (1985) as the
“voluntary termination of participation in employment from an organization, excluding retirement or pressured voluntary withdrawal, by an individual who received monetary compensation from the organization”. Employee turnover in this study should not be confused with layoffs, which involved the termination of employees at the employer's discretion in response to business conditions such as reduced sales or a merger with another company.
Organizational Culture: The norms, values, and beliefs concerning the organization that are shared by members of the organization (Parboteeah & Cullen, 2011). For the purpose of this study this embodied organizational values, norms and mode of operations that guide behavior and attitudes within the organization.
Compensation: This refers to all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship (Milkovich, Newman
& Gerhart, 2011) or a “bundle of value returns” offered in exchange for a “cluster of employee contributions” (Bloom, 1995; Cappelli & Rogovsky, 1994).
Job Satisfaction: The extent to which people like or dislike their jobs. It is an emotional response towards the components of the job (Spector, 2003). It can also result from the environment in which employees have the ability and desire to provide exceptional service and wanting to work in a pleasant atmosphere. Based on the purposes of this study this definition sums up the concept we want to measure.
Service Industry: Also known as the tertiary industry includes industries that, while producing no tangible goods, provide service or intangible gains. Retrieved from:
Encyclopedia (2011): http://www.britannica.com. In this study, we looked at specifically the financial service industry.
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Delimitations
The study was delimited to the investigation of the relationship of organizational culture, compensation, job satisfaction and turnover in the Gambia service industry. Others factors that causes turnover in the industry or are correlated to turnover intention are not within the scope of this study.
Secondly, the study participants were exclusively drawn from the financial service industry, one out of the dominant players of the service industry in the country. Since other players would not be included, the researchers were committed working towards obtaining a large response rate for the study which is as well ideal for statistical analysis. In this way, the results of the study could be accurately used to give a more general and holistic picture of what is happening in the industry with regards to turnover.
Lastly, due to lack of adequate resources and time the study did not covered all employees in the financial service industry country wide. Therefore, the study is delimited to employees of financial service industry located in the Greater Banjul Area.
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