Reasons for Employees Leaving Saudi Aramco Prematurely

Abstract

A growing concern among the senior leaders of organizations is to ensure the maintenance of a competent workforce capable of meeting the organizational objectives effectively and efficiently. This has led to the continuous search for talented employees and to ascertain the ways of retaining the best talents. Theory reiterates the dominant role of motivation in enhancing employee satisfaction and its impact on the employee retention. This study by analyzing the available literature explores the extent to which the motivational theories have an influence over employee satisfaction. Through surveys conducted with the current and ex-employees of Saudi Aramco the study establishes that absence of organizational fairness, lack of effective performance appraisal systems and procedures and greater work related stress are some of the factors that cause higher employee turnover in Saudi Aramco.

Introduction

It is a widely acknowledged fact by the business enterprises that the human resources are an invaluable business asset. Therefore it is logical and meaningful to infer that this valuable asset has a very vital and crucial role to play in achieving the business objectives. There are numerous turnover problems faced by both the firms and the employees in every economic climate; be it is a boom or a depression. When the economy is having an upturn employee turnover presents a major issue for the employers as it affects the firm’s productivity. Economist (2000) reports that during the boom period in the US, more than 25 percent of workers were having an average tenure of work of less than a year. On the other hand during times of economic downturn the operating costs in maintaining the intrinsic value of a firm by cutting down the number of employees by retrenchment or other means also was a major phenomenon. Downsizing also has its own adverse effects on the firm in the form of low level of morality and loyalty among the remaining workers.

In addition the firm has the disability to replenish the workers quickly in case the economy bounces back at a faster pace than anticipated. As a consequence employee turnover has been researched across a number of disciplines including psychology, sociology, management and economics. Any increase in the employee turnover ratio would cost the company heavily on the financial front also in the form of enhanced administrative, recruitment and selection costs. Having gained much of significance in today’s management perspective, the function of employee retention which is the core function of HR management is usually associated with best practices of human resource management that is based on taking all the efforts to retain the available competencies so that the employee turnover is kept at the lowest level. The war for talent has assumed greater significance in the economically liberalized cutting edge technology where the employee selection, recruitment and retention have proved to be a major concern for the top management. The employer – employee relationship has also changed in the nature and scope to such an extent that the employee retention has been recognized as a major issue that needs a continuous monitoring and control by the HR managers and executives. Similarly any increase in the employee turnover ratio would cost the company heavily on the financial front also in the form of enhanced administrative, recruitment and selection costs. Employee retention is often influenced by a set of factors which are both internal and external to the organization. Addressing these factors form the major function of the HR management professionals throughout the world in almost every large and small business entity. The competition among the different organizations is growing day by day as also the war for acquiring the required talent. Hence the measurement of the cost of employee turnover is also strategically important from the point of view of organizational performance

In this context the practice of Human Resources Management differs in various countries with respect to the employee retention and reduction in the employee attrition. In the country of Saudi Arabia being a developing economy and having a wide spread expatriate work force, the factors affecting the retention of the employee and the employee turnover are considered to have different characteristics that pose different management issues. This research paper attempts to unravel this paradox and present a detailed report on the various faces that surround the issue in the context of the chosen company Saudi Aramco.

Saudi Aramco – An Overview

Saudi Aramco is the fully integrated, global petroleum enterprise of the Kingdom of Saudi Arabia. The company has operations in exploration, production, refining, marketing and international shipping. Building on a legacy that dates back nearly 75 years, Saudi Aramco today leads the world in crude oil production and exports, is the top exporter of natural gas liquids and is a major natural gas producer.

Established by Royal Decree in 1988, Saudi Aramco assumed the responsibilities of its predecessor, the Arabian American Oil Company (Aramco), whose origins date back to the original 1933 oil concession granted by King’ Abdul-Aziz ibn Sa’ud. The Aramco consortium was made up of four major oil companies: Chevron, Exxon, Texaco and Mobil. During the 1970s, the Saudi Government purchased Aramco in stages from its four original owners, acquiring 100% of the assets by 1980. The company has discovered, and is responsible for, about one-quarter of the world’s proven conventional oil reserves. Since it first found crude oil in commercial quantities in Saudi Arabia’s Eastern Province in 1938, the company has discovered about 90 oil and gas fields throughout the Kingdom and in its offshore waters. More than one-fourth of the discoveries have been made since 1989. Saudi Armco’s sustainable crude oil production capacity is 10 million barrels per day. The company manufactures and markets a wide range of petroleum products from oil and gas, both domestically and internationally.

To meet its growing operations, new business strategies and world-wide expansions, Saudi Aramco employs around 52,000 employees of different nationality and cultures. In addition, the company utilizes substantial number of contractors’ employees to provide non-core services.

Research Background

Occasionally, Saudi Aramco offers its employees redundancy packages targeting certain employees’ categories who have served determined number of years and they are at or above specific age. The latest package of this nature was offered by the company in 1999. Surprisingly, considerable number of excellent performance employees applied for this package which was not intended to be for such employees.

Lately, this situation has been aggravated due to company external factors such as the new pension regulations issued by the General Organization of Social Insurance (GOSI), emergence of competitive local and regional employment opportunities and the substantial country economical growth which encouraged employees to start their own private business.

On the other hand, in 2001 the General Organization of Social Insurance (GOSI) changed its pension guidelines to be eligible for applicants who have been registered with GOSI for a total of twenty five (25) years. Since then, Saudi Aramco has suffered from premature retirement and resignation requests from employees who met the new GOSI regulation for pension. Again, good employees are leaving the company.

Saudi Aramco has been the dream employer for new Saudi graduates from high schools, vocational institutes and collages. However, lately this picture started to change and the company noticed that job applicants started to decline their job offers which are considered to be an alarming situation.

The above cited situations, led to manpower constrains in Saudi Aramco especially in globally growing Oil and Gas Industry that made it more difficult to hire from abroad.

In view of this situation, and as part of the company meddle management, I felt the need to research this problem towards diagnosing it and eventually introducing practical recommendations that would lead to maintaining current employees and making have Saudi Aramco an attractive and competitive employer. However, I will focus on the company internal factors in order to understand this situation better and come up with solutions to attract and retain required talent. I elected to focus on the internal factors since the external one are beyond the control of the company’s management and therefore beyond this research scope and interest.

Research Objectives

Among other things this study proposes to achieve the following objectives:

1. To study in detail the motivational theories affecting employee behavior and performance levels.
2. To examine in detail various factors that affect the turnover intention of the employees in various settings.
3. To study in-depth the HRM practices with respect to various functions of HRM and review the related theories and literature.
4. Through an employee survey and interviews to ascertain the reasons for the employee turnover in the chosen organization of Saudi Aramco.

Research Purpose

The purpose of this research is to understand the main drivers causing Saudi employees to prematurely leave Saudi Aramco using one of the phenomenological methods.

As briefly touched in the introduction, there are two reasons for selecting this topic. The first one is purely a practical one, since the research will help understand the root cause for the exodus of middle management level officials, of which I happened to be a part. The second reason is to address an issue of such magnitude, which Saudi Aramco and the Saudis are experiencing for the first time (Simon and Vosseberg, 2001). This situation is totally new to Saudi Aramco as it was the flagship to many applicants’ dreams. Also, it was the same company where employees showed reluctance to resign even after their retirement age of sixty. This research materializes from the need to revitalize Saudi Aramco as the number one company in Saudi Arabia and bring back its lost glory, especially at a time when negatives seem to outnumber positives in the recruitment of qualified employees from abroad, fueled by the demand for qualified hands in the global oil and gas industry.

By undertaking a research, it is expected to help understand the factors which led to the current situation and consequently improve it; proposing recommendations which the organization’s top management could implement and bring the grounded company back on rail. Hopefully, this will lead to better man-management practices which will restrain the flow of professional staff and attract new employees. The aim of the proposed research topic indicates that this research will be analytical, and that it will go beyond, ‘understanding phenomena by discovering and measuring causal relations among them’ (Collis and Hussey, 2003, 11). This research will avoid making any serious explorations, as this is an area that has been widely covered by other researchers. Also, this research will not be a predictive one, and will only generalize the analysis by predicting certain phenomena (Collis and Hussey, 2003, 12).

For the sake of a cohesive presentation I have organized the paper into different chapters with chapter 1 introducing the topic of ‘employee retention and employee turnover’ to the readers. Chapter 2 contains a detailed review of the literature available on the subject of employee retention and employee turnover. Chapter 3 describes the research methodology I adopted for preparing the paper. Chapter 4 presents a report on the findings and a detailed analysis of the findings of the research followed by the concluding remarks making a recapitulation of the issues and matters discussed in the paper and a few recommendations which are strategic in approach to reduce the employee turnover and increase the retention of the employees in Saudi Aramco under chapter 5.

Literature Review

Introduction

In order to have an in-depth knowledge on the factors that influence the employee turnover and the measures to enhance the employee retention it is essential that a detailed review of the available literature on the subject. The review will enable an understanding and appreciation of various issues connected with the employee turnover and retention. Despite the fact that the area of employee turnover management has been conceptualized recently there is an abundance of literature available on the subject that makes the study a lot easier.

It is observed that organizations spend considerable time in recruitment and selection as well as training and development of their employees. Therefore it becomes imperative that the leaders of the organizations take all efforts within their means to enhance the employee retention. According to Kevin et al (2004) there is no standard framework that explains the employee turnover process as whole. However through a study of a wide range of factors, it is quite possible to interpret the reasons for employee turnover and take corrective measures. This understanding of the employee turnover process has placed an absolute necessity on the part of the HR managers to acquire a thorough knowledge of the factors that influence the employee turnover. The HR managers are also expected to design and implement strategic moves to be undertaken by the organization for retaining the employees by reducing the turnover considerably. The advent of economic globalization the organizations are compelled to garner a high level of competitive advantage for sustaining their growth. This is possible only by employing new strategies being offered by the talented employees at various levels. Meaghan et al. (2002) are of the view that since the value of highly talented employees to the organization is intangible and cannot be replaced so easily it becomes vitally important that the organizations retain them at any cost. According to Abbasi et al. (2000) the economic success of any organization is greatly ensured by employees who are talented and they are therefore at the root of the organization’s success. With this background this review deals with salient aspects of employee motivation and turnover as being illustrated in the available literature.

Motivation Theories

Several empirical works concluded that motivation is a very complex subject that is not only concerning pay, compensations, work condition and morale but it extends to cover several psychological and social factors (Mullins, 2002). These factors are driven by needs and expectations which if not satisfied create tension that stimulates internal drives which consequently influence the employee behavior adversely. However, these factors vary in their strength as their intensity is affected by external environment and time (Ramlall, 2004). Therefore this attribute makes motivation dynamic in nature since the factors that motivate employees’ change with time (Bowen & Radhakrishna, 1991) and makes the concept even more complex too.

The importance of employee motivation has been subjected to intensive research with a view to understand the elements that have the ability to motivate individuals, so they will acquire the required inner force that drives them to achieve their personal and organizational goals (Lindner, 1998). Several definitions were given to motivation including:

“…those psychological process that cause the arousal, direction, and persistence of voluntary actions that are goal oriented” (Mitchell, 1982, P 81).

As defined by Robbins (2003) is the “willingness to exert high levels of effort toward organizational goals, conditioned by the effort’s ability to satisfy some individual need.” (Ramlall, 2004, P 53).

Mullins defined motivation to be “some driving force within individuals by which they attempt to achieve some goal in order to fulfill some need or expectation.” (Mullins, 2002, P 418).

Kreitner (1995) defines motivation as the psychological process that provides the purpose and direction for behavior. Buford et al (1995) has found motivation to be a predisposition to behave in a purposive manner to achieve specific unmet needs. While Higgins (1994) identifies motivation as internal drive to satisfy the needs that remain unsatisfied, Bedeian (1993) defines motivation as the will to achieve. Motivation has been found to be the way the urges, aspirations, drives and needs of human beings direct or control or explain their behavior (Appleby 1994).

These theories of motivation enable one to understand the reason behind the behavior of individuals. However no theory is able to explain in precise terms and has a universal approach to explain the human behavior. This is so because the human beings are very complex in nature. (Donnelly et al 1996).

A study of these definitions and others available in the structure, it can be stated that in general most motivational theories focus around the concept of individuals’ needs and expectations. These needs and expectations are used as motives that will enable the employers to influence individuals’ behavior to be in line with organizations’ goals. Consequently, it has become essential to indentify individuals’ needs and expectations so that they can be used to improve organizational performance (Pride et al, 1999). Motivating employees can take the shape of different schemes that reward employees in return for their contribution towards organizational success. Motivation will encourage employees to positively participate in organizational performance by being more productive, innovative, safe in actions, and will also reduce employee turnover. Consequently well designed motivation schemes will really add to organizations’ bottom line. Large size organizations such as Saudi Aramco do employ large number of staff with different needs and goals. To fulfill such needs, it is important for such large organization, to ensure that they put in place motivations programs that have wide enough spectrums which will motivate the majority of the employees. Successful motivation schemes will result in retaining the talented staff that proves to be the competitive edge for any organization.

According to Mullins (2002) motivation theories are generally classified under two categories, content and process. Theories that are classified under content, in general, try to clarify and indicate the factors that motivate employees at work and cater to the employees’ need, while process theories are concerned with the motivation mechanism and dynamics. The below figure (Fig. 2.1) gives an overview of the major motivation theories and where they are classified

An overview of main motivation theories

To cover the essence of this research paper, literature review will cover both content and the process theories of motivation. However, the research will focus on six motivation theories, namely; Maslow’s need-hierarchy theory; McClelland needs theory, Herzberg’s two-factor theory, Vroom’s expectancy theory, Adams’ equity theory, and Skinner’s reinforcement theory. The theories are explained in detail in the following sections.

Needs Hierarchy Theory – Maslow

Maslow (1954) advocates behavior of an individual at any particular moment is determined by the strongest need. Based on his observations, Maslow published his theory which states that there is a general pattern of needs or satisfaction that people generally follow in a systematic order (Beech et al, 2005). These needs were grouped in five levels citing physiological, safety, social, esteem, and self-actualizing (Lindner, 1998). Maslow characterized these needs into a hierarchy model, which consists of five levels ascending from the lowest to the highest needs as shown.

This theory argued that needs are to be satisfied in a systematic order to motivate employee. This implies that the lower level needs have to be satisfied first before the next level needs become the motivators. (Lindner, 1998) In his ranking, Maslow showed that some of the needs are more powerful than others. Subsequently, these dominant needs should be satisfied first before the higher level needs have the adequate impact to motivate individuals’ behavior (Pride et al, 1999). Also the theory argued that the unsatisfied needs are the needs that actually motivate people. On the other hand the satisfied needs are not motives any more to influence the employee behavior (Mullins, 2002). The theory point outs that if all needs at work are substantially satisfied, then the motivational needs are reduced. Consequently, job satisfaction does not necessarily lead to better work performance as the vital motives to work were fulfilled (Mullins, 2002).

Moreover, it can also be concluded from this theory that people do not get all their needs satisfied only through employment but also through other means, such as social life (Pride et al, 1999). Therefore, organizations need to structure wide spectrum of incentive schemes to their workers to ensure retaining the required talent through fulfilling the unmet needs along the hierarchy. This shall ensure constant growth opportunities to capitalize on the workers potential. Failure to forecast and implement appropriate programs may lead to employees’ frustration that will eventually cause turnover (Mullins, 2002). The practicality of this theory is that, if you want to motivate an individual, you first should locate his current motivation level on the hierarchy and work to substantially satisfying those needs or the needs above that level (Lawler III, 1994). One way of achieving this is that, organization may conduct satisfactions surveys to measure addressed needs in order to adjust its incentive schemes towards avoiding adverse results.

This theory has widely opened the door for other researchers, in the motivational field, to revisit the concept aiming either to support or oppose the Maslow’s theory. That wave has made it possible for other theories to see the light and even discovering other factors influencing the employees’ motivation as can be observed more in the rest of this section.

Needs Theory – McClelland

This theory is a needs based theory that has emerged during McClelland’s efforts to investigate the extent the need of hunger would dominate the imagination process about food. Subsequently, McClelland identified four needs based motives namely, the need for achievement, the need for power, the need for affiliation and the need for avoidance. This theory shares some similarity with Maslow’s theory. The first three motives mentioned above relate or slightly similar to Maslow’s self-actualization, esteem and love needs (Mullins, 2002). According to this theory people have different motives and therefore respond to the employer in different ways based on their motives (Alder, 1999).

Individuals who are motivated by achievements are characterized by their tendency to set moderately challenging goals for themselves and are satisfied when they have accomplished them. Hence this type of individuals favor situations that challenge their normal achievements level where there is some risk of not succeeding, but not a high level of risk. Achieving their set goals result in enhancing their esteem and self-actualization and encourage them to take more challenging goals and responsibilities (Mullins, 2002). People of this type are not only motivated by the challenge of success but also by fright of not being successful. (Shah& Burke, 2003) Moreover, the individuals who are in need of achievements seek concrete feedback on their performance. This is not always possible in some sort of jobs which sometimes de-motivates such type of people (Mullins, 2002). The implication of this observation to business is that organizations are to ensure having good feedback system to motivate such individuals so that they would be able to retain them.

The McClelland theory, defines the need for affiliation as the aspiration for friendly interpersonal relationships. The individuals who are in need of affiliation are motivated by social recognition and connection with others. (Shah & Burke, 2003) These needs are similar to Maslow’s need to belong. The needs of this type of individuals are noticeable in several social needs such as the desire to be liked by others, to be part of a group and to have warm relationships. They value relationships and friendship over achievements and power respectively. (Kotze) Therefore, such individuals do not seem to be effective managers due to their worries about the impact of their decisions’ on their relationship and social image.

Power motivated individuals seek to have an effectively participation in accomplishing goals. As argued by Mullins (2002), the need of power here is what he called “socialized power” that is aimed at organizations. It is not the power of dominating people or as it is called “personalized power” (Mullins, 2002). Such people have a tendency to influence, coach, teach, or encourage others to achieve. Giving the people of high needs for power key positions will motivate them (Ramlall, 2004). McClelland observed that majority of North American managers, whom he studied, and who reached top ranks in their organizations, had demonstrated high efficiency and ability to influence people. These are characteristics of individuals who are in high needs of power (Kotze). In view of these observations, McClelland concluded that effective managers have a high need for power but not high affiliation need (Ramlall, 2004). The conclusion of McClelland’s theory, according to C.David & H.David (2003), is that the strongest motivator is the need for power.

In his study, McClelland noticed also that the need for power and achievement increased more than the need for affiliation as those managers progress in organization hierarchy. However, when reaching the top of organizations, these needs for achievement and power no longer remain a motive. (Shah & Burke, 2003) This observation takes us back to Maslow needs levels and the proponent concept. This theory postulates that different needs motivate people differently (Ramlall, 2004). Therefore it confirms the Maslow theory’s essence of treating individuals differently according to their most pressing need in order to achieve their highest performance. Also, it suggests that individuals are to be treated differently when assigned tasks and given feedback on their accomplishment. Therefore, organizations are to design a dynamic and various aspect motivational programs to retain the talented employees.

Motivation – Hygiene Theory – Herzberg

Based on his survey, Herzberg et al (1959) identified two categories of factors that influence employees’ motivation at work which are called motivators and hygiene factors. Motivators are intrinsic factors while hygienes are extrinsic factors. Motivators include; achievements, recognition, work contents, advancement and chances to take responsibility. Hygiene factors are; work conditions, financial compensation, security, status, work interpersonal relationship and company policy (Bassett-Jones and Lloyd, 2005). Hence, hygiene factors are described as the environment and the surrounding of the work but not the work itself. According to the theory, motivation, in a job, will be proportional to the extent that the prescribed motivators are present. However, the absence of motivators does not lead to dissatisfaction. The theory mentioned also, that dissatisfaction will occur in a job to the level that hygiene factors are absent from that job. The occurrence of hygienes will prevent dissatisfaction, but will not lead to motivation (Lindner, 1998) and (Basseet-Jones and Lloyd, 2005).

In describing the motivation factors, Herzberg got very close to Maslow’s self-actualization level. In his view, motivators are related to psychological growth and job advancement. The similarity comes from the point where individuals are motivated by factors which express their highest potential that involves challenge, accomplishment and consequently the need of recognition. Actually, Herzberg went further on to cover some of the esteem level elements in the Maslow’s need hierarchy as well. (Kotze)

In view of this theory, Hertzberg argued that employees will be highly motivated by redesigning the jobs, through improving the content and nature, to allow opportunity of important practices such as, accomplishment feedback, accountability, new learning and experiences and (Bassett-Jones and Lloyd, 2005) and (Ramlall, 2004). Several approaches could be done to achieve this goal, including job enlargement, job enrichment and employees empowerment. The job enlargement could be performed through allowing employees to work on various tasks with different variety and moderate challenge levels. This will make the work interesting to the employees. In his late edition, Hertzberg did not consider job enlargement as strong as job enrichment in motivating employees (Mullins, 2002). The job enrichment shall be obtained through wider and deeper job spectrum with complex and challenging tasks to fulfill the high needs for achievement. The empowerment will provide employees with the prerogatives to control their work related decisions and consequently to celebrate their success which yield in high self- actualization (Bassett-Jones and Lloyd, 2005). These practices will lead to job “vertical loading”, where employees will be given more responsibilities, rather than job ‘horizontal loading’, where employees are given more similar tasks yet with the same degree of difficulty (Ramlall, 2004). On the other hand, Finder argued that job “vertical loading”, concept is not consistent with Herzberg’s approach that apprise job “horizontal loading” (Ramlall, 2004).

Therefore, Herzberg massage is; to motivate individuals at work, the focus should be on the work itself and its nature. Out of this, we can say that employees are motivated by performing interesting and challenging jobs rather than by higher pay (Lindner, 1998). In this regard, Herzberg’s theory has been interpreted in such a way that, although poor financial compensation could work as a de-motivating factor, yet its impact is limited to certain level after which it turns to be a hygiene factor (Bassett-Jones and Lloyd, 2005). This conclusion was the most arguable part of this theory in several researches and literatures. For instant, Mullins (2002) argued that money is a motive to certain level depending on various personal variables and circumstances after which it will not be so (Mullins, 2002).

In summary, motivators are related to individuals’ relationship with what they perform. On the other hand, hygiene factors are related to individuals’ context or environment at which individuals perform jobs. In a dynamic manner, individuals are responding to both factors the internals and the externals ones which in turn react with each other to influence motivation (Bassett-Jones and Lloyd, 2005).

Expectancy Theory – Vroom

Expectancy theory was advocated by Victor Vroom (1966). Basically this theory is based on the belief that employees effort will lead to performance which will result in rewards, either positive or negative (Lindner, 1998). The theory introduced three important mental concepts which are valence, instrumentality and expectancy. Valence is the feeling about specific outcomes which is considered to be the attractiveness of a specific outcome to individuals. Instrumentality is the connection between first and second level outcomes (Mullins, 2002). Hence high valence outcome is that the individual anticipates it to have high instrumentality to result in the achievement of several needs related outcomes (Ramlall, 2004). Expectancy describes the scale of probability of desired outcome as result of performing a given task. The probability spectrum is governed the type of work that might be carried out and the expected rewarding outcome. In addition other factors such as individuals timely needs, work nature and organizational repetition do contribute to the probability range (Ramlall, 2004).

The theory focuses on three important relationships that play crucial role in motivation. These relationships are the ones that exist between efforts and performance, performance and reward, and rewards and personal goals. The theory argued that, in order to motivate an individual to perform a given task, the expected rewards shall be in line with individuals’ needs and goals. (Kotze) The strength of the expected reward alignment and magnitude, with the individual’s needs and goals, will determine the intensity of the attraction and the motivation levels (Lindner, 1998). Therefore tasks appraisal and selection by individuals are very much controlled by their needs and goals of specific outcome at certain stage or time. (Kotze) According to Langford et al. (1995), this theory is based on self-interest. Meaning that individuals realize their needs and whenever they approach certain tasks, they analyze the assigned tasks outcome and rewards and benchmark with their needs. According to the analysis, individuals determine the level of participation. Expecting the rewards or pre-judging the outcome may make individuals to decide not to perform certain tasks that are not aligned with their needs and goals at that time. (Kotze).

The expectancy theory highlights a very important motivation connection between the performance and the reward. This is a very delicate relationship since it could lead in adverse results if individuals perceived that the existing rewarding system is not good enough to fulfill their needs and goals comparing to their performance levels. Then employees may consider other alternatives to fulfill their needs or readjust their performance to match the existing rewarding schemes. One of the alternatives could be leaving the organization. The practical implication of this theory is that, employees behave according to the expected outcomes and its alignment to their needs. Hence organizations, need to consider employees desired outcomes to motivate the staff and maximize the engagement. Consequently, careful implementation of the theory’s concept will play a crucial role in retaining employees in organizations once strategically embedded in the human resource management structure.

To investigate this theory, Galbraith and Cummings conducted a study on a group of employees who were working for a heavy equipment manufacturing organization. Briefly, the study’s result suggested little coloration of the theoretical model when it comes to the question of comparing productivity with second level outcomes such as pay, promotion, and style of supervision and work relations. Better linkage was found between desired workers’ supervisor support and their performance (Mullins, 2002).

Surly enough, this theory indicated that the individuals do not try to satisfy their needs in a simple straight line manner as suggested by Maslow. Instead, there is a chain of goals and rewards to fulfill needs at various levels in different times (Mullins, 2002). On the other hand, Mullins (2002) argued that expectancy theory is a generic one and should not be tied to one writer.

Equity Theory – Adams

Equity theory was made popular by Adams. (1965)This theory states that perceived inequity is one of the motivational forces for the employees. Adams’ theory states that employees work hard to achieve equity between themselves and their colleagues using the outcome to input ratio as a measure to judge performance and consequently evaluate rewards (Lindner, 1998). Inputs such as effort, experience, education, and competence are compared to outputs such as pay, merit increases, recognition and support (Ramlall, 2004). The employees are not just motivated by absolute rewards but with relativity in view of the inputs to outputs ratio as explained. This theory is based on three important hypotheses. The first one is the employees constitute perceptions about what is fair in turn of inputs. Secondly, employees tend to compare that perception as the exchange with the employer. The third assumption is that, employees benchmark the inputs to outputs ratio with colleges to judge equitability and fairness. Consequently, employees then are motivated to take whatever actions they consider as appropriate to reach equitability stage (Ramlall, 2004).

According to this theory, employees are motivated by their perspective of having fair or unfair rewarding system. Based on the judgment, if employees feel that they are unequally treated, they try to restore equity through different ways including adjusting their performance, either positively or negatively, in term of quality and quantity. Ultimately, employees may leave the organization to another where they feel fairness exists (Lindner, 1998). Again, this theory shows the importance of employees’ perspectives about the fairness of performance appraisal and reward schemes. In addition, the employees’ views of such fairness will determine their performance and staying in organization. The important concern here is the term “employees’ perspectives” which sometimes do not reflect reality. Hence organizations need to ensure transparent communication if they are inclined implementing performance- based reward system. Doing so, will reduce ambiguity and retain employees. This is a challenging area for organization, since, it is hard to convince employees to perceive the rewards system as fair and equitable (Ramlall, 2004).

In business, this theory is the cornerstone behind the development of the performance-based reward schemes. The concepts of this theory are crucial in attracting and retaining employees.

Reinforcement Theory

Unlike the need motivation theories, reinforcement theory focuses on the environment and its effects on individual behaviors (Harris and Kleiner, 1993). The fundamental principle of the theory is that, “human behavior is a function of contingent consequences” (Luthans and Stajkovic, 1999). Mainly, this theory has four reinforcers; positive, negative, extinction and punishment. Positive reinforcers promote desired behavior through rewards and recognition. On the other hand, negative reinforcers concentrate on preventing negative consequences. While extinction is applied by preserving some positive reinforcement, punishment is a way to reduce the occurrence of an unwanted behavior (Harris and Kleiner, 1993).

Business implications of this theory are that, employees’ behaviors which result in desired outcomes will be repeated once positively reinforced by managers. On the other hand, when managers negatively reinforce behaviors that lead to negative outcomes, those behaviors will not be preferred by the employees. (Lindner, 1998) In brief, when the hypothesis as postulated by this theory is applied in workplace, it leads to the concept of “getting what you reinforcing” (Luthans and Stajkovic, 1999). In view of these concepts, this theory has been widely used to develop rewards and punishments schemes in organizations aiming to highly motivate and retain employees. (Bassett-Jones and Lloyd, 2005).

However, and as found out by Luthans and Stajkovic (1999), retaining employees, in view of this theory, depends on the quality of set schemes as well as on the supervisors’ honesty of implementation. This argument has been evident by the empirical work of Luthans and Stajkovic (1999) which reveals that performance is not necessarily correlated to the reward or pay (Luthans and Stajkovic, 1999). This leads us to look into the relationship of human resources practices and retention schemes with employees’ turnover, as will be discussed in the next part of this chapter.

Motivation Theories Critique and Summary

Maslow theory has attracted great deal of attention simply due to its logical approach and easiness to be understood which makes it practical to be adopted in developing business motivational schemes (Beech et al, 2005). On the contrary, the theory received several criticisms questioning some of its assumptions. For instance the systematic order of motivational needs levels were questioned since this order may vary from one person to another according to their nature, circumstances, culture and preferences which dominate certain needs over others (Mullins, 2002). Building on his study conclusion, Lindner (1998) did not support the concept of the need to fulfill the lower needs prior to moving to satisfying the higher level (Lindner, 1998). The other point is that, the theory indicates that individuals are motivated by one needs level at a time. Practically, individuals practice some of various needs levels to certain degree at the same time. Also, individuals keep alternating between the needs levels according to their timely needs (Pride et al, 1999). Therefore individuals do not progressing in a systematic order, in one direction, from lower needs level to the higher ones as suggested by Maslow (Lawler III, 1994).

The important driving force for motivating employees therefore is the degree to which the individual values certain rewards or the second-level outcomes out of employment. This necessitates assessing the strength of the several needs operating to motivate the behavior. Modern behaviorists are of the view that against the background of the practices in Western Europe which is in a highly advanced stage, the lower-level physiological and safety needs are generally satisfied in the modern industry. The high level needs of the employees always remain unsatisfied and therefore there is the need for putting more emphasis on higher-level need satisfaction in the organizations. In this context the application of Maslow’s theory or for that matter the older theories of motivation have only limited applicability in the present day industrial and business environment as the aspirations and expectations of the employees have tremendously changed from the basic needs. However since basically there is no change in the attitude and behavior of individuals the older theories of motivation still form the basis for formulating new theories on the basis of the changed circumstances. Based on the foundation laid down by Maslow it is easier to replace the needs instead of those adopted by him and still apply the theory to study the employee motivation.

Herzberg’s theory has also been subjected to a number of criticisms. In fact there are more evidences to disprove the theory. The first issue about Herzberg theory is that this theory is strictly uni-dimensional in the sense that it considers a job factor either be a satisfier or a dis-satisfier. But according to the findings in many researches, the real life world the job factors act both as satisfiers as well as dis-satisfiers which fact is not considered by this theory. The good examples in this direction are money and inter-personal relationships. Fear of punishment can also act as a strong motivator.

Another issue concerning the Herzberg theory is that the theory assumes that the motivational and hygiene factors operate in the same intensity on all individuals. But this always does not hold good. The intensity of application of these factors may vary from individual to individual which questions the basics of this theory. The other criticism leveled against Herzberg theory is that it is more method based the suitability of which is questionable in the practical situations existing.

However despite these criticisms, Herzberg theory has made a major contribution to the understanding of motivation by applying the need hierarchy to several work settings. In fact Herzberg theory is the only one that has a serious focus on the role of job content in employee motivation. Although his way of applying job-enrichment principles may seem to be an over-simplification of issues, it provides very practical applications for motivating employees. This has greatly influenced the managerial practices in the modern business world.

Vroom’s theory as an alternative to Herzberg theory provides that the strength of the motivation to act is a function of the algebraic sum of the products of valences multiplied by expectancies or probabilities. In general although there are many variations of Vroom’s theory that are developed in recent years, the practicality of this theory in helping in actually motivating the employees has remained questionable. However since this theory takes into account the individual differences in the needs this has been supported by many of the later studies in the field. (Lamp Li, 2003).

From the foregoing it may clearly be observed that the needs are the origin in most cases of individual motivation and motivations in turn are the inner generators of the employees. It is vitally important that the generators have to be incited or ignited by a perfect organizational climate so that the employees remain motivated and therefore committed to the organizational success. Here comes the important role of the Human Resources Department (HR). It is the job of HR that they clearly identify the values and impact of different needs of the employees on achieving the overall organizational objectives. Based on their assessment of the needs HR has to create rewards and recognition for the employees which will continuously motivate them. The following section discusses the role of HR in employee motivation.

Human Resource Practices

Employee motivation challenges every manager. When we speak of employee motivation, managers and supervisors inevitably revolves around pay, hours and benefits (Burstein 2005) or Maslow’s physiological needs. But these needs or factors are classified as hygiene in Hertzberg’s theory which does not necessarily promote motivation (Allen 1998). In order for managers and supervisors to motivate and retain qualified employees, Hertzberg’s motivators such as recognition and achievement are essential. Recognizing the achievements of employees leads to the ultimate job fulfillment and promotes powerful respect from subordinates. The ability to give recognition upon deserving employees may sound simple to everyone but too many supervisors or managers overlook this potential strategy (Burstein 2005). HR plays a crucial role in this respect. The following sections describe the role of HR in employee motivation and retention.

HRM encompasses a wide range of activities like recruitment, training, performance appraisal, employee motivation, industrial relations, safety, employee benefits and compensation and the like. Cherrington (1995) observes the HR practices of a company are crucial in steering the employees towards achieving the organizational goals. An essential component of HR is to analyze the job contents and decide on the activities, skills and knowledge required of the employee to make a best fit in the job. If this is not done properly it may result in difficulties for the organization to retain good employees. Quite often if the employees do not find the job content to their satisfaction they may decide to look for alternative employment opportunities. This will increase the employee turnover rate. Many previous researches have linked HRM practices to employee turnover. Take for example the case of Lea and Heard (2000) who argued that the one important area that affected employees’ intention to leave their job was due to their organization’s HRM practices. In a similar vein, Pao-Long and Wei-Ling (2002) in their study on HR practices found that training and development, teamwork, benefits, planning, and job review and performance appraisal systems were paramount to healthy employer-employee relations and enhanced workforce performance.

Recruitment and Selection

Research conducted in the area of employee turnover and retention has indicated that effective recruitment and selection of employees is essential for successful training outcomes, higher level of employee performance and increased employee retention (Schmidt & Hunter, 1998). According to Huselid (1995) the recruitment and selection process has an impact on the high performance work practices as well as on the employee retention.

In the Middle Eastern context employee retention strategies have become one of the prominent issues to be handled by HR. Efficient recruitment and selection process is at the root of retaining good talents in the organizations. “In countries such as the UAE, Saudi Arabia and Oman that have government mandates to nationalize the workforce, recruiting and retaining local and expatriate talent have become an almost painful exercise in frustration.”

Saudi Arabia is approaching a situation of war for technical talent while there is already a shortage of managerial talent. Unaware of the repercussions the private employers in Saudi do not consciously create employee retention programmes. No long term benefits that would retain the talent with the company are being thought of by the companies, with the result that there is a high employee turnover rate being experienced in the region. This situation is so even in highly competitive industries like telecommunication industries and this result in a continued dependence of the expatriate labor. (Laurie Tapozada 2000).

Recruitment and selection of expatriate labor is an expensive and time consuming process. It also needs a different kind of orientation for the HR personnel, to conduct the process of recruitment and selection of expatriate staff.

Usually larger organizations send HR teams to countries where potential labor is available. Alternatively the job of recruitment and selection is entrusted to specialized agencies. In any case there is always the risk of sub-standard employees entering the organization. It is for the HR to identify out of these people newly recruited the particular set of people whose performance can be improved by providing proper training.

It has also to be remembered that the costs of employee turnover are very high as there are a number of hidden and indirect costs that cannot be estimated are associated with employee turnover. Therefore it is highly important that the HR takes into account the suitability of the applicants for jobs at various levels before they finally make the recruitment and selection.

Performance Management & Appraisal

Kessler (2003) observes that the performance appraisals are one of the most important requirements for conducting any business successfully and also to have an effective Human Resources (HR) policy. Recognizing and rewarding will promote effective performance in any organization and it also helps in identifying ineffective performers for the organizational development. Identifying such ineffective performers and taking personnel actions is an essential aspect of effective HR development. (Pulakos, 2003) The ability to undertake effective performance appraisal depends on the ability to make an assessment of the performance of the employees in a fair and accurate manner. It should be understood that evaluating the employee performance is a complex task. Once the supervisor is able to understand the nature of the functions of the subordinates and the sources from which he can collect information, he has to collect such information in a systematic way which is provided as feedback. Such information collected should be integrated into the process of organization’s performance management process which later can be used in performing the complex tasks of employee compensation, job placements, promotions and training and assignment decisions (London 2003). Bryson and Freeman (2007) also report a positive association between monitoring and performance pay. When applied as development tool the performance appraisal requires a development plan and requires the performance appraisal to be involved more in the individual employee development rather than the organizational development. This approach aims to improve the organizational performance by improving the individual employee skills.

Establishing effective reward system is at the root of an efficient performance appraisal. However decisions as to the time the rewards need to be offered, the relation between the performance and rewards and the ways in which the group efforts can be rewarded are some of the ticklish issues that needs careful consideration of the HR department and the top management. Most of the times simple rewards like more autonomy in the job, words of praise in achieving a good progress, chances for professional development and training and vacation at optimal intervals may prove to result in more than expected performance. The most important aspect of the reward systems is that there should be consistency in approaches to ensure an effective performance (Emery and Giauque 2001).

Performance appraisal has a close link with employee turnover intentions. When an employee’s performance has been adversely commented on the basis of an appraisal, he may decide to leave the job. It therefore becomes imperative on the part of the HR department to evolve suitable performance appraisal systems that is satisfying to both the management and the employees having fairness and simplicity.

Disciplinary Policy

In most case, when an employee(s) work against an organizations interest, they are warned and asked to mend their ways to work toward benefiting the organization they represent. However, when periodic warnings have no effect on the erring employee(s), HR or the management can remove them from their roles. This is perhaps the last possible solution left to the organization in protecting itself and its numerous employees from losses.

Constructive dismissal is when an employee is forced to quit his/her job against their will because of the way they are treated. Even though there is no dismissal attempted by the employer, the end result is the same as if one’s been sacked. Though it remains difficult prove the employer’s behavior, the reason for leaving must be serious and one of breach of contract. HR should take the initiative to devise and implement a comprehensive discipline policy applicable to most of the situations. It is impossible to devise a disciplinary policy that is applicable to each and every situation that requires corrective action which may arise in the workplace. Therefore it is for the HR to take a comprehensive approach regarding employee discipline by considering all the relevant factors before devising the disciplinary policies.

If an employee is proved guilty of any misconduct and as a consequence faces dismissal, the HR will have to show that there were fair grounds for the dismissal. Generally a dismissal is presumed to be unfair unless the employer shows substantial grounds to justify it. These include issues such as lateness, absenteeism and persistent absence through illness or injury, either short-term or long-term.

Incompetence is another area that can be used to justify dismissal. As an employer one must educate the employee of the standards that are expected of him/her and must refer to the job they were hired to do. HR will notify the affected of the rules and regulations stipulated in their contract. They would be advised to change their attitude and work in favor of the company and grow with it, or face legal action for contempt of duty (Citizens Information, 2007).

However, the disciplinary policies in Saudi Arabia are different, and this would have to be taken into account in dealing with issues pertaining to disciplinary actions against employees or employer.

Promotion Policy

Promotional policy is based on the organizational climate. Organizational climate can be construed as a global impression of any organization including its compensation and promotional policies covering the employees. Organizational climate strives to describe the perception of the employees towards the organization which normally would link to wage and promotional policies and forming the work attitude on the basis of these policies. (Litwin & Stringer,1968; Pritchard & Karasick, 1973) The organizational climate usually consists of structures designed to ensure that the mission and objectives of the organization are properly implemented. It also deals with levels of responsibility, decision-making authority, and formal reporting relationships with others in the organization (Scott & Kenneth, 1998). Employees usually are found to be emotionally exhausted when they perceive inconsistencies in the management expectations and if their job responsibilities are not clearly defined (Jaramillo et al 2006). Employees should get a feeling that they are being rewarded fairly and they should also perceive the organization’s promotion policies consistent and well within their expectations. If an employee feels it is quite unlikely that he or she to obtain a deserving promotion to the next higher level then he/she will start looking for alternative job opportunities. (Ing-Chuang et al 2003).

Retention Programs

Job Design and Enrichment

There is awareness about quality work life since several decades (Macy 1979) Routine tasks often make the workers frustrated and dissatisfied. This may lead to reduced output, lower quality, attitudinal issues, absenteeism, labor turnover, work stress and pressure for better working conditions. According to Herzberg (1968) theory of job enrichment is a potential motivator. The objective of job enrichment is to provide an opportunity to the employees to grow psychologically along with the work setting. The idea behind job enrichment is to make the job itself as a motivational factor. (Michael and Paul 1989) According to studies conducted jobs that have higher levels of job enrichment factors result in higher job satisfaction. It is also to be recognized that enriched jobs require more training time and result in slightly higher anxiety and stress (Michael, 1988). “Job enrichment increases a job’s range and depth, which refers to the number of activities and the autonomy, responsibility, discretion, and control.” (A. D. Ugah).

The designing of the jobs and the selection of the employees suitable for such jobs are at the root of an efficient employee turnover management. The process of engaging the services of the employees, the capacity of the organization to devise effective policies and procedures in the areas of recruiting and retaining the employees would go a long way in improving the value of the employees. Such value creation also depends on an efficient designing of the jobs, an effective utilization of the employee time and the commitment and support that the management extend towards the employees’ efforts would provide the necessary motivation for the employees to continue their employment in the organization concerned.

Herzberg et al (1959) and Hackman and Oldham (1975) found that employee motivation is related to the content and the nature of the job itself. Some important job related factors that influence employee motivation as identified by previous research are as follows:

• Job Varity: According to Hackman and Oldham (1975), a change in mental activity as well as changes in body movements, and postures can provide task significance to the employee, thus employees find their work meaningful and as a result remain motivated to a large extent.
• Autonomy: While Spector (1997) proposed that allowing individual freedom and autonomy within their jobs has a positive impact on the employee motivation.
• Clarity of Job Roles: Bedeian and Armenakis (1981), identifies that the employees who have clear understanding of the job roles are at ease and more likely to have less errors within their jobs, which affects positively towards motivation of an employee; on the other hand role ambiguity decreases employee motivation and results into stress and burnout {Rizzo, House & Lirtzman (1970), Schultz (1977), and Um & Harrison (1998)}.

Career Planning

By implementing a proper process for career planning it is possible for the HR to ensure that the people as well as the organizations develop simultaneously. A comprehensive understanding of the career planning development framework and implementation thereof will enhance the chances of achieving the organizational objectives at a faster pace.

Traditionally the concept of career planning has been based on the testing of the aptitude of the prospective candidate and judging their suitability for the desired career path. These tests had the inherent shortcoming of indicating the most suited career while the preferences of the employees may be diametrically opposite. Therefore in the traditional approach the career planning has been entrusted to the individual concerned. Unfortunately the HRD in most of the organizations does not approach the issue of career planning of the employees with a futuristic planning.

It is necessary the HR should understand that career planning should be viewed from a non-traditional perspective so that the human potential can be harnessed effectively for the success of the organization. It is to be recognized that the ambiguity in career progress and betrayal along the path of progression are the large cause of human frustration, anger and the ultimate burn out of the employees in stress. These stress elements act to destruct the human motivation both within and outside the organization. Career planning function should therefore be viewed and analyzed from an emotional intelligence angle and necessary policies implemented. (Aspera Vision)

When every employee in an organization align their personal and organizational goals in the same direction there is the likelihood that many positive factors would manifest themselves to promote the organizational growth. High level of personal motivation as against less reliance on motivation from organizational side, reduction in in-house politics and increase in employee initiative are some of the immediate benefits of a proper career planning. In addition there is every chance that the organization gets a goal oriented staff and the employees practice more effective time management.

Training and Development

Martin (2003) has identified a somewhat complex relationship between the training facilities and the employee turnover. He has found out that in those organizations where there are facilities for enhancing the skills of the workers through training the turnover rate is bound to be less. However the turnover ratio has a tendency to increase when there are training facilities for developing varied skills of employees, as there are chances that the employees trained in multi-skills will find better alternative employment opportunities. “The literature on the link between lower turnover and training has found that off-the-job training is associated with higher turnover presumably because this type of training imparts more general skills” (Martin, 2003).

Impact of Training on the Employee Mobility

Shah and Burke (2003) undertook a literature review to study the impact training has on the turnover phenomenon. Green et al. (2000) out of a British Study examined the relationship between the training and mobility of employees and concluded that the training has no impact on the employee mobility. However the training undertaken by the individuals on their volition did have a chance to make him search for a new job. The employer sponsored training is a likely to have “downward effect on the employee mobility.”

Lynch (1991, 1992) observed a considerable effect of on-the-job training as well as off-the-job training on the mobility factor. The formal on the job training has a declining effect on the job mobility especially in the case of young women, whereas off-the-job training results in increased mobility. Elias (1994) on the basis of a study on the British local labour markets observed that the women receiving the employer sponsored training programmes results in lower tendency to switch jobs or to leave the job to remain unemployed. But in the case of men there is no such effect found of the training on the turnover intentions.

Employees and Management Relationship

As per Storey (1998) a systems as well as an agency perspective can be employed within which the strategic development of employee relations can be attempted to. Quite a bit of dependent variables based on the strengths and weaknesses of the forces both internal and external to the organization are created by the systems and agency perspectives that have a say in the choices available to the management in the issue of employee relations. For example occupying a strong legal environmental and societal value system enables organizations to conduct employee relations at a regional or national level. Multinational companies with global exposure may seek to take a more company-led approach.

The relationship of the employees that exists between the co-workers and the subordinates are of differing nature. It is usual for an individual employee to relate these two aspects differently. Researchers have found that perception of lack of fairness in management practices and dissatisfaction with the behavior of the supervisors had caused higher levels of employee turnover (e.g. Cotton& Tuttle 1986; Mor Barak et al, 2001) Considering the same analogy it can be inferred that the interpersonal relationship of the employees with co-workers and supervisors may be different in their nature with respect to the organizational and personal outcomes. The employees usually identify those in the position of authority in the hierarchy of the organization as the representative of the management. Although such recognition is important from the point of view of the success of both positions in the case of a conflict with the supervisor the subordinate’s outlook and thoughts regarding their job and subsequently about the employer get negatively impacted and may lead to turnover intentions. (Frone, 2000) Therefore it is for the HR department to treat the relationship of the supervisor with that of the subordinate with caution and care so that they will be able to reduce the employee turnover on this count.

Yet another variation of the attributes affecting the management choices is prescribed by Storey (1998) on the basis of the degree of regulation and the “source of procedures and rules” which basically affect the management choice regarding the employee relation. There are two variation of such decision variables depending on the regulations namely; highly regulated and minimally regulated. In highly regulated environment, the industrial levels prevalent in the location acts as the determining factor externally and the strength and capabilities of the employees to make a collective bargaining act as a internal force for influencing the management choices.

In the case of minimally regulated environments, the minimum terms and conditions applicable to the industry makes the management choice externally and the consultative management prerogative available internally decide which choice the management should adopt for its employee relation approaches.

Benefits and Compensation

There are no conclusive studies that have considered the link between job satisfaction and pay and allowances with voluntary turnover. According to Mobley et al. (1979) the relationship between pay and the turnover has not been established fully and as such it cannot be said that pay has its effect on the turnover. There is no significant relationship found between these two variables by other studies also. Higher wages coupled with career opportunity was found to be the one of the important reasons for voluntary turnover by Campion (1991) cited in Tang. Martin (2003) has established that the organizations having higher levels of pay have a relatively lesser turnover ratio.

Pay and Job Performance

Griffeth et al (2000) have found only a modest impact of pay and other wage related issues on the employee turnover. They have arrived at this conclusion after studying the relationship between an employee’s pay, his performance and turnover. According to the authors when the high performers are poorly paid they are bound to leave the organization. The findings of Milkovich and Newman (1999) indicate that where collective reward programs are introduce in place of individual performance incentives then it will lead to higher turnover as the high performers may decide to leave the organization.

Flat Rate and Piece Rate Systems of Wage Payment

According to a study relating to employee turnover conducted by Taplin et al (2003) in the UK clothing industry the factors like low wage levels in the clothing industry compares to other manufacturing industries and the inherent fear of employees about the future of the clothing industry in the UK were the main reasons causing turnover in the clothing industry. The study also covered the system of wage payment and found that under flat rate system of wage payment the employee turnover rate was comparatively lower.

Employee Attitude towards Money

Some of the employees do not consider money alone as the sole criteria for deciding on the continuance of the existing employment. Tang et al (2000) after studying the relationship between employee attitude towards money, job satisfaction and voluntary turnover among mental health professionals found that the employees who consider the variable of money more than job satisfaction tend to switch jobs more causing higher turnover. Those employees who do not attach more importance both the intrinsic job satisfaction and money do not change jobs quite often. However in the case of employees who place higher value on intrinsic job satisfaction and lower value on money also change jobs frequently resulting in higher turnover. The researchers found that considering a higher value for money predicted the incidence of actual turnover but the thoughts about leaving do not have a material impact on the turnover intentions.

Employee Retention in Saudi Arabian Context

The economic development of any country depends on the availability of the financial resources as well as human resources. As far as Saudi Arabia is concerned though the financial resources is in abundance the countries economic growth has been hampered by the shortage of human resources all along. “Obtaining a sufficient level of qualified manpower for industrialization and economic growth, though, is a major problem that needs to be overcome inter alia through the development of better educational and training programs”.(Khalid and Gardner 2004) Saudi Arabia has been facing the crucial importance of the development of manpower due to lesser population, shortage of skilled and unskilled workforce locally in the face of large projects undertaken for development programmes at very high cost levels. As a result the country has to resort to the import of manpower needed by it for the development of the economy in the various sectors. “There had been a considerable dependency on the expatriate labour force for quite a long time.”(A. Al-Aali) The shortage of skilled and unskilled native manpower remains of great concern to many in Saudi Arabia. (S.S. Al-Qahtani), It has been emphasized that the GCC countries, both as a group, and individually, face a number of very real constraints to prolonged economic growth and the chronic scarcity of human resources, both skilled and unskilled, is regarded as the most important. (A. El-Kuwaiz) In addition, the quality and standard of native manpower are also key elements of labour force gaps in Saudi Arabia. (Seventh Development Plan: Ministry of Planning (MOP). The present day employee turnover phenomenon in the Saudi Arabian context can be identified with the following excerpts from the article in Gulf Business (2006). Though the article presents the scenario as a whole for the Gulf Cooperation Council countries the situation in Saudi Arabia is being aptly exhibited by this statement.

“Even as the region offers a greater pull, grander lifestyles and more gratifying salary-hikes than most other traditional greener pastures, the need to employ and hone local talent has never before been felt more acutely. Of course, an economic boom across the region may be responsible for fatter take-home cheques and bulky bonuses, but as companies – both local and multinational – are realizing it the hard way, merely inflating the salary packages and making counter offers to poached employees may not be enough to retain the best talent.” (Gulf Business 2006)

Studies have revealed that there is high employee turnover in the region due to various reasons. The employers find it difficult to retain the workforce. It has been suggested that in order to retain the talents the employers must focus on:

• Providing pro-active training and career development opportunities including those for skill development instead of making attractive counter-offers which are only reactive to the situation.
• Revising the salary payment policies to adopt a performance based compensation schemes in the place of across – the – board annual salary increments that do not satisfy the employees any more.
• Offering generous cost-of-living based flexi-benefit schemes replacing the traditional predefined annual bonus plans. (Laurie Tapozada 2000).

Employee retention in Saudi Arabian context is directly and intensely related to the employee satisfaction levels as the salary and benefits have never been a consideration for the job changes. The common factors usually cited as responsible for the employee dissatisfaction and the consequent employee turnover intentions are:

1. Lack of Sense of Belonging: This phenomenon can be regarded as the most influencing one on the employee retention area. Most of them being expatriate employees under specific term employment contracts the sense of belonging is usually not found in the employees. This is so even in the case of Saudi nationals as they are employed by the private employers under the saudization programmes of the government for insignificant positions. This prevents both the employer and the employee attaching any seriousness to the work.
2. No Career Advancement Plans: The employments always being temporary and contractual in nature the employers do not care to plan for any career advancement for the employees. This places the employees in a position to always look for better prospects with other employers.
3. Lack of Recognition: This factor also plays a crucial role in improving the employee satisfaction. In the Saudi Arabian context there are very little occasions where the contribution of the employees are recognized as being of some merit by awards or other means of recognition. Offering fattier salary increments without any gesture of recognition of the contribution may not always increase the job satisfaction of the employees.
4. Barriers to Prove Capabilities: Working in a very tight and inflexible environment kills the initiative of the employees to show their true worth to the organization. Most of the jobs being in repetitive in nature do not offer any scope for improvement in the skills and exhibit positive achievements in the jobs being handled.
5. Lack of Professional Development: Again the jobs being handled are of more repetitive nature coupled with no initiatives from the employer to offer any opportunities for development of the professional skills the work becomes monotonous very fast and deter the employees to excel in their professions or advance further.
6. Poor Working Relationship with the Boss and Colleagues: Usually there will be no opportunities for the employees to move freely in the working place with the colleagues and bosses. This is due to the fact that there is always a rift between the expatriate work force and the national workers, as the latter feel that the expatriates snap away their opportunities and take back the wealth of their nation to the expatriate’s own country. In addition the expatriates always have a feeling of insecurity about their jobs and this makes them always confined to their work grimly without moving freely in the working environment.
7. Sense of Unequal Treatment: It is always the feeling of the expatriate labour force that they are being given a second class citizen treatment in the Kingdom. Similarly the nationals who have been appointed by the private employers under the government’s saudization programmes usually are not allowed to take part in any decision making process and this makes them feel that they are treated unequally and deserve a better position. Often this feeling tells upon the employee’s job satisfaction and with this feeling the retention becomes impossible.

Leadership Style

Voluntary turnover can have a significant impact on the human capital of an organization. In addition there are a number of organizational re-adjustments of personnel and work units that may be forced upon the organization as a result of employee voluntary turnover (Hom& Griffith, 1995; Lee& Mitchell 1994. Replacing personnel due to voluntary turnover also enhance the personnel costs to an organization (Darmon, 1990) It also put additional strain on the HR to provide training to the newly hired personnel (Smith &Watkins 1978) Researchers have found a strong relationship between voluntary turnover and organizational commitment, worker burnout, job satisfaction, information seeking process, propensity for participating in decision-making, gender differences, and leadership styles (Rosin & Korabik, 1991)

Leadership can be construed as a social influence process in which the leaders seek the voluntary participation of their subordinates in the efforts to attain the organizational objectives (Omolayo, 2000) Effective leadership can be identified with the extent to which the leaders can continuously and progressively lead and direct their followers towards achieving the organizational goals. In this context leadership style may be considered as the pattern of behaviors exhibited by the leaders while leading or directing their subordinates. Lewin, Lippit and White (1939) have identified autocratic, democratic and laissez-faire leadership styles to be in existence in organizational context.

Work stress is the most harmful physical and emotional response that an employee experiences when the requirements of the job is not commensurate with the capabilities, resources or needs of the work. Role conflict and Role Ambiguity are the two aspects of organizational stress (Khan et al 1964) Role conflict arises when there are different expectations by the members of the set roles from focal persons. Similarly role conflicts arise when the internalized values, ethics, or personal standards do not match with the expectations. Role ambiguity on the other hand occurs when the people are not made aware of what is expected of them. (Khan et al 1964) This happens when the members of role set do not communicate properly with the focal person about their expectation or the information needed. Both role conflicts and role ambiguity results in work stress which is the feeling of tension, discomfort, uncertainty, indecisiveness and distress that a worker experiences as a result of the social and physical circumstances of the work setting. (Kreitner & Kinicki, 1998) If not mitigated the work related stress results in voluntary turnover intentions on the part of the employees.

The extent of work stress can be influenced by the leaders practicing different leadership styles in varying degrees. Leaders can reduce the work related stress by providing proper direction and guidance to the subordinates in different organizational circumstances and this makes the leadership styles an important phenomenon in the organizational context. (Smith, 1998).

Summary

In motivating employees it is imperative that HR identifies the operative needs and job related goals of the employees. In case they are not able to ascertain the goals they may devise particular goal setting process with the employees’ participation therein. Once the goals have been set to be in place the next job of HR is to ensure that the performance is properly measured so that there can be an effective process of rewarding the employees who have performed well and punishing those who have not. In all these processes it is important that HR takes the motivational issues carefully. A dissatisfied employee may be more vulnerable to voluntary turnover decisions. It must be the aim of HR to retain people who can be helpful in achieving the organizational objectives.

Another important aspect that HR needs to consider in the matter of employee turnover is the retention strategies discussed within the text of this review like promotion policies and career planning. These factors largely influence the employee motivation. Carefully devised policies governing career planning and internal promotions of the employees will help the HR to maintain the pace of organizational growth by retaining best talents within the company. Training and development is another area that needs the focus of HR in an intensive way which not only will boost morale of the employees to be motivated but also will help the organization to devise its succession planning in an effective way.

Research Methodology

The objective of this chapter is to present a detailed description on the salient aspects of different social research methods more commonly employed and their relative merits and demerits. This chapter also presents a discussion on the justification for the research methods that have been used to complete this study.

Introduction

In general social science uses a number of different research methods for improving the knowledge, theory and practice in different areas of social science. It can be observed that the different types of quantitative and qualitative research methods are linked to epistemological and theoretical frameworks. The research methods can be grouped under five common categories. They are; (i) experimental, (ii) correlation, (iii) natural observation, (iv) survey and (v) case study. The conducting of any research relating to social sciences has to find a suitable research method to accomplish the research objectives. The choice of the particular research method depends on the topic under study and the aims and objectives of the research. Although there are many ways of classifying the research methods the most popularly used distinction is between qualitative and quantitative research methods.

Quantitative Research Methods

Quantitative research methods find their origin in natural sciences where they are used to diagnose and analyze natural phenomena. Certain commonly adopted quantitative methods include survey methods, laboratory experiments, econometrics and mathematical modeling. According to White (2000) the quantitative research method consists of investigative process that leads to research conclusions expressed in numerical values. The numerical values represent the findings of the study and are subjected to statistical analysis for presenting the results of the study.

Qualitative Research Methods

The main objective of developing qualitative research methods is to enable the researchers to make an in-depth study into the social and cultural phenomena. Action research, case study, ethnography are some of the techniques employed for conducting qualitative research. Creswell (1994) defines qualitative research as a process of enquiry that involves the understanding any problem connected with the social or human behavior. The qualitative research process according to Creswell (1994) is based on the views and perceptions of various informants being the participants to the study that are expressed in a natural setting. The data sources for supplementing qualitative research methods include observation and participant observation (fieldwork), structured and semi structured interviews, focus groups and questionnaires, documents and texts. The data may also be provided by the impressions and reactions of the researcher himself/herself.

Rationale to Use Qualitative Research Methods

The motivation for engaging qualitative methods in preference to quantitative methods stem from the fact that the human beings possess the special quality of talking which distinguishes mankind. It is the qualitative research methods that enable the researchers to understand the people from the social and cultural contexts within which they are expected to act. According to Kaplan and Maxwell (1994) when an attempt is made to quantify the textual data collected, it distracts the goal of understanding the phenomenon under study from the perspectives of the participants and its social and institutional setting.

Although most researchers use qualitative or quantitative methods, authors like, Gable (1994), Kaplan and Duchon (1988) Lee (1991) Mingers (2001) and Ragin (1987) suggest the use of a mixed method. The term ‘triangulation’ implies combining one or more research methods in one study. For the purpose of the current study a mixed method has been used where the quantitative and qualitative research methods have been employed to get the advantages of both the research methods.

Research Philosophy

Any research whether it is qualitative or quantitative is bound to have some underlying assumptions about the elements of a valid research and the suitability of the research methods. It therefore becomes important to have a detailed knowledge about these underlying assumptions. For the purpose of conducting this research the most pertinent philosophical assumptions relate to the underlying epistemology that steers the research through. The term ‘epistemology’ denotes the assumptions about the knowledge and the ways in which such knowledge can be acquired. (Hirschheim 1992) According to Guba and Lincoln (1994) there exist four underlying paradigms for qualitative research. They are (i) positivism, (ii) post-positivism, (iii) critical theory and (iv) constructivism. Yet another method of classifying these paradigms is provided by Orlikowski and Baroudi (1991) who have specified positivist, interpretive and critical approaches based on the underlying research epistemology. However Lee (1989) is of the opinion that although these three research epistemologies is found to be philosophically distinct they are not observable so clearly in the practices relating to social science researches. Nevertheless for the purpose of our study this three-fold classification will be taken as the basic theoretical framework in so far as the research philosophy is concerned. However it also needs to be mentioned that the choice of a specific qualitative research method is independent of the underlying philosophical position assumed for the purpose of the research.

Techniques for Data Collection

Each of the research method adopted uses one of more techniques for the collection of the required empirical data. The word ‘empirical materials’ is considered more appropriated by the qualitative researchers as most of the qualitative data is non-numeric. The techniques adopted for collection of empirical materials range from interviews, focus groups, observational techniques including participant observation and fieldwork. The written data is collected from published and unpublished documents, reports, newspaper articles, publications in professional journals and so on.

It is observed as a common practice in anthropology and sociology to distinguish between sources of data as primary and secondary sources. In general primary sources comprise of those data which the researcher has collected originally from the people or organizations directly and which remain unpublished, while secondary sources of data are represented by any print materials like books, articles etc which have been published previously. Walliman (2005) defines the primary sources as the ones that are usually direct and detached wherefrom the information and data is gathered. Saunders et al (2003) feel that the secondary data possess greater value since a number of sources are being used for collection of data. However Walliman (2005) considers the secondary data as having a shortcoming in which the reliability of such data is always questionable. He further states that since the secondary data are passed on through several hands there is the possibility that such data might contain errors that can vitiate the results of the study and disturb the focus and direction of the research. Authors like Denzin and Lincoln (2005), Miles and Huberman (1994) Rubin and Rubin (1995) have contributed a great deal to the qualitative techniques of data collection. Sivlerman (1993) and Myers and Newman (2007) have evolved definite guidelines for conducting qualitative interviews based on a dramaturgical model.

Choice of Research Methods for Current Study

The perceptions of the employees on their turnover intentions are always subjective in nature. Considering the nature of the topic under study it is proposed to use a mixed research method for achieving the objectives of this research. The research has employed the quantitative research method of survey and qualitative research method semi-structured interviews for collecting the required empirical materials.

Survey Method

Survey method is deemed as non-experimental and descriptive in conducting social researches. This method is being employed by the researchers for collection of information and data on issues where the researchers cannot involve themselves directly. Survey method employs the use of questionnaire for collection of the required information. This method is criticized as it is often being designed and administered in a disorderly manner that results in the collection of data which are inaccurate. Meyer (1998) observes a careful selection of representative sampling and a proper design of the questionnaire are two important elements of survey method. A poorly designed questionnaire may generate meaningless information. Thus the information and data collected from the samples represent the views of the total population and therefore the information need to be gathered through intelligent questions addressed to the chosen samples (Cresswell 1994; Neumann 2002; Fink 1995).

Semi-Structured Interviews

Semi-structured interview is the most common form of interviewing technique in which the interviewer has determined the set of questions he/she intends to ask in advance but still allows the interview to flow more conversationally. In order to have the flow of conversation the interviewer can change the order of the questions or the particular wording of the questions. The interviewer has the option to leave out the questions that may appear to be meaningless with reference to the context. The main objective of the semi-structured interview is to get the interviewee to talk freely and openly so that the researcher would be able to obtain in-depth information on the topic under study.

Summary

By employing the ‘online’ survey method a questionnaire containing close-ended questions (as exhibited in Appendix I) was distributed to 100 chosen employees of Saudi Aramco through their respective email addresses. Structured interviews were conducted with Senior HR executives of Aramco to ascertain their view points on the established HR practices and the impact of these practices on employee turnover in Saudi Aramco. The questions that were presented to interviewees are appended in the Appendix II. Apart from the interviews with HR executives interviews were conducted with two ex-employees of Saudi Aramco to gather their ideas on the relationship of HR with the employee turnover in Saudi Aramco. The questions that were asked to the ex-employees of Saudi Aramco are presented in Appendix III. The results of the survey and the interviews are presented along with a detailed analysis in the next chapter.

Findings and Analysis

Introduction

The objective of this study is to study the impact of motivational theories on the employee behavior and performance and to analyze the various factors that influence the turnover intention of the employees under different circumstances. Through a review of the available literature the study has accomplished these objectives and the report on these findings are presented under different section of this chapter. This analysis also covers the HRM practices with respect to different functionalities of HRM. In order to accomplish the objective it was proposed to a survey among the employees of Saudi Aramco the chosen organization. An exit survey was also conducted among the ex-employees who left Saudi Aramco was also undertaken as a part of the research. The findings out of the surveys are presented in this chapter.

Survey Questionnaire

In order to assess the impact of employee motivation on the turnover intentions of the employees of Saudi Aramco the company chosen for the case study a survey questionnaire was prepared (see Appendix I) and sent to 300 selected employees of Saudi Aramco. The questionnaire was constructed on the basis of knowledge drawn from the previous research reviewed. The questionnaire contained seven different parts dealing with (i) overall company appraisal, (ii) performance appraisal, (iii) views of the employees on their interaction with supervisor and management, (iv) job expectations of the employees, (v) career advancement, (vi) Training and development, (vii) engagement and (viii) demographic information of the participants. The questions were closed ended questions requiring the employees to express their opinions/views on the questions asked by indicating their choice among the given criteria/options. The questionnaire also contained detailed instructions as to how the questions need to be answered. The questionnaire also requested the respondents to refrain from indicating their names with a view to maintain the anonymity. There was a statement contained in the questionnaire assuring the confidentiality of the responses from the participants.

Exit Survey

It was considered essential that the views of those employees who left the company Saudi Aramco earlier should also be found out and reported so that a comprehensive opinion on the impact of employee motivation can be formed and reported. In fact the employees who left the organization can be expected to be more free and up to the point on expressing their views on different aspects concerning the employee motivation and retention issues. The questionnaire (as exhibited in Appendix II) was prepared and circulated to 100 of the ex-employees of Saudi Aramco to get their views on the issues connected with employee motivation and turnover issues.

The questionnaire for exit survey was constructed as having three parts; (i) reasons for leaving Saudi Aramco, (ii) ex-employees’ perceptions on levels of satisfaction and (iii) demographic details of the participants. In this case also the respondents were assured of their anonymity and were asked to refrain from disclosing their identity.

Findings

Out of the 300 questionnaire distributed to the current employees 216 of them responded by sending out the filled questionnaire. This represents a response rate of 72 percent which can be considered as a good base to develop the discussion on the findings of the research. However for the exit survey the response rate was only 32 percent as out of 100 questionnaires circulated responses were received back only from 32 people. Still the opinions and views of the respondents are considered for this presentation. The findings of the both the surveys are presented in the following sections.

Findings of the Survey among Current Employees

The demographic details furnished by the current employees in the questionnaire indicate the following results.

Age Group of Samples

The table and the chart represent the age-wise distribution of samples. It can be observed the age distribution of the samples is almost uniform in respect of age groups up to 29 years, 30-39 years and 40-45 years. There is lesser percentage of people in the age group of 46-50 years and above 50 years working for Saudi Aramco. This information on the age of the samples was collected from the information provided by the respondents in the questionnaire.

Job Role

The information furnished by the respondents in respect of their respective job functions are given below.

Grade Code

In the questionnaire the respondents were asked to indicate their respective grades. The information gathered are analyzed and presented as below.

Service Years

The information collected from the participants on the number of years of service put by them is presented below.

Observations of Current Employees on General Satisfaction Levels

On the basis of the responses received from the participants the observations of the current employees on the general performance level has been collected under different groups and presented below. The grouping has been done to improve the cohesiveness of the information collected.

Satisfaction by Elements

This group contains the satisfactory level of the respondents in respect of different elements connected with the overall satisfaction.

Career Development

Training

Job Itself

Supervision

Work-Life Balance (Stresses)

Salary Levels

Fairness

Perceived Fairness (Equity)

Performance Feedback

Organization Commitment

Reasons to stay with Aramco

Reasons for Turnover Intentions

Findings of the Survey among Ex-Employees

The findings out of the exit survey conducted with the ex-employees of Saudi Aramco are presented below. The demographic details furnished by the current employees in the questionnaire indicate the following results.

Age Group of Samples

The table and the chart present the age-wise distribution of the ex-employees who participated in the survey. It is seen that there are more number of employees who left Saudi Aramco in the age group of 30-39 years.

Job Role

The information furnished by the respondents in respect of their respective job functions are given below.

Grade Code

In the questionnaire the respondents were asked to indicate their respective grades. The information gathered are analyzed and presented as below.

Service Years

The information collected from the participants on the number of years of service put by them is presented below.

Observations from Exit Survey

Based on the answers provided by the respondents to the exit survey the following observations have been made. The answers have been collected, analyzed and tabulated for a comprehensive presentation.

Reasons for Leaving the Job

Perceptions of Employees who Left the Job

Satisfaction Level and Perceptions of Employees before Leaving the Job

The next set of questions in the questionnaire asked the ex-employees to present their views and opinions on several statements listed in the question directed at finding out the perceptions of the employees on their job and work environment with Saudi Aramco.

Analysis

Managers have always been overwhelmed with the complexity relating to the actions of workers in a desired manner. The correction of the courses of action of the workers has been constantly attempted to in a number of ways; like offering various incentive programs, encouraging talks from the side of the management, and several other administrative actions intended to improve the satisfaction of the employees. However since the workers have the tendency to adjust their behavior to any of these measures the question whether the employee satisfaction is actually influenced is a question that was the central focus of many researches. Nevertheless creation of satisfaction among the employees has been a crucially important task of the management, since satisfaction has the ability to create confidence and loyalty among the workers which ultimately improves the quality of performance of the employees. However it needs to be understood that satisfaction is not a simple result of an incentive program announced by the management. This part of the paper analyses the findings of the survey results and the literature reviewed on the impact of motivational theories on employee satisfaction and draws from the approach of the motivational theories to job satisfaction and the part played by motivation in within job satisfaction.

Analysis of Survey Results

The findings on the demographic information on the current employees are self explanatory. It is observed that 29% of the current employees who participated in the survey belong to the age group of 46 years and above. With this group of people it may not be possible to except the same kind of aspirations as the youngsters as they have spent most of their time working for Saudi Aramco and therefore they would have been used to the style of functioning in the organization. It is difficult to comprehend that any type of motivating factors would have the desired effect on them.

Another factor to consider is the distribution of samples among different levels and segments of employees. The samples are distributed more evenly which enhances the validity of the results. More number of samples represents grades3 to15. This ensures fair comments from the employees at the junior and middle level as these are the people that generally need motivation. It is also observed that a majority of 32% of the people selected as samples had put in service of 15 to 20 years. It must be appreciated that these employees would know more about the lacking on the part of the organization on various employee motivation aspects and therefore they can contribute more to the results of the research.

General Satisfaction Levels

The results of the survey with the current employees of Saudi Aramco indicate that a majority of 45.83% of the people remain satisfied on an overall level with their employment with Saudi Aramco. While 21.29% of the respondents have indicated that they are very satisfied the same percentage of people has reported that they are dissatisfied with the employment with Saudi Aramco. 56.94% of the participants agree that their jobs with Saudi Aramco have more positive things than negative things. 16.2% of the respondents do not agree with this statement.

On the career development prospects 39.81% of the participants agree that they are satisfied with the career development plans being offered by Saudi Aramco. 50% of the samples are convinced that there are enough opportunities available with Saudi Aramco for the development of their skills; but 16.20% of the samples do not agree with the view. Similarly 50% of the respondents are of the opinion that there exist various career development opportunities within the company while 43.05% of the respondents agree that they are satisfied with career development in Saudi Aramco.

In respect of training prospects within Aramco 51.38% of the current employees surveyed believe that the company provides with the necessary training to the employees for carrying out their jobs effectively. 18% of the employees strongly agree that they are satisfied with the training facilities in Saudi Aramco on an overall level.

16.67% of the participants to the survey strongly feel that the work being done in the company makes use of their skills and a similar percentage of people believe their jobs are interesting and challenging in a positive way. A majority of 47.68% of the respondents are of the view that there is job variety in the company and 56.48% of the employees surveyed feel that they are satisfied with their jobs on an overall assessment.

79 out of 216 people surveyed representing 36.57% disagree with the statement that their supervisors are excellent role models. However 18 people strongly agree and 51people agree that the supervisors can be considered as role models.

Around 22% of the employees who participated in the survey feel that they are not affected by any stress from the job. While 48% of the people agree that they are constantly under work pressure almost same percentage of people feel that they are constantly facing the situation of over-working.

Only 5.09% of the people strongly disagree that they are satisfied with the salary levels. 56.94% of the surveyed people are of the opinion that they are satisfied with the current level of pay they are getting from the company.

The respondents have revealed a very strong opinion on the fairness of the organization. It is observed from the results of the survey that around 45% of the current employees are not all agreeable to the statement that Saudi Aramco is fair in its evaluation of employee performance or they have a fair performance appraisal system. It seems out of the survey that a majority of the current employees are not satisfied with the rewards and recognition system existing in the company. 90 out of 216 people responded to the survey have expressed the feeling that they agree that promotions are based purely on personality without considering the merit of the real performance of the employees. 86 out of 216 representing 39.81% disagree that Saudi Aramco deals fairly with the employees.

The results of the survey clearly indicate that the employees are not being given a proper feedback on their lacking in skill or knowledge. 52.31% of the current employees are of the view that the performance appraisal results are not being communicated to the employees in a timely manner.

However on an overall assessment 100 out of 216 employees surveyed express that they have a strong sense of belonging to the company. 42% of the people express that they would like to continue the rest of their career with Saudi Aramco.

33.79% of the employees state that salary and benefits is the main reason for their staying with the company. Interesting jobs have made 25.46% of the samples surveyed to stay with the company. It is also observed out of the survey that 31.48% of the current employees would like to consider leaving the job due to lack of fairness in the organization while 18.98% of the people cited work stress as the reason for their turnover intentions.

Analysis of Exit Surveys

The demographic information out of the results of the exit survey indicates that a majority of 66% of the people who left the company belong to 30-39 years age group. 38% of the people left the company belong to technical jobs and 50% f the respondents belong to the job grade 11 to15. It is interesting to note that 31% of the employees have left the services of Saudi Aramco after putting in a service of 5 to 10 years and 35% of them after a service of 15 to 25 years. The analysis of the reasons for the employees leaving the service reveal that 37.5% of the ex-employees cite the reason of lack of fairness while 21.87% people have the work stress as the reason for their leaving the service. 14 out of 32 respondents representing 43.75% strongly disagree to the point that there was a consistent and fair system of rewarding the employees in Saudi Aramco. 10 out of 32 ex-employees responded to the survey are of the view that the jobs were filled with undue stress and the employees were not provided with sufficient information on the promotion criteria.

Motivational Theories and Employee Satisfaction

According to Herzberg et al (1959) when the employee attitude is understood then such understanding acts to produce the best employee motivation. The internal attitude of workers which takes its root at the state of mind of the workers should be able to provide the clue to the managers on the information relevant to the motivation. With respect to the study on the relationship between employee attitude and motivation the theory proposed by Herzberg et al (1959) strived to find answers to the questions on the elements which will reflect the attitude of the individual worker towards the performance of his job, factors responsible for these attitudes and the likely consequences of these employee attitudes. Through a methodical approach to find answers for these questions Herzberg et al (1959) wanted to demonstrate the relationship between employee attitude and behavior. Thus the work of Herzberg was focused more towards qualitative in to the factor-attitude-effect combination rather than a quantitative evaluation of the information. Herzberg has designed the questions in his experiments to draw information more specifically about the workers’ experiences based on his/her positive or negative feelings while on work. This discussion summarizes the importance of the attitudes as the base for the dual factor theory of Herzberg. In fact the questionnaire to the employees of Saudi Aramco has been constructed more or less in line with this observation of this theory.

It may be noted that the motivating factors like recognition, achievement, advancement, responsibility and the like are a set of factors that causes good attitude within the worker and these factors are mostly task-related. The set of hygiene factors like salary, interpersonal relationships between supervisor, subordinates, working conditions, status, job security and the like are more related to the conditions that surrounded doing any job and are present with the feeling of unhappiness or bad attitude of the employees. Thus Herzberg differentiates between motivational and hygiene factors by the inherent level of satisfaction/dissatisfaction associated with each of the factors. According to Herzberg while motivators form the basis for the creation of positive job attitudes in the absence of the motivators dissatisfaction does not occur automatically. Similarly hygiene factors have the potential to cause dissatisfaction and the mere absence of them does not result in enhanced motivation.

However Locke (1976) criticizes Herzberg’s theory on grounds like (i) mind-body dichotomy, (ii) unidirectional operation of needs, (iii) lack of parallel between man’s needs and the motivation and hygiene factors, (iv) defensiveness, (v) use of frequency data and (vi) denial of individual differences. According to Locke (1976) satisfaction is a function of the perceived discrepancy between intended and actual performance or the extent to which one’s performance differs from his own set of values. The closer the expected performance to the actual outcome the higher is the yield of satisfaction. Locke (1976) postulates agents and events in the place of motivators and hygiene factors. An event or a condition is one that makes the employee feel satisfied. An agent on the other hand is that which makes an event happen. Events or conditions like success or failure or the responsibility entrusted to the worker act like motivators to create satisfaction or dissatisfaction among the workers. Agents on the other hand are like hygiene factors; for instance the customers or supervisors are capable of creating an event which then results in satisfaction or dissatisfaction among the employees. While Herzberg’s theory limits the scope of the factors to create positive results the agents and events suggested by Locke (1976) are capable of producing both positive and negative influences on the employee satisfaction.

Thus Herzberg, Locke and all other motivational theorists correlate the employee satisfaction to the motivation and performance levels of employees in an organizational setting. The discussion on the motivational theories become relevant to the study in the light of the fact that one of the objectives of the study is to examine the motivational theories to study the impact of employee satisfaction on motivation and the resultant impact on the employee performance levels. From the literature reviewed it can reasonably be concluded that the presence of motivational factors produce both positive and negative attitudes among the employees. It is the perception of the employees about the relative weight the factors carry on his/her performance and such perception decides the positive or negative attitude of the employees. This attitude has for sure its own impact on the employee motivation and performance.

Factors influencing Employee Turnover Intentions

Industrial psychologists, senior management and human resource professionals focus their attention on the issue of employee turnover that causes serious concerns about the impact the employee turnover has on the organizational growth. Employee turnover is apparently one of the intractable HR challenges that confront the organizations. Apart from the hindrance to the organizational growth employee turnover also creates a burden on the organization in terms of the costs associated with the employee turnover. The scope of this study was limited to examine the factors that create turnover intentions among the employees. The review of the relevant literature has identified several factors responsible for employee turnover intentions. In the exit interviews conducted one of the main causes cited for leaving the current job is the availability of alternative jobs with relatively higher pay and allowances. It is obvious that in a better economy the availability of alternatives always play a role in the employees’ decisions to switch jobs. However in the opinion of the researcher this reason is often overstated in the exit interviews.

When the operating efficiency of the organization goes down and is shown by the financial results of the organization, it becomes a serious cause of concern for the existing employees to find out better alternatives and therefore organizational performance is also one of the factors identified to be one of the factors responsible for creating turnover intentions among the employees.

There is an abundance of literature on the correlation between the organizational culture and employee turnover. The organizational culture represented by the employee performance appraisal and rewarding system, qualities and involvement of organizational leaders, ability of the organization to inculcate a sense of belonging in the employees and the development of a sense of shared goals among the employees and the openness of communication are some of the organizational cultural factors identified as having relevance to the employee turnover.

The characteristics of the jobs handled by the individual employees are also having a role to play in the employee’s decisions to leave an organization. It can be observed while some jobs are intrinsically more attractive and likeable to the employees than others some other jobs might be dull not evolving any excitement among the employees in the completion thereof. The attractiveness of a job is subjected to the influences of the repetitiveness of the job, challenges posed by the job, potential dangers involved, importance of the job as perceived by the employee and the capability of the job to evoke a sense of achievement among the employees, and the status of the job within the organization are considered as relevant factors to influence an employee’s turnover intentions.

Most common among other factors is the perceived level of expectations about a job by the aspirants at the time of applying for the job. When the unrealistic expectations are not met after taking up the job, the employee becomes disillusioned and is driven to take a decision to switch jobs.

According to several empirical studies, demographic and biographic characteristics of employees also play a vital role in the number of people changing jobs and increasing the turnover rate of the organizations. In addition to several other factors the individual characteristics of the individual employee also has an effective role in determining the employee turnover decisions. There are personal and trait based characteristic features such as family circumstances, desire to advance the career potential or an unsolicited job change offer will all lead to employee decisions on job switching. Some of the trait-based or personality features also play an important role in influencing the employee turnover rates.

The observation here is that some of the factors are within the control of the organization while most of them are beyond the control of the organization employing the individuals. Especially in an organizational as that of Saudi Aramco the personal factors play a very dominant role in the employee turnover. In a large organization like Aramco with a number of hierarchy levels there are very little opportunities for individuals to plan their career advancement and this can be the one likely factor to make the employee dissatisfied over the job. In addition many of the jobs that people handle may be or repetitive nature which also hampers the employee motivation and this increases the number of people leaving Aramco to find more interesting jobs though they may be lesser pay as compared to Aramco. The perceived expectations of the job aspirants to take up a job with a large organization like Aramco may turn out to be unrealistic once the individuals join the company and this may also be one other reason for a higher employee turnover in Saudi Aramco.

HRM Practices

Weakness in the relationship that exists between the organization and the employees is often a potential cause for an increased employee turnover rate. Though employees have a tendency to switch jobs for better monetary gains or career advancement opportunities, traditional HR approaches that rely heavily on the competitive scales of pay have been found to have only limited success in motivating the employees and retaining them with the organization in the long run. This limitation has pushed the HRM practitioners to consider the installation of sophisticate HRM infrastructures along with the implementation of other HRM practices like person/organization fit selection approach, performance based incentives, and offering training and development opportunities for improving the organizational ties with the employees. Past research have found organizations having strong employee attachment tend to have relatively lower turnover intentions than those with weaker organizational commitment. Therefore in this respect adopting appropriate and effective HRM practices has been viewed as vitally important for strengthening the relationship between the employees and the organization.

An analysis of the literature reviewed indicates the necessity of HRM practices in the areas of recruitment and selection, salary and benefits, training and development, performance appraisal systems, promotions and career development and disciplinary measures. It is stressed by most of the literature that the person organization fit needs to be given more emphasis during the process of recruitment and selection. Screening the applicants can well be accomplished by looking at the work enthusiasm and compensation expectations along with the personality traits of the prospective candidates. For arriving at the selection criteria it is important that the HRM personnel have to work closely with other functional managers like the required skill levels and technical competency required. As against the traditional practice of recruiting employees on the basis of the individual judgment of the functional manager, it should be developed as a team work among the HR executive and the functional manager concerned.

The compensation policies should be evolved in such a way that they do not accord blanket pay increases nor do they provide increase to non-performers. The employees who perform extraordinarily will remain motivated with the differentiation in the salary levels for average and excellent performance.

It is observed from the review of the literature that training for promotion and succession planning is the ideal strategy to be followed in place of replacements for enhanced skill requirements. This enables organizations to prepare employees for shouldering larger responsibilities that usually accompany promotions. It is also important that the HR functions cover the identification of necessary training or re-skilling required for aligning the HR requirements with the future organizational plans and critical systems existing in the organization.

It is the complicated portion of the function of HRM to devise performance appraisal systems that apply objective criteria, detailed formulae for assessing the employee performance at different levels and proper quantitative measures in the pay decisions. It is critical that the performance appraisal systems evolved by HRM should more standardized, and job specific rather than a global one. In order to uphold the qualities of validity, reliability and credibility of the performance appraisal systems the organizations have to take serious efforts on monitoring and control in the form of training the assessors, revision of employee performance goals and bi-annual readjustment of key performance indices in response to changes in the internal and external circumstances.

In respect of promotion considerations it is for the HRM to develop excellent performance and consistent proven track records as the basic criteria. Usually it is the performance appraisal system, succession planning, and performance management system forms the foundation on which the promotions are decided.

The traditionally practiced guaranteed seniority promotion system that promotes employees in a lock step is definitely a threat to organizational prosperity.

It is not sure whether all the HRM practices analyzed above is in practice in Saudi Aramco. It is essential that HRM practices are approached scientifically and systematically to ensure a high level of organizational performance and reduced employee retention levels at any organization including Saudi Aramco.

Conclusion and Recommendations

Conclusion

The growing concern among the corporate executives and top management in identifying and maintaining a committed workforce capable of fulfilling the organizational commitments has led to the continued search for techniques to improve the commitment of the employees towards the organization. The research findings of this study reveal that the literature has widely dealt with this phenomenon. Similarly the surveys conducted as a part of the study with the current employees as well as those who left the employment of Saudi Aramco being the organization chosen for study have covered a number of factors that determine the motivation level of the employees and the identification of the personal goals with those of the organization. The findings reveal that the notion that compensation packages although considered important have only limited role to play in the enhancing the employee motivation and retention. The study results provide qualitative evidence that at least three areas are of serious concern for Saudi Aramco; fairness to be shown to the employees in recognizing their performance, removal of work related stresses and instituting proper performance appraisal systems.

First the results of the exit survey clearly indicate that majority of the people have left the employment on the ground that the organization has not been fair enough in dealing with the employees. This fact has been corroborated by the current employees that there is no fairness in promotions where personal considerations have priority over the performance of the employees. The past literature has also pointed out the fact the commitment and fairness of the organization has an important role to play in the employee turnover intentions. If the organization does not show fairness in its dealings with the employees, there is a good chance the employees may get frustrated and decide to leave the organization. Here the role of HR can be emphasized. Effective HR practices in providing promotion criteria based on the performance level of the employees will increase the commitment of the employees towards the organization.

It is highly necessary that organizational fairness is to be exhibited through effective HR activities. The findings of several past researches have demonstrated that the employee perceptions of organizational fairness are closely associated with the willingness on the part of the employees in their organizational commitment behavior. Especially the perceived fairness with respect to reward distribution and performance appraisal procedures encourages the employees to display extended commitment behavior. Consistent with the empirical findings of the past the evidence of this study reveals that the organizational fairness has been one of the important reasons for employee turnover in Saudi Aramco. To summarize there should be organizational support in establishing transparent performance appraisal procedures with trained appraisers to ensure that the employees get a feeling of confidence on the organizational fairness. Since this factor has taken the centre focus in the surveys of both the current employees and ex-employees Saudi Aramco has to take the necessary initiatives in the direction of improving the show of organizational fairness to improve the employee retention.

Another area that needs improvement may be a revamping of the performance appraisal system. In the case of performance appraisal and its impact on the employee turnover intentions have been discussed at great lengths in various HR literature. The institution of proper performance appraisal systems that provide for rewards and recognition in relation to the employee performance has been advised to improve the employee retention. It has always been suggested that performance orientation in the pay and promotion system plays a crucial role in reinforcing the commitment and loyalty of the employees towards the organization. The pay and promotion strategies of the company in differentiating between average and excellent performers have the potential to make the employees see that the merit of the truly rewarding performance will always be recognized and it will lead to the fulfillment of the extrinsic need for financial rewards. “Performance based promotions play a crucial role in staff retention and job motivation in that they may satisfy the achievement, affiliation and recognition needs of individuals.”

One other salient finding of the study is that work stress has been identified to be a factor that influences employee turnover intentions in Saudi Aramco. The organizational concern for employees through reducing work related stress has been highlighted by this study. When the employees are expected to perform continuously under constant work pressure it makes the employees get frustrated and as a natural consequence the employees tend to look for alternative employment opportunities with less mental strain. This factor also has been identified by both the current employees as well as those who left the employment of Saudi Aramco as one important factor that may make the employees think about the continuance of their employment with Aramco.

Recommendations

Considering the views and opinions expressed by the respondents to the survey conducted under this study and based on the knowledge gathered from the literature reviewed few of the following strategic actions on the part of Saudi Aramco may go to improve the employee retention in the organization.

1. There is the absolute necessity of the strategic integration of complementary HR practices for ensuring effective improvement in the employee retention in Saudi Aramco. The company has to have an effective and efficient HR department in place to review and revamp all the performance appraisal procedures.
2. In framing the new performance appraisal procedures the company should ensure that there is the involvement of the employees in goal setting and other review procedures. This for sure will enhance the commitment of the employees to the performance appraisals and will also improve the confidence of the employees towards organizational fairness.
3. Evolving procedures to monitor work related stresses with a view to reduce their impact on the employee performance is another area that needs to be concentrated by the management of Saudi Aramco. Forming employee committees to suggest ways to reduce work stress will help in this direction.

Limitations of the study

The major limitation of the study was the collection of data and information from the ex-employees of Saudi Aramco. It may be noted that the response rate from the ex-employees is only 32%.They were either not interested in reviewing their association with Saudi Aramco or otherwise busy in their current engagements. Another limitation was to organize the overwhelming literature on the topic. Due to the abundance of the literature available on employee motivation and retention it was a herculean task to organize the gathering of the appropriate literature for the presentation of the study. Thirdly, though not serious following the responses from the current employees of Saudi Aramco for the survey also posed a limitation for the completion of the study.

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Appendix I

Instructions

Please evaluate the following statements and indicate how much you agree with the content by checking the appropriate box on the following scale: Strongly Agree (100%), Agree (75%), Somewhat Agree (50%), Disagree (25%), and Strongly Disagree (0%). Please answer all questions and return the survey directly to me on or before 2008.

How to answer the survey questions

For each question, select the answer that best represents your view – based on your experience as working for Saudi Aramco.

For example: In answering the question below, if you want to choose the option “Agree” mark an “✗” in the box under the heading “Agree”.

Please respond to every question, and only mark one answer per question. If you want to change an answer, block out your original choice and clearly mark your preferred choice with an “✗”.

If a question does not apply to you, please leave it blank.

Thinking about the company as a whole, to what extent do you agree or disagree with the following statements?

I like working for Saudi Aramco because of (please select only the one most important factor):

 Good Supervisor  Good Work Environment  Interesting Job

 Growth Opportunities  Salary and Benefits  Other reason: …………….

If I have the opportunity, I would like to leave Saudi Aramco because of (please select only the one most prevalent factor):

 Poor Supervisor  Stressful Work Environment  Boring job

 Lack of Fairness  Lack of Growth Opportunities  Salary and Benefits

 Other reason: …………………………………..

My Supervisor ……………….

If I am considering or planning to leave my job, it would be mainly due to: (please select only the one most prevalent factor):

Please Remember: – Your responses are kept strictly confidential and cannot be individually traced.

Please provide the following demographic information. The information provided will be treated with utmost confidentiality. No individuals name will be identified and only aggregate results will be presented.

______________________________________________________________

What is your gender?

Please indicate your nationality:

What is your age?

Which of the following title best describes your current job role?

Which of the following bracket best describes your grade code?

How long have you worked for Saudi Aramco:

Thank you for your honest opinion. I do really appreciate your time and consideration given for answering this questionnaire.

Appendix II

Instructions

Please evaluate the following statements and indicate how much you agree with the content by checking the appropriate box on the following scale: Strongly Agree (100%), Agree (75%), Somewhat Agree (50%), Disagree (25%), and Strongly Disagree (0%). Please answer all questions and return the survey directly to me on or before 2008.

How to answer the survey questions

For each question, select the answer that best represents your view – based on your experience as working for Saudi Aramco.

For example: In answering the question below, if you want to choose the option “Agree” mark an “✗” in the box under the heading “Agree”.

Please respond to every question, and only mark one answer per question. If you want to change an answer, block out your original choice and clearly mark your preferred choice with an “✗”.

If a question does not apply to you, please leave it blank.

I left my job in Saudi Aramco, mainly due to (please select only the one most prevalent factor):

To what extent do you agree with the statements below:

Before quitting your job, how satisfied were you with:

Please Remember: – Your responses are kept strictly confidential and cannot be individually traced.

Please provide the following demographic information. The information provided will be treated with utmost confidentiality. No individuals name will be identified and only aggregate results will be presented.

______________________________________________________________

What is your gender?

Please indicate your nationality:

What is your age?

Which of the following best described your last job role?

Which of the following best described your last grade code?

How long have you worked for Saudi Aramco:

Thank you for your honest opinion. I do really appreciate your time and consideration given for filling this questionnaire.