effects of employee turnover on competitive …
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EFFECTS OF EMPLOYEE TURNOVER ON COMPETITIVE
ADVANTAGE OF INSURANCE COMPANIES: A CASE OF AAR
INSURANCE COMPANY
BY
BIO GINETTE D. ANIANOU FANOU
UNITED STATES INTERNATIONAL UNIVERSITY -AFRICA
SUMMER 2018
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EFFECTS OF EMPLOYEE TURNOVER ON COMPETITIVE
ADVANTAGE OF INSURANCE COMPANIES: A CASE OF AAR
INSURANCE COMPANY
BY
BIO GINETTE D. ANIANOU FANOU
A Research Project Report Submitted to the Chandaria School of
Business in Partial Fulfillment of the Requirement for the Degree of
Masters in Business Administration (MBA)
UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA
SUMMER 2018
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STUDENT’S DECLARATION
I, the undersigned, declare that this is my original work and has not been submitted to
any other college, institution, or university other than the United States International
University in Nairobi for academic credit.
Signed: ________________________ Date: _____________________
Bio Ginette D. Anianou Fanou (ID No: 647589)
This project has been presented for examination with my approval as the appointed
supervisor.
Signed: ________________________ Date: _____________________
Fred O. Newa
Signed: ________________________ Date: _____________________
Dean, Chandaria School of Business
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COPYRIGHT
Copyright© Anianou, 2018
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ABSTRACT
The purpose of the study was to establish the effects of employee turnover on
competitive advantage of insurance companies. The study was guided by the following
research questions: What are the effects of voluntary turnover on competitive advantage
of insurance companies? What are the effects of involuntary turnover on competitive
advantage of insurance companies? What are the mitigating strategies to gain
competitive advantage?
A descriptive research was used. The study was conducted in AAR located in Real
Towers. The target population was 218 employees. Stratified random sampling was used
to select a sample of 65 employees. Data collected from the field was analyzed and
coded. Quantitative technique was used to analyze data. Descriptive statistics and Social
Sciences (SPSS) were used to analyze quantitative data. Regression and correlation
analysis was also done to determine relationship between variables. Results were
presented using table and figures.
The first objective set to establish effects of voluntary turnover on competitive
advantage. It was revealed that respondents could not reach an agreement on AAR
experiences voluntary turnover, voluntary employee turnover at AAR occurs due to low
salary and lack of benefits, Additionally, respondents also disagreed on higher rate of
voluntary turnover has lowered work productivity at AAR, voluntary employee turnover
at AAR occurs due to unattractiveness of the job, voluntary turnover occurs due to life
time decisions or circumstances for instance, family moves, serious illness and death
and voluntary turnover had affected organizational profitability.
The second objective set to establish effects of involuntary turnover on competitive
advantage. Respondents could not reach an agreement on involuntary turnover or
discharge has occurred at AAR due to an employee violating workplace policies
(discipline issues). Furthermore, it was also revealed respondents disagreed on AAR
experiences involuntary turnover, involuntary turnover is due to business slowdown or
economic necessity, Employees have left AAR or been discharged due to performance
problems, AAR has used re-organization or restructuring (downsizing) strategy to cut
costs, involuntary turnover is due to employee’s death or family issues and involuntary
turnover occurs frequently at AAR, through involuntary turnover.
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The third objective set to establish mitigating strategies used to gain competitive
advantage. Findings revealed that respondents agreed that they are aware of the
company’s mission and vision. However, respondents could not reach an agreement on
leadership style at AAR has positively influenced employee productivity, organizational
culture at AAR has influenced employee commitment and job satisfaction, AAR uses
job satisfaction strategies such as reward systems, performance pay, training and career
development, the organizational culture at AAR has influenced employee performance
and leadership style at AAR has positively influenced employee retention and
performance.
In conclusion, voluntary and involuntary turnover has occurred due to salary and lack
of benefits, unattractiveness of the job, due to life time decisions or circumstances for
instance, family moves, serious illness and death, performance problems, employee’s
death and workplace policies or discipline issues, thus affecting organization
productivity and performance. However, employees are aware of company’s mission
and vision. Leadership style does not influence employee productivity and transactional
leadership have not developed standards, policies, procedures regulations and use
reward and punishment strategies.
It is recommended that AAR should boost sustainable employee commitment, increase
organizational effectiveness and gain a competitive advantage, develop policies and
strategies that they can use in cases of involuntary turnover and should develop an
organizational culture that is unique and will differentiate them from other organization.
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ACKNOWLEDGMENT
My heartfelt gratitude to the Almighty God through who this was possible. Lydia &
Desire Anianou my dear parents, I am deeply grateful for your prayers, endless love and
support. Thank you for always being there for me. I would like to thank my sister and
brothers for their support. My deepest gratitude to Mr. Fred Newa for devoting your
time, sharing and guiding me through the different stages of this project. My sincere
gratitude to AAR staff especially Mr Peter Gakinya, HR Business Partner, and Mr Simon
Kiraguri, Business Executive, who assisted me to acquire the information needed to
carry out this research study. My sincere gratitude to Abel Santiago Robles for his
contribution and valued support. Finally, appreciation to my friends for the
encouragement.
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DEDICATION
To God be the glory!
I dedicate this project to my husband Frederic Fanou and my children Atsila and Atniel
Fanou, my greatest source of inspiration and motivation. Thank you for your prayers,
love, patience and valued support. May the Lord abundantly bless you!
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TABLE OF CONTENTS
STUDENT’S DECLARATION ................................................................................... ii
ABSTRACT ................................................................................................................... ii
ACKNOWLEDGMENT ............................................................................................. iv
DEDICATION................................................................................................................v
LIST OF TABLES ....................................................................................................... iii
LIST OF FIGURES ..................................................................................................... iv
CHAPTER ONE ............................................................................................................1
1.0 INTRODUCTION....................................................................................................1
1.1 Background of the Study ...........................................................................................1
1.2 Statement of the Problem ...........................................................................................5
1.3 Purpose of the Study ..................................................................................................6
1.4 Research Questions ....................................................................................................6
1.5 Significance of the Study ...........................................................................................7
1.6 Scope of the Study .....................................................................................................7
1.7 Definition of Terms ....................................................................................................7
1.8 Chapter Summary ......................................................................................................8
CHAPTER TWO .........................................................................................................10
2.0 LITERATURE REVIEW .....................................................................................10
2.1 Introduction ..............................................................................................................10
2.2 Effects of Voluntary Turnover on Competitive Advantage .....................................10
2.3 Effects of Involuntary Turnover on Competitive Advantage ..................................14
2.4 Mitigating Strategies and Competitive Advantage ..................................................19
2.5 Chapter Summary ....................................................................................................25
CHAPTER THREE .....................................................................................................26
3.0 RESEARCH METHODOLOGY .........................................................................26
3.1 Introduction ..............................................................................................................26
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3.2 Research Design.......................................................................................................26
3.3 Population and Sampling Design .............................................................................27
3.4 Data Collection Methods .........................................................................................29
3.5 Research Procedures ................................................................................................29
3.6 Data Analysis Methods ............................................................................................30
3.7 Chapter summary .....................................................................................................30
CHAPTER FOUR ........................................................................................................31
4.0 RESULTS AND FINDINGS .................................................................................31
4.1 Introduction ..............................................................................................................31
4.2 Demographical Factors ............................................................................................31
4.3 Effects of Voluntary Turnover on Competitive Advantage .....................................35
4.4 Effects of Involuntary Turnover on Competitive Advantage ..................................37
4.5 Mitigating Strategies to Gain Competitive Advantage ............................................38
4.6 Competitive Advantage ...........................................................................................41
4.7 Correlation between Employee Turnover on Competitive Advantage of Insurance
Companies......................................................................................................................42
4.8 Regression Analysis of Employee Turnover on Competitive Advantage ...............43
4.9 Chapter Summary ....................................................................................................46
CHAPTER FIVE .........................................................................................................47
5.0 DISCUSSION, CONCLUSION AND RECOMMENDATION .........................47
5.1 Introduction ..............................................................................................................47
5.2 Summary ..................................................................................................................47
5.3 Discussion ................................................................................................................49
5.4 Conclusion ...............................................................................................................53
5.5 Recommendations ....................................................................................................54
REFERENCES .............................................................................................................56
APPENDIX I: QUESTIONNAIRE ............................................................................72
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LIST OF TABLES
Table 3.1: Population Distribution ................................................................................ 27
Table 3.2: Sample Distribution ..................................................................................... 28
Table 4.1: Response Rate……………………………………………………………...31
Table 4.2: Number of Years in the Organization……………………………………...35
Table 4.3: Descriptive on Voluntary Turnover on Competitive Advantage of Insurance
Companies..................................................................................................................... 36
Table 4.4: Descriptive on Involuntary Turnover on Competitive Advantage of
Insurance Companies .................................................................................................... 38
Table 4.5: Descriptive on Mitigating Strategies and Competitive Advantage of
Insurance Companies .................................................................................................... 40
Table 4.6: Competitive Advantage ............................................................................... 42
Table 4.7: Correlation between Employee Turnover on Competitive Advantage........ 43
Table 4.8: Model summary of Competitive Advantage and Other Variables .............. 44
Table 4.9: Anova Employee Turnover on Competitive Advantage ............................ 44
Table 4.10: Coefficients of Variables of Employee Turnover on Competitive
Advantage ..................................................................................................................... 45
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LIST OF FIGURES
Figure 4.1: Age ............................................................................................................. 32
Figure 4.2: Gender ........................................................................................................ 32
Figure 4.3: Marital Status ............................................................................................. 33
Figure 4.4: Academic Qualification .............................................................................. 33
Figure 4.5: Management Level ..................................................................................... 34
Figure 4.6: Cases of Employee Turnover ..................................................................... 35
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CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Study
Employee retention is a major challenge in many organizations. Globally, there is an
increase in matters of recruitment and staff retention (Bushe, 2012). Employee skills,
knowledge, and experience are essential in running an organization. Through human
capital, an organization can create and sustain its competitive advantage (Grant, 2010).
Implementing an employee retention program is an effective way of ensuring key
employees remain in the organization while maintaining job performance, productivity
and therefore competitiveness. Organization should ensure that it manages, develops
and retains its talented employees thus reducing employee turnover and achieving
competitive advantage (Cappelli, 2008). Employee turnover appears to be one of the
main issues that extensively affect the overall performance hence the competitiveness
of organization; it is one of the most expensive and difficult workforce challenges
facing organizations.
Employee turnover is the percentage or number of employees who leave a company or
an organization and are replaced by new workers. It is the rate at which employees leave
an organization. Armstrong (2012) states that employee turnover is known as labor
turnover or attrition. It is sometimes known as ‘wastage’ or ‘attrition’. Employee
turnover could be voluntary turnover, involuntary turnover or avoidable and
unavoidable turnover. It related to loss of firms’ competitive advantages (Hedwiga,
2011). Kazi and Zedah (2011) posits that labor turnover is the rotation of workers
around the marketplace between firm, jobs and occupations and between the states of
employment and unemployment. According to Nzuve (2010), employee turnover is the
rotation of workers around the labor market; between firms, jobs and occupations; and
between the states of employment and unemployment.
According to Hutchinson and Purcell (2010), to achieve a competitive advantage and
increase performance, an organization can reduce employee turnover by: training
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employees, job security, flexible working hours, regular appraisals and good working
environment. An organization can achieve a competitive advantage when it acquires or
develops an attribute or combination of attributes that allows it to outperform its
competitors. These characteristics can include access to highly trained and skilled
personnel (Mugusia, 2012).
According to Haider, Rasli, Akhta, Yusoff, Malik and Aamir (2015); (Yamamoto,
2011), employee turnover can negatively impact the competitive advantage of a firm
and cause related costs. High level of employee turnover will lead to the reduction in
organizational and employee performance hence increase in recruitment and training
costs (Chen, Lin, & Lien, 2010). According to Wangiri (2015), organizations face a
higher cost due to employee turnover. This is in line with the study done by Lavania
(2011) on faculty recruitment and retention: A key for managing talent in higher
education. GLA University Mathura Mathura Uttar Pradesh, India findings revealed
that costs of lost talent can range between 70% and 200% of the lost employee’s annual
salary. Akrani (2011) asserts that organizations can incur both direct and indirect costs
due to staff turnover. Caplan (2011) states that based on a research done by CIPD, it
was revealed that in the UK, there was about 15.7% turnover and the average cost of
every leaver was £6,150.
Khatri, Budhwar and Chong (2010) states that most organizations in Asian countries
such as Malaysia, Singapore, Hong Kong, Taiwan and South Korea have been facing
challenges due to employee turnover. According to Employment Labor Statistics Korea
(2016), statistics show that the average number of employee turnover in the year 2011
to 2015 was 3.6% in the construction industry; accommodation and food service had
5.2% and business facilities management and business support services were at (3.9%).
Smith (2009) businesses spend over USD 200 billion annually recruiting and replacing
employees. Meudell and Rodham (2010) argues that in USA turnover rate in health care
sector would reach 29% in 2020.
The lack of organizational support, work socialization, and employee involvement
creates isolation among employees, hence lowering productivity and effectiveness
(Mathe & Slevitch, 2013). Employee turnover is caused by lack of employee training,
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which affects employee competence (Perez & Mirabella, 2013). According to a
research done by Price water house coopers (2010), a lot of insurance companies are
facing a challenge due to skill shortage which is due to lack of recruitment, training and
career development strategies. Besides, a lot of insurance companies are not able to
achieve a competitive advantage because they focus more on short-term goals rather
than long-term goals. Due to changes that are taking place in the labor market,
organizations need to develop strategies that will help them respond to changes and
workforce expectations.
Rawat (2013) posits that organizations face a lot of problems due to high turnover rate.
Employee turnover occurs because employees are dissatisfied with their job, poor
working conditions, low salary, lack of career advancement and better offer. High
employee turnover leads to low performance in the organization. Mendes and Stander
(2011) assert that company should invest in employee retention in order to be
successful. Competition and the lack of availability of highly talented skilled employees
make finding and retaining talented employees a significant priority for organizations.
Maria, Xavier, Luis and Joseph-Oriol (2014) researched the effects of training on the
competitive economic advantage of companies in Spain and findings revealed that there
was a positive correlation between training and competitive advantage. Kim (2015)
conducted a study on what increases public employees’ turnover intention and finding
recommended that South Korean companies need to provide employees with
opportunities for training and career development to reduce turnover intention.
Boxall and Purcell (2011) posit that human resource strategies can enable companies
to achieve a sustainable market leadership position. In Addition, competitive
advantages based on human resource strategies are superior and hard to copy by
competitors. McWilliams, Van Fleet and Wright (2001) argue that highly skilled and
motivated workforce has great potential to create a source of sustainable competitive
advantages. Employee retention practices increase employee loyalty, commitment and
minimize employee turnover cost. James and Mathew (2012) argue that organizations
should come up with effective retention strategies that they can use to minimize
employee turnover and achieve a competitive advantage.
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Farid (2014) conducted a study on an assessment of the impact of employee turnover
on organization performance in Barclays Bank Tanzania. It was established that
employee turnover increases workload and reduces efficiency. It was recommended
that for an organization to improve its performance, employees should be paid
marketable salary and rewarded once they achieve their goals. Gertrude (2014)
conducted a research on assessment of employee’s turnover in the private sector.
Findings revealed that each year, the rate of employees’ turnover is growing and this
will have a negative effect on the growth of private sector. It was recommended that
private sector should restructure employee’s salary scales hence increase employee
satisfaction.
Kuria, Odingi and Wanderi (2012) researched factors influencing labor turnover in
three and five stars - rated hotels in Nairobi, Kenya. Findings revealed that employee
turnover was caused by lack of balance between work and personal life. It was
recommended that employers need to create conducive work environment. Sohail,
Muneer, Tanveer and tariq (2011) employee retention is important factors that will
enable organization to increase their performance and remain competitive. Moreover,
for organizations to remain competitive, they need to have in place employees who are
focused, equipped with effective skills and committed to their work.
According to Mutiga (2014), in Kenya, insurance sector consists of 25 general insurers,
11 composite insurers and 13 life insurers. It has 198 licensed insurance brokers, 29
medical insurance providers (MIPs), 5,155 insurance agents, 133 investigators, 108
motor assessors, 25 loss adjusters and 24 insurance surveyors. In addition, the
insurance sector also consists of The Association of Kenya Insurers (AKI) and The
Association of Insurance Brokers of Kenya (AIBK) whereas, the regulating body of the
industry is the Insurance Regulatory Authority (IRA).
Mutiga (2015) states that insurance industry has recorded gross written premium of
KES 173.79 billion in 2015 from KES 157.21 billion in 2014 hence, representing a
10.5% increase. Gross earned premium increased by 9.8% to stand at KES 146.16
billion in 2015 compared to KES 133.12 billion in 2014. The industry recorded a profit
of KES 11.57 billion before tax in 2015 compared to KES 15.74 billion in 2014. The
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industry asset base in 2015 increased by 11.5% to stand at KES 465.98 billion compared
to KES 417.76 billion in 2014. The overall insurance penetration in 2015 was 2.79%
compared to 2.93% in 2014. In 2014, penetration was affected by the rebasing of the
GDP upwards. The low penetration is due to untapped opportunities for insurance
business in areas such as oil and gas, real estate, infrastructure, bancassurance, micro
insurance and agriculture. However, the industry is coming up with strategies to
increase penetration to ensure that businesses are covered and more Kenyans are
insured (Mutiga, 2015).
1.2 Statement of the Problem
The business world today is very competitive and only firms with the appropriate
human resource can keep up with the competition. It is therefore considered to be an
important task to manage employee turnover for any organization. However, retaining
employees is one of the biggest challenges that companies are facing (Terera &
Ngirande, 2014). According to a research done by Deloitte (2011), it was revealed that
employee turnover can have a positive impact of organization productivity.
Organizations may lay off employees who are not very productive hence replacing them
with employees who have the required skills and knowledge hence increase
productivity.
Luciana and Ciro (2015) conducted a study on employee turnover and organizational
performance in Brazilian retail sector; findings revealed that there was a positive
relationship between employee turnover and organizational performance. Zeeshan,
Imam and Muhammad (2016) conducted a study on the impact of employee turnover
on organizational effectiveness in Telecommunication Sector of Pakistan. Findings
revealed that there was a positive relationship between employee turnover and
organizational effectiveness. However, a study done by Msafiri (2013) on impacts of
labour turnover on organizational performance in Mtwara regional administrative
office revealed that there was a negative relationship between organizational
performance and the employees’ turnover. Maryam (2014) conducted a research on an
assessment of the impact of employee turnover on organization performance in
Barclays Bank Tanzania.
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Francis (2015) conducted a research on factors influencing labor turnover in
Commercial Banks in Kenya. Findings revealed that employer rules, regulations affect
labor turnover and open communication in the organization has enhanced employee
relations, which has reduced rate of labor turnover. Nangami (2014) conducted a
research on factors influencing turnover among doctors at the Aga Khan Hospital
Kisumu. It was revealed that the hospital had a turnover rate of 67% for doctors due to
low remuneration, lack of attractive benefits, lack of recognition, lack of training and
development opportunities and lack of motivation.
Albana and Enver (2015) conducted a study on the role of human resources in gaining
competitive advantage. They found that wholesale distribution firms of food and non-
food products in Kosovo do not consider human resources as significant resources in
providing competitive advantage. Mohamed (2016) conducted a research on factors
influencing high staff turnover in Commercial Banks in Kenya and findings revealed
that there was a strong correlation between career development and staff turnover.
Obiero (2014) conducted a research on factors influencing high staff turnover in
commercial banks in Kenya.
A lot of studies have been done on employee turnover but none of them have done on
effects of employee turnover and competitive advantage. Therefore, this study closes
the gap and adds more literature and knowledge on effects of employee turnover on
competitive advantage.
1.3 Purpose of the Study
The purpose of this study was to determine the effects of employee turnover on
competitive advantage of insurance companies.
1.4 Research Questions
1.4.1 What are the effects of voluntary turnover on competitive advantage of insurance
companies?
1.4.2 What are the effects of involuntary turnover on competitive advantage of
insurance companies?
1.4.3 What are the mitigating strategies used to gain competitive advantage?
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1.5 Significance of the Study
1.51. Insurance Companies
Findings and recommendations from this study will shed light to insurance companies
on how to attract, maintain employees and therefore reduce employee turnover. It will
help insurance companies come up with strategies they can use to reduce employee
turnover hence achieve a competitive advantage.
1.5.2 Policy Makers
Government organizations or insurance regulators will implement policies and
guidelines that human resource managers can use to deal with issues regarding
employee turnover hence gain competitive advantage.
1.5.3 Academicians and Researchers
Researchers and academicians can use findings and recommendation from this study to
conduct further research hence, contribute more knowledge on employee turnover and
competitive advantage.
1.6 Scope of the Study
The study covered the effects of employee turnover on competitive advantage of
insurance companies. The study targeted AAR Insurance Company in Nairobi and it
was conducted only at AAR branch located in Real Towers. The study sampled 218
employees and the target population comprised managers and non-management
employees. Data was collected using questionnaires. The study was conducted out from
January to April 2018. The limitation of the study was lack of time to distribute the
questionnaires and cost spent to travel around distributing and collecting the
questionnaires.
1.7 Definition of Terms
1.7.1 Turnover
Employee turnover refers to a measurable incidence of people joining and leaving the
organization. It occurs when employees leave an organization and have to be replaced
(Mathis & Jackson, 2013).
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1.7.2 Voluntary Turnover
Voluntary turnover is the process where employees leave an organization at their own
discretion (Torrington, Hall, & Taylor, 2014).
1.7.3 Involuntary Turnover
Involuntary turnover occurs when an employee is terminated from a position in an
organization, when employment is terminated against the wishes of the employee
(Sims, 2007).
1.7.4 Functional Turnover
Functional turnover is the process employees deliberately leave the organization
(Torrington et al, 2014).
1.7.5 Internal Turnover
Internal turnover involves employees leaving their current positions and taking new
positions within the same organization (Wolfe, 2015).
1.7.4 Human Capital
Human capital is a link between workforce and organizational planning (Dessler, 2014).
1.7.5 Competitive Advantage
Competitive advantage is achieved whenever a company has some type of edge over
rivals in attracting buyers and coping with competitive forces. A company is said to
have a competitive advantage when its profitability is greater than the average
profitability of all the firms in the industry. It allows the productive entity to generate
more sales or superior margins than its competition (Pearc & Robinson, 2014).
1.8 Chapter Summary
This chapter has presented the background of the study and the statement of the
problem. It has also highlighted the purpose of the study, research questions,
importance of the study, scope of the study and definition of terms. Chapter two dealt
with literature review emphasizing on the different types of employee turnover and the
competitive advantage strategies. Chapter three, explained: research design, population
to be studied, the instruments used. Also, data collection procedures and data analysis
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techniques were discussed. Chapter four discussed findings and interpretation
established from the study. Finally, chapter five dealt with the discussions of the
findings, conclusions and recommendations.
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CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 Introduction
This chapter presented literature review from different scholars to determine effects of
employee turnover on competitive advantage. The research was guided by the
following research questions: what are the effects of voluntary employee turnover on
competitive advantage of insurance companies? What are the effects of involuntary
employee turnover on competitive advantage of insurance companies? What are the
mitigating strategies used to deal with employee turnover in insurance companies?
2.2 Effects of Voluntary Turnover on Competitive Advantage
2.2.1 Voluntary Turnover
Voluntary turnover is the process where an employee leaves an organization at his/her
own discretion (Dess & Shaw, 2006). According to Shaw, Delery and Gupta (2005),
voluntary turnover occurs when an employee decides to leave an organization. Sims
(2007) states that voluntary turnover occurs when an employee initiates the termination
of their employment at their own free will. Gomez-Mejia, Berrone and Franco (2014)
voluntary turnover is a separation that occurs when an employee decides to end the
relationship with the employer due to personal reasons. Voluntary turnover refers to
termination initiated by employees. Employee might decide to leave an organization
voluntarily because of getting a better job, changing career, or present job is unattractive
because of poor working conditions, low pay or benefits, and bad relationship with
supervisor (Heneman, Judge, & Kammeyer-Muelle, 2012).
According to Zeru (2016), voluntary turnover is classified into functional and
dysfunctional turnover whereas; dysfunctional turnover is grouped into avoidable
turnover and unavoidable turnover. Functional turnover is the process where an
employee leaves due to substandard performers and dysfunctional turnovers refer to the
exit of effective performers. Additionally, organization can control dysfunctional
turnover caused by lower compensation and poor working condition. Ade, Musibau,
Sholanke and Tolani (2015) avoidable turnover is a type of turnover that can be
prevented by an organization through offering employees pay raise or new assignment
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or better working conditions. It is something organizations can prevent by hiring,
training, evaluating and motivating their employees more effectively. Unavoidable
turnover is the process in which an employee has no choice in the termination.
Moreover, unavoidable turnover occurs in unavoidable circumstances for example,
when an employee dies, or spouse relocates to another country. Sandra (2012) states
that unavoidable turnover occurs due to life time decisions that are beyond an
employer's control. It occurs when an employee moves to a new area or a job transfer
for a spouse. Unavoidable turnover occurs due to family moves, serious illness, and
death, over which the organization has little or no influence (Taylor & Finley, 2010).
2.2.2 Competitive Advantage
Competitive advantage is the process where a firm is able to achieve and sustain profit
that exceeds what its competitors are achieving. An organization is able to gain a
competitive advantage over its competitors by understanding its market, customers. It
is a situation whereby an organization is able to deliver the same benefits as competitors
but at a lower cost (cost advantage), delivers benefits that exceed those of its
competitors’ products (differentiation advantage) and creates superior value for its
customers (Porter, 2010). A competitive strategy therefore enables a firm to gain
competitive advantage over its rivals and sustain its success in the market.
Ghemawat and Rivkin (2006) assert that competitive advantage is an organization’s
ability to create the willingness among buyers to pay much more than it costs to produce
the product or service. Competitive advantage is the ability of a firm to attract and serve
relatively more customers than its competitors while at the same time achieving its
strategic objectives (Newbert, 2008). Competitive advantage is the ability gained
through attributes and resources to perform at a higher level than others in the same
industry or market (Al-Swidi & Mahmood, 2011).
Huselid and Becker (2011) state that competitive advantage is driven by workforce
productivity, creativity and discretionary effort, which are in turn affected by the levels
of employees’ skills and motivation. According to Njuguna (2009), competitive
advantage is the ability of a firm to create its customers with value that exceeds costs
that a firm will incur when creating a product or service. Otieno (2012) posits that
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competitive advantage is the ability gained through unique attributes and /or resources
to perform at a higher level than others in the same industry or market. In addition,
access to natural resources, access to highly trained and skilled human skills, new
technologies, new product (service) or improvement of production processes are
example of attributes that an organization can use to achieve a competitive advantage.
Competitive advantage is the strategic advantage an organization has over its
competitors. An organization is able to achieve a competitive advantage when it
acquires or develops an attribute or combination of attributes that allows it to
outperform its competitors (Kimaru, 2012). Wang (2014) asserts that an organization
is able to obtain a competitive advantage by developing or acquiring a set of attributes
that will help it to outperform its competitors. Competitive advantage allows a firm to
create superior value for its customers and profits for itself. A firm positions itself in
the industry through its choice of low cost or differentiation. This decision is a central
component of the firm’s competitive strategy. Competitive advantage arises when an
organization acquires or develops an attribute or attributes hence outperform its
competitors (Chepngeno, Wagoki, & Okello, 2012).
2.2.3 Voluntary Turnover and Competitive Advantage
Dess and Shaw (2001) conducted a research on voluntary turnover, social capital, and
organizational performance. Findings revealed that voluntary employee turnover incurs
losses in productivity. Jacob (2011) conducted a research on the effects on performance
of voluntary and involuntary labor turnover in an evolutionary signaling model;
voluntary turnover has the expected negative effect on performance. Griffeth, Hom,
Mitchell and Lee (2012) conducted a research on reviewing employee turnover;
findings revealed that there was a negative relationship between job performance and
voluntary turnover. Voluntary turnover can be due to: employees not being satisfied
with their jobs, job stress, getting a better job, conflict with a manager or contract is
terminated for disciplinary reasons (Chowdhury & Nazmul, 2017).
Ryan and Todd (2009) conducted a research on the impact of job performance on
employee turnover intentions and the voluntary turnover process. Findings revealed
that job performance will have an indirect influence on voluntary turnover. Shaw (2011)
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researched on turnover rates and organizational performance. It was established that
turnover rate will decrease profitability and financial performance of the organization.
Tae-Youn and Jason (2013) researched on turnover rates and organizational
performance findings revealed that voluntary turnover has a negative effect on job
performance.
Kimungu and Maringa (2010) researched on an assessment of the impact of employee
turnover on customer service and competitiveness of an establishment. It was
established that high level of employee turnover has a negative effect on quality of
service and consequently on the desired competitiveness of the hotel. Voluntary
turnover can have significant effects on the execution of business plans and may
eventually cause a parallel decline in productivity (Oki, 2014). Higher rate of voluntary
turnover will lower productivity. New employees will often require time to learn how
to fulfill their roles and tasks. It may also have a negative impact on the remaining
workers’ morale thus reducing the performance which in turn, will affect organization
productivity (Hamel & Breen, 2013). This will lead to lower productivity and lower
profits and will affect the competitiveness of the company.
According to Mellahi and Collings (2010), high loss of staff leads to low performance
in the organization therefore, organizations have to come up with policies and practices
on retaining employees so as to ensure that employees stay in the organization for a
longer duration and have a positive effect on their performance. Aman (2015) in his
research on the causes and effects of employees’ turnover in Oromia water works
design and supervision enterprise, it was revealed that due to employee turnover the
organization will not be competitive in the market, it will incur cost of recruitment and
training and loss of profit. Msafiri (2013) conducted a research on impact of labor
turnover on organizational performance in Mtwara regional administrative office.
Finding revealed that employees’ turnover is positively associated with the organization
inefficiency.
Vuyisile (2013) conducted a research on impact of staff turnover on organizational
effectiveness and employee performance at the Department of Home Affairs in the
Eastern Cape Province. It was revealed that staff turnover causes reduction in effective
14
service delivery to the customers and reflects poorly on the image of the Department.
It was recommended that the organization should pay its employees a marketable
salary, reward and develop career advancement opportunities for its employee.
According to Ziel and Antoinette (2013), the cost of voluntary staff turnover and the
impact on productivity alone is enough to depress any human resource manager and the
organization. Turnover will cause delay in service delivery while waiting for the
replacement staff to arrive. In addition, there might be production losses while
assigning and employing replacement staff.
Zeeshan et al (2016) researched on impact of employee turnover on organizational
effectiveness in Tele Communication Sector of Pakistan. Findings revealed that there
is a significant relationship between employee turnover and organizational
effectiveness. Lejaras (2014) researched on effect of employee turnover on
performance of organizations; findings revealed that employee turnover affects
performance of the Mastermind tobacco Kenya Limited. The highest turnover rate in
financial services particularly in commercial banks has great impact on productivity,
quality and profitability due to the loss of knowledge and technical skills. The turnover
rate of any organization will impact the organization’s operation cost in investing
trainings that required for new employee and eventually will impact the end profit of
the organization (Keni, Teoh, & Rubiah, 2013).
2.3 Effects of Involuntary Turnover on Competitive Advantage
2.3.1 Concepts of Involuntary Turnover
Gomea-Mejia et al (2014) posits that involuntary turnover is a type of turnover that an
organization or employee cannot control. Involuntary turnover occurs when
management decides to terminate its relationship with an employee due to economic
necessity or a poor fit. Sims (2007) states that involuntary turnover occurs when
employment is terminated against wishes of employees. It is a type of turnover in which
employees have no choice in their termination. Involuntary turnover might occur due
to long term sickness, death, or moving overseas (Heneman et al 2012). Employee may
leave an organization due to sickness, death, moving abroad or employers-initiated
termination (Aman, 2015). Mayhew (2017) argues that involuntary turnover occurs
when employers terminate an employee’s contract or ask an employee to resign.
15
Involuntary turnover might occur when an employee violates workplace policies,
performs poorly or in case of business slowdown.
According to Shaw, Delery and Gupta (2005), involuntary turnover is divided into
discharge turnover and downsizing. Discharge turnover is the process where an
employee leaves an organization due to performance problems or discipline.
Involuntary turnover or discharge, is the process where an employer decides to
terminate an employment relationship. On the other hand, downsizing is the process
where an organization is restructuring. According to (Dessler, 2014), it is the reduction
of number of people employed by a firm. The basic idea is to cut costs and raise
profitability. Chowdhury and Nazmul (2017) noted that involuntary turnover or
discharge is an employee’s decision to terminate their employment. Moreover, an
involuntary turnover can occur due to retirement, death, dismissal, taking care of sick
family member or to accompany a spouse to remote area.
According to Nyandiga (2011), downsizing refers to a work force reduction entailing
the involuntary departure, not for cause of one or more employees. It is the reduction
in the number of employees in an organization. Downsizing is the involuntary loss of
one's employment or the removal of people from a work force. Downsizing includes
employee early retirement scheme, retrenchment, freeze on recruitment and withdrawal
of guaranteed employment to university and pre-service training graduates. Downsizing
can be in the form of retrenchment, early retirement or casualization of staff (Hellgren,
Naswell, & Sverke, 2005). In addition, downsizing caused by increased financial costs
can take the form of casualization. Casualization occurs when an organization
outsource temporary tasks to minimize the core size of the organization. Restructuring
through downsizing is done in order for an organization to survive in a competitive
market (Datta, Guthrie, Basuil, & Pandey, 2010).
Downsizing can be used as a cost reduction program to improve organizational
effectiveness and increase shareholder value (Adnan, 2010). Omolo (2011) asserts that
organizations use downsizing as a strategy of reducing employment cost hence,
improve employee efficiency and effectiveness. According to Zakira (2013),
downsizing is a type of reorganization, restructuring or reduction of workforce to
16
streamline, tighten and shrink the organizational structure with respect to the number
of personnel that the organization employs. In addition, downsizing may occur
intentionally as a strategic, proactive response designed to improve organizational
effectiveness. It may involve mergers, acquisitions, sell-offs, or restructuring to enable
the organization to meet its mission (Kozlowski, Chao, Smith, & Hedlund, 2013).
According to Hildebrandt (2010), downsizing is the reduction in the number of
employees working in an organization with the intention of cutting down costs, to
reduce overall operating costs. Downsizing refers to the reduction in the number of
employees, mostly middle-level management, in a company (Johnson, Melin, &
Whittington, 2013).
Nyakundi (2012) investigated the effects of employee downsizing on business
organizations in Kenya. The study revealed that most organizations in Kenya use
downsizing when they are over staffed, non-competitive and due to changes, that are
taking place in the industry. The study also revealed that the organizations uses
involuntary retirements, separation with benefits, separation without benefits and pay
to quit, retraining thus reduce expenses, increase profits and dividends. Finds also
revealed that downsizing reduces employee morale. According to Miguda (2013),
downsizing affects the size of the firm’s workforce and its work process. In addition,
downsizing is used in an organization to increase efficiency, productivity, and/or
competitiveness. Mutonga (2011) states that downsizing undermines teamwork,
reduces employee empowerment and undercuts employee perceptions. Moreover, it
erodes employee commitment to quality workforce, threatens job security and weakens
top management commitment to quality workforce.
2.3.2 Involuntary Turnover and Competitive Advantage
Chepkirui (2012) suggests that downsizing should be used by organizations as a
strategic mean to increase productivity and efficiency. According to Zakira (2013),
globally, companies have used downsizing to improve employee competitiveness,
profitability, organizational effectiveness, efficiency as well as to reduce the size of
their workforce. Gyu‐Chang and Jong‐Sung (2006) research on the effects of
downsizing on the financial performance and employee productivity of Korean firms.
It was established that downsizing has a positive effect on firm profitability. However,
17
according to a research done by Anssi (2014), on downsizing as a strategy: effects on
profitability and signal value for the capital markets–finish evidence 2005-2010.
Findings revealed that downsizing does not have a significant impact on profitability.
Omolo (2011) conducted effects of downsizing on organizational performance: a case
of the Kenyan Civil Service. Findings revealed that downsizing did not improve
performance in the Civil Service. Gitonga (2009) conducted a research on an
investigation into the effects of organization downsizing on employee performance.
Findings revealed that downsizing at Telkom Kenya failed to improve performance,
productivity or profits. Miguda (2013) states that downsizing is currently one of the
most popular strategies being used by organizations in an effort to survive and compete
in the current business environment. However, since downsizing eliminates
redundancies and reduces employment costs, many executives believe that through
downsizing organizations are able to compete efficiently and improve profitability.
Downsizing strategies are used to enhance performance in organizations.
Özlem and Mete (2006) noted that downsizing is the systematic reduction of work force
which is often used during economic crisis in order to increase productivity, efficiency,
profitability and competitiveness of firms. Sadia (2016) researched on impact of
downsizing on organizational performance. It was established that downsizing has a
positive effect on organizational performance. Wali-ur and Hummayoun (2012) states
that downsizing affects employees’ loyalty, perception about the job insecurity and
their commitments toward the organization thus resulting into poor employee and
organizational performance.
2.3.1 Factors Causing Involuntary Turnover
Employee turnover can be caused by lack of training and development, poor working
conditions, lack of reward and compensation (Verhee, 2011). According to Campbell,
Ganco, Franco and Agarwal (2012), employees leave an organization due to bad
relationship in the work place, being bored or unchallenged in the work itself and poor
benefits. Yohannes (2014) conducted a study on factors affecting employee turnover
and its impact on Ethiopian Evangelic Al Church M Ekane Yesus. Findings revealed
that employee turnover was affected by lack of employee career advancement.
18
Ndemak (2014) conducted a study on factors influencing turnover among doctors at the
Aga Khan Hospital, Kisumu. Findings revealed that low remuneration, lack of
attractive benefits, lack of recognition, lack of training and development opportunities
and lack of motivation are examples of factors that affect employee turnover. Alhassan
(2012) conducted a study on the relationship between employee perceptions of training,
organizational commitment and their impact on turnover. Chong, Kho, Lee, Ooi and
Tan (2013) conducted a research on the impact of HRM practices on employee turnover
intention in Utar. Findings revealed that training has a positive effect on employee
turnover. Mahamad and Aiman (2015), on his empirical study on the Pakistan banking
industry, argues that by boosting the training and development activities of employees
within the banking sector, employees do get motivated to stay with the bank.
Byoung, Dong, Jang, Ram, Ha and Dong (2016) conducted a study on impact of work
environment and work-related stress on turnover intention in physical therapists.
Findings revealed that there was a significant positive correlation between turnover
intention and work-related stress and a significant negative correlation between
turnover intention and work environment. Muchemi (2012) conducted a study on
factors that lead to high staff turnover in private secondary schools in Thika West and
Kiambu East Districts of Kenya. Findings revealed that working condition affects
employee turnover. Ruchi and Jaipur (2014) suggested that efficient human resource
management and maintaining good work environment will affect not only employee
performance but also organizations growth and development.
Kuria et al (2012) researched on the assessment of causes of labor turnover in three and
five star rated hotels in Kenya it was established that unfavorable working conditions,
long working hours with minimal pays and poor employees training policies affects
employee turnover. Rashid, Khalil, Zahid, and Moeed, (2013) conducted a research on
work life balance and stress with turnover rate of the employees. Findings revealed that
work life balance and stress affect employee turnover. Ghayyur and Jamal (2012)
researched on work-family conflicts: a case of employees' turnover intention. Findings
revealed that there was a significant positive correlation between work life balance and
employee turnover.
Abassi and Hollman (2000) noted that employee turnover is affected by lack of
recognition and competitive compensation systems in an organization. Sara and Joeri
19
(2015) conducted a study on how reward satisfaction affects employees’ turnover
intentions and performance. Findings revealed that reward has a positive influence on
employee turnover. Wesonga, Kombo, Murumba and Makworo (2011) researched on
the factors contributing to labor turnover in the sugar industry in Kenya it was revealed
that poor pay package, fringe benefits, promotion procedures affects employee
turnover. Mendis (2017) researched on the impact of reward system on employee
turnover intention: a study on logistics industry of Sri Lanka it was established that
financial and non-financial rewards have a strong impact on employee turnover
According to Lee and Jimenez (2011), performance-based rewards, supervision support
reduce the possibility that employees will opt to leave their current jobs, however, job
satisfaction is the most important predictor of turnover intention. Other studies have
determined that bad working condition, lack of career growth, unfair compensation,
negative supervisory support, lack of employee development and job stress influences
employee turnover rate (Sattar & Ahmed, 2014). A’yuninnisa and Saptoto, (2015) in
their research on the effects of pay satisfaction and affective commitment on turnover
intention it was revealed that pay satisfaction affects turnover intention. According to a
research done by Foon, Leong and Osman (2010) on an exploratory on employee
turnover intention among private sector, findings revealed that salaries, bonuses and
promotions are tangible rewards systems can increase or reduce employee turnover in
the banking sector.
2.4 Mitigating Strategies and Competitive Advantage
2.4.1 Mitigating Strategies
2.4.1.1 Organizational Culture
Organizational culture is values, beliefs, attitudes, norms behavior of employees and
their expectations which are shared within the organization by its members (Greenberg
& Baron, 2010). It is defined as values, beliefs and behaviors that differentiate one
organization from another. Organizational culture is the mindset of people that
distinguishes them from each other, within the organization or outside the organization.
Organizational culture includes: values, beliefs, and behaviors of employee’s
(Hofstede, 2001). Nickels, McHugh and McHugh (2010) states that corporate culture
is shared values within an organization that provide coherence and cooperation to
20
achieve goals. Organizational culture influences how employees interact with each
other, with clients and with stakeholders (Chepngeno et al 2012).
According to a study done by Chidinma and Ikechukwu (2017), on organizational
culture and employee retention of selected Commercial Banks in Anambra State, there
was a significant positive relationship between innovative culture and the employee
commitment in commercial banks. Edwinah (2012) in his study on corporate culture
and organizational effectiveness determined that corporate culture influences
organizational effectiveness. It was recommended that the organization should share
their mission with their employees hence enable them to achieve their goals and
employees should also be involved during decision making.
Stafford and Miles (2013) defines organizational culture as a system of shared
assumptions, values and beliefs that governs how an organization interacts both with
internal and external environments. Hofstede and Hofstede (2010) states that
organizational culture is unique in different organizations. It is based on different
parameters such as achievement, fairness, collaboration, teamwork, competitiveness
and rules.
2.4.2 Leadership Style
Ng’ethe and Namusonge (2012) states that leadership is a relationship that occurs when
one person is able to influence the behavior of other people; relationship in which the
leaders are able to use their human influence to make people achieve a certain goal.
Armstrong (2012, p.4) describes leadership as the “ability to persuade others willingly
to behave differently”. Epie (2014) asserts that benefits, leadership style, supervisor
support, recognition, job characteristics and work environment are example of factors
that influence employee retention. Leadership style is a style that a leader adopts to deal
with their followers (Ngure, 2013).
Transactional leadership style develops standards, policies, procedures, regulations and
use reward and punishment (Nikezic, Puric, & Puric, 2012). Michael (2010) states that
leadership has a direct cause and effect on relationship upon organizations and their
success. Leaders determine values, culture, change tolerance and employee motivation.
21
Charismatic leaders develop vision and personality to motivate followers to achieve
their goals and objectives. In addition, charismatic leadership style encourages
employees to be more creative and innovative. According to Amal and Nosheen (2014),
laisser-faire leadership has minimum interaction with employees, does not give clear
instructions and orders and leaders avoid responsibilities. In addition, employees are
usually not motivated hence leading to job dissatisfaction and poor performance.
Cherry (2012) posits that laissez-faire leadership is usually effective when employees
are highly skilled, motivated and capable of working on their own.
Ngambi (2011) states that leadership is a process of influencing employees to realize
their full potential and achieve a value added, shared vision, with passion and integrity.
Nwagboso and Duke (2012) noted that leadership is the most difficult and critical aspect
of human endeavor and that no organization or country can grow bigger than the vision
of its leadership. According to Paracha, Qamar, Mirza, Hassan and Waqas (2012),
studies have shown that leadership styles are positively related to job satisfaction. Lee
and Chuang (2009) states that an excellent leader inspires employees to meet their
requirement and achieve their goals and objectives.
2.4.3 Job Satisfaction
Employee job satisfaction is the fulfillment, gratification and enjoyment that come from
work. It is not the money or the fringe benefits, but the feelings employees receive from
the work itself (Asegid, Belachew, & Yimam 2014). Employees determine job
satisfaction by comparing the extent to which the outcome meets or exceeds their
expectations; this is compared to how co-workers are performing, rewarded and
whether there is fairness (Chatzoglou, Vraimaki, Komsiou, Polchrou, & Diamantidis,
2011). According to a study done by Yukon Government (2010), it was revealed that
organizations use job satisfaction strategies such as: use of reward systems,
performance pay, training and career development, high level of wage rate and
empowerment in decision making. Through this, organizations are able to reduce
employee turnover rate and increase performance of the organization.
Mosadeghrad, Ferlie and Rosenberg (2008) assert that job satisfaction can be
influenced by relationships, task variety and working conditions. Mullins (2010)
22
suggests that through job satisfaction, employees are more motivated hence, increase
in performance. Juma, Simatwa and Ayodo (2011) noted that job satisfaction is the
degree in which an organization is able to fulfill its employee’s needs. Nganzi (2014)
research on factors influencing secondary school teachers’ job satisfaction levels in
Lang’ata District, Nairobi-Kenya Department of education. Findings revealed that
teachers lack motivation at their work place hence, leading to poor performance.
Wangui (2011) job satisfaction is a positive feeling about work or work environment,
while job dissatisfaction is unhappy or negative feelings about work or work
environment. Job satisfaction describes how content an individual is with his or her job.
Kabir and Mosammod (2011) working environment plays an important role in the
employee’s job satisfaction.
2.4.2 Mitigating Strategies and Competitive Advantage
2.4.2.1 Organizational Culture and Competitive Advantage
Ames (2016) in his research on effect of organizational culture on performance of
Kenya Power and Lighting Company, it was established that there exists a strong and
positive relationship between organizational culture and performance. The study
recommends that for an organization to achieve a sustainable competitive advantage,
they should ensure that they have a good organizational culture in place and the culture
should be aligned with their strategies and policies. Chepngeno et al (2012) investigated
effects of organizational culture on sustainable competitive advantage in state owned
corporations in Kenya. It was established that organizational values affected sustainable
competitive advantage.
Sophie (2015) in her study on effects of organizational culture on performance of
subsidiaries of selected regional commercial banks headquartered in Kenya. It was
revealed that organizational culture has a positive influence on policies and strategic
implementation thus creating a sustainable competitive advantage against competitors.
Organizations should have rules that provide employees with clear instructions, process
and procedures. Salman, Saira, Amjad, Sana and Muhammad (2014) conducted a
research on the impact of organizational culture on job satisfaction, employee’s
commitment and turnover intention. It was determined that organizational culture
highly influences the employee commitment, job satisfaction and retention.
23
Kotter (2012) suggests that through organizational culture, an organization is able to
increase its performance, employee job satisfaction and motivate employees to solve
problems. In addition, according to Tavitiyaman, Qu and Zhang, (2012) organizations
with a deeply entrenched culture are also able to increase their revenue, increase
workforce expansions, increase in share price, and improve their net income as
compared to companies with weaker culture. Organizational culture is an essential
ingredient of organizational performance and a source of sustainable competitive
advantage. Organizational culture is used by organizations to combine various
organizational cultures in the corporate group structure (Kenny, 2012).
2.4.2.2 Leadership Style and Competitive Advantage
Devie and Hotlan (2015) conducted a research on the different impact between
transformational leadership and transactional leadership on competitive advantage.
Findings revealed that transactional leadership style influences the development of
competitive advantage more that transformational leadership. Hamilton (2009)
organizations that use transactional leadership style are able to increase job satisfaction,
employee innovation, work efficiency and performance.
Obiwuru, Andy, Victoria and Idowu (2011) conducted a research on effects of
leadership style on organizational performance. It was established that transactional
leadership style had significant positive effect on performance; transformational
leadership style had positive but insignificant effect on performance. The study
concluded that transactional leadership style was more appropriate in inducing
performance and productivity in small scale enterprises than transformational
leadership style (Obiwuru, 2011). Ojokuku, Odetayo and Sajuyigbe (2012) conducted
a research on impact of leadership style on organizational performance. Findings
revealed that leadership style predict organizational performance and productivity.
Amal and Nosheen (2014) researched on impact of leadership style on organizational
performance. Findings revealed that Leadership style has a significant impact on the
organizational productivity hence, influences performance. Fu-Jin, Shieh and Tang
(2010) researched on effect of leadership style on organizational performance as viewed
from human resource management strategy. Findings revealed that charismatic,
transformational and visionary of a leadership style are positively related to the
24
organizational performance. Munirat, Umar and Aina (2014) conducted a research on
management of leadership style: an approach to organizational performance and
effectiveness in Nigeria. It was established that there is a positive significant
relationship between the application of leadership style and productivity and
performance of business organizations. It was recommended that managers should
adopt appropriate leadership style that suits the organization.
2.4.2.3 Job Satisfaction and Competitive Advantage
Ntuara (2008) conducted a survey of the relationship between job satisfaction and
organizational performance of companies listed on the Nairobi Stock Exchange, Kenya.
Findings revealed that teamwork, employee involvement and pay significantly affect
productivity. Chengedzai and Pooe (2013) researched on the relationship between
employee satisfaction and organizational performance. Findings revealed that there was
a positive correlation between organizational performance and working conditions,
creativity and teamwork.
Kuria (2011) states that employees are more satisfied and productive when the
organization offers them employee recognition, good working condition, opportunities
to participate in decision making, clear goals and responsibilities, promotion, fringe
benefits, incentive, compensation, health and safety measures. An organization is able
to achieve a sustainable competitive advantage by ensuring their employees are more
satisfied hence reducing employee turnover and retaining skilled employees. In
addition, employee job satisfaction influences organizational productivity. Through job
satisfaction employees are able to increase their performance hence increase profits
(Odembo, 2013).
Sikowo, Namusonge, Makokha and Nyagechi (2016) conducted a research on
determinants of employee satisfaction on organizational performance. Findings
revealed that employee productivity influences organizational performance. The study
also revealed that there exists a positive and significant relationship between work
environment and organizational performance. In conclusion, the study revealed that job
satisfaction significantly affected organizational performance.
25
Khan, Nawaz, Aleem, and Hamed (2012) researched on Impact of job satisfaction on
employee performance: An empirical study of autonomous Medical Institutions of
Pakistan. Findings revealed that pay, promotion, job safety and security, working
conditions, job autonomy, relationship with co-workers, relationship with supervisor
and nature of work affect the job satisfaction and performance
2.5 Chapter Summary
This chapter has discussed literature review based on the following research questions:
What are the effects of employee turnover on competitive advantage of insurance
companies? What are the factors affecting employee turnover on competitive advantage
of insurance companies? What are the strategies used to deal with employee turnover?
Chapter three presented research methodology that used in the study.
26
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Introduction
This chapter presents research methodology that was used in the research. Research
methodology is the process by which data is extracted to be clearly understood.
Methodology involves the possible choices decided by the person carrying out the
research regarding data collection methods, data analysis techniques and procedures
(Silverman 2001). Therefore, in this study, this section gives an outline of research
design, population and sampling methods, the data collection methods to be applied,
the research procedures, the data analysis and presentation methods that was used.
3.2 Research Design
According to Cooper and Schindler (2014), research design is used to determine the
analysis approach or strategy that a researcher used. Research design is also used as a
blue print or guide to collect and analyze data based on research questions (Saunders,
Lewis & Thornhill, 2016). Research can be classified into two categories: qualitative
and quantitative research design. According to Mugenda and Mugenda (2008),
qualitative research focuses on designs, techniques and measures that do not produce
discrete numerical data while quantitative studies are used to test objective theories by
examining the relationship between variables through measurements. Quantitative
research deals with numbers and anything that can be measured in a systematic an
investigate phenomena and their relationships. It is used to answer questions on
relationships within measurable variables with an intention to explain, predict and
control phenomena (Leedy, 2010).
According to Zikmund and Babin (2012), descriptive research is a study concerned with
the frequency with which something occurs or the relationship between two variables.
Descriptive design is appropriate for this study because it utilizes data collection and
analysis techniques that capture the measures of central tendency, variation, and
correlation (Shajahan., 2009). Descriptive research design was used to describe specific
characteristics. Descriptive research is used when there is a clear statement of the
research problem, specific research questions and detailed information needed
(Malhotra, Baalbaki, & Bechwati, 2010).
27
3.3 Population and Sampling Design
3.3.1 Population
A population is complete group of elements in which a researcher wishes to study
(O’Gorman & MacIntosh, 2014). It is a collection of elements which researchers want
to examine and make inference about. According to Mugenda and Mugenda (2012),
target population is complete set of individuals, cases or objectives with similar
characteristics. The target population was 218 employees of AAR insurance company.
The study was conducted only in AAR insurance branch located in Real Towers in
Nairobi because of the ease of access to information and time and cost constraints.
Table 3.1: Population Distribution
Management level Total Population Percentage (%)
Senior management 6 3
Middle management 14 6
Low management 28 13
Non-management 170 78
Total 218 100
Source: AAR Human Resource Data Base (2018)
3.3.2. Sampling Design
Sampling is the process of selecting respondents for a study in such a way that the
respondents selected are a representative of the whole population (Mugenda &
Mugenda 2012). Sampling procedure may be defined as a systematic process of
individuals for a study to represent the larger group from which they are selected
(Cooper and Schindler, 2008). The sample is defined as the method of selecting a
portion of the population for conducting a study in order to represent the population
adequately.
3.3.2.1 Sampling Frame
A sampling frame is the representation of all elements of the population in which a
sample is drawn (Saunders, Lewis, & Thornhill, 2011). The sample frame of this study
28
was 218 employees who worked at AAR Insurance located in Real Towers and this was
acquired from the Human Resource office.
3.3.2.2 Sampling Technique
Cooper and Schindler (2011) a sampling technique is the process of picking out a
representative portion from which to carry out a test from the population. Stratified
sampling was used. According to Mbwesa (2006), stratified random sampling is the
process of stratification of segregation of the population in homogenous groups (groups
with the same characteristics). Simple random sampling was used to select a sample of
65 respondents within the strata. Simple random sampling is the process where every
member of the population is given a chance of being selected (Cooper, Schindler, &
Blumberg, 2014).
3.3.2.3 Sample Size
According to Lind (2008), a sample is a subgroup of the population whereas the number
of observation obtained from a sample is referred to as a sample size. Mugenda and
Mugenda (2012), a sample should compose of 10-30% of the population, and a good
population sample should be at least 10% and not more than 30% of the entire
population. The sample size of our study is 30% of the entire population that is 65.
Table 3.2: Sample Distribution
Management level Numbers of
employees
Sample ratio
(0.3)
Percentage
(%)
Senior management 6 2 3
Middle
management
14 4 6
Low management 28 8 13
Non-management 170 51 78
Total 218 65 100
29
3.4 Data Collection Methods
Data collection can be defined as the process of gathering and measuring information
on variables of interest, in an established systematic fashion that enables one to answer
stated research questions, test hypotheses and evaluate the outcomes (Cooper and
Schindler, 2008). The study used both primary and secondary data. Primary data was
collected using structured questionnaires. Mugenda and Mugenda (2012) state that
questionnaires are commonly used to obtain important information about the
population. Structured questions are designed to give respondents to select from a series
of alternatives. The researcher is able to control the form, length and content of the
possible answer. Structured questions are dichotomous, multiple-choice, checklist,
rating, or raking response strategies (Cooper & Schindler, 2010). The questionnaire had
a five-point Likert scale where 1= strongly disagree, 2= disagree, 3= neutral, 4= agree
and 5= strongly agree. The questionnaire was divided into four sections; section I
Respondents’ profile, section II Voluntary turnover, section III Involuntary turnover,
section IV Mitigation strategies and section V Competitive advantage. Questionnaires
were self-administered and picked after two weeks when completed.
3.5 Research Procedures
Research procedures is the detailed description of the steps to be taken. Moreover, the
conduct of research should be provided for by the study. Five questionnaires were pre-
tested to check for completeness, accuracy and clarity. A pretest of the questionnaire is
the administration of the questions with a small set of respondents to identify problems
and find possible corrections. Therefore, results based on pre-test were used to improve
the questionnaire before administering it to the sample.
Reliability of research instruments refers to the degree to which a research instrument
yields consistent results or data after repeated trials (Mugenda & Mugenda, 2012). An
introductory letter was obtained from USIU to enable the researcher get permission to
collect data. Five-point Likert scale was used. Initially, respondents were given five
days to answer the questionnaire and ask any relevant questions, but it had taken them
two weeks to complete the questionnaires. Information reviewed was treated
confidentially and used only for academic purpose. Mugenda and Mugenda (1999)
30
noted that validity is the degree to which results obtained from the analysis of the data
actually represent the variables of the study.
3.6 Data Analysis Methods
Wagner, Halley and Zaino (2011) data analysis is the process of cleaning, analyzing
transforming and modeling data collected. Quantitative technique was used to analyze
data. Data collected from the field was analyzed and coded. Quantitative data collected
was analyzed by the use of inferential statistics using Statistical Package for Social
Sciences and presented through tables. Mean and standard deviation was used to present
results. Correlation analysis was done to determine if there is a relationship between
the variables and regression to find out the type of relationship. According to Cooper
and Schindler (2014), a correlational research design is used to describe a phenomenon
or features associated with a population and also to find out if there is a relationship
among these different variables. Results were presented using table and figures.
3.7 Chapter summary
This chapter discusses research methodology that was used in the study. In addition, it
also highlights research design, the population, sampling frame, sampling technique,
sample size, data collection methods used to efficiently collect data for the study and
data analysis methods that were used. The next chapter presents the results and findings
of the study.
31
CHAPTER FOUR
4.0 RESULTS AND FINDINGS
4.1 Introduction
The purpose of this study was to determine the effects of employee turnover on
competitive advantage of insurance companies. The chapter covers results based on
data analysis that was done. Moreover, the chapter also discusses results based on
demographics factors (age, gender, marital status, level of education, management
level, number of years in the organization). Findings have also been presented based on
research questions: effects of employee turnover on competitive advantage, effects on
involuntary turnover on competitive advantage and mitigating strategies used to gain
competitive advantage. Bar charts, Pie charts and table have been used to present the
data analysis.
4.1.1 Response Rate
A response rate refers to the extent to which the final set of questionnaires collected
from respondents is calculated against the number of questionnaires received back from
the respondents interviewed in the study (Bacon, Johnson, Stewart, 2016). It measures
the statistical power of a research and the higher the rate, the better. In this study, a total
of 65 questionnaires were issued and a total of 63 were filled and returned giving a
response rate of 97% as shown in Table 4.1.
Table 4.1: Response Rate
Questionnaires Number Percentage
Filled and returned 63 97
Non-responded 2 3
Total 65 100
4.2 Demographical Factors
The demographic factors of the respondents for this study comprise: gender, age,
marital status, level of education, management level and years of work in the
organization.
32
4.2.1 Age
Age analysis revealed 14% of respondents are 41 years and above, 8% are between 36-
40years whereas 19% are between 31-35 years. Findings also showed that 44% are
between 26-30 years whereas 13% are below 25 years and 1% of the respondents did
not respond. This implies that the organization has a lot of as mature employees as
shown in Figure 4.1.
Figure 4.1: Age
4.2.2 Gender
To аnаlyze the gender of the respondents, findings showed that 54% of the respondents
were male and 44% were female and 2% did not respond. This shows that both genders
were adequately represented in the study.
Figure 4.2: Gender
0
5
10
15
20
25
30
35
40
45
25 andbelow
26 - 30years
31-35years
36 - 40years
41 yearsand above
Missing
8
28
12
5
9
1
13%
44%
19%
8%
14%
1%
Frequency
Percentage
54%
44%
2%
Male Female Missing
33
4.2.3 Marital Status
The study sought to find out marital status of the respondents. It was revealed that 52%
of the respondents are single, 45% are married and 3% are divorced. It shows that
marital status of the respondents was sufficiently represented in this study as shown in
Figure 4.3.
Figure 4.3: Marital Status
4.2.4 Academic Qualification
The analysis of academic qualification revealed that none of the employees has a PhD,
10% of respondents have a master, 65% have a degree, 21% have a diploma and 5%
have a certificate. This shows that the organization had well educated employees who
are able to contribute positively in the organization as shown in Figure 4.4.
Figure 4.4: Academic Qualification
45%
52%
3%
Married Single Divorced
0
10
20
30
40
50
60
70
Certificate Diploma Degree Masters
Frequency 3 13 41 6
Percentage 5 21 65 10
34
4.2.5 Management Level
The study sought to establish management level of the respondents. The results were
shown in Figure 4.5. The study revealed that 29% are in the non-management position,
24% are working in low management position, 43% of respondents are working in
middle level position and 5% are in senior level position.
Figure 4.5: Management Level
4.2.6 Number of Years in the Organization
The study sought to establish number of years in the organization. Results were shown
in Table 4.2. The study showed that 19% have worked in the organization for less than
1 year, 57% of respondents for 1-5 years, 16% have worked in the organization for 6-
10 years, 5% for 11-15 years and 3% of the respondents have been work for more than
15 years in the company.
Table 4.2: Number of Years in the Organization
Variable Frequency (n) Percentage (%)
Less than 1 year 12 19
1 – 5 years 36 57
6 – 10 years 10 16
11 – 15 years 3 5
More than 15 years 2 3
0
5
10
15
20
25
30
35
40
45
Senior Middle Low Non -management
3
27
1518
5
43
24
29
Frequency Percentage
35
4.2.7 Cases of Employee Turnover
The study sought to find out if the organization has experienced cases of employee
turnover. Findings revealed that 10% of respondents said that the organization very
rarely experiences cases of employee turnover, 33% said rarely, 30% said very often
and 27% said often as shown in Figure 4.6.
Figure 4.6: Cases of Employee Turnover
4.3 Effects of Voluntary Turnover on Competitive Advantage
The first objective set to effects of voluntary turnover on competitive advantage of
insurance companies. Respondents were asked a set of questions to indicate to what
extent they agree or disagree with the statement. The study used a five point Likert scale
where 1 - Strongly Disagree, 2- Disagree, 3- Neutral, 4- Agree, 5- Strongly Agree.
4.3.1 Descriptive on Voluntary Turnover on Competitive Advantage of Insurance
Companies
The results established that respondents could not reach an agreement on AAR
experiences voluntary turnover 3.89, voluntary turnover occurs frequently at AAR 3.24,
voluntary employee turnover at AAR occurs due to low salary and lack of benefits 3.30,
voluntary employee turnover at AAR occurs due to entrepreneurship 3.16, high rate of
voluntary turnover has affected AAR performance and effectiveness 3.02 and voluntary
turnover has a negative effect on AAR competitiveness 3.18.
Very rarely10%
Rarely33%
Very Often30%
Often27%
36
Moreover, respondents disagreed on voluntary turnover occurs due to life time
decisions or circumstances for instance family moves, serious illness and death 2.95,
voluntary employee turnover at AAR occurs due to unattractiveness of the job 2.97,
higher rate of voluntary turnover has lowered work productivity at AAR 2.98 and
voluntary turnover had affected organizational profitability 2.95 as shown in Table 4.3.
On analysis of the standard deviation, voluntary turnover had affected organizational
profitability had the highest deviation value of 1.486. This means that there was a bigger
variation between those who agreed, disagreed and were neutral. Whereas AAR
experiences voluntary turnover had the lowest standard deviation value of 0.935,
implying that there was little variation between those who agreed, disagreed and were
neutral
Table 4.3: Descriptive on Voluntary Turnover on Competitive Advantage of
Insurance Companies
Variable Mean SD
AAR experiences voluntary turnover. 3.89 0.935
Voluntary turnover occurs frequently at AAR. 3.24 1.210
Voluntary turnover occurs due to life time decisions or
circumstances for instance family moves, serious illness and
death.
2.95 1.184
Voluntary employee turnover at AAR occurs due to low salary and
lack of benefits. 3.30 1.375
Voluntary employee turnover at AAR occurs due to
entrepreneurship. 3.16 1.089
Voluntary employee turnover at AAR occurs due to
unattractiveness of the job. 2.97 1.367
Higher rate of voluntary turnover has lowered work productivity
at AAR. 2.98 1.476
High rate of voluntary turnover has affected AAR performance
and effectiveness. 3.02 1.442
Voluntary turnover had affected organizational profitability. 2.95 1.486
On overall, voluntary turnover has a negative effect on AAR
competitiveness.
3.18
1.454
37
4.4 Effects of Involuntary Turnover on Competitive Advantage
The second objective set to effects of involuntary turnover on competitive advantage of
insurance companies. Respondents were asked a set of questions to indicate to what
extent they agree or disagreed with statement. The study used a five point Likert scale
where 1 - Strongly Disagree 2 - Disagree 3 - Neutral 4 - Agree 5 - Strongly Agree.
4.4.1 Descriptive on Involuntary Turnover on Competitive Advantage
The results established that respondents could not reach an agreement on involuntary
turnover or discharge has occurred at AAR due to an employee violating workplace
policies (discipline issues) 3.17. Additionally, it was also revealed respondents
disagreed on AAR experiences involuntary turnover 2.75; involuntary turnover occurs
frequently at AAR 2.42, involuntary turnover is due to employee’s death or family
issues 2.53 and involuntary turnover is due to business slowdown or economic necessity
2.73. Respondents disagreed also on employees have left AAR or been discharged due
to performance problems 2.60, AAR has used re-organization or restructuring
(downsizing) strategy to cut costs 2.60, AAR has used downsizing to raise profitability
at AAR 2.38, downsizing has improved organizational effectiveness and efficiency at
AAR. 2.24, Involuntary turnover has positively affected productivity 2.25 and through
involuntary turnover, AAR was able to achieve competitive advantage 2.41 as shown
in Table 4.4.
On analysis of the standard deviation, Involuntary turnover is due to employee’s death
or family issues and AAR has used re-organization or restructuring (downsizing)
strategy to cut costs had the highest deviation value of 1.251 meaning there was a bigger
variation between those who agreed, disagreed and were neutral responding to the
questions. Involuntary turnover occurs frequently at AAR had the lowest deviation
value of 0.879.
38
Table 4.4: Descriptive on Involuntary Turnover on Competitive Advantage of
Insurance Companies
Variable Mean SD
AAR experiences involuntary turnover. 2.75 1.150
Involuntary turnover occurs frequently at AAR. 2.42 .879
Involuntary turnover is due to employee’s death or family issues. 2.53 1.251
Involuntary turnover is due to business slowdown or economic
necessity. 2.73 1.133
Involuntary turnover or discharge has occurred at AAR due to an
employee violating workplace policies (discipline issues). 3.17 1.185
Employees have left AAR or been discharged due to performance
problems. 2.60 1.171
AAR has used re-organization or restructuring (downsizing)
strategy to cut costs. 2.60 1.251
AAR has used downsizing to raise profitability at AAR. 2.38 1.113
Downsizing has improved organizational effectiveness and
efficiency at AAR. 2.24 .995
Involuntary turnover has positively affected productivity. 2.25 .915
Through involuntary turnover, AAR was able to achieve
competitive advantage. 2.41 .927
4.5 Mitigating Strategies to Gain Competitive Advantage
The third objective set to determine mitigating strategies used to gain competitive
advantage. Respondents were asked a set of questions to indicate to what extent they
agree or disagreed with statement. The study used a five-point Likert scale where 1 -
Strongly Disagree 2 - Disagree 3 - Neutral 4 - Agree 5 - Strongly Agree.
4.5.1 Descriptive on Mitigating Strategies to Gain Competitive Advantage
The results established that respondents agreed that they are aware of the company’s
mission and vision 4.13. However, respondents could not reach an agreement on
leadership style at AAR has positively influenced employee productivity 3.98,
transactional leadership style develops standards, policies, procedures, regulations and
use reward and punishment 3.89, AAR uses job satisfaction strategies such as reward
systems, performance pay, training and career development 3.87. Moreover,
39
respondents could not agree on organizational culture at AAR has influenced employee
commitment and job satisfaction 3.83, the organizational culture at AAR has influenced
employee performance 3.77; organizational culture has positively affected profitability
at AAR 3.67 and organizational culture is an essential source of sustainable competitive
advantage at AAR 3.59. Respondents could not also agree on organizational culture
highly influences employee retention 3.52, charismatic leadership style encourages
employees to be more creative and innovative 3.47 and transformational leader style
uses values and principles to motivate its followers to accomplish their performance
3.43. Additionally, there was no agreement on leadership style at AAR has positively
influenced employee performance 3.29 and leadership style at AAR has positively
influenced employee retention 3.17. as shown in Table 4.5.
On analysis of the standard deviation, whereas Leadership style at AAR has positively
influenced employee productivity had the highest deviation value of 5.167, the
organizational culture at AAR has influenced employee performance had the lowest,
1.486.
40
Table 4.5: Descriptive on Mitigating Strategies and Competitive Advantage of
Insurance Companies
Variable Mean SD
Transactional leadership style develops standards, policies,
procedures, regulations and use reward and punishment.
3.89 1.127
Transformational leadership style uses values and principles to
motivate its followers to accomplish their performance.
3.43 1.217
Charismatic leadership style encourages employees to be more
creative and innovative.
3.47 1.194
I am aware of the company’s mission and vision. 4.13 1.198
Organizational culture at AAR has influenced employee
commitment and job satisfaction.
3.83 1.115
Organizational culture has positively affected profitability at
AAR.
3.67 1.122
The organizational culture at AAR has influenced employee
performance.
3.77 1.039
Organizational culture highly influences employee retention. 3.52 1.105
Organizational culture is an essential source of sustainable
competitive advantage at AAR.
3.59 1.265
Leadership style at AAR has positively influenced employee
productivity.
3.98 5.167
Leadership style at AAR has positively influenced employee
performance.
3.29 1.263
Leadership style at AAR has positively influenced employee
retention.
3.17 1.277
AAR uses job satisfaction strategies such as reward systems,
performance pay, training and career development.
3.87 1.100
AAR uses job satisfaction strategies such as good working
conditions.
3.75 1.177
Employee job satisfactions at AAR has influenced performance
and productivity.
3.62 1.170
Through involuntary turnover, AAR was able to achieve
competitive advantage.
3.60 1.302
41
4.6 Competitive Advantage
The study sought to establish the effects of competitive advantage. Respondents were
asked several questions and were expected to rate them with the highest being strongly
agree (5) and the least being strongly disagree (1).
4.6.1 Descriptive on Competitive Advantage
The results established that respondents agreed that access to highly trained and skilled
employees has helped AAR achieve a competitive advantage 4.06. However,
respondents could not reach an agreement on access to new innovative procedures has
contributed to achieve competitive advantage at AAR 3.89, AAR has sustained its
competitive advantage over years 3.43. Additionally, respondents could not agree on
AAR branches are strategically located in order to achieve competitive 3.95.
Competitive advantage is driven by workforce productivity and creativity at AAR 3.90.
AAR has used a new product/ service processes to achieve competitive advantage 3.89.
AAR offers product/ services that have unique attributes 3.84; access to new
technologies has contributed to achieve competitive advantage at AAR 3.82. Finally,
they could not agree on AAR operates with enough branches in the city to gain
competitive advantage 3.81, AAR offers an added value products/ services 3.76 and
AAR has achieved competitive advantage 3.65 as shown in Table 4.6.
On analysis of the standard deviation, the access to new technologies has contributed
to achieve competitive advantage had the highest deviation value of 1.248 meaning
there was a bigger variation between those who agreed, disagreed and neutral. Whereas
AAR has achieved competitive advantage had the lowest deviation value of 0.936. This
implies that there was little variation between those who agreed, disagreed and neutral.
42
Table 4.6: Competitive Advantage
Variable Mean SD
AAR has achieved competitive advantage 3.65 0.936
AAR has sustained its competitive advantage over years 3.71 1.099
Competitive advantage is driven by workforce productivity and
creativity at AAR. 3.90 0.953
The access to highly trained and skilled employees has helped
AAR achieve its competitive advantage. 4.06 0.948
The access to new technologies has contributed to achieve
competitive advantage at AAR. 3.82 1.248
The access to new innovative procedures has contributed to
achieve competitive advantage at AAR. 3.98 1.055
AAR offers product/ services that have unique attributes. 3.84 0.971
AAR offers an added value products/ services. 3.76 1.027
AAR has used a new product/ service processes to achieve
competitive advantage. 3.89 1.002
AAR operates with enough branches in the city to gain
competitive advantage. 3.81 0.998
AAR branches are strategically located in order to achieve
competitive 3.95 0.974
4.7 Correlation between Employee Turnover on Competitive Advantage of
Insurance Companies
The study undertook a correlation to analyze the relationship between employee
turnover on competitive advantage of insurance companies. The findings revealed that
there was a strong positive correlation between mitigation strategy and competitive
advantage (r = 0.585**, p<0.00) whereas, there was a negative relationship between
voluntary turnover and competitive advantage r= -0.265*, p<0.05 and a negative
43
relationship between involuntary turnover and competitive advantage (r= -0.283*,
p<0.05). This indicates an increase in mitigation strategy will led to an increase in
competitive advantage as shown in Table 4.7. For all the variables, the P value was less
than 0.05 therefore the relationships were statistically significant.
Table 4.7: Correlation between Employee Turnover on Competitive Advantage
Competitive
Advantage
Voluntary
Turnover
Involuntary
Turnover
Mitigation
Strategy
competitive
advantage
Pearson
Correlation 1 -.265* -.283* .585**
Sig. (2-
tailed) 0.036 0.025 0.00
voluntary
turnover
Pearson
Correlation -0.265* 1 .323** -0.223
Sig. (2-
tailed) 0.036 0.01 0.078
involuntary
turnover
Pearson
Correlation -0.283* 0.323** 1 -0.207
Sig. (2-
tailed) 0.025 0.01 0.104
mitigation
strategy
Pearson
Correlation 0.585** -0.223 -0.207 1
Sig. (2-
tailed) 0.00 0.078 0.104
*. Correlation is significant at the 0.05 level (2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed).
4.8 Regression Analysis of Employee Turnover on Competitive Advantage
The study was set to analyze the effects of employee turnover on competitive
advantage. For the purpose of this study, Statistical Package for Social Sciences (SPSS)
version 21 was used. The findings between employee turnover and competitive
advantage had a significant correlation, the relationship was subject to regression
analysis to determine the percentage contribution to the significance. Regression
44
analysis was done to determine if employee turnover has an impact on competitive
advantage. The variables were coded, entered and computed the measurements of
multiple regression.
4.8.1 Model Summary
The results established that the coefficient of determination R2, was 0.378 which
indicates that 37% of Competitive Advantage is determined by employee turnover as
illustrated in Table 4.8
Table 4.8: Model summary of Competitive Advantage and Other Variables
Model R R
Square
Adjusted
R Square
Std.
Error of
the
Estimate
Change Statistics
R
Square
Change
F
Change
df1 df2 Sig. F
Change
1 .615a .378 .347 .63956 .378 11.966 3 59 .000
a. Predictors: (Constant), mitigation strategy, involuntary turnover, voluntary turnover
4.8.2 ANOVA
An ANOVA analysis was done between employee turnover and competitive advantage
and at 95% confidence level, the F value=11.966, P<0.000) therefore it is established
that employee turnover has a significant effect on competitive advantage. The results
are shown in Table 4.9.
Table 4.9: Anova Employee Turnover on Competitive Advantage
Model Sum of
Squares
df Mean
Square
F Sig.
1
Regression 14.683 3 4.894 11.966 .000b
Residual 24.133 59 .409
Total 38.816 62
a. Dependent Variable: competitive advantage
b. Predictors: (Constant), mitigation strategy, involuntary turnover, voluntary turnover
45
4.8.3 Coefficients of Employee Turnover on Competitive Advantage
The findings in Table 4.10 indicates that only mitigation strategy has a positive effect
on competitive advantage β3 = 0.487, p<0.00 whereas, voluntary turnover β1 = -0.106,
p>0.363 and involuntary turnover β2 = -0.181, p>0.207 have negative effect.
Table 4.10: Coefficients of Variables of Employee Turnover on Competitive
Advantage
Model
Unstandardized
Coefficients
Standardized
Coefficients
T Sig. B Std. Error Beta
1 (Constant) 2.872 .635 4.520 .000
Voluntary turnover -.106 .116 -.101 -.916 .363
Involuntary turnover -.181 .142 -.140 -1.277 .207
Mitigation strategy .487 .097 .533 5.010 .000
a. Dependent variable: Competitive Advantage
As per Table 4.10, the equation (Y= β0+ β1X1 + β2X2 + β3X3) becomes:
Y= 2.872 – 0.106X1 – 0.181X2 + 0.487X3
Where
Y – Competitive advantage (dependent variable)
X1 – Voluntary turnover (independent variable)
X2 – Involuntary turnover (independent variable)
X3 – Mitigating strategies (independent variable)
The regression equation illustrated in Table 4.10 has established that taking all factors
(voluntary turnover, involuntary turnover, mitigating strategies) into account and all
other factors held constant, competitive advantage increased by 2.872. Findings also
showed that with all other variables held at zero, a unit change in voluntary turnover
would result in 0.106 decrease in competitive advantage while a unit change in
involuntary turnover would lead to 0.181 decrease in competitive advantage. But a unit
change in mitigating strategies would lead to 0.487 increase in competitive advantage.
All variables were significant (p>0.05), therefore in the equation there was a positive
46
relationship between mitigating strategies and competitive advantage but a negative
relationship voluntary turnover, involuntary turnover and competitive advantage.
4.9 Chapter Summary
This chapter discuses results obtained from data analysis. It has also presented data on
employee demography and specific research questions. The chapter also presents
results on regression and correlation analysis. Chapter five presents discussions,
conclusions and recommendations of the study.
47
CHAPTER FIVE
5.0 DISCUSSION, CONCLUSION AND RECOMMENDATION
5.1 Introduction
This chapter explained discussion, conclusions and recommendations. It looked at the
results and findings obtained from the study based on Effects of employee turnover on
competitive advantage: A case of AAR insurance company. Discussions were based on
research questions which were required to determine effects of voluntary turnover on
competitive advantage, involuntary turnover on competitive advantage and mitigating
strategies used to gain competitive advantage. The chapter looked at the researcher’s
discussion on the findings of the study as compared to the literature review.
Conclusions and recommendations were made.
5.2 Summary
The purpose of the study was to establish the effects of employee turnover on
competitive advantage of AAR insurance company. The study was guided by the
following research questions: What are the effects of voluntary turnover on competitive
advantage of insurance companies? What are the effects of involuntary turnover on
competitive advantage of insurance companies? What are the mitigating strategies to
gain competitive advantage?
A descriptive research was used. The target population was 218 employees who work
at AAR. The study was conducted in AAR located in Real Towers (Nairobi). Stratified
random sampling was used to select a sample of 65 employees. Primary data was
collected using a structured questionnaire. Data collected from the field was coded and
analyzed using Statistical Package for Social Sciences (SPSS) version 21 data.
Quantitative technique was used to analyze data. Inferential statistics was done using
regression and correlation analysis to determine relationship between the variables. Out
of 65 questionnaires distributed to the AAR employees, 63 were received back. Results
of the findings were presented using table, and figures. On whole, while there was a
positive relationship between mitigating strategies and competitive advantage, findings
48
revealed that there was a negative relationship between voluntary and involuntary
turnover and competitive advantage.
The first objective set to establish effects of voluntary turnover on competitive
advantage. It was revealed that respondents could not reach an agreement on AAR
experiences voluntary turnover, voluntary turnover occurs frequently at AAR,
voluntary turnover at AAR occurs due to low salary and lack of benefits, voluntary
employee turnover at AAR occurs due to entrepreneurship. They could also not agree
on high rate of voluntary turnover has affected AAR performance and effectiveness and
voluntary turnover has a negative effect on AAR competitiveness. However,
respondents disagreed on voluntary turnover occurs due to life time decisions or
circumstances for instance family moves, serious illness and death, voluntary employee
turnover at AAR occurs due to unattractiveness of the job. They also disagreed on
higher rate of voluntary turnover has lowered work productivity at AAR and voluntary
turnover had affected organizational profitability.
The second objective set to establish effects of involuntary turnover on competitive
advantage. Respondents could not reach an agreement on involuntary turnover or
discharge has occurred at AAR due to an employee violating workplace policies
(discipline issues). However, findings revealed that respondents disagreed on AAR
experiences involuntary turnover, involuntary turnover occurs frequently at AAR,
involuntary turnover is due to employee’s death or family issues, involuntary turnover
is due to business slowdown or economic necessity. Moreover, they did not agree on
employees have left AAR or been discharged due to performance problems, AAR has
used re-organization or restructuring (downsizing) strategy to cut costs, AAR has used
downsizing to raise profitability. Additionally, they disagreed on downsizing has
improved organizational effectiveness and efficiency at AAR, involuntary turnover has
positively affected productivity and AAR was able to achieve competitive advantage
through involuntary turnover.
The third objective set to establish mitigating strategies used to gain competitive
advantage. Findings revealed that respondents agreed that they are aware of the
company’s mission and vision. However, respondents could not reach an agreement on
organizational culture at AAR has influenced employee commitment and job
satisfaction, organizational culture has positively affected profitability at AAR,
49
organizational culture at AAR has influenced employee performance, organizational
culture highly influences employee retention and organizational culture is an essential
source of sustainable competitive advantage at AAR. Moreover, they could not agree
on leadership style at AAR has positively influenced employee productivity,
transactional leadership style (develops standards, policies, procedures, regulations and
use reward and punishment) is adopted, charismatic leadership style (encourages
employees to be more creative and innovative), transformational leader style (uses
values and principles to motivate its followers to accomplish their performance),
leadership style at AAR has positively influenced employee performance, and
leadership style at AAR has positively influenced employee retention. Respondents
could not reach an agreement on AAR uses job satisfaction strategies such as reward
systems, performance pay, training and career development, AAR uses job satisfaction
strategies such as good working conditions, employee job satisfaction has influenced
performance and productivity and finally, through job satisfaction, AAR was able to
achieve a sustainable competitive advantage.
5.3 Discussion
5.3.1 Effects of Voluntary Turnover on Competitive Advantage
It was revealed that respondents could not reach an agreement on high rate of voluntary
turnover has affected AAR performance and effectiveness. Similar to this, according to
a study done by Jacob (2011) on the effects on performance of voluntary and
involuntary labor turnover in an evolutionary signaling model; voluntary turnover has
the expected negative effect on performance. Griffeth et al (2012) conducted a research
on reviewing employee turnover; findings revealed that there was a negative
relationship between job performance and voluntary turnover.
The study revealed that respondents could not reach an agreement on voluntary
turnover at AAR occurs due to low salary and lack of benefits. According to Vuyisile
(2013), in his study, it was revealed that staff turnover causes reduction in effective
service delivery to the customers and reflects poorly on the image of the Department.
It was recommended that the organization should pay its employees a marketable
salary, reward and develop career advancement opportunities for its employee.
50
It was revealed that respondents disagreed on voluntary turnover has lowered work
productivity at AAR. In contrast according to Oki (2014), voluntary turnover can have
significant effects on the execution of business plans and may eventually cause a
parallel decline in productivity. Ziel and Antointette (2013) states that the cost of
voluntary staff turnover and the impact on productivity alone is enough to depress any
human resource manager and the organization. Kimungu and Maringa (2010) in their
study, it was established that high level of employee turnover has a negative effect on
quality of service and consequently on the desired competitiveness of the hotel.
Findings showed that respondents disagreed on voluntary turnover had affected
organizational profitability. According to a study done by Shaw (2011), it was
established that turnover rate will decrease profitability and financial performance of
the organization. Turnover rate of any organization will impact the organization’s
operations, cost in investing trainings that are required for new employee and eventually
will impact the end profit of the organization (Keni et al 2013).
Aman (2015) in his research on the causes and effects of employees’ turnover in
Oromia water works design and supervision enterprise. It was revealed that due to
employee turnover the organization will not be competitive in the market, it will incur
cost of recruitment and training and loss of profit.
It was established that respondent disagreed that voluntary employee turnover at AAR
occurs due to unattractiveness of the job. In contrast, Heneman et al (2012) asserts that
employee might decide to leave an organization voluntarily because of getting a better
job, changing career, or present job is unattractive because of poor working conditions,
low pay or benefits, and bad relationship with supervisor.
It was revealed that there was a disagreement on voluntary turnover occurs due to life
time decisions or circumstances for instance family moves, serious illness and death at
AAR. This is in line with the study done by Sandra (2012) unavoidable turnover occurs
due to life time decisions that are beyond an employer's control. It occurs when an
employee moves to a new area or a job transfer for a spouse. Unavoidable turnover
occurs due to family moves, serious illness, and death, over which the organization has
little or no influence (Taylor & Finley, 2010). Those circumstances can make
employees voluntarily resign from the job.
51
5.3.2 Effects of Involuntary Turnover on Competitive Advantage
It was revealed that respondents could not reach an agreement on involuntary turnover
or discharge has occurred at AAR due to an employee violating workplace policies.
This is as described by Mayhew (2017) in her study, involuntary turnover occurs when
employers terminate an employee’s contract or ask an employee to resign. Involuntary
turnover might occur when an employee violates workplace policies, performs poorly
or in case of business slowdown. involuntary turnover might occur when an employee
violates workplace policies, performs poorly or in case of business slowdown.
Findings revealed that respondents disagreed on employees have left AAR or been
discharged due to performance problems. According to Shaw et al (2005), involuntary
turnover is divided into discharge turnover and downsizing. Discharge turnover is the
process where an employee leaves an organization due to performance problems or
discipline. Involuntary turnover or discharge, is the process where an employer decides
to terminate an employment relationship.
It was established that involuntary turnover is due to employee’s death or family issues.
Heneman et al (2012), Aman (2015) noted that involuntary turnover might occur due
to long term sickness, death, moving overseas or employers-initiated termination.
Findings also revealed that respondents disagreed that downsizing, has been used at
therefore it has not improved organizational effectiveness and efficiency at AAR. In
contrast, Omolo (2011) asserts that organizations use downsizing as a strategy of
reducing employment cost hence, improve employee efficiency and effectiveness.
Downsizing can be used as a cost reduction program to improve organizational
effectiveness and increase shareholder value (Adnan, 2010). Zakira (2013) posits
downsizing may occur intentionally as a strategic, proactive response designed to
improve organizational effectiveness.
Findings revealed that respondents disagreed that AAR has used re-organization or
restructuring (downsizing) strategy to cut costs and AAR has used downsizing to raise
profitability. Miguda (2013) posits that downsizing eliminates redundancies and
reduces employment costs; many executives believe that through downsizing
52
organizations are able to compete efficiently and improve profitability. Downsizing
strategies are used to enhance performance in organizations.
It was established that respondents disagreed that through involuntary turnover, AAR
was able to achieve competitive advantage and involuntary turnover has positively
affected productivity. Chepkirui (2012) suggests that downsizing should be used by
organizations as a strategic mean to increase productivity and efficiency. Zakira (2013)
asserts that globally, companies have used downsizing to improve employee
competitiveness, profitability, organizational effectiveness, efficiency as well as to
reduce the size of their workforce.
5.3.3 Mitigating Strategies to Gain Competitive Advantage
Findings showed that respondents agreed on they are aware of the company’s mission
and vision. Similar to this statement according to a study done by Edwinah (2012), on
corporate culture and organizational effectiveness, it was determined that corporate
culture influences organizational effectiveness. It was recommended that the
organization should share their mission with their employees hence enable them to
achieve their goals and employees should also be involved during decision making.
Chepngeno et al (2012) investigated the effects of organizational culture on sustainable
competitive advantage in state owned corporations in Kenya. It was established that
organizational values affected sustainable competitive advantage.
It was established that respondents could not reach an agreement on organizational
culture is an essential source of sustainable competitive advantage at AAR. Findings
also revealed that respondents could not reach an agreement on organizational culture
has positively affected profitability at AAR. Ames (2016) and Chepngeno et al (2012)
in their research, findings revealed that there exists a strong and positive relationship
between organizational culture and performance. Ames (2016) recommends that for an
organization to achieve a sustainable competitive advantage, they should ensure that
they have a good organizational culture in place and the culture should be aligned with
their strategies and policies.
53
Findings reveled that respondents could not reach an agreement on organizational
culture at AAR has influenced employee performance. Kotter (2012) suggests that
through organizational culture, an organization is able to increase its performance,
employee job satisfaction, and motivate employees to solve problems. Organizational
culture is an essential ingredient of organizational performance and a source of
sustainable competitive advantage. Organizational culture is used by organizations to
combine various organizational cultures in the corporate group structure (Kenny, 2012).
It was revealed that leadership style at AAR has positively influenced employee
productivity. According to a research done by Ojokuku et al, (2012), Amal and Nosheen
(2014) and Munirat et al (2014), it was revealed that there was a positive and significant
relationship between leadership style and organizational performance and productivity.
Munirat et al (2014) recommended that leaders should adopt an appropriate leadership
style that suits the organization.
Findings showed that respondents could not reach an agreement on AAR uses job
satisfaction strategies such as reward systems, performance pay, training and career
development. According to a research done by Yukon Government (2010), it was
revealed that organizations use job satisfaction strategies such as; use of reward
systems, performance pay, training and career development, high level of wage rate and
empowerment in decision making. Through this organizations are able to reduce
employee turnover rate and increase performance of the organization.
5.4 Conclusion
5.4.1 Effects of Voluntary Turnover on Competitive Advantage
Based on the findings, even though it is not significant, AAR has experienced voluntary
turnover and it has occurred due to entrepreneurship, low salary and lack of benefits,
unattractiveness of the job, due to life time decisions or circumstances for instance,
family moves, serious illness and death. Therefore, voluntary turnover can affect
performance, effectiveness and lower productivity and this may not help in sustaining
competitive advantage.
54
5.4.2 Effects of Involuntary Turnover on Competitive Advantage
The study of involuntary turnover at AAR reveals that it has not occurred due to
workplace policies or discipline issues, due to business slowdown or economic
necessity, due to performance problems, employee’s death, positively affected
productivity or family issues. Additionally, downsizing has not enhanced
organizational effectiveness and efficiency and re-organization or restructuring was not
used to cut costs. Therefore, involuntary turnover at AAR may have not affected the
organization’s competitive advantage.
5.4.3 Mitigating Strategies to Gain Competitive Advantage
Based on the findings, employees are aware of company’s mission and vision.
Leadership style used in AAR has not positively influenced employee productivity.
Respondents could not really inform about the leadership style used at AAR:
transactional leadership style (used to develop standards, policies, procedures
regulations and use reward and punishment strategies) transformational leadership style
(used to motivate employees to accomplish their performance and charismatic
leadership style to encourage employees to be more creative and innovative. In
addition, Organizational culture does not influence employee retention hence, affecting
productivity and performance. Finally, the job satisfaction strategies used have not
significantly affected employees’ performance and productivity. All this have not
significantly affected competitive advantage at AAR.
5.5 Recommendations
5.5.1 Recommendation for Improvement
5.5.1.1 Effects of Voluntary Turnover on Competitive Advantage
AAR can boost sustainable employee commitment, increase organizational
effectiveness and gain a competitive advantage by reducing voluntary turnover. It
should develop motivation strategies such as; offering pay raise, new assignment,
effective communication better working conditions. It should also encourage work
balance life and offer growth opportunities. Through this it will be able to increase
employee job satisfaction and commitment hence raise profitability.
55
5.5.1.2 Effects of Involuntary Turnover on Competitive Advantage
AAR should develop policies and strategies that they can use in cases of involuntary
turnover. They can used downsizing strategies such as; retrenchment, early retirement
or casualization of staff. This will enable them to cut costs, reduce business slow-down,
increase organizational effectiveness, efficiency and productivity therefore gain
competitive advantage.
5.5.1.3 Mitigating Strategies to Gain Competitive Advantage
AAR should develop an organizational culture that is unique and will differentiate them
from other organizations. Through this, they will be able to have leader who will be
able to develop vision and personality to motivate employees. In addition, also develop
rules that will provide employees with clear instruction, policies and procedures that
they can use to achieve their goals and objectives.
5.5.2 Recommendations for Further Studies
The study recommends that since no study has been done on types of employee turnover
and their effect on competitive advantage further studies ought to be done on other
insurance companies and organizations.
56
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APPENDIX I: QUESTIONNAIRE
EFFECTS OF EMPLOYEE TURNOVER ON COMPETITIVE ADVANTAGE
This questionnaire assists in data collection for academic purpose. The research intends
to give an analysis of the effects of voluntary and involuntary turnover on competitive
advantage.
All information obtained will be handled with high level of confidentiality. Please do
not incorporate identification or names in this questionnaire.
Please answer every question by using either a cross(x) or tick (√) in the option that
applies.
SECTION A: RESPONDENT´S PROFILE
Please tick the most appropriate answer (√/x)
1. Gender: Male Female
2. Age
25 and below
26-30 years
31-35 years
36-40 years
41years and above
3. Marital status: Married Single Widowed Divorced
4. Academic Qualification
Certificate Diploma Degree Masters PhD
5. What is your management level?
Senior
Middle
Low
Non- management
6. How long have you been working in the organization?
Less than 1 year
1 – 5 years
6 - 10 years
11 - 15 years
More than 15 years
73
7. Does the organization experience cases of employee turnover?
Very rarely
Rarely
Very often
Often
Never
SECTION B: Effects of Voluntary Turnover on Competitive Advantage
Voluntary turnover refers to termination initiated by employees because of getting
a better job, changing career, or present job is unattractive because of poor
working conditions, low pay or benefits, and bad relationship with supervisor or
for circumstances like health, family reasons, death.
Rate your level of agreement on effects of voluntary turnover on competitive advantage.
(1- Strongly Disagree, 2-Disagree, 3-Neutral, 4-Agree, 5- Strongly Agree)
Statement
Str
on
gly
Dis
agre
e
Dis
agre
e
Neu
tral
Agre
e
Str
on
gly
Agre
e
1 2 3 4 5
1 AAR experiences voluntary turnover
2 Voluntary turnover occurs frequently at AAR
3 Voluntary turnover occurs due to life time
decisions or circumstances for instance family
moves, serious illness and death.
4 Voluntary employee turnover at AAR occurs due
to low salary and lack of benefits.
5 Voluntary employee turnover at AAR occurs due
to entrepreneurship.
6 Voluntary employee turnover at AAR occurs due
to unattractiveness of the job.
7 Higher rate of voluntary turnover has lowered
work productivity at AAR.
8 High rate of voluntary turnover has affected
AAR performance and effectiveness.
9 Voluntary turnover had affected organizational
profitability.
10 On overall, voluntary turnover has a negative
effect on AAR competitiveness.
74
SECTION C: Effects of Involuntary Turnover on Competitive Advantage
Involuntary turnover occurs when management decides to terminate its
relationship with an employee due to economic necessity, business slowdown;
when employee violates workplace policies or performs poorly.
Rate your level of agreement on effects of involuntary turnover on competitive
advantage. (1- Strongly Disagree, 2- Disagree, 3-Neutral, 2- Agree, 1- Strongly
Agree)
Statement
Str
on
gly
Dis
agre
e
Dis
agre
e
Neu
tral
Agre
e
Str
on
gly
Agre
e
1 2 3 4 5
1 AAR experiences involuntary turnover?
2 Involuntary turnover occurs frequently at AAR?
3 Involuntary turnover is due to employee’s death or
family issues.
4 Involuntary turnover is due to business slowdown
or economic necessity.
5
Involuntary turnover or discharge has occurred at
AAR due to an employee violating workplace
policies (discipline issues).
6 Employees have left AAR or been discharged due
to performance problems.
7 AAR has used re-organization or restructuring
(downsizing) strategy to cut costs.
8 AAR has used downsizing to raise profitability at
AAR.
9 Downsizing has improved organizational
effectiveness and efficiency at AAR.
10 Involuntary turnover has positively affected
productivity.
11 Through involuntary turnover, AAR was able to
achieve competitive advantage.
SECTION D: Mitigating Strategies and Competitive Advantage
75
There are strategies that can be used to curb employee turnover. Among others
are organizational culture, leadership style and job satisfaction.
Identify type of leadership style at AAR
Statement
Str
on
gly
Dis
agre
e
Dis
agre
e
Neu
tral
Agre
e
Str
on
gly
Agre
e
1 2 3 4 5
1 Transactional leadership style develops standards,
policies, procedures, regulations and use reward and
punishment.
2 Transformational leadership style uses values and
principles to motivate its followers to accomplish their
performance.
3 Charismatic leadership style encourages employees to
be more creative and innovative.
Rate your level of agreement on the effects mitigating strategies and competitive
advantage. (1- Strongly Disagree, 2- Disagree, 3- Neutral, 2- Agree, 1- Strongly Agree)
Statement
Str
on
gly
Dis
agre
e
Dis
agre
e
Neu
tral
Agre
e
Str
on
gly
Agre
e
1 2 3 4 5
1 I am aware of the company’s mission and vision.
2 Organizational culture at AAR has influenced
employee commitment and job satisfaction.
3 Organizational culture has positively affected
profitability at AAR.
4 The organizational culture at AAR has influenced
employee performance.
5 Organizational culture highly influences
employee retention.
6 Organizational culture is an essential source of
sustainable competitive advantage at AAR.
7 Leadership style at AAR has positively influenced
employee productivity.
8 Leadership style at AAR has positively influenced
employee performance.
76
Statement
Str
on
gly
Dis
agre
e
Dis
agre
e
Neu
tral
Agre
e
Str
on
gly
Agre
e
1 2 3 4 5
9 Leadership style at AAR has positively influenced
employee retention.
10 AAR uses job satisfaction strategies such as
reward systems, performance pay, training and
career development.
11 AAR uses job satisfaction strategies such as good
working conditions.
12 Employee job satisfactions at AAR has influenced
performance and productivity.
13 Through job satisfaction, AAR was able to
achieve a sustainable competitive advantage.
SECTION E: Competitive Advantage
Competitive advantage is the process where a firm is able to achieve and sustain
profit that exceeds what its competitors are achieving.
Rate your level of agreement on the effects mitigating strategies and competitive
advantage
(1- Strongly Disagree, 2- Disagree, 3- Neutral, 4- Agree, 5- Strongly Agree)
Statement
Str
on
gly
Dis
agre
e
Dis
agre
e
Neu
tral
Agre
e
Str
on
gly
Agre
e
1 2 3 4 5
1 AAR has achieved competitive advantage?
2 AAR has sustained its competitive advantage over
years.
3 Competitive advantage is driven by workforce
productivity and creativity at AAR.
4 The access to highly trained and skilled
employees has helped AAR achieve its
competitive advantage.
5 The access to new technologies has contributed to
achieve competitive advantage at AAR.
6 The access to new innovative procedures has
contributed to achieve competitive advantage at
AAR.
77
Statement
Str
on
gly
Dis
agre
e
Dis
agre
e
Neu
tral
Agre
e
Str
on
gly
Agre
e
1 2 3 4 5
7 AAR offers product/ services that have unique
attributes.
8 AAR offers an added value products/ services.
9 AAR has used a new product/ service processes to
achieve competitive advantage.
10 AAR operates with enough branches in the city to
gain competitive advantage.
11 AAR branches are strategically located in order to
achieve competitive.
THANK YOU FOR YOUR PARTICIPATION