Studying the Effective Factors on Employees' Premature

12 Pages·2014·0.28 MB·English

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APRIL 2014
INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS VOL 5, NO 12

Studying the Effective Factors on Employees' Premature Retirement in Bank Saderat in
Isfahan Province

Mohammad Ahmadi3, Reza Najjari4 , Iraj Esmaeili5
Abstract
Premature retirement in the organizations is a basic problem under the current circumstances,
because replacement of the experienced labor force in a very short time seems hard and
impossible. Studying different factors that are led to employees' request for premature retirement
enables the organizations to identify such factors and eliminate them and hence provide
conditions for the experienced personnel who are regarded as human capitals of the organization
to have more tendency to remain in the organization.
The aim of this survey is to study the effective factors on employees' premature retirement in
Bank Saderat in Isfahan province. It was conducted using descriptive-field method. The
statistical population included that group of employees who have retired themselves prematurely
in 2014 (N=56). Questionnaire was tool of data collection which was consisted of 46 questions
based on five-option Likert scale. The reliability coefficient was obtained equal to 0.762 using
Cronbach's alpha coefficient. Also, data analysis was conducted through SPSS21 software. The
obtained results revealed that there is a relationship among family problems, risk of fraud,
forgery, robbery and employees' premature retirement.
Key words: Retirement, Premature Retirement, Bank Saderat in Isfahan province

Introduction

3 Mohammad Ahmadi, Assistant professor in business management department, payam-e-noor
university, Tehran, Iran
4 Reza Najjari. Assistant professor in administration management, department, payam-e-noor
university, Tehran, Iran
5 Iraj Esmaeili (Corresponding Author) Graduated in MBA (executive management) payam-e-
noor university, Tehran, Iran

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Human capital in the third millennium is the most valuable capital and the biggest property
of any organization and country. It is in a way that efficient human capital is regarded as a key
for organizational development. Capable and experienced manpower is one of the biggest
competitive advantages of countries and organizations. Competition for survival in the current
world has been led to challenges for organizations and it has become more difficult for modern
organizations due to increasing of complexity and rapid changes of the competitive business
environment (Randhawa, 2007). Competition among the firms to attract high quality employees
and maintenance of human capitals is one of the effective factors for encountering such complex
environment (Ghadirian & Asili, 2012). According to managers, attracting and maintaining high
quality employees at present is more important than before, because some attitudes such as
globalization, increasing of knowledge tasks and technology growth rate make it necessary to
attract and maintain human capitals. In this regard, stability of labor force is a strong competitive
strategy and even it will play a more vital role in a predictable future (Moeinibadi, 2001).
Besides utilization of methods to attract the most suitable people for the most suitable jobs,
management tries to maintain the attracted labor force (Afkhami Ardekani & Faraji, 2012). If the
management cannot fulfill this desirably, employees will leave the organization. Although there
is a clear difference in cost analysis of leaving the organization among different countries, the
importance of this issue lies in the fact that there are several negative consequences for
organizations in which the turnover rate is high. This high rate of turnover is undoubtedly very
expensive and threatens the quality (Simon et al, 2004). Given to above-mentioned issues,
organizations need to maintain their manpower, since turnover and employees' tendency to leave
the organization will create some problems. Also employees' tendency towards turnover means
that the expenses related to selection, employment and training of employees are high (Rasouli et
al, 2013).
Similarly, investigation of the effective factors on employees' premature retirement is
important for organizations that do not want the experienced personnel leave the organization
prematurely. Due to several factors, the experienced employees can retire themselves
prematurely through the existing rules in the organization. The most important factors in this
regard include inter-organizational cases or the ones due to personal problems of employees. As
the process of identification, selection, attraction, training and maintenance of people is cost
intensive, organizations try to maintain their personnel. Basically, it is due to the fact that losing
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the educated and competent employees can increase costs and decrease services and efficiency
and even it can be led to adverse effects among the personnel (Hwang et al, 2007).
Purposes of the survey
1- Identification of the effective factors on employees' premature retirement in Saderat
Bank in Isfahan province
2- Proposing effective strategies to prevent premature retirement of well-educated
personnel before mandatory retirement

Research questions
1- Which one of the individual factors is effective on employees' premature retirement in
Saderat Bank in Isfahan province?
2- Which one of the organizational factors is effective on employees' premature retirement
in Saderat Bank in Isfahan province

Methodology
This survey was conducted using descriptive-field method. The statistical population
included that group of employees who have requested for premature retirement or have retired
themselves prematurely in 2014. Finally fifty six persons were selected randomly among them.
Historical study was used to collect one part of data and questionnaire was used for field studies.
The questionnaire was consisted of 46 questions based on five-option Likert scale. The reliability
coefficient was obtained equal to 0.762 using Cronbach's alpha coefficient. Also, SPSS21
software was employed for data analysis.

Research background
The results obtained from previous researches reveal that paying attention to motivational
factors and individual needs of employees will stimulate them and increase their productivity.
Thus, employees have tendency to remain in the organization (Hojati & Kimia, 2010). There is a
basic difference between voluntary turnover and forced turnover in viewpoint of the
organization. Compulsory turnover is basically applied to cases where it cannot be controlled by
the organization like retirement, transfer because of marriage, continue studying, etc. But
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voluntary turnover is applied to cases where the organization can control it and is usually due to
the current circumstances in the organization (Asili & Ghadirian, 2012).
Also, results of a study on effective factors on employees' tendency towards turnover in
RighTel Company showed that job burnout, job satisfaction, age, and organizational post are the
best predictors for leaving the organization (Habibi et al, 2014). Ever-increasing studies on
employees' turnover behavior reveal that age, job satisfaction Position satisfied expectations, and
organizational commitment have a significant relationship with turnover intention and real
turnover (Randhawa, 2007).
Meyer (1993) defines turnover intention as informed tendency towards looking for the
opportunities and career options in another organization (Mkavga, Onyishi, 2012).

Research literature
Manpower is one of the most important properties in any society which paves the way for
economic, social and political progress of each country. It is the most efficient tool to achieve
pre-determined purposes and inattention to provide a suitable environment for manpower can be
led to several consequences for organizations. In the current turbulent environment,
organizations are faced with a gradual change in traditional relations of employment. Loyalty to
the organization and average term of office for a job are decreased and on the other hand,
turnover rate has been increased (Randhawa, 2007). In a general classification, the effective
factors on employees' premature retirement and turnover can be divided into individual and
organizational factors.

A) Individual factors
Individual factors explain people's status and contain demographic variables such as age, gender
and marital status which have an important role in turnover. Besides demographic factors, family
problems (work-family conflict) reflect interference of working life and family life and labor
hours in each week show being exposed to the workplace (Simon et al, 2004).
Family problems (work-family conflict): work-family conflict occurs when activities related to
work interfere with those related to the family. This type of conflict may be created due to lack
of support by colleagues and managers, limited job independence, inflexible work schedule table
and increasing of labor hours. This conflict is increased when people are married, have more
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children or more work experience. Indeed, their responsibility is increased by increasing of work
experience which can have a positive relation with increased work-family conflict.
Organizational supports can decrease such conflict (Sabkro et al., 2012).
Job burnout: it has been defined as a mental reaction to job stress (Zarei Matin, Sayyed Kalali,
Akhavan Anvari, 2012). It shows excessive emotional exhaustion because of involvement and
commitment to the job and people for many years. In other words, job burnout is physical,
emotional and mental exhaustion due to long-term exposing to hard work. This illustrates a state
where power and ability of people is low and their intention and enthusiasm for working is
reduced. It is psychological syndrome including emotional exhaustion, personality
metamorphosis and reduction of personal performance.

B) Organizational factors
Many organizational factors are effective on employee's tendency towards premature retirement.
Role conflict, lack of job satisfaction, job stress, workplace climate, quality, and leadership style
in the organization and opportunities for progress can be mentioned among the most important
organizational factors.
Role conflict: role conflicts occur when expectations of a person are in contrast. Such conflict
messages can be transferred from another person, two or more persons or inside the role (when a
person has two or more conflicting roles). Also, role ambiguity (when there is uncertainty about
scope of work and others' expectations) has been indicated in previous studies as the negative
effect of working conditions and it is proposed as an important source of job dissatisfaction (Pia
Tham, 2007).
Job satisfaction: job satisfaction has been defined as the "positive emotional state resulted from
job assessment or experience" (Price, 2001). It is the extent of positive attitudes and feelings that
people have towards their job. When a person says he/she has a high job satisfaction, it means
that he/she really likes his/her job, has a good feeling about it and values it highly. Job
satisfaction is a multidimensional structure that includes satisfaction with job, supervisor,
colleagues, payment conditions, promotion plans, policy of the firm and sense of job security. It
decreases turnover rate and enhances organizational commitment. Therefore, organizations
should attach importance to employees' job satisfaction, because it has a strong relation with
other vital results of the organization (MacIntosh & Doherty, 2010).
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Risk of fraud, forgery or robbery: employees of the banking network are encountered with
difficulties such as fraud, forgery and robbery. Serving in bank has been converted into a
stressful job because of the above difficulties. For this reason, concern and risk of fraud, forgery
and robbery during the service period are one of the effective factors on employees' premature
retirement.

Leadership style and quality: leadership style has a good documentary relationship with
leaving the organization (Griffeth et al, 2000). To what extent leadership has been perceived
fairly has a significant relationship with turnover intention (Pia Tham, 2007). Fair treatment of
employers refers to the fact that they value the employees and pay attention to their welfare. Also
it reinforces employees' expectations that they will be treated fairly during their term of office
(Griffeth et al, 2000).
Relation with colleagues and management: employees' perception shows that sense of being in
a family or group can help enhance sense of belonging. This is an important value which affects
intermediately the probability that a person wants to stay in an organization. Creating a work
environment in which employees have close relations and treat members and other customers in
a friendly manner can help managers solve employees' problems better (MacIntosh & Doherty,
2010).
Job promotion: it means that to what extent it is possible for employees to promote in the
related job. Possibility of job promotion is one of the factors that is led to more motivation of
manpower and employees can use their capabilities to fulfill organizational purposes.

Responding the research questions
Normal distribution test
Normal distribution of the collected data should be determined before testing the hypotheses.
This is done by means of Kolmogoroff-Smirnoff test. The obtained results are displayed in Table
3.

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Table 3. Results of Kolmogoroff-Smirnoff test about normality assumption of distribution
(comparing distribution of scores of research variables with normal distribution)

Questionnaire K-s-z Significance level
Effective factors on employees' premature 0.610 0.200
retirement

According to results of Table 3, given that value of Kolmogoroff-Smirnoff test in the
questionnaire is between +1.96 and -1.96, the assumption regarding normal distribution can be
accepted with confidence coefficient 0.95.

Regression test
Regression test was used to test the hypotheses and determine which one of the independent
variables is effective on employees' premature retirement. Validity of the collected data was first
ensured in the regression model. Values of Durbin-Watson test for the regression model are
about 2 and ensure the researchers that the data are adequately valid. Given that value of VIF for
research variables is less than 10 and tolerance is less than 1, validity of the regression test is
equal to 0.000 and less than 0.05. Therefore, there is a regression relation and it can be stated that
at least there is a significant relationship between one of the independent variables and the
(dependent) variable of employees' premature retirement. Now it is possible to make decision
given to values of test validity in the below table.
The obtained results illustrate that only three independent variables (among 11 independent
variables) explain the dependent variable. Also, R2 is close to 0.171 which means that the
variables inserted in the equation have explained 1.171 of variance of changes related to
employees' premature retirement. But considering that the test validity shows a regression
relation, this relation is acceptable and does not alter the low value of coefficient of
determination.

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Table 2. Results of regression analysis test about the effective factors on employees' premature
retirement

Variables inserted in the Personal factors (physical illness and exhaustion, family
regression equation problems, conflict in relations with colleagues, not meeting
(independent variables) welfare needs, cost analysis of employees' benefit)
Organizational factors (weakness in job promotion system,
dissatisfaction with senior management performance, high job
stress due to managers, high job stress due to too much work,
weakness in manpower attraction plan, risk of fraud and forgery)
(Dependent) variable Employees' premature retirement
Multiple correlation R=0.414
coefficient
Coefficient of determination R 2= 0.171
Standard error S.E= .53
Variance analysis ANOVA = 10.64
Durbin-Watson D-W = 1.98
Significance level Sig =.000
Now the following table is used to see which variable exists in the regression model. Value of
regression coefficient for each variable is shown in this table.

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Table 4. Linear regression table for the effective factors on premature retirement
Model Coefficient Standard Standardized Test statistic Test validity
deviation coefficients
coefficient
Constant of the model 0.598
1.101 0.274 4.016
Family problems 0.046
0.096 0.162 0.357 0.712
Physical illness and 0.173
0.117 0.115 0.98 0.223
exhaustion
Conflict in relations with 0.309
0.111 0.204 0.138 0.634
colleagues
Not meeting welfare needs 0.48
0.374 0.295 0.054 1.862
Cost analysis of employees' 0.467
0.279 0.166 0.549 2.149
benefit
High job stress due to 0.887
0.105 0.117 0.115 0.733
managers
High job stress due to too 0.309
.034 0.324 0.086 0.200
much work
Weakness in manpower 0.089
0.176 0.134 0.065 1.028
attraction plan
Weakness in job promotion 0.099
0.226 0.268 0.669 1.710
system
Dissatisfaction with senior 0.073
0.023 0.378 0.459 0.143
management performance
Risk of fraud and forgery 0.016
0.223 0.232 0.129 0.99

According to the obtained results, family problems (among individual factors) and risk of fraud
and forgery (among the organizational factors) are significant in the regression model. Hence,
there is a relationship between family problems and risk of fraud and forgery with employees'
premature retirement and these two variables are effective on employees' premature retirement.

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Discussion and conclusion
Turnover and premature retirement have direct and indirect costs for organizations.
Moreover, reduction of quality and not realizing the intended purposes are irreparable
consequences of this phenomenon. Identification of the effective factors on turnover intention
and premature retirement, therefore, reinforces employees' motivations positively for permanent
presence in the organization besides preventing turnover and the adverse consequences.
The present study was conducted to investigate the effective factors on employees' premature
retirement in Saderat Bank in Isfahan province. The effective factors on turnover and employees'
premature retirement were divided into two classes: individual factors and organizational factors.
Then the data were analyzed using statistical tests. The results indicated that family problems
(among individual factors) and risk of fraud and forgery (among the organizational factors) are
effective on premature retirement and no significant relationship is observed among other
variables and premature retirement. Since topic of this research is unique and the issue of
turnover and employees' premature retirement has not already been studied from this aspect, the
obtained findings cannot be consistent with findings of previous studies.

Given to the obtained findings, the following applied suggestions are presented:
1- Considering the effect of family problems on employees' premature retirement, it seems
that if managers provide the required conditions, there will be no conflict between job
and family for employees and they conduct their tasks properly. The reason is that studies
show a major portion of employees' family problems root in the conflict between job and
family which is led to psychological effects on employees and type of their
organizational performance.
2- Risk of fraud, forgery and robbery is one of the organizational factors that has a positive
effect on employees' premature retirement. In other words, if this risk is reduced,
employees' stress is decreased and they will perform their tasks with more peacefulness
and want to remain in the organization. Obviously, utilization of modern and advanced
technologies in banking as well as holding training courses and using insurance coverage
can decrease this problem to a large extent.
3- Re-investigation of work processes and executive instructions can help improve them and
this will decrease works friction and mental peacefulness of employees. This increases
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