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The significance of job status upon voluntary termination rates

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The significance of job status upon voluntary termination rates

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Content THE SIGNIFICANCE OF JOB STATUS
UPON VOLUNTARY TERMINATION RATES
by
Ronald Bruce Mills
A Thesis Presented to the
FACULTY OF THE SCHOOL OF PUBLIC ADMINISTRATION
university of SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
MASTER OF PUBLIC ADMINISTRATION
May 198 3
UMI Number: EP64934
All rights reserved
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Oisssftation
UMI EP64934
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' 0 3
This thesis, written by
Roi^^kb ûROce Mikks
under the direction of the undersigned Guidance
Committee, and approved by all its members, has
been presented to and accepted by the Faculty of
the School of Public Administration in partial ful~
filiment of the requirements for the degree of
MASTER OF
PUBLIC A D M IN IS T R A T IO N
/ V N / T e a
Date............................... L ............................................. .....................
Guidance Committee:
Chairman
r
ABSTRACT
This study was undertaken to explore the reasons for a
high voluntary termination rate in a mortgage loan broker
age firm. The voluntary turnover rate had roughly doubled
in the years 1980-1982 from the previous years 1978-1980.
Because company hiring policies had significantly changed
in 1980, data from the years 1980-1982 only were the focus
of the study. Years of service with the firm was regressed
on the variables age, status, gender, exempt/non-exempt job
status, salary, and education. Results showed that only
exempt/non-exempt status had a significant impact on years
of service.
n
TABLE OF CONTENTS
Section Page
I. INTRODUCTION........................................................... 1
A. Background and Objectives ............................... 1
B. Literature Review ............................... 2
I I . METHODS........................................ 4
A. Materials and Data C o l l e c t i o n ..................... 4
B. Definition of Exempt/Non-Exempt
Job S t a t u s ........................................... 5
I I I . FINDINGS........................................................... 9
IV. DISCUSSION . . . . . . . ' ..................................................... 13
A. General Discussion .................................................. 13
B. Conclusions and Recommendations
for Further S t u d y ............................................ 16
1 11
LIST OF TABLES
Table Page
1. Percentage of Voluntary Terminations
July 1, 1978 - June 30, 1982 ....................
2. Literature Search Data Bases ..........................
3. Variable Codes ............................................................ 5
4. One-Way Frequencies for Categorical
Variables ............................................................... 9
5. Descriptive Statistics for Continuous
V a r i a b l e s ............................................................... 10
6. Zero-Order Correlations ................................... 10
7. T-Tests with Years of Service as
Dependent Variable ............................. . . . 11
8. T-Test with Salary as Dependent
V a r i a b l e .................................................................... 12
9. Multiple Regressions with Years of
Service as Dependent Variable .. . . 12
2 ^
I. INTRODUCTION
A. Background and Objectives
The subject company is a financial services firm, spe
cializing in the brokering of mortgages in Southern Cali
fornia. This study was undertaken to examine the reasons
for a high voluntary termination rate among its full-tim e
workers. The voluntary termination rate at the subject
company had roughly doubled in the years 1980-1982 from the
previous years 1978-1980 (see Table 1).
TABLE 1
PERCENTAGE OF VOLUNTARY TERMINATIONS
JULY 1, 1978 - JUNE 30, 1982
Median Age
of All
Employees
Fiscal Year
Total
Number of
Employees
Voluntary
Employment
41 July 1, 1978-June 30, 1979 169
40 July 1, 1979-June 30, 1980 196
35 July 1, 1980-June 30, 1981 219
33 July 1, 1981-June 30, 1982 178
34
42
71
72
20
21
32
40
Beginning in July of 1980 and continuing through June
of 1982, hiring objectives were changed from recruitment of
trained, experienced candidates to the hiring of candidates
with no prior training, l i t t l e experience, and only basic
clerical skills. This paper focuses on the predictions of
voluntary terminations under the 1980-1982 hiring policies.
Eventually data were gathered for age, gender, educa
tion, salary, exempt/non-exempt job status, as well as
length of service with the company. In the absence of pre
vious work on the topic (see Literature Review section),
these factors might reasonably be expected to be related to
decisions to leave the firm.
Cost of recruitment, training, and lost productivity
due to voluntary terminations is a significant budget fac
tor. The ultimate use of the results of this study were
viewed as a potential means of lowering these costs by
reducing job turnover.
B. Literature Review
After a preliminary manual search through several l i
braries failed to locate any pertinent references, a deci
sion was made to order a computer-assisted literatu re
search. Both manual and computer-assisted literatu re
searches revealed no pertinent references to the topic of
job turnover. The data bases searched are listed in
Table 2.
TABLE 2
LITERATURE SEARCH DATA BASES
Data Base Years Examined
National Institute of
Mental Health (NIMH)
National Technical
Information Service (NTIS)
Social Sciences
Citation Index (SSCI)
Trade and Industrial
Index (Til)
1969-1981
1979-1982
1977-1982
1981-1982
None of the queries to the data bases yielded refe r
ences pertinent to this study. The lack of reference ma
te ria l was discussed with two professors of Public Admini
stration, and with the Research Librarian who conducted the
computer-assisted literatu re search. They all confirmed
that there was no reference material in the lite ra tu re
available.
While it is possible that some information useful to
this study could conceivably be embedded within doctoral
dissertations, that information would not be in a format
that could be retrieved by existing data bases and indexes.
Therefore, i t was concluded that either pertinent refe r
ences did not exist or were not retrievable by conventional
means. It was decided that further search should be dis
continued.
3
II. METHODS
A. Materials and Data Collection
The data used in this study were obtained from all
cases of voluntary terminations between July 1, 1980 and
June 30, 1982. The final number of cases was 143.
Sampling was considered for this study but was rejected
for the following reasons:
1. Records and variable information were easily
obtained with minimal time and l i t t l e expense.
2. The changed recruitment objectives were constant
for the defined two-year period.
3. The number of subjects was small enough for the
inclusion of all cases.
Data were gathered on the age, education, gender, sal
ary, years of service to the company, and exempt/non-exempt
job status of each employee (see Table 3). Since i t is not
nearly so self-evident as the other variables, an expanded
description of how status was defined and determined is
detailed.
TABLE 3
VARIABLE CODES
Variable Code Description
Age
High School
Education
Years of
College
Gender
Status
Salary
Years with
Com pany
Coded as a continuous variable with values from
17 to 67
Coded as a binary variable: Yes = 1, N o = 0
Coded as a continuous variable with values from
0 to 4
Coded as a binary variable: Female = 0 , Male = 1
Coded as a binary variable: Non-Exempt = 0,
Exempt = 1
Coded as a continuous variable with values from
5 to 113, representing annual salary to the nearest
thousand dollars
Coded as a continuous variable with values from
0.17 to 10.00, representing years
B. Definition of Exempt/Non-Exempt Job Status
Status in this study refers to whether or not an em
ployee is subject to state regulations governing wages,
hours, and working conditions as detailed in the State of
California Industrial Welfare Commission Order 4-80,
T itle 8, California Administrative Code 11345. Non-exempt
employees are subject to these regulations, exempt employees
are not. Generally, management and sales positions are con
sidered exempt.
Order 4-80 states that employees engaged in executive
and administrative duties are considered exempt i f they meet
5
both of the following c rite ria : (1) the employee performs
duties appropriate to such a capacity, and (2) he/she re
ceives $900 or more per month in compensation. The data
gathered for this study used an even more stringent test
for exemption as follows:
TEST FOR EXEMPTION
Is the employee exempt or non-exempt? The employee is exempt i f the
job he or she performs passes any one of the four following tests, and
the employee earns $975.00 per month or more. To pass a test, all
questions in the test group must be answered "yes."
(Check Your
Answer Below)
Executive Exemption Test
Does the employee:
a) Primarily manage the company, a department, or
a department subdivision?
b) Direct the work of at least two other employees?
c) Have authority to hire or fire (or make recom
mendations that carry particular weight)?
d) Customarily and regularly exercise discretion
ary powers?
e) Spend 60% or more of his/her time working
directly on executive duties?
Administrative Exemption Test
Does the employee:
a) Have as his/her primary duty office or nonmanual
work directly related to management policies or
general business operations?
b) Customarily and regularly exercise discretion
and judgment?
YES N O
YES N O
Administrative Exemption Test (continued)
c) D o any one of the following:
(1) Directly assist an owner, executive^ or
administrator? _____ (Yes/No) or,
(2) Perform only under general supervision,
specialized or technical work requiring
special training, experience, or knowl
edge? _____ (Yes/No) or,
(3) Exercise special assignments under only
general supervision? _____ (Yes/No)
d) Spend 60% or more of his/her time working
directly on administrative duties?
Professional Exemption Test
Does the employee:
a) Either one of the following:
(1) Have a primary duty that requires ad
vanced knowledge, customarily acquired
by specialized study? _____ (Yes/No) or,
(2) Have a primary duty that requires original
and creative work in a recognized field?
(Yes/No)
b) Perform duties that require constant exercise
of discretion and judgment?
c) D o work predominantly intellectual and varied
in character, the result of which can't be
standardized in relation to a given period of
time?
d) Spend 80% or more of his/her time at work that
is an essential part of professional duties?
YES
YES
4. Outside Salesperson Exemption Test
Does the employee:
a) Work outside of the office to make sales or
obtain orders?
b) Spend 80% or more of the number of standard
company work-week hours working in duties
incidental to sales, either inside or outside
of the office?
YES
III. FINDINGS
As a group, all employees who voluntarily terminated
the firm were well-educated. Roughly two-thirds (66,44%)
had at least one year of college. The majority were women
in non-exempt-status jobs.
TABLE 4
ONE-WAY FREQUENCIES FOR CATEGORICAL VARIABLES
Variable Category Frequency
Cumulative
Frequency
Percent
High School Yes 141 143 98.61
Education N o 2 2 1.39
College 0 years 48 48 33.56
Education 1 year 65 113 45.46
2 years 20 133 13.99
3 years 6 139 4.20
4 years 4 143 2.79
Gender Male 33 143 23.07
Female 110 110 76.93
Exempt, Non- Non-Exempt 124 124 86.72
Exempt Status Exempt 19 143 13.28
Those who voluntarily terminated their positions tended
to be young (mean age = 29.9 years), and stayed with the
firm approximately 1.5 years (see Table 5).
TABLE 5
DESCRIPTIVE STATISTICS FOR CONTINUOUS VARIABLES
Variable Mean
Standard
Deviation
Minimum Maximum
Age
Years with
Com pany
29.9
1.6
9.11
1.9
17
0.2
67
10
There was a slight tendency for younger employees to
leave sooner than older employees, as expected. Older em
ployees generally have more to lose when leaving a position
than younger employees. When age and salary were considered
as in Table 6, salary did show a relatively high correlation
of 0.7226 with years of service. However, the associated
probability values for both age and salary were not s i g n i f i
cant at either the 0.01 and 0.05 levels of certainty. When
salary was later regressed along with other variables (see
Table 8), i t again did not prove to be significant.
TABLE 6
ZERO-ORDER CORRELATIONS
Variables Salary
Years of
Service
Age
Salary
0.3626
P = 0.0001
0.5645
P = 0.0001
0.7226
P = 0.0001
10
Further analysis showed that there was no significant
difference in time with the firm in terms of either gender
or educational level. However, the results did demonstrate
that status significantly affected how long one remained
with the firm.
TABLE 7
T-TESTS WITH YEARS OF SERVICE AS DEPENDENT VARIABLE
Independent
Vari able
T-Ratio
Standard
Error
Probabi1ity
Gender
High School
Education
College
Education
Status
-0.7138
-0.5035
0.9560
3.3347
0.0998
0.3358
0.0416
0.1540
0.4766
0.6155
0.3408
0.0016
Additional analyses showed that exempt status in par
ticu lar (see Table 8) was positively related to salary.
(Figures for non-exempt status were not considered due to
equal variance between the means.)
That salary should be so positively related to exempt-
status employees is as expected. Exempt employees are by
definition supervisors and managers, job categories which
trad itio n a lly are among the highest paid in any budget
system.
11
TABLE 8
T-TEST WITH SALARY AS DEPENDENT VARIABLE
Variable Number T-Ratio
Standard
Error
Variance Probability
Status :
Exempt
Non-Exempt
19
124
4.1163
10.4237
5.9066
0.2179
Unequal
Equal
0.0006*
0.0001
*Significant at the 0.01 level
When all variables were regressed with years of ser
vice, only status proved significant at the 0.01 level. In
fact, when age, gender, salary, and educational levels were
held constant, the effects of status on length of time with
the firm were three times that of salary, over four times
that of college education, and over nine times that of age.
TABLE 9
MULTIPLE REGRESSIONS WITH YEARS OF SERVICE
. AS DEPENDENT VARIABLE
Independent Variable
Regression
Coeffi cient
Beta
Age
High School Education
College Education
Gender
Status
Salary
0.0008
-0.1691
0.0398
-0.0713
0.4966
0.0048
0.0371
■0.0397
0.0753
■0.0600
0.3372*
0.1199
R ^ = 0.1781
F Ratio =4,91
*Significant at the 0.01 level 12
IV, DISCUSSION
A. General Discussion
The key finding of this study, tbat status had a sig
nificant impact on years of service, even when income was
held constant, came as a surprise. I t had been assumed
that the strongest predictors of years of service would be
salary and age. In fact, the i n i t i a l working hypothesis
for the study was that salary would be a significant factor
in the decision to remain with the company for longer per
iods of time, As the results of the study showed in the
Findings section, age and salary did not significantly af
fect the decision to voluntarily terminate employment,
A word on resignations seems pertinent. That a given
employee has voluntarily terminated is an easily verified
fact. I f there is a resignation, there has been a termina
tion. Yet, the reason behind it generally remains unknown.
Because the reasons remain unknown, i t is d i f f ic u l t to dem
onstrate causality for voluntary quits,
All 143 cases studied had letters of resignation on
f i l e . Yet, over 80 percent (115 of the 143) only gave cur
sory reasons for resigning, i f a reason was provided at all
Most letters just contained standard phrases about how good
i t was to work for the company, how the employee disliked
13
leaving, and how he/she was going on to a better opportu
nity (the exact nature of which was rarely given); informa
tion for the most part was too general to even be coded.
Key information about employee dissatisfaction/satisfaction,
training effectiveness, general mamagement, wage/perquisite
demands, and the like was only provided i n . 15 of the 143
cases (10.5%).
The reasons why letters of resignation do not cite
specific reasons for leaving are unclear. Perhaps individ
uals are afraid that they or their co-workers would be
labeled "trouble-makers" and be retaliated against i f they
spoke out on important issues. For the soon-to-be ex
employee going to or seeking a new job, there may be concerr
that references could be jeopardized by what is said. Many
employees, therefore, appear to follow the rule of thumb
that i t is best to exit on a positive note. Unfortunately,
this precludes more extensive data analysis.
Another factor in any employment decision is the mar
ketplace at large. Normally, i t is possible to chart spe
c ific labor trends within a given geographic area and to
make reasonable assumptions about the impact of those
trends on the a v a ila b ility of jobs. Job a v a ila b ility , of
course, influences voluntary terminations. People need to
work, and, i f they leave one job, they generally have an
other one to go to.
Unfortunately, the general economy of the country for
most of the time covered in this study (1980-1982) was so^^
chaotic as to be beyond prediction. Home mortgage rates
soared in the subject company to over 20 percent, which had
a direct result in loss of over 40 percent of the company's
revenues. There were over 100 business failures within the
industry in Southern California, with many established firms
closing their doors permanently. These factors, a poor
economy and a poor market for the subject company's ser
vices, undoubtedly had an influence on the decisions of in
dividual employees to submit their resignations. But what
the exact nature of that influence was remains unknown.
D if fic u lt financial times seem to produce two strong,
but opposite, interpretations among employees. On the other
hand, in a poor economy some people tend to stay with what
ever position they hold, assuming that i t is better to be
employed than risk taking another position with an uncertain
future. People who ascribe to this view will stay with
their job even i f dissatisfied with i t . On the other hand,
in a poor economy, especially one accompanied with high in
fla tio n , there is obvious pressure to make more money.
Raises are smaller than normal, i f granted at a l l , and ad
vancement is less frequent. The pressure to earn more money
can lead to accepting the belief that the best way to keep
pace with inflation and progress in a career is to leave one
company for another. It seems safe to assume that these two
ways of reacting to a poor economy affected individual deci
sions to resign for many of the 143 cases studied. But
there is no way to measure the exact influence of the
15
economy with the data available. Likewise, there is no way
to measure the effect of other possibly crucial influences,
such as marital problems, career growth demands, or other
outside influences, without the employee informing the com
pany directly.
B. Conclusions and Recommendations for Further Study
This study examined voluntary termination rates at the
subject company and provided original analyses of the effect
of a number of variables on the decision to resign. Based
on these analyses of this study, there is a positive re la
tionship between an employee's status and their longevity
on the job.
The implications for management of these analyses
would appear to be to take a closer look at status as a
means of retaining employees. In other words, to examine
individual work responsibilities with a view to seeing i f
they can be reasonably changed. This study shows that the
more an employee has to lose (in terms of status), the less
lik ely i t is that the employee will leave through voluntary
termi nation.
While the results of this study form a persuasive
argument for a very significant correlation between status
and longevity, as i t relates to voluntary terminations, a
number of other factors deserve examination to determine
what impact, i f any, they make on individual decisions to
voluntarily terminate employment. Further studies should
16
address the possible correlation between voluntary termina
tions and such factors as: marital status, career growth,
job dissatisfaction, skill levels, prior job s ta b ility , and
specific economic trends in the immediate geographic area
of subject companies.
17

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Asset Metadata

Creator Mills, Ronald Bruce (author)

Core Title The significance of job status upon voluntary termination rates

Degree Master of Public Administration

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag OAI-PMH Harvest,Social Sciences

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