EMPLOYMENT LONGEVITY MODEL OF IT-BPO INDUSTRY: THE CASE OF

ABC COMPANY

A Thesis

Presented to

The Faculty of College of Governance and Business

University of Southeastern Philippines

Obrero, Davao City

In Partial Fulfillment of the Requirements for the Degree

Master of Business Administration

Major in Corporate Management

MARY ANN A. BARAYUGA, CPA

April 2015
Chapter 1

INTRODUCTION

Background of the Study

Employees are the realization of what the business wants as they are the
hands that work and the minds that think. Failure to accommodate and provide
what is due for them leads to resignation. The decision to stay or leave the
company depends with many factors. Casserly (2013) states that the top five
things employees look for when seeking a job are stability, compensation,
respect, health benefits and work-life balance. To add, when employees feel
underappreciated, when there is an existence of unrealistic goals, lack of
management support, lack of joyful environment and clear pathway to success,
these pushes employees not to stay longer but opt to jump from their current
work to another as quoted by Poindexter (2012). Failure to consider above things
means loss of employees.

Employee’s resignation is a serious thing that every industry must address

seriously. When you lose an employee, you lose the experience, skills and
knowledge they bring to the table and it can be hard for the team and the entire
company (Hobbs, 2010). In fact according to Myeroff (2011), President of Direct
Recruiters Inc., of the US Department of Labor and Statistics, that employment
turnover can cost an organization 33% of an employee’s total compensation
including both salary and benefits and the impact is not only financial, it also
affects employee morale. Therefore, it would be prudent for hiring managers to
focus on reducing turnover rates but must first understand the reasons why
employee quits (jobsDB, 2012).

As published in Economics Times last August 22,2013, India continues to

be the forerunner in the IT-BPO industry. However, a number of South and
South-east Asian countries are increasingly gaining share in the global IT-BPO
industry. Additionally, Mitra (2009) said that a number of developing countries
have established significant IT services and ITeS-BPO industries. Among
developing countries, China has the largest industry in serving domestic market
for IT software & services and hardware, while India is the leader in export of IT-
BPO services. While countries other than India, namely, China, Philippines,
Mexico and many others, have been developing a significant IT-BPO service
export industry.

According to IT and Business Process Association of the Philippines (n.d),

the BPO industry has a high turnover of employees with some estimates putting
the rate close to 50% per year. This is exactly alarming since employee’s
resignation means costs and lowers down business productivity. Turnover
among IT staff can cause disastrous effects. This is due to the loss of their
knowledge and acquired technical skills. Excessive turnover can be fatal to
organization due to the shortage of expertise in the job market and high cost of
training new employees. Turnover also has personal costs to employee in the
form of lost benefits, friendship and a disruption of the family (Samad, 2006).

Davao City is considered as the most viable city in the Philippines for BPO
companies (Lumawag, 2014), it is a challenge to maintain the lowest possible
employment turnover rate. This will save costs and as a result, increase business
revenues. As ABC Company suffers a high turnover rate for long years without
knowing where to start solving it, there is a need to do a study about employment
longevity model of an IT-BPO industry specifically in the case of ABC Company.
Statement of the Problem

This study attempted to develop employment longevity model of IT-BPO

industry in Davao City, the case of ABC Company. Specifically, it sought to
answer the following questions:

1. What is the demographic profile of the respondents in terms of:

a.) Age;
b.) Sex;
c.) Civil Status; and
d.) Educational Attainment?
2. What is the level of satisfaction of the respondents as to:
a.) Compensation;
b.) Work itself;
c.) Working environment;
d.) Rewards and Recognition;
e.) Training and Career Development;
f.) Supervisor-Subordinate Relations; and
g.) Company and Administrative Policies?
3. What is the employment longevity of IT-BPO employees?
4. Is there a significant difference in the employment longevity when grouped
according to profile of employees?
5. Is there a significant relationship between employment longevity and the
level of satisfaction as to:
a.) Compensation;
b.) Work Itself;
c.) Work environment;
d.) Rewards and recognition;
e.) Training and Career Development;
f.) Supervisor-subordinate Relations; and
g.) Company and Administrative Policies?
 6. What are the factors that significantly predict employment longevity?

Objectives of the Study

The main objective of the study was to know of determinants of

employment longevity among IT-BPO employees of ABC Company in Davao City.
Also, this study sought to know the demographic profile of the respondents in
terms of age, sex, civil status and educational attainment. Additionally, the study
wanted to know the level of satisfaction of the respondents and if there is a
significant relationship between employment longevity and such factors as
profile of the respondents, compensation, work itself, working environment,
rewards and recognition, training and career development and supervisor-
subordinate relations and company and administrative policies. Furthermore,
the study shows the employment longevity of ABC Company employees and the
significant difference in employment longevity when grouped according to profile
of the employees. Finally, the study attempted to show if there is a significant
relationship between employment longevity and the level of employees'
satisfaction as to compensation, work itself, work environment, rewards and
recognition, training and career development, supervisor-subordinate relations
and company and administrative policies and the factors that significantly
predict employment longevity.

Significance of the Study

The study aims to know those determinants in order to help ABC Company
employer and human resource department retain employees longer, thus, saving
hiring, training and other associated costs. This study shall also be beneficial to
the following stakeholders:

ABC Company. As the company had been experiencing high turnover rate
for over long years, this study will help them put the right solution with regards
to their employment retention problem.
 New Entrants. The industry is a growing business, as such, there is a big
possibility of having more new entrants in the near future. As new in the
industry, they are still weighing things out, trying to figure out if this or that
strategy will work. They are not yet that competitive. This study will help them
especially in keeping their employees longer. It’s good thing to know that as newly
start IT-BPO companies, they can now have a basis on what determinants to
consider when it comes to employees’ longer retention period.

Human Resource Managers. The study will give result that is important
to ABC Company HRM and to other IT-BPO Human Resource Managers. This
will serve as their guide on what to offer to their new and existing employees.

ABC Company Employees. With the help of this study, ABC Company
employees, knowing that their employer knows what they truly want will decide
to stay long in the company and probably, will no longer look for another job.
They will do their best to work harder and use their skills productively. ABC
Company employees, knowing that the company will give what they desire,
surely will give back fully and beyond what the company expects from them.

IT-BPO Employees. Since the study will give result that will allow
employees to stay longer in an IT-BPO company, employees can now experience
and enjoy what they expect from their employers. They can also save time and
costs for they don’t need to do job hunting and look for another job from time to
time.

Future Researchers. The study might not be applicable many years from
now since employees expectations from their employers varies from time to time.
The research will serve as a guide and reference for future researchers who want
to further, develop and improve this study.

Scope and Limitation of The Study

This study focused on identifying predictors of employment longevity in

order to set up employment longevity model in IT-BPO industry, specifically the
case of ABC Company. The factors considered are limited only to, namely: Profile
of the Respondents such as age, sex, civil status and educational attainment
Compensation, Work Itself, Working Environment, Rewards and Recognition,
Training and Career Development and Supervisor-Subordinate Relations,
Company and Administrative Policies. Sixty (60) out of seventy five (75) qualified
employees were included in the study. Some of the other fifteen employees were
not interested and some could not just give a level of trust to the researcher for
the confidentiality of the study. They preferred not to participate.

This study was conducted from January to March 2015.

Definition of Terms

The following terms are defined based on how they were used in the study:

Age refers to the number of years an employee lived or existed, that could
be 20 years and below, 21 to 29 years, 30 to 39 years, 40 to 49 years and 50
years and above.
ensure that the employees understand the organization’s new directions. These
changes should be widely publicized.

Theory Base

This study is anchored on Motivation-Hygiene Theory of Frederick

Herzberg. He developed the motivation-hygiene theory. Riley (2005) mentioned
that according to Herzberg (1959), there are two types of factors, the motivating
factors and hygiene factors. Motivators include achievement and growth. The
hygiene factors do not ‘motivate/satisfy’ rather ‘prevent dissatisfaction.’ These
factors are company policy, supervision, relationship with boss, working
conditions, salary and relationship with peers. This study investigates the
relationship of job satisfaction/motivation to employment longevity. Redmond
(2014) said job dissatisfaction leads to job turnover. Job turnover can result from
various conditions such as job satisfaction. Job satisfaction is a multi-faceted,
meaning one can be satisfied in one area but does not complete satisfaction in
all areas; likewise, dissatisfaction in one area does not mean complete job in
dissatisfaction. Furthermore, a person is more likely to be actively searching for
another job if they have low satisfaction; whereas, a person who is satisfied with
their job is less likely to be job seeking.
Conceptual Framework

This study determined the employment longevity model of IT-BPO industry

in Davao City, the case of ABC Company that is dependent on the factors such
as profile of the respondents in terms of age, sex, civil status and educational
attainment, compensation, work itself, work environment, rewards and
recognition, training and career development, supervisor-subordinate relations
and company and administrative policies. The dependent variable and in this
study is the employment longevity.

Incorporating and organizing the existing literatures and studies, Figure 1

shows the conceptual framework of the study. Each variable is thought to be a
significant factor in determining employment longevity.
Independent Variables Dependent Variable

Respondent’s Profile

 Age
 Sex
 Civil Status
 Educational
Attainment

Compensation

Work Itself

Employment
Working Environment Longevity

Rewards and Recognition

Training and Career

Development

Supervisor-Subordinate
Relations

Company and
Administrative Policies

Figure 1. Conceptual Framework of the Study

Research Hypothesis

To be able to objectively answer the stated problems, the research

hypotheses of this study were stated as follows:

1. There is a significant difference in employment longevity when grouped

according to profile of the respondents.
2. There is a significant relationship between employment longevity and
employees’ level of satisfaction as to compensation, work itself, working
environment, rewards and recognition, training and career
development, supervisor-subordinate relations and company and
administrative policies.
3. The following factors such as profile of the respondents, compensation,
work itself, working environment, rewards and recognition, training
and career development, supervisor-subordinate relations and
company and administrative policies are significant predictors of
employment longevity among ABC Company employees.
 Chapter 3

METHODOLOGY

Presented in this chapter are the method used, sources of data, gathering
instrument, sampling technique, procedure of the study and statistical
treatment.

Method Used

Descriptive correlational method of research was used in the study. The

major purpose of descriptive research, as the term implies, is to describe
characteristics of a population or phenomenon. Descriptive study gives no
explanation for the cause of findings. It is clear that mere description of a
situation may provide important information and that in many situations
descriptive information is all that is needed to solve business problems, even
though the answer to why is not given. The findings of descriptive study do not
provide evidence of a casual nature, Zikmund (1991). This study does not specify
cause and effect relationships between variables under consideration but it
determines whether and how employment longevity and factors such as
compensation, work related factors like work itself and working environment,
rewards and recognition, trainings and career development and company and
administrative policies are related and to test the expected relationship between
and among the said set of variables. As such, in this study, descriptive
correlational method was the appropriate method to use to properly set up an
employment longevity model.
Sources of Data

Primary data was used in the study. Data comes directly from ABC
Company employees. The use of survey questionnaire was the main data
collection technique. The questionnaire was distributed to all project,
probationary and regular employees of ABC Company. These said employees
served as the primary source of the research data.

Data Gathering Instrument

The survey questionnaire consists of three parts. Part one includes the
socio-demographic profile of the respondents in terms of age, sex, civil status
and educational attainment. Part two consists of the set of variables such as
compensation; work-related factors such as work itself and work environment;
rewards and recognition; training and career development, supervisor-
subordinate relations and company and administrative policies.

Part II of the survey questionnaire were adopted and modified from the
studies of: Verallo (2013) entitled “Job Satisfaction and Job Performance of Pag-
Ibig Fund, Davao Branch Employees: A Basis for Human Resource Intervention”,
Maningo (2013) entitled “Organizational Justice and Job Satisfaction in a Call
Center Environment in Davao City”, Valdez (2013) entitled “Determinants of
Employees Job Motivation: The Case of Vintage International, Inc.”, Feedee
(2012) entitled “Job Satisfaction and Job Engagement of Philippine Women’s
College of Davao City, Dayanan (2014) entitled “Work Motivation Factors Among
Support Services Employees of Lapanday Foods Corporation: An Exploratory
Factor Analysis.”

Part III is about the employees’ decision on the length of time/years to stay
in the IT-BPO industry, particularly, ABC Company.
 Excluding the demographic profile and employees’ decision as to the length
of stay in the industry, all questions were rated on a 5-point Likert scale as
indicated in Table 1.

Table 1. Likert Sale and the Corresponding Description on the Level of

Satisfaction

Scale Range Description

5 4.50-5.0 Highly Satisfied
4 3.50-4.49 Satisfied
3 2.50-3.49 Moderately Satisfied
2 1.50-2.49 Dissatisfied
1 1.0-1.49 Highly Dissatisfied
Sampling Technique

Complete enumeration technique was used in the study. Respondents are

those ABC Company employees who are in a project, probationary and regular
employment status. Sixty out of seventy five qualified employees of ABC
Company participated in this survey research.

Procedure of the Study

The study started with the proposal of the research title to the adviser.
Upon receiving the approval, the researcher then finalized the related literature
and studies wherein the conceptual framework was anchored. After finalization
of this part, the researcher worked on the remaining part of Chapter 1 to 3 and
looked for some studies that will help in conceptualizing the survey
questionnaire. Chapters 1 to 3, the survey questionnaire and references were
presented to the thesis advisory committee to gain additional comments and
suggestions. The presentation made was primarily to improve the study and to
have its best results. The researcher then proceeded with the distribution of
questionnaires after internalizing and integrating the committees’ important
suggestions during presentation. Collection, analysis, interpretation of data and
preparation of the last two chapters followed. Finally, completed study was
presented again to the thesis recognition, training and career development,
supervisor-subordinate relations and company and administrative policies.

Multiple Linear Regression was used to identify which among the

employment longevity factors best predict employment longevity. The regression
model is presented as:

Y = a + b1X1 + b2X2 + b3X3...bnXn

 Where, Y = the employment longevity

X1, X2, X3...Xn = factors

A, b1, b2, b3...bn = regression coeffecients

a = Y-intercept

Note: No questionnaire attached.