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Ardi22 - Predicting Turnover Intention of Indonesian Millennials Workforce in The Manufacturing Industry - A PLS-SEM Approach
Ardi22 - Predicting Turnover Intention of Indonesian Millennials Workforce in The Manufacturing Industry - A PLS-SEM Approach
1. Introduction
Before the ongoing COVID-19 pandemic, the manufacturing industry played an essential
role in the Indonesian economy, contributing at least 19% of the gross domestic product
(Rahman, 2020). However, the COVID-19 pandemic pushed this sector to tighten its
business and caused a downturn due to severe supply–demand uncertainty (Iswara, 2020).
The pandemic has exposed, if not escalated, a problem that the manufacturing industry has
faced for several years – talent shortage.
Received 2 August 2021
There are two possible reasons why manufacturing firms in Indonesia are experiencing Revised 16 October 2021
6 February 2022
a talent shortage. First, the job seekers’ interests are shifting from manufacturing to the 9 June 2022
service sector. This situation could be due to the public’s perception of the nature of the 24 July 2022
Accepted 28 July 2022
working environment of the manufacturing industry, such as excessive work shift
This research was funded by
systems, the messy situation of factories and unsafe working conditions (Suryaratri and the grant of Publikasi Terindeks
Abadi, 2018; Thompson and Gregory, 2012). Second, a massive influx of millennials Internasional (PUTI) Q3 from
Directorate of Research and
has emerged in recent years and poses unique challenges to decision-makers in the Development, Universitas
manufacturing industry. Approximately two million people join the Indonesian labor pool Indonesia (UI) number
NKB-4576/UN2.RST/
each year, with a workforce of more than 128 million workers in 2018 (Budiati et al., HKP.05.00/2020. The authors
2018). Accordingly, Indonesia’s millennials are two-thirds of the labor market (Statistics appreciate the constructive
comments from the anonymous
Indonesia, 2019). reviewer.
DOI 10.1108/ICT-08-2021-0056 VOL. 55 NO. 1 2023, pp. 47-61, © Emerald Publishing Limited, ISSN 0019-7858 j INDUSTRIAL AND COMMERCIAL TRAINING j PAGE 47
This phenomenon is crucial because millennials have unique attitudes and values about the
nature of jobs (Naim and Lenka, 2018). One important report indicated that most millennials
have little trust in the existing firms. They doubt whether:
2. Literature review
Based on the theory of planned behavior, people’s intention to act on an issue can affect their
actual behavior (Ajzen, 1991). Many studies have found a correlation between turnover intention
and turnover behavior (Cho and Lewis, 2012; Joo and Park, 2010; Lee and Whitford, 2008; Tan
et al., 2019). Turnover intention refers to planning to end a relationship or membership with a
business entity (Zhang, 2016). There are two types of employee turnover, i.e. voluntary and
involuntary. Voluntary turnover is when an employee consciously intends to leave a company,
whereas involuntary turnover is when a company deliberately makes this decision.
The tightened competition to access talents causes organizations to pay attention to
voluntary turnover intention because they must prevent this from happening. Some
interrelated factors complicate the situation. On the one hand, voluntary turnover intention
creates an opportunity to replace incompetent talents. On the other hand, it mostly leads to
unfavorable outcomes for the company, such as direct expenses to the organization and
indirect costs of losing tacit knowledge and weakening its reputation (McElroy et al., 2001).
Hence, organizations always attempt to retain their seemingly committed employees across
different generations.
Howe and Strauss (2000) classified generations based on the era in which individuals were
born. Their age influences their perspectives, behaviors and attitudes toward work (Ertas,
2015). Howe and Strauss’ classification comprises four generations:
The three latter generations currently share the same workplace, yet they might have
different aspirations about work.
Millennials are believed to be tech-savvy, experiencing the development of information and
technology communication through extensive social media exposure (Kapoor and Solomon,
2011). They also learn enthusiastically and participate in various activities to help their
personal growth. Millennials appreciate the balance between work and personal life (Ng
et al., 2010). On the contrary, baby boomers and X generations tend to be more
individualistic and value a straightforward command-and-control approach. These opposite
characteristics depict a potential clash of generations. Brack and Kelly (2012) illustrated the
complexity of the current working place situation as follows:
䊏 Millennials tend to collaborate with a broader network outside their organizations and
respect more diverse perspectives, whereas the older generations might consider
these behaviors as a lack of loyalty.
䊏 Millennials aspire to personal enrichment and development, thus seeking flexibility in
their workplace. This notion somehow contrasts with that of their senior co-workers, who
value stability and security.
䊏 Millennials regard meaningful work (MW) and a sense of accomplishment as more
valuable job satisfaction factors, whereas older generations value a high salary and
responsibility more than the other factors.
One might criticize the generalization and applicability of these generation cohorts and their
characteristics in other places outside the Western regions because the concept’s
originality and the empirical analysis regarding these topics mostly came from the Western
view. To our knowledge, no study has proposed alternative cohorts for the Indonesian
setting. Many studies in Indonesia accept the generational cohorts as it is and then use
them as the basis of analysis, including the work of Arli et al. (2017), Gunawan et al. (2020),
Irawanto (2019) and Febriandika et al. (2020), to name a few.
Despite that, our study argues that the generational concepts, especially of millennials, are
relevant in the Indonesian context. The relevancy occurs because of their practicability,
especially considering that Statistics Indonesia (a nondepartmental government institute of
Indonesia, responsible for conducting a national decennial census) has presented one of
the 2020 population census results using the generation cohorts (Statistics Indonesia,
2021). Not surprisingly, Statistics Indonesia cited a source from the USA as the basis for the
classification of population in the census.
Another important thing needs to be addressed when discussing the characteristics of
millennials and other generation cohorts: there also appears another stream of literature
that suggests little to no evidence of generational differences, especially within the
workplace setting. For instance, Cucina et al. (2018) examined the presence of
generational differences in workplace attitudes. They figured out that only minor
differences existed in these variables across generation membership. Furthermore,
Heyns and Kerr (2018) explored the influence between generational cohorts and
employee motivation and found little evidence of the differences in intrinsic and
extrinsic motivational preferences across cohorts. It might be possible that the
behavioral differences exist, not because of the generational membership but rather
because of the workers’ stage of life.
Accordingly, a recent study found that Indonesian millennials are not that radically different
from other cohorts (Utomo and Noormega, 2020). Here, these authors attempted to explore
the millennial’s specific values, behaviors and attitudes by studying more than 5,500
1. the adventurer, who loves to explore new things and vocals on their opinions;
2. the visioner, who is inspiring, charismatic and achievement-driven;
3. the artist, who has strong aesthetic aspirations and a unique sense of spontaneity;
4. the leader, who is goal-oriented, dedicated and has strong leadership skills;
5. the socializer, who likes spending time and energy encouraging others and involve
deeply in social activities;
6. the conservative, who is family oriented and relies on facts when making decisions; and
7. the collaborator, who is eager to create great teamwork and is full of ideas.
Even though the Indonesian millennials express characteristics that have similarities with
the previous generations; still, they show distinct behaviors and attitudes, such as:
䊏 They observe news and information through mixed channels, including Television,
YouTube, Instagram, social media and newspapers. These activities would then
influence their subsequent behaviors, such as Google search activities for observing
new and exciting stories or online shopping decisions (Utomo and Noormega, 2020).
䊏 They have a significant number of digital activities on the internet. They not only often
access common platforms such as YouTube, Instagram and Facebook but also
connect to more niche channels such as Line and Tiktok (Utomo and Noormega, 2020).
䊏 Consequently, Indonesian millennials have distinct relationships with mental health
issues. They not only have a higher vulnerability to depression due to increasing social
media exposure but also higher awareness of various treatment modalities for solving
their mental problems (Citraningtyas, 2020).
Considering the discussion regarding the generational cohorts and its characteristics, our
study uses PLS-SEM as the main method to accomplish the research objective. PLS-SEM is
a variant of SEM that explores or extends an existing social theory (Hair et al., 2021). It is
suitable for assessing the causal relationships in a developing model/theory, consisting of
reflective and formative measurements. This method allows such assessment in a situation
where the sample is limited and normal distribution of the sample is difficult to achieve (Hair
et al., 2019). Previous works have used PLS-SEM to examine the millennials’ workplace
behaviors in the developing countries, including Malaysia, Thailand, United Arab Emirates,
Oman and Egypt (Mahmoud et al., 2020; Qadri et al., 2022; Supanti and Butcher, 2019).
3. Methodology
3.1 Model conceptualization
Figure 1 shows the conceptual model under study, developed based on the literature
review. Mainly, this study uses the work of Ng et al. (2010) as the basis to determine the
latent variables of the conceptual model because of the following reasons:
Hence, it opens a space for further work investigating the characteristics of millennials from
other regions.
Ng et al. (2010) revealed several factors contributing to millennials’ career choices, i.e.
salary and benefits, prospects for career advancement, development of new skills,
meaningful work (MW) experience and satisfying life outside work. Several studies have
also highlighted the relationship between employee satisfaction (ES) and turnover intention.
Hence, the conceptualized model in this study uses ES as a mediating variable in the
relationship between competency development (CD), compensation and benefits, work–life
balance (WLB), MW and turnover intention (Frian and Mulyani, 2018).
ES is considered the main factor in preventing turnover intention, i.e. when employees love their
job, it increases their commitment to their company (Bayarçelik and Findikli, 2016). ES would
eventually decrease turnover intention (Frian and Mulyani, 2018; Rizwan and Mukhtar, 2014).
Employees ensure the smooth running of a company’s daily operations. Therefore, ES is
essential because it is a company’s core asset. Hence, the following hypothesis is proposed:
H1. Employee satisfaction (ES) has a significant negative impact on the turnover intention
(TI) of millennials in Indonesia’s manufacturing industry.
Another factor that can improve ES is CD. CD is activities carried out by a company and its
employees to improve employee function, enhance employee learning processes and
increase employee career competency (De Vos et al., 2011). De Vos et al. (2011) developed
an instrument to measure CD. This variable was measured using 12 items (CD1–CD12). This
study proposes the following hypothesis about the relationship between CD and ES:
H2. Competency development (CD) has a significant positive impact on employee
satisfaction (ES) of millennials in Indonesia’s manufacturing industry.
ES also depends on other factors such as compensation and benefits (CB), WLB and MW
(Saxena and Rai, 2016; Stefanovska-petkovska et al., 2019; Steger et al., 2012). Employee
Education level
Diploma 13 11,3
Bachelor 86 74,8
Master 16 13,9
Type of manufacturing industry
Metal 21 18,3
Automotive 27 23,5
Chemical 12 10,4
Pharmaceutical 8 7,0
Electronics 4 3,5
Food and beverages 16 13,9
Others 30 26,1
Work experiences
<6 months 6 5,2
6–12 months 13 11,3
1–2 years 21 18,3
2–4 years 37 32,2
>4 years 38 33,0
good to satisfactory. All the CR values of the model (Table 3) show that all the latent
variables exceed these requirements. Hence, all of them are reliable.
Furthermore, this study used convergent validity to explain the extent to which the latent
variables are correlated (Surienty et al., 2014). This analysis uses variables whose average
variance extracted (AVE) values are greater than 0.5 (Hair et al., 2019). Table 3 shows that
all the latent variables exceed the minimum requirement of the AVE. Moreover, variables
with a factor loading of less than 0.5 are not included in further analysis. Hence, this study
removed an item from the CD (CD7) and MW (MW8) categories.
5. Conclusion
The findings of this study have important implications for academics and practitioners as it
theoretically contributes to the literature about the work attitudes of different generations
from the perspective of human resource management practice. It recommends that
companies should implement programs to reduce employee turnover intention; examples of
such programs are providing training and enhancing learning opportunities to retain
competent employees. Based on the results, our study suggests that when employees
acquire new skills as part of their CD, it would then play a significant role and makes a
company more attractive.
Interestingly, this study finds that CB do not significantly affect millennials’ turnover intention
because the manufacturing industry tends to have lower salaries than the service industry.
Employees are the most valuable company assets because company achievement
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Corresponding author
Romadhani Ardi can be contacted at: romadhani.ardi@ui.ac.id
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