PREDICTING TURNOVER INTENTIONS OF HOTEL EMPLOYEES

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Hemdi & Nasurdin —Predicting Turnover Intentions of Hotel Employees

Gadjah Mada International Journal of BusinessJanuary-April 2006, Vol. 8, No. 1, pp. 21–42

PREDICTING TURNOVER INTENTIONS OFHOTEL EMPLOYEES:

The Influence of Employee Development HumanResource Management Practices and Trust in

Organization

Mohamad Abdullah HemdiAizzat Mohd. Nasurdin

This study investigates the variables that may be predictive ofhotel employees’ turnover intentions. The influence of trust inorganization as a mediator in the proposed relationship is alsoexamined. A total of 380 operational employees from 5-star ratedhotels completed the questionnaires. Hierarchical regression analy-sis was used to test the relationships hypothesized in the model.Most of the hypotheses were supported. It is suggested that toenhance employees’ trust in organization and subsequently to re-duce turnover intentions, hotels need to continue to provide trainingand development programs to their employees, conduct fair andformal appraisal system, and provide ample and clear career ad-vancement to their employees. Limitations and suggestions forfuture studies are forwarded.

Keywords: performance appraisal; training and development; career advance-ment; trust; turnover intentions

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Gadjah Mada International Journal of Business, January-April 2006, Vol. 8, No. 1

Introduction

“What determines employee turn-over?” The answer to this question hasgreat relevance to the individual whomay be thinking about quitting a job,and for the manager who is faced withlack of employee continuity, the highcost involved in the induction and train-ing of new staff, and declining organi-zational productivity. Within hospi-tality industry, workforce turnover hasbeen one of the most pressing issuesfor many years. Studies consistentlyshow that hotels all over the worldexperienced high turnover rates(Woods 1997). Globally, the turnoverrate in the hotel industry is estimatedto range from 60 percent to 300 per-cent annually, far higher than the 34.7percent reported in the manufacturingindustry (Foley 1996). Excessive em-ployee turnover rate is detrimental toorganizations. It is related to direct andindirect costs; it affects morale, pro-ductivity, reputation, and survival ofthe organizations (Hinkin and Tracey2000). In fact, both researchers andpractitioners devote a considerableamount of time and resources in theirattempt to better understand and findsolutions to this problem of employeeturnover.

The prediction and understandingof employee turnover intentions hasbeen studied from many different per-spectives (Hom and Griffeth 1995;Mobley 1982; Price and Mueller 19811986). A majority of these studies havefocused solely on the direct anteced-ents and examined their roles in thecontext of process models of turnover.

In addition, previous turnover inten-tions studies have focused exclusivelyon job-related variables (e.g. role con-flict, role ambiguity, role overload,work conditions, job tasks, and au-tonomy) and demographic variables(e.g. gender, age, tenure, and educa-tion) as determinants affecting em-ployee attitudes and/or turnover inten-tions (Kim 1999; Lum et al. 1998;Parnell and Crandall 2003).Individual’s beliefs about organiza-tional-related variables, particularlyhuman resource management (HRM)practices, however, has been over-looked and omitted as determinants inturnover intention studies (Arthur1994; Mor Barak et al. 2001; Price andMueller 1981; 1986). Moreover, fromprevious studies (Agarwala 2003;Dirks and Ferrin 2002; Konovsky andPugh 1994; Whitener 2001), empiricalevidence on the mediating role of trustin organization on the relationship be-tween HRM practices and turnoverintentions is still not forthcoming. Dirksand Ferrin’s 2002) examination on theimpact of HRM practices on organiza-tional commitment concluded that theevidence on the link between organi-zational commitment and HRM prac-tices to be, at best, inconclusive. Whit-ener (2001) argues that no studies haveexplored the role of trust in organiza-tion on the relationship between HRMpractices and turnover intentions.Therefore, this study extends theknowledge on employees’ turnover in-tentions by examining the effects ofcognitive attitude (trust in organiza-tion) on turnover intentions.

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Researchers have not systemati-cally investigate the linkages that linkemployees’ perceptions of HRM prac-tices, attitudes towards organization(trust in organization) and behavioralintentions (turnover intentions). In asocial exchange relationship (Blau1964) where the norm of reciprocity(Gouldner 1960) is central, the pres-ence of HRM practices signaling con-cern towards employees developmentmay induce employees to reciprocateby increasing their display of trust inorganization and willingness to stay inthe organization. Although severalstudies involving hotel employees inMalaysia have been recorded (for in-stance, Hemdi 1996; Hemdi et al. 2003;Nasurdin 2001; Nasurdin and Ahmad2001; Nasurdin et al. 2001; Nasurdinand Ramayah 2003; Songan et al.2003), the focus of these studies werewide-ranging involving variables likemotivational preferences, commit-ment, and citizenship behavior. Turn-over intention was not examined as thecriterion variable. Therefore, the twoobjectives of this study are: (1) toinvestigate the influence of employeedevelopment HRM practices on trustin organization and turnover inten-tions, and (2) to examine whether trust

in organization serves to mediate therelationship between perceptions ofHRM practices and turnover inten-tions. To achieve the objectives of thisstudy, a theoretical framework wasdeveloped as illustrated in Figure 1.

In essence, the proposed theoreti-cal framework postulates that employ-ees’ perceptions of HRM practiceswill directly and negatively influencetheir turnover intentions (Becker andGerhert 1996; Lam et al. 2002). Fur-ther, the framework also postulatesthat employees’ perceptions of organi-zation’s HRM practices will directlyand positively influence their trust inorganization. This is in line with previ-ous researchers (Dirks and Ferrin 2001;Mayer and Davis 1999) who reportedthat positive perceptions of HRM prac-tices will lead to increased trust in theorganization. Subsequently, sinceFishbein and Ajzen’s (1975) Theoryof Reasoned Action have demonstratedthat attitude is consistently related tobehavioral intention, this study furtherproposes that trust in organization isdirectly and negatively related withturnover intentions. Further, the frame-work also postulates that trust in orga-nization mediate the relationship be-tween perceptions of HRM practices

Figure 1. Theoretical Framework

Employee Development HRMPractices:

Performance Appraisal

Training and Development

Career Advancement

Turnover

Intentions

Trust in

Organization

(-)

(+) (-)

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and turnover intentions. This is in lightof other researchers (Fishbein 1967;Newman 1974; Mathieu and Zajac1990) who assert that employees’ atti-tudes mediate the relationship betweenbeliefs/perceptions and behavioral in-tentions.

Theoretical Framework andHypotheses

The Effect of HRM Practices onTurnover Intentions

Mobley (1982) defined turnoveras the cessation of membership in anorganization by an individual who re-ceived monetary compensation fromthe organization. However, a distinc-tion must be made between turnoverintention and turnover itself. Turnoverintention refers to an individual’s per-ceived probability of staying or leav-ing an employing organization (Cot-ton and Tuttle 1986), while actual turn-over is the movement of organiza-tional members across the boundary ofan organization (Price 2001).

Although, it is recognized thatpeople leave their jobs for a variety ofreasons, there is consistent researchevidence indicating that voluntary turn-over can be explained by employees’intention to leave the organization. Inthe investigations of turnover, actualvoluntary turnover measures are ex-tremely difficult to obtain. Therefore,intentions to turnover are used in ma-jority of turnover studies, as these in-tentions are the only antecedent thathas been consistently found to be a

direct antecedent to actual turnover(Griffeth et al. 2000; Hom and Griffeth1995). In fact, studies on turnover haveshown that turnover intention is thebest immediate predictor of voluntaryturnover (Griffeth et al. 2000; Lam-bert et al. 2001; Price 2001). A meta-analysis undertaken by Steel and Ovalle(1984) confirmed that intentions weremore predictive of turnover than atti-tudes such as job satisfaction or orga-nizational commitment. The turnoverintention – turnover relationship is sup-ported by the attitude-behavior theory(Fishbein and Ajzen 1975), whichholds that one’s intention to perform aspecific behavior is the immediate de-terminant of that behavior. Thus, likeprevious works (for instance, Bluedorn1982; Mowday et al. 1982; Steel andOvalle 1984), the current study fo-cuses on employees’ intentions to leavethe organization.

Delery and Doty (1996) concep-tualized HRM practices as a set ofinternally consistent policies and prac-tices designed and implemented to en-sure that a firm’s human capital con-tributes to the achievement of its busi-ness objectives. From the employees’point of view, HRM practices are con-sidered as the organization’s efforts insupporting their well-being and en-hancing their career development. Al-though there has been a lack of consen-sus regarding a universal set of HRMpractices, in many cases, certain prac-tices such as realistic job preview,orientation program, compensationsystems, job security, performance ap-praisals, training and development, and

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career advancement, were more fre-quently identified as HRM practices(Allen et al. 2003; Delery and Dotty1996; Huselid 1995). Jackson andSchuler (2003) identified performanceappraisal, training and development,and career advancement as HRM prac-tices used by the organization to de-velop employees’ job and career de-velopment at the workplace. Giventhat the hotel jobs have been describedas having low skill, low pay, limitedchances of training and career oppor-tunities, long and unsocial workinghours, and low job status (Woods1997), examining the influence of per-formance appraisal, training and de-velopment, and career advancementon the organizationally-related attitudeand behavioral intentions is consid-ered timely.

Performance appraisal refers tothe evaluation of subordinates’ workperformances by immediate supervi-sors. Following Delery and Doty(1996) and Tsui et al. (1997), thisstudy conceptualized performance ap-praisal as the degree to which employ-ees’ perceived that the employing ho-tels have conducted formal perfor-mance evaluations and feedback sys-tems for the purpose of employees’control and development. Konovskyand Cropanzano (1991) reported thatperceptions of fair performance ap-praisal was significantly related to turn-over intentions. Employee training anddevelopment refers to strategies, tools,and procedures aimed at improvingthe ability and capability of organiza-tional members. Lam et al.’s (2002)

study on new hotel employees con-firmed that commitment and turnoverintentions were significantly related totraining. They argued that if an em-ployee does not understand how toperform his or her tasks effectively,frustration level will increase and thatemployee will often leave at the earli-est opportunity. Career advancementreflects the use of organizationalmechanisms in assisting employees toachieve their career goals. FollowingDelery and Doty (1996) and Burke etal. (1998), this study conceptualizedcareer advancement as the degree towhich employees perceived the hoteladministrators have provided careerplanning programs to assist their mem-bers to achieve career goals. Brewerand Nauenberg (2003) and Chen et al.(2004) reported that dissatisfactionsteaming from limited opportunitiesfor promotion and career advancementsignificantly predicted employees’turnover intentions. Therefore, basedfrom the above discussion, the follow-ing hypothesis is presented:

H1: Employee development HRMpractices (Performance Appraisal,Training and Development, Ca-reer Advancement) will be nega-tively related to turnover inten-tions.

The Effect of HRM Practices onTrust in Organization

Trust has been defined in variousways. For example, trust is the willing-ness of one party to be vulnerable toanother party and involves a degree of

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uncertainty and risk (Mishra 1996;Mayer et al. 1995). Rousseau et al.(1998) defined trust as a psychologicalstate comprising one’s intention to ac-cept vulnerability based upon positiveexpectations of the intentions or be-havior of another. Mayer et al. (1995)added that this attitude is derived fromthe trustor’s perceptions and attribu-tions about the trustee’s perceived trust-worthiness of ability, benevolence, andintegrity. Martins (2002) used wordssuch as honesty and fairness to definesimilar constructs of ability and integ-rity as in Mayer et al.’s (1995) trustdimensions. On the other hand, Mishra(1996) used the termed competency,openness, concern for other’s interest,and reliability to reflect aspects oftrustee’s trustworthiness. These dimen-sions additively and collectively con-tribute to the development of one’strust in organization. The structure oftrust can be differentiated according towhether it is rooted in rationality (cog-nitive trust) or emotion (affective trust).According to McAllister (1995), cog-nitive trust is reflected in a belief orexpectation that the trustee is reliable,has integrity, is predictable, will tellthe truth, and will act in a fair or justmanner. Alternatively, affective trustis more grounded in emotional con-text, such as friendship, caring, or genu-ine concern for the welfare of the otherparty. Researches have found a sig-nificant positive relationship betweencognitive trust and work-related atti-tudes and behaviors such as commit-ment, job satisfaction, organizationalcitizenship behavior, and performance

(Dirks and Ferrin 2001; Podsakoff etal. 1990). Thus, this study will focuson trust as a cognitive psychologicalstate, such as a belief or attitude of atrustor (employee) toward a trustee’s(top management, hence organization)trustworthiness.

The extent to which employeesbelieve that their employers are con-cern about their well-being has a sig-nificant impact on their work-relatedattitudes and behaviors. Wayne et al.(1997) argued that HRM practicesimply the organization’s concern andcare for employees. Similarly, employ-ees’ perceptions of HRM practicesthat signal investment in employees’development have a positive relation-ship with trust in organization (Mayerand Davis 1999; Saks 1996; Whitener2001). Employees who perceived thattheir organization’s HRM practices aremeant to take care of their well-beingwill experience greater trust in theirtop management and higher affectivecommitment (Whitener 2001), and areless likely to leave the organization(Allen et al. 2003). Accordingly, basedon Blau’s (1964) social exchangetheory and Gouldner’s (1960) theoryof norm reciprocity, employees tend toexchange and reciprocate with posi-tive attitudes such as higher trust andcommitment in organization when theirexpectations and needs have been metby the organization. In this vein, Folgerand Konovsky (1989), for example,found that employees who felt thattheir managers had conducted perfor-mance appraisals in a fair manner havehigher trust in management. Dirks and

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Ferrin’s (2002) meta-analysis con-firmed that the perception of fairnesson organization’s performance ap-praisal system explained additional andunique variance in employees’ trusttoward management. Similarly,Robinson and Rousseau (1994) postu-lated that organizations that providecareer advancement opportunities en-hanced the employability security oftheir employees and thus engenderedtrust in organization. Therefore, em-ployees’ perceptions of their organi-zation’s HRM practices would directlyand positively influence their trust inorganization. Hence, Hypothesis 2 ispostulated:

H2: Employee development HRMpractices (Performance Appraisal,Training and Development, Ca-reer Advancement) will be posi-tively related to trust in organiza-tion.

The Effect of Trust inOrganization on TurnoverIntentions

Trust in organization has beenreported to have a negative impact onturnover intentions. In other words,the higher employee’s trust in organi-zation, the less likely he or she willleave the organization. Schnake andDumler (2000), for example, reportedthat trust in organization was nega-tively and significantly related to turn-over intentions. A meta-analysis con-ducted by Dirks and Ferrin (2001)showed that trust acts as a significantpredictor of an individual’s intent to

quit. A recent finding by Connell et al.(2003) indicates that employees’ turn-over intentions were significantly re-duced when employees had more trustin their top management. Bijlsma andKoopman’s (2003) meta-analysis alsoconfirmed that a trustful relationshipbetween workers and their employingorganization led to an increase in one’sloyalty and a decrease in one’s inten-tion to leave the organization. Thisline of thought is consistent with theTheory of Reasoned Action (Fishbeinand Ajzen 1975) who has postulatedthat attitude is consistently related tobehavioral intention. Accordingly, thefollowing hypothesis is formulated:

H3: Trust in organization will be nega-tively related to turnover inten-tions.

Trust in Organization as aMediator of the HRM Practices–Turnover IntentionsRelationship

Trust in organization has also beenempirically reported as an importantintervening variable impacting fromone’s beliefs to behavioral intentionsor outcomes. Brashear et al. (2005)reported that trust was a key mediatingvariable between employees’ percep-tion of organizational justice and turn-over intentions. Similarly, Wong et al.(2002) ascertained that trust in super-visor significantly mediates the rela-tionship between perception of orga-nizational justice and organizationalcitizenship behavior (OCB). This lineof thought concurred with social ex-

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change (Blau 1964) and Gouldner(1960) norm of reciprocity theories.According to Robinson and Rousseau(1994), trust is the essence of socialexchange and as trust develops theextent of exchange increases. Withinthis context, HRM practices send pow-erful signals to employees about theextent to which the organization truststhem, and if organizations fail to de-liver on contractual or other promises,employees’ sense of indebtedness ormutual obligations will be reduced(Williams 2003). Thus, Williams(2003) argued and empirically con-firmed that trust mediated the relation-ship between employees’ perceptionof their organization’s HRM practicesand outcomes such as performance orturnover. Accordingly, Hypothesis 4is presented:

H4: Trust in organization mediates therelationship between employeedevelopment HRM practices (Per-formance Appraisal, Training andDevelopment, Career Advance-ment) and turnover intentions.

Methodology

Subjects

Participants in this study consistedof operational employees attached totwenty two large hotels located in thestate of Selangor, Kuala Lumpur, andPenang, Malaysia. A total of 628 ques-tionnaires were distributed to the re-spondents with the help of the hotels’human resource managers. The “drop-off” and “pick-up” method was em-

ployed. Respondents were given twoweeks to answer the questionnaires. Inall, 380 usable questionnaires werereturned and analyzed, representing aresponse rate of 60.5 percent.

Measures

Questions regarding performanceappraisal systems were measured us-ing an eight-item measurement adoptedfrom Delery and Doty (1996) and Tsuiet al. (1997). The items measure em-ployees’ perceptions of the formal ap-praisal system implemented by theirhotels. Specifically, items in the per-formance appraisal scale tapped em-ployees’ perception on formal feed-back system, evaluation criteria, andappraisal methods practiced by theirhotels. Employees’ perception on theirhotel’s formal training programs wasassessed using a six-item measurementadapted from Delery and Doty (1996).These items asked respondents’ per-ceptions on the existence and avail-ability of formal training programs,effectiveness of training programs,policy of training programs, and theneeds of training programs. Employ-ees’ perception on career advancementwas measured using an eleven-itemmeasurement adapted from Delery andDoty (1996) and Burke et al. (1998).The items sought employees’ judg-ment pertaining to career paths, careeraspirations, internal promotions, andpromotional criteria provided by theirhotels. A seven-item measurementtaken from Mishra (1996) and Mayerand Davis (1999) was used to measuretrust in organization. The questions

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measure employees’ feeling of trust intop management (representing organi-zation) in terms of keeping promises,openness, competence, fair treatment,consistency, care, and honesty. Finally,turnover intentions were measuredusing an index comprising of 5 itemstaken from Hom and Griffeth (1991)and Wayne et al. (1997). All the mea-sures were rated on a 7-point Likertscale, ranging from 1 = strongly dis-agree to 7 = strongly agree.

Given that age, gender, maritalstatus, education, and organizationaltenure may influence turnover inten-tions and trust in organization as notedby previous scholars (for example,Bluedorn 1982; Ghiselli et al. 2001;Tepeci and Bartlett 2002), these vari-ables were controlled in the statisticalanalyses.

Data Analysis

Principal component factor analy-ses were initially undertaken to verifythe internal validity of the measures.Next, descriptive statistics such asmeans, standard deviations, reliabil-ity, and intercorrelations were com-puted. Hypotheses were tested usinghierarchical multiple regression(Cohen and Cohen 1975). Control vari-ables were entered in the first step,followed by the model variables. Totest for mediation, the procedures assuggested by Baron and Kenny (1986)and Kenny (2003) were followed.

Profile of Respondents

Gender distribution of the respon-dents was slightly higher for males

(57.1%). A majority of the respon-dents (61.1%) were unmarried. In termsof ethnicity, Malays constitute almost70 percent of the sample. Regardingeducation, 70 percent of the respon-dents possessed STPM or lower quali-fications. This relatively low educa-tion level is consistent with the entryqualification for non-supervisory em-ployees. In terms of organizational ten-ure, 31.8 percent of the respondentshave been with the hotel for more than5 years. The respondents were almostequally represented in terms of theirwork departments: Front Office(23.2%), Food Production (24.7%),Housekeeping (27.1%), and Food andBeverage Service (25%). Finally, thesample can be considered relativelyyoung (mean = 28.1 years, SD = 7.09years).

Factor Analyses of StudyVariables

A principal component factoranalysis with varimax rotation wasconducted to validate the underlyingstructure of HRM practices. In inter-preting the factors, only a loading of0.50 or greater on one factor and 0.35or lower on the other factors are con-sidered (Igbaria et al. 1995). Results ofthe varimax rotated analysis of HRMpractices indicated the existence ofthree significant factors as originallyconceptualized with eigenvaluesgreater than one explaining 56.19 per-cent of the variance. The Kaiser-Meyer-Olkin (KMO) measure of sam-pling adequacy value for the items was0.90 indicating sufficient inter-corre-

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lations while the Bartlett’s Test ofSphericity was also found to be sig-nificant (Chi square = 3789.25,p<.001). These factors were namedperformance appraisal (7 items), ca-reer advancement (4 items), and train-ing and development (4 items) respec-tively. Similarly, another factor analy-sis was undertaken to examine thedimensionality of the mediating vari-able (trust in organization). A singlefactor solution was obtained explain-ing 59.80 percent of the variance. TheKMO measure of sampling adequacywas 0.90 indicating sufficientintercorrelations, while the Bartlett’sTest of Sphericity was significant (Chisquare= 1179.04, p<.01). Finally, an-other factor analysis was carried out toconfirm the dimensionality of turn-over intentions. A one-factor solutionwas revealed explaining 63.70 percentof the variance in turnover intentions.The KMO measure of sampling ad-equacy was .835 indicating sufficientintercorrelations, while the Bartlett’sTest of Sphericity was significant (Chisquare= 842.10, p<.01).

Before proceeding with furtheranalysis, the data was submitted to the

Harmon one-factor test (Podsakoff andOrgan 1986). This test was conductedto identify whether common methodvariance (CMV) posed a potentialthreat to the results of this study sinceall the data in this study were collectedfrom the same individuals, at the sametime, and using the same method. CMVexists when there is only one factor orthe first factor explains majority of thevariance (Hair et al. 1998; Podsakoffand Organ 1986). The results of theexploratory factor analysis for HRMpractices produced multiple factorswith eigenvalues equal to or greaterthan one, and the first factor explainedonly 29.94 percent of the variance.Thus, the Harmon one-factor test indi-cates that CMV was not a seriousproblem in this study.

Means, Standard Deviations,Correlations, and ReliabilityCoefficients of Study Variables

Table 1 indicates the means, stan-dard deviations, reliability coefficients,and inter-correlations of the study vari-ables. As shown in Table 1, the meanvalue for each of the three dimensions

Table 1. Means, Standard Deviations, Reliability Coefficients, andIntercorrelations of the Study Variables

Variables Mean SD 1 2 3 4 5

1. Performance Appraisal 4.83 0.99 (0.83)2. Training and Development 4.73 1.24 .59** (0.64)3. Career Advancement 4.59 1.17 .51** .54** (0.77)

4. Trust in Organization 4.59 1.13 .49** .55** .62** (0.88)

5. Turnover Intentions 3.87 1.38 -.30** -.48** -.40** -.50** (0.86)

Note: N = 380; *p<.05, **p<.01; Cronbach’s alpha for each measure is in parentheses.

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of HRM practices as well as trust inorganization were slightly on the highside ranging from 4.59 to 4.83. Thestandard deviations for these variablesranged from 0.99 to 1.24. Turnoverintentions for the sample were consid-ered moderate with a mean score of3.87. In terms of the correlation coef-ficients, HRM practices had signifi-cant positive correlations with trust inorganization. Similarly, HRM prac-tices and trust in organization had sig-nificant negative correlations with turn-over intentions. All the reliability co-efficients for the measures were ac-ceptable since they exceeded the mini-mum recommended level of 0.60(Sekaran 2000).

Hypotheses Testing

To test for H1, HRM practiceswere regressed on to turnover inten-tions. Table 2 presents the regressionresults of this analysis. As can be seenfrom Table 2, the five control vari-ables managed to explain 2.3 percentof the variance in turnover intentions(Model 1). However, a closer scrutinyreveals that the model is not signifi-cant (F- change = 1.780, p>.05), andnone of the demographic variablesmade any significant contribution to-wards the variance in turnover inten-tions. In the second step, the modelvariables were able to explain an addi-tional 15.0 percent (R2 change = .150,

Table 2. Regression Results on the Impact of HRM Practices on TurnoverIntentions

Predictors Model 1Std. Model 2Std.

Step 1: Control VariablesGendera .014 -.002Age -.139 -.120Marital Statusb .016 .018Education -.001 .001Organizational Tenure -.032 -.024

Step 2: HRM PracticesPerformance Appraisal -.106Training and Development -.106Career Advancement -.247 **

R2 .023 .173Adj. R2 .010 .155R2 Change .023 .150F -Change 1.780 22.378 **

Note. N = 379; *p<.05, **p<.01; Dummy Coded, amale = 0, female = 1; bsingle = 0,married = 1.

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F-change = 22.378, p<.01) of the varia-tion in turnover intentions. Of the threeHRM practices, only career advance-ment ( = -.247, p<.01) has significantnegative relationship with turnoverintentions. Hence, Hypothesis 1 is par-tially supported.

To test for H2, HRM practiceswere regressed on to trust in organiza-tion. Table 3 depicts the regressionresults of this analysis. From Table 3,the five control variables did not madeany significant contribution towardsthe variance in trust in organization(Model 1). When HRM practices wereentered in the second step, the modelvariables were able to explain an addi-tional 50.7 percent (R2 change = .507,F-change = 126.552, p<.01) of theobserved variations in trust in organi-

zation. All the employee developmentHRM practices were found to havesignificant and positive relationshipswith trust in organization. Career ad-vancement was found to have the stron-gest positive impact on trust in organi-zation (= .456, p<.01), followed bytraining and development (= .244,p<.01), and performance appraisal (= .135, p<.01) respectively. Thus, hy-pothesis 2 is fully supported.

To test for the effect of trust onturnover intentions (hypothesis 3) andthe mediation effects of trust in organi-zation on the relationship betweenHRM practices and turnover inten-tions (hypothesis 4), a four-step proce-dure suggested by Baron and Kenny(1986) and Kenny (2003) was under-taken. Table 4 provides the summary

Table 3. Regression Results on the Impact of HRM Practices on Trust inOrganization

Predictors Model 1Std. Model 2Std.

Step 1: Control VariablesGendera -.062 -.019Age .026 -.002Marital Statusb -.028 -.040Education .023 .026Organizational Tenure .023 .008

Step 2: HRM PracticesPerformance Appraisal .135 **Training and Development .244 **Career Advancement .456 **

R2 .005 .512Adj. R2 -.008 .501R2 Change .005 .507F –Change .318 126.552**

Note. N = 375; *p<.05, **p<.01; Dummy Coded, amale = 0, female = 1; bsingle = 0,married = 1.

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of the regression analyses to ascertainthe mediation effects of trust in organi-zation on the relationship betweenHRM practices and turnover inten-tions.

As observed from Table 4, trust inorganization (= -.477, F change =35.496, p<.01) was found to have asignificant and negative relationshipwith turnover intentions (Model 3),thereby, providing full support for hy-pothesis 3. Of the three HRM prac-tices, only career advancement was

able to meet the conditions for media-tion as suggested by Baron and Kenny(1986) and Kenny (2003). The effectof career advancement on turnoverintentions (= -.247, p< .01) becameinsignificant (= -.053, p>.05) in thepresence of trust in organization,thereby, implying full mediation. Inother words, career advancement hasonly an indirect effect on turnoverintentions via trust in organization.Thus, Hypothesis 4 is partially sup-ported.

Table 4. Summary of Results: Impact of Mediated Regression

Criterion Variable

Trust in Turnover Turnover

Predictors Variables Organization Intentions Intentions

Std. Std. Std.

Step 1: Control Variables

Gendera -.019 -.002 -.008

Age -.002 -.120 -.142 *

Maritalb -.040 .018 .024

Education .026 .001 -.014

Organizational Tenure .008 -.024 -.012

Step 2: Model Variables

Performance Appraisal .135 ** -.106 -.030

Training and Development .244 ** -.106 .008

Career Advancement .456 ** -.247 ** -.053

Step 3: Mediator

Trust in Organization -.477 **

R2 .512 .173 .295

Adj. R2 .501 .155 .278

R2 Change .507 .150 .272

F Change 126.552 ** 22.378 ** 35.496 **

Note: N = 378; *p<.05, **p<.01; Dummy Coded, amale = 0, female = 1; bsingle = 0, married = 1.

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Discussion

The statistical results obtained inthis study showed that hotel employ-ees’ perception of HRM practices,particularly those relating to careeradvancement, training and develop-ment, and performance appraisal hadsignificant and positive effects on theirtrust in organization. The predictedinfluence of employees’ perceptionsof their organizations' HRM practiceson their feeling of trust in organizationsupports the empirical evidence fromprevious studies (Lam et al. 2002;Mayer and Davis 1999; Robinson andRousseau 1994; Whitener 2001). Oncareer advancement, the findings fromthis study showed that if the hotelemployees perceived better prospectsof internal promotion, objective pro-motional criteria, and availability ofcareer advancement within their orga-nizations, they tend to experiencegreater trust in their organizations.Similarly, employees’ higher percep-tions on the availability and effective-ness of formal training programs, anda clear policy on training programsadopted by their hotel administratorswould lead them to experience a highersense of trust in their organizations.Higher perceptions of fair and objec-tive performance measures would alsoinfluence the employees to exhibitgreater trust in the organization.

Subsequently, trust in organiza-tion was found to have a significantand negative influence on turnoverintentions. This findings is in tandemwith those of previous researchers

(Connell et al. 2003; Delaney andHuselid 1996; Delery and Dotty 1996;Dirks and Ferrin 2001; Lam et al. 2002).When employees have faith in theirorganization, they are likely to remainloyal and committed, resulting in lowerturnover intentions. In social exchange(Blau 1964) and the norm of reciproc-ity (Gouldner 1960), positive percep-tions of the organization’s HRM prac-tices are bound to create an obligationfor employees to reciprocate by dis-playing greater trust in their employ-ing organization, which in turn re-sulted in lower turnover intentions.

The findings also highlight theimportance of employees’ trust in or-ganization as the key mediating rolebetween perceptions of HRM prac-tices and turnover intentions. Resultsof this study found that trust in organi-zation fully mediated the relationshipbetween career advancement and turn-over intentions. This implied that ca-reer advancement has an indirect anddirect effect on turnover intentions.The indirect effect is through trust inorganization. This findings show thata higher level of trust in organizationwill be experienced only when em-ployees have higher levels of perceivedcareer advancement in the organiza-tion and this in turn, would make themless inclined to leave the organization.The result of this study concurs with arecent finding by Brashear et al., (2005)on salespersons’ turnover behavior.Their study reported that trust was akey mediating variable between per-ceptions of organizational justice andturnover intentions. The impact of

35


employees’ perceptions of theirorganization’s performance appraisaland training and development on turn-over intentions were not mediated bytrust in organization. The lack of asignificant mediating relationship oftrust in organization between perfor-mance appraisals, training and devel-opment, and turnover intentions maybe explained by the lack of interper-sonal relationship between the opera-tional employees and the top manage-ment and the respondents’ short orga-nizational tenure. Operational employ-ees in this study may not have a closeinterpersonal relationship with theirtop management since their job de-scriptions are more on performing op-erational tasks which require high cus-tomer contact and less supervision fromthe managers (Dittmer 2002).McAllister (1995) contended that atrusting relationship develops throughyears of interpersonal relationship be-tween the two parties. In this study, theemployees (appraisees) may not havehigh faith and confidence that their topmanagers (appraisors) will be fair andobjective in their performance evalua-tions because of weak interpersonalrelationships. In addition, organiza-tional tenure for majority of the re-spondents in this study was consideredshort and at the early stage of theiremployment since nearly 67.0 percentof the respondents had organizationaltenure less than three years. At thisearly stage of employment, respon-dents may not yet experienced exten-sive training and development pro-grams within their employing organi-

zations, thus perceptions of the avail-ability of training and developmentmay not have significant influence onturnover intentions.

Implications and Limitations

The findings from this study alsohave practical application for hotels.Given that employees are more willingto trust their organization when theyperceive that the HRM practices of theorganization are able to take care oftheir job or career development needs,fostering a supportive HRM practicesdesigned for employee developmentwould be beneficial. The availabilityand extensiveness of training and de-velopment programs convey the mes-sage to employees that they are beingvalued, supported, and cared for by theorganization. Hence, it would be worth-while for hotel authorities to provideample training programs on an ongo-ing basis to the operational employ-ees. Similarly, it is also essential forhotels to provide clear career paths fortheir employees. A written job pro-gression showing the opportunities forcareer advancement within the hotelfor each employee would be useful. Awritten career path may indicates toemployees that promotions within thehotel are objectively spelt out and asan assurance that all employees haveequal chances of moving up the careerladder as far as their abilities permit-ted. In addition, hotels need to traintheir managers in order to be able toaccurately evaluate the job perfor-mance of their subordinates. This is

36


because effective performance man-agement activities reinforce employ-ees’ sense of fair play and consistency,leading to increased trust in organiza-tion.

Two limitations were identified.First, the HRM practices investigatedin this study were limited in scope.Only HRM practices pertaining toemployee development initiatives wereinvestigated. Other HRM practices per-taining to employee well-being suchas orientation program, compensationsystem, job security, safety and health,and employee relations may play arole in shaping employees’ attitudes.Future researchers may need to widenthe scope of investigation by incorpo-rating these HRM practices. Second,given that trust is the basis for socialexchange (Blau 1964), the possibilityof reciprocal causation should be ac-knowledged. It is possible that the levelof trust in organization experienced byemployees may also influence theirjudgments about HRM practices.Therefore, future studies may want toutilize other analytical methods suchas Structural Equation Modeling(SEM) to determine the reciprocal re-lationships among the study variables.

Conclusion

The two objectives of this studywere: (1) to investigate the influenceof human development in HRM prac-tices on trust in organization and onturnover intentions, and (2) to exam-ine whether trust in organization serves

to mediate the relationship betweenperceptions of HRM practices and turn-over intentions. The results of thisstudy generally support the hypoth-eses forwarded concerning the rela-tionship between HRM practices, trustin organization, and turnover inten-tions. Thus, it can be concluded fromthis study that when employees per-ceive that their organizations showgreater concern for their personalgrowth and welfare via the provisionof adequate and continuous trainingand development, fair and formal per-formance appraisal and feedback sys-tem, and adequate career advancementopportunities, they will experience apositive emotional state (trust in orga-nization).

This study adds further knowl-edge on the importance of HRM prac-tices as predictors of turnover inten-tions. This study also provides evi-dence to the importance of trust inorganization as intervening variablebetween the predictor variables andturnover intentions. By demonstratingthe existence of significant direct andindirect effects of HRM practices, trustin organization, and turnover inten-tions, this study provides clear evi-dence that HRM practices are impor-tant in fostering employees’ positiveattitudes. Additionally, this study alsoconcurred with Blau’s (1964) socialexchange theory. In other word, thisstudy has empirically supported Blau’s(1964) social exchange theory whichposited that employees tend to recip-rocate with positive attitudes such as

37


having a higher trust in organizationand having a willingness to stay longerwith the organization when their ex-

pectations and needs are met by theirorganizations.

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Documents

PREDICTING TURNOVER INTENTIONS OF HOTEL EMPLOYEES