Achieving Organisational Prosperity through Employee Motivation and Retention: A Comparative Study of Strategic HRM Practices in Malaysian Institutions
Yin Teng Chew
Abstract
A growing concern among companies operating in the Malaysian labour market with high job mobility is how to maintain a workforce capable of fulfilling corporate exigencies. This study compares and contrasts how strategic human resource management activities from different country origins are implemented in Malaysian companies to motivate and retain talented cadres. The findings reveal there were significant differences across the study countries. Moreover, the study results demonstrate that, while an attractive pay package is effective in manifesting job motivation, complementary strategic human resources practices are profoundly important in reducing staff turnover. These findings are discussed in terms of the other application aspects of well integrated human resource practices.
Introduction
Human resources (HR) are the backbone of an organisation (Gerhart & Milkovich 1990, Pfeffer 1998). Moreover, the continuing prosperity of a firm is likely to be enhanced by employees who hold attitudes, value and expectations that are closely aligned with the corporate vision (Borman & Motwidlo 1993, Spector 1997, Cable & Parsons 2001, Feldman 2003). Clearly, hiring capable people is an attractive point of departure in the process, but building and sustaining a committed workforce is more likely to be facilitated by the employment of sophisticated human resource management (HRM) infrastructures (Schuler & Jackson 1987, Beechler, Bird & Raghuram 1993). Arguably, HRM policies and practices can be strategically designed and installed to promote desirable employee outcomes, which include the enhancement of the in role and extra role behaviours of employees. Yet, despite such costly investments, corporations are continually searching for techniques to improve and cement the linkage between employees and their organisations.
Weak employee organisational linkages are often displayed as the phenomenon of turnover. Indeed, people are likely to job hop to obtain better monetary rewards and career development opportunities. However, traditional approaches that rely heavily on competitive monetary rewards often have limited success in staff retention and job motivation in the long run. This limitation has brought practitioners to consider, along with the facilitation of sophisticated HRM infrastructures, other techniques to enhance employee attachment towards their organisation (i.e., person organisation fit selection approach, performance based incentives, extension of the attractive executive perks to all employees). With proper implementation, these techniques often facilitate a more committed workforce. This effect can be achieved through the enhancement of in role (i.e., organisational commitment) and extra role (i.e., organisational citizenship) behaviours (Allen & Meyer 1990, Organ 1990). The form of organisational attachment and in role behaviour, the organisational commitment that psychologically characterises an employee’s relationship with the organisation for which he or she works, has implications for whether or not an employee will choose to remain with the organisation. Past research (Porter & Steers 1973, Allen & Meyer 1990) found that organisations with strong employee attachment, or organisational commitment, tend to have lower turnover or intention to leave than would those with weak employee attachment. Organisational citizenship behaviour (OCB), a form of extra role behaviour and reciprocation of fair treatment by employees (Colye-Shapiro, Kessler & Purcell 2004), is considered as part of work related activities performed by employees that contribute to organisational prosperity, and yet, are beyond the regular scope of job descriptions and contractual sanctions or incentives (Organ 1990). Past work found fair management of the reward distribution and procedures in an organisation would foster employees’ intention to display OCB (Organ & Konovsky 1989), and further enhance the employees’ intention to stay with the current firm (Carsten & Spector 1987).
The issues of staff retention and job motivation have continued to plague organisations in Malaysia. Annual surveys by Malaysian Employers Federation (MEF 2004, 2005) report that the annual labour turnover rates for 2003 and 2004 were high, approximately 17 per cent and 16 per cent respectively. Another survey (Lim 2001) reports that Malaysian respondents are only willing to stay with their current organisations for less than three years. Considering the need for HRM to address low organisational linkages to motivate staff and retain them, and that multinational corporations (MNCs ) tend to introduce different home country practices to efficiently manage and control local operations, this study compares and contrasts how the strategic HRM activities from different country origins are implemented in Malaysian companies to motivate and retain talented cadres. This study also discusses the application aspects of well integrated HRM practices.
There is a body of academic research that examines the HRM activities to achieve organisational prosperity. Much of the research has focussed on a specific HRM activity (Butler Ferris & Napier 1991, Snell 1992). A literature review (Abdullah 2001, Sheppard 2001, Yong 2003) reveals that numerous case studies involve general comparisons that lack a depth of study in Malaysia. Further, this study, which uses a sample of Malaysian based Japanese and Western MNCs , in addition to Malaysian local firms, is deemed important due to the magnitude of these MNCs ’ impacts on the Malaysian economy. According to Ariff (2004) of the Malaysian Institute of Economic Research, the United States and Japan are the second and third largest investors in Malaysia. Their total exports and imports were above USD38 billion and USD18 billion respectively (Ministry of International Trade 2005). Also, these MNCs create huge employment and skill enhancement opportunities in Malaysia. In addition, data collection and preliminary interviews with the senior management of various industries reveal that the personal care industry is ideal for this study, given its competitive nature in which the labour turnover rate is high and the employees are highly mobilised. This industry is also considered as ideal in terms of the growing Asian market, the ability of such companies to offer higher than average pay packages (MEF, 2004), and high labour turnover (14.5 per cent) as a consequence of the heavy poaching of talented cadres by both business rivals and unrelated industries (MEF, 2004). This situation calls for investigation into the personal care industry. Thus, this study is expected to become, in part, a meaningful guideline for management practitioners in motivating and retaining talented cadres in the Malaysian context.
The format of this paper is in six stages. First, a brief overview is given of the distinctive work values that shape the HRM practices of the study countries. This brief introduction will provide a general idea of the HRM activities that may influence the operations of the five study companies of the personal care industry. Second, the methodology of this case study will be presented. The third stage will cover the comparison of six major HRM activities of the study companies. The purpose is to show how the strategic HRM activities from the different country origins are implemented in the Malaysian companies to motivate and retain talented cadres. In particular, the recruitment and selection, salary and compensation, fringe benefits, training and development, and performance appraisal (PA) system, and promotion and succession planning will be examined. The fourth stage will illustrate other aspects of the well integrated HRM practices of these organisations in enhancing the in role and extra role behaviours of the employees. Fifth, the findings will be discussed to highlight the distinctive approaches of study companies before concluding (the sixth stage) with some challenges and HRM implications important to achieving organisational prosperity in Malaysia.
Backgrounds of HRM in Host Countries
Compared with MNCs from other countries, Japanese MNCs have a strong tendency to transfer their parent country’s HRM practices, which are called the ‘Japanese-style HRM’, and to control their local subsidiaries through the overseas assignment of parent country expatriates (Peterson, Napier & Shim 1996). It is generally known that Japanese MNCs are largely group oriented, and emphasise harmonious work relationships and teamwork. They also tend to adopt culturally distinctive HRM practices to elicit the employee’s sense of loyalty and commitment to their organisations. For example, the seniority wage and promotion system, lifetime employment, extensive training programmes, and group oriented approaches (Gomez-Mejia & Welbourne 1996, Chew 2005) are features of Japanese firms. Traditional staffing of young graduates with learning potential is viewed as being critical as Japanese firms expect the new recruits to assimilate the organisational culture (Hatvany & Pucik 1981, Pucik 1984). Mid career employees are generally not recruited. Under the paternalistic management pay and promotion systems decisions have traditionally been based principally on age and seniority, rather than on job classification or performance. Although this approach helped strengthen the intention to stay (Befu & Cernosia 1990), evidence suggests that the importance of seniority has declined in pay and promotion (Clark & Ogawa 1992, Morishima 1992). Efforts such as replacing seniority with merit were made to decrease the emphasis on seniority as being the main criteria for salary increase. This change is partly due to the economic slump and the elevated labour costs of seniority practices (Mroczkowski & Han