ENVIRONMENTAL IMPROVEMENT

TO REDUCE HIGH TURNOVER RATE IN Healthcare Industry 25% WITHIN 6

MONTHS

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION
1.1

Introduction

1.2

Employee Turnover: Definition

1.3

Employee Turnover in Healthcare Industry

1.4

Malaysia Health Care Industry

11

1.5

Problem Statement

16

1.6

Propose Solution

17

1.7

Objectives & Scope

17

1.8

Sub-Objective

18

1.9

Limitation & Constraint

18

CHAPTER 2: LITERATURE REVIEW

2.1

Literature Review

20

2.2

Turnover Intention

22

2.3

Organizational Culture

23

2.4

Organizational Commitment

26

2.5

Person Organization Fit

27

CHAPTER 3: METHODOLOGY
3.2

Methodology

30

3.3

Research Framework

30

3.4

Hypotheses Development

31

3.5

Data Collection Process & Analysis

36

CHAPTER 4: DATA EVALUATION

4.1

Data Evaluation

38

4.2

Employment Environment: Malaysia Poultry Industries

41

4.3

Overview of Agricultural Sector (Includes Poultry Food)

45

4.4

Turnover Reduction

49

4.5

Reason for Food Industry Employees Leave

53

4.6

Turnover Reduction by 25% within 6 Months

55

CHAPTER 5: FINANCIAL
5.1

Financial

72

5.2

Financial Impact

78

CHAPTER 6: CONCLUSION
6.1

Conclusion

79

6.2

Improved Labor Efficiency

80

6.3

Improved Market Access

80

6.4

The Way Forward

81

REFERENCES

LIST OF TABLES
Table 1: Malaysia Livestocks Product Output 1999 2008
Table 2: Malaysia Livestocks Product Ex-Farm Value 1999 2008

LIST OF FIGURES
Figure 1: Research Methodologys Operational Framework

83

Figure 2: Theoretical framework on factor to reduce turnover rate

Figure 3: Malaysia Productivity Growth
Figure 4: Strategies to Address Business Challenges for Agriculture Sector
Figure 5: Factor for Turnover Intention

LIST OF GRAPHS
Graph 1: Staff Turnover Due To Work Environment
Graph 2: Staff Perception on Job Insecurity

CHAPTER 1
INTRODUCTION

Introduction
The world economic growth is sustaining and it is forecasted to grow at an average of 3.5% in
2008 - 2017. This is much better that the annual economic growth of below 3% in 2001 - 2007.
The regional economic growth comprising the United States of America (USA), European Union
(EU) and Japan are expected to remain at moderate gains of 2% - 2.5% in 2008 - 2017. The
economic growth is expected to perform better in other parts of the world such as India, China
and the rest of Asia with an estimate of 30% share in the global economy growth. This robust
growth in has given a positive impact on employee turnover rate globally. Worldwide employee
turnover levels forecast to reach new highs, rising sharply in 2014 with turnover in emerging
markets set to spike first (Wiebe, 2008).
Global firms face a rising talent exodus as economic and labor market conditions improve,
according to a new study from global management consultancy Hay Group, conducted in
association with the Centre for Economics and Business Research (Cebr). Many economies are
seeing initial signs of growth. Further, we are seeing an increased focus on generating growth in
mature markets. As growth builds and employment opportunities increase, worldwide employee
turnover is set to accelerate in 2014, after broadly flat levels in recent years. The number of
workers taking flight is expected to reach 161.7 million in 2014 a 12.9 per cent increase
compared to 2012. This trend is set to continue. Average employee turnover rates over the next
five years are predicted to rise from 20.6 to 23.4 per cent, and the number of global departures in
2018 will stand at 192 million. The Asia-Pacific countries such as Malaysia, Singapore and
China is experiencing its largest spike in employee turnover levels this year, as employment
growth and wealth creation continue energizing an aspirational and mobile workforce.
Organizations in the region will also experience the highest increase in turnover rates worldwide,
rising from 21.5 to 25.5 per cent over the period 2012-2018.

In order to identify the key factors affecting employee retention Hay Group conducted a detailed
analysis of their employee opinion database, which includes information from over 5.5 million
employees across the world. The research reveals that confidence in leadership, opportunity for
career development, autonomy; supportive work environment and appropriate compensation are
among the most consistent predictors of employee engagement and commitment. Studies shows
that with retention a growing concern for organizations in not just for key high performing
employees, but also core employees, understanding the factors that drive commitment and
loyalty is essential for managing increasing turnover risks in the months and years ahead. Now is
the time for organizations to understand where they stand on and tackle these influences, to keep
employees from taking flight.
Employee Turnover: Definition
In human resources context, turnover or staff turnover or labor turnover is the rate at which an
employer loses employees. Simple ways to describe it are "how long employees tend to stay" or
"the rate of traffic through the revolving door". Turnover is measured for individual companies
and for their industry as a whole. If an employer is said to have a high turnover relative to its
competitors, it means that employees of that company have a shorter average tenure than those of
other companies in the same industry. High turnover may be harmful to a company's productivity
if skilled workers are often leaving and the worker population contains a high percentage of
novice workers. Companies also often track turnover internally across departments and divisions
or other demographic groups such as turnover of women versus turnover of men.

When accounting for the costs (both real costs, such as time taken to select and recruit a
replacement, and also opportunity costs, such as lost productivity), the cost of employee turnover
to for-profit organizations has been estimated to be between 30% to upwards of 150% of the
employees' remuneration package. There are both direct and indirect costs. Direct costs relate to
the leaving costs, replacement costs and transitions costs, and indirect costs relate to the loss of
production, reduced performance levels, unnecessary overtime and low morale. The true cost of

turnover is going to depend on a number of variables including ease or difficulty in filling the
position and the nature of the job itself. High turnover brings destruction to the organization in
the form of direct and indirect cost. According to Staw (1980) expenditures incurred on the
selection, recruitment, induction and training of new employees are direct cost. According to
Des & Shaw (2001), cost of learning, reduced morale, pressure on the existing employees and
the loss of social capital are the indirect cost incurred by an organization due to high turnover.
This turnover can be reduced by the proper or effective staffing. Now the most important thing is
to develop strategies in order to select the candidates. A selection process must be possessed
tracking system of recruitment sources, realistic job previews, assessment tools and interviews,
and hiring to fit & motivation in order to predict the candidates' potential abilities for turnover.

Firstly, organizations use a variety of sources for recruiting the job applicants such as classified
ads, walk-in interviews, head hunter agencies, employment agencies, professional agencies,
referrals, and online recruiting. Researchers have proved that employee referral among all
sources is the most reliable source. Employees always refer that candidate to the organization
which match with the organization's culture, values and vision and thus can be a more suitable
candidate. So, organization should communicate with their employees about upcoming vacancy
through better approaches and should reward higher incentives for the referrals.

Secondly, to attract the potential applicant realistic job preview play vital role. It means an
organization should address the all aspects of the job and work environment both positive and
negative in a realistic way including the work location and department history instead of "sugar
coating" approach. Organizations can show realistic job preview to the potential candidates
through websites, brochures and through oral presentation.

Thirdly, the use of assessment tools and interviews where according to Barrick and Zimmerman,
there are three assessment variables to predict employee turnover as:
i) Employee bio data means longevity at former employers, referral by current employees and
having friends or family members working at the new organization increases the likelihood new
employees will stay.
ii) Employee attitudes and behavioral intentions means applicants who express "intention to
stay" with the organization and "desire for the job" are more likely to stay.
iii) Employee dispositions means self-confident and decisive individuals are more likely to stay.

Fourthly, hiring for fit and motivation stated, organizations should hire employees through
proper selection, interviews and who fit the organization's own culture. The motivation for such
employees' organization should focus on job enrichment. Other factors to motivate such a job
design can include employee involvement, empowerment, and rewards.

This omitted link in turnover reduction should be an integral component of any retention
initiative. While it's true that most strategies for reducing turnover will focus on what can be
done to improve the satisfaction, loyalty and retention of current employees, organizations are
remiss if they fail to carefully examine and improve their selection process and hire for "fit".
Employee Turnover in Healthcare Industry
The Healthcare industry has one of the highest turnover rates of any industry. "Nation's
Compdata News" emphasizes that turnover tends to increase when the industry grows and the
economy expands, because people are more willing to take risks to find better jobs. In 2011, the
People Report Workforce Index found that 47 percent of companies experienced an increase in

employee turnover, while 49 percent of companies saw an increase in management turnover.

However the long-term trend of turnover may be slowly decreasing, however.
Employee traits play a significant role in turnover. Younger employees are more likely to leave
their jobs, as are employees working part-time positions. Student employees may leave when
they graduate school or get internships, and some older employees may temporarily work
Hospital staff positions when they've been laid off or are experiencing money problems. When
they get better jobs, they're more likely to leave. Small businesses interested in reducing these
factors can seek workers who are looking to start careers by offering management training, fulltime hours and similar benefits.
As the national unemployment rate continues to drop slowly, turnover rates are inching up. The
average total turnover rate reported for healthcare employers in 2015 is 19.2 percent, according
to Compdata Surveys national survey, Compensation Data Healthcare, surveying 10,250
healthcare facilities. Thats up from 17.7 percent reported in 2014. The average voluntary
turnover rate also increased this year, at 14.4 percent in 2015, up from 13.1 percent the previous
year.
Voluntary turnover rates vary by sub-industry. At 19.0 percent, long-term care facilities had the
highest voluntary turnover rate in healthcare. Medical groups reported the lowest voluntary
turnover rate in healthcare, at 10.3 percent.
Employers are reporting rising voluntary turnover rates, indicating the workforce has increasing
confidence in the job market, said Amy Kaminski, Vice President for Compdata Surveys. Your
key employees have options when it comes to where they want to work. Understanding turnover
trends allows you to put programs into place for retaining your quality employees, as well
develop a solid plan for recruiting new ones.
In order to fill the vacancies created by departing employees, healthcare employers exercise a
variety of methods to find skilled workers. 90 percent of healthcare employers advertised open
positions on the internet. 47.6 percent of participating companies offered sign-on bonuses to
recruit new employees, up 3.8 percentage points from the previous year. As a recruiting tactic,
Trade/Professional association advertising saw the largest increase in usage at 51.8 percent, up
7.5 percentage points from the previous year.

Employee turnover is a cause of concern for healthcare organisations as it bears implications on

the quality of service provided to patients. Employee turnover refers to the process of employees
leaving an organisation and having to be replaced. High employee turnover results in increased
costs in selection and recruitment; and orientation and training. It also affects organisational
productivity as well as morale and motivation of remaining employees. Employee turnover is
often found to be negatively correlated with job satisfaction.
Job satisfaction, on the other hand, has been defined by Locke as a pleasurable or positive
emotional state resulting from the appraisal of ones job or job experiences. Thus, it reflects an
employees general attitude toward, and his feeling about, his job. According to Stamps and
Slaritt domains of job satisfaction among health professionals include variables such as pay,
autonomy, task requirement, organizational requirements, interaction and job prestige. Rad and
Moraes,8however, found dimensions of job satisfaction among employees in public hospitals to
be pay, promotion, supervision, fringe benefits, contingent rewards, working conditions, coworkers, nature of work, and communication. According to (Manaf), the Malaysian public
healthcare is at a crossroad. The changing socio-economic development of the country,
escalating healthcare costs, rising patient expectations, changing demography and epidemiology,
all have implications on the nations public healthcare system; and consequently, its health
workforce. Thus, staff retention is also an imperative in Malaysian public healthcare service,
which often always has to compete for talent with the more lucrative private sector. Van Dam10
posited that intention to leave an organisation is also affected by alternatives that are available in
the market.
Apart from that, according to the research conducted in Malaysia by Converging Knowledge Pte
Ltd (as cited in Summary of the Independent Market Research Report, 2011); Malaysia
Healthcare industry is highly competitive. Every player in this industry always encounters with
challenge in enhancing the standards and innovating their services offerings in order to attract
more customers. Additionally, Hall (2010) stated that front line employees have contributed
significantly to an organisations competitive advantage and could have a serious effect on its
bottom line. He also declared that the work performance of employees in fast food industry
would directly lead to customer satisfactions or dissatisfaction since they are the one who face

directly with customers. Therefore it is important to successfully evaluate the turnover rate in
Malaysia Health care industry as to ensure the competitive edge is maintain on the long term.

Malaysia Hospital and Healtcare Industry

Historically, healthcare in Malaysia has undergone radical transformations. In the earlier precolonial days, medical care was confined to traditional remedies common among local
populations of Malays, Chinese and other ethnic groups. The advent of colonialism brought
western medical practice into the country. Since the country's independence in August 1957, the
system of medical care has been transforming gradually to meet the medical needs of today.
Malaysia, as one of Asia's most recognised developing countries, has immense potential in an
increasingly important sector - medical tourism. Healthcare in Malaysia under the responsibility
of the government's Ministry of Health has an efficient and widespread system of health care,
operating a two-tier health care system consisting of both a government-run universal healthcare
system and a co-existing private healthcare system.
More and more of our private hospitals offer expertise in medical fields such as but not limited to
cardiology, oncology, aesthetic surgery, robotic surgery, fertility treatment, bariatric surgery,
orthopaedics, dental implants, ophthalmology, neurology and aesthetics procedures that includes
minimally invasive surgeries. Apart from being regulated by the Ministry of Health, in most
cases these hospitals have internationally recognised accreditations, for instance, from the Joint
Commission International, which accredits healthcare organisations and programmes in the
United States.
As such, with top-notch medical services providing reliable, safe and effective treatments in
comfortable surroundings with ease of access and affordable prices, Malaysia has certainly
become a leading choice for foreign patients seeking healthcare treatment abroad. Our healthcare
industry has certainly taken a leap forward.

The growth of the healthcare industry in Malaysia has been organic in nature and is primarily
driven by domestic consumption of healthcare products and services. Moving forward, it is now
time to reframe and position healthcare as an engine of economic growth. To ensure the right
balance of breadth and depth of coverage, the Healthcare NKEA is focused on the larger subsectors within the healthcare ecosystem. These include bio-pharmaceuticals, med tech, private
healthcare financing and health services. Wellness services as related to traditional and
complementary medicine (T&CM) are considered out of scope for the Healthcare NKEA given
the infancy of the industry, fragmentation of the competitive landscape and the fact that until the
enactment of the T&CM Bill, the boundaries of T&CM are still not well defined. As seen in
Exhibit below our expectation is that focus on the largest economic engines will directly impact
the healthcare infrastructure and indirectly result in better quality care for the rakyat. For
example, the increase in hospital beds, doctors and nurses as a result of the growth in the
healthcare industry should reduce wait times for patients, shorten the turnaround time on
diagnostic lab results and improve the quality of patient outcomes through access to more
specialist care centres.

Exhibit 1Malaysian health care to have economic, infrastructure and patient impact.
Malaysia is in a unique position today. We can either aggressively participate in the global shift
towards Asia by becoming a major player in the regions healthcare arena, or we can become
marginalised as less developed countries such as Indonesia and less expensive countries such as
Vietnam play larger roles on the ASEAN stage. Indonesia and Vietnam are already positioning
themselves for healthcare growth. In
Indonesia, local pharmaceutical companies are capturing an increasing share of the domestic
market. In Vietnam extensive commitments and strong government support are going towards
growing the med tech sub-sector through developing infrastructure and building a skilled, lowcost labour force. Malaysia must act now and determine how best to use its infrastructure
capabilities, domestic consumption base and diverse population to create an economic growth
agenda for healthcare. Recent indicators show that despite fundamentals being at risk, the
Malaysian healthcare industry has a solid starting point to undertake an economic transformation
(Exhibit 2).

Exhibit 2
we can see that there is a real opportunity to improve our position on each of the

fundamental sub-sectors. Although RM422 billion of prescription and pharmaceutical drug

patents are about to expire in the next 10 years, Malaysia remains a net importer of generic
products. Despite the rapid growth in med tech products, Malaysia remains focused on one
category of products, medical consumables, which are primarily rubber-based products. The
emphasis on lower-value products has resulted in Malaysia not fully developing the more
profitable med tech sub-sectors such as medical devices, diagnostic equipment and healthcare
information technology.
Finally, the health travel industry in Malaysia remains small and fragile and in 2009 declined by
four percent. This can be primarily attributed to the lack of clear positioning relative to peers and
an insufficient network of partners for source patients. In contrast neighbouring countries such as
Singapore and Thailand continued to grow during the same period and leveraged price, quality of
care and an overall health travel experience to retain volume. It is critical for Malaysia to bounce
back in this attractive sector.
With 1.9 beds per thousand and 0.8 doctors per thousand as of 2008, Malaysia has a solid
foundation to build on. In addition the high incidence of lifestyle diseases and experience with
quality assurance permits Malaysia to be a credible R&D and clinical trial destination for the
pharmaceutical and med tech industries.
Our goal is to migrate from primarily a lower-value product strategy to a more comprehensive
product, services and asset strategy that better leverages our competencies.