Editorial Board

A Refereed Monthly International Journal of Management

Exploring the Relationship between Socially Responsible Human Resource Management and Turnover Intention: A Case of Pakistan Banking Sector

Author

Mr. Kamran Iqbal Bahria university Islamabad

Dr. Sarwar Zahid Bahria university Islamabad

Dr. Muhammad Arif Bahria university Islamabad

Abstract

This study has examined the relationship between socially responsible human resource management (SRHRM), organizational identification, organizational trust, and turnover intention, specifically explore the multiple mechanisms of organizational identification and organizational trust between SRHRM and turnover intention. It has utilized social identity theory and social exchange theory to investigate the role of organizational identification and organizational. A survey of 424 employees from the banking sector of Pakistan was analyzed using the SPSS macro PROCESS. Our results suggest that both organizational identification and organizational trust mediate the link between SRHRM and turnover intention. However, the trust mechanism is considerably stronger than the mechanism of organizational identification. The findings of this study maybe beneficial for the HR managers of banking organizations and experiencing challenges related to turnover of their skilled and valuable employees.

Keywords: Socially Responsible Human Resource Management; Organizational Identification; Organizational Trust; Turnover Intention.

Introduction

Over the last few decades, increasing attention hasbeen given to the topic of corporate social responsibility (CSR) (Kolk, 2016).Scholars have continually demonstrated the benefits of CSR for all stakeholders, including shareholders, investors, employees, management, and consumers(Story & Neves, 2015). In Pakistan, despite significant importance and benefits, CSR has not been explored extensively (Asrar-ul-Haq, Kuchinke, & Iqbal, 2017). CSR could be a source of competitive advantage through its contribution toward organizational image and its role in retaining skilled employees (Jones, 2010). CSR has become very important for the organization to gain competitiveness (Turyakira, Venter, & Smith, 2014). Many studies have confirmed the role of social performance in gaining economic performance (Boulouta & Pitelis, 2014; Lee, 2008).Nowadays, organizations use their active involvement in social activities as an essential tool to achieve their strategic objectives (Kramer & Porter, 2011). Globalization and drastic changes in technology have influenced the businesses in a way that has made human capital as the primary source of competitive advantage because of its integral role in the firm’s success. Researchers have been increasingly focused on the impact of HR practices on employee work-related attitudes and behaviours (Andreeva & Sergeeva, 2016; Kooij & Boon, 2018; Kooij, Jansen, Dikkers, & De Lange, 2010; Kundu, Mor, Bansal, & Kumar, 2019; Mostafa & Gould-Williams, 2014; Osman, Ho, & Carmen Galang, 2011). HRM practices in an organization are the communication signals between organization and employees, which reveal how serious an organization is about their employee's welfare and well-being (Guzzo & Noonan, 1994).Kundu and Gahlawat (2015) emphasized the need for a paradigm shift in the organizations from focusing on economic growth to sustainable and responsible HRM. Previous studies have revealed the significant association between CSR and HRM (Bučiūnienė & Kazlauskaitė, 2012; Jamali, El Dirani, & Harwood, 2015b).Bučiūnienė and Kazlauskaitė (2012)have described the importance of HRM in CSR by highlighting two points: one is being a dimension of CSR, organizations are required to take care of its employee’s well-being, and second, it is actually through employees that an organization would be able to perform its CSR activities. Jabbour and Santos (2008) postulated that in sustainable organizations, a significant portion of innovation is related to managing diversity through human resource management. The concept of socially responsible HRM was introduced by Shen (2011). SRHRM is defined by Shen and Benson (2016) as “corporate social responsibility (CSR) directed at employees, underpins the successful implementation of CSR.”SRHRM is derived from the blend of three interrelated areas Business ethics, Sustainability, and corporate social responsibility (Ardicvili, 2012). SRHRM is regarded as a dimension of CSR that mainly covers the CSR policies related to employees (Shen, 2011) The present study contributes to the literature in the following ways. First, we tested multiple mechanisms through which SRHRM influences turnover intention (Figure.1).Although previous research has tested the impact of SRHRM on turnover intention, this study is going to explore organizational identification (Social identity as a theoretical lens) and organizational trust (Social exchange as a theoretical lens) as potential mechanisms between SRHRM and turnover intention. Second, this research has adopted a three-phase time–lag study design in data collection, which assists the researchers to come up with more meaningful and robust outcomes. Finally, most of the researches on SRHRM have been done in western countries and Chinese context (Bombiak & Marciniuk-Kluska, 2019; Newman, Miao, Hofman, & Zhu, 2015; Shen & Benson, 2016). There is a significant difference in the economic condition and culture of Pakistan. Therefore, this study will be helpful to understand the impact of SRHRM on employee outcomes, specifically in the context of Pakistan. This research has enhanced our knowledge of the SRHRM- Turnover intention linkage by exploring the multiple psychological mechanisms. Prior studies have mainly utilized social identity mechanism to explain the linkage between SRHRM and employee outcomes. This study has introduced a new psychological mechanism of organizational trust along with its comparison with organizational identification mechanism in explaining the relationship between SRHRM and turnover intention that will opens a new avenue for future studies on SRHRM.

2. Theoretical background and hypothesis development

Our proposed model focuses on the relationship between SRHRM, organizational identification, organizational trust and turnover intention. Figure 1 describes the model used in this study to examine the relationship between SRHRM, organizational identification, organizational trust and turnover intention. This study not only helps to understand the relationship between SRHRM and employee turnover intention but also contribute to a better understanding of black box between SRHRM and turnover intention. The theory which drives this model is that SRHRM contribute to stimulate organizational identification and organizational trust which in turn influence turnover intention. The subsequent sections provide support to the depicted model and hypothesis development

2.1 SRHRM

HRM plays a significant role in creating a win-win situation for organizations by aligning strategic direction and mission of the organization, which help the organizations to translate their CSR efforts into desirable outcomes (Jamali, El Dirani, & Harwood, 2015a; Wright & McMahan, 2011). SRHRM is derived from the blend of three interrelated areas Business ethics, Sustainability, and corporate social responsibility (Ardichvili, 2012). The concept of SRHRM has been developed by Shen (2011) from the literature of CSR, ethics, organizational behavior, and HRM. Three dimensions of SRHRM: namely legal compliance HRM, employee-oriented HRM, and general CSR facilitation HRM. HRM practices are being used as a mean to enhance employee performance and to achieve long term strategic goals of the organization. The primary purpose of human resource department is to create value for their organization by acquiring human resource with the unique skills and characteristics that enable the organization to achieve sustainable competitive advantage (Wright & McMahan, 1992). Jabbour and Santos (2008)pointed out that human resource strategies should be formulated following economic, social, and environmental strategies of the organization to integrate HRM with organizational sustainability. According to Buciuniene and Kazlauskaite (2013), socially responsible organizations are more caring toward their employees and continuously working to improve existing work condition for their employees and to enhance their well-being. When employees perceive HRM practices as supportive, they are more likely to reciprocate it by their positive attitudes and behaviours (Hannah & Iverson, 2004).

2.2 Turnover Intention

Turnover intention has remained a topic of great concern for the scholars of human resource.

2.3 The mediating role of Organizational identification

The concept of organizational identification has its root in social identity theory (Tajfel, 1978; Tajfel & Turner, 1979). Decoster et al. (2013) pointed out that organizational identification contributes towards employee’s resilience in a difficult time and situation.Organizational identification may be considered as the main route to achieving organizational mission (Broch, Lurati, Zamparini, & Mariconda, 2017). (Dutton, Dukerich, & Harquail, 1994)argued that “As members identify more strongly with the organization, their beliefs about the organization are likely to become more positive. Members who strongly identify with an organization are likely, for example, to believe that the organization is producing valuable outputs.” (253).Group members generally assess their group more positively than other groups because group assessment has an impact on their positive self-image (Tajfel, 1978). Also, the more positively employees evaluate their organizations, the more valuable their organizations become for their self-image (Decoster et al., 2013).CSR activities contribute towards the organizational identification of employees because CSR activities produce an attractive and distinctive image of the organization that enhances employees’ self-concept (De Roeck, El Akremi, & Swaen, 2016). Perceived external image is another variable which contributes towards organizational identification. When employees perceive that outsider views their organization as prestigious, the organizational image became attractive to these employees, which will help to maintain their self-concept (Glavas & Godwin, 2013).Van Dick, Ullrich, and Tissington (2006) suggest organizational identification of employee is likely to be enhanced if employee perceived work environment as favorable, and they are more likely to produce positive outcomes. Organizational membership can confer positive attributes in employees when members perceive the external image in a positive way; they may experience high organizational identification, in turn, this leads to desirable outcomes for instance high organizational commitment, job satisfaction, engagement, organizational citizenship behaviors and lower turnover intention (Dutton et al., 1994). Previous studies have found a significant relationship between Identification and Turnover intention (Liu, 2013). HRM has been acknowledged as a critical factor that determines organizational performance and helps a firm to gain a competitive advantage (Newman et al., 2015). Previous studies have employed social identity as a theoretical lens to examine employee voice behaviour (Islam, Ahmed, & Ali, 2019), employee performance (Buil, Martínez, & Matute, 2019), job satisfaction (Boğan, Türkay, & Dedeoğlu, 2018), organizational commitment (Omer, Payaud, Merunka, & Valette-Florence, 2013). Prior studies on SRHRM has also employed organizational identification as a mediating variable in several studies along with SRHRM as an independent variable for instance (Newman et al., 2015; Shen & Benson, 2016). In line with previous work, this study has proposed organizational identification as a psychological mechanism between SRHRM and turnover intention. Thus, the following hypotheses have been proposed:

H1: There is a significant positive relationship between SRHRM and organizational trust.
H2: Organizational identification mediates the effects of SRHRM on employee’s turnover intention. 

2.4 The mediating role of Organizational trust

Individual possess high organizational trust give priority to organizational goal over their interests. Variables that have been shown to influence Organizational trust positively include transformational leadership (Top, Tarcan, Tekingündüz, & Hikmet, 2013), HR practices (Tremblay, Cloutier, Simard, Chênevert, & Vandenberghe, 2010), employee organizational relationship (Yu, Mai, Tsai, & Dai, 2018). Social exchange theory has been utilized to explain the relationship between SRHRM and Organizational trust. Social exchange theory pointed out the norm of reciprocity as a critical element in the exchange process (Cropanzano & Mitchell, 2005). When employee perceives that organizational HR practices are supportive and environmental friendly, the employees will reciprocate with a high level of organizational trust (Tzafrir, 2005; Tzafrir, Harel, Baruch, & Dolan, 2004; Vanhala & Ahteela, 2011).Vanhala and Ahteela (2011)argued that HR practices should be designed in such a way that facilitates mutual reciprocity, and that will contribute to enhancing employee’s trust in their organization. Positive HRM practices are signals of organizational support and care to its employees, which ultimately influence their motivation and their trust in their organization(Whitener, 1997). According toGuest and Conway (2001), if employees perceive HR practices as high-commitment HR, they feel fairly treated that would increase their trust in management. We argued that SRHRM practices initiate social exchange relationship between an organization and its employees; it is expected that SRHRM positively influences organizational trust of employees. Prior studies have utilized organizational trust as psychological mechanism to examine organizational commitment (Aryee, Budhwar, & Chen, 2002; Omer et al., 2013), job satisfaction, performance and turnover intention (Aryee et al., 2002), and organizational citizenship behaviour (Rezaeian, Tehrani, & Lotfi Foroushani, 2013). Social exchange theory plays a significant role in explaining social exchange reciprocation (Jiang, Gollan, & Brooks, 2017). Social exchange theory has suggested trust as a key element in facilitating the social exchange process (Blau, 1964). SRHRM invoke social exchange relationship between an organization and its employees.(Spence Laschinger, Finegan, & Shamian, 2002)emphasized that "The degree of trust within an organization depends on managerial philosophy, organizational actions and structures, and employees' expectations of reciprocity" (p. 63). Thus:

H3: There is a significant positive relationship between SRHRM and organizational trust.
H4: Organizational trust mediates the effects of SRHRM on employee’s turnover intention.

3. Methodology

The population of the study was the employees working in the banking sector of Pakistan. Data were collected in three phases. Data related to SRHRM were collected on the first phase, data related to organizational identification and organizational trust were collected on the second phase, while response related to turnover intention were collected on the last phase. The participation of individuals in the study was voluntary. A cover letter was also attached to the questionnaire to explain the purpose of the current study and to assure the respondents about the anonymity of responses. Respondents were asked to respond to each item according to their perceptions of SRHRM, organizational identification, organizational trust, and turnover intention. Finally, 424 complete questionnaires were used for data analysis. Data analyses are being conducted using the PROCESS macro in SPSS Statistics software version 23.

3.1 Measure

3.1.1 SRHRM

The measure of SRHRM was adopted from Shen and Zhu (2011), which consists of 13 items. Example items include: “My firm ensures equal opportunity in HRM” “Employees participate in decisions making and total quality management” “My firm appoints adequate staff implementing general CSR initiatives.” Items on the SRHRM are measured on a 7-point Likert-scale, ranging from 1 = strongly disagree, to 7 = strongly agree. The value of Cronbach’s alpha coefficient was observed .901.

3.1.2 Turnover Intention

The turnover intention was measured by using three-items adopted from Colarelli (1984). Example items are “I often think about quitting this job” "If I have my own way, I will be working for this organization one year from now (R)."Items on the turnover intention are measured on a 7-point Likert-scale, ranging from 1 = strongly disagree, to 7 = strongly agree. The value of Cronbach’s alpha coefficient was observed .782

3.1.3 Organizational identification

The measure of organizational identification was adopted from Mael & Ashforth (1992), which containing six-items. Sample items are: “when someone praises my organization, it feels like a personal compliment,” “I am very interested in what others think about my organization,” Items on the organizational identification are measured on a 7-point Likert-scale, ranging from 1 = strongly disagree, to 7 = strongly agree. The value of Cronbach’s alpha coefficient was observed .860.

3.1.4 Organizational Trust

The questionnaire of Organizational trust is adopted from Robinson (1996) containing three items. Example items include: “My employer is open and upfront with me” “I believe my employer has high integrity.”Items on the organizational trust are measured on a 7-point Likert-scale, ranging from 1 = strongly disagree, to 7 = strongly agree. The value of Cronbach’s alpha coefficient was observed .878.

4. Results

4.1 Demographics

The demographics of the respondents used in this study are shown in table 1, which shows the majority of respondents were males making 63% of the total sample. Out of total sample, 188 are married, whereas 236 are non-married, constituting 44.3% and 55.7% of the sample, respectively. Most of the respondents have ages between 25 to 35 years, with 63.4%, followed by 24.5% with age less than 25 years, while only .7% has aged 58 years and above. Moreover, the data of Organizational tenure shows that majority of the respondents have been working in the current organization from 3 to 7 years with 47.2%, followed by 34.7% with organizational tenure of 1-2 years. Furthermore, 48.2% have job tenure 3-7 and above, followed by 22.4% with 1-2 years, while only 4% with job tenure of 20 or above years.

Table 1.Demographic Analysis
Variable/detail	Frequency	Percentages
Gender
Male	267	63%
Female	157	37%
Marital status
Married	188	44.3%
Non-Married	236	55.7%
Age
Less than 25 years	103	24.3%
25-35	269	63.4%
36-46	39	9.2%
47-57	10	2.4%
58 and Above	3	.7%
Organizational Tenure
1 -2	147	34.7%
3-7	200	47.2%
8-13	57	13.4%
14 and above	20	4.7%
Job Tenure
1-2	95	22.4%
3-7	207	48.2%
8-13	85	20.0%
More than 14	37	8.7%
Total	424	100%

4.2 Descriptive statistics and correlations

In addition, means, standard deviation, and correlations are given in table 2. The results show that SRHRM is significantly and positively correlated with organizational identification (r (424) =0.410, p<0.01), organizational trust (r (424) =0.558, p<0.01) and negatively correlated with turnover intention (r (424) =-.301, p<0.01). Organizational identification is found to be statistically significant with organizational trust (r (424) =.514, p<0.01) and turnover intention (r (424) =-.332, p<0.01). Finally, there is a significant and negative association between organizational trust and turnover intention (r (424) =-.384, p<0.01).

Table. 2 Descriptive statistics and correlations
Variables	Mean	SD	1	2	3	4
1.       Socially responsible HRM	4.9256	1.01442	1
2.       Organizational Identification	5.1010	1.10105	.410**	1
3.       Organizational Trust	5.3999	.97600	.558**	.514**	1
4.       Turnover Intention	2.9646	1.33375	-.301**	-.332**	-.384**	1
N= 424                                                    **. Correlation is significant at the 0.01 level

4.3 Measurement model

Before testing of hypotheses, we have run confirmatory factor analysis to verify the suitability of measurement model (Anderson & Gerbing, 1988). The indices of proposed model have shown acceptable model fit, χ2 =797.93, comparative fit index (CFI) = .915, Truker–Lewis fit index (TLI) =.902, and root mean square error of approximation (RMSEA) = .054. Moreover, the factor loadings of all indicators are loaded significantly, and their value is greater than 0.50. Overall, the confirmatory factor analysis shows that the proposed model has satisfactory discriminant validity (Table. 3).

Table 3. Measurement model: Confirmatory factor analysis
Model	χ2		CFI	TLI	RMSEA
Four-factor model (SRHRM, OI, OT, TI)	797.93	355	.915	.902	.054
Three-factor model (Combining OI and OT into a factor)	1102.23	358	.857	.837	.070
Two-factor model (Combining OI and OT, and TI into a factor)	1405.52	360	.799	.717	.083
Two-factor model (combining SRHRM and OI into a factor and, OT and TI into a factor)	1546.78	360	.771	.742	.088
One factor model (Combining all items into one factor)	1872.51	361	.709	.673	.099

4.4 Hypotheses testing

We predicted in H1 that SRHRM is positively related to organizational identification. Table 4 reveals a positive and significant relationship between SRHRM and organizational identification (β=.4452, Ƿ<.05). Thus, our hypothesis H1 has supported. H2 predicts that SRHRM is positively related to the organizational trust. The results show that SRHRM has a positive and significant relationship between SRHRM and organizational trust (β=.5371, Ƿ<.05). H3 predicts that SRHRM is negatively related to turnover intention. Table 3 reveals a negative and significant relationship between SRHRM and turnover intention (β=-.3952, Ƿ<.05). H4 predicts that organizational identification mediates the relationship between SRHRM and turnover intention. The mediation effect is examined through the bootstrapping method with 5,000 bootstraps resamples. The results show that indirect effect through organizational identification is considered as significant as confidence interval does not include zero (point estimate = -.0899; CI = -1605 to -.0323). Thus, H4 has supported. Finally, H5 predicts that organizational trust mediates the association between SRHRM and turnover intention.The results reveal that indirect effect through the organizational trust isconsidered as significant as confidence interval do not include zero (point estimate = -.1804; CI = -.2887 to -.0831). Thus, H5 has also supported.

Table 4. Hypotheses testing

SS

Step 1: Organizational Identification (OI)

Step 2: Organizational Trust (OT)

Step 3: Turnover Intention (TI)

B

SE

LLCI

ULCI

B

SE

LLCI

ULCI

B

SE

LLCI

ULCI

SRHRM

.4452**

.0482

.3504

.5399

.5371**

.0389

.4607

.6134

Total effect of SRHRM on TI

-.3952**

.0610

-.5152

-.2752

Direct effect of SRHRM on TI

-.1249**

.0712

-.2648

-.0150

Indirect effect of SRHRM on TI through OI

-.0899**

.0325

-.1605

-.0323

Indirect effect of SRHRM on TI through OT

-.1804**

.0523

-.2887

-.0831

N= 424

5. Discussion

In order to explore the interaction between SRHRM and employee turnover intention), we proposed two theory-based mechanisms. The first mechanism has its origin in social identity theory (Tajfel & Turner, 1979) and proposes that the relationship between SRHRM and turnover intention is mediated by organizational identification. The second mechanism is based on organizational exchange theory (Blau, 1964; Cropanzano & Mitchell, 2005) and proposes that organizational trust will mediate the linkage between SRHRM and employee turnover intention. Theforeprimary purpose of this research was to propose and test a model that is connecting SRHRM to turnover intention, as well as to explore the multiple mediators of organizational identification and organizational trust. The results show that all four hypotheses were supported. Hypothesis 1, which states that SRHRM is positively related to organizational identification. The results reveal a positive relationship between SRHRM and organizational identification. This finding is in line with previous studies(Newman et al., 2015; Shen & Benson, 2016). Hypothesis 2, which stipulate the positive relationship between SRHRM and organizational trust. Our results collaborate the previous research that has observed the mediating role of organizational trust between CSR activities and affective organizational commitment (Omer et al., 2013). Hypothesis 3 is sought to examinewhether organizational identification act as a mediating variable between SRHRM and turnover intention. The results have confirmed this hypothesis. Hypothesis 4, which stipulate to determine that organizational trust act as an intermediate variable between SRHRM and turnover intention. This hypothesis was also supported. Overall, our results have supported the hypothesized model. However, the results show that the indirect effect of SRHRM on turnover intention via an organizational trust (-.1804) is stronger than that of via organizational identification (-.0899). This finding is in contrast with the study of (Omer et al., 2013), who found the identification mechanisms as stronger than the trust mechanism in developing CSR- affective commitment linkage

6. Conclusion

The findings of this research could help the HR professional, especially in the banking sector, to retain their skilled employees through employee friendly and environmental HR practices. By revealing the importance of SRHRM to employee turnover intention, this study would help design HR practices in such a way that could help the organizations to minimize turnover intention of their valuable employees. Future researchers are highly encouraged to extend this research by examining the model in other industries and countries. The future student could also use a qualitative approach to confirm the results of this study.

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