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Factors Affecting Employees’ Intention to Leave In
Bakery Industry
Ong Yuh Kiang, Sharifah Zaidatul Aina, Lau Su Feng and Yap Say Chi
ABSTRACT
This case study aimed to investigate the factors affecting employee intention to leave in the
bakery industry. Fieldwork was conducted using focus group, structured and unstructured
interview and observation. The focus group method highlighted problems faced by company
especially on the reasons for employee turnover. The structured and unstructured interview
was used to measure the variables nature of working condition, perceived organizational
support, pay and compensation benefits package and intention to leave respectively.
Thorough observation was conducted to observe the working environment and normal
routine of workers in the bakery manufacturing process. The major factors affecting
employee intention to leave in bakery industry are nature of working condition, perceived
organizational support (POS) and pay and compensation benefits package. This paper also
recommends some suggestions to minimize employees turnover by identifying major factors
affecting the intention of employees to leave. This paper’s findings should be useful to many
organisations in bakery industry to identify the reasons affecting employee intention to leave
and improve the company performance.
Keywords: intention to leave, working condition, perceived organizational support
(POS), pay and compensation benefit package
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INTRODUCTION
The turnover issue is a common problem that is constantly faced by the management in
companies and industries. In a recent development, Malaysia manufacturing sector has
become a critical sector for employee turnover issue compared to other sectors. The purpose
of this study is to examine factors that lead to turnover intention among workers in
manufacturing industry or more specifically baking industry. This paper concerns one of the
baking companies in Malaysia, Fairy Food Industries Sdn. Bhd.
Background of Company
Fairy was founded by the Tan brothers, Tan Ah Kiang and Tan Kooi Hwak in 1983. Its base
of operation then was at No.66, Jalan Ibrahim, Sungai Petani, Kedah under the name of Fairy
Hot Bread & Cake House. The business has grown in strength and capabilities since its early
days and a two-storey shophouse at Jalan Ibrahim, Sungai Petani was purchased in 1986 to
house the production and retailing of Fairy products.
In 1994, Fairy Group Corporation Sdn. Bhd. and Fairy Food Industries Sdn. Bhd.
were incorporated as the holding company and production/marketing arms of the group
respectively. In early 1995, they have purchase one unit light industrial factory building with
modern facilities in the Sungai Petani Light Industrial Estate. In 1997, Fairy Food Industries
Sdn. Bhd. has taken over the production activities of the group and expanded its distribution
outlets by opening new retail cake house in states of Kedah and Penang in the year 2000.
Currently, there are 128 local employees in Fairy Food Industries Sdn. Bhd., with
nearly equal ethnic composition of Chinese, Malay, and Indian. Besides, FAIRY has a total of
11 outlets and majority of them are located in Perlis and Kedah. Their main business includes
the manufacturing and distribution of cakes, various bread sorts, pastries and other foodstuffs.
The group planned to open additional two new retail outlets in the Northern Region in this
year. Besides, they also envisaged to expand its market by opening cafe and cake ingredients
shop in the near future.
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CASE ANALYSIS
This is the second time where Mr. Tan conducting job interview with the applicants
who interested to work at his organization in this month. Mr. Tan feels very upset because
there were five employees initiated voluntary turnover to leave the company last week and he
received another three resignation letters today. In other to recruit new workers to take over
the duty and workload of the leaving employees, Mr. Tan needed to incur expenses on
advertising site such as newspapers and online job posting platform. Besides that, Mr. Tan
also need to pay for expenses in training the new hires to learn the skill in handling daily job
routine such as cakes decoration skills, handling the baking and mixing machines,
confectionery packaging skill and etc.
Besides the expenses, Mr. Tan also noticed that the productivity and performance of
the workers declined weekly. Mr. Tan is curious to know the reason why employees are
intended to leave the organization and hope to address the high employee turnover rate.
PROBLEM STATEMENT
In Malaysia, the critical issue for manufacturing sector compared to other sectors is employee
turnover (Nizamuddin Zainuddin, Nik Norsyamimi. Mad Nor & Husna Johari, 2015).
According to Ministry of Human Resource Malaysia, manufacturing sector stated the highest
number of job opportunities which was 259, 831 compared to other sectors in 2014. It
accounted 34.3% of total job vacancy in all industries. Although there are high job
opportunities in the manufacturing industry, the employee turnover in this sector is
considerably high.
Employee turnover can be split into two types which are voluntary turnover and
involuntary turnover (Melaku, 2014). Involuntary turnover is defined as the employee
turnover which is initiated by the organization such as the layoff and terminating of
employee. In contrast, voluntary turnover is the turnover that is initiated by the employee
itself. Employee turnover can be very costly for the organization. The cost comprises of
spending the time to recruit and to train new employees. Other than that, indirect cost might
include the probability that an organization loses their customers and a competitive market.
Therefore, any organization would strive to avoid incurring the cost of voluntary turnover
because it is the cost that every organization is unwilling to spend on.
To avoid this cost, the organization has to manage this voluntary turnover. Recently,
many researchers have started to investigate on the employee turnover intention. Tett and
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Meyer (1993) asserted that previous studies have already proven that the actual turnover of
employees can be predicted from the employee intention to leave (as cited in Kalemci Tuzun
& Arzu Kalemci, 2012). In other words, the intention to leave of employees can give a sign to
the organization in determining employee turnover.
Employee turnover in Fairy Company is considerably high. Every month, the human
resource department in Fairy has to conduct some interviews to recruit suitable employees in
order to place them in the right places. The recruitment has generated a great deal of cost to
the company. Mostly, the employee turnover in Fairy was initiated from the employees
themselves. This voluntary turnover resulted from employees who were not satisfied with the
harsh working environment, especially in the baking room. They have to work at either hot or
cold temperature. This is why the employees have the intention to leave because they cannot
endure to this kind of working environment.
Some employees in Fairy also grieved about the proportion of the pay and work were
not balance. Sometimes, the employees have to work overtime but no extra pay is given to
them. Other than that, lower level of management and normal workers do not have the
opportunity to participate in any decision making process. All these have affected the
satisfaction of the employees. The dissatisfied employees began to be absent from job.
Employee absenteeism in Fairy depicts the low level of commitment to the company. This in
turn shows that the employees have a high intention to leave. As a result, they will quit their
job. Therefore, to identify the employee intention to leave and determine the factors that
affected the employees of doing so should be the major tasks of Fairy’s human resource
department.
Previous researchers have found that some key factors can influence the employee
intention to leave which include nature of working condition, perceived organizational
support (POS) and pay and compensation benefit package. Nature of working condition in
terms of the harsh working environment, high workload and repetitive job scope can lead to
employees having the intention to quit. The harsh working environment such as hot or humid
working environment and bad ventilation of working environment in the bakery industry
causes the employees to be unable to concentrate on their job. This will bring dissatisfaction
to the employees. Lofquist and Dawis (1969) pointed out, “increasing levels of job tension or
stress might lead to a decision to quit” (as cited in Hanafiah Haji Hasin&Normah Haji Omar,
2007, p. 22). This is because the high workload can influence the quality of life of employees
which in turn, creating dissatisfied employees. Other than that, the repetitive job scope can
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make the employees feel bored with their job. This would also create the intention to look for
another job among employees.
Employees are one of the valuable assets in the organization. A good employee can
help the organization to sustain in the market. Joo and Park (2010) stated that employee
engagement and high commitment of employees can help an organization to gain the
competitive advantage in the labor and product market. Therefore, having the ability to retain
good employees can become an essential tool for the organization to grow and prosper.
Unfortunately, to retain employees is definitely not an easy task. Low commitment among
employees is exhibited through absenteeism which can signal to employee intention to leave.
Many researchers defined perceived organizational support (POS) as the degree of
organizations to value and care their employees in terms of contribution of employees.
Ultimately, employees effort can be strengthened by POS. Employees will work harder when
they perceived their organization as being appreciative of their performance (Colakoglu,
