A Study on Factors Affecting Turnover Intention of Jewelry Distribution Distributor

Abstract

Purpose - This study aims to present ways to secure capable employees by examining key factors of internal marketing applicable to the jewelry distribution business and analyzing the relations among organizational commitment, job satisfaction, and turnover intentions among employees who play important roles in jewelry distributors. Research Design, data, and methodology - To examine these research models, samples were collected from 210 individuals working in jewelry distribution companies. The analysis was conducted by the use of a questionnaire method among employees in jewelry distribution companies. SPSS 18.0 were utilized for data analysis. Results - Among internal marketing components of jewelry distribution companies, the two factors - management support and reward system - have positive (+) effect on organizational commitment and while internal communication and education/training have negative (-) effect on employees' turnover intention. Jewelry distribution company employees' job satisfaction and organizational commitment have negative (-) effect on their turnover intention. Conclusions - This is an exploratory study that aims to find out ways to prevent employee turnover in the perspective of jewelry distribution companies' organizational measure - internal marketing. The future study needs to present more sophisticated strategies of internal marketing based on in-depth analysis of specific causes that make employees at jewelry distribution companies leave the occupations.

1. Introduction

In the jewelry industry, consumption has increased drastically as monetary values of jewelry items and their usefulness in expressing one's beauty and characters are recognized. In the domestic jewelry market, the scale is estimated to 5 trillion and 746.3 billion won as of 2015. The number of jewelry business entities around the country is 12,076, among which 1,567 are in the manufacturing industry and 13,509 are in the distribution industry. Among 32,233 individuals, 6,660 in the manufacturing industry and 25,573 in the distribution industry are working in jewelry business sectors (Wolgok Jewelry Industry Research Center, 2016).

Among jewelry distributors, the number of wholesale businesses is 2,358, and the number of retail businesses is 11,151, which indicates the latter accounts for the far larger portion. This is because jewelry items are transected through direct contacts and relations between customers and salespersons. In addition, market prices of jewelry raw materials fluctuate significantly and the values are varied depending on the size, weight, and kind. Thus, many purchasers buy jewelry items with no technical knowledge but merely based on their trust in the jewelry seller. As trustworthiness is a key factor in jewelry distribution business, it is of great importance to build customer loyalty by serving existing customers and maintaining good reputations in addition to attracting new customers. Just as in other service areas, salespersons play a key role from the step of customers' information searching to the step of production and consumption in the jewelry distribution business which involves service characteristics of nonseparability and heterogeneity because such salespersons take this responsibility of maintaining customer trust and satisfaction in contact with them.

Jewelry sales are based on the technical knowledge and customer treatment of jewelry distributors' employees as well as customers' trust in jewelry distributors. Specifically, employees' expertise for appraisal and discernment of jewelry items, understanding of latest design trends, rich experiences for proper customer treatment, and continued management of relationships with customers are important factors for customer satisfaction. Since these factors affect the corporate performance directly, they are vital assets to jewelry distributors. For this reason, jewelry distributors invest a lot of time and expenses until new employees finally become able to provide quality services. When a capable employee leaves the jewelry company, it should take lying down the leak of important business information and the loss of human resources. Furthermore, it also needs to recruit new employees again and invest assets to train them to become capable salespersons. Therefore, jewelry companies should take strategic measures to prevent employees from leaving them.

Internal marketing is to regard employees as internal customers and to satisfy and motivate them to provide quality service to customer satisfaction. Research on internal marketing has been carried out for hotels, medical institutions and logistics firm (Lee, 2006; Jeon & Yoo, 2012; Yoon & Lee, 2007; Han et al., 2014; Choi, 2009). [Table 1]. However, despite the fact that the importance of skilled employees is emphasized in the field of jewelery distribution, the sufficient research on the internal marketing and its effects in that field was not carried out. The present study aims to present ways to secure capable employees by examining key factors of internal marketing applicable to the jewelry distribution business and analyzing the relations among organizational commitment, job satisfaction, and turnover intentions among employees who play important roles in jewelry distributors.

[Table 1] Research on Turnover Intention

2. Existing Studies

2.1. Internal Marketing

2.1.1. The Concept and Components of Internal Marketing

Internal marketing is a strategic method to realize customer satisfaction by regarding employees as internal customers and providing them with internal quality services (Javanmard & Hasani, 2017).

One existing study defines internal marketing as an activity to promote positive attitudes toward service quality and raise awareness of customer-oriented values among employees (Wasmer & Bruner, 1991). Another study defines it as an activity to promote teamwork among employees in direct contact with customers and to help them develop customer-oriented views through training (Kotler, 2003). Internal marketing is also defined as an activity to instill a desirable service mind and customer-oriented ways of thinking among employees who should be viewed as a primary customer group and to motivate them to produce better results. Accordingly, internal commodities such as vocational and managerial methods, human resource management policies, plans, and executive procedures to attract and secure good employees are required (Lee, 2013).

According to one research, internal marketing components include employee's involvement in education/training, management support, reward system, internal communication, and external communication (Grönroos, 1990). Another research suggests that education/training, internal communication, management support, human resource management, and delegation are internal marketing components (Conduit & Mavondo, 2001). Another research also suggests that communication, education/training, management support, reward system, and empowerment are internal marketing components (Jung et al., 2015).

2.2. Job Satisfaction

Job satisfaction is a feeling that an individual have toward his/her occupation, and there are relatively varied definitions of it among scholars. One research defines job satisfaction as a pleasant and positive emotion toward the result of assessing one's occupation or working experience (Locke, 1973). Another definition is a positive emotional reaction or attitude toward one's occupation and the physical, social conditions of work performance (Schermerhorn et al., 1997). Another research defines job satisfaction as an individual's emotional state in cognitive assessment of working experience (Brackette & Salovey, 2006). These researches describe in common job satisfaction as an attitude toward the occupation or a pleasant, positive psychological state in relation to one's occupation or working experience (Kim et al., 2015).

2.3. Organizational Commitment

Organizational commitment has long been regarded as a major indicator of organizational effectiveness, and there are varied definitions of it among scholars. organizational commitment is viewed as a type of attitude that reflects a person's feeling of the organization and its member's behavior pattern. It is a major variable that affects turnover rates, organizational citizenship behavior, and absentee rate (Meyer, Allen, & Smith, 1993). One research defines organizational commitment as one's will to accept the organization's goal and value, put forth efforts for the organization out of commitment, and remain in the organization (Koo et al., 2016). As these researches point out, organizational commitment indicates the extent that one tries to involve in organizational matters in reflection of his/her psychological state in relation to the organization. A person's acceptance of the organization's values goals and goals is an important factor in this regard (Yang & Tasnuva, 2013).

2.4. Turnover Intention

Turnover means to give up being a member of one organization and secede from it. Researches on turnover behaviors view turnover intentions as a predisposing factor that precede turnover behaviors and as an important factor for understanding of transferring employees' behaviors (Song, et al., 2015). One research defines turnover intention as a deciding factor of turnover and an intent of leaving the current occupation right before the step of turnover (Allen & Meyer, 1990). Another research defines turnover intentions as a psychological state of considering to leave the organization or team rather than an act of leaving the organization as its member (Yang & Cho, 2015). Accordingly, this study emphasizes the necessity to manage employee turnover in consideration of the fact that as a capable employee leaves the organization, investments into recruitment, education/training, etc. becomes invalid and that without being controlled, such intentions induce employees to change the occupation more easily (Jeon et al., 2006).

3. Study Methodology

3.1. Study Model and Hypothesis Establishment

With the aim to verify the effect of jewelry distributors’ internal marketing on employee’s organizational commitment, job satisfaction, and turnover intentions based on existing studies, this study sets up a study model as in [Figure 1] below:

[Figure 1] Research Model

3.1.1. The Relation between Internal Marketing & Job Satisfaction and Organizational Commitment

The effects of internal marketing factors such as employee’s involvement in education and training, management support, reward, internal communication, and external communication on employee royalty, job satisfaction, trust in management have been presented (Conduit & Mavondo, 2001). One research on the effects of internal marketing elements such as role clarification, reward system, working condition, and management evaluation on job satisfaction suggests that the 3 factors except reward system affect job satisfaction (Arnett et al., 2002). One research suggests that satisfaction with management performance among employees at home appliance distributors as internal customers has positive (+) effect on management performance, and that improvement of internal customers' satisfaction is an important factor related to corporate management performance (Park, 2005). According to one research, 5 internal marketing factors - working condition, leave system, empowerment, collection of employee's opinions, education/training, communication, and role clarification - except reward system have positive effect on job satisfaction and organizational commitment (Han & Kim, 2005). Another study presents the finding that internal marketing factors such as communication, reward system, education/training, leave system, and working environment had positive (+) effect on a casino business employee's job satisfaction (Han & Kim, 2005). According to another research conducted among employees at global distributors, internal marketing factors such as reward system, internal communication, and education/training have positive (+) effect on job satisfaction while such factors as reward system, internal communication, education/training, and empowerment have positive (+) effect on organizational commitment (Choi, 2009). Based on the findings of existing studies above, the present study sets up [Hypothesis 1] and [Hypothesis 2] as below:

[Hypothesis 1] Internal marketing activity of jewelry distribution companies will have positive (+) effect on employee's job satisfaction.

[Hypothesis 2] Internal marketing activity of jewelry distribution companies will have positive (+) effect on employees' organizational commitment.

3.1.2. Relation between Internal Marketing & Turnover Intentions

One research group asserted that education/training could prevent employees’ complaints and turnover (Pigors & Myers, 1977); another suggested a finding that internal marketing elements such as reward system, education/ training system, communication system, etc. have negative (-) effect on turnover intentions (Doo et al., 2005) and another research suggests that internal marketing elements such as reward system, internal communication, education/ training, and empowerment decrease turnover intentions among employees (Choi, 2009). One survey conducted among hotel employees regarding the relation between internal marketing and job stress and turnover intentions concluded that factors of education/training and internal communication could reduce turnover intentions (Jeon & Yoo, 2012). Based on the findings stated above, the present study sets up [Hypothesis 3] as below:

[Hypothesis 3] Internal marketing activity of jewelry distribution companies will have negative (-) effect on employees' turnover intentions.

3.1.3. Relation among Job Satisfaction, Organizational Commitment & Turnover Intention

One existing research suggests the finding that job satisfaction or dissatisfaction affects turnover intentions (Mobley et al., 1978). According to one survey conducted among golf service employees, as the level of job satisfaction increases, turnover intentions are reduced (Kim, 2014). One research conducted among airport service employees suggests that employee's job satisfaction has negative (-) effect on turnover intentions (Lee, 2017). According to another survey conducted among employees at 5-star hotels in Seoul, emotional commitment and continued commitment of employees have negative (-) effect on turnover intentions (Koo et al., 2016). Based on the findings of existing studies stated above, the present study sets up [Hypothesis 4] as below:

[Hypothesis 4] Job satisfaction and organizational commitment among employees at jewelry distribution companies will have negative (-) effect on employee's turnover intentions.

3.2. Operational Definition & Variable Analysis

3.2.1. Internal Marketing of Jewelry Distribution Companies

This study assumes that jewelry distribution companies' internal marketing elements include management support, education/training, internal communication, reward system, and physical environment.

Management support means that in order to improve management performance of the jewelry distribution company, the management shows keen interest in employee's activity puts forth efforts into supporting them. In reference to Choi et al. (2014), the present study revises it according to the objective and develops the following 6 items in Likert 7-point scale: the management's will of communication, easiness of communication, employees’ involvement, smooth interactive communication, presentation of data or methods for problem-solving, inducement of open communication.

Education/training is defined as an organizational activity of education for employee's knowledge and attitudes that is conducted to improve management performance of jewelry distribution companies. The research tool of Choi (2009) was revised according to the present study's objective, and the following 5 items were developed in Likert 7-point scale: sufficiency of provided education programs, variety of education programs, proper operation of education programs, values of education programs, and usefulness of education programs.

Internal communication is defined as organization members' effective exchange of information available in and out of jewelry distribution companies. Based on Rafiq and Ahmed (2000), the study methods were revised according to the objective of this study, and the following 6 items were developed in Likert 7-point scale: expression of opinions, exchange of opinions, provision of information, feedback, report and communication, and accuracy of communication.

Reward system is defined as an organizational fair process and system that handles both monetary and non-monetary rewards at jewelry distribution companies. In reference to Choi et al. (2009), its study method was revised according to the objective, and the following 5 items were developed in Likert 7-point scale: fairness of reward, customer evaluation-based reward, establishment of relationships with customers, provision of useful information, and reward for exemplary individuals.

Physical environment is a condition established for employees' smooth work performance at jewelry distribution companies. To employees, physical environment means more than working conditions. Rather, the images of their organizations are also a basis for judgment (Han & Kim, 2005). In this study, physical environment is defined as an objective and physical factor that an organization can control. One research suggests that in the relation between employees and customer satisfaction, employees' behaviors are affected indirectly in cognitive, emotional, and physiological reactions to the physical environment (Bitner, 1992). One survey conducted among IT companies presented the finding that among internal service quality factors, the tangible element - physical working condition - affects employee's satisfaction most significantly (Im & Kim, 2014). To measure the physical environment of jewelry distribution companies in this study, the following 5 items were developed in Likert 7-point scale: clean environment, efficient working environment, convenience facility, facility and atmosphere appropriate for the job, and sufficient service possibility.

3.2.2. Job Satisfaction among Jewelry Distribution Companies

Job satisfaction among employees at jewelry distribution companies is defined as the level of satisfaction with the job and working environments that one is involved in. In this study, the study methods of Hartline and Ferrell (1996) were revised according to the objective, and the following 5 items were developed in Likert 7-point scale: satisfaction with job, satisfaction with colleagueship, satisfaction with the relation with supervisors, satisfaction with the human resource management system, and satisfaction with the general condition at work.

3.2.3. Organizational Commitment among Employees at Jewelry Distribution Companies

Organizational commitment among employees at jewelry distribution companies is defined as the extent of participating actively in handling matters at work with favorable attitudes toward the organization and regarding oneself in the same light with the jewelry distribution company. In reference to Hartline et al. (2000), the study methods were revised according to the objective of the present study, and the following 5 items were developed in Likert 7-point scale: a sense of belonging to the company, pride of the working condition, pride of the company, attachment to the company, and regarding oneself in the same light with the company.

3.2.4. Turnover Intentions among Employees at Jewelry Distribution Companies

The turnover intention among employees at jewelry distribution companies is defined as the intent to leave the jewelry distribution company where one is currently working. The study methods of Koo et al. (2016) was revised according to the objective of the present study, and the following 5 items were developed in Likert 7-point scale: looking for another workplace, considering working at another company, intent of leaving the current workplace, turnover intention when a better condition is offered, turnover intention when the current workplac’s condition gets worse.

3.3. Analysis Method

For the empirical analysis of this study, SPSS Window ver. 18.0 was utilized. The specific analysis procedures are as follows: First, A frequency analysis was conducted to examine demographic characteristics of the objects. Second, a factor analysis was conducted to structure internal marketing factors, job satisfaction factors, organizational commitment factors, and turnover intention factors. Cronbach’s α coefficient was utilized in the reliability test. Third, a regression analysis was conducted to test the study hypotheses.

4. Study Results

4.1. General Characteristics of Samples

To achieve the purpose of this study effectively, a questionnaire-based survey was conducted. For sampling in the survey, the judgmental sampling method was utilized. The survey was conducted among employees working at jewelry wholesalers and retailers over metropolitan cities including Seoul, Busan, and Daegu between November 1 and 15, 2016. 400 copies of the questionnaire in total were distributed, and 225 were collected. The collecting rate was 56.3%. With 15 copies where the responses were incomplete, 210 copies were used for the analysis.

Among 210 respondents, 34 (16.2%) were men and 176 (83.8%) were women. As for age brackets, 48 were in the group of 20 to 24 (22.9%), 88 25 to 29 (41.9%), 32 30 to 34 (15.2%), 22 35 to 39 (10.5%), and 20 40 or older (9.5%). 36 were married (17.1%), and 162 (77.1%) were unmarried, and 12 (5.7%) were single. As for academic backgrounds, 8 (3.8%) were highschool graduates or lower, 54 (25.7%) college graduates, 142 (67.6%) four-year university graduates, 6 (2.9%) with a master's degree or higher. As for working career, 50 (23.8%) had 1-year or less working experience, 78 (37.1%) 1 to 3 year experience, 34 (16.2%), 3 to 6 year experience 24 (11.4%) 6 to 10 year experience, and 24 (11.4%) 10 year or longer experience. As for positions at work, 98 (46.7%) were in junior class positions, 54 (25.7%) in senior class positions, 30 (14.3%) in master class positions, 28 (13.3%) in chief class positions. 90 individuals, about 42.9% of the entire respondents, had an experience of turnover.

4.2. Reliability and Validity Test

The results of the factor analysis for the reliability and validity test in this study are presented in [Table 1] below. The main element analysis and factor analysis were conducted by means of the varimax method.

With 0.8 as the latent root, 5 factors were extracted. It turned out that internal marketing of jewelry distribution companies consisted of the following 5 elements: education/ training (ED), internal communication (IC), management support (MS), reward system (RS), and physical environment (PE).

The results of the factor analysis for the reliability and validity test of job satisfaction, organizational commitment, and turnover intention among employees at jewelry distribution companies are presented in [Table 2] below. In the initial factor analysis result, some variables were not loaded on the same factors but distributed, making the result unclear. Thus, items of different factors and job satisfaction factors number 4 and 5, whose correlation coefficient was relatively high, were removed. Thereafter, the factor analysis was conducted repeatedly, and as a result, the validity of variables used in this study - job satisfaction (JS), organizational commitment (OC), and turnover intentions (TI) - were verified.

[Table 2] Factor Analysis (Internal Marketing)

KMO=0.940, χ²=7376.317, df=351, p=0.000

[Table 3] Factor Analysis (Job Satisfaction, Organizational Commitment, Turnover Intention)

KMO=0.884, χ²=3055.161, df=78, p=0.00

4.3. Hypothesis Tests

To test the hypotheses of this study, the multiple regression analysis was conducted.

4.3.1. Test of Hypothesis 1

[Hypothesis 1] is that “the internal marketing activity of jewelry distribution companies will have positive (+) effect on the employees' job satisfaction.” This hypothesis was tested by means of the multiple regression analysis, and as a result, R²=0.667, F=81.583, and the significance probability=0.000. Hence, it was verified that internal marketing of jewelry distribution companies had significant positive (+) effect on the employees’ job satisfaction.

Thus, [Hypothesis 1] was accepted.

It turned out that among internal marketing components, management support (MS) and reward system (RS) had effect on job satisfaction (JS) but no effect on internal communication (IC) and education/training (ED). Physical environment (PE) had negative (-) effect on job satisfaction, but it was inconsistent with the hypothesis. Thus, it was thought that there was no significant effect. As the physical environment is better, it is likely that there would be more restrictions to employee’s working attitudes, etc.

[Table 4] Regression Analysis

R² =.667, F=81.583, p=.000, Durbin-Watson 1.615​​​​​​​

4.3.2. Test of Hypothesis 2

[Hypothesis 2] is that “internal marketing of jewelry distribution companies will have positive (+) effect on the employees' organizational commitment.” This hypothesis was tested by means of the multiple regression analysis, and as a result, R²=0.759, F=128.208, and significance probability=0.000. Thus, it turned out that internal marketing of jewelry distribution companies had statistically significant positive(+) effect on the employees' organizational commitment.

Thus, [Hypothesis 2] was accepted

Among internal marketing components, management support (MS) and reward system (RS) turned out to affect organizational commitment (OC) while internal communication (IC) and physical environment (PE) had no effect. Education/training (ED) had statistically significant negative (-) effect on job satisfaction, but it was inconsistent with the hypothesis. Thus, it was thought that there was no significant effect. It seems to be because senior or higher class respondents accounted for the majority of the entire respondents (53.3%).

[Table 5] Regression Analysis

R² =.759, F=128.208, p=.000, Durbin-Watson 1.879​​​​​​​

4.3.3. Test of Hypothesis 3

[Hypothesis 3] is that “internal marketing of jewelry distribution companies will have negative (-) effect on the employees' turnover intention.” This hypothesis was tested by means of the multiple regression analysis, and as a result, R²=0.278, F=15.699, and significance probability=0.000. Thus, it turned out that internal marketing of jewelry distribution companies had statistically significant negative (-) effect on the employees' turnover intentions.

Thus, [Hypothesis 3] was accepted.

Among internal marketing components, education/training (ED) and internal communication (IC) had statistically significant negative (-) effect on the employees' turnover intentions (TI) while management support (MS), reward system (RS), and physical environment (PE) had no effect on the employees' turnover intention.

[Table 6] Regression Analysis

R² =.278, F=15.699, p=.000, Durbin-Watson 1.722​​​​​​​

4.3.4. Test of Hypothesis 4

[Hypothesis 4] is that “jewelry distribution company employees' job satisfaction and organizational commitment will have negative (-) effect on their turnover intentions.” This hypothesis was tested by means of the multiple regression analysis, and as a result, R²=0.230, F=30.959, and significance probability=0.000. Thus, it turned out that jewelry distribution company employees' job satisfaction(JS) and organizational commitment(OC) had statistically significant negative(-) effect on their turn over intentions(TI).

Thus, [Hypothesis 4] was accepted.

[Table 7] Regression Analysis

R2=.230, F=30.959, p=.000, Durbin-Watson 1.658​​​​​​​

5. Conclusion

5.1. Summary

The objective of this study is to present a way to manage and secure capable employees by examining core factors of internal marketing applicable to employees playing a key role in jewelry distributors and by analyzing the relation among job satisfaction, organizational commitment, and turnover intentions.

According to the study results, first, it turned out that among the internal marketing components of jewelry distribution companies including management support, education/training, internal communication, reward system, and physical environment, the two factors - management support and reward system - had positive (+) effect on the employees' job satisfaction. Second, the organizational commitment while education/training and internal communication had negative (-) effect on the employees' turnover intentions. Third, In addition, as the effect of employees' job satisfaction and organizational commitment on their turnover intention was analyzed, it turned out that both variables - organizational commitment and job satisfaction - had negative (-) effect on the employees' turnover intention.

The above-mentioned findings empirically verify that internal marketing of jewelry distribution companies such as management support and reward system have significant effect on the employees' attitudes of doing their best in given tasks with a pride of working at a jewelry distribution company. This study suggests the following implications as a result of the above study.

5.2. Implication

First, [Hypothesis 1, 2] Internal marketing activity of jewelry distribution companies had positive (+) effect on employee's job satisfaction and organizational commitment. The results of this analysis are in accordance with those of Arnett et al. (2002) and Han and Kim (2005) in that the internal marketing components increased both the job satisfaction and organizational commitment. It was found that physical environment has a negative effect on job satisfaction. Therefore, the resting facility and an institutional arrangement of breaks for the employees in the jewelry distribution companies are needed.

Second, [Hypothesis 3] Internal marketing activity of jewelry distribution companies had negative (-) effect on employees' turnover intentions. The results of this analysis are in accordance with those of Doo et al. (2005) and Jeon and Yoo (2012) which showed that the education training and the internal marketing factors decreased the turnover intention. In addition, as jewelry distribution companies' internal marketing activity reduces the employees' turnover intention and plays a key role in securing capable employees who have expertise and customer response skills in the area of jewelry, provide excellent service, and thus are trusted by customers and maintain long-term relations with them.

Third, [Hypothesis 4] Job satisfaction and organizational commitment among employees at jewelry distribution companies had negative (-) effect on employee's turnover intentions. Lee (2017) and Koo et al. (2012) also reported the same results that job satisfaction and organizational commitment reduced the turnover intention. Therefore, top managers at jewelry distribution companies need to pay attention to employees' activity, maintain open communication with them, and put forth more effects to support them. Awarding exemplary employees based on customer evaluation results and operating a fair, appropriate reward system will enhance employee satisfaction and motivate them to be more absorbed in the organizational duties. Such efforts will prevent capable employees from leaving the companies. There may be varied other reasons of turnover such as personal characteristics in addition to organizational causes stated in the present study.

This is an exploratory study that aims to find out ways to prevent employee turnover in the perspective of jewelry distribution companies' organizational measure - internal marketing. The importance of this study is in that it proved the result of the internal marketing study in various fields such as hotels also can be applied to the importance of skilled employees of small-size jewelry distribution industry. The future study needs to present more sophisticated strategies of internal marketing based on in-depth analysis of specific causes that make employees at jewelry distribution companies leave the occupations.