Journal of Management Information and Decision Sciences (Print ISSN: 1524-7252; Online ISSN: 1532-5806)

Research Article: 2021 Vol: 24 Issue: 1S

Relationship between Working Environment, Job Satisfaction and Employee Retention on Medical Doctors in Government Hospitals in Malaysia: An Investigative Study

Teo Hui Yang, INTI International University

Abidah Binti Saad, INTI International University

Nagwan AlQershi, Universiti Tun Hussein Onn Malaysia

Abstract

 Employee retention in Government hospitals in Malaysia has become a concern due to more employees leaving for the private healthcare sector. Many factors have contributed to this phenomenon, such as salary discrepancy, work-life balance, working environment and job satisfaction. The objective of this study is to examine the mediating effect of job satisfaction on the relationship between the influencing factors and employee retention on medical doctors in government hospitals in Johor. Through this study, the relationship between the influencing factors and employee retention in government hospitals in Malaysia was explored and analyzed, while the mediating effect of job satisfaction was determined. By analyzing the factors that influence employee retention, this study aims to provide a guide for the government to handle the employee retention issue, and perhaps, help in introducing more effective retention strategies. The independent variable is working environment and the mediating variable is job satisfaction in this study. This is a cross-sectional research using the quantitative and descriptive method. Data was collected through an online questionnaire distributed to respondents to test the significance of the study. Results indicate that the working environment has no direct relationship with employee retention, but has a significant effect on job satisfaction. Also, job satisfaction has a significant effect on employee retention. Finally, the findings of this study show that the working environment predicts employee retention indirectly through job satisfaction.

Keywords:

Employee Retention (ER), Working Environment (WE), Job Satisfaction (JS).

Citation Information:

Yang, T.H., Saad, A.B., & AlQershi, N. (2021). Relationship between working environment, job satisfaction and employee retention on medical doctors in government hospitals in malaysia: An investigative study. Journal of Management Information and Decision Sciences, 24(S1), 1-10.

Introduction

Employee retention is one of the factors that determines a company’s competitive advantage, especially in this highly globalized and digitalized business world (Frye et al., 2020). Employee retention has become a major problem for many organizations as it affects daily operational flow and also shareholders’ interest (Perreira et al., 2018). Excellent employees are important for an organization for maintaining efficiency and reducing operational cost, which means that retention of employees is vital for any organization (Kokubun, 2017). According to many researchers who have conducted their studies on employee retention (Brown & Yoshioka, 2003; Ellett et al., 2007), when employees remain in the same organization for a longer period and become familiar with their work, productivity and efficiency will be increased, which indirectly will contribute to cost saving for the organization.

According to Saxenian (2007), the global economy is growing at a tremendous rate and organizations require many talented employees to face the challenges. To maintain competitive advantage, retaining talented employees has become one of the key missions of organizations. According to Phillips & Connell, (2004), employee retention is a strategy to motivate and encourage employees to remain in the same organization for as long as possible, and provide their time and best effort to their job. Losing experienced employees is a nightmare for employers due to the potential leak of confidential information and also losing out in terms of competitive advantage (Brown et al., 2010). Another reason that employee retention is important is because it takes much effort and money to hire a new employee; therefore, retaining experienced employees will be more cost effective (Hom et al., 2019). The additional time and training cost for new employees will delay overall organizational performance until the new employee becomes fully functional (Phillips & Connell, 2003). Many organizations are persistently facing issues of a lack of a robust workforce due to the increasing global competition for talented employees (Phillips & Connell, 2004).

For many organizations, employee retention has become a difficult task to accomplish because more and more job opportunities are readily available in the market for talented employees (Goldstein et al., 2017). How the organization plans to retain its employees while facing the increasing problem of employees voluntarily quitting the organization, is an ongoing challenge for many organizations (Hom et al., 2019). Many researchers (MacLean, 2001; Mujtaba, 2005; Adkerson, 2000) have agreed that an employee will be willing to quit his or her current position and join another organization if he or she is not satisfied with the current conditions. Therefore, the capability of the employer to attract and retain employees, which also directly determines the success of the organization over the long-term, is crucial. Talented employees will continuingly contribute their best work if they are being retained effectively (O'Malley, 2000).

However, according to Ellias, (2020), employees leaving an organization in an acceptable rate is actually a normal healthy process as long as the organization has a strategy to retain the best employees. According to Phillips & Connell, (2003), modest employee turnover can exist while retaining the best employees is possible. Many researchers from all around the world (Tirta & Enrika, 2020; Garg &Yajurvedi, 2016; Msengeti & Obwogi, 2015), have studied the factors of employee retention, which include reward and incentive system, work life balance, working environment and opportunities for career development. De Sousa, et al., (2018) stated that career opportunity, job stability and supervisor support are among the main factors that affect employee retention. Adequate work training and opportunities for career development, interpersonal relationship among colleagues and reward management also affect the employee retention rate. On the other hand, Dechawatanapaisal, (2018) confirmed that for organizations to successfully retain their employees, performance appraisal system, employee empowerment, and succession planning are among the main factors. Schwepker, (2001) concluded that there are many factors that force employees to shift to another organization, such as unsatisfactory working conditions, poor job satisfaction, and lack of mutual understanding between employer and employee.

Many studies have been conducted on employee retention in many different industries (Khalid & Nawab, 2018; Papa, et al., 2018; Kundu & Lata, 2017). However, there are still gaps to be filled by the researchers related to the mediating effect of job satisfaction on employee retention.

Employee retention is a main item on the agenda for the human resources management department, and therefore, many studies have been conducted in various fields, including the manufacturing sector (Othman et al., 2017); the pharmaceutical industry (Mathimaran & Kumar, 2017); and many more. In terms of employee retention in the Malaysian healthcare industry, many studies have been done as well to assess: employee retention among nurses in government hospitals Malaysia; the relationship between work-life balance and job performance and employee retention among doctors and nurses (Dousin, Collins, & Kler, 2019); the effects of workload on job performance and retention rate among doctors (Ahmad et al., 2019). Despite the many studies available, there are still gaps to be filled regarding the topic of employee retention of medical doctors in government hospitals in Johor, in terms of how job satisfaction mediates the relationship between employee retention and each influencing factor. More relevant studies could be done to provide a clearer picture of the conditions of retention of medical doctors in government hospitals in Johor.

This research provides sufficient information on retention of medical doctors in government hospitals in Johor, simultaneously increasing the awareness of the Malaysian government to take note of the situation and understand it toward better retention plans and strategies.

Literature Review

Working Environment and Employee Retention

A safe, healthy and conducive working environment is crucial, which ultimately affects employees attitude towards their job and their willingness to continue working in the same organization (Bibi, Ahmad & Majid, 2018). Besides focusing on training, skills development, and employee compensation system, organizations must also focus on optimizing the working environment, where a safe and healthy environment is one of the priorities of human resources management (Salman et al., 2016). Employees are the most vital assets of an organization, and therefore, a working environment where the employees cannot work safely and utilize their full potential, are among the factors that cause employees to be frustrated, ultimately increasing their stress level as well (Inda & Mishra, 2016). According to the five pyramids of Maslow’s hierarchy of needs (1943), health needs, safety, personal security and well-being, are among the most basic human desires; therefore, to fulfil the needs of the employees should be the priority of organizations (Skelsey, 2018).

According to Salman, et al., (2016), the concept of a safe and healthy working environment has become one of the well-known approaches for employee retention. Most organizations agree that the essence of retaining competent and talented employees is to provide an appropriate level of jobs and working environment. A healthy working environment has a strong impact on the employees as the employees tend to get attached to their jobs as long as they are satisfied with the working environment; subsequently, the retention rate can be maintained (Inda & Mishra, 2016). A healthy working environment should be able to improve both mental and physical health of the employees, which in turn, will improve the work performance, job satisfaction and retention rate (Salman et al., 2016)

According to Madiha Shoiab, et al., (2009), physical work environment is the main contributor that affects the willingness of the employees to remain in the organization. The working environment should be physically safe for the employees to work besides being comfortable. In the industrial sector, several factors are focused on to improve the working environment, such as the use of heavy lifts, noise, exposure to toxic substances, etc. (Madiha Shoiab, Ayesha Noor & Sajid Bashir, 2009). According to a research on the automotive industry, Durai (2017) mentioned that environmental factors, including workshop surroundings, and building function, have significant influences on how the employees will carry out their daily activities, how it will affect their job satisfaction, and ultimately, their retention rate. Besides that, Madiha Shoiab, et al., (2009) mentioned that lighting at the work place is a possible determinant for the overall work place comfort to improve the psychological welfare, creativity and even productivity of the employees.

On the other hand, the services sector might have a different perspective of the working environment compared to the industrial sector, where the psycho-social working environment, such as support, work load, demands, decision latitude, and stressors, are more crucial as the services sector mainly involves interaction between the employees and the consumers/clients (MadihaShoiab, et al., 2009). Poorly designed working environment will give an impression that the organization ignores the welfare of its employees, subsequently impacting the working efficiency and loyalty of the employees to the organization (Mandhanya, 2015). A well-designed and organized working environment will have a positive impact on how the employees will carry out their job as the working efficiency can be greatly improved (Raziq & Maulabakhsh, 2015). Besides that, a healthy and safe working environment, where the employees can easily get a sense of achievement and belongingness, can help to motivate employees to perform better, and the organizations will be awarded with a stronger, reliable workforce, who harbor more innovative ideas for growth (Inda & Mishra, 2016).

Many researchers (Raziq & Maulabakhsh, 2015; Bibi, Ahmad & Majid, 2018; Lu, Zhao, & While, 2019), have pointed out that the working environment has a significant influence on employee retention in many different contexts. In order to encourage employees to stay longer in one organization, improving work environment is usually one of the main foci (Bibi, Ahmad & Majid, 2018). Most employees would prefer to work in a safe, clean, well designed for work, and conducive atmosphere everyday (Salman et al., 2016). Accordingly, the employees will be more likely to stay longer in the organization if they are comfortable with the working environment (Inda & Mishra, 2016).

In this study’s conceptual framework, the relationship between the independent variable (working environment) and the dependent variable (employee retention) is determined. From the discussion above, the hypothesis on the relationship between the working environment and retention of medical doctors in government hospitals in Johor is as follows.

H1: The working environment has a significant relationship with employee retention.

Relationship between Job Satisfaction and Working Environment and Employee Retention

According to Bibi, Ahmad & Majid, (2018), the working environment is one of the main contributors to job satisfaction. A good working environment can cater to the basic human needs, as according to the five pyramids of Maslow’s hierarchy of needs, (1943), health needs, safety, personal security and well-being of the employees, can assure job retention (Skelsey Guest, 2018). A healthy working environment has been evinced to have a positive influence on the employees’ job satisfaction, which in turn, also improves work performance, organizational attachment, and employee retention rate in an organization (Inda & Mishra, 2016; Salman et al., 2016).

A good working environment has been proven to have a positive influence on the employees’ physical and psychological satisfaction during work (Madiha Shoiab, Ayesha Noor & Sajid Bashir, 2009). A safe and comfortable working environment is a basic requirement for all employees so that they can work effectively and efficiently, which in turn, can encourage positive emotion among the employees and improve job satisfaction (Inda & Mishra, 2016). Besides that, a conducive working environment, such as good support from colleagues and employers, good interpersonal relationship, and encouragement from employers, are among the factors that can improve the positive vibes in the working place, which can contribute to improving job satisfaction (Bibi, Ahmad & Majid, 2018).

Job satisfaction indeed has a positive mediating effect on the relationship between working environment and employee retention as evidenced by many researches done previously (Sheemun et al., 2013; Inda & Mishra, 2016; Olaniyan & Hystad, 2016). A good working environment will contribute to greater job satisfaction among employees, while employees who are satisfied with their current job will more willingly remain longer in the same organization (Su et al., 2016). On the other hand, an unfavorable working environment will cause greater job dissatisfaction among employees, and they will be more likely to accept other job offers which promise a better working environment (Ali, 2016). Therefore, the conceptual framework demonstrating the mediating role of job satisfaction in the relationship between working environment and employee retention is presented as below.

In this research model, the relationship between the three variables are measured: working environment (independent variable), job satisfaction (mediating variable), and employee retention (dependent variable). As mentioned previously, employees will have better job satisfaction, and subsequently, be more willing to stay if the perceived working environment seems conducive. Experiencing good working environment gives them better job satisfaction and motivates them to stay longer in the same organization (Bibi, Ahmad & Majid, 2018). Therefore, based on the evidence as discussed above, hypotheses can be formulated to find out the direct and indirect relationships between the study variable.

H2: The working environment has a significant relationship with job satisfaction.

H3: Job satisfaction has a significant relationship with employee retention

H4: Job satisfaction mediates the relationship between working environment and employee retention.

As shows in Figure 1.

Figure 1: Study Model

Research Methodology

Sample and Data Collection

The aim of this study is to find out the relationship between the influencing factors and the retention of medical doctors in government hospitals in Johor. Data was collected from respondents and analyzed through the quantitative method (AlQershi et al., 2021). In addition, in this research, the unit of analysis chosen is the individual. The data was collected via a questionnaire distributed to the employees who are currently working in government hospitals in Malaysia. The main sample target of this research are the medical doctors who work in government hospitals in Johor. The main focus of the study is to determine the influencing factors that affect the retention of medical doctors in government hospitals in Johor. Medical doctors who are working in government hospitals are chosen as the target population because there is limited research on employee retention for this particular group. Data collection was done by distributing an online questionnaire through Google Form. Finally, Partial Least Squares-Structural Equation Modelling (PLS-SEM) was used as the research method as it provides higher level of statistical power in the condition of smaller sample size or with complex model structures (Hair et al., 2013; AlQershi et al., 2020).

Results

To test the significance of path coefficient, bootstrapping procedure was done with the protocol (cases=345, resample=5000). In this study, the critical T value is 1.96 (significance level of 5%) which is commonly used. As shown in Table 1, the relationship between job satisfaction and employee retention and between working environment and job satisfaction have T values more than 1.96; therefore, these relationships are proven to be significant at the 5% probability of error. The path coefficient is further proven to be significant as the p-value is less than 0.05, except for the path relationship of working environment to employee retention. Therefore, Hypothesis 1 is rejected; while Hypothesis 2, 3 and 4 are accepted.

The path relationship between working environment and employee retention has p-value of 0.063, which is not significant (p>0.05). However, the path relationship becomes significant if mediated by job satisfaction as the p-value for the path relationship between working environment and job satisfaction is zero, while p-value for the path relationship between job satisfaction and employee retention is also zero (p<0.05). This indicates full mediation effect of job satisfaction on the relationship between working environment and employee retention.

Table 1
Relationships Results
Constructs t-values p-values Decision
WE -> ER 0.198 0.084 Not Supported
WE -> JS 3.047 0.002 Supported
JS -> ER 2.538 0.005 Supported
WE*JS -> ER 3.526 0.003 Supported

Discussion

The objective of this research is to investigate the mediating effect of job satisfaction on the relationship between the influencing factors (working environment) and retention of medical doctors in government hospitals in Johor. To achieve this aim, hypotheses were tested to examine the direct and indirect effects of each influencing factor on employee retention among medical doctors in government hospitals in Johor. Therefore, Hypotheses 1, 2 and 3 were for examining the direct effect; while Hypothesis 4 was for examining the indirect effect through the mediator (job satisfaction).

According to the conceptual framework in section 2, the independent variable (working environment) is pointing directly (direct effect) to the dependent variable (employee retention) and indirectly (indirect effect) through job satisfaction, which is the mediating variable. A total of 345 questionnaires were collected for data analysis, which is greater than the expected 300 questionnaires; therefore, the data analysis was accurate as a larger sample size was used.

Hypothesis 1 stated that working environment has no direct relationship with the retention of medical doctors in government hospitals in Johor. This hypothesis testing showed that the direct effect of the working environment on the retention of medical doctors in government hospitals in Johor, is rejected.

According to many previous researchers (Bibi et al., 2017; Bibi, Ahmad & Majid, 2018; Ahmad et al., 2019; Lu, Zhao & While, 2019), the working environment is usually proven to have a significantly positive impact on employee retention in an organization. However, this study shows that the relationship between the direct effect of the working environment on the retention on medical doctors in government hospitals in Johor, is not significant.

This phenomenon can be caused by several reasons; since the introduction of the medical doctors’ contract system, medical doctors are more concerned with their job security as compared to the working environment. Loss of job security has already sparked great job dissatisfaction among medical doctors, which has made the other influencing factors, including the working environment, to be less important.

In addition, Hypothesis 4 stated that job satisfaction mediates the relationship between the working environment and retention of medical doctors in government hospitals in Johor. Further, Hypothesis 2 was that the working environment is positively related to job satisfaction; and Hypothesis 3 was that job satisfaction is positively related to retention of medical doctors in government hospitals in Johor. As Hypothesis 1 is proven to be statistically insignificant and Hypothesis 4 is statistically significant, job satisfaction is proven to have full mediation effect on the relationship between the working environment and the retention of medical doctors in government hospitals in Johor.

The findings of this research show that the working environment predicts employee retention indirectly through job satisfaction. In this study, job satisfaction is found to be the underlying mechanism for the relationship between the working environment and employee retention. When the working environment is improved, medical doctors who are satisfied with the improved working environment are more likely to stay in the organization. The improvement of the working environment should meet the demands of medical doctors in order to increase job satisfaction, which ultimately, will improve employee retention.

Contribution

After reviewing all the literature available, most of the studies have investigated the factors affecting employee retention among different population segments, such as pharmaceutical employees (Sheemun et al., 2013); nurses (Olaniyan & Hystad, 2016); (Zaharee et al., 2018). The findings of this research can be beneficial as it fills the gap on the topic of retention of medical doctors in government hospitals in Johor. This study adds to the current pool of information as further reference for researchers. The findings also help the future researchers to gain more knowledge on the factors that influence retention of medical doctors in government hospitals. This research has shown the full mediation effect of job satisfaction on the relationship between working environment and employee retention, assisting academicians in their future studies regarding this topic.

Conclusion

This is the final section of this study which serves to conclude the findings and discussion of the study. The objective of this research is to examine the mediating effect of job satisfaction on the relationship between the influencing factor (working environment) and retention of medical doctors in government hospitals in Johor. The findings of this study can help the hospital management team to manage medical doctors’ retention rate, and be a reference point for other institutions or companies as well.

Job satisfaction is an underlying mechanism in the relationship between the working environment and career development and employee retention. In the other words, medical doctors will be satisfied with their job, and subsequently, be willing to stay longer in the government hospitals, if a good working environment and opportunities for career development are provided by management. Finally, if the working environment and opportunities for career development can satisfy the medical doctors, they will be more likely to stay in the government hospitals instead of moving to other facilities.

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