In-Circle Group on Employees' Turnover using Guanxi within LMX Approach: Saudi Arabia - Research Proposal Example

Research proposal On The Impact of In-Circle Group on Employees Turnover using Guanxi within LMX Approach: the Case of Saudi Arabia. submission: © 2014 Table of Contents Table of Contents 2 CHAPTER ONE 4 1.0 Background of the Study 4 1.1 Statement of the problem 6 1.2 Justification 6 1.3 Research questions 7 CHAPTER TWO 7 LITERATURE REVIEW 7 CHAPTER THREE 11 STUDY METHODOLOGY 11 3.0 Research Locale 11 3.1 Research Approach and Design 11 3.2 Population Target 11 3.3 Sample size 12 3.4 Instruments of data collection 12 3.5 Data analysis and presentation 12 3.6 Significance of the study 12 3.7 Theoretical Framework 13 3.8 Conceptual Framework 14 3.9 Limitations of the study 14 3.10 Reliability and validity 15 3.11. Ethical consideration 16 4.0 TIME SCALE 17 5.0 References 18 Abstract Saudi Arabia has quickly emerged into a business hub with a vibrant privates sector in the wake of this economic development. Therefore, to safeguard the interests of the Saudi nationals, the government policy has introduced quota system that requires private organizations to employ Saudis in place of foreign workers while enforcing restrictions on the foreign employees. Thus, different industries in the private sector especially MNCs are challenged by the high turnover of employees that is adversely affecting firms’ performance. As a result, modern day workplace has brought with it new dimensions that have proceeded to influence relationships in the organizations, behaviors and turnover. However, argues some authors, motivation is essential in fostering impression management and relationships in an organization. While others believe the environmental compulsions has a become powerful antecedents that necessitate proactive participation of the workforce in the change process. Various scholars emphasize the importance of Guanxi that significantly influences the didactic relationship between the leader and a worker in an organization. Others believe employee commitment, extra effort, leadership effectiveness and satisfaction with the leader have a positive relationship with LMX. LMG (guanxi) has mixed effects on the turnover. In connection to this, the broad objective of this research is to examine the critical success factor of employees’ outcome turnover among the private enterprises of Saudi Arabia. Therefore, the sample size of 300 respondents randomly selected from three institutions representing the private sector will be issued with questionnaires and subjected to interviews. Qualitative data analysis will be used to analyses the collected data and represented through graphs, pie charts, and tables. The study will be highly significant for private sector in Saudi Arabia, in addressing the high employee turnover. CHAPTER ONE 1.0 Background of the Study Saudi Arabia is an important part of the Arab World and the Middle East as a regional power especially economic Zhou (2008). This can be demonstrated by the development of infrastructure, like a road network, and the effectiveness they exude in the region and the most conspicuous fast growing multinational organizations. Saudi Arabia’s characteristics in the determination of social developments and modernization methods have been influenced by the national conditions of history and reality. In the wake of this economic development, of most importance is the synergy developed between the workforce and their supervisors and the resultant perception created of the organization. This paper will, therefore, seek to evaluate, using Guanxi, the impact of in-circle group on employees productivity within Leader-Member Exchange (LMX) approach in Saudi Arabia. Saudi Arabia is deeply alive to the reality that the organizational change is unavoidable and necessitates changes in the organizational structure and operations of its companies through change in policies (Kotter & Schlesinger, 2008; Hodgson, 2009). The workforce becomes critical ingredient in the organizational change processes, as they are the key facilitators for implementing these changes for higher performance outcome (George & Jones, 2005). The on-going relationship between the managerial leadership and the workforce becomes the primary stimulant of mutual exchange that encourages workers to adopt changes to meet new challenges (Lee, 2008). The broad objective of this research is to study the critical success factor of employees’ outcome turnover among the private enterprises of Saudi Arabia. The paper aims at, answering questions seeking to determine the effects of Guanxi within the LMX approach on employee turnover. The paper will move on to examine the combined impact of in a circle group and Guanxi on employee turnover while studying the critical success factors of employees’ outcome and their turnover intentions within the broader framework of guanxi based LMX approach. Moreover, this study seeks to determine the effect of in circle groups on LMX approach and employee turnover. Leader-member exchange (LMX) accentuates the differentiated relationship that exists between a leader and his subordinate (Martin et al., 1999). In any social set up, administration is meant to influence subordinate in a positive way and to motivate them into outdoing themselves through willingly developing desired positive Person Organization (PO) fit. However, the desirable PO fit generated is not pegged on a theoretical leadership style, but rather the quality of the relationship of the leader in question with his subordinate that matters Podsakoff et al., (2000). Numerous researches have established some positive observations in the synergy between LMX and guanxi (LMG) (Deluga, 1998; Podsakoff et al, 2000; Wayne et al, 1997). According to Rousseau (1995), Leadership behaviors most certainly affect PO fit through employee’s perception of fairness and developed interests of the workplace. The supervisor-subordinate guanxi looks at the relationship that ensues between superiors and their subordinates within the organization. This concept has been appropriate in Chinese context, where it originated, and would be interesting to see its significance in Saudi Arabia’s fast growing multinational organizations when applied in the LMX approach. LMX relies on the assumption that relational leadership is an efficient mechanism of predicting employees’ behavior and turnover as it promotes a positive social exchange between the leaders and the subordinates Graen & Uh-Bien, (1995). A vibrant Saudi Arabia multinational business environment will benefit from a hybrid of leader the –subordinate approach and will act as an indicator of what other potential markets should emulate. 1.1 Statement of the problem Saudi Arabia has seen massive changes in its socio-economic development processes. It is witnessing rapid urbanization and upsurge in expatriate population due to fast growth of multinational organizations (Library of Congress, 2006). The private sector is extensively involved in the economic development with the help of the government through investment in Saudi economy. In order to safeguard the interests of the Saudi nationals, the government policy has introduced quota system that requires private organizations to employ Saudis in place of foreign workers while enforcing restrictions on the foreign employees Looney, (2004). The Western culture is vastly different to Islamic culture of Saudi Arabia that fosters conflicts across the workforce. Besides, the Islamic culture tends to borrow a lot from the Chinese culture, which is the epitome of Guan xi Kate & David (2006). Thus, various industries in the private sector especially MNCs are challenged by the high turnover of employees that is adversely affecting firms’ performance. 1.2 Justification The study investigates the role of social exchange as critical facilitator of higher performance among Saudi Arabia private sector businesses. The research outcome would, therefore, become highly pertinent in evaluating the various interacting elements of cultural exchange that can be exploited within LMX approach of organizational leadership for influencing employees’ turnover intentions. It would also encourage future research on the various imperatives of guanxi and multi-dimensional aspects of LMX approach in the private sector of Saudi Arabia. 1.3 Research questions 1.3.1 Main Research Question What is the critical success factor of employees’ outcome turnover? 1.3.2 Further research questions a. What are the effects of Guanxi on employee turnover within the LMX approach? b. What is the combined impact of in circle groups and Guanxi on employee turnover? c. Which turnover intentions are possible within the broader framework of guanxi based LMX approach? d. What impact does in circle groups have on LMX approach and employee turnover CHAPTER TWO LITERATURE REVIEW Modern day workplace has brought with it new dimensions that have proceeded to influence relationships in the organizations, behaviours and turnover. However even with the changing time, some groups still grapple with isolated behaviors in doing work. In a research conducted by Zoe et al. (2005), the most common challenges faced by organizations ranged from demographic dissimilarity, relationships among remote work, social network centrality, and practical use of impression management behaviors. The hardest part for organizations is establishing a positive identity of the workplace in the wake of the new work arrangements. In this new arrangement, brought about by the shifting of traditional world markets to emerging markets, technological advancements and globalization, changes in the organizational social networks serves to diminish employees’ positive view of the organization. The resultant effect on the employee turnover is negative, given the limited interpersonal understanding and social interaction that foster employee effectiveness and efficiency. Motivation is an important determinant in fostering impression management and relationships in an organization Leary & Kowalski (1990). The environmental compulsions become powerful antecedents that necessitate proactive participation of the workforce in the change process Oakland & Turner (2007). The various imperatives that influence the effectiveness of organizational leadership focus on developing a facilitating exchange between the leaders and the workforce to influence workers’ perspectives and workplace behavior. Various scholars emphasize the importance of Guanxi that significantly influences the didactic relationship between the leader and a worker in an organization Cheung et al. (2009). It is an important concept that encourages positive leader-follower exchange relationship as it incorporates the different perspectives of the manager and the worker. The concept of guanxi is pertinent as it helps to develop high-quality exchange relations between the organizational leadership and the workforce. Thus, guanxi augmented exchanges can be judiciously employed across different aspects of LMX to influence employees’ turnover intentions Lau et al. (2008). The relationship between subordinates’ reports and LXM is of uttermost importance to many organizations. According to Vikramaditya (2005), employee commitment, extra effort, leadership effectiveness and satisfaction with the leader had a positive relationship with LMX. However, employees’ intention to quit related negatively to LMX. It is important to note that LMX has significant influence on the attitude of the employee, with if combined with a definite desire by the organization to empower the employees’ it would enhance their turnover significantly. Much research has been undertaken to determine the extent upon which leaders differentiate among their subordinates. Nonetheless, much focus has been on the western LMX approach. The indigenous relationship based on the Chinese social values and norms offer significant study insights from an indigenous approach, the leader-member guanxi (LMG) Ying et al. (2013). In determining the effects of LMG (guanxi) on the turn over intention, co-worker helping behaviour, organizational commitment, and employee job satisfaction, it was observed that LMG (guanxi) has mixed effects on the turnover. According to Ying et al. (2013), the adverse effects of guanxi lie on the negative work attitude and their intentions of leaving the group. On the contrary, guanxi has significant positivity on the organizational commitment, co-worker helping behavior and job satisfaction. For the urban setup, guanxi has been considered illegitimate ways of acquisition favors Guthrie (1998, 1999). In addressing these concerns, Bian (1997) and Yang (1994) have suggested rational-legal framework at all levels of engagement, the organization, and the state. The nature of the relationship of in cycles and LMX has significant influence on the turnover intentions. The resultant effects are overall satisfaction, job performance, member competence and turnover intentions Gerstner et al. (1997). However, the direct relationship between turnover and LMX may be quite insignificant unless modified by external variables such as the levels of trust employees have in the leaders and the age of tenure. CHAPTER THREE STUDY METHODOLOGY 3.0 Research Locale The study will be conducted in Saudi Arabia among the private sector businesses particularly in the financial sector, food, retail, and telecommunication industries in Saudi Arabia. 3.1 Research Approach and Design The study will employ a case study of firms in selected industries, which fall within the private sector of Saudi Arabia .This type of research design will be used as it will allow collection and gathering of in-depth information relevant to the study. A qualitative approach will be followed. A descriptive study design will be used to collect primary data for describing an enormous population that it would be difficult to observe directly (Mouton 1996:232). A survey obtains 3.2 Population Target The target population for this study will be the private sector in the financial sector, food, retail, and telecommunication industries in Saudi Arabia. The research will target particularly banks, fast food stores, retail stores, and telecommunication firms in Saudi Arabia. This population was targeted because it represented a vast majority of private owned firms and multinationals, which the research thesis addresses. 3.3 Sample size The sample size for this research will be determined from the target population using purposive sampling method where individually selected industry representatives will provide respondents through random sampling. 300 respondents randomly selected from 3 institutions namely; banks, fast food industry and retail and telecommunication firms representing the private sector in Saudi Arabia. 3.4 Instruments of data collection For this study, data will be obtained through administration of questionnaires at the selected respondents in selected firms. Semi-structured interviews on managers and employees of firms in the privates sector will also be used to collect primary data for this study. 3.5 Data analysis and presentation SPSS will be used to analyze the data, and the following tests will be carried out; ANCOVA, MANOVA, ANOVA and t-test among others. This mode of data analysis will be useful for assessing the effects of a number of on more than one continuous dependent variable. Besides, graph, pie charts, and tables will be used in the presentation of analyzed data. 3.6 Significance of the study The study would be highly significant for private sector in Saudi Arabia as it would address the high turnover of employees in the different organizations of the private sector. The country needs to involve its people in the development processes. Saudi Arabia is witnessing fast transformation in most significant areas of the economy and service delivery of public concern like health, education, transport, environment and infrastructure development. The low rate of citizens’ work in the private sector is of great concern to the Saudi Arabia government. Despite the Saudi government policy, which has ensured employment for Saudi nationals, there has emerged a chronic problem in employee turnover attributed to lack of commitment, insufficient qualifications and skills. Organizations are seeking ways to optimize employee potential and hence turnover. This study is bent on helping organizations realize their employee full potential and maximize their turnover for the sake of the organizations. Gamble and Huang (2008) assert that the cultural variance is a vital element that has a substantial impact on the employee commitment and their turnover. The study looks at the various combinations of variables aimed at improving the leaders and workers efficiency and effectiveness hence directly influencing employee turnover. Through the outcome of this research, the Saudi Arabia government and private organizations will have actions to implement in order to ensure that Saudi nationals are truly involved in the development of their country. 3.7 Theoretical Framework The research framework below shows the guanxi relationship between business and family (community) connections. Guanxi has a direct effect on the LMX within an organization, as is in circle groups in organizational relations Andrew et al. (2006). However, unlike the traditional guanxi, modernized guanxi, in sync with the contemporary trends in industrialization and modernization has been reiterated the importance of social networks developed from the expatriate community and relational contraction in Saudi Arabia. LMX has a direct influence on the effectiveness of employee turnover. However, the degree of LMX influences the outcome. With is, the employee turnover could be affected by the organization commitment towards enhancing employee turnover. The organization has an obligation to enhance the positive perception of the organization among its employees and management. On the other hand, the LMX will be affected by the duration employees have served in the organization and the level of trust in the LMX relationship and the organization at large. These variables are equally capable of directly influencing the employee turnover in any given group. 3.8 Conceptual Framework Figure 1. Proposed research framework 7 3.9 Limitations of the study Based on the qualitative method of research, the researcher found out that there is inadequate study done on the research topic. As such, the study will rely on the little information that is available as well as the case study. Moreover, some information required for this study is confidential and important in business strategies of organizations. As such, it might not be easy to access such information for the fear of exposure to competitors. 3.10 Reliability and validity 3.10.1 Reliability According to Polit et al. (2001), data reliability refers to the degree of consistency of an instrument in measuring the attribute it was designed to measure. The questionnaire answered by the respondents in the identified firms, revealed consistency in responses. Reliability will be ensured through minimizing possible sources of measurement error such as data collector bias. Data collector bias can be minimized 43 by having only one researcher administering the questionnaire in an allocated sample group, and through standardizing conditions like ensuring unbiased personal traits to all respondents, for instance, friendliness and support. The psychological and physical environment where data will be collected should be made private, guarantee confidentiality and overall physical comfort. Subjects will be asked not to indicate their names or any identification on the questionnaires to guarantee confidentiality. Additional information for use in the research will be obtained from semi-structured interviews of representative samples of employees and managers from sampled firms in selected industries. 3.10.2 Validity In order to achieve content validity, the questions questionnaire were derived from information gathered in the literature review in order to ensure they were correct representative of what private organizations grappled with regarding employee turnover. The number of respondents who refused to participate upon being approached will be reported to enable a judgment of threats to external validity. 3.11. Ethical consideration Ethical considerations are an intrinsic part of research and must ensure the trust and confidentiality of the respondents. Saudi Arabia is a culturally sensitive state with patriarchal society. Thus, the need to endorse the right to privacy of the participants, encourage confidentiality, and trust building is critical to gain information, which is accurate. The members would be informed about the details of the study. A consent form would be used to protect the respondents’ rights and the confidentiality of the information given by them. 4.0 TIME SCALE Submission of questionnaire 3 days Maximum allowance time to fill the questionnaires 14days Collection of questionnaires 3 days Collection of other data 14 days Analysis of collected data 14 days Preparation of a report 14 days This amounts to a total of 62 days 5.0 References Andrew M., Markus E., & Barry W. (2006). Guanxi and supplier search mechanisms in China. Human Relations, 59(4), 505–531. Bian, Y. (1997). 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