CC BY
6
UDC 331
THE ROLE OF ORGANIZATIONAL ENGAGEMENT MEDIATES THE EFFECT OF SUPPORTIVE WORK ENVIRONMENT ON EMPLOYEE RETENTION
Sadhu Bendesa Gede Widyastana Putra*, Surya Ida Bagus Ketut
Faculty of Economics and Business, University of Udayana, Bali, Indonesia *E-mail: bendesa.sadhu@gmail.com
ABSTRACT
Human resources are an important part of an organization where the success of a company depends on the quality of its human resources, including the hotel business. Employee retention is recognized as key to the delivery of quality service in a competitive hospitality market environment. This research aims to analyze the influence of a Supportive Work Environment on Employee Retention which is mediated by Organizational Engagement. This research involved 93 employees of Intercontinental Sanur Resort Bali. Data collection was obtained through observation, interviews and questionnaires. The analysis techniques used are descriptive statistical analysis and inferential statistical analysis. Data were analyzed using Structural Equation Modeling (SEM) with a Partial Least Square (PLS) approach. The results show that Supportive Work Environment and Organizational Engagement have a positive and significant effect on Employee Retention. Organizational Engagement partially mediates the influence between Supportive Work Environment and Employee Retention. Theoretical implications based on Social Exchange Theory show that the reciprocal relationship between companies and employees will always be positive. The conclusion obtained from this research is that the higher the level of supportive work environment and organizational attachment felt by employees, the better employee retention will be.
KEY WORDS
Supportive work environment, organizational engagement, employee retention.
Human capital is a critical component of organizational success, particularly in sectors like hospitality. The hospitality industry, closely intertwined with human resources, relies heavily on the human element, considering it an integral part of its service delivery (Ghazali, 2010). The direct interaction between staff and customers further underscores the importance of human resources in this sector (Bibi, 2018). Employees are recognized as invaluable assets, playing a pivotal role in shaping the organization's image (Bharwani and Butt, 2012). Challenges in the hospitality industry extend beyond recruiting suitable talent, encompassing a significant hurdle in retaining employees. High turnover rates pose a substantial loss in investment, impacting human resources, quality, and training (Davidson, Timo, & Wang, 2010). In the face of global economic uncertainties, retaining employees has become a universal challenge (Pfeffer, 1994). Strategies such as rewards, recognition, and respect are identified as key elements in enhancing efficiency, reducing absenteeism, fostering a positive work environment, and ultimately increasing revenue (Nazia and Begum, 2013). The issue of employee retention is not novel, dating back to the 20th century when scholars began exploring factors influencing employees' job satisfaction and longevity (Mathimaran & Kumar, 2017). High turnover rates are acknowledged to impact a hotel's cost structure, workplace efficiency, and overall productivity (Deery and Shaw, 1997; Lashley and Chaplain, 1999). Employee retention, defined as the motivation to stay in an organization for an extended period, is contingent on meeting employee values and expectations (Griffeth & Hom, 1995). A Supportive Work Environment (SWE) is identified as a critical precursor to employee retention (Richman, 2008). Acknowledging SWE becomes instrumental in retaining talented individuals (Sahney, 2011). Maintaining a learning culture and fostering a positive work climate are recognized as essential for attracting and retaining top professionals (Boswell, 2017). The Social Exchange Theory highlights the reciprocal relationship between employee and employer, emphasizing the role of perceived support in
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fostering commitment and prolonged tenure (Cropanzano and Mitchell, 2005; Bibi et al., 2018). ~
The work environment, encompassing non-monetary elements, significantly influences employee decisions to stay with an organization (Chao, 2008). An appealing and clean work environment is believed to positively impact employee retention and commitment (Mangi, Soomro, Ghumro, Abidi, and Jalbani, 2011; Kundu and Lata, 2017). Organizations leverage top management support to enhance employee retention, as organizational support positively influences attitudes and intentions to stay (Taylor, 2010). Organizational Engagement emerges as a crucial aspect in the retention equation, acting as a mediator between HR practices and turnover intention (Juhdi et al., 2013; Saks, 2006). Recognizing human resources as valuable assets, institutions are encouraged to provide dynamic career development opportunities and ensure a good fit between the organization and its employees to foster retention (Lynn, 1997; Denton, 1992; Bibi et al., 2018). In the highly competitive hospitality market, creating a conducive work environment with organizational support becomes imperative for retaining professional employees (Ghosh and Sahney, 2011).This study aims to open a broader view of a Supportive Work Environment where Organizational Engagement works as a mediator to address employee retention. This study investigates Supportive Work Environment and Organizational Engagement as variables that influence employee retention and simultaneously attempts to establish a causal relationship between these variables.
Intercontinental Bali Sanur Resort is a private company engaged in hospitality services. Intercontinental Bali Sanur is located at Jl. Kusuma Sari No. 8, Sanur, South Denpasar, Bali which is a five-star hotel located in Denpasar City, Bali Province. Based on the results of a pre-survey of 10 employees of Intercontinental Sanur conducted randomly, some indications indicate a high level of employee retention which can be seen in Table 1.
Table 1 - Intercontinental Sanur Bali Employee Retention Pre-Survey Questionnaire Results
No Statement Score 1 2 3 4 5 Total Score Average Criteria
1 I will probably stay with the organization for the next five years 0 5 3 1 1 28 2,80 High Enough
2 I will not move away from this organization easily 0 5 2 2 1 29 2,90 High Enough
3 For me, this organization is the best of all existing organizations to work for. 0 4 5 1 0 27 2,70 High Enough
Total Average Score 2,80 High Enough
Based on the results of the respondents' answers to the pre-survey questionnaire, some respondents felt that they would stay in the company for a long time and would not move away from this organization easily, but others stated otherwise, so a phenomenon related to employee retention in the company was found. This raises the question of the factors that lead to Intercontinental Sanur Bali's imperfect employee retention rate and the managerial approach towards their employees. According to the recognition of several respondents, one of the factors for high employee retention rates can be influenced by a supportive work environment, which is defined as how capable the environment is of influencing employees' decisions to stay. This influence certainly cannot be separated from the organizational engagement factor where the level of organizational support that has a positive effect can affect employee attitudes (Einsenberg, 1986) so that the environment can have an effect mediated by the attachment felt by employees. Based on this description, research was conducted regarding the effect of Supportive Work Environment and Organizational Engagement on Employee Retention (study at Hotel Intercontinental Sanur Bali). Based on the literature the following hypotheses can be proposed:
• H1: Supportive Work Environment has a positive and significant effect on employee retention;
• H2: Organizational Engagement has a positive and significant effect on Employee Retention;
• H3: Supportive Work Environment has a positive and significant effect on Organizational Engagement;
• H4: Organizational Engagement mediates the effect of a Supportive Work Environment on employee retention.
METHODS OF RESEARCH
This research was conducted using a quantitative research approach. This research was conducted at the Intercontinental Bali Sanur Resort Hotel located at Jl. Kusuma Sari No. 8, Sanur, South Denpasar, Bali which is a sample of hotel service-based companies located in Denpasar City, Bali Province. The selection of the research location is in line with the results of a pre-survey that has been conducted related to the level of employee retention that has not been maximized and the influence of the Supportive Work Environment and Organizational Engagement variables on it. The Exogenous Variable (X) is Supportive Work Environment. Endogenous Variable (Y) is Employee Retention. Mediating Variable (Z) is Organizational Engagement. The population in this study was employees of the Intercontinental Sanur Bali hotel, totalling 121 employees. The sample in this study was 93 employees of the Intercontinental Sanur Bali Hotel. Sampling in this study uses a proportionate stratified random sampling method. Data collection methods used in this study include observation, interviews and questionnaires. The data analysis technique in this study uses two techniques, namely descriptive statistical analysis and inferential statistics using the Structural Equation Model (SEM).
RESULTS AND DISCUSSION
The validity test results show that all research instruments used to measure the Supportive Work Environment, Organizational Engagement and Employee Retention variables have a correlation coefficient value with the total score of all statement items greater than 0.30 with a significance of less than 0.05. This shows that the statement items in the research instrument are valid and suitable for use as research instruments. The reliability test results show that all research instruments have a Cronbach's Alpha coefficient of more than 0.60. So, it can be stated that all variables have met the reliability requirements so that they can be used to conduct research.
Table 2 - Convergent Validity Testing Results
X (Supportive Work Environment) Y (Employee Retention) Z (Organizational Engagement)
X1 0,738
X2 0,728
X3 0,788
X4 0,782
X5 0,731
X6 0,745
X7 0,745
X8 0,715
Y1 0,892
Y2 0,911
Y3 0,841
Z1 0,831
Z2 0,803
Z3 0,868
Z4 0,879
Z5 0,909
Z6 0.855
Source: Processed Data, 2023.
The convergent validity test results in Table 2 show that all variable indicator outer loading values have a value greater than 0.70. Thus, it can be concluded that all indicators have met the requirements of convergent validity. The results of the convergent validity test can be seen in the following figure:
Figure 1 Model PLS Algorithm Table 3 - Discriminant Validity Results
Root of Average variance : extracted (VAVE)
Average variance extracted (AVE) X (Supportive Work Environment) Y (Employee Retention) Z (Organizational Engagement)
X (Supportive Work Environment) 0,558 0,747
Y (Employee Retention) 0,778 0,611 0,882
Z (Organizational Engagement) 0,736 0,648 0,777 0,858
Source: Processed Data, 2023.
Based on Table 3, it can be explained that the AVE value of the Supportive Work Environment, Organizational Engagement and Employee Retention variables is greater than 0.5, thus, all variables in the tested model meet the discriminant validity criteria. The results of the discriminant validity test can also be carried out by comparing the cross-loading values
Table 4 - Cross-Loading Test Results
X (Supportive Work Environment) Y (Employee Retention) Z (Organizational Engagement)
X1 0,738 0,506 0,528
X2 0,728 0,454 0,590
X3 0,788 0,857 0,652
X4 0,782 0,509 0,678
X5 0,731 0,767 0,633
X6 0,745 0,561 0,587
X7 0,745 0,520 0,709
X8 0,715 0,558 0,664
Y1 0,733 0,892 0,640
Y2 0,733 0,911 0,662
Y3 0,680 0,841 0,752
Z1 0,699 0,653 0,831
Z2 0,608 0,513 0,803
Z3 0,721 0,667 0,868
Z4 0,754 0,683 0,879
Z5 0,816 0,692 0,909
Z6 0,743 0,761 0,855
Source: Processed Data, 2023.
Based on Table 4, it can be seen that the correlation of indicators X1, X2, X3, X4, X5, X6, X7 and X8 with their variables is higher than the correlation with other variables. Because the cross-loading value on the variable X (Supportive Work Environment) indicator has a greater correlation with its indicators than with other variables, it can be said that variable X (Supportive Work Environment) has met discriminant validity. Furthermore, the correlation of indicators Z.1, Z.2, Z.3, Z.4, Z.5 and Z.6 with their variables is higher than the
correlation with other variables. Because the cross-loading value of the Z (Organizational Engagement) variable indicator has a greater correlation with its indicators than with other variables, it can be said that the Z (Organizational Engagement) variable has met discriminant validity. Likewise, the correlation of indicators Y.1, Y.2, and Y.3 with their variables is higher than the correlation with other variables. Because the cross-loading value of the variable Y (Employee Retention) indicator has a greater correlation with its indicators than with other variables, it can be said that variable Y (Employee Retention) has met discriminant validity.
Table 5 - Instrument Reliability Research Results
Cronbach's alpha Composite reliability (rho a) Composite reliability (rho c) Average variance extracted (AVE)
X (Supportive Work Environment) 0,887 0,892 0,910 0,558
Y (Employee Retention) 0,857 0,857 0,913 0,778
Z (Organizational Engagement) 0,928 0,933 0,944 0,736
Source: Processed Data, 2023.
The output results of composite reliability and Cronbach's alpha of Supportive Work Environment, Organizational Engagement, and Employee Retention variables are all above 0.70. Thus, it can be explained that all variables have good reliability.
Table 6 - Dependent Variable R-square Value
R-square R-square adjusted
Y (Employee Retention) 0,686 0,679
Z (Organizational Engagement) 0,719 0,716
Source: Processed Data, 2023.
Based on Table 6, the model of the effect of a Supportive Work Environment on Organizational Engagement provides an R-square value of 0.719 which can be interpreted that the variability of the Organizational Engagement variable can be explained by the variability of the Supportive Work Environment variable by 71.9 %, while 28.1 % is explained by other variables outside the study. Furthermore, the model of the effect of a Supportive Work Environment and Organizational Engagement on Employee Retention provides an R-square value of 0.686 which can be interpreted that the variability of the Employee Retention variable can be explained by the variability of the Supportive Work Environment variable, and Organizational Engagement by 68.6 per cent, while the remaining 31.4 % is explained by other variables outside the study:
Q2 = 1- (1 - (R-i)2 ) (1 - (R2)2) = 0,912
The results of these calculations obtained the Q2 value is 0.912 so it can be concluded that the model has good predictive relevance. Thus, it can be explained that 91.2 % of the variation in Employee Retention is influenced by Supportive Work Environment and Organizational Engagement, while the remaining 8.8 % is influenced by other variables not examined in this study.
Table 7 - Goodness of Fit Test Results
Average variance extracted (AVE) R Square
X (Supportive Work Environment) 0,558
Z (Organizational Engagement) 0,736 0,719
Y (Employee Retention) 0,778 0,686
Average 0,691 0,7025
Source: Processed Data, 2023.
Table 7 shows the average value of R Square is 0.691 then the average value of AVE 0,7025, the results of the Goodness of Fit calculation are as follows:
GoF
= ^AVE x R2 = 0,697
A GoF value of 0.365 is classified as large, a GoF value of 0.25 is classified as medium/moderate and a GoF value of less than 0.25 is classified as small (Hair, 2017). A model that has a large GoF value means that it is more suitable for describing the research sample. Based on the results of the Goodness of Fit (GoF) calculation above, the GoF value is 0.697 so it can be concluded that the model in this study has a relatively large research model fit.
Figure 2 - Empirical Model of Direct Effect (Source: Processed Data, 2023)
Figure 2 explains that a Supportive Work Environment has a direct effect on Employee Retention with a statistical t value of 4.696. A supportive Work Environment has a direct effect on Organizational Engagement with a statistical t-value of 26.531. Organizational Engagement has a direct effect on Employee Retention with a statistical t value of 2.609.
Table 8 - Test Results of Total Effect between Variables
Original Sample T Statistic dO/STDEVD P Values Information
X (Supportive Work Environment) -> Y (Employee Retention) 0,544 4,696 0,000 H1 accepted (Positive & significant effect)
Z (Organizational Engagement) -> Y (Employee Retention) 0,316 2,609 0,009 H2 accepted (Positive & significant effect)
X (Supportive Work Environment) -> Z (Organizational Engagement) 0,848 26,531 0,000 H3 accepted (Positive & significant effect)
Source: Processed Data, 2023.
Hypothesis testing on the effect of a Supportive Work Environment on Employee Retention results in a correlation coefficient value of 0.544, then the Supportive Work Environment has a positive effect on Employee Retention. The t Statistics value obtained is 4.696 (> t-critical 1.96) with a p-value of 0.000 <0.050, so the effect of a Supportive Work Environment on Employee Retention is significant. Thus, hypothesis 1 (H1) which states that Supportive Work Environment has a positive and significant effect on Employee Retention is accepted. The results of this study are in line with previous research from Ramlall (2003) which states that perceptions related to a Supportive Work Environment encourage employees' intention to stay in the organization. The results of this study are also in line with research conducted by Kyndt et al. (2009), Taylor (2010) and Bamel et al. (2013) which
found that Supportive Work Environment has a positive and significant influence on Employee Retention.
Hypothesis testing on the effect of Organizational Engagement on Employee Retention produces a correlation coefficient of 0.316, so Organizational Engagement has a positive effect on Employee Retention. The value of t Statistics obtained 2.609 (> t-critical 1.96) with a p-value of 0.009 <0.050, then the effect of Organizational Engagement on Employee Retention is significant. Thus, hypothesis 2 (H2) which states that Organizational Engagement has a positive and significant effect on Employee Retention is accepted. The results of this study are in line with previous research from Malinen (2013) where employees who have more trust in management show higher attachment and lower intention to leave the organization. This research is also in line with Harter (2002), Kahn (1990), Saks (2006) de Lange (2008), Argawal (2016) and Schaufeli & Bakker (2004), which explains that there is a negative correlation between organizational attachment and intention to leave the organization.
Hypothesis testing on the effect of a Supportive Work Environment on Organizational Engagement produces a correlation coefficient of 0.848, the Supportive Work Environment has a positive effect on Organizational Engagement. The value of t Statistics obtained is 26.531 (> t-critical 1.96) with a p-value of 0.000 <0.050, then the effect of a Supportive Work Environment on Organizational Engagement is significant. Thus, hypothesis 3 (H3) which states that a Supportive Work Environment has a positive and significant effect on Organizational Engagement is accepted. The results of this study are in line with previous research from Shuck (2010) that coworker relationships, perceived climate and a supportive work environment can encourage employee organizational attachment. This is also in line with the results of research from Juhdi (2013) which states that a supportive work environment with perceived flexibility and supportive work-life policies is the best predictor of expected employee engagement and retention.
Table 9 - Test Results of Indirect Effect (Specific Indirect Effect)
Original Sample (O) Sample Mean (M) Standard Deviation (STDEV) T Statistics dO/STDEVU P Values
X (Supportive Work Environment) -> Z (Organizational Engagement) -> Y (Employee Retention) 0,268 0,263 0,104 2,576 0,010
Source: Processed Data, 2023.
Supportive Work Environment on Employee Retention through Organizational Engagement obtained a correlation value of 0.268 with a t statistic of 2.576> 1.96, and a p value of 0.010 <0.050, so there is a significant positive indirect effect between Supportive Work Environment on Employee Retention through Organizational Engagement.
Table 10 - Recapitulation of Mediation Variable Test Results
Mediating Variable Effect - Description
(A) (B) (C) (D)
X (Supportive Work Environment) -> Z (Organizational Engagement) -> Y (Employee Retention) 0,268 (Sig.) 0,544 (Sig.) 0,848 (Sig.) 0,316 (Sig.) Partial Mediation
Source: Processed Data, 2023.
Organizational Engagement can partially mediate the indirect effect of a Supportive Work Environment on Employee Retention. This result is shown from the mediation test conducted, which shows that the direct effect has a significant value, while effect A which is the indirect effect of the independent variable (Supportive Work Environment) on the dependent variable (Employee Retention) by involving the mediating variable has a significant value. Thus, Organizational Engagement is a complementary partial mediation. The results of this study are in line with previous research from Kundu & Latha (2019) which shows that Organizational Engagement can mediate the effect of a Supportive Work
Environment on Employee Retention. Employees who feel a supportive work environment will play an important role in increasing organizational attachment and employee retention, then it can be said that employees who have high Organizational Engagement will also trigger employees to continue working in the organization. The results of this study are also in line with research conducted by Saks (2006) who found that Organizational engagement mediates the relationship between processes (including Supportive Work Environment) and outcomes (Employee Retention) of the organization.
RESEARCH IMPLICATIONS
Organizations should prioritize creating and sustaining a supportive work environment. This could include initiatives such as flexible work arrangements, employee wellness programs, and fostering positive interpersonal relationships among team members. Regular assessments of the work environment's effectiveness should be conducted, and adjustments made as necessary to address evolving employee needs. Management should actively work towards enhancing organizational engagement among employees. This might involve initiatives such as fostering a sense of belonging, providing opportunities for professional development, and recognizing and rewarding employees for their contributions. Regular feedback sessions and surveys can help gauge the level of organizational engagement and guide improvement efforts. Recognizing that organizational engagement acts as a mediator in the relationship between a supportive work environment and employee retention, organizations should actively promote strategies that boost both aspects simultaneously. Training programs, mentorship opportunities, and clear communication channels can be implemented to strengthen the link between a supportive work environment and organizational engagement.
Future research should explore additional variables beyond supportive work environments and organizational engagement. Factors such as work stress, leadership styles, compensation, and other organizational dynamics should be considered to provide a more comprehensive understanding of employee retention. The study highlights the interconnectedness of supportive work environments, organizational engagement, and employee retention. Further research could delve into the intricate mechanisms at play, examining how different variables interact and influence each other in the context of employee retention. The practical implications suggest actionable steps for organizations to enhance employee retention, while the theoretical implications point towards avenues for further academic exploration and refinement of existing models.
CONCLUSION
Based on the results of research analysis and discussion results in the previous chapter, the conclusions of this study are as follows: Supportive Work Environment on Employee Retention has a positive and significant influence, which means that the better the supportive work environment, the higher the level of employee retention. Organizational Engagement on Employee Retention has a positive and significant influence, which means that the higher the sense of organizational attachment that employees have, the higher the level of employee retention. Supportive Work Environment on Organizational Engagement has a positive and significant effect, which means that the better the supportive work environment, the higher the level of employee attachment to the organization. Organizational Engagement can partially mediate the complementary effect of a Supportive Work Environment on Employee Retention, which means that the higher the level of a supportive environment, then coupled with the existence of organizational engagement felt by employees, the higher the level of employee retention.
Management must be able to maintain and maintain the work environment so that it remains comfortable and supportive for employees so that the level of employee retention in the company remains high. It is necessary to improve supporting factors that can increase perceived organizational attachment such as a supportive work environment, intergroup
assistance, relationships with superiors, compensation and so on so that the high level of perceived organizational attachment will spur employees' desire to stay in the organization for a longer time. For future research, it is recommended to add other variables besides Supportive Work Environment and Organizational Engagement in conducting research related to Employee Retention. For example, by adding variables of work stress, leadership style, compensation, or other variables.
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