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Pay differentials The pay system is a copy of the pay-for-performance V\VWHP XVHG LQ WKH GRPHVWLF IDFLOLWLHV 3D\ LV FDOFXODWHG XVLQJ D PXOWLSOLHU GHULYHG IURP SURGXFWLRQ DQG TXDOLW\ DJDLQVW D EDVH UDWH7KH LQWHUYLHZHHV H[SODLQHG WKDW ZKHQSD\UDWHVGHFOLQHGXHWRPRGHOFKDQJHVGHVFULEHG LQGHWDLOLQWKHQH[WVHFWLRQHPSOR\HHVEHFRPHGLVVDWLV¿HG%HFDXVHZRUNHUVDUHPRUHIDPLOLDUZLWKDQGIDYRUD VHQLRULW\EDVHGV\VWHP D YLRODWLRQRI SURFHGXUDO MXVWLFH 3/13/09 10:45:32 AM 66 Understanding Employee Turnover Patterns in Mexican 0DTXLODGRUDV RFFXUVZKHQDVHQLRUZRUNHUHDUQVOHVVWKDQMXQLRUZRUNHUVGR'DLOH\ODQG.LUNVXJJHVWWKDWWKLVYLRODWLRQ FDQUHVXOWLQMREGLVVDWLVIDFWLRQ 7KH LQDELOLW\ WR DGMXVW WR QHZ VXUURXQGLQJV FRXSOHG ZLWK YLRODWLRQV RI FXOWXUDO QRUPV DQG SURFHGXUDO MXVWLFH DOOOHDGWRZRUNHUGLVVDWLVIDFWLRQDQGXOWLPDWHO\LQWHQWWR OHDYHWKHFRPSDQ\%ODFN'DLOH\O.LUN 7XQJ)ROORZLQJWKHLQWHQWLRQWRVHDUFKIRUDOWHUQDWLYHVLVWKHHYDOXDWLRQRIDOWHUQDWLYHV:KHQWKHHYDOXDWLRQ SURFHVV OHDGV WR WKH SHUFHSWLRQ RI JUHDWHU EHQH¿W LQMREVHOVHZKHUHDQGWKHUHDUHRWKHUMRERSSRUWXQLWLHV WKH ZRUNHU ZLOO GHYHORS WKH LQWHQWLRQ WR TXLW 0REOH\ *ULIIHWK 0HJOLQR ,QWHUYLHZHHV UHSRUWHG WKDW WKHUHDUHQXPHURXVIDFWRU\MREVDYDLODEOHLQWKHDUHDDQG WKRVHZKROHDYHWKHFRPSDQ\FDQXVXDOO\¿QGDQRWKHUMRE TXLFNO\ ,QVXPPDU\WKHGDWDJDWKHUHGIURPWKHLQWHUYLHZVVXJJHVWWKDWWKUHHGLVWLQFWFRQGLWLRQVH[LVWWKDWFRQWULEXWHWR WXUQRYHURUJDQL]DWLRQDOFXOWXUHVKRFNDQGWKHLQDELOLW\WR DGMXVWWRZRUNGHDOLQJZLWKIDPLO\DQGHFRQRPLFLVVXHV DQGSD\GLIIHUHQWLDOVUHVXOWLQJLQDYLRODWLRQRISURFHGXUDO MXVWLFH &RPELQLQJ WKH WKUHH FRQGLWLRQV VLPXOWDQHRXVO\ H[DFHUEDWHV QHJDWLYH IHHOLQJV WKHUHE\ FRQWULEXWLQJ VLJQL¿FDQWO\WRHPSOR\HHWXUQRYHU Quantitative Data 7KHGDWDJUDSKLFDOO\UHSUHVHQWHGLQ)LJXUHLQGLFDWH that there are consistent turnover patterns represented by WZR PDMRU SHDNV )LUVW -DQXDU\ LV KLVWRULFDOO\ DQG FRQVLVWHQWO\ WKH PRQWK GXULQJ ZKLFK PRVW SHRSOH OHDYH WKH FRPSDQ\7KH VHFRQG VLJQL¿FDQW SHULRG RI VHSDUDWLRQ LV WKH-XO\±$XJXVWSHULRG January turnover 7KH JUDSK VKRZQ LQ )LJXUH LQGLFDWHV WKDW WKH SUH &KULVWPDV YDFDWLRQ SHULRG KDV WKH ORZHVW PRQWKO\ HPSOR\HHWXUQRYHUDQGWKHVSHFL¿F¿JXUHVSURYLGHGLQ7DEOH VKRZWKDWWKH'HFHPEHUDYHUDJHWXUQRYHULVZKLFK LVE\IDUWKHORZHVWUDWHIRUWKHHQWLUH\HDUZLWK1RYHPEHU EHLQJVHFRQGORZHVWDW,QFRQWUDVWWKH-DQXDU\DYHUDJHRIVHYHQWLPHVKLJKHUWKDQWKDWRI'HFHPEHU FOHDUO\VLJQDOVWKHVLJQL¿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±$XJXVWSHDN July-August turnover 7KHLQWHUYLHZHHVH[SODLQHGWKDWWKHUHZHUHVHYHUDOLVVXHVZLWKSD\SHUFHLYHGDVXQIDLUZKLFKSURYLGHGZRUNHUVZLWKDPRWLYHWROHDYH'XULQJWKHPRQWKRI-XO\WKH IDFWRU\ UHFHLYHV PRVW RI LWV SURGXFWLRQ PRGHO FKDQJHV Figure 1: $QQXDO7XUQRYHUIURP2FWREHUWR$SULO C JCC Vol 2 Issue 1.indd 66 3/13/09 10:45:33 AM Understanding Employee Turnover Patterns in Mexican 0DTXLODGRUDV 7DEOH Annual Turnover Percentage by Month and Year from October 2000 to April 2005 )LVFDO\HDU 2FW 1RY Dec. 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The company under study JUDQWHGYHU\OLPLWHGDFFHVVWRLQWHUYLHZHHV+RZHYHUDO- 3/13/09 10:45:33 AM Understanding Employee Turnover Patterns in Mexican 0DTXLODGRUDV WKRXJKWKHUHZHUHIHZLQWHUYLHZVWKHUHZDVDOPRVWFRPSOHWHFRQJUXHQFHDPRQJDOOWKUHHOHYHOVRILQWHUYLHZHHV 7KLV KLJK OHYHO RI FRQVLVWHQF\ VXJJHVWV WKDW DGGLWLRQDO LQWHUYLHZVZRXOGOLNHO\KDYHSURYLGHGVLPLODUUHVSRQVHV 7KLVFRPSDQ\DVNHGWKDWLWVQDPHLQGXVWU\DQGVSHFL¿F SODQWORFDWLRQQRWEHLQFOXGHGLQWKLVSDSHU$OWKRXJKVXFK LQIRUPDWLRQPD\KDYHHQKDQFHGWKHUHVXOWVZHKDYHUHVSHFWHGWKHFRPSDQ\¶VUHTXHVWIRUFRPSOHWHDQRQ\PLW\ )XWXUHUHVHDUFKVWXGLHVFRXOGEHGHVLJQHGWREXLOGRQ WKHUHVXOWVSUHVHQWHGKHUHDQGIRUH[DPSOHFRXOGDLPWR DQVZHUWKHIROORZLQJTXHVWLRQV$UHVLPLODUWXUQRYHUSDWWHUQVHYLGHQWLQRWKHUGHYHORSLQJFRXQWULHVVXFKDV&KLQD DQG ,QGLD" :KDW LV WKH UHODWLRQVKLS EHWZHHQ FXOWXUDOO\ EDVHG DWWLWXGHV WRZDUGV ZRUN DQG WXUQRYHU" $QHFGRWDO HYLGHQFHIURPH[SDWULDWHVLQGLFDWHVWKDWVRPH¿UPVKDYH UHGXFHG WXUQRYHU E\ SURYLGLQJ DPSOH WUDLQLQJ DQG SD\ UDWHVWKDWDUHHTXLYDOHQWWKURXJKRXWWKHLQGXVWULDOVHFWRU RIDSDUWLFXODUUHJLRQ7KLVFRQFOXVLRQVHHPVUHDVRQDEOH EHFDXVHWKHVHWZRIDFWRUVDUHSRVLWLYHO\UHODWHGWRMREVDWLVIDFWLRQZKLFKLVQHJDWLYHO\UHODWHGWRZRUNHUWXUQRYHU 5RVVH +XOLQ 7KHUHIRUH IXWXUH VWXGLHV PD\ DGGUHVV W\SHV RI WUDLQLQJ DQG SD\ PHWKRGV WKDW HQKDQFH MREVDWLVIDFWLRQDVZHOODVSD\PHWKRGVWKDWGRQRWFDXVH turnover. Conclusion $V maquiladoras FRQWLQXH WR H[SHULHQFH LQFUHDVHG PDQXIDFWXULQJ RUGHUV DQG WR H[SDQG LQ QXPEHU FRPSDQLHVWKDWKDYHDEDQGRQHG0H[LFRLQVHDUFKRIORZHUFRVWV HOVHZKHUHPD\EHWHPSWHGWRUHWXUQWR0H[LFRGXHWRLWV FORVHSUR[LPLW\WRWKH8QLWHG6WDWHV$ZDUHQHVVRISUHGLFWDEOHWXUQRYHUSDWWHUQVZLOOEHXVHIXOIRUWKRVHFRPSDQLHV WKDWDUHFRQVLGHULQJLQLWLDWLQJQHZRSHUDWLRQVLQ0H[LFR DV ZHOO DV IRU WKRVH ¿UPV WKDW KDYH RQJRLQJ RSHUDWLRQV :KHQWKHUHVXOWVIURPWKLVVWXG\DUHXVHGLQFRQMXQFWLRQ ZLWKWKRVHRIRWKHUVWXGLHVmaquiladoraPDQDJHUVPD\ be in a better position to understand and reduce turnover. 3UHHPSWLYH PHWKRGV WR UHGXFH WXUQRYHU VKRXOG HQDEOH PDQDJHUVWRORZHUFRVWSHUXQLWSURPRWHHI¿FLHQF\HQKDQFHRQWLPHGHOLYHULHVDQGEROVWHUTXDOLW\OHYHOV References $QGHU]HQ , $UQHW] % % 3V\FKRSK\VLRORJLFDO UHDFWLRQVGXULQJWKHÀUVW\HDURIIRUHLJQDVVLJQPHQW5HVXOWV IURP D FRQWUROOHG ORQJLWXGLQDO VWXG\ :RUN 6WUHVV (4), 304-318. %ODFN-6:RUNUROHWUDQVLWLRQV$VWXG\RI$PHULFDQ H[SDWULDWH PDQDJHUV LQ -DSDQ -RXUQDO RI ,QWHUQDWLRQDO %XVLQHVV6WXGLHV(2), 277-294. %URXWKHUV / ( 0F&UD\ - 3 :LONLQVRQ 7 - 0DTXLODGRUDV (QWUHSUHQHXULDO H[SHULPHQWDWLRQ WR JOREDO FRPSHWLWLYHQHVV%XVLQHVV+RUL]RQV(2), 37-44. &KLQHQ . 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(IIHFWLYH OHDGHUVKLS LQ WKH 0H[LFDQ PDTXLODGRUD &KDOOHQJLQJFRPPRQH[SHFWDWLRQV-RXUQDORI,QWHUQDWLRQDO 0DQDJHPHQW(1), 51-73. /DZUHQFH-<HK562QWKHXVHDQGHIIHFWLYHQHVV RIHPSOR\HHLQYROYHPHQWLQ0H[LFR-RXUQDORI,QWHUQDWLRQDO 0DQDJHPHQW389-416. Linnehan, F., & Blau, G. (2003). Testing the impact of job VHDUFK DQG UHFUXLWPHQW VRXUFH RQ QHZ KLUH WXUQRYHU LQ D maquiladora. $SSOLHG3V\FKRORJ\$Q,QWHUQDWLRQDO5HYLHZ (2), 253-269. Losing their shirts. (2004). (FRQRPLVW59-60. /XFNHU * : 7KH KLGGHQ FRVW RI ZRUNHU WXUQRYHU$ FDVH VWXG\ LQ WKH LQERQG LQGXVWU\ LQ 0H[LFR -RXUQDO RI %RUGHUODQG6WXGLHV 93-98. /XFNHU*:$OYDUH]$&RQWUROOLQJPDTXLODGRUD WXUQRYHU WKURXJK SHUVRQQHO VHOHFWLRQ 6RXWKZHVW -RXUQDO RI %XVLQHVVDQG(FRQRPLFV(3), 1-10. 0DF/DFKODQ , $JXLODU$ * 0DTXLODGRUDV P\WKV /RFDWLRQDODQGVWUXFWXUDOFKDQJHLQ0H[LFR·VH[SRUWPDQXIDFWXULQJLQGXVWU\3URIHVVLRQDO*HRJUDSKHU(3), 315-331. 0DHUW]&3%LRJUDSKLFDOSUHGLFWRUVRIWXUQRYHUDPRQJ 0H[LFDQZRUNHUV$QHPSLULFDOVWXG\,QWHUQDWLRQDO-RXUQDO RI0DQDJHPHQW(1), 112-119. 0LOOHU - 6 +RP 3: *RPH]0HMLD / 5 7KH high cost of low wages: Does maquiladora compensation UHGXFHWXUQRYHU"-RXUQDORI,QWHUQDWLRQDO%XVLQHVV6WXGLHV (3), 585-595. 0REOH\ : + *ULIIHWK 5 : 0HJOLQR % 0 5HYLHZ DQG FRQFHSWXDO DQDO\VLV RI WKH HPSOR\HH WXUQRYHU process. 3V\FKRORJLFDO%XOOHWLQ493-522. Oberg, K. (1960). Cultural shock: Adjustment to new cultural HQYLURQPHQWV3UDFWLFDO$QWKURSRORJ\177-182. 3HOOHG/++LOO.'D(PSOR\HHZRUNYDOXHVDQG RUJDQL]DWLRQDO DWWDFKPHQW LQ 1RUWK 0H[LFDQ PDTXLODGRUDV 7KH,QWHUQDWLRQDO-RXUQDORI+XPDQ5HVRXUFH0DQDJHPHQW (4), 495-505. 3/13/09 10:45:33 AM Understanding Employee Turnover Patterns in Mexican 0DTXLODGRUDV 3HOOHG/++LOO.'E3DUWLFLSDWLYHPDQDJHPHQWLQ 1RUWKHUQ0H[LFR$VWXG\RIPDTXLODGRUDV7KH,QWHUQDWLRQDO -RXUQDORI+XPDQ5HVRXUFH0DQDJHPHQW(4), 197-212. 3HxD / 5HWDLQLQJ D 0H[LFDQ ODERU IRUFH -RXUQDO RI %XVLQHVV(WKLFV(2), 123-131. 5RPHUR ( - 3URIHVVLRQDO 0H[LFDQ HPSOR\HHV 7KH HVVHQWLDO HOHPHQW LQ 0H[LFDQ PDTXLODGRUD TXDOLW\ LPSURYHPHQW LQLWLDWLYHV /DWLQ $PHULFDQ %XVLQHVV 5HYLHZ (3), 45-64. 5RVVH-*+XOLQ&/$GDSWLRQWRZRUN$QDQDO\VLV RIHPSOR\HHKHDOWKZLWKGUDZDODQGFKDQJH2UJDQL]DWLRQDO %HKDYLRUDQG+XPDQ'HFLVLRQ3URFHVVHV324-347. Sargent, J., & Matthews, L. (2003). Boom and bust: Is it the HQG RI 0H[LFR·V PDTXLODGRUDV" %XVLQHVV +RUL]RQV (2), 57-65. Segrest, S. L., Romero, E. J., & Domke-Damonte, D. J. (2003). ([SORULQJWKHUROHRIPDFKLVPR in gender discrimination: A FRPSDULVRQEHWZHHQ0H[LFRDQGWKH86(TXDO2SSRUWXQLWLHV ,QWHUQDWLRQDO(1), 13-31. Smith, G. (2004, August 6). Made in the maquilas - again. %XVLQHVV:HHN45. 6ROLV/(5DJK\1DWKDQ765DR66$UHJLRQDO VWXG\RITXDOLW\PDQDJHPHQWLQIUDVWUXFWXUHSUDFWLFHVLQ86$ C JCC Vol 2 Issue 1.indd 71 DQG0H[LFR,QWHUQDWLRQDO-RXUQDORI4XDOLW\DQG5HOLDELOLW\ 0DQDJHPHQW(6), 597-613. Stephens, G. K., & Greer, C. R. (1995). Doing business in 0H[LFR8QGHUVWDQGLQJFXOWXUDOGLIIHUHQFHV2UJDQL]DWLRQDO '\QDPLFV(1), 39-55. Tamimi, N., & Sebastianelli, R. (1998). The barriers to total TXDOLW\PDQDJHPHQW4XDOLW\3URFHVV(6), 57-60. 7HDJDUGHQ0%%XWOHU0&YRQ*OLQRZ0$ 0H[LFR·V PDTXLODGRUD LQGXVWU\ :KHUH VWUDWHJLF UHVRXUFH management makes a difference. 2UJDQL]DWLRQDO'\QDPLFV (3), 34-47. Tiano, S. (1994). 3DWULDUFK\ RQ WKH OLQH /DERU JHQGHU DQG LGHRORJ\ LQ WKH 0H[LFDQ PDTXLOD LQGXVWU\ Philadelphia: 7HPSOH8QLYHUVLW\3UHVV Tung, R. L. (1988). 7KH QHZ H[SDWULDWHV Cambridge, MA: Ballinger. * Correspondence concerning this article should be addressed to Dr. Eric J. Romero, e-mail: [email protected] ** Correspondence concerning this article should be addressed WR'U.HYLQ:&UXWKLUGVHPDLONHYLQFUXWKLUGV#QLFKROOV edu 3/13/09 10:45:33 AM Understanding Employee Turnover Patterns in Mexican 0DTXLODGRUDV Appendix Interview Questions Employees Supervisors Managers )DFWRU\HQYLURQPHQW³FXOWXUHVKRFN´ ¥ ¥ ¥ :RUNLQJXQGHUH[WUHPHGXUHVV ¥ 6FKHGXOHGRYHUWLPHIDPLO\FRQÀLFWV ¥ ¥ 6FKHGXOHGRYHUWLPHcomercio informal ¥ ¥ 3D\LQHTXLW\ ¥ ¥ ¥ ¥ ¥ E&KULVWPDVYDFDWLRQSD\WZRZHHNV ¥ ¥ ¥ F3URGXFWLRQSD\RQHZHHN ¥ ¥ ¥ ¥ ¥ a. comercio informal ¥ ¥ b. other factories ¥ ¥ ¥ ¥ :K\GRVRPDQ\SHRSOHOHDYHWKHFRPSDQ\" :K\GRVRPDQ\OHDYHLQ-DQXDU\" +LJKLQFRPHSHULRG¿YHZHHNVLQRQHSD\SHULRG a. 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