Effects of Crisis-driven Reduction Measures on Business Process Outsourcing Employees' Motivation, Performance, and Retention

• Published in: Review of Integrative Business and Economics Research 2024-01, Vol.13 (4), p.281-299
• Main Authors: Saavedra, Lorelei Leslie Marie L, Uy, Chin, Canoy, Leonardo M
• Format: Article
• Language: English
• Subjects: Communication; Cost control; COVID-19; Employee involvement; Employee turnover; Employers; Human capital; Human resources; Job satisfaction; Motivation; Pandemics; Productivity; Retention; Success; Workforce
• ISSN: 2414-6722; 2304-1013

Shared Services and Business Process Outsourcing (BPO) rely heavily on human capital for their success. This industry has recently been forced to employ workforce reduction measures to offset the economic consequences of the pandemic and keep businesses afloat. This study attempts to answer questions about how such reductive actions affect human capital. Specifically, it explores how workforce reduction measures impact the motivation, performance, and retention levels of BPO employees in the Philippines, and whether organizational communication plays a part in moderating the effects of such measures on employee performance. Four hundred thirty-seven respondents, mostly from business districts in Metro Manila, participated in this study through an adapted online questionnaire. Descriptive statistics and structural equation modeling were used to test the hypotheses. Findings show that workforce reduction measures, while implemented to a moderate extent, had resulted in lower employee motivation. Additionally, higher motivation led to higher performance and higher retention. Organizational communication has also been found to effectively moderate the effects of reduction measures on employee motivation. The research findings can help firms improve their human resource strategies to keep employees motivated, high-performing, and loyal.