p–ISSN: 2723 - 6609 e-ISSN: 2745-5254
Vol. 5, No. 11, November 2024 http://jist.publikasiindonesia.id/
Indonesian Journal of Social Technology, Vol. 5, No. 11, November 2024 5117
Developing a Strategic Framework for Enhancing Employee
Engagement and Retention
Kirana Erlinda Yasmin1*, Madju Yuni Ros Bangun2, Henndy Ginting3
Institut Teknologi Bandung, Indonesia
Email: kirana_erlinda@sbm-itb.ac.id
*Correspondence
ABSTRACT
Keywords: employee
engagement, retention,
turnover, dairy industry.
Employee engagement is a critical focus in human resource
management, particularly in industries with strategic
significance such as the dairy industry in Indonesia. The
Indonesian dairy industry plays a vital role in ensuring
community nutrition and contributes significantly to the
national economy through job creation and improving
farmer welfare. As the market leader, PT Indosusu Nasional
acknowledges that human resources are its primary asset and
key to organizational success while facing intense
competition and high employee turnover. This study aims to
analyze employee engagement at PT Indosusu Nasional,
focusing on factors influencing engagement levels and their
impact on employee retention. Data was collected through a
survey involving employees from various departments of the
company. The results of this study can be recommended to
PT Indosusu Nasional as a strategy for retaining its
employees is related to the company's reputation in building
the company's image and conducting routine training for
employees.
Introduction
The dairy industry in Indonesia occupies a crucial role in the national economy,
contributing significantly to both nutrition and employment. (Aji, Wijoyo, & Rachmadi,
2024). This sector is experiencing remarkable strategic importance, with strong prospects
for growth and expansion. According to data from the Directorate General of Animal
Husbandry and Animal Health of the Ministry of Agriculture of the Republic of Indonesia
(Ditjen PKH Kementerian Pertanian RI), the demand for milk in Indonesia currently
stands at 4.3 million tons per year. However, domestic production meets only
approximately 22.7% of this demand, with the remainder fulfilled through imports. This
gap between supply and demand represents a substantial opportunity for the domestic
fresh milk industry. Additionally, the performance of milk processing companies is
heavily influenced by the management of human resources. Employees are one of the
most valuable assets in an organization, contributing significantly to its growth and
success. (Alana & Sharif, 2023). Their contribution extends beyond mere satisfaction and
commitment to achieving the organization’s desired effectiveness through engagement.
Kirana Erlinda Yasmin, Madju Yuni Ros Bangun, Henndy Ginting
Indonesian Journal of Social Technology, Vol. 5, No. 11, November 2024 5118
In this research, comparisons were made between dairy industry companies listed
on the IDX. The companies compared with PT Indosusu Nasional include PT Diamond
Food Indonesia Tbk (DMND), PT Cisarua Mountain Dairy Tbk (CMRY), and PT
Campina Ice Cream Industry Tbk (CAMP) (Bygstad, Munkvold, & Volkoff, 2016). In
such a competitive environment, companies must focus on growth, profitability, and
market share. Despite its historical market leadership, PT Indosusu Nasional faces
contemporary challenges that require thorough research and evaluation to maintain and
enhance its position in the competitive dairy industry. (Aprilia & Alfansi, 2024).
Analyzing external factors is crucial for understanding the dynamics that influence
a company's performance. (Chang & Yu, 2023). This research conducts a comparative
analysis of various companies in the dairy industry to determine PT Indosusu Nasional's
competitive standing. The findings indicate that PT Indosusu Nasional outperforms the
average of the three other dairy industry companies analyzed. Despite having the fewest
employees in 2022, PT Indosusu Nasional achieves higher sales per employee,
demonstrating its efficiency and strong performance.
Table I
Sales and Number of Employees Each Company (in Billion Rupiah)
PT
Indosusu
Nasional
PT PT PT
Average Cimory
Campina Diamond
Sales Rp7,656.30 Rp6,378.00 Rp1,129.00 Rp8,461.77 Rp5,906.
27
Number of
Employees
970 3527 1357 7224 3,269.5
Sales per
Employee
7.89 1.81 0.83 1.17 2.93
However, over the past five years, PT Indosusu Nasional has experienced a decline
in profit per employee and profit per personnel cost.
Figure 1
Profit per Employee of PT Indosusu Nasional from 2018-2022
Developing a Strategic Framework for Enhancing Employee Engagement and Retention
Indonesian Journal of Social Technology, Vol. 5, No. 11, November 2024 5119
This trend indicates that the company has not fully maximized the efficiency of its
workforce in generating profits, as evidenced by the lack of annual increase in profit per
employee.
Figure 2
Profit per Personnel Cost of PT Indosusu Nasional from 2018-2022
A declining ratio could suggest that a significant portion of the company's revenue
is being devoted to personnel costs, indicating a need to reassess the cost structure or
find ways to enhance productivity. This trend signifies that the company is increasingly
generating less profit from its personnel expenses over time.
To fully understand and analyze the external factors, it is essential to also
investigate the internal factors thoroughly. When examining the decrease in profit per
employee and the stagnation of profit relative to personnel costs, it becomes clear that
there are underlying issues within the company's human resources domain.
Table 2
Employee Turnover Ratio
In 2022, the turnover ratio saw a notable increase compared to previous years. High
employee turnover can significantly affect both the quality and quantity of production
(Wu, 2012). Discussing the importance of turnover is crucial, as it directly relates to
organizational performance (Bygstad et al., 2016).
Method
Participants
This research employs a quantitative approach, collecting data by distributing
questionnaires to a sample of participants. The study included 100 respondents from
various departments within the company.
Measures
This research aims to measure the level of employee engagement with the company
across eight dimensions: brand, leadership, performance, the work, the basics, company
Kirana Erlinda Yasmin, Madju Yuni Ros Bangun, Henndy Ginting
Indonesian Journal of Social Technology, Vol. 5, No. 11, November 2024 5120
practices, business problems, and people problems. Each dimension includes three sub-
drivers (indicators) represented by specific questions in the questionnaire. The
questionnaire comprises 30 items, each rated on a six-point Likert scale.
Results and Discussion
In this research, measurement models with reflective indicators are evaluated
using convergent validity (AVE). An AVE value greater than 0.5 indicates that the
variable is ideal, meaning the indicator is valid for measuring the construct it forms.
Consistency reliability was assessed using Cronbach's Alpha parameter, with a
recommended value greater than 0.7. Composite reliability in PLS is also conducted to
measure the consistency of the measuring instrument. A construct is considered reliable
if it has a composite reliability value greater than 0.70 (Chang & Yu, 2023). The results
demonstrated that the validity and reliability tests met the required standards, indicating
that each indicator in this study is valid and reliable for measuring the constructs.
Table 3
Validity and Reliability Test
Variable AVE Croncbach’s Alpha CR
Company Brand 0.814 0.886 0.929
Leadership 0.794 0.868 0.920
Performance 0.625 0.875 0.922
The Work 0.672 0.819 0.892
The Basics 0.795 0.797 0.877
Company Practices 0.799 0.872 0.920
External Factors 0.784 0.703 0.833
Internal Factors 0.810 0.758 0.860
Say 0.860 0.725 0.879
Stay 0.705 0.767 0.895
Strive 0.733 0.837 0.925
A higher R-Square value signifies a robust predictive capability of the research
model. (Indrawati, 2015), indicating the effectiveness with which the independent variable
impacts the dependent variable. As the R-Square value increases, so does the strength of
the independent variable's influence on the dependent variable (Puspawati & Febrianta,
2023).
Developing a Strategic Framework for Enhancing Employee Engagement and Retention
Indonesian Journal of Social Technology, Vol. 5, No. 11, November 2024 5121
Table 5
R-Square Value for SEM-PLS Model
In SEM PLS, hypothesis testing is carried out by evaluating the significance value
between constructs, t-statistics, and p-values. This study employs the bootstrapping
method with a significance level set at 0.05. A positive beta coefficient and a p-value
below 0.05 indicate a significant hypothesis (Putra & Hayadi, 2024). Furthermore, if the
calculated T value exceeds 1.660 (based on the t-table with degrees of freedom = N-1
and alpha of 5%), the hypothesis is accepted.
Table 6
Hypothetical Testing
Hypothesis Original
sample
Sample
mean
R2 T-
Statistic
P-
Values
Result
Company
Brand ->
0.131 0.131 0.408 1.873 0.031 Influencing
Leadership -
> Say
0.222 0.211 0.489 1.789 0.037 Influencing
Performance
->
0.045 0.077 0.490 0.280 0.390 Not
Influencing
The Work -
> Say
0.307 0.305 0.637 1.918 0.028 Influencing
The Basic -
> Say
0.130 0.130 0.510 1.019 0.154 Not
Influencing
Company
Practices ->
Say
(0.093) (0.083) 0.209 0.928 0.177 Not
Influencing
External
Factors ->
Say
(0.043) (0.043) 0.204 0.553 0.290 Not
Influencing
Internal
Factors ->
Say Stay
0.240 0.233 0.562 2.067 0.020 Influencing
Company
Brand ->
0.276 0.279 0.358 2.617 0.005 Influencing
Leadership -
> Stay
(0.075) (0.076) 0.149 0.639 0.261 Not
Influencing
Performance
-> Stay
0.150 0.173 0.221 1.053 0.146 Not
Influencing
The Work -
> Stay
(0.141) (0.146) 0.219 0.661 0.254 Not
Influencing
The Basic -
> Stay
0.033 0.012 0.258 0.232 0.408 Not
Influencing
Company 0.059 0.059 0.184 0.501 0.308 Not
Kirana Erlinda Yasmin, Madju Yuni Ros Bangun, Henndy Ginting
Indonesian Journal of Social Technology, Vol. 5, No. 11, November 2024 5122
Practices - Influencing
External
Factors ->
0.152 0.131 0.256 1.094 0.137 Not
Influencing
Internal
Factors ->
0.219 0.239 0.336 1.233 0.109 Not
Influencing
Company
Brand ->
0.042 0.039 0.358 0.737 0.231 Influencing
Leadership -
> Strive
0.279 0.255 0.523 2.137 0.017 Influencing
Performance
-> Strive
(0.077) (0.065) 0.401 0.542 0.294 Not
Influencing
The Work -
> Strive
(0.141) (0.146) 0.219 0.661 0.254 Not
Influencing
The Basic -
> Strive
0.229 0.242 0.563 2.040 0.021 Influencing
Company
Practices -
Strive
0.035 0.036 0.343 0.384 0.351 Not
Influencing
External
Factors ->
Strive
0.137 0.143 0.379 1.844 0.033 Influencing
Internal
Factors ->
Strive
0.280 0.274 0.636 2.826 0.002 Influencing
The bootstrapping test results for this research model show the influence of
independent constructs (employee engagement drivers) on the dependent construct
(employee engagement behavior). Among the engagement drivers, four engagement
drivers were identified as factors influencing "Say" employee engagement behavior, 1
engagement driver was identified as a factor influencing "Stay" employee engagement
behavior, and 4 engagement drivers were identified as factors influencing "Strive"
employee engagement behavior, while the rest had no effect. (Shiu, Liao, & Tzeng,
2023). For "Say" behavior, the significant variables are Company Brand, Leadership,
Work, and Internal Factors. For "Stay" behavior, only the Company Brand variable is
significant. For "Strive" behavior, the significant variables are Leadership, Basic,
External Factors, and Internal Factors.
The table provides a ranking of employee engagement drivers, emphasizing which
drivers should be prioritized for improvement or maintenance. It is crucial to concentrate
on the highest-ranked drivers, particularly those with lower scores, to ensure alignment
with desired employee behaviors. By mapping these drivers effectively and
implementing targeted preventive measures for critical drivers, engagement can be
enhanced significantly. (Zhang, Chen, & Zamil, 2023).
Developing a Strategic Framework for Enhancing Employee Engagement and Retention
Indonesian Journal of Social Technology, Vol. 5, No. 11, November 2024 5123
Table 7
Engagement Drivers Ranking
To identify business solutions, data is structured into a matrix known as the matrix
of influence and variable score (Fajar, 2017), which correlates current conditions with
engagement driver results. This matrix visualizes the relationship between a company's
present situation and expected outcomes, where the X-axis reflects the company's
current condition derived from average questionnaire scores, and the Y-axis represents
the Beta values associated with engagement drivers and their impact on engagement
behaviors.
Matrix of “SAY” Engagement Behavior
Figure 3
Matrix of “SAY” Engagement Behavior
According to the "SAY" Engagement Behavior Matrix depicted in Figure 3, one
dimension falls within quadrant I, indicating it as the highest priority requiring
improvement. The primary sub-driver identified for improvement is leadership coaching,
specifically represented by Q24. Therefore, enhancing leadership coaching stands out as
the company's top priority to foster a positive environment where employees speak
favorably about the company to colleagues, family, and customers.
Kirana Erlinda Yasmin, Madju Yuni Ros Bangun, Henndy Ginting
Indonesian Journal of Social Technology, Vol. 5, No. 11, November 2024 5124
Matrix of “STAY” Engagement Behavior
Figure 4
Matrix of “STAY” Engagement Behavior
According to the "STAY" Engagement Behavior Matrix presented in Figure 4, the
company currently does not have urgent needs for immediate improvements as no items
fall within quadrant I (crucial). However, several items are situated in quadrant II,
indicating high and average influence, which suggests areas for enhancement to bolster
employee engagement. The analysis indicates that the company brand is the sole
significant factor influencing "Stay" behavior. Specifically, the main sub-drivers
requiring improvement are reputation and corporate responsibility, represented by Q18
and Q2. Therefore, focusing on these areas is crucial for cultivating a stronger sense of
belonging and commitment among employees.
Matrix of “STRIVE” Engagement Behavior
Figure 5
Matrix of “STRIVE” Engagement Behavior
Developing a Strategic Framework for Enhancing Employee Engagement and Retention
Indonesian Journal of Social Technology, Vol. 5, No. 11, November 2024 5125
According to the "Strive" Engagement Behavior Matrix depicted in Figure 5, one
dimension falls within quadrant I, highlighting it as a top priority requiring improvement.
The primary sub-driver identified for enhancement is leadership coaching, specifically
represented by Q24. Therefore, improving leadership coaching stands out as the
company's foremost priority to motivate employees and foster efforts toward achieving
success in their work and for the company.
Conclusion
The research findings indicate that not all engagement drivers equally impact
employee engagement behaviors. Internal factors notably influence "Say" and "Strive"
behaviors, whereas the company's brand significantly affects "Stay" behavior. Utilizing a
business solutions matrix, it was determined that leadership, particularly coaching,
requires improvement to enhance "Say" and "Strive" behaviors, while the company's
brand, focusing on reputation and corporate responsibility, is critical for fostering "Stay"
behavior. Strengthening these areas can yield positive impacts for the company and
uphold its leadership in the market. Effective employee engagement and retention,
especially among high-performing employees, necessitate strategic human resource
management.
Kirana Erlinda Yasmin, Madju Yuni Ros Bangun, Henndy Ginting
Indonesian Journal of Social Technology, Vol. 5, No. 11, November 2024 5126
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