UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Huỳnh Thiên Hải FACTORS INFLUENCING ORGANIZATIONAL COMMITMENT AND INTENTION TO STAY OF CORE EMPLOYEES IN SMALL - MEDIUM SIZED COMPANIES IN HOCHIMINH CITY MASTER OF BUSINESS (Honours) Ho Chi Minh City - Year 2012 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Huỳnh Thiên Hải FACTORS INFLUENCING ORGANIZATIONAL COMMITMENT AND INTENTION TO STAY OF CORE EMPLOYEES IN SMALL - MEDIUM SIZED COMPANIES IN HOCHIMINH CITY ID: 60340102 MASTER OF BUSINESS (Honours) SUPERVISOR Dr. NGUYỄN THỊ NGUYỆT QUẾ Ho Chi Minh City - 2012 TIEU LUAN MOI download : skknchat@gmail.com INDEX ACKNOWLEDGEMENTS .5 LIST OF FIGURES .6 LIST OF TABLES.6 LIST OF APPENDIX. Background to the research .1 The importance of small and medium sized companies. The facts of labor force in SMEs and problem statement.
Scope of the study. Significances of the study:. Structure of the study .13 CHAPTER 2: LITERATURE REVIEW. Relative concepts and definition .Small and medium companies.
Core employee retention. Review of previous study. Remuneration and reward. Organizational culture and policies.
22 TIEU LUAN MOI download : skknchat@gmail. Intention to stay. Proposal research hypotheses .1 Measure of variable. Data analysis technique.
Testing of Reliability. Exploratory factor analysis (EFA). Hypotheses testing: Multiple Regression Analysis .34 CHAPTER 4: DATA ANALYSIS. Sample description and data clearance.
Testing of Reliability. Exploratory factor analysis (EFA). Finding and discussion .46 TIEU LUAN MOI download : skknchat@gmail. Suggestion for future Research .3: Testing of reliability variables.
EFA for all independent variables. EFA for all independent variables (The first time in 4 times) .2: EFA with all independent variable (the second time in 4 times). EFA for all independent variables (The third time in 4 times). EFA for all independent variables (The fourth time in 4 times).
Independent variables: Training, leadership, remuneration and company policies; dependent variable: Commitment. Independent variables: Organizational Commitment; dependent variable: intention to stay.76 TIEU LUAN MOI download : skknchat@gmail.com 5 ACKNOWLEDGEMENTS First at all, I would like to express my sincere gratitude to my supervisors, Dr. Nguyen Thi Nguyet Que for her continuous support of my thesis. I would like to take this opportunity to thank leaders, teachers and staffs in ISB who help me usefully all the subjects of my master course.
My sincere thanks also goes to the friends and colleagues who participated in the initial trial survey stages that led to the development of the final survey questionnaire and their support over the time when I am busy to study. I would like to thank my Mummy, my sisters, brothers and my special friend who is my moral support in all my studying period. Last at all, I would like to present the achievement to my Dad's soul who spent all the life for my family Ho Chi Minh City, December 28, 2012 Huynh Thien Hai TIEU LUAN MOI download : skknchat@gmail.com 6 LIST OF FIGURES Name of configure Page Figure 2.1 proposal research hypothesis 24 Figure 3.1 Research Design Process 26 44 Figure 4.1 Final model LIST OF TABLES Table name Page Table 2. Classification of SMEs in Vietnam 16 Table 3.
Measurement of training and career 27 development 27 Table 3. Measurement of leadership 28 Table 3. Measurement of working environment Table 3. Measurement of remuneration and 29 rewards Table 3.
Measurement of company policies 29 Table 3. Measurement of organizational 30 commitment 30 Table 3. Measurement of intention to stay Table 3.8: Cronbach’s alpha reliability coefficient 33 Table 4.1 Sample Demography 37 Table 4.2: Cronbach’s alpha reliability coefficient of variable 37 Table 4.3: Pattern matrix in the last time (the fourth time) of regression analysis 37 Table 4.4 Correlations model 1 40 Table 4.5 Model Summaryb model 1 40 Table 4.6 ANOVA of model 1 41 Table 4. Coefficientsa of medel 1 41 Table 4.8 Model Summaryb model 2 43 Table 4.
Coefficientsa of model 2 43 Table 5. Questionnaire for organizational polices 46 TIEU LUAN MOI download : skknchat@gmail.com 7 LIST OF APPENDIX Appendix name Page APPENDIX 1.1: ENGLISH QUESTIONAIRE 55 APPENDIX 1.2: VIETNAMESE QUESTIONAIRE 50 APPENDIX 4.3: Testing of reliability of variables 65 Appendix 4. EFA for all independent variables 67 Appendix 4. EFA for all independent variables (The first 67 time in 4 times) Appendix 4.2: EFA with all independent variable (the 68 second time in 4 times) Appendix 4.
EFA for all independent variables (The third 70 time in 4 times) Appendix 4. EFA for all independent variables (The 71 fourth time in 4 times) Appendix 4.Correlation bivariable model 1 73 Appendix 4.Correlation bivariable model 2 76 TIEU LUAN MOI download : skknchat@gmail.com 8 LIST OF ABBREVIATION SME. Small and medium sized company SMEs. Small and medium sized companies HCMC.
Hochiminh City VCCI. Vietnam Chamber of Commerce and Industry HR .Human resource VND. Vietnam Dong WTO. the World Trade Organization WB.
World Bank TIEU LUAN MOI download : skknchat@gmail.com 9 ABSTRACT Employee retention especially core employees is one of the most important ongoing practices of human resource management. Employee’s turnover is a major HR organizational threat. The problem is being faced by different organizations of almost all the countries. Organizations are trying different plans to get maximum output from employees.
Core employee retention is one of the main factors that could help in achieving the required results. There are many theories for retention employees but there is not any closed research for SME employees in HCMC. This study elaborates the retention of core employees; its benefits and factors that may help to retain the best employees of the organization. Questions with five-point Likert scale are used to the research for investigating needs of core employees.
Base on the result of investigation, the most affective factors among of factors: training-career path; leadership; working environment ; remuneration-rewards and organizational culture-policies will be recognized. Intermediary variable is organizational commitment that is used in the research. The research findings prove significant relationship of training-career path; leadership; working environment; remuneration-rewards and organizational culture-policies that influence the staying decision of core employee. This study will help SMEs in HCMC to find out various HR policies and to revise their current policies for further improvements.
TIEU LUAN MOI download : skknchat@gmail.com 10 CHAPTER I: INTRODUCTION 1. Background to the research 1.1 The importance of small and medium sized companies Small and medium sized companies (after here called by SMEs) are important to almost all economies in the world. SMEs are main element in all economics, in Europe, there are 57 per cent of 1- person enterprises, 34 per cent of micro enterprises (less than 10 employees); 7.7 per cent of small enterprises; 1per cent of medium, totally of SME is 99.7 per cent but there are only 0.27 per cent of large companies and 0.03 per cent of Stock Exchange (Agnès, 2010). SMEs in Russia (with up to 250 employees) account for about 90 per cent of the total number of firms, they provide 45 per cent of total employment and they account for 40 per cent of total sales; SMEs in China account for 99.9 percent of the total number of firms, they provide 84 per cent of total employment and account for 71 percent of total sales (Qimiao, 2003).
General Statistics Office (2012) reported SMEs are approximately 97 per cent of 448.393 companies in Vietnam and they represent the main drivers in obtaining employment and VCCI (2012) reported SMEs contribute 60 per cent GDP in Vietnam with the capital of 6 million billion VND 1. The facts of labor force in SMEs and problem statement Although there are many important SME's distribution, they still face many problems in HR, the demands for the human resource is increasing and the lack of the right personnel, especially in the management personnel, prevent the SMEs development. One of the specifications of HR in SMEs is not clearly function between administration and human resource such as administration usually is responsibility recruitment function in SMEs, but that are 2 different functions of HR in the organization (Torben., 2003) SMEs is very hard to completive with other organization type to attract qualified employee because there is not clearly policies to intent them. According to a recent poll of undergraduates and recent graduates of the three local universities, Singapore Management TIEU LUAN MOI download : skknchat@gmail.com 11 University (SMU), National University of Singapore (NUS) and Nanyang Technological University (NTU), MNCs, as a category, still outstrip SMEs as employers of choice.
Recruitment firm Jobs Factory, which polled over 4,500 students, revealed that in this year’s survey, the top five employers of choice in the private sector are Apple, Singapore Airlines, Google, 3M and DBS Bank – all large companies with operations across the world. It is not difficult to see why job seekers flock to MNCs. Besides the easily-recognizable brand names, they are also seen as organizations that are more transparent, offer higher remuneration, superior benefits and strong organizational structure – all of which point to better career prospects. Recent surveys have highlighted that culture and work-life balance are important to the younger generation, and bigger firms are perceived to be more flexible – or at least, more open to suggestion – in these areas.
Conversely, SMEs are often seen to be non-transparent, authoritarian and less professional (than MNCs). More often than not, the founder/boss’ inner circle is made up of family and relatives, with competence a secondary consideration. (Developing an Argument, 2010) Employee working life in SMEs is short, most of employee think SMEs is temporary place, so they do not have any long term plan for the SME. The other specification of employees in SMEs is they are not confident working, always waiting direction for leader.
The studies indicated that the work relationship between the employer and the employee in SME’s is not generally governed by a contract. Only (15%) of the workers had a contract (El Mahdi, Nov. The lack of contract may just be a reflection of the traditional and informal environment in which SME’s is conducting its affairs. So, the most important issue of SME’s is the insecurity of the workers regarding their future, due to the lack of social security coverage and due to the fact that employers are not bound by any contract towards their employees.
The previous studies indicated that although the provision of technical and other aspects of running the small firms are highly needed, the training assistance that is offered to small enterprises through the different programs of support and finance is almost negligible. According to the study of Soliman et al.9% of the studied projects indicated TIEU LUAN MOI download : skknchat@gmail.com 12 that they did not get any kind of assistance, especially training, from the finance providers. Despite the fact that a few studies tackled the issue of small enterprises, employment and micro-finance, none of these research tried to assess the kind of relationship that exists between offering micro finance and employment creation in the small enterprises. There are many reasons (or factors) are influencing employee but there is no study that researches what the factors more affect to employee, which factors are influencing organizational commitment and intention to stay of employee in the SMEs.
Those questions are the problem of labour force in SMEs and that will be answered in the study. Research objective In the thesis, we will review relevant theories and previous researches on factors that have impact on the intention to stay of core employees stay in SMEs. Specially, the study will investigates what factors influencing the intention to stay of core employees and measure how deep the influencing factors effect organizational commitment and intention to stay of core employees.