UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ PHAM THUY THUY DUNG FACTORS AFFECTING ORGANIZATIONAL COMMITMENT AND RETENTION OF KEY EMPLOYEES IN SMALL AND MEDIUM SIZED FIRMS IN HO CHI MINH CITY. MASTER OF BUSINESS (Honours) Ho Chi Minh City - 2014 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ PHAM THUY THUY DUNG FACTORS AFFECTING ORGANIZATIONAL COMMITMENT AND RETENTION OF KEY EMPLOYEES IN SMALL AND MEDIUM SIZED FIRMS IN HO CHI MINH CITY. ID: 21110009 MASTER OF BUSINESS (Honours) SUPERVISOR: DR. DINH THAI HOANG Ho Chi Minh City – 2014 TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENT ABSTRACT……………………………………………………………………………….1 Research background and problem statement.4 Significance of the study.
6 CHAPTER 2: LITERATURE REVIEW 2. 16 CHAPTER 3: RESEARCH METHODOLOGY 3.2 Data Collection and Procedure .4 Data analysis method. 24 CHAPTER 4: DATA ANALYSIS 4.3 Exploratory Factor Analysis. 32 TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 5: CONCLUSION, IMPLICATIONS AND LIMITATIONS.2 Limitation and future research.
50 LIST OF FIGURES Figure 2.19 TIEU LUAN MOI download : skknchat@gmail.com LIST OF TABLES Table 3. Source of data collection………………………………………….2 Reliability Test Results………………………………………………….3 KMO and Bartlett’s Test of Independent Variables………………………….4 Rotated Component Matrix of Independent Variables……………………….5 KMO and Bartlett’s Test of Dependent Variables………………… ……….6 Rotated Component Matrix of Dependent Variables………….8 Model Summary of multiple regression analysis……………….9 ANOVA of multiple regression………………………………………………35 Table 4.10 Coefficients of multiple regression analysis……………………………….11 Model Summary of Simple Regression Analysis…………………….12 ANOVA of Simple Regression Analysis……………………………………38 Table 4.13 Coefficients of Simple Regression Analysis……………….14 Summary of testing hypotheses result……………………………………….40 TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENTS First at all, I would like to express my sincere gratitude to my supervisor, Dr. Dinh Thai Hoang for his continuous support in the throughout process of my thesis. I would like to take this opportunity to thank leaders, professors and staffs at ISB who have helped me during my two year master course.
My sincere thanks also go to the friends and colleagues at Bach Viet JSC, that 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 was busy to study. Last but not least, I would like to grant special thanks to my family members who have loved and supported me all over the time. Ho Chi Minh City, July 4, 2014 Pham Thuy Thuy Dung TIEU LUAN MOI download : skknchat@gmail.com ABSTRACT Retaining of key employees is one of the most important current matters of human resource management. Employee’s turnover is a major threat to sustainability and development of organizations.
The problem is being faced by different organizations around the countries. Intent to stay of key employee is one of the main factors that could help reinforce the labor force and achieve the targeted goal. This study examines the retention of key 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 the needs of core employees.
Base on the previous research, the most affective factors among of factors: training and career opportunities; job characteristics, and work/life policies will be considered. The research findings prove significant relationship of training and career opportunities; job characteristics, and work/life policies that affect the staying decision of core employees. This study will help SMEs in HCMC to find out various human resource policies and to revise their current policies for further improvements. 1 TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 1: INTRODUCTION 1.1 Research Background and Problem Statement Small and medium sized companies (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 China account for 99.9 percent of the total number of firms, they provide 84 percent 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 percent GDP in Vietnam with the capital of 6 million billion VND. Although there is many important SME's distribution, they still face to many problems in HR, the demand of the human resource is increasing and the lack of the right person, especially in the management personnel, prevents the SMEs from development.
One of the specifications of HR in SMEs is not clearly function between administration and human resource such as administration usually is responsibility for recruitment function in SMEs, but that are 2 different functions of HR in the organization (Torben. SMEs are very hard to compare with other organization type to attract qualified employees because there are not clear policies to keep them. 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 Multinational Companies (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. 2 TIEU LUAN MOI download : skknchat@gmail.com Recent surveys have highlighted that work-life balance is 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. 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 retention is considered the greatest challenge for businesses in Vietnam and becomes a hot topic for discussions of human resource managers. Vietnamese employees aggressively accelerate their career to better positions, challenging jobs and better pay. In a survey of Navigos Group, the leading and largest executive recruitment solution provider reported in Vietnam Plus (2010) “63,8 percent of respondents from 168 companies operating in Vietnam including foreign-invested ones ranked the employee retention as the number one human resource challenge in 2010”. And it also confirmed “getting the right people into the right job with the right skills and to have them stay and grow are missions which will keep human resource personnel busy in 2010.
As long as this is the fact, employee retention is hard work.” According to Towers Watson (2011) in a briefing of engagement indicator survey, Vietnam labor market has experienced a talent war in which Vietnamese employers are trying to engage their talent through some employee engagement programs. In the Towers Watson’s data, it also showed that “employee engagement levels in Vietnam have remained steady over the last five years (currently 78% favorable) and higher than employee engagement levels in the overall Asia Pacific Region (currently 74% favorable). However, employee intent to continue working for their current companies is lower in Vietnam (54%) compared to Asia Pacific (61%). In other words, the war for talent is fiercer in Vietnam than elsewhere in Asia Pacific because employees are at higher risk of leaving.” It is clear that organizational commitment has become one of the big matters to human resource managers and employers in organizations in general and small and medium sized organizations in particular today in Vietnam.
It is also the role of HR 3 TIEU LUAN MOI download : skknchat@gmail.com managers and employers to understand what are the critical factors affecting employees to get their higher commitment to the company. Employee working life in SMEs is short; most of employees 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 that they are dependent on working, always waiting direction from leader. Based on that, the employers at small and medium sized companies in Vietnam should come up with strategic action plans to engage their employees into the sustainability of the organization.
These requirements from the reality are important to the employers to find out what factors are affecting organizational commitment and intent to stay of key employees in small and medium sized firms in Ho Chi Minh City.2 Research objectives In the thesis, we will review related theories and previous researches on factors that have impact on the organizational commitment of employees in SMEs. Besides, this study will find out what factors are affecting the retention of key employees and measure how deep the influencing factors effect organizational commitment and retention of key employees in SMEs.3 Research Scope The research was conducted in Ho Chi Minh City, a commercial and financial trading center of Vietnam. Ho Chi Minh City has been chosen for this research due to its centricity for Economic and Industrial activities and being a silicon valley for many other activities (such as culture, education, sport) in which also gathers the largest number of small and medium enterprises in the country. This study focuses on small and medium sized enterprises in the area of Ho Chi Minh City.4 Significance of the study HCMC is the biggest trading, financial and service center of Vietnam.
There are over 170.000 SMEs, among of 38 per cent of SMEs in Vietnam (HCMC Department of Planning and Investment, 2012). SMEs in HCMC are very flexible so they not only 4 TIEU LUAN MOI download : skknchat@gmail.com achieve the best result but also get bad influence with any negative chances. According to the Ho Chi Minh City department of planning and investment, there are many companies among 26.324 companies that quit in 6 months in the beginning of 2012 facing difficult situation in retaining their talent employees. Because of the importance of key employees, this research focuses on retention key employees in SMEs in HCMC.
In general, key employees are normal employees with some special specification such as working period, their importance in organizations,. So besides normal desires as normal employees, they also need more request and to meet their demand. They are key things to retain them in organizations.5 Research Structure The study consists of five main parts: Introduction: Research background, problem statement, research purposes, scope of study and significances of the study Literature review: Some relative concept and definition of the study will be explained in this chapter such as small and medium firms, key employees, key employee retention as well as review of previous study about training and career opportunities; job characteristics, and work/life policy; organizational commitment and retention of employee. Proposal research hypotheses will be introduced in this chapter.
Methodology: Research process will be introduced in this chapter. This chapter also introduces the methodologies of questionnaire design, measure of variable, draft questionnaire, pilot study as well as the way to collect data and methodologies of data analysis. Data analysis: Collected data will be analyzed in this chapter. Conclusion, implications and limitation: This is the result of the study distribution of study for theory and applied, the limitation of the study and suggest to later study 5 TIEU LUAN MOI download : skknchat@gmail.6 Summary This chapter provides the background of the study, statement of the problem, research purposes of the study, and previous theoretical framework.
It also represents the scope and the structure of this study. 6 TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 2: LITERATURE REVIEW 2.1 Introduction There are many previous studies for the factors that affecting organizational commitment and retention of key employees in the world.