The Effects of Human Resource Management Practices on Organizational Commitment – The Case of Viettel Group45314

EDESUS Proceeding 2019 33 of 1531The Effects of Human Resource Management Practices on Organizational Commitment – The Case of Viettel Group Thi Huong Dang 1,* , Thi-Ngoc Bich Chu 1 1

EDESUS Proceeding 2019 (33 of 1531)

The Effects of Human Resource Management

Practices on Organizational Commitment – The Case

of Viettel Group

Thi Huong Dang (1),(*) , Thi-Ngoc Bich Chu (1)

(1) VNU University of Economics and Business, Vietnam National University, Hanoi, Vietnam

* Correspondence: huongdth@vnu.edu.vn

Abstract: This paper explores the effects of human resource management practices on the employee

commitment in Viettel Group The framework is proposed based on inheriting and adjusting from previous empirical studies Data were collected from 270 employees in Viettel Group through a questionnaire survey from February to April 2019 and processed by SPSS The result shows that Training, Performance Appraisal, Compensation; Career Planning, and Employee Participant have positive effects on employees' commitment at Viettel Group Based on these results, the article proposes some suggestions to enhance the commitment and attachment of Viettel Group's employees

to the organization

Keywords: Human Resource Management Practices, Organizational Commitment

1 Introduction

In today's turbulent business environment, human resources are among the most valuable assets of any organization, determining the success of the organization With their knowledge and endless creativity, human resources are important success factors contributing to organizations' competitive advantages (Barney 1991; Singh 2004) Therefore, organization's strategies have recently been focusing on improving human resource management (HRM) practices to achieve sustainable development

This, however, implies fiercer competition for high - quality workers Maintaining the workforce, especially high-quality ones, is becoming increasingly difficult In order to succeed, organizations need to know how to retain employees, to strengthen organizational commitment, to avoid the phenomenon of "the grass is always greener on the other side” – desire of employees to switch from one company to another Retaining the workforce by organizational commitment rather than by contract or by sanctions is considered a new sustainable, humane trend, which brings more value to the organization

To testify this fact, researches about the linkage between HRM practices and organizational commitment have recently gained high attention Authors have identified evidence of HRM practices on organizational commitment in various organizations and they have found their substantial positive influence In Vietnam, however, few studies have

been conducted, especially taking into consideration different types and sizes of organizations Our purpose, therefore, is to fill this gap We analyze and assess influential factors on organizational commitment in order to provide useful suggestions Our results will further provide additional hints on the linkage between HRM practices and organizational commitment in various types of organizations in Vietnam

2 Conceptual framework and hypotheses

2.1 Literature review

Globally, many researches have focused on HRM and the effects of HRM practices

on performances and on organizational commitment

Noe et al (2006) states that HRM refers to the policies, practices and systems that affect the relationship between the organization and its employees HRM includes the practices that are designed to provide and coordinate the human resources of an organization HRM is considered as the crucial practice of improving the close relationship between employers and employees (Farnham and Pimlott 1990) Guest (1997) and Pfeffer (1998) describe the main dimensions of HRM practices: selection (selective hiring of new personnel), training, appraisal, rewards, job design, involvement, status and security and sharing (extensive sharing of financial and performance information throughout the organization) Guest (1997) notes that the commitment and involvement of employees play

an important role in HRM practices Other studies, for example Ramlall (2003) and Singh (2004), analyze the elements of HRM practices too; both authors point out that these practices are closely linked to achieve the goal of establishing and retaining high-quality, committed human resources for an organization Singh (2004) further states that all practices are equally important and each of them needs to work well to complement each other Tran, K.D (2011) studies HRM practices in Vietnam and indicates 12 functions of HRM; she concludes that if these functions work well, HRM will obtain better results and the commitment of employees will be strengthened and it will become more effective

Regarding organizational commitment, Mowday et al (1979) affirm that organizational commitment is the relative strength of an individual's identification with, and involvement in, a particular organization According to the authors, organizational commitment can be characterized by three factors: a strong belief in, and acceptance

of, the organization’s goals and values; a willingness to exert considerable effort on behalf of the organization; and a strong desire to maintain membership in the organization For brevity, they are stated respectively, as Belief, Effort, and Loyalty Guest (1994) and Legge (1995) confirm this view, stating that the commitment of employees plays a crucial role in HRM practices Commitment, rather than being obedience due to a controlled system, is built on belief and mutual trust generated in the working environment The papers of Meyer and Allen (1991) and Northcraft and Neale (1996) agree that the commitment of employees to the organization is meant to be a loyal and positive work attitude combined with the wish of remaining in the organization

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Furthermore, they also mention a shared belief and acceptance of the organization's target and values as a primary element of commitment

Several researches put in evidence the linkage between HRM practices and organizational commitment, for instance Ritzer and Trice (1969); Meyer and Smith (2000); Paul and Anantharaman (2004) and Browning (2006) Particularly, Ritzer and Trice (1969) find a positive relationship between compensation-benefits packages and the commitment

of employees Bartlett (2001) confirms that training activities are positively associated with the commitment of employees Meyer and Smith (2000) find a significant impact of career development, appraisal employees' performance and compensation on the commitment of employees Paul and Anantharaman (2004) identify the link between HRM and organizational commitment in the software industry in India Browning (2006) analyses the impact of HMR practices on the commitment of employees in service companies in South Africa Payne and Huffman (2005) stress the link between HRM practices and turnover rate Employees quit often when they feel to have no perspectives even if they commit or if they feel the organization does not keep its promises Studies of Shahnawaz and Juyal (2006) and Qiao et al (2008) also find a positive association between HRM practices and organizational commitment in consultancy, research, fashion, and IT industry in China

In Vietnam, some few studies on the relationship between HRM practices and organizational commitment have been conducted Ho, H.T & Pham, H.L (2012) find a relation between the the support in the workplace and the commitment of employees Pham, T.A & Nguyen, T.H.D (2013) point out the connection between compensation, career development opportunities, job definitions and organizational commitment The paper of Nguyen, N.T (2015), by using random samples collected from many companies, shows that HRM practices has, on average, a positive impact on organizational commitment in all its three main aspects (normative commitment, continuance commitment, and affective commitment)

In short, previous studies have found the positive link between HRM practices and organizational commitment The number of researches in Vietnam, however, is rather exiguous, particularly studies considering different businesses and organizations operating

in foreign markets The present study aims at filling the gap by providing evidence on the linkage between HRM practices and organizational commitment in Viettel Group We believe these results are important given the present high level of competition for human resources in a developing country like Vietnam, requiring organizations to pay more attention on employees

2.2 Research model and hypotheses

The conceptual framework of this study is based on the findings of previous researches about the link between HRM practices and organizational commitment Seven dimensions of HRM practices are adopted from the studies of Guest (1997); Pfeffer (1998); and Singh (2004) These dimensions have been modified in the study of Tran, K.D & Van, M.L (2006) for the case of Vietnam These seven dimensions of HRM practices include: Job

Definition, Selection, Training, Performance Appraisal, Compensation, Career Planning and Employee Participation

Measurements of organizational commitment have been developed by Mowday et

al (1979) and have been subsequently modified in the work of Tran, K.D (2006) to adapt to the Vietnamese case Three aspects of commitment are: Loyalty, Pride, and Effort This study further includes Willingness as an additional measure for organizational commitment since Willingness is considered as the strongest expression of employee’s commitment and fulfillment This indicator is particularly relevant to Viettel Group's culture; it is added based on theory and on the results of interviews with ten researches, experts, managers and employees of Viettel Group

Figure 1 shows the framework of the link between HRM practices and organizational commitment

Figure 1 Research Model (Source: Based on previous studies and authors' proposal)

Research Hypotheses

From the theories and conceptual framework, we propose seven hypotheses as below:

H1: Job Definition has a positive effect on organizational commitment

H2: Selection has a positive effect on organizational commitment

H3: Training has a positive effect on organizational commitment

H4: Performance Appraisal has a positive effect on organizational commitment H5: Compensation has a positive effect on organizational commitment

Job Definition

Performance Appraisal

Organizational commitment

Loyality

Selection

Training

Compensation

Carreer Planning

Employee Participation

Pride Effort Willingness

H1 (+)

H2 (+)

H3 (+)

H4 (+) H5 (+)

H6 (+)

H7 (+)

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H6: Career Planning has a positive effect on organizational commitment

H7: Employee Participation has a positive effect on organizational commitment

3 Methodology

3.1 Measurement and Questionnaire

Seven dimensions of HRM practices and measurement instruments are adopted from the studies of Guest (1997); Pfeffer (1998); and Singh (2004) They then have been modified in the study of Tran, K.D & Van, M.L (2006) for the case of Vietnam In which, Job Definition was measured by four items, Selection was measured by four items, Training with five items, Performance Appraisal with five items, Compensation with four items, Career Planning was measured by five items, and Employee Participation with 3 items Meanwhile, organizational commitment is described by four factors: Loyalty, Pride, Effort, and Willingness The first three factors (Loyalty, Pride, Effort) have been developed Mowday et al (1979) and then have been modified by Tran (2006), while the Willingness factor has been firstly introduced in this study after thorough interviews with ten experts of HRM, executives inside and outside of Viettel Group Each factor was represented by three items slightly changed to be more suitable for this study

The statements were then assessed by respondents based on a five-points Likert scale where 1 indicates “Strongly disagree” and 5 indicates “Strongly agree” The questionnaire has been first tested on 30 employees of Viettel Group to ensure its intelligibility and clearness After collecting employees' comments, the questionnaire has been further

adapted and used for the official survey

3.2 Sampling and data collection

The official survey was conducted at Viettel Group This is Vietnam's largest telecommunications group, 100% state-owned and operated by the Ministry of Defense The group is considered as one of the fastest-growing telecommunications companies in the world Measured by subscribers, it is among the top 15 global telecommunications companies By revenues, it is ranked in the top 40 global telecommunications companies Viettel Group currently invests in ten countries across three continents (Asia, America, and Africa), with a total population of more than 240 million people By 2020, it will expand the investment to markets with a population of 400-500 million people and it will rank in the top 10 global telecommunications companies

Convenient sampling was used to conduct the survey To ensure the representativeness of the sample, we followed Hair et al (1992), according to which the sample size should be five times the number of the variables In this study, we use 42 observed variables for assessment of HRM practices and organizational commitment, therefore the sample size is estimated around 210 The actual number of questionnaires sent out was 300

The official survey was conducted from February to April 2019 through various methods: online survey on the Google Form platform, email survey, and direct paper questionnaires A total of 283 questionnaires were collected, in which 270 were valid for the study (response rate 90%) The data were coded, entered, cleaned, processed and analyzed

using the statistical software SPSS

4 Results

Among the 270 questionnaires that were returned completed, 64.4% were answered

by male respondents and 35.6% by female This ratio is in line with the typical gender distribution of technology and telecommunications enterprises In terms of employment duration, 14.1% of respondents have worked at the company for “less than 3 years”, 54.5% for “between 3-5 years”, and 31.5% for “more than 5 years”

Cronbach's Alpha test is used to assess the reliability of the variables and the scales Most seven dimensions of HRM practices and the four dimensions of organizational commitment had Cronbach’s Alpha coefficient greater than 0.7 (Table 1); all 42 scales had corrected item-total correlation greater than 0.5 Therefore, all variables and scales in the proposed model can be considered reliable (Nunally & Burnstein 1994)

Table 1 Cronbach’s Alpha

Source: own compilation

The results of exploratory factor analysis (EFA) show that the KMO value is equal to 0.885 with a significance level of 0.000 Considering that Hair et al (1998) propose a lower threshold of 0.5 for reliability, our results indicate that using EFA in this study is appropriate

The Rotated Component Matrix result shows that rotation converges in 42 variables,

in which 30 variables belong to the seven factors of HRM practices and the remaining 12 variables belong to the four factors of organizational commitment The Pearson correlation coefficients, with significance level <0.05, suggest that the correlation between the independent and the dependent variables is statically significant (Table 2)

Table 2 Correlations among the variables

1.Job Definition 1 534 ** .405 ** .326 ** .273 ** .476 ** .163 ** .250 ** .228 ** .264 ** 161 **

2 Selection 1 492 ** .547 ** .343 ** .570 ** .278 ** .406 ** .339 ** .332 ** 214 **

EDESUS Proceeding 2019 (39 of 1531)

* Correlation is significant at the 0.05 level (2-tailed)

** Correlation is significant at the 0.01 level (2-tailed)

Source: own compilation

The preliminary test for multicollinearity indicated that multicollinearity was likely

to be an issue, since VIF values for the variables Job Definition and Performance Appraisal were greater than 2 To solve this, the variable Job Definition, that had the largest VIF value, was removed from the model We have then re-run the model finding that the remaining variables have VIF values lower than 2, thus excluding further problems of multicollinearity (Table 3)

Table 3 VIF Coefficients Model Unstandardized

Coefficients

Standardized Coefficients

T Sig Collinearity Statistics

Performance Appraisal 141 049 174 2.853 005 525 1.905 Compensation -.114 049 -.133 -2.355 019 607 1.646 Career Planning 108 045 132 2.413 017 648 1.542 Employee Participation 485 039 566 12.364 000 927 1.078

Source: own compilation

Regression results for the Loyalty factor

The results of our regression (Table 4) show that Training, Compensation, Career Planning and Employee participation do have an effect on the Loyalty of Viettel's employees (adjusted R2 = 0.356, F value = 25.752, p value < 0.01) Moreover, the Employee participation factor has the largest impact In fact, supporting employees to participate in common activities is a strength point of Viettel Group Employees who join common activities tend

to have a feeling of being part of the organization, and they become increasingly attached

to the organization They are likely to regard the organization as their family and tend to make more efforts at work to become an important member of the organization Training and Career Planning are activities that help employees to improve their capacity and long-term career development orientation In general, when these activities are

well-implemented, they tend to increase employees' trust in the organization, create employees' strive, and improve their long-term efforts Compensation, however, has a negative impact

on Loyalty This can be explained by the fact that compensation and reward systems, if done properly, may attract and encourage employees; however, when compensation is the only rewarding mechanism, employees may be less willing to remain in the organization

Table 4.4: Regression results for factor Loyalty

Coefficients – Beta

t

Sig

a Dependent Variable: Loyalty The **, and * indicate the significance level at the 0.01 and 0.05, respectively

Source: own compilation

Regression results for the Pride factor

Table 5 shows that Performance Appraisal and Employee Participation have a positive impact on the Pride factor of Viettel's employees (adjusted R2 = 0.372, F value = 27.554, p value < 0.01) Assessing employees' performance, if done well, make them feel respected and appreciated so that they tend to be prouder of their work Supporting employees to join common activities will increase connection, willingness to share, collaboration and support among employees Other practices of HRM do not have statistically significant effect on Pride

Table 5 Regression results for factor Pride

Coefficients – Beta

t

Sig

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a Dependent Variable: Pride The **, and * indicate the significance level at the 0.01 and 0.05, respectively

Source: own compilation

Regression results for Effort factor

Table 6 shows the positive effect of HRM practices on the Effort factor of Viettel's employees (R2 = 0.296; F value =19.807, p value <0.01) In details, Performance Appraisal, Career Planning and Employee Participation positively affect Effort In particular, Performance Appraisal and Employee Participation have the highest coefficient magnitude, indicating that these factors have the largest impact on Effort Compensation has a negative influence on Effort too This again suggests that compensation and reward systems do not seem to have positive impact on the commitment of employees The organization is not likely to retain highly qualified workforce if it only focuses on a well-implemented compensation system

Table 6 Regression results for factor Effort

Coefficients – Beta

t

Sig

a Dependent Variable: Effort The **, and * indicate the significance level at the 0.01 and 0.05, respectively

Source: own compilation

Regression results for Willingness factor

The link between HRM practices and the aspect of Willingness of organizational commitment is showed in Table 4.7 (adjusted R2 = 0.298; F value = 20.029, p value < 0.01) Notably, the Employee Participation factor has a statistically significant and positive impact

on Willingness This implies that in Viettel Group, organizational culture and positive work environment have important impact on organizational commitment Moreover, encouraging employees to participate in common activities will improve their connection, make them willing to share, cooperate and support each other in the workplace This is a necessary practice for a corporation operated by the Ministry of Defense where employees must strictly comply with the work assignments even when they are difficult to fulfill For other factors, however, we do not find any statistically significant effect on organizational commitment

Table 7: Regression results for factor Willingness

Coefficients – Beta

t

Sig

a Dependent Variable: Willingness The **, and * indicate the significance level at the 0.01 and 0.05, respectively

Source: own compilation

Recapitulating, the regression results have shown that several HRM practices, namely Training, Performance Appraisal, Employee Participation, Compensation and Career Planning, all have significant influence on organizational commitment at Viettel Group Hypotheses H3, H4, H5, H6, H7 are accepted Job Definition and Selection are not statistically significant, therefore hypotheses H1 and H2 are not accepted These results certify the positive link between HRM practices and organizational commitment In consequence, the effective way to improve organizational commitment is to focus on HRM practices Investing in HRM practices will strengthen organizational commitment, thereby bolstering employees' work efficiency and productivity