Luận văn thạc sĩ the role of transformational leadership behaviors in affective employee engagement, an empirical study in the two industries of retail and financial services in hcm city

The Role of Transformational Leadership Behaviors in Affective Employee Engagement: An empirical study in the two industries of retail and financial services in Ho Chi Minh City ABSTRAC

HUYNH NGOC DUY

THE ROLE OF TRANSFORMATIONAL

LEADERSHIP BEHAVIORS IN AFFECTIVE EMPLOYEE ENGAGEMENT: AN EMPIRICAL STUDY IN THE TWO INDUSTRIES OF RETAIL AND FINANCIAL SERVICES IN HCM CITY

Subject: Master of Business Administration Code: 60.34.01.02

MASTER THESIS OF BUSINESS ADMINISTRATION

HO CHI MINH CITY – 2012

The Role of Transformational Leadership Behaviors in Affective Employee Engagement: An empirical study in the two industries of retail and financial

services in Ho Chi Minh City

ABSTRACT

According to many previous studies, the effective leaders are one of the most important factors in engaging the employees to the organization; leveraging the human capital to create sustainable competitive advantage for the organization efficacy and leading to organizational benefits The purpose of this study was to investigate the relationship between transformational leadership behaviors and affective employee engagement and to examine their impact on employees’ level of affective engagement in private and foreign-owned companies in Ho Chi Minh City Total participants in the research were 320 full-time employees from the industry of retailing and financial services in Ho Chi Minh City The majority of employees have worked in private organizations (55.3%) and followed by foreign-owned companies (44.7%); in financial services (53.4%) and in retail industry (46.6%) respectively

The findings of the study indicated that transformational leadership behaviors including intellectual stimulation, idealized influence behaviors and individual consideration have significant and positive correlations with affective employee engagement Among the independent variables, individual consideration is found to

be the most important factor in driving affective employee engagement

The research results have contributed to the literature and provided more evidences for the managers in their decisions of their workforce planning However, the sample for the research is still limited due to the application of convenient sampling method and surveyed only in Ho Chi Minh City Therefore, the generalization is not

so high; the study might have not covered all the demographic factors; and also some other important variables were not considered all due to the scope of the study All the restrictions will motivate the next researchers in this interesting topic

ACKNOWLEDGEMENTS

I am deeply grateful to my advisors, Dr Nguyen Huu Lam and Dr Nguyen Dinh Tho for the guidance and comments through the process of completing this thesis Without the support and encouragement from Dr Lam and Dr Tho, the thesis might not be possible in meeting the requirements and expectations of the research

I also extend my thanks my classmates in sharing with me the ideas; store managers

in Crescent Mall in district 7 and MBA students at the University of HCMC Economics in filling in the questionnaires

I would like to acknowledge the support and encouragement of my family in the concession of time, money and effort to complete the program Most of all, I would like to be grateful to my Buddha for giving me good health, optimism and strength

to finish the study

TABLE OF CONTENTS

ABSTRACT 1

ACKNOWLEDGEMENTS 3

TABLE OF CONTENTS 4

CHAPTER ONE: INTRODUCTION 8

1.1 BACKGROUND OF THE STUDY 8

1.2 STATEMENT OF THE PROBLEM 10

1.3 OBJECTIVES OF THE STUDY 11

1.4 RESEARCH QUESTIONS 12

1.5 SIGNIFICANCE OF THE STUDY 12

1.6 SCOPE OF THE STUDY 13

1.7 STRUCTURE OF THE STUDY 13

CHAPTER TWO: LITERATURE REVIEW 14

2.1 INTRODUCTION 14

2.2 THE CONCEPT OF LEADERSHIP 15

2.3 THE EVOLUTION OF LEADERSHIP THEORIES 15

2.4 LEADERSHIP MODEL 17

2.5 FIVE DIMENSIONS OF TRANSFORMATIONAL LEADERSHIP BEHAVIORS 18

2.5.1 Idealized influence (Attributes) (IIA): leaders instill pride and build trust 18

2.5.2 Idealized influence (Behaviors) (IIB): leaders emphasize collective sense of mission, talk about values and beliefs 18

2.5.3 Inspirational motivation (IM): leaders communicate and express enthusiasm, optimism, confidence, and emotional appeals 18

2.5.4 Intellectual stimulation (IS): leaders stimulate followers to view the world from new perspectives; encourages problem solving, critical thinking and creativity 18

2.5.5 Individual consideration (IC): leaders develop, coach, and teach each follower to grow individually by paying attention to individual needs, desires and assigning projects 18

2.6 THE CONCEPT OF EMPLOYEE ENGAGEMENT 19

2.7 THE EVOLUTION OF EMPLOYEE ENGAGEMENT 20

2.8 TWO DIMENSIONS OF AFFECTIVE EMPLOYEE ENGAGEMENT 21

2.9 THE RELATIONSHIP BETWEEN TRANSFORMATIONAL LEADERSHIP BEHAVIORS AND EMPLOYEE ENGAGEMENT 22

2.10 RESEARCH MODEL AND HYPOTHESES 24

CHAPTER THREE: RESEARCH METHODOLOGY 26

3.1 QUALITATIVE RESEARCH 26

3.1.1 Sampling 26

3.1.2 Data collection and In-depth interview 26

3.2 QUANTITATIVE RESEARCH 27

3.2.1 Response rate and sample size 27

3.2.2 Data sources and type 29

3.2.3 Data gathering instruments 30

3.2.3.1 Multifactor leadership questionnaire 30

3.2.3.2 Affective employee engagement questionnaire 31

3.2.4 Independent and dependent variables of the study 32

3.2.5 Data analysis and presentation procedures 33

CHAPTER FOUR: RESULTS AND FINDINGS 34

4.1 DEMOGRAPHIC CHARACTERISTICS OF THE PARTICIPANTS 34

4.2 DESCRIPTIVE STATISTICS FOR TRANSFORMATIONAL LEADERSHIP BEHAVIORS AND AFFECTIVE EMPLOYEE ENGAGEMENT 36

4.2.1 Employees perception to Transformational leadership behaviors 37

4.2.2 Employees perception to their organizational engagement 37

4.3 THE RELATIONSHIP BETWEEN TRANSFORMATIONAL LEADERSHIP BEHAVIORS AND AFFECTIVE EMPLOYEE ENGAGEMENT 38

4.4 SCALE ASSESSMENT 40

4.4.1 Cronbach Alpha 40

4.4.2 Exploratory Factor Analysis (EFA) 42

4.4.2.1 Independent variables 43

4.4.2.2 Dependent variables 44

4.5 CORRELATION AND REGRESSION ANALYSIS 44

4.5.1 Correlation analysis 44

4.5.2 Regression analysis 45

4.5.2.1 Assessment of the model 45

4.5.2.2 Testing of the hypotheses 49

4.6 RESULTS AND DISCUSSION 51

4.6.1 Regression analysis 51

4.6.1.1 Intellectual stimulation 51

4.6.1.2 Idealized influence behaviors 52

4.6.1.3 Idealized influence attributes and inspirational motivation 52

4.6.1.4 Individual consideration 52

4.6.2 Industry analysis 53

4.6.3 Discussion of the results 53

4.6.4 Summary 54

CHAPTER FIVE: DISCUSSION, RECOMMENDATION AND CONCLUSION 55 5.1 CONCLUSIONS 55

5.2 THE CONTRIBUTIONS OF THE STUDY 56

5.2.1 Contributions to the literature 56

5.2.2 Contributions to the practices 56

5.3 RECOMMENDATIONS 57

5.3.1 Recommendations for the organizations and managers in Ho Chi Minh City 57

5.3.2 Recommendation for future research 59

5.4 LIMITATIONS OF THE STUDY 60

REFERENCES 61

Appendix A: Total Variance Explained 66

Appendix B: Rotated Component Matrixa 67

Appendix C: Total Variance Explained 68

Appendix D: Rotated Component Matrixa 69

Appendix E: KMO and Bartlett's Test 69

Appendix F: KMO and Bartlett's Test 69

Appendix G: ANOVAa 70

Appendix H: Histogram Dependent Variable AC 70

Appendix I: Normal P-P Plot of Regression Standardized Residual Dependent Variable AC 71

Appendix J: Scatterplot Dependent Variable AC 72

Appendix K: ANOVAa 72

Appendix L: Histogram Dependent Variable SC 73

Appendix M: Normal P-P Plot of Regression Standardized Residual Dependent Variable SC 74

Appendix N: Scatterplot Dependent Variable SC 75

Appendix O: Questionnaire (in English) 76

Appendix P: Questionnaire (in Vietnamese) 81

LIST OF TABLES

Table 1: Location for paper survey, sample size and response rates 28

Table 2: Independent and Dependent variables 32

Table 3: Summary of Employees’ profile 35

Table 4: Mean and Standard Deviations of Transformational Leadership Behaviors and Affective Employee Engagement for employees’ responses 36

Table 5: Pearson correlation matrix between transformational leadership behaviors and affective employee engagement dimensions 39

Table 6: Cronbach Alpha 41

Table 7: Result of EFA for Independent variables 43

Table 8: Result of EFA for Dependent variables 44

Table 9: Correlation analysis 45

Table 10: Summary (AC) 46

Table 11: Summary (SC) 46

Table 12: Anova (AC) 46

Table 13: Anova (SC) 47

Table 14:Profile of Independent variables 47

Table 15: Profile of Independent variables 48

Table 16: Summary of results of hypotheses 50

Table 17: Industry analysis 53

LIST OF FIGURES Figure 1: Proposed Research Model 24

CHAPTER ONE: INTRODUCTION

1.1 BACKGROUND OF THE STUDY

In Vietnam News (2002), it showed that:

More than 43% of employees in Vietnam express high levels of commitment

to both their job and the company they work for In its global employee

commitment report 2002 Taylor Nelson Sofre says the commitment

percentage in Vietnam is higher than the average in the Asia-Pacific region

and Europe, but slightly lower than in the United States and Latin America.”

And then in Thanhnien News (2008), it is suggested that:

Vietnam needs more skilled workers since its WTO accession The survey by

Grant Thornton, a global accounting, tax and business advisory firm which

involved over 7,800 privately held businesses in 34 countries shows that 84

percent of Vietnamese companies focus on recruiting and retaining staff,

compared to a global average of only 59 percent Vietnamese companies

focus more on attracting and retaining employees than do companies

elsewhere

Employee retention is considered the greatest challenge for businesses in Vietnam and becomes a hot topic for discussions for any workshops 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 fierce 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 evidence that employee engagement has become one of the most leading priorities for human resource practitioners and senior managers in the organization today in Vietnam It is also the role of HR managers and line mangers to understand what are the critical factors affecting employees to get their high commitment to the company Based on that, the managers come up with strategic action plans to engage their employees into the sustainability of the organization These requirements from the reality are really urgent for the managers in Vietnam to deal with them in their daily managerial works

1.2 STATEMENT OF THE PROBLEM

Nowadays, the workplace changes day by day and requires products and services to keep in line with this demand In order to remain competitive, employee engagement is one of the most important factors in the face of these pressures.Since employee engagement is strongly correlated to the leadership behaviors of direct mangers and this concerns a focus on improving the quality of leadership in achieving greater employees to engage to the organization and its sustainable growth, and the profitability as well Many researchers have revealed that employee engagement and leadership behaviors are of crucial determinants in the organizational success However, leadership is one of the least understood concepts

in the corporate world and the term of employee engagement should also be considered in many dimensions to result in a full picture of this relationship

Beverly and John (2008) shows indisputable links between employee engagement and various measurements of financial success in which a US survey of 24 publicly listed traded companies with a total of over 250,000 employees over the last 5 years recognized the stock prices of 11 companies with highest engagement increased an average of 19.4% in comparison to only 8% of those in the same industries Several surveys also reveals that companies with high employee engagement levels experienced a higher operating margin, net profit margin, revenue growth and earnings per share than those with low employee engagement

It is clear that employee performance or behavior on the job is influenced by his or her immediate manager and its positive relationship will be essential to strengthening employee engagement So, to improve the quality of leadership and management can be the most important step in keeping the employee committed to the organization

On the contrary, engagement is also complicated and continuous for further research then it requires a simultaneous solution as the employees can be emotionally engaged, cognitively engaged or physically engaged

According to Towers Watson (2012), the voluntary turnover rate in Vietnam was 15,8% in 2010 and 13,1% in 2011 The main reason is due to the conflicts and disagreement with their direct managers’ behaviors Academicians, researchers and practitioners have highlighted the significant influence that managers can have on engagement levels of the employees Effective managers can have more engaged staffs and the quality of the relationship between a manager and employees is one of the most crucial factors driving engagement Towers Perrin (2006, as cited in Gemma and Carl, 2009) posits that “many of the factors that influence employee engagement and retention are factors directly and indirectly within the manager’s control.”

Many previous researches have demonstrated the positive relationship between leadership behaviors and employee engagement However, the number of studies conducted in Vietnam in general and in specific organizations or industries are lacking and limited Therefore, this research is considered important to test the link between transformational leadership behaviors and affective employee engagement

in the industry of retail and financial services in Ho Chi Minh City and also to explore employees’ perceptions on these behaviors

1.3 OBJECTIVES OF THE STUDY

The research is to explore the relationship between transformational leadership behaviors and affective employee engagement in the industry of retail and financial services in Ho Chi Minh City To achieve the goal, the specific objectives of the study are:

 To examine the relationship between transformational leadership behaviors and two dimensions of affective employee engagement

 To identify the employees’ perceptions about the transformational leadership behaviors and two dimensions of affective employee engagement

1.4 RESEARCH QUESTIONS

Specific research questions are:

1) What are the perceptions of employees in the industry of retail and financial services about transformational leadership behaviors and two dimensions of affective employee engagement?

2) What is the relationship between transformational leadership behaviors and two dimensions of affective employee engagement?

1.5 SIGNIFICANCE OF THE STUDY

Firstly, the result of the research is important to bring the awareness to the managers in Ho Chi Minh City about the determinant variables in influencing the engagement level of the employees in their organization

Secondly, it will be useful as the reference or guidance for the others to conduct further studies in related topics and other organizations regards to similar problems

Thirdly, it is believed the research can add more value to the literature on leadership behaviors and employee engagement, especially in Vietnam setting

1.6 SCOPE OF THE STUDY

The focus of this study is to examine the relationship between transformational leadership behaviors and affective employee engagement in the industry of retail and financial services in Ho Chi Minh City, Vietnam Of course, the data for the study is delimited to the surveyed employees of the two industries in Ho Chi Minh City

The study can also cover its limited share of the sampling frame which only considered a particular group and therefore the results cannot be generalized to represent for the whole industry or other various types of organizations in Vietnam

1.7 STRUCTURE OF THE STUDY

The thesis is organized into five chapters as follows

 Chapter one: presents the background of the study, describes the problem statements, research objectives, significance of the study

 Chapter two: provides literature review

 Chapter three: focuses on the research methodology, describes data collection and analysis methods

 Chapter four: analyses and presents the research findings by showing how each of the questions has been answered and how the findings contribute to the purpose of the study

 Chapter five: provides the conclusions, limitations and recommendations

The end of the thesis includes references, appendices and questionnaires of the survey form to collect primary data for the work

CHAPTER TWO: LITERATURE REVIEW

2.1 INTRODUCTION

Leadership refers to the tools, behaviors and capability that a person needs in order

to be successful at motivating and directing others While employee engagement (Kahn, cited in Jessica and Helena, 2011) concerns the degree to which individuals make full use of their cognitive, emotional, and physical resources to perform role-related work

When people talk about high-performing employee retention, they often focus on financial and non-financial incentives However, researches from all over the world show that there is another mutual link of leadership behaviors in keeping the staff engaged at work All organizations expect to have engaged employees and willingly

to spend their resources to improve employee engagement And one of the antecedents of employee engagement is leadership behaviors

Researchers believe that leadership is one of the most important organizational factors having direct impact on the motivation, satisfaction and the performance of individuals Tichy and Cohen (as cited in Salman, Riaz, Saifullah, and Rashid, 2011) said that “the scarcest resource in the world today is the leadership talent capable of continuously transforming organizations to win in tomorrow’s world The individuals and organizations that build leadership engines and invest in leaders developing other leaders have a sustainable competitive advantage”

Moreover, Kotter and Haskett (as cited in Salman et al, 2011) consider leadership as

a single most important factor in making organizational change and establish its strategic direction In reality, the relationship between the leaders and employees is

a causal link and has a mutual link on each other The leader behaviors will have a direct impact on staff performance and engagement

2.2 THE CONCEPT OF LEADERSHIP

There is no single correct definition of leadership as various researchers explore in different aspects and leadership is also a complex phenomenon involving the leader, the followers and the situation Researchers may focus on the relationships between the leader and the followers; the physical traits, behaviors, personality; or the situations that affect the ways the leader acts

Leadership can be understood in different definitions as the process a leader induces

a subordinate to behave in a desired manner; direction and coordination for the work of group members; an interpersonal relation others comply because they want to; the process of influencing a group towards achieving the goals; or the actions that focus resources to create opportunities (Richard, Robert, and Gordon, 2009)

2.3 THE EVOLUTION OF LEADERSHIP THEORIES

Leadership traits

The theory considers leaders to possess some abnormal abilities to set them apart, make them different from others and bring them to success It also supports the leaders might obtain some universal characteristics that the others cannot The study

of leadership is to attend to the traits of the person, also called Great Man theory and assumes leaders are born rather than are made (Sharon, 2003).The shortcomings of this theory are that they cannot measure the leader’s performance and attend to different circumstances

Situation leadership also can be leadership traits or leadership behaviors depending

on the leaders’ actions or responses in a given situation

Contingency leadership

It is to focus on the situational variables to predict the appropriate leadership styles

in comparison to the given circumstances In the same meaning, the leadership effectiveness is combined both the qualities of the leaders and the demands of the situations In order to make a good decision, the leaders have to address to situational variables

Transactional leadership

The model focuses on social contract between the leaders and the followers in relation to the effectiveness; the mutual benefits which the leaders deliver to

followers the rewards or recognition in exchange for the commitment or loyalty of the followers

Transformational leadership

Transformational leadership does not aim to replace the transactional leadership but

to contribute to describe more attributes of the leaders Transformational leaders focus on the needs of the followers, engage them to the organization and implement the organizational performance

2.4 LEADERSHIP MODEL

Transformational leadership

The concept of transformational leadership was firstly introduced by Burns with the definition of transformational leadership as a process both the leaders and the followers promote each other to motivation, rationality, problem solving and morality

Transformational leaders enhance the followers’ capability by creating new demands and values so that they can grow their performance Moreover, transformational leaders often challenge others for changes, extraordinary works and drive the organization effectively They have an important role in influencing the organization changes; designing a very clear picture for the organization and share the vision so that the employees can be inspired of it (Burns, 1978, as cited in Gholamreza, Hasan, and Ali, 2009)

Transformational leaders always encourage the followers to think of new perspectives in solving problems; help the followers to try harder their capability and inspire them to focus on the organizational objectives They also influence the

followers to attempt higher results by providing new perspectives and higher efforts

in attaining the goals “The transformational leader asks followers to transcend their own self-interests for the good of the group, organization, or society; to consider their longer-term needs to develop themselves, rather than their needs of the moment; and to become more aware of what is really important Hence, followers are converted into leaders” (Bass, 1990, as cited in John, 2006)

Evidences from researchers show that transformational leaders focus on the task, value and vision (Bass, 1985, as cited in Gholamreza et al, 2009) Transformational leaders treat each employee individually, provide them personal attention and tend

to manage through inspired motivation and individualized consideration (Burns et

al, as cited in Yueh-shian, n.d.)

2.5 FIVE DIMENSIONS OF TRANSFORMATIONAL LEADERSHIP

BEHAVIORS

2.5.1 Idealized influence (Attributes) (IIA): leaders instill pride and build trust 2.5.2 Idealized influence (Behaviors) (IIB): leaders emphasize collective sense of

mission, talk about values and beliefs

2.5.3 Inspirational motivation (IM): leaders communicate and express enthusiasm,

optimism, confidence, and emotional appeals

2.5.4 Intellectual stimulation (IS): leaders stimulate followers to view the world

from new perspectives; encourages problem solving, critical thinking and creativity

2.5.5 Individual consideration (IC): leaders develop, coach, and teach each

follower to grow individually by paying attention to individual needs, desires and assigning projects

The five constructs are measured by MLQ form 5X (Bass & Avolio, 1997, as cited

in Ronald and Rebecca, 2008)

2.6 THE CONCEPT OF EMPLOYEE ENGAGEMENT

Numerous definitions of employee engagement can be referred to a condition in which the employee has an organization purpose and show their enthusiasm, effectiveness, effort, commitment, involvement, passion to the work In engagement, employees tend to express themselves physically, cognitively and emotionally during their role performances Employee engagement also captures the extent to which employees are motivated to contribute to the organizational success and provide discretionary effort to accomplishing their tasks for the achievement of organizational goals

According to Nitin (2005), employee engagement is the level of commitment and involvement that an employee has towards their organization and its value An engaged employee can be aware of business context and works to improve performance for the benefit of the organization Kahn (as cited in Sandeep, Mark, Chris, Emma, and Katie, 2008) defines “employee engagement is the harnessing of organization members’ selves to their work roles.”In addition, engagement also relates to the degree of discretionary effort that the employees willingly apply in their work; choose whether to contribute at minimum level of their performance or

to go beyond the minimum to offer outstanding effort (Beverly and John, 2008)

There are three components of employee engagement: cognitive engagement refers

to ‘thinking’, affective or emotional engagement refers to ‘feeling’, and behavioral engagement refers to ‘doing’ The cognitive aspect concerns the employees’ belief about the organization; their managers and working conditions The emotional or affective aspect refers to how employees feel whether they have positive or negative

attitudes And the physical or behavioral aspect implies the physical energies of the employees to accomplish their roles

2.7 THE EVOLUTION OF EMPLOYEE ENGAGEMENT

Wave 1 (1990-1999)

This wave begins with the concept of personal engagement by Kahn (as cited in Mary, 2011) as “the harnessing of organizational members’ selves to their work roles; in engagement, people employ and express themselves physically, cognitively, and emotionally during role performance” Then Buckingham and Coffman (as cited in Mary) come up with the definition of an engaged employee if

he or she can answer yes to all 12 questions of Gallup questionnaire

Wave 2 (2000-2005)

This wave witnesses the emergence of many consultancy firms in measuring employee engagement through the perceptions of work and the satisfaction with the organization And Harter (as cited in Mary) defines “employee engagement as a combination of cognitive and emotional antecedent variables in the workplace This omits Kahn’s (1990) behavioral element represented by his physical engagement component.”

Schaufeli and Bakker (as cited in Mary) influence the concept in reference to the organization context and job engagement with dimensions: cognitive, emotional and physical

Wave 3 (2006-2010)

In this period, Saks extended Kahn’s viewpoint in considering both job engagement and organization engagement And the CIPD (as cited in Mary) with the literature support from some academics also identifies the three dimensions of employee engagement: “emotional engagement (being very involved emotionally with one’s work; cognitive engagement (focusing very hard while at work); and physical engagement (being willing to go the extra mile for your employer).”This wave also draws the interest of many researchers such as: Macey and Schneider, Kular, Shuck and Wollard, Attridge, Albrecht to contribute to the diversifications of the literature review of employee engagement

2.8 TWO DIMENSIONS OF AFFECTIVE EMPLOYEE ENGAGEMENT

Affective employee engagement comprises two components: affective commitment and supervisory commitment

Affective engagement is a multi-dimensional construct focusing on the individuals’ relationships with their roles, organizational commitment, job involvement and job satisfaction Researches from academicians and practitioners have showed a strong correlation between the work outcomes and the line manager, leadership and follower thinking and behavior Therefore, affective engagement is measured by the employee’s feelings of commitment to their immediate supervisor in particular and the organization in general

According to Allen and Mayer (1990, as cited in Dilys, Sarah, and Sue, 2004), affective commitment is the most important form of commitment because it indicates the most potential benefits for the organizations Employees with high affective commitment will go beyond their role and duty for the good of the

organization Moreover, affective engagement is a positive feeling about doing a good job (Kerstin, Catherine, Emma, Chris, and Mark, 2010)

Supervisory commitment engagement is also a multi-dimensional construct to attend to the relationships between the direct supervisor and the subordinates The employees tend to engage to the organization if they commit to their line manager Researches from academicians and practitioners also provide positive correlation between the line manager and the followers

The construct of affective commitment is measured by Allen and Mayer’s organizational commitment scale and the construct of supervisory commitment is measured by Becker’s job satisfaction (as cited in Jonnie, 2009)

2.9 THE RELATIONSHIP BETWEEN TRANSFORMATIONAL

LEADERSHIP BEHAVIORS AND EMPLOYEE ENGAGEMENT

According to Hai Nam and Sherif (2011), transformational leadership lies in the leaders’ ability to inspire trust, loyalty and admiration in followers It builds relationships, gives larger meaning to activities and enlists followers by focusing on intangible qualities such as vision, shared values, and ideas

Transformational leadership is strongly positively correlated with follower job satisfaction, follower motivation and organizational commitment (Jessica and Helena, 2011) In addition, transformational leadership behaviors are associated more with positive attitudes from employees; result in higher levels of individual, group, and organizational performance (Bass, 2003, as cited in Nichola, Matthew, Lew, Calum, and James, 2009); look for potential motives in followers, seek to satisfy higher needs, and engage the full person of the follower (Burns, 1978, as cited in Priyanka and Venkat, 2000); predict higher follower OCB, employee

performance, satisfaction and perceived leader effectiveness (Bass & Avolio, 1990,

as cited in Caroline, 2007); and enhance job satisfaction, reduction of work pressures and increase on employees’ morale (Dahlen, 2002, as cited in Sulieman, Hussein, and Ayat, 2011)

Report from Lowe et al (as cited in Caroline, 2007) shows meta-analytical evidence

to support the findings that transformational leadership is effective, productive, innovative, and satisfying to followers Transformational leadership uses soft influence tactics, such as inspirational appeals and ingratiation to motivate followers (Charbonneau, 2004, as cited in Caroline, 2007)

Individuals exhibiting transformational leadership are considered to be more effective leaders It is also true for higher and lower level leaders in public and private settings (Lowe et al, 1996, as cited in Sulieman et al, 2011) The ability of the transformational leaders has an important influence on individual outcome and perceptions of justice (Greenberg, 2003, as cited in Azman, Mohd, Hassan, Nurhana, and Karen, 2010); serves the function to engage followers into their work and generates task performance (Tsang-lang, Li-chu, Chih-wei, and Yi-li, 2011)

From the above-mentioned evidences, the transformational leadership behaviors provide clear links with engagement constructs Transformational leaders move followers beyond their self-interest for the great good of the organization by creating a blame-free environment and building trust in leader to enable employee engagement (Kahn, as cited in Jessica and Helena, 2011); to engage the followers’ higher needs (Hunt, 1996, as cited in Robert and Beverly, 2000); to positively correlate with how effective subordinates perceive leaders, how much effort they will expend, how satisfied they are and how well subordinates perform as rated by the leader (Hater and Bass, 1988, as cited in Cheryl, Delene, and Gert, 2003)

2.10 RESEARCH MODEL AND HYPOTHESES

Based on the literature review and prior research, I propose:

Research Model:

Transformational leadership behaviors Affective employee engagement

Figure 1: Proposed Research Model

Supervisory commitment (SC)

Hypotheses:

H1: Idealized influence (attributes) is related positively to both affective

commitment and supervisory commitment

H2: Idealized influence (behaviors) is related positively to both affective

commitment and supervisory commitment

H3: Inspirational motivation is related positively to both affective commitment and

CHAPTER THREE: RESEARCH METHODOLOGY

This chapter shows the methods studying the relationships between independent variables and dependent variables It also outlines the research design, unit of analysis, the population, the sample, the sampling technique, the measurement, the collection and administration of data, the technique of analyzing data The study was intended to be carried out in Ho Chi Minh City and was designed for the quantitative study to collect the relevant information regard to transformational leadership behaviors and employee engagement It is also considered as survey research

3.1.2 Data collection and In-depth interview

Firstly, the interviews were conducted by asking the employees how they understood the measurement scales Secondly, they received the questionnaire and

went into details of each item And finally, the researcher recorded the results for further in-depth interviews

Based on the results, the measurement scales were modified into the questionnaire After that, the second interviews were conducted by also asking the same questions

in the first interview The result this time showed clear evidence that the participants had understood the meaning and the Vietnamese translation of the measurement scales Then the quantitative research was implemented for further explorations

3.2 QUANTITATIVE RESEARCH

The purpose of the study is to explore the relationship between transformational leadership behaviors and affective employee engagement by surveying the employees The target population of the study included the employees in Ho Chi Minh City currently working in the industry of retailing and financial services

In summary, the combination of purposive and simple convenient sampling techniques was applied to select samples It was to ensure the target groups within the population are adequately represented in the sample and to improve efficiency

by gaining greater control on the composition of the sample

3.2.1Response rate and sample size

The sample consisted of participants of the study surveyed in Ho Chi Minh City I combined both paper survey distributing the questionnaires to the employees in Crescent Mall, in the University of HCMC Economics and online survey through Google Docs

The study includes 26 variables in which 15 variables are independent and 11 variables are dependent As a general term, the sample size should be greater than

100 and the minimum sample should obtain the ratio of 5 observations per variable

As such, the minimum sample size is equal to 130 at least (Hair, Black, Babin, and Anderson, 2010)

However, in order to increase the accuracy of the data for further analysis a sample

of 320 respondents was selected from the employees in Ho Chi Minh City currently working in the industry of retailing and financial services

For paper survey, I distributed 130 questionnaires to the employees in Crescent Mall and 115 questionnaires to the employees currently joining MBA, Finance major at night time in the University of HCMC Economics whereas 104 employees questionnaires in Crescent Mall and 109 employees questionnaires in the University

of HCMC Economics were successfully completed and returned with a response rate of 20% and 5,2% respectively The total sample size of 213 respondents including the employees in Crescent Mall and in the University of HCMC Economics were used in this study amounting to a total non-response rate of 13,1% from the beginning sample

non-Table 1: Location for paper survey, sample size and response rates

The questionnaires were distributed to the employees by handout and online survey

in October 2012 in which handout contributed to 213 samples and online survey contributed to 107 samples

3.2.2 Data sources and type

In order to come up with the relevant data for the study, both primary and secondary date sources were applied Primary data is the information that the researcher finds out by himself/herself regard to the specific topic and the advantage of this type of data collection is to help collect the information fit for the researcher’s purpose The information resulting from this type is more consistent with the research questions, purpose and directly linked to the study

As the study is empirical in nature, primary data was collected from the employees

in Crescent Mall and in the University of HCMC Economics to answer the questions So, the questionnaires were designed on Likert scale of measurement basis to collect primary data and the variables were ranked to measure the degree of their strength, agreement or disagreement of the respondents

Secondary data is to serve the researcher to better understand and explain the research problem So it is necessary to review the existing data for what to be accomplished in the study This saves time and effort for the researcher because he/she can discard the data that is not fit for the study and also results in the information that can only serve for the specific study The secondary data of this study is also referred to many sources to get better insight on the research topic and

to establish the theoretical framework for the research; to design the sample frame and questionnaire for primary data It was also considered to validate and compare the data with the questionnaire and existing literature, articles as well

3.2.3 Data gathering instruments

The quantitative methodology involving the questionnaire with 5-point Likert scale was used as the measurement instrument The instruments included multifactor leadership questionnaire (MLQ) and employee engagement questionnaire was employed in the research to get the quantitative information on transformational leadership behaviors and affective employee engagement respectively

3.2.3.1 Multifactor leadership questionnaire

Before selecting the Multifactor Leadership Questionnaire for the research, other instruments such as 360 degree leadership feedback, managerial grid, situational leadership questionnaire were also considered as optional measurements of leadership behaviors Since the subscales and items of these instruments do not focus on the differentiation of the transformational leadership behaviors but to place emphasis on identifying the behaviors appropriate for situational or task basis, then none of them was suitable for the research

The Multifactor Leadership Questionnaire has been introduced and improved since

1985 and it was also developed through many versions of the questionnaire Bass & Avolio (1995) introduced the MLQ form 5X with nine subscales of leadership behaviors

Participants were asked to judge the extent to which they recognized the transformational leadership behaviors of their manager measured by the MLQ The MLQ form 5X is self-scoring and used 15 items to measure 5 subscales (3 items for each) in the study The items using a 5-point Likert scale labeled as 1= strongly disagree, 2= disagree, 3= neutral, 4= agree, 5= strongly agree High score shows high effectiveness of transformational leadership behaviors of the manager

Examples of items from the MLQ form 5X questionnaire:

Idealized influence attributes (IIA): instills pride in me for being associated with him/her

Idealized influence behaviors (IIB): talks about the most important values and beliefs

Inspirational motivation (IM): talks optimistically about the future

Intellectual stimulation (IS): re-examines critical assumption to question whether they are appropriate

Individual consideration (IC): spend time teaching and coaching

3.2.3.2Affective employee engagement questionnaire

For this specific study the affective commitment and supervisory commitment were selected as the measure of affective employee engagement Affective commitment scale was employed from Meyer & Allen (1990, as cited in Jonnie, 2009) and Supervisory commitment scale was from Becker, Eveleth & Gilbert (1996, as cited

in Jonnie, 2009)

The affective employee engagement consists of two dimensions as affective commitment and supervisory commitment The selected questionnaire is also a self-scoring and the responses to each of 11 items (5 items for affective commitment and

6 items for supervisory commitment) are rated by a 5-point Likert scale labeled as 1= strongly disagree, 2= disagree, 3= neutral, 4= agree, 5= strongly agree High score shows high employees’ engagement perception to the organization and low score implies low perception in the scale

Examples of items from the affective employee engagement questionnaire:

Affective commitment: I would be very happy to spend the rest of my career in this organization

Supervisory commitment: When I talk about my supervisor, I usually say “we” rather than “they”

3.2.4 Independent and dependent variables of the study

The variables in Multifactor Leadership Questionnaire (MLQ form 5X) were considered as independent variables with the subscales inside In addition, two separate measures of affective employee engagement were employed as dependent variables including affective commitment and supervisory commitment as follows

in the table 2

Table 2: Independent and Dependent variables

Independent variable measures

Instrument Variables Scales/Subscales

- Idealized influence attributes

- Idealized influence behaviors

- Inspirational motivation

- Intellectual stimulation

- Individual consideration

Dependent variable measures

Instrument Variables Scales/Subscales

Employee Engagement

Questionnaire

(Meyer & Allen, 1990;

Becker, Eveleth & Gilbert,

1996)

Affective Employee Engagement

- Affective commitment

- Supervisory commitment

3.2.5 Data analysis and presentation procedures

After the data was collected, the statistical techniques were employed to analyze the information as the quantitative research So, the survey data was processed by Statistical Package for the Social Sciences (SPSS); the relevant data was coded and then transferred to SPSS for analysis and presentation

The analysis of data begins with reliability test for the scales through Cronbach Alpha And in Cronbach Alpha’s reliability analysis, the closer it is to 1.0 the higher the internal consistency reliability In addition, two-tailed Pearson correlation coefficient analysis was carried out to investigate the relationship between transformational leadership behaviors and affective employee engagement dimensions

Then multiple regression analysis was also conducted to examine which among the five independent variables is the most important in explaining affective employee engagement In this part, the correlation coefficient R will indicate the strength of relationship between the variables and also provide how much of the variance in the dependent variables explain R Square is also provided to show the amount of variance in explaining the dependent variables, F statistic and the significance level help interpret the results

In the research presentation, frequency table was to summarize the respondents profile of frequency and percentages whereas the descriptive statistics such as mean and standard deviations of employees’ answers to transformational leadership behaviors and employees commitment to the organization The details of the presentation on variables with the interpretations will be discussed in the next chapter

CHAPTER FOUR: RESULTS AND FINDINGS

The chapter presents, discusses the results of the study and also provides the association amongst transformational leadership behaviors and affective employee engagement

The main purpose of the study is to examine the relationship amongst the independent variables namely IIA, IIB, IC, IS, IM with the dependent variables namely affective commitment and supervisory commitment It targets to achieve the research objectives, to answer the research questions in the chapter one and to verify the hypotheses in the chapter two

The statistical method of Pearson correlation is to determine the existence of the relationships between the independent and dependent variables Regression analysis

is to examine which among the five levels of independent variables which one is the most important in explaining employee affective engagement Findings on the demographics of the participants and the statistical analyzes are also presented to interpret and understand the results

4.1 DEMOGRAPHIC CHARACTERISTICS OF THE PARTICIPANTS

There was a total sample of 320 full-time employees participating in this study from the industry of retailing and financial services in Ho Chi Minh City In the summary

of employees’ profile, male and female were equal in the percent by sharing 50% for each The majority’s age group was between 26 to 35 years (49.4%), followed

by those under 26 years old (46.9%)

Most of the employees have worked for their current organization under 3 years (60.3%), followed by 3 to 5 years (25.3%); worked under the current manager 2 to 3 years (45.3%), followed by under 2 years (37.5%) as the minimum requirement was

that the employees had at least 3 years of working experience and at least 1 year of working under the current manager

The majority of employees have worked in private organizations (55.3%) and followed by foreign-owned companies (44.7%); in financial services industry (53.4%) and in retail industry (46.6%) respectively From the total participants, most of the employees were single (76.3%), followed by 23.8% married; 80.6% of the employees had bachelor degree, followed by 16.3% for master degree

Table 3: Summary of Employees’ profile

3 to 5 years Above 5 years

193

81

46

60.3 25.3 14.4 Worked under current Manager Under 2 years

2 to 3 years Above 3 years

120

145

55

37.5 45.3 17.2

Foreign-owned

177

143

55.3 44.7

Financial services

149

171

46.6 53.4

(Academic qualification)

High school Bachelor Master

10

258

52

3.1 80.6 16.3

Married

244

76

76.3 23.8

4.2 DESCRIPTIVE STATISTICS FOR TRANSFORMATIONAL

ENGAGEMENT

The descriptive statistics was used to examine the mean, standard deviation and other information that are not clear in the data It was also employed to determine the employees’ perception to the transformational leadership behaviors and employee engagement Table 4as below contained descriptive data for five transformational leadership subscales and two employee engagement scales The distribution of scores for the sample showed reasonable variance and normality in subsequent analyses

Table 4: Mean and Standard Deviations of Transformational Leadership

Behaviors and Affective Employee Engagement for employees’ responses

Individual consideration (IC)

Each subscale of transformational leadership behaviors has 3 items

Subscale of affective commitment and supervisory commitment has 5 items and 6 items respectively

4.2.1 Employees perception to Transformational leadership behaviors

The sample size of 320 for all variables showed that the purpose of the research was

to determine employees’ perception to the current organization’s transformational leadership behaviors and their engagement to the organization The mean values for each of transformational leadership behaviors’ subscales ranged from 3.17 to 3.64; individual consideration had the highest standard deviation 1.00, followed by inspirational motivation scored at 0.89

The overall scores of data for transformational subscales were fit for the ideal levels for effective leadership which suggests the mean of 3.0 or higher for idealized influence attributes, idealized influence behaviors, inspirational motivation, intellectual stimulation, and individual consideration

4.2.2 Employees perception to their organizational engagement

In addition to the scores of transformational leadership behaviors, the mean and standard deviations of the employee engagement to their organization also were presented in the table 4 as indicated by the respondents The mean and standard deviation scores for each of the affective employee engagement scales ranked by respondents as affective commitment (AC) has 3.10 and 0.99, supervisory commitment has 2.88 and 0.97 respectively

From the table, the respondents perceived their affective engagement with higher mean of 3.10 whereas their supervisory engagement was at 2.88 The standard

deviation score of affective engagement was also higher than supervisory engagement

According to some previous researchers, they did not provide the benchmarks for average, required or ideal mean scores for affective engagement or supervisory engagement but focused on identifying the relationship amongst the different types

of organizational commitment, the outcomes, the findings, and the level of influence However, they also proposed the required ranking from affective commitment as the leading factor, then other kinds of commitment

The results of the study reflected the mean scores were consistent with the mentioned by showing that the affective commitment had the highest score, followed by the supervisory commitment This also indicated the employees had a strong affective commitment towards their organizations where they considered themselves as belonging to the organizations In addition, they also committed to engage with their manager and organization through the high mean score of supervisory commitment only after affective commitment

ENGAGEMENT

In the section, the relationship between transformational leadership behaviors and affective employee engagement was explored by two-tailed Pearson correlation analysis

It also provided correlation coefficients which indicated the strength and direction

of relationship; the p value also indicated the probability of the significance of the relationship The findings are presented below

Table 5: Pearson correlation matrix between transformational leadership behaviors and affective employee engagement dimensions

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

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