Studying factors influencing employee turnover at setech

2 National Economics University NEU Business School RESEARCH STUDYING factors influencing employee turnover at setech SUPERVISOR Assoc Prof Dr VU THANH HUNG STUDENT Vũ Thu Trang CLASS eMBA 14a Hanoi –[.]

STUDYING FACTORS INFLUENCING EMPLOYEE TURNOVER AT

SETECH

SUPERVISOR: ASSOC PROF DR VU THANH HUNG

STUDENT: VŨ THU TRANG

CLASS: EMBA 14A

HANOI – 2017

First of all, I would like to send my faithful thanks to the Business School,National Economics University (BSNEU) with all the members, lecturers andassistants for the whole knowledge, experience that has been taught and transferredthrough comprehensive lectures, discussions and exams in the passing time ofEMBA course

Secondly, I would also want to express my sincere appreciation to mysupervisor, Assoc Prof Dr Vu Thanh Hung His wide knowledge and logicalthought of business management in general has brought great values to me Based

on his experience, he had instructed and encouraged me so much to help mecomplete this MBA thesis I could never complete this work without his pricelesssuggestions and guidance

Thirdly, one of the most important factors which supported me to finish thisthesis is the willing help of many people working at Setech, especially the leaders,who was very busy at business but still helped me in developing the questions in myquestionnaire Absolutely, without their opinions and information, I could never beable to complete this thesis in a practical and proper manner

Finally, I would like to save my special thanks to my parents, my boyfriend,whose support, encouragement and sacrifices have helped me through manydifficult times during the creation of this dissertation

Hanoi, August 2017

Vu Thu Trang

EMBA 14A

TABLE AND CONTENT

ACKNOWLEDGEMENT 2

TABLE AND CONTENT 3

LIST OF TABLE 6

LIST OF FIGURE 7

EXECUTIVE SUMMARY 8

CHAPTER 1: INTRODUCTION 11

1 Rationale 11

2 Research Objectives 12

3 Research Questions: 13

4 Methodology 13

4.1 Research process: 13

4.2 Data collection methods 14

4.3 Data analysis 16

5 Research Scope 16

6 Thesis Structure 16

CHAPTER 2: THEORETICAL BACKGROUND ON EMPLOYEE TURNOVER INTENTION AND FACTORS INFLUENCING EMPLOYEE TURNOVER INTENTION 18

2.1 Overview of employee turnover and turnover intention 18

2.1.1 Employee turnover and turnover intention 18

2.1.2 The necessity to study employees turnover and turnover intention: 19

2.2 Factors influencing employee turnover intention 21

2.2.1 Overview of researches on employee turnover intention 21

2.2.1.1 Research of Mobley, Griffeth, Hand, & Meglino (1979) 21

2.2.1.2 Unfolding model: 22

2.2.3 Factors influencing employee turnover intention at Setech 24

2.2.3.1 Work environment (X1) 25

2.2.3.2 Compensation policy (X2) 26

2.2.3.3 Job training and Career Advancement (X3) 26

2.2.3.4 Management behavior (X4) 27

2.2.3.5 Alternative job(X5) 28

2.2.4 The necessary of applying employee turnover intention model to Setech: 28

CHAPTER 3 ANALYSIS OF FACTORS INFLUENCING EMPLOYEE TURNOVER INTENTION AT SETECH 30

3.1 Overview of Setech 30

3.1.2.History of Setech’s development 30

3.1.3 Organizational structure 32

3.1.4 Mission and vision 33

3.1.5 Employee turnover at Setech: 33

3.2 Factors influencing employee turnover at Setech: 35

3.2.1 Demography Background of Respondents 35

3.2.2 Factors influencing employees turnover at Setech 40

3.2.2.1 Work environment factors: 40

3.2.2.2 Compensation policy factors: 43

3.2.2.3 Job training and career development factor: 47

3.2.2.4 Management behavior: 50

3.2.2.5 Alternative job: 54

CHAPTER 4 SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS 56

4.1 Development orientation from 2016 to 2020: 56

4.2 Summary of finding 57

4.3 Recommendations: 58

4.3.1 Organizing more team building activities aims to strengthen the bond among employees as well as between employees and managers: 58

4.3.2 Developing a clear reward system to increase transparency of the company’s compensation policy: 59

4.3.3 Creating a job training system to increase skills and knowledge

about company: 60

4.3.4 Examining company’s core competency aims to develop a clear direction of growth for the company: 60

4.3.5 Creating exit interviews and focused-group meeting aims to reduce employee turnover’s intention: 61

CONCLUSION 63

REFERENCES 64

Appendix A: Questionnaire for Current Employees 66

Appendix B: Questionnaire for Ex-Employees 70

Appendix D: Questionnaire for Current Employees in Vietnamese 73

Appendix E: Questionnaire for Ex-Employees in Vietnamese 76

Appendix F: Successful partnership and projects 78

Appendix G: Demographic Background of Respondents from current and former employees 84

LIST OF TABLE

Table 1: Demographic Background of Respondents from current and former

employees 35

Table 2: Academic Qualification of Respondents from current and former employees 37

Table 3: Employee Information of Respondents from current and former employees 38

Table 4: Job Position of Respondents from current and former employees 39

Table 5 Working environment analysis of current and former employees 40

Table 6 Response of current employees and former employees regarding relationships among staffs and management 42

Table 7 Response of current and former employees regarding base salary at Setech 45

Table 8 Response of current and former employees regarding additional benefits and reward system at Setech 46

Table 9 Response of current and former employees regarding job training and career development plan at Setech 47

Table 10 Response of current and former employees regarding promotion mechanism at Setech 49

Table 11 Response of current and former employees regarding unfair treatment at Setech 51

Table 12 Response of current employees regarding workload at Setech 52

Table 13 Response of current and former employees regarding other mismanagement problems at Setech 53

Table 14 Response of current employees regarding other alternative jobs 54

LIST OF FIGURE

Figure 2.1 Mobley et al (1979)’s simplified model 22

Figure 2.4: Unfolding model 23

Figure 2.5: Employee turnover Model 25

Figure 3.1 Organizational structure of Setech 32

Figure 3.2 Employee turnover rate at Setech from 2011 – 2016 34

EXECUTIVE SUMMARY

The exploration of the study was derived from the author’s experience andinvolvement in Setech, which dated back to 2014 when the author was recruited tojoin the financial team in Setech

While working in Setech, the author recognized that the employee turnoverrate was relatively high, most employees in Setech had not been working for thecompany long enough to feel committed and loyal The author of this thesis is anexample As an ex – employee, the author yearned to find out for what reasonsnumber of employees resigning from Setech remains high throughout the yearsand how employee turnover at Setech might have had influence the quality ofservice and job performance Moreover, employee turnover, as an academicconcept, has aroused wide attentions from the fields of management, socialpsychology, and practical operations in recent years For these reasons, the author

choose to demeanor a study called “Studying factors influencing employee turnover at Setech”

The main purposes of this study is to point out significant objectives are tosystemize researches on employee turnover and factors influencing employeeturnover, and based on previous researches, the author develop her own modelapplicable to Setech’s situation Based on the analysis of data collection, the authorwill explore the main factors leading to the decision to leave of employees andpropose suitable recommendations that can be applied to Setech

The study will utilize quantitative method and present the results throughgraph and statistical data with the conditions that information and permission will

be obtained beforehand Based on the interviews with the head of the company anddepartment heads and the data collected from participants, the author articulated thefollowing as the factors that are influencing Setech’s high employee turnover:

- Work environment;

- Compensation policy;

- Job training and career development;

- Management problems;

- Alternative job opportunities

Based on the information collected from respondents, the author notices thateach of mentioned factor influences employee turnover differently For instances,Setech has done amazing jobs on creating a good working environment foremployees, providing salary in accordance to employees’ experiences and workload

as well as making employees feel that they would rather at Setech even though thereare better opportunities on the market However, other factors such as unclearreward system, lack of job training and career development system, low employeemorale and lack of employee empowerment affect Setech negatively Based on theresults of the survey, the author proposes the following recommendations:

- Organizing more team building activities aims to strengthening the bondamong employees as well as between employees and managers: The team-buildingactivities can be a camp-fire overnight trip incorporating team-building challenges,

a company holiday trip or even just a company dinner All of these activitiesencourage team work and collaboration among members of the company as well as

to relieve employees’ stress

- Creating a clear reward system aims to increase transparency of thecompany’s compensation policy: The company needs to create employeeperformance expectations, including the goals employees need to achieve and othernecessary requirements After developing employee performance expectations, thecompany needs to determine which type of rewards applying to different goals Thereward system and requirements need to be known by all of employees in Setech forthem to understand that the company is fair and everyone can be rewarded if theyachieve the requirements needed

- Developing a job training system aims to increase skills and knowledgeabout company: Setech needs to develop two types of job training systems: generaltraining and skill-set training General trainings are needed when new employeesjoin the company, which is a one – on – one conversation with the head of thecompany about what kind of company Setech is and what Setech expects ofemployees Skill-set training will be an on – job training The skill the companyrequires of employees varies depending on which departments the employees workfor as well as the positions the employees hold After the training period of 6months, each new employee will be evaluated by supervisor and manager.

- Developing suitable core competency aims to develop a clear direction ofgrowth for the company: The company needs to have a good core competency inorder to make employees believes in its capability as well as its future The goodcore competency needs to be valuable, rare, no substitute, costly to imitate Based

on those criteria, the core competency of Setech will be “Innovation: developingVietnam as the country of smart and secured city” With the core competency,employees will understand what Setech is good at and the ability of Setech to grow,

in turn, employees will feel more powered and have high morale when knowingwhat working for Setech

- Creating exit interviews and focused-group meeting aims to reduceemployee turnover’s intention: Exit interview is important in knowing andunderstanding reasons former employees leave company Based on informationgathered from former employees, the company will develop a suitable solution forimprovement Each month, the company will organize focused-group meeting inorder to employees to talk about their dissatisfaction and what the company needs

to work on

of retaining superb employees in the companies, thus, helping the companies achieve asuccessful position in the market From a managerial point of view, the attraction andretention of high-quality employees are more important than ever

Applying the knowledge about employee turnover rate and the effect of highturnover rate on a company’s performance, this research is to evaluate the currentemployee turnover rate and find out the reasons why most employees have notstayed for more than two years with Setech, a start – up company which supplysecurity systems to government entities, factories, companies and households thatthe researcher used to work for

According to yearly reports of Setech, the employees turnover rate atSetech is at the alarming rate since the establishment of the company In 2011,with the support of many government entities, the head of the companyestablished Setech with only 7 employees However, after some times workingfor Setech, 4 out of 7 employees resigned, looking for another opportunity in themarket In 2012, the company had chances to partner up with governmententities to host events and projects With the increasing in amount of work,Setech decided to hire more employees and established departments within thecompany With the end of each project, employees decided to resign and thenumber of employee turnover at Setech is up to 7 out of 32 The number of

employees turnover in 2013, 2014, 2015 is 2 out of 37, 5 out of 46 and 8 out of

63, respectively In 2016, with the expansion of Setech venturing into Buon MeThuat, head of the company decided to hire more employees, especially thecollaborators in order to expand the current market However, the number ofemployees resigning remained high, 6 out of 98 in 2016

According to Ms Do Nhat Nga, the company’s founder and CEO, “the highstaff turnover originates from the current state of the company Even though thecompany is always profitable and the working environment is relatively goodcompared to other companies, the staff often resigns.” She reveals that after one totwo years, with enough experience, employees often seek for job with higherpayment and more stability In a company such as Setech, in which engineers andprocurement experts plays a center role in delivering products and service tocustomers in their mandates, employees resigning can lead to loss of personnel,reduction in knowledge, decreased staff morale and increased workload Forinstances, Setech has had the situation when the loss of experienced employee leads

to the loss of his contact He was the one who often communicated with theVietnamese Procurement Paper to publish information on newspaper and website.However, with his resignation, Setech has to assign another employee to reach outand acquaint new contact In the context of the research, this thesis will further

“Study factors influencing employee turnover at Setech.”

2 Research Objectives

The main purpose of this research is to point out significant objectives as follows:

●To systemize researches on employee turnover intention and factorsinfluencing employee turnover intention

●To identify the reasons that lead to turnover intention and employeeturnover at Setech

●To propose solutions to improve employee turnover intention at Setech

3 Research Questions:

●What are the factor influencing turnover intention at Setech?

●How is the current situation of turnover intention and employee turnover atSetech?

●What are solutions and recommendations to reduce turnover intention andemployee turnover at Setech?

4.2 Data collection methods

To make sure that the research can be reasonable and persuasive, theresearch uses both secondary and primary data

Secondary data: I collected from different sources as follows:

- Internet, market’s report, newspaper

- Setech’s Code of Conduct, Setech’s annual report, Setech’s employee profiles

- Related seminar and roundtable discussion documents

Primary data:

This research will use primary data from two methods, which arequantitative (surveys) with the sample of 73 current employees and 5 formeremployees and qualitative data (in-depth interviews) with 5 former employees

Employees and former employees’ survey:

Respondent: Employees who are working or used to work at Setech

Sample size: 73 current employees and 5 former employees of Setech

Sampling method: The questionnaires were sent directly to the employees orsent via email to former employees After checking the delivery status of thequestionnaires posting, the researcher will request the employees to reply via email

or see them directly for collecting

+ Develop factors and subfactors influencing employee turnover: Based onthe proposed factors influencing employee turnover developed by author, the author

interviewed the head of the company as well as the head of departments to find outtheir thoughts and opinions about the subfactors of each category Through theinterviews with the managers of the company, their opinions are written down andmodified as suitable for the questionnaire The questionnaire for former employeesare created similarly to the questionnaire for current employees.

+ Pretest: Pretest is an important step in testing the understandability of therespondents In this thesis, the author decides to choose 5 employees both currentlyworking for Setech and have resigned from Setech to find out if any of them haveproblems with the survey As the future survey is sent both personally and throughemail, the author decided that the testers should finish the survey the same wayfuture respondents will do, which means that 3 of testers would be given the surveypersonally and 2 of them would receive the survey by email The testers receivingsurvey by email printed the survey and answered questions at the same place andsame time with other 3 testers When filling the answers of the survey, testers wereasked to think out loud, and author of this thesis would write each opinion downand perfect the survey according to testers’ opinions After completing the surveyaccording to testers’ opinions, 5 our of 30 statements were deleted off the survey.Many of the testers believed that these statements were not suitable, too direct ordid not belong to the same topic as others

- Questionnaires include three parts as following:

+ Part 1: Collect general information

+Part 2: Survey on the working conditions, reward system as well asopportunity for development within Setech

+Part 3: Questions regarding opinions towards factors influencingemployee turnover

In-depth interview:

The in-depth interviews are to learn through administration and departmentheads about former employees’ reasons to resign from positions in Setech and their

thoughts about in what measure Setech can do to reduce high level of employeeturnover

The interview will involve asking informants open-ended questions, andobtain data deemed useful by the researcher including whys, hows and personalperceptions that the questionnaires does not mention

Geographical scope of the research: Setech Company in Hanoi and in Buon

factors influencing employee turnover This chapter proposes some contents such astheories and research on employee turnover as well as frameworks developed frompast studies The third chapter analyzing the current situation regarding employeeturnover in Setech The final chapter proposes some findings of the research andrecommendation to level of.

Chapter 1: Introduction

Chapter 2: Theoretical background on employee turnover and factors

influencing employee turnover

Chapter 3: Analysis of factor influencing employee turnover

Chapter 4: Recommendations to reduce level of employee turnover in Setech.

CHAPTER 2:

THEORETICAL BACKGROUND ON EMPLOYEE

TURNOVER INTENTION AND FACTORS INFLUENCING

EMPLOYEE TURNOVER INTENTION

2.1 Overview of employee turnover and turnover intention

2.1.1 Employee turnover and turnover intention

Employee turnover, as defined by Hom and Griffeth (1994), is “voluntaryterminations of members from organizations” Loquercio et al (2006) describedstaff turnover as the proportion of staff leaving in a given time period but prior tothe anticipated time of ending of their contract According to Singh et al (1994),staff turnover is the rate of change in the working staffs of a concern during adefined period Ivancevich and Glueck (1989) believed that staff turnover is the netresult of the exit of some employees and entrance of others to the organization.Kossen (1991) defined turnover as the amount of movement in and out (of

employees) in an organization Griffeth and Hom (2001) further studies that staff

turnover that can occur in any organization might be either voluntary or involuntary.Voluntary turnover refers to termination initiated by employees while involuntaryturnover is the one in which employee has no choice in the termination as it might

be due to long term sickness, death, moving overseas, or employer-initiatedtermination (Heneman, 1998)

Various studies have shown the distinction between employee turnover andturnover intention According to Mobley (1977), turnover intention is the intention

to leave the jobs voluntarily While Ajzen (1991) stated that intentions were astatement about specific behaviors or interest In other words, employee turnoverintention can be described as the voluntary intention of employee to depart fromtheir current jobs

From previous researches and studies, it could be referred that turnoverintention is the best predictor of turnover intention According to Hom et al (1992),turnover intention and employee turover had a positive and correlational relationshipwith each other Employees that show interest in leaving the organizations oftenresults in resigning from organizations later on Gregory et al (2007) also stated thatturnover intention was just a precedent that later would develop into the actualemployee turnover Mobley (1977), in his model of employee intention, alsodescribed that turnover intention was just a final step that would lead to turnover.Specifically, Mobley theorized that after evaluating factors related to their job, lowjob satisfaction might lead employees to think about resigning, which may influencethat employee to evaluate the expected usefulness of searching for another job and thecosts associated with quitting the current job From the evaluation, the employee willcompare the alternative job with the current job, and decide whether they quit theirjob or not According to his model, employee turnover intention was a concludingmeasure that will lead to the result of employees resigning, and thus, turnoverintention is really importance in influencing employee turnover

In summary, one of the main ingredients of staying competitive in themarketplace is reducing level of employee turnover The results of employee turnover

as follows: loss in productivity, low level of commitment and loss of experienced andskilled personnel Therefore, companies should study employee turnover andturnover intention in order to fortify their strength and improve their weakness

2.1.2 The necessity to study employees turnover and turnover intention:

In modern business, philosophy business should be personnel oriented andthe implementation of the main principles of continuous improvement, justifies theimportance of evaluating and analyzing the causes and effects of employeeturnover In short, employee turnover is considered as baseline of how well theorganizations are rewarding their employees and at the same time, identifying thecompetitiveness of organizations in the market by measuring the number of starperformers in those organizations

To be successful in business, enterprises have to satisfy the needs andwants of the employees The importance of employee satisfaction, loyalty andretention has always been emphasized by many researchers The importance ofreducing level of employee turnover in an organization has a positive effect onorganization’s performace

However, due to unmeasurable qualitative and undefinable quantitative result

of employee turnover, organizations often overlook the importance of turnover Inreality, the loss of experienced and skilled employees leads to undesirableconsequences Turnover is harmful for various industries For example, in the hotelindustry, a decline in employee turnover would be a significant factor in loweringcosts and enhancing labor productivity However, managing and accounting forturnover remain a difficult challenge for hotels as there is no single point ofaccountability within or between units

The research of Ahlrichs (2000) highlighted the most underestimated costs ofturnover of key employees for organizations There are two kinds of costs forturnover, which are visible and invisible costs Visible turnover costs often involvethe cost that affect the profitability and performance of the organizations includingleave capitalization, recruitment expenses, expenses of referencing, temporaryemployee expenses, relocation expenses, formal training expenses and inductionexpenses Invisible costs involve enlarged HR and payroll administration, loss ofproductivity, and informal training Besides mentioned visible and invisible costs,there are many other hidden costs comprising of potentially missed deadlines, loss

of organizational knowledge, low motivation as a result of overwork and theresigning of knowledgeable employees, loss of clients and chain reaction turnover

Another turnover penalty for the organization is its impact on customer relationships Normally, long-termed employees develop personalrelationships with customers These relationships are the basis for a re-enforcingcycle of beneficial interactions between employees and customers, thus enforcing a

employee-positive effect on good customer relationship and ultimately profitability (Rust,Stewart, Miller, & Pielack, 1996)

Another consequence of employee turnover is its effect of employees that stywith the organization Losing good employees often has negative impact oncompany morale Those that remain with the organizations may often feeldemotivated or disheartened, ensuing in a reduction in productivity and jobsatisfaction In extreme cases, the resignation of knowledgeable employees maylead to chain reaction of other employees leaving the companies voluntary Theselatter costs, although more difficult to calculate, are also more harmful (Hay, 2002)

2.2 Factors influencing employee turnover intention

2.2.1 Overview of researches on employee turnover intention

2.2.1.1 Research of Mobley, Griffeth, Hand, & Meglino (1979)

One of classic turnover model was designed by Mobley, Griffeth, Hand, &Meglino (1979) Mobley, Griffeth, Hand, & Meglino (1979)’s model classifies factorsinfluencing employee satisfaction, causing turnover intention inside their heads and inturn, causes employee turnover, into individual, organizational and economic/labormarket factors These causal influence are classified into individual, organizational andeconomic/labor market factors

Individual factors include elements such as interests, personality, aptitude,family responsibility, and demographic elements such as age, gender, education,length of tenure, and socio-economic status Organizational factors are thoseelements inherent to a work environment such as working conditions, climate, size,job content, goals and values, policies and procedures, pay, promotion, peerrelations, and supervision Economic and labor factors potentially mediate the ease

of movement to another job for the employee based on perceptions of alternativejob possibilities, unemployment rates, job vacancy rates, word of mouth, level ofrecruiting, and communication (Mobley et al., 1979)

All of these factors can lead to turnover intention, and result in employeeturnover These factors are illustrated below in Figure 2.1

Figure 2.1 Mobley et al (1979)’s simplified model

Source: Mobley et al (1979)’s research 2.2.1.2 Unfolding model:

The unfolding model views incoming information as shocks (pregnancy,alternative job offers, etc.) This theory suggests that internal or external shocks willcause employee intention and lead the individual to leave an organization becausethe situation (shock) compels the employee to leave This model introduces fivepaths that will lead to turnover In Path 1, the shock activates a pre-existing writing

or script with which the individual connects with previous incidents and this causesthe individual to leave the organization without considering an alternative or theindividual’s connection with the organization Path 2 has a shock that triggers theperson leaving, without thinking of other job alternatives The incominginformation is perceived as a violation of the person’s values, objectives andstrategies In short, path 2 involves employees envisioning about their expectation

of work and their goal for the future, and forming intention to leave after relaizingthat the job they are currently doing does not match their thought Path 3 includes ashock that provoke a judgement of the images of the job he or she currently has,

Turnover behaviorTurnover intention

Utility of present jobUtility of alternative jobs

Economic/labormarket factorsOrganizational factors

Individual factors

providing the information that the shock is not in tune with the images This pathleads to intentional job search, with the aim of finding out about alternative job onthe market to replace the current one The last two paths do not contain shocks Path

4 explains a situation where the person’s job satisfaction is so low that the personleaves without finding out about whether he/she has alternative job This path can

be considered an impulsive decision after briefly forming an intention With Path 5,the person’s job satisfaction is low and this leads to job search, an assessment ofalternatives, the intention to leave and, subsequently, turnovers (Thomas et al.1996)

Shock Engaged

script

Imageviolation Satisfaction

Search and/orevaluation ofalternative

Yes*

NoYes

No*

Yes*

No

YesNoYesNo*

YesNo

Path 1Path 3

Path 2No

Yes*

No

YesNo*

Yes*

No

YesNo

Figure 2.4: Unfolding model

Source: Lee T W & Mitchell T R (1991)’s research

2.2.3 Factors influencing employee turnover intention at Setech

All of the above models all recognize that employees’ intention to leave theirjob comes from both internal and external factors Internal factors include personaljob preferences, interests,… External factors include job environment, advancementopportunity, alternative-job opportunity, compensation compared to averagecompensation in the market,…

Even though all of the models above are the results of thoroughly researchand market-testing process, they cannot be applied in the case of Setech In case ofMobley, Griffeth, Hand, & Meglino (1979)’s model, the model recognizes thatemployees’ reasons to resign come from three main factors, which are personal,organizational and market factors However, because market factor is an unstablefactor that requires additional research apart from this study, thus, the researcherchoose to apply part of this model to Setech Lee T W & Mitchell T R (1991)’smodel goes in-depth into employee turnover intention after considering variousaspects, including triggers to form turnover intention, employee satisfactions aswell as external push However, unfolding model fails to mention in detail thefactors that lead to voluntary turnover intention, resulting to employees resigningfrom companies

Based on these models and aspects that lead to employee turnover intention,the researcher adapts them into a similar model that is suitable for Setech as well asother Vietnamese companies The proposed model is as of the following:

X1

Figure 2.5: Employee turnover Model

Source: Model developed by author, 2017

Even though the model developed by author consisting of 5 factors does notcover every factor that can impact employee turnover intention; for the purpose ofthis research, the researcher adapts these aspects into a model that is suitable forSetech and can thoroughly reflect the reality of employee turnover and turnoverintention at Setech

2.2.3.1 Work environment (X1)

Work environment is one the key organizational factor leading to turnoverintention of an employee Factors of a good working environment includingorganizational stability, friendly competitiveness among staffs, comfortableworking environment… enable employees feel attached to their job and reduce thelevel of their turnover intention Opposite from that, organizational instability has

Alternative jobManagement

behavior

Job training andCareer Advancementopportunity

Compensation

policy

Work environment

Employeeturnoverintention

been shown to have a high degree of high turnover According to Zuber’s “A career

in food service cons: high turnover”, employees are more likely to stay when there

is a predictable work environment and vice versa (Zuber, 2001) In organizationswhere there was a high level of inefficiency there was also a high level of staffturnover (Alexander et al., 1994) Therefore, in situations in which organizations arenot stable, employees tend to think of quiting and look for more stable organizationsbecause with stable organizations they would be able to predict their careeradvancement

2.2.3.2 Compensation policy (X2)

Compensation is arguably an important factor that influences employeeturnover intention in both profit and non-profit organizations Even if employeesfind organizational mission and goals satisfy their interest and their desire, theywould not like to stay and contribute their talent to the organizations if they feel thatthe compensation is not enough Griffeth et al (2000) also noted that pay and pay-related variables have a modest effect on turnover Their analysis includedresearches that studied the relationship between compensation, employees’performance and employee turnover intention They came to a conclusion that whenhigh performers are insufficiently rewarded, they are more likely to form tuenoverintetion, which might lead to the resignation from their current positions

2.2.3.3 Job training and Career Advancement (X3)

According to David and Stephen (2005), career development is one ofprominent factor that contributes to employee turnover intention Motivationalfactors including recognition and advancement opportunities are important inkeeping employees stay loyal with the organizations they are working for In order

to motivate employees, employees need to feel that their work bears fruit andadvancement opportunities are the result of their commitment

Dessler (2000) also insisted that job training and career developmentprograms of an organization helped an individual in the organization to identify thegap between their skill and advancement requirement and thus, devote themselves

to achieve a goal they set out With structured and well-function advancement plan,employees are encouraged to try their best and are enabled to have equalopportunity of being promoted By making employees feel that they have a chance

of being in a higher position, organizations are having them fostering commitment

According to Dessler, a clear and equal opportunity in career developmentbuilds sense of organizational ownership and minimizes employee turnoverintention From organizational view point, career development can reduce costsdue to the reduction in turnover intention and employee turnover Moreover, fromemployee’s point of view, a clear career development plan can help improvemoral, boost productivity, and push the organization to become more efficient

Besides career development, job training is one the factors that directly affectthe intention of leaving If the company consists of different levels of job trainingcatering to different types and skills of employees, they will be more prepared fortheir job, thus, making employees feel that the position they are working for issuitable for them Otherwise, with lack of job training, employees often feel thatthey are not well-prepared for the positions they are being assigned to, which mayresult in them forming turnover intention

2.2.3.4 Management behavior (X4)

Management behavior is one of the key factors that lead to employeesforming the thoughts of leaving organizations they are working for Managementability to retain its employee and keep them with their knowledge gives acompetitive advantage and increase service quality and productivity However, incompanies that do not acknowledge that management is their weaknesses, chancesare that mismanagement is the character that embeds in the core of the company

Management behavior includes treatments among staffs, participation indecision making process, working schedule… All of these reasons may have anegative or positive influence on employees’ will to work

2.2.3.5 Alternative job(X5)

Abdul Rahman et al (2008) reported that availability of alternative jobopportunities had significant positive impact on turnover intentions Moreover,turnover is more likely to occur to a high performer than a low performer within acompany due to the condition of the market Carsten and Spector (1987) respondedthat high unemployment rates reduce voluntary turnover In addition, jobdissatisfaction and intentions to leave appear less likely to translate into turnoverwhen unemployment rates are high One of the reason why is due to the fact thatlow performer may not have many attractive alternative job opportunities unlessthere is a shortage of workers in the labor market In contrast, companies are alwaysseeking for high performers regardless of the market condition

This factor concerns both internal and external condition and environment ofthe firm If the firm has good environment and reward star employees adequatelyaccording to their work performance, employees may not feel the need to look atanother job However, if employees have any dissatisfaction toward their job, theymight want to accept any alternative offer that they feel as more suitable

2.2.4 The necessary of applying employee turnover intention model to Setech:

Mobley, Griffeth, Hand, & Meglino (1979)’s model mentioned aboveconsidered three groups of factors that affect the decision to resign of employees,except for the unfolding model The unfolding model is the mapping of employees’thought from having the intention of leaving to leaving the company, in which eachsituation originates from different reasons affected by different dependent variables

However, all these models are very complexed models, that evenacknowledging the economy as the variable that lead to voluntary turnover AsSetech is a fairly new company, with more than 100 employees, the complexedmodels above cannot be applied into Setech’s situation The 5 factors chosen byresearcher are five factors that are most common and can be researched throughsurvey with current employees and former employees All of these factors are alsothe factors taken from the models above, applying them into Vietnamese market

and Setech’s situations For instance, one of the proposed factor that mightinfluence turnover intention and employee turnover at Setech is work environment.This factor is taken from all of models above since this factor is considered anintrinsic factor, a motivator that needs to be fulfilled in order to keep employeesstay loyal Similarly, all of other factors such as compensation policy, job trainingand career development, management behavior also originates from internal and can

be improved as mentioned in Mobley, Griffeth, Hand, & Meglino’s model Unlikementioned factors above, alternative job is an external factor This factor is alsochosen based on Mobley, Griffeth, Hand, & Meglino’s model Even though thisfactor cannot be enhanced by company, company needs to be mindful of externalenvironment and be attentive of how to treat employees

Since the idea of finding factors influencing employee turnover, the relevant documents to this subject had been found and collected from different sources This chapter systemized theoretical foundation on employee turnover and factors influencing employee turnover, which was presented in some papers and text book written by some famous scholar such as Mobley, Griffeth, Hand, & Meglino (1979) and unfolding model Especially, this chapter focuses on five factors influencing employee turnover derived from famous models They are work environment, compensation employee, job training and career development, management behavior and alternative jobs that are used in the thesis

CHAPTER 3 ANALYSIS OF FACTORS INFLUENCING EMPLOYEE

TURNOVER INTENTION AT SETECH

3.1 Overview of Setech

3.1.2.History of Setech’s development

Services and Development Technology of Vietnam Co.,Ltd (Setech Co.,Ltd.)was established in 2011 under the business license No.: 0105478900, which isissued by the Division of Business Registration - Department of Planning andInvestment of Hanoi

Setech has been built and developed with the background of young,intellectual, enthusiastic and willing team The company has six years of experience

of organizing international specialized exhibitions, seminars, consultation andproviding security & safety equipment, etc

Setech is specializing in providing and installing security and safetyequipment, electronic devices and telecommunication equipment Setech hasparticipated in many projects; always ensured the rate of process, technical quality,fine art, reasonable price and the loyalty from customers There are many successfulprojects collaborated with some of the biggest organizations and companies inVietnam, which should be mentioned such as the National Assembly Office,Vietnam News Agency, General Department of Logistics Technology - Ministry ofPublic Security, Military Institute of Science and Technology - Ministry of Defense,Vietnam Television Corporation – VTC, Hoang Gia hotel- Quang Ninh, ThanhNhan Hospital, Kim Lien Hotel - Hanoi, The Bac Ninh Province People'sCommittee Guest house, The Yen Bai Province People's Committee Guest house,Military Institute of Automation Technology - Ministry of Defense, Ngo Si LienSecondary School, Vietnam Maritime Administration, Ha Tinh University,Diplomatic Academy of Vietnam- Hanoi and etc

Setech company operates in the following business areas:

 Consulting and installing security and safety protection system for families,hotels, office buildings, schools…

 Consulting and installing advanced perimeter security system for prisons,train stations, buildings, public vehicles, borders…

 Providing and installing electronic, informatics and telecommunicationequipment…

 Organizing national and international specialized events, seminar and exhibitions

 Providing GPS navigation devices;

 Providing security platform for informatics technology;

 Consulting and providing other specialized equipment;

 Providing software solutions;

 Providing defense equipment, import and export with condition;

 Consulting education, investment, managing business and etc

 Transferring technology in industrial, agricultural, constructional,informatics, cyber and telecommunications areas;

 Visa services, organizing tour, printing, designing and supplying gifts and etc With the enthusiasm, innovation, high qualification and regular methodicaltraining, Setech is always willing to receive, implement and bring new technology

to the customers

Setech always ensures the transparency in our business activities andcomply with customers and business partners’ commitments Now, Setech is thetrade representative of some big international corporations, for instance:

- El-Far corporation (Israel): Providing advanced perimeter security solutions;

- Haritham Technologies company (India): Software solutions;

- Trivox security group (Singapore): Security and safety equipment;

3.1.3 Organizational structure

Figure 3.1 Organizational structure of Setech

Source: Setech’s report, 2017

SETECH Co.,Ltd is an organization recruiting professionally trainedengineers and bachelors of Science SETECH’s employees are people who havegained working experiences from different companies and supplying equipment toministries and organizations such as: Ministry of Science & Technology, Ministry

of Public Security, The officers of the National Assembly, schools and othergovernment entities

Number of employees working for Setech currently is 107 people, dividinginto three (03) departments, which are:

• Technical department: Technical department includes two type of staffs,technicians/ project staffs who are working at the office assisting technical workers

on site and collaborators with directions that the CEO and department heads have inmind and technical workers on site The technicians/project staffs’ jobs are to plan,guide employees to follow the customers’ order and make sure the projects are onthe right track Technical workers on site, on the other hands, have to keep track ofthe technical parts, making sure the machines and system installed are workingcorrectly In the situations that the systems installed are not suitable with theexisting system, technical workers have to follow up, and fix up the problems

Collaborators

ProcurementspecialistAccountants

Technicalworkers on site

Technicians/

Project staffs

Head ofProcurementdepartment

Head of Accountingdepartment

Head of Technical

department

Head of the company

• Accounting department: The main job of employees at accountingdepartment is to deal with the financial problems and perfect the financial statementand analysis of the company

• Procurement department: Procurement specialists’ main job is to procureneeded machines, system in the most favorable ways for the company In manycase, procurement specialist have to find collaborative partners to participate inprojects that require of other expertise other than security and technologydevelopment Collaborators are people who work under Setech, however, often,work outside, communicating and finding new projects for Setech

Besides, SETECH Co., Ltd also cooperates with teams of collaborator fromdifferent expertise and professions With projects regarding consultation and design,equipment supply and installation, SETECH Co., Ltd., always has supports fromdomestic and foreign specialists

The company’s purpose is to afford our officers enough capability andknowledge in order to satisfy all customers’ requirements in transferring the latesttechnological achievements in the field of electronics, telecommunications andinformation technology into real life

3.1.4 Mission and vision

Mission: To build a well-known brand, to be a leading company in servicesand technology development

Vision: Developing the human resource and develops advanced technologyproducts to satisfy the demand from science and technology areas

3.1.5 Employee turnover at Setech:

According to yearly report of Setech, the employees turnover rate at Setech

is at the alarming rate since the establishment of the company In 2011, with thesupport of many government entities, the head of the company established Setechwith only 7 employees However, after some times working for Setech, 4 out of 7employees resigned, looking for another opportunity in the market In 2012, thecompany had chances to partner up with government entities to host events and

projects With the increasing in amount of work, Setech decided to hire moreemployees and established departments within the company With the end of eachproject, employees decided to resign and the number of employee turnover atSetech is up to 7 out of 32 The number of employees turnover in 2013, 2014, 2015

is 2 out of 37, 5 out of 46 and 8 out of 63, respectively In 2016, with the expansion

of Setech venturing into Buon Me Thuat, head of the company decided to hire moreemployees, especially the collaborators in order to expand the current market.However, the number of employees resigning remained high, 6 out of 98 in 2016

2011; Employee

turnover rate;

57%

2012; Employee turnover rate;

22%

2013; Employee turnover rate; 5%

2014; Employee turnover rate;

11%

2015; Employee turnover rate;

13% 2016; Employee turnover rate; 6%

Employee turnover rate

Employee turnover rate

Figure 3.2 Employee turnover rate at Setech from 2011 – 2016

Source: Setech’s yearly report, 2016

From Figure 1, it can be referred that the employee turnover rate at Setech is onthe verge of declining, however, the reduce in employee turnover rate is due to theincreasing number of employees joining the company In fact, the number ofemployees resigning from Setech in number remains the same from 2011, even thoughproportionally, the rate of employee resigning is decreasing This shows the reality thatSetech has series problem regarding staff management that employees often stay atSetech for a very short amount of time until finding a new job One of the formeremployee, Mr Tran Quoc Thang, after 2 years working as procurement specialists,

decided to quit his position at Setech, even though he was still fond of the company,and worked as Deputy Director of another technology company From his perspective,during his two years working at Setech, employee turnover at Setech is not at seriousstage but need attention from management level Many positions, after employeesleaving, are difficult to fill since former employees have already developed their ownconnection with customers and partners He, himself, had to fill the position of a formeremployee, and had to spend quite some time to acquaint with many importantconnections, including people at the high position of government entities.

In an attempt to reduce the level of employee turnover as well as tounderstand factors leading to employees forming turnover intention at Setech,researcher asked for a survey of current and former employees in order to studyabout the factors leading to employee turnover The detail of data analysis of thesurvey will be presented in the thesis

3.2 Factors influencing employee turnover at Setech:

3.2.1 Demography Background of Respondents

Table 1: Demographic Background of Respondents from

current and former employees Current employee Former employee Department Heads

As Setech is a technical – focused company consisting of three department:technical department, accounting department and procurement department,employees of the company consists of mainly male employees Even though theresearcher tried to create a survey with balance in genders during data gatheringprocess, it is unavoidable that more male employees participated than femaleemployees From data gathered from current employees, 64.38% are male and35.62% are female out of 74 employees that participated in the survey, while 40%

of former employees took part in this survey are male and 60% are female.Regarding the genders of department heads in Setech, 2 out of 3 are male and 1 out

of 3 is female, whose position is the department head of finance Because the datasample from former employee group is small, the data has not yet proven whethermale employees or female employees leave company more

Age of respondent’s has been categorized into five groups, which are below

25, from 26 – 30, from 31 – 35, from 36 – 40 and above 40 As the company itself

is considered a start – up company, the age range of employees are limited to 5groups with employees under 30 responding consisting of more than 40% From allthe current employees that take part in this survey, 23.29% of them are under 25 and23.29 of them are from 26 to 30 The age group from 31 to 35 consists of thehighest number of employees participating, up to 28.77% Employees from age 36

to 40 are 16 people out of 73 There are only 2 employees that are over 40 years old,one of them is the head of the company and one of them is the head ofprocurement/project department Out of 5 former employees, 4 of them (80%) areunder 25 years old, which may reflects the author’s assumption that younger peopletend to take risk more and often strive for the position in bigger and more profitablecompany despite their lack of experience

Regarding marital status of employees and ex – employees that take part inthis survey, most of them are single, which indicates the fact that the companyconsists of young and inexperienced staffs compared to other companies of thesame size Out of 73 current employees, 65.75% of them are single while the rest

are married In regard to former employees, all 5 of them are single 3 out of 3heads of department are married This illustrates a hypothesis that married peopleare more committed to their job, regardless of their positions since they have more

to lose compared to younger employees

Table 2: Academic Qualification of Respondents from current and former

employees Current

employee

Former employee

Department Heads Academic

Source: Data analyzed and collected by author, 2017

In order to ascertain academic qualification, current employees and formeremployees that participated in the survey were requested to answer questionsregarding academic qualifications The qualification was categorized into six parts.Regarding data gathered from current employees, none of them are at the academiclevel of high school and high school graduate, which is understandable becauseacademic level is extremely important in Vietnam Since company consists of manyyoung employees, most of them just freshly graduates from college According tothe result of the survey, 12.33% of current employees that engage in this study

graduated from community college, 80.82% of them are university graduate whileonly 5 of them have MA/MBA/MTh degree, of which 2 out of 5 are heads ofdepartment 100% of former employees graduated college, which may be due to theassumption that they have wider range of choices compared to community collegegraduate, and may leave the company due to the opportunity of better job offer.

Table 3: Employee Information of Respondents from current and former employees

Current employee

Former employee

Department Heads Years of Working in

Setech

Source: Data analyzed and collected by author, 2017

Since the company was established in 2011, the respondent’s year of servicewas categorized into four groups: less than 1 year, 1 – 2 years, 3 – 5 years and 6 –

10 years There are 19 out of 73 current employees that have worked for Setech forless than 1 year 46.58% of the respondents from existing employee group havebeen serving for 1- 2 year, 21.92% have been serving for 3 – 5 years and 5.48% (4employees) have been serving for more than 5 years Out of 3 department heads, all

3 of them have been working for Setech since the start The evaluation of years ofexperience in Setech (collected from former employees) signifies that the moreyears employees spend time in Setech, the more chance they develop a sense ofloyal and connected to the company

Table 4: Job Position of Respondents from current and former employees

Current employee

Former employee

Department Heads

Source: Data analyzed and collected by author, 2017

To understand what positions and departments are vulnerable to turnoverintention and employee turnover, the respendents were requested to answer questionabout their job position at Setech The result of respondents from existingemployees indicates that 1 out of 73 (1.37%) is the head of the company while thedepartment heads is 4.11% Out of 3 departments, the number of respondents fromtechnical department takes up the most Technicians/project staffs, collaborators andtechnical workers on site consist of 19.18%, 23.29% and 32.88% respectively Thenumber of accountants that were working for Setech at the time of doing survey is 5out of 73 (6.85%), which is a small number compare to staffs of technicaldepartment and procurement department (12.33%) Out of former employees takingpart in the survey, the number of procurement specialists is 2 out of 5 (40%), 1 out

of 5 (20%) is technician/project staff, 1 out of 5 (20%) is accountant and 1 out of 5(20%) is technical workers on site From the author’s understanding throughinterview with managers of Setech, the higher number of procurement specialists

leaving the company might be due to the reality that procurement specialists areextremely valued by companies, especially technical companies Thus, they havebetter chance to find better jobs with better salary and treatment.

3.2.2 Factors influencing employees turnover at Setech

3.2.2.1 Work environment factors:

Factors of a good working environment including organizational stability,friendly competitiveness among staffs, comfortable working environment… enableemployees feel attached to their job and reduce the level of their turnover intention

In order to be explained thoroughly, work environment is divided into twogroups, which are working environment and relationship among staffs anddepartment heads The details are of the following:

3.2.2.1.1 Working environment

Table 5 Working environment analysis of current and former employees

major driver that

would make not think