THE PROBLEM AND ITS SETTING
Background and Rationale of the Study
Human resource management (HRM) plays a crucial role in enhancing business performance and establishing a competitive advantage, as highlighted by Esra Nemli Caliskan in the Journal of Naval Science and Engineering While organizations may readily justify investments in HR functions like training and employee engagement during prosperous times, these areas often face the first budget cuts during financial hardships Nonetheless, the strategic importance of HRM remains vital for sustaining organizational success across varying economic conditions.
Human resources play a crucial role in driving economic development and enhancing business performance In the context of increasing international economic integration and volatility, nations with a skilled workforce are more likely to succeed For Vietnam, achieving industrialization and modernization requires a large pool of highly qualified personnel capable of advancing environmental technologies and competing globally Therefore, improving the quality of human resources, particularly in terms of professional skills and adaptability to rapid technological changes, is essential for ensuring Vietnam's economic growth towards modernization and sustainability.
Human resources are crucial for the success of small and medium enterprises (SMEs) in Vietnam, serving as a key competitive factor that enables effective management of financial and other resources These enterprises constitute the majority in the country and play a vital role in job creation, income enhancement for workers, and mobilizing social resources for development and poverty reduction.
Many SME owners are engineers or technicians rather than trained managers, leading to a lack of formal management education and expertise This deficiency results in weak financial health and a short-sighted vision for most Vietnamese enterprises, causing insufficient investment in human resources In contrast, successful companies worldwide recognize that employees are crucial to their development, often providing a supportive work environment and competitive compensation This approach fosters employee loyalty and commitment, as exemplified by Japan's thriving businesses.
In the context of robust global and Vietnamese economic growth, small and medium-sized enterprises (SMEs) are becoming increasingly vital to the economy by generating jobs and contributing to GDP To thrive amid fierce competition, SMEs must prioritize human resources to establish competitive advantages This involves enhancing business management practices and emphasizing the importance of human capital within the organization, ultimately aiming to boost productivity and improve competitive capabilities.
Thai Nguyen is a province located in the Northern Midlands and Mountains region
Thai Nguyen province stands out as a regional economic and cultural hub, boasting advantages such as a strategic geographical location, a favorable climate, abundant mineral resources, and a skilled workforce These factors foster a conducive environment for the growth of Small and Medium Enterprises (SMEs), which have significantly contributed to job creation, GDP growth, and increased national export volumes However, SMEs in the region encounter challenges in their development, primarily due to a lack of management experience and human resources, coupled with uncertainties in the business environment, leading to operational obstacles.
Thai Nguyen province is home to approximately 2,034 small and medium enterprises (SMEs), which have significantly contributed to the region's industrial production growth in recent years Notably, the total industrial production value increased from VND 24,902.3 billion in 2010 to VND 571,424.8 billion in 2017, marking an 18.9% rise compared to the previous year and demonstrating a remarkable 23-fold growth since 2010 This growth reflects the robust development of SMEs in Thai Nguyen from 2006 onwards.
2010 reached 15.45% / year, 2011 - 2016 reached 76% / year and the average of 11 years from
From 2006 to 2016, the growth rate of SMEs in the province reached 46% per year, significantly contributing to job creation for 15,703 workers This development has played a crucial role in stabilizing the local economy and ensuring social security, as highlighted in the Statistical Yearbook of Thai Nguyen (2010-2018).
Small and medium enterprises (SMEs) continue to face significant challenges despite various supportive policies, including outdated technology, limited business capital, and insufficient access to loans Many SMEs struggle to provide transparent financial information, hindering the loan appraisal process and limiting their ability to secure funding Additionally, competition from imported goods and foreign-invested enterprises intensifies the pressure on these businesses, particularly in terms of product structure and pricing The fragmented nature of their operations and low management capacity further exacerbate their vulnerabilities, while inadequate human resource management remains a critical issue for SMEs in Thai Nguyen province.
Human resource management in small and medium enterprises (SMEs) in Thai Nguyen province is significantly underdeveloped, leading to various challenges that hinder business performance A preliminary survey reveals that 70% of SMEs face difficulties in managing human resources, with 35% struggling with employee turnover and 25% encountering recruitment challenges These issues contribute to low labor productivity and limited employee commitment, adversely affecting the overall production and business outcomes of these enterprises.
Recent studies in human resource management highlight significant findings in various sectors Mai Van Luong's 2019 dissertation examines the practices of human resource management at the Bank for Investment and Development of Vietnam, providing insights into banking sector strategies Similarly, Nguyen Thanh Binh's 2007 research focuses on enhancing human resource management within Vietnam's aviation industry, analyzing its current status and proposing improvements by 2015.
Currently, there is a lack of research on the impact of human resource management practices on the organizational performance of enterprises in Thai Nguyen province This dissertation presents descriptive findings regarding human resource management practices and organizational performance among SMEs in the region The study seeks to identify solutions that will assist small and medium enterprises in Thai Nguyen province in developing high-quality human resources and improving their overall organizational performance.
Objectives
This study aims to examine the impact of human resource management practices on both HR outcomes and organizational performance, specifically focusing on the effectiveness of these practices in small and medium enterprises in Thai Nguyen province.
In solving the research problem, this study has the specific objectives:
This study aims to examine the impact of human resource management practices—specifically recruitment and selection, salary and welfare, job evaluation, and training and development—on employee outcomes, particularly employee commitment, within small and medium enterprises in Thai Nguyen province.
- To study the effect of human resource outcomes (Employee’s Commitment) on organizational performance of small and medium enterprises in Thai Nguyen province according to employee’s perspective
- To assess the effectiveness of human resource management practices in small and medium enterprises in Thai Nguyen province
- To propose some recommendations and policies to improve the human resource management practices and to increase the organizational performance of small and medium enterprises in Thai Nguyen province.
Hypotheses
With view to analyzing the effectiveness of human resource management practices to organizational performance in small and medium enterprises in Thai Nguyen province, the following hypotheses will be tested:
High-quality recruitment and selection processes significantly enhance employee satisfaction, which in turn fosters greater commitment to the organization Therefore, we propose the following hypothesis:
Hypothesis 1 : Recruitment and selection is positively related to the commitment of human resource (employee’s commitment) in small and medium enterprises in Thai Nguyen province The higher quality of recruitment and selection, the higher commitment of human resource is
When employees feel satisfied with salary, they will think to work for company for long time and engage more on commitment to contribute their ability to company Therefore:
Hypothesis 2: Salary and welfare is positively related to the commitment of human resource in small and medium enterprises in Thai Nguyen province The higher quality of Salary and welfare policy, the higher commitment of human resource is
Properly evaluating employee performance and offering salaries that reflect their contributions can lead to increased job satisfaction and greater commitment to the company.
Hypothesis 3: Job Evaluation is positively related to commitment of human resource in small and medium enterprises in Thai Nguyen province The higher quality of Job Evaluation, the higher commitment of human resource is
Implementing effective training programs for employees enhances their skills, leading to increased job satisfaction and long-term commitment to the company.
Hypothesis 4: Training and developing is positively related to commitment of human resource in small and medium enterprises in Thai Nguyen province The higher quality of Training and developing policy, the higher commitment of human resource is
Employee commitment significantly enhances their tenure and willingness to contribute to company growth, ultimately leading to improved organizational performance A strong commitment correlates with better outcomes, as highlighted by Drucker (1954), who noted the longstanding concern of HR professionals about demonstrating their value to the organization The evolution of Human Resource Management (HRM) as a strategic approach has countered criticisms regarding the value of human resources, emphasizing alignment with business goals, involvement of line management, and employee engagement This focus has spurred researchers to conduct empirical studies to validate that effective HRM practices yield higher organizational performance, leading to the formulation of the following hypothesis.
Hypothesis 5: Commitment of human resource is positively related to higher organizational performance in small and medium enterprises in Thai Nguyen province.
Theoretical Framework
1.4.1 Human Resources (HR) and Human Resource Management (HRM)
Human Resource Management (HRM) is a strategic and cohesive approach to managing an organization's most valuable asset: its people According to Armstrong M (2006), HRM encompasses all management decisions and practices that directly impact employees, both individually and collectively, in achieving organizational objectives.
Boxall, Purcell, and Wright (2007) differentiate between an organization’s human resources—skilled and experienced employees—and human resource systems, emphasizing that the former has greater potential for sustainable value generation High levels of skill, motivation, and commitment among employees, fostered by effective HRM practices, lead to productive behaviors and improved capabilities Barney (1991) posits that human resources can yield sustained competitive advantages if they are valuable, rare, inimitable, and well-organized Therefore, it is crucial for firms to implement HRM practices that optimize the utilization of their workforce.
Figure 1.1: The Human Resource Cycle
Source: Armstrong M (2006), A Handbook of Human Resource Management Practice, p.6 1.4.2 The model of human resource management and performance
Research in human resource management indicates that effective HR practices can enhance business performance by aligning individual practices to foster essential resources and competencies David Guest's (1997) model illustrates the connection between HRM and performance, highlighting key dimensions: HRM strategy, HRM practices, HRM outcomes, performance outcomes, and financial outcomes This model posits that improved performance is driven by the organization's people, utilizing expectancy theory to clarify the HRM-performance link It suggests that performance is contingent upon high motivation, skills, and abilities, with HRM practices promoting employee commitment and a flexible, high-quality workforce Additionally, figures 2.2, 2.3, and 2.4 visually represent the interplay between HRM practices, HRM outcomes, and financial performance.
Figure 1.2: The relationship between strategic HRM and performance
Figure 1.3: HRM - performance linkage model
Source: Paul A K and Anantharaman R N (2003), Impact of people management practices on organizational performance: analysis of a causal model, International Journal of Human Resource management, Vol.14, p.1249
HRM practices Intervening variables Operating performance
Employee Productivity Product quality Speed of delivery Operating cost
HR outcomes: competence commitment flexibility
Quality of goods and services
Figure: 1.4: HRM activities, HRM outcomes and performance
Source: Boselie, P., Dietz, G., Boon, C (2005), "Commonalities and contradictions in HRM and performance research", Human Resource Management Journal, Vol 15, p.2
HRM practices, including training, job design, compensation, and incentives, significantly influence key operational performance metrics such as employee retention, productivity, product quality, delivery speed, and operating costs Recent studies have demonstrated a positive correlation between effective HR practices and both organizational and employee performance (Guest, 2011).
Dyer and Reeves (1995) identified key human resource outcomes, including turnover, absenteeism, job satisfaction, and commitment, alongside financial metrics such as profit, return on assets, and return on investment Building on Guest's foundational model, researchers like D Armstrong (2006) have further explored these HR outcomes.
Conceptual Framework
The study investigates the impact of human resource management (HRM) practices on organizational performance in small and medium enterprises (SMEs) in Thai Nguyen province Key strategic HRM practices identified include planning, job analysis, recruitment and selection, performance evaluation, training and promotion, compensation, and interpersonal relationships within the workplace The outcomes of effective HRM encompass competence, commitment, and flexibility, which in turn enhance organizational performance indicators such as product/service quality, profitability, sales, and customer satisfaction A significant challenge lies in pinpointing performance measures that reliably predict the long-term success of SMEs, as highlighted by Holloway et al (1995).
HRM practices do not directly enhance firm performance; instead, they impact critical resources like human capital and employee behavior By fostering a skilled, motivated, and empowered workforce, HRM practices contribute to improved operational performance, which subsequently drives higher overall organizational performance.
Researchers have extensively explored the connection between Human Resource Management (HRM) practices and organizational performance, revealing that effective HRM is crucial for enhancing organizational effectiveness and performance Despite the complexities surrounding the precise nature of this relationship, often referred to as a "black box," the positive correlation between HRM and organizational performance is well-documented and significant.
The debate on performance over the past decade highlights that "HRM does matter" (Huselid, 1995), with Guest (1997) emphasizing that enhanced performance stems from the organization's people Huselid's 1995 research established a significant link between HR practices and corporate turnover, profitability, and market value, indicating that effective HR policies can greatly influence organizational performance However, the success of HRM policies relies on their alignment with broader business strategies In contrast, Hyde et al (2008) found minimal evidence supporting a positive correlation between HRM practices and firm profitability.
To examine the impact of human resource management practices on HRM outcomes and organizational performance, it is essential to incorporate various control variables into the model This approach helps account for additional organizational and environmental factors that influence both the implementation of HRM policies and overall organizational performance (Delaney & Huselid, 1996).
Organizational Performance because the choice of control variables in the analysis can have an important effect on the result (Guest, 2001).
The operational definitions
1.6.1 The definition of HRM practices
Human Resource Management (HRM) encompasses various essential functions such as job analysis, personnel planning, recruitment, employee orientation and training, wage management, benefits provision, performance evaluation, dispute resolution, and communication across all organizational levels Key qualities of effective HR management include in-depth industry knowledge, strong leadership abilities, and proficient negotiation skills.
Small and medium-sized enterprises (SMEs) are registered business entities that engage in the production, supply, and exchange of goods and services in the market Their primary objective is to enhance consumer satisfaction while maximizing profits for the business owners.
According to Guest's (1997) human resources management model, key HR practices such as planning, job analysis, recruitment, training, and employee relations serve as independent variables that influence HRM outcomes These outcomes, in turn, significantly affect the overall organizational performance of enterprises.
Recruitment and selection involve the systematic process of identifying, attracting, and choosing candidates for job positions within a business To assess the effectiveness of recruitment and selection practices, a five-point scale was utilized, measuring responses from Strongly Disagree to Strongly Agree, based on four items adapted from Signh K (2004).
RS1 The recruitment and selection systems in your company are highly scientific and rigorous
RS2 In the company, line managers and HR managers participate in selection
RS3 Valid and standardized test are used when required in the recruitment and selection
RS4 Recruitment and selection system in the company selects those having the desired knowledge, skill and attitudes
Salary refers to a fixed regular payment made by employers to employees, typically on a monthly basis In addition to salary, welfare encompasses additional payments provided to employees To assess the salary and welfare scale, five items were utilized, adapted from the research of Williams et al (1999), employing a 5-point scale ranging from Strongly Disagree to Strongly Agree.
SW1 My current salary is in line with my capacities and my contribution to the company SW2 My salary is equitable with other employees at work
SW3 Welfare policies of the company are clear and accurate
SW4 Welfare policies demonstrate the careful caring of administrators for employees SW5 Employees receive full benefit and attractive welfare
Labor training enhances workers' knowledge and skills, enabling them to perform their jobs more effectively Employee development aims to elevate individuals to higher positions within the organization To assess the Training and Development Scale, four items were utilized on a 5-point scale, adapted from Tran Kim Dung's research (2011).
TD1 I was fully trained all skills to perform my job
TD2 The company has always facilitated to improve my knowledge and skills to work TD3 Promotion policies of the company are fair
TD4 The company always makes advanced opportunities for qualified people
A job evaluation is a systematic method for assessing the value of a job in comparison to other roles within an organization This process is crucial for establishing equitable compensation and ensuring that each position is appropriately valued The evaluation framework is based on four key items adapted from Tran Kim Dung's research conducted in 2011.
JE1 My ability is recognized equally
JE2 My salary is adequate with my contribution
JE3 My job is evaluated equally
JE4 I feel satisfied with company’s job evaluation
Human Resource Management (HRM) practices significantly influence organizational performance and employee commitment Commitment, characterized by attachment and loyalty, reflects individuals' emotional connection to their organization As highlighted by Mowday et al., this relationship between HRM and employee commitment is crucial for enhancing overall enterprise effectiveness.
(1982), the commitment has three characteristics:
- A strong desire to remain as a member of the organization
- A strong belief in and acceptance of the values and goals of the organization
- A readiness to exert considerable effort on behalf of the organization
Therefore, it is measured as the following criteria:
EC1 Employees have strong effective commitment in the company because they want
EC2 Employees perceive that the costs of leaving the company are greater than the costs of staying in the company
EC3 Employees with high levels of normative commitment stay with the company because they feel they ought to
EC4 I intend to do my job with the best ability
Organizational performance variable is dependent variable According to Signh K
(2004), in the research of the impact of HRM practices on firm performance for 359 firms in
India, organization performance is measured as evaluation of managerial employees Four items adapted from Mowday et al (1982) were used to measured organizational performance (5- point scale), as followings:
COM1 - The sales of the company is good in comparison with other companies
COM2 - The quality of the company's products is good
COM3 - The products of the company meet the needs of customers
COM4 - The profit of the company is good in comparison with other companies
1.6.4 Effectiveness of Human Resource Management Practice
Effectively managing and implementing HRM practices is essential for achieving HRM objectives and aligning with organizational strategic goals By prioritizing the needs of internal customers, organizations can enhance employee satisfaction and improve overall HRM outcomes.
Effective staffing involves recruiting and selecting candidates with the right skills from diverse sources to meet employee needs Utilizing modern recruiting technologies enhances the efficiency of this process.
Effective Compensation : The systems that recognize and encourage individual and team performance, satisfying internal customer needs and requirements; by applying adequate and equitable payments
Effective training and development are crucial for employees at all organizational levels to continuously enhance their knowledge and skills, ultimately improving their performance, attitude, and quality of work Utilizing updated training tools and technologies significantly boosts the effectiveness of these programs.
Effective performance appraisal focuses on fostering employee development and accurately measuring performance It achieves its greatest impact when aligned with organizational objectives that support strategic goals and utilizes modern appraisal technologies.
Employees Satisfaction : Employee’s positive emotional state results from the effective HRM practices
To evaluate effectiveness of human resource management practice, the following items were used
Effectiveness of Recruitment and Selection
ERS1 You evaluate the effectiveness of determining the employee recruitment demand in your company
ERS2 You evaluate the effectiveness of in attracting the number of the employee as compared to employee recruitment demand in your company
ERS3 You evaluate the suitable method of recruitment in your company
ERS4 You evaluate the effectiveness of the process of employee selection
ERS5 You evaluate the suitable method of selection in your company
Effectiveness of Salary and Welfare
ESW1 You evaluate the equality in salary policy of your company
ESW2 You evaluate the clearance and transparent in salary policy of your company
ESW3 You evaluate the effectiveness of salary and welfare policy in ensuring employee’s life in your company
ESW4 You evaluate the effectiveness of salary and welfare in motivating employee to work in your company
ESW5 You evaluate the effectiveness of salary and welfare in creating employee loyalty in your company
Effectiveness of Training and Development
ETD1 You evaluate the effectiveness of money spending for training and development in your company
ETD2 You evaluate the suitable content of training and development program in your company
ETD3 You evaluate the knowledge and skills of a group of people who are in charge of training and development program in your company
ETD4 You evaluate the necessary facility of training and development program
ETD5 You evaluate the suitable method in training and development program in your company
ETD6 You evaluate the effectiveness of process in training and development program in your company
EJE1 You evaluate the fairness of job evaluation in your company
EJE2 You evaluate the suitable method of job evaluation in your company
EJE3 You evaluate the standard and criteria of job evaluation in your company
EJE4 You evaluate the effectiveness of the procedure of job evaluation
EEC1 You evaluate the level of satisfaction with the work you are doing now
EEC2 You evaluate the level of support receiving from your coworkers in your company EEC3 You evaluate the relationship with your coworkers in your company
EEC4 You evaluate the level of responsiveness receiving your company
EEC5 You evaluate the level of linking between you and the core values of the company
EOP1 You evaluate the effectiveness of the process of organization performance
EOP2 You evaluate the suitable method of selecting the organization performance in your company
EOP3 You evaluate the suitable selected criteria in organization performance of your company
EOP4 You evaluate the effectiveness of evaluating organization performance of your company
Scope and Limitation
- Place of the study: This study was carried out in Thai Nguyen province
Secondary data: The data of period of 2015 – 2018 was used to analyze
This study aims to investigate the impact of human resource management practices on the performance of small and medium enterprises (SMEs) in the industrial sector of Thai Nguyen province, excluding those in the services and trade sectors.
This study focuses exclusively on small and medium enterprises within the industrial sector, leaving out other business types Additionally, the research is confined to Thai Nguyen province, which has unique socio-economic conditions that may differ from other regions.
Significance of the Study
This study aims to provide valuable insights for managers of small and medium enterprises in Thai Nguyen province, highlighting the significant impact of human resource practices on enhancing business outcomes.
This research offers valuable insights for managers of small and medium enterprises in Thai Nguyen province, suggesting effective strategies to enhance employee commitment through improved human resource management practices.
The research highlights the importance for small and medium enterprises in Thai Nguyen province to focus on enhancing managerial practices that foster employee commitment, ultimately leading to improved company performance By prioritizing employee satisfaction with management, these businesses can cultivate loyalty and encourage employees to contribute their full potential to the organization.
To support managers in small and medium enterprises in Thai Nguyen province, it is essential to prioritize employee well-being and foster a culture that encourages staff to actively contribute their skills and talents towards achieving the company's goals.
- The improvement in performance of small and medium enterprises in Thai Nguyen province may help Thai Nguyen province increase the budget through taxes
Research findings on the link between human resource management activities and the business performance of small and medium-sized enterprises provide valuable insights for policymakers These insights aid in the development of wage and remuneration policies, establishing a legal framework that supports effective human resource management practices within businesses.
- For the researchers, the findings about the impact of human resource management to the business performance of small and medium enterprises are highly applicable models.
REVIEW OF RELATED LITERATURE AND STUDIES
Related Literature
Qualitative definitions define small and medium enterprises based on their qualitative aspects In the USA, based on four key factors identified by the 1947 Committee of
Economic Development (CED), the authorities define a small firm to be one which:
2) Has capital supplied and ownership held by an individual or small group
3) Has an area of operation which is localized in one community
4) Is small in relation to other firms in the industry
In the UK, the Bolton Committee adapted the qualitative definitions It identified three major aspects of small business:
Firstly, in economic terms, a small firm is one that has a relatively small share of the market, and is unable to influence the price or quantity of goods or servicing
Secondly, an essential aspect of a small firm is that its owner or part owner manages it in a personalized way, and not through the medium of a formal management structure
Thirdly, it operates independently, meaning it is not part of a larger enterprise, allowing owner-managers to make key decisions without external influence.
Small and medium enterprises (SMEs) are quantitatively defined by various measurable aspects, although these measurements can be challenging The primary methods for assessing enterprise size include the number of employees, sales revenue or turnover, total assets, and net worth Among these, the number of employees is the most commonly utilized metric globally, while sales revenue and total assets also play significant roles in defining the size of small enterprises.
The quantitative characteristics of small enterprises differ significantly across various industries and countries For instance, a business classified as small in the cement manufacturing sector may be viewed as large in industries like trading or tourism Additionally, what is considered a small enterprise in the USA may be regarded as relatively large in countries such as Thailand, Malaysia, or Vietnam.
Quantitative definitions of SMEs are crucial as they establish the foundation for research and statistical data collection These definitions also create standardized metrics that facilitate comparative analysis of SMEs across different countries.
In Vietnam, businesses registered under the business law are categorized into three levels: very small, small, and medium enterprises This classification is based primarily on total capital, which corresponds to the total assets listed in an enterprise's accounting balance sheet, as well as the average annual number of employees Total capital serves as the priority criterion for determining the size of the business.
Small and medium-sized enterprises (SMEs) encompass various business structures, including private enterprises, limited companies, joint stock companies, cooperatives, and family businesses This study specifically targets those business forms that have established a formal human resource management system, focusing on private enterprises, limited companies, and joint stock companies.
Classification of enterprises by total capital and number of laborers in Vietnam
Very small enterprises Small-sized enterprises Medium-sized enterprises
Number of laborers Total capital Number of laborers Total capital Number of laborers
Between over VND 20 billion and VND 100 billion
Between over VND 20 billion and VND 100 billion
Between over VND 10 billion and VND 50 billion
2.1.2.1 The definition of human resource management
Human Resource Management (HRM) focuses on effectively managing human resources to enhance employee performance in alignment with an employer's strategic goals The HR Department plays a crucial role in developing policies and systems that govern the management of people within organizations Key responsibilities of HR departments include designing employee benefits, overseeing recruitment, facilitating training and development, conducting performance appraisals, and managing compensation and benefits systems.
Human Resource Management (HRM) is a strategic and cohesive approach to managing an organization’s most valuable asset: its people According to Armstrong M (2006), HRM encompasses all management decisions and practices that directly impact the workforce, playing a crucial role in achieving organizational objectives through the contributions of individual and collective efforts.
2.1.2.2 The goals of human resource management
According to Armstrong’s handbook of human resource management practice (Page 5), the goals of human resource management are:
- Support the organization in achieving its objectives by developing and implementing human resource strategies that are integrated with the business strategy
- Contribute to the development of a high- performance culture
- Ensure that the organization has the talented, skilled and engaged people it needs
- Create a positive employment relationship between managers and employees and climate of mutual trust
- Encourage the application of an ethical approach people management
In “Personnel and human resource management”, published by Thomson learning, Gerald Cole, 2002, the goals of human resource management are:
- Ensure that the organization’s human resource needs in the next five years are met both in term of numbers and categories of employees
- Maintain wage and salary levels sufficient to recruit, retain and motivate staff at all levels in the organization
- Ensure top priority given to development of leadership skill for key personnel
- Ensure effective training and development opportunities for all staff to improve skills and develop flexible of roles
-Develop effective communication systems between managers and other employees and between departments and functions
Recruiting involves attracting qualified candidates from both the external labor market and within the organization, playing a crucial role in shaping the selection process and enhancing the quality of human resources The selection phase evaluates candidates against job requirements to identify the best fit among those attracted during recruitment.
In view of Bratton et al (2012) (Human resource management: Theory and Practice), the stages of recruitment and selection process are:
In selection research, it is crucial to focus not only on selection techniques but also on the development of transparent procedures, including thorough job analysis and personnel planning This involves clear distribution of responsibilities in the selection process and providing adequate information to both candidates and assessors regarding the chosen predictors Additionally, examining procedures to forecast supply-demand imbalances is important Companies should evaluate the effects of their recruitment and selection processes, aligning with the broader ‘PDCA’ cycle in HRM practices This comprehensive approach enables managers to define the necessary knowledge, skills, and resources for effective recruitment Studies by Guest (2011) highlight the significant relationships between HRM practices, including job analysis, and positive HR outcomes.
Research indicates that offering competitive wages significantly reduces voluntary turnover (Shaw et al., 1998) In France, wages encompass salaries, benefits, and any direct or indirect cash payments made by employers to employees In Japan, wages include regular cash and in-kind remuneration for both working hours and non-working time, such as paid vacations and holidays, excluding employer contributions to social insurance and pension funds Vietnam presents diverse wage concepts, defining wages as the price of labor agreed upon between employers and employees, reflecting market supply and demand Additionally, wages are described as the compensation workers receive upon completing their tasks, as long as the work is lawful.
Wages refer to the monetary compensation employers provide to employees for completing their job functions as outlined by law or agreed upon in a labor contract This term is often synonymous with remuneration, which is more directly linked to labor agreements in production, business, and civil contracts for temporary workers In the context of a free market, remuneration is viewed as the price of labor, with "wages" typically associated with manual labor in Vietnam, while "remuneration" pertains to payment for intellectual or mental work.
Methods of remuneration can be broadly categorized into time-based and result-based systems, with various incentive schemes offering both monetary and non-monetary benefits to employees Currently, many companies adopt these approaches to enhance motivation, commitment, job engagement, and discretionary behavior According to Michael Armstrong (2006), it is essential to value and reward individuals based on their contributions to foster a productive work environment.
Performance antecedents, as outlined by Dr Stephan J Motowidlo, encompass both direct determinants—such as knowledge, skills, motivation, habits, and situational factors—and indirect determinants, including individual differences in ability and personality Performance reviews focus on staff development and motivation by identifying key areas affecting individual performance and assessing their effectiveness An essential aspect of this process is the implementation of evaluation systems, which play a crucial role in shaping perceptions of procedural and distributive justice Direct determinants are believed to mediate the influence of indirect determinants on job performance, facilitated by mechanisms related to learning capacity, learning opportunities, motivation to learn, and individual fit within the workplace.
Job performance evaluation is a systematic and formal process that measures an individual's work against established standards It quantifies performance through scores or event lists, allowing for comparisons among employees This evaluation involves a structured approach that integrates key elements and fosters a connection between performance standards and feedback between employees and management Performance appraisal, as defined by Cascio (2006), reviews the strengths and weaknesses of individuals or groups within an organization.
The objective of the assessment work carried out within an organization:
Related Studies
David Guest and his colleagues (2003) concluded that the overall findings regarding HR practices are predominantly negative While there is a positive correlation between the implementation of more HR practices and reduced labor turnover, as well as increased profitability, no significant relationship was found between HR practices and productivity Additionally, the presence of more HR practices did not lead to any measurable changes in performance.
According to M.Armstrong, many researchers from USA and other countries published researches reported positive statistical relationships between the human resource management and business performance
Table 2.2: Outcome of research on the link between HR and oragnizational performance
Source: M.Armstrong (2006), strategic human resource management: A guide to Action,
Data from 30 US strip mills used to assess impact on labour efficiency and scrap rate by reference to the existence of either a high- commitment strategy or a control strategy
Firms with a high- commitment strategy had significantly higher levels of both productivity and quality than those with a control strategy
An analysis of responses from 968 US firms reveals insights into the implementation of high-performance work practices This study explores the synergies developed among these practices and their alignment with competitive strategies, highlighting the importance of integrating effective workforce management to enhance organizational performance.
Productivity is influenced by employee motivation; financial performance is influenced by employee skills, motivation and organizational structures
An index of HR systems in 740 firms was created to indicate the degree to which each firm adopted a high- performance work system
Firms with high values on the index had economically and statistically higher levels of performance
Outcomes of a number of research projects were analysed to assess the strategic impact on shareholder value of high performance work systems
High-performance systems make an impact as long as they are embedded in the management infrastructure
The research examined the link between business performance and organization culture and the use of a number of HR practices
HR practices play a crucial role in influencing profitability and productivity, demonstrating significant variations of 19% and 18%, respectively Notably, two key HR practices stand out: the acquisition and development of employee skills, and effective job design, which encompasses flexibility, responsibility, variety, and the implementation of formal teams.
A study of the impact of highperformance work practices such as teamworking, appraisal, job rotation, broad-banded grade structures and sharing of business information in 623 UK aerospace establishments
The number of HR practices and the proportion of the workforce covered appeared to be the key differentiating factors between more and less successful firms
An analysis of the survey, which sampled some 2,000 workplaces and obtained the views of about 28,000 employees
A strong association exists between HRM and both employee attitudes and workplace performance
835 private sector organizations were surveyed and interviews were carried out with 610 HR professionals and
A greater use of HR practices is associated with higher levels of employee commitment and contribution and is in turn linked to higher levels of productivity and quality of services
A University of Bath longitudinal study of 12 companies to establish how people management impacts on organizational performance
The most successful companies had what the researchers called
The companies demonstrated a clear vision and integrated values that were enduring and collectively managed There was strong evidence linking positive attitudes towards HR policies and practices with increased satisfaction, motivation, commitment, and overall operational performance.
Soumendu Biswas, Vijai N Giri, Kailash B L Srivastava (Examining the Role of
Research on managerial issues in post-liberalization India highlights the critical role of human resource management in enhancing individual and organizational efficacy A quasi-experimental field study involving 357 managerial employees reveals that effective HR practices significantly improve both in-role and extra-role performance, as well as overall organizational effectiveness The findings emphasize the importance of considering cultural and structural factors that influence HR practices in Indian organizations, making it essential for both researchers and practitioners in the field.
In "The Impact of Human Resource Management on Organizational Performance: Progress and Prospects," Brian Becker and Barry Gerhart emphasize the significant role of human resource management (HRM) decisions in influencing organizational performance They aim to advance research on the HRM-performance link by identifying key unresolved questions and providing suggestions for researchers to build a cumulative body of knowledge with practical implications The authors advocate for a holistic business management approach that reviews overall performance and aligns strategic and operational objectives to enhance goal attainment.
In the doctoral thesis titled "Researching Jobs of Trained Laborer Occupations in Vietnam," Bui Ton Hien from the National Economics University, Hanoi, explores the theoretical aspects of vocationally trained workers and analyzes their employment status post-training The research highlights the effective utilization of human resources in alignment with the country's industrial modernization goals Additionally, the author proposes several solutions for enhancing training and job creation for the labor force through vocational education, targeting the period from 2011 to 2020.
Doctoral thesis “Training and developing professional human resourcesin the field of detection and handling of boms, mines and explosive objects after the war in Vietnam ”in
In 2009, Nguyen Trong Canh from the National Economics University conducted a thesis examining the state of training and development for professional and technical human resources in Vietnam's mine and UXO management from 2000 to 2008 The research focuses on organizational management perspectives and solutions for enhancing human resource capabilities in this sector, with implications for the industry leading into 2010 and beyond.
In 2020, the author introduced innovative perspectives and solutions aimed at enhancing the training and development of professional and technical human resources for mine and UXO treatment in Vietnam, particularly in the context of the global economic integration.
In her 2015 doctoral thesis, Dinh Thi Hong Duyen explores the training of human resources within Vietnam's digital content industry She introduces a modified research model inspired by K.J Jayawardana et al (2007) to evaluate the factors influencing the effectiveness of human resource training in this sector The study includes an analysis of training activities and assesses the effectiveness of these training programs specifically at VMG Company.
Research indicates a strong link between HRM practices and organizational performance, suggesting that effective HRM can enhance firm performance (Delery, 1998; Guest, 1997; Huselid, 1995) By influencing critical resources like human capital and employee behavior, HRM practices contribute to improved operational performance, which ultimately drives higher organizational outcomes Key measures of operational performance include lead time, fallout ratio, quality level, customer satisfaction, productivity, and on-time delivery (Harel and Tzafrir, 1999; Holloway et al., 1995; Rogg et al., 2001; Stone, 1996), along with HRM-related metrics such as absenteeism and employee turnover (Huselid, 1995).
Most previous studies focused on analyzing the human resource management practices So, there are some limitations in the past as follows:
- Firstly, these studies in the past focused only on business models in developed countries like UK, USA, France, Japan
- Secondly, these studies focused on the activities of human resource management
This thesis introduces a model that identifies the "factors affecting human resource management" specifically tailored for small and medium enterprises in Thai Nguyen province, Vietnam The model evaluates how various internal factors influence the performance of human resource management within these businesses By analyzing these factors, the authors aim to develop solutions that enable resource-constrained small and medium enterprises to enhance the efficiency of their human resource administration.