FACTORS INFLUENCING ON THE JOB COMMITMENT OF EMPLOYEES AT INTERNATIONAL HOTELS IN HANOI: AN EXPLORATORY STUDY

Therefore this study is expected to find ways to resolve the problem of international hotel employees‟ commitment so as to form and maintain a stable and highly qualified workforce for t

FACULTY OF ECONOMICS AND INTERNATIONAL BUSINESS

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GRADUATION THESIS

Major: International Business Economics

FACTORS INFLUENCING ON THE JOB

TABLE OF CONTENTS

LIST OF TABLES iv

LIST OF FIGURES vi

LIST OF ABBREVIATIONS vii

INTRODUCTION 1

EMERGENCE OF THE STUDY 2

OBJECTIVES OF THE STUDY 2

SCOPE AND SUBJECTS OF THE STUDY 3

METHODOLOGY 4

BACKGROUND OF THE STUDY 4

STRUCTURE OF THE STUDY 5

CHAPTER 1: LITERATURE REVIEW 6

1.1 Hotel – accommodation 6

1.1.1 Definition of hotels 6

1.1.2 Classification of hotels 7

1.1.3 Factors affecting the performance of the hotel industry 9

1.1.3.1 External factors 9

1.1.3.2 Internal factors 11

1.2 Job commitment 12

1.2.1 Definition of job commitment 12

1.2.2 Levels of job commitment 17

1.2.3 Impacts of job commitment on organizational performance 18

1.2.3.1 Negative impacts of job commitment 18

1.2.3.2 Positive impacts of job commitment 19

1.2.4 Factors affecting job commitment 20

1.2.4.1 Leadership 21

1.2.4.2 Employee relations 21

1.2.4.3 Nature of jobs 22

1.2.4.4 Performance management and promotion 22

1.2.4.5 Salary and compensation on performance 22

1.2.4.6 Job satisfaction 23

1.2.4.7.Training and development 24

1.2.4.8 Role ambiguity and role conflict 24

1.2.4.9 Secondary working conditions 25

1.2.4.10 Knowledge sharing and knowledge management 25

1.2.4.11 Organizational culture 26

1.2.4.12 Job security 27

CHAPTER 2: RESEARCH ANALYSIS AND FINDINGS 29

2.1 Overview of employment in the hospitality industry 29

2.1.1 In the world 29

2.1.2 In Vietnam 30

2.2 Proposed research model and hypotheses 32

2.3 Research design 33

2.3.1 Questionnaire design 33

2.3.2 Sampling design 39

2.3.3 Data collection procedure and analysis techniques 39

2.3.3.1 Data collection procedure 39

2.3.3.2 Data analysis techniques 40

2.4 Research results 43

2.4.1 Sample description 43

2.4.2 The overall job commitment level of employees at international hotels in Hanoi 47

2.4.3 Analysis of the factors influencing on the job commitment of employees at international hotels in Hanoi 48

2.4.3.1 The Kaiser-Meyer-Olkin (KMO) Measure of Sampling Adequacy and Bartlett's test of sphericity 48

2.4.3.2 Cronbach’s alpha reliability test 49

2.4.3.3 Exploratory Factor Analysis (EFA) 52

2.4.3.4 Adjusted research model and hypotheses 54

2.4.3.5 Correlation analysis 55

2.4.3.6 Multiple regression analysis 56

2.4.3.7 One-way ANOVA test on demographic factors 59

2.5 Conclusions 60

CHAPTER 3: RECOMMENDATIONS 62

3.1 Recommendations 62

3.2 Future trends of the tourism and hospitality industry 77

CONCLUSION 79

REFERENCES 80

APPENDIX 90

APPENDIX 1: Questionnaire (Vietnamese version) 90

APPENDIX 2: Results of KMO Measure of Sampling Adequacy and Bartlett's test of sphericity 95

APPENDIX 3: The first two Rotated Component Matrixes 96

LIST OF TABLES

Table 1.1 Comparison between different Organizational Commitment models 16

Table 1.2 List of factors affecting job commitment of employees 20

Table 2.1 Available options for demographic questions in Section A 35

Table 2.2 Measurement of Leadership 36

Table 2.3 Measurement of Employee Relations 36

Table 2.4 Measurement of Nature of jobs 37

Table 2.5 Measurement of Performance management and promotion 37

Table 2.6 Measurement of Salary and compensation on performance 38

Table 2.7 Measurement of Training and development 38

Table 2.8 Cronbach’s alpha reliability coefficient 41

Table 2.9 Distribution of educational level among different departments/divisions 46

Table 2.10 Frequency table of participants’ job position level, type of employment and length of service 47

Table 2.11 Descriptive statistics of job commitment 47

Table 2.12 Results of KMO Measure of Sampling Adequacy and Bartlett’s test of sphericity on proposed factors 48

Table 2.13 Item – total statistics of “Leadership” factor 49

Table 2.14 Item – total statistics of “Employee relations” factor 49

Table 2.15 Item – total statistics of “Nature of jobs” factor 50

Table 2.16 Item – total statistics of “Performance management and promotion” factor 50

Table 2.17 Item – total statistics of “Salary and compensations on performance” factor 51

Table 2.18 Item – total statistics of “Training and development” factor 51

Table 2.19 Cronbach’s alpha reliability coefficients of variables 52

Table 2.20 Final Rotated Component Matrix 53

Table 2.21 Results of correlation analysis between the dependent and independent variables 56

Table 2.22 Results of the correlation analysis between five independent variables

56

Table 2.23 Model Summary 57

Table 2.23 ANOVA 57

Table 2.24 Coefficients 58

Table 2.25 Summary of the results of multiple regression analysis 58

Table 2.26 Summary of the results of one-way ANOVA test on seven demographic variables 59

Table 3.1 Possible training topics for several hotel departments 73

Table 3.2 Contents of a typical Orientation session 74

LIST OF FIGURES

Figure 1.1 Different ways to classify hotels 8

Figure 1.2 Organizational Commitment Model 15

Figure 1.3 Levels of Organizational Commitment 17

Figure 1.4 Characteristics of under-commitment and over-commitment 18

Figure 1.5 Maslow’s hierarchy of needs 23

Figure 1.6 Organizational culture model 27

Figure 2.1 U.S employee turnover rates by sectors in 2011 30

Figure 2.2 Percentage (%) of three types of international tourists to Vietnam during 2006 – 2013 31

Figure 2.3 Average expenditure of a foreign tourist to Vietnam in 2013 (USD) 31

Figure 2.4 Proposed research model 33

Figure 2.5 The 5-point Likert scale 39

Figure 2.6 Percentage of participants according to gender 43

Figure 2.7 Number of participants according to age 44

Figure 2.8 Number of participants according to highest educational background 44

Figure 2.9 Number of participants according to departments/divisions 45

Figure 2.10 Frequency of responses to statement JC = "I am committed to this hotel.” 48

Figure 2.11 Adjusted research model 55

Figure 3.1 Training plan in January 2015 of Sunway Hotel Hanoi 72

PEST Political, Economic, Social and Technological analysis

PM Performance management and promotion

SC Salary and compensations on performance

SCR

Supportive and cooperative workplace relationships

SPSS Statistical Package for the Social Sciences

USA The United States of America

INTRODUCTION

International hotels have been increasingly developing at a fast pace in Vietnam since their first emergence Along with the promising development of the tourism industry in recent years, hospitality has become a desirable industry to work for International hotels provide an international and professional working environment, as well as other advantages that, to some people, other organizations

do not provide However, those perks are just the tip of an iceberg Hospitality is a labor-intensive industry, which accepts employees from any levels but requires them to comply with the long working hours and suffer pressure from highly demanding jobs After several months, employees may lose their initial excitement when they realize that the hotels do not meet their expectations They would be more willing to leave their current hotels for other places if they do not find any other reasons to cling onto Therefore, this study aims at resolving the low commitment of employees in international hotels, particularly in Hanoi By determining which factors significantly contribute to the level of job commitment, the study could thereafter give out recommendations to make employees stay with and commit to their hotels

I hereby wish to express my sincere gratitude and appreciation to Dr Nguyen Hai Ninh for his valuable assistance and guidance during the progress

I also would like to give my most grateful thank to the Faculty of Economics and International Business for offering me the opportunity to conduct and complete this study It has taught me a lot about doing a scientific research that helps me prepare for higher education in the near future

Due to the limitation of time and knowledge, this study certainly still contains shortcomings All comments to help the study become more complete would be highly appreciated

Hanoi, May 2015 Nguyen Nhu Ngoc

EMERGENCE OF THE STUDY

Recent years have witnessed a remarkable movement of the hospitality industry Until 2014, there were 686 3 – 5 star hotels in Vietnam, 127 of which located in Hanoi Ho Chi Minh City had the most 3 – 5 star hotels, 140 in particular

Da Nang was ranked third, following Hanoi, with the number of 3 – 5 star hotels of

114 The rest were sparsely distributed in popular tourism cities and provinces throughout the country (Grant Thornton Vietnam, 2014) Still the number is still increasing by years As a result, it would become more difficult for the hotel management to retain their employees while there are more and more open opportunities Employee‟s commitment has turned into a real problem among hotels

in Vietnam When they first come to work at hotels, they expect an international and professional work setting where they can fully employ their skills and

knowledge as well as further develop themselves “To the extent that the organization is perceived as facilitating these ends, organization commitment is likely to increase.” (Mottaz, 1988)

The commitment issue has been regarded as a popular topic in the literatures

of industrial and organizational psychology and organizational behavior According

to Mathieu and Zajac, 1990), “the concept has received a great deal of empirical study both as a consequence and an antecedent of other work-related variables of interest.” High level of job commitment would be more likely to benefit all parties,

namely the employees, employers and the society Therefore this study is expected

to find ways to resolve the problem of international hotel employees‟ commitment

so as to form and maintain a stable and highly qualified workforce for the hospitality industry in general and especially in Hanoi – a well-known tourist destination of Vietnam

OBJECTIVES OF THE STUDY

The ultimate objective of this study is to have better understanding of job commitment among hotel employees, especially those working in international hotels in Hanoi, and the factors that could have influence on it In particular, the study hopes to achieve the following objectives:

 To determine the relationship between international hotel employees‟ job commitment and six factors, namely Leadership, Employee relations, Nature of jobs, Performance management and promotion, Salary and compensations on performance, and Training and development,

 To determine whether the demographic factors also contribute to different levels of job commitment among international hotel employees

Based on these objectives, the research questions were proposed as follows:

 Is there a positive relationship between the hotel management‟s leadership and employees‟ job commitment?

 What kind of relationship is there between employee relations and their job commitment?

 Does nature of job have any impact on the job commitment of hotel employees?

 Do the hotel‟s practices in performance management and promotion positively affect job commitment?

 To what extent do salary and compensations on performance influence on employees‟ job commitment?

 Does training and development affect the job commitment of employees

at international hotels?

 Is there a difference in the level of job commitment among distinctive groups of each demographic factor?

SCOPE AND SUBJECTS OF THE STUDY

The study was conducted on employees who are working at international hotels in Hanoi The targeted industry was known to employ human resources from

a wide range of backgrounds for various specialized functions, including Front Office, Housekeeping, Food and Beverages, Kitchen, Engineering, Security, Human Resources, Finance and Accounting, Sales and Marketing Printed and online surveys were distributed to the selected participants and their networks, all within the designated scope

METHODOLOGY

This study employed the quantitative method to determine the relationship between job commitment and six independent variables, as well as the relationship between job commitment and each demographic factor After being collected, survey results were analyzed by the Statistical Package for the Social Sciences (SPSS) Version 20

A number of tests were performed on the collected data, namely Meyer-Olkin (KMO) Measure of Sampling Adequacy, Bartlett‟s test of sphericity, Cronbach‟s alpha reliability test, Exploratory Factor Analysis, Correlation analysis, Multiple regression analysis and One-way ANOVA test

Kaiser-BACKGROUND OF THE STUDY

There have been a number of significant researches on employees‟ commitment in the past Porter, Steers, Mowday and Boulian (1974) were among the first to study on organizational commitment, particularly among psychiatric technicians The measurement of organizational commitment was then studied by Mowday, Richard and Porter (1979) Thereafter, the topic on employees‟ commitment has become popular in more researches, including those related to the hospitality industry To name a few there would be:

 “Investigating hotel employees’ organizational commitment: The influence of Human Resource Management practices and perceived organizational support” by Hemdi (2009),

 “A Study of the Relationship between Manager’s Leadership Style and Organizational Commitment in Taiwan’ s International Tourist Hotels”

STRUCTURE OF THE STUDY

Apart from the Introduction and Conclusion, this study consists of three main chapters:

 Chapter 1: Literature Review

o Presenting the foundation knowledge on hotels and the hospitality industry,

o Providing an overview of employees‟ job commitment and previous studies about the factors influencing on it

 Chapter 2: Research analysis and findings

o Presenting the proposed research model about the relationship between job commitment and six independent factors,

o Describing the process of research design, including questionnaire design, sampling design, data collection procedure and analysis techniques,

o Reporting the results of data analysis,

o Discussing the findings

 Chapter 3: Recommendations

o Proposing recommendations according to the achieved findings,

o Discussing future trends of the tourism and hospitality industry

CHAPTER I

LITERATURE REVIEW

1.1 Hotel - accommodation:

1.1.1 Definition of hotels:

According to Nguyen Van Minh and Hoang Thi Lan Huong (2008), the word

“hotel” originates from French During the medieval, it was used to call luxurious houses of landlords It was not until the late seventeenth century that “hotel” started

to be widely known in France with its modern meaning and not until the late nineteenth century that it began to get popular in other countries

Chon and Sparrowe (1995), cited by Nguyen Van Minh and Hoang Thi Lan Huong (2008), defined “hotel” as an accommodation where anyone could pay to stay the night They also stated that each guestroom must have at least one bathroom and one bedroom, where there should be a bed, a telephone and a television Apart from the accommodation service, a hotel might provide other services such as: luggage transportation, shopping center, restaurant, bar, or other leisure services Hotels could be found near commercial areas, resorts or airports.1

The Faculty of Tourism, National Economics University (2001) developed a

definition for “hotel” as follows: “Hotels are providers of accommodation services (with sufficient amenities), food and beverages services, leisure services and other essential ones to their guests who pay to stay overnight Normally, hotels are built

2

“Khách sạn là cơ sở cung cấp các dịch vụ lưu trú (với đầy đủ tiện nghi), dịch vụ ăn uống, dịch vụ vui chơi giải trí và các dịch vụ cần thiết khác cho khách lưu lại qua đêm và thường được xây dựng tại các điểm du lịch.”

accommodations, it is clearly stated that: “Hotels are independently established architectural works, with at least 10 guest rooms, conforming to the quality standards of facilities, equipment, and services that are essential to serve tourists” 1

1.1.2 Classification of hotels:

According to Nguyen Van Minh and Hoang Thi Lan Huong (2008), there are five aspects, upon which hotels can be classified into different types These five aspects are:

 Geographical locations:

o City center hotels: built in the center of big cities, urban areas or densely populated areas to serve guests who are going on business trip, participating in conventions or sporting events, visiting relatives,

or travelling on tours This type of hotels operates year-round

o Resort hotels: built in resort areas, located in the mountainous areas or near beaches Guests coming to resort hotels normally for the purpose

of relaxation The operation of resort hotels depend mostly on weather conditions, therefore they operate seasonally

o Suburban hotels: built in suburban areas or city centers They often serve guests who take a weekend trip, sometimes are also booked by business guests with medium or low affordability

o Highway hotels: built along highways to serve guests travelling the roads by cars or motorbikes

o Airport hotels: built near major international airports to serve passengers who are in compulsory transit The accommodation expenses are already included in the ticket fees

beauty salons, fitness centers, conference rooms The price offered by this type of hotel is often the highest compared to others

o Full service hotels: equivalent to 4-star hotels in Vietnam, focusing on guests with high income level They have large parking space, restaurants offer in-room dining services and other limited outdoor services

o Limited service hotels: equivalent to 3-star hotels in Vietnam, focusing on middle income guests Conference rooms and outdoor leisure services are optional for limited service hotels

o Economy hotels: equivalent to 1-star or 2-star hotels in Vietnam They offer very limited services, including accommodation, catering, laundry and information

Figure 1.1: Different ways to classify hotels

Source: Adapted from Nguyen Van Manh and Hoang Thi Lan Huong (2008)

 Price: in the order of high to low:

Luxury hotels

Full-service hotels

service hotels

Limited-Economy hotels

Price

Luxury hotels

Up-scale hotels

Mid-price hotels

Economy hotels

Budget hotels

Scale

Big-sized hotels

sized hotels

Medium-Small-sized hotels

Ownership and management

owned hotels State- owned hotels Joint- venture hotels

Private-o EcPrivate-onPrivate-omy hPrivate-otels

o Budget hotels

 Scale: based on the number of guestrooms owned by each hotels

o Big-sized hotels: more than 200 rooms (or equivalent to 5-star hotels)

o Medium-sized hotels: between 50 and 200 rooms

o Small-sized hotels: below 50 rooms

 Ownership and management:

o Private-owned hotels: the owner of this kind of hotels is also the management, who could be an individual or a limited liability company They are responsible for operating their hotels and the final business results

o State-owned hotels: they receive initial investments from the government, and thereafter are managed by national enterprises or organizations

o Joint-venture hotels: they are invested and established by two or more investors In terms of management, the ones that are responsible for operating the hotels could be either the owners themselves or their partners, or both

1.1.3 Factors affecting the performance of the hotel industry:

1.1.3.1 External factors:

The PEST analysis provides a broad view on the macro-environment in which the hotel industry is operating PEST is an acronym for Political, Economic, Social and Technological factors that have impacts on an organization‟s business

 P (Political factors):

o Political stability: Unstable political conditions would prevent tourists

to the country, making it an unfavorable for the tourism and hospitality to develop

o The government's support towards enterprises in the hotel industry: More support creates a favorable environment for a hotel to develop, therefore increase competition in this industry

 E (Economic factors):

o Economic growth: Positive results of the economy would lead to higher living standards; when people feel more secured about their financial capabilities, they would not hesitate to spend on services to improve their spiritual lives Thereby the services industry, including hospitality, might see promising results

o Inflation rate: Inflation rate and economic growth has a negative relationship High inflation rate indicates an unhealthy economy, causing people to lose confidence in their own currency and economy,

as well as driving away potential foreign investments Under this circumstance, any industry would suffer adverse consequences

o Investments on facilities and infrastructures: Upgraded traffic systems, accommodation facilities and any infrastructures that contribute to the tourism industry would also benefit the hospitality industry

o Tax policies: By adjusting the tax policies, the government could either encourage or discourage the hotel business

as well as customers‟ experience

o Development of social networks assists worldwide promotion of images from Vietnam and its tourism and hospitality industry

o Changes in the way customers get access to information about hotels should be kept up with in order for the hotels to employ the most up-to-date and effective channels

1.1.3.2 Internal factors:

 Products:

Nguyen Van Minh and Hoang Thi Lan Huong (2008) stated that hotel

products are “the commodities and services that it provides in response to customers’ demands from the time they first check in to when they finish using the products and check out” 1

Based on the definition above, there would be two types of products provided by hotels:

o Commodities: they could be in the form of food, beverages, souvenirs

or other kinds of items that are appropriate to be sold in hotels

o Services: Hotels provide two types of services, namely, main services (accommodation, food and beverages) and additional services (any services other than two main ones)

Since most of the hotel products are services rather than commodities, it could be safe to say that hotels provide services products, along with complementary commodities

 Customers:

Hotel guests could come from different backgrounds or places to satisfy different needs and wants, within different lengths of stay in the hotels There are three indicators that might determine the performance of a hotel in a certain period of time (Nguyen Van Minh and Hoang Thi Lan Huong, 2008):

o Total number of guests (in a specific period of time, for example, a year or a business cycle),

o Total accumulative number of guests, and

o Average length of stay (normally calculated within a month, a quarter,

a year or a business cycle)

1

“Sản phẩm của khách sạn là tất cả những dịch vụ và hàng hóa mà khách sạn cung cấp nhằm đáp ứng nhu cầu của khách hàng kể từ khi họ liên hệ với khách sạn lần đầu tiên để đăng ký buồng cho tới khi tiêu dùng xong và rời khỏi khách sạn.”

Other indicators can be suitable to evaluate the hotel‟s performance, such

as the occupancy rate (the percentage of available rooms occupied over a period

of time) or customer satisfaction

Apparently, abundant financial resources are the result of effective performance of the hotel And by using those resources wisely, the hotel could achieve its development goals and yield even more revenues Financial resources can be used to tackle issues like improving facilities, developing marketing channels, switching to better suppliers, expanding market share, or stabilizing human resources, etc

 Human resources:

Hospitality is a labor-intensive industry; therefore human resources play a decisive role in the performance of hotels In order to perform effectively, hotels not only need enough human resources but also require diversified specializations among their employees to work in different operations Long working hours and constant pressure have made careers in hospitality less desirable, facing the hotel management with difficulties in hiring, selecting and distributing their human resources without negatively affecting the hotel‟s overall performance

1.2 Job commitment:

1.2.1 Definition of job commitment:

The concept of job commitment, or more popularly called organizational commitment, has been studied since the late twentieth century by many researchers

and behavioral scientists As a result, this term has been quite well established and defined, therefore widely accepted so far

In the early period, it was viewed as a single dimension According to Porter

et al (1974), organizational commitment is “an attachment to the organization, characterized by an intention to remain in it; an identification with the values and goals of the organization; and a willingness to exert extra effort on its behalf” Considering this was one of the early definition establishments, it showed that Porter and his peers had done a relatively thorough research on the matter This definition sketches three characteristics of the concept:

 to believe in and accept the organizational goals and values, which is value commitment,

 the willingness to make an effort, which is effort commitment, and

 the strong desire to maintain the membership of the organization, which

is retention commitment

Steers (1977) defined organizational commitment as an employee‟s willingness to contribute significant effort and to remain closely attached to the organization Although it was developed after Porter et al, Steers‟ way of breaking it down missed out an important aspect – identification with the organizational goals and values –which explains why there could be such strong links between an organization and its employees, and without which the whole definition would seem rather emotion-based

Then in 1979, Mowday, Steers and Porter added one more attribute to Steers‟ definition of organizational commitment, together defining the term with three factors:

 A strong belief in, and acceptance of, the organization‟s goals and values,

 A willingness to exert considerable effort on behalf of the organization, and

 A strong desire to remain in the organization

Compared to Porter‟s 1974 version, this is a similar yet more developed one

It was not until 1984 that the term was characterized into multi-components Pioneers were Meyer and Allen, who defined organizational commitment as affective commitment and continuance commitment The components are considered to be independent of one another; such existence of one type of commitment does not guarantee the existence of the other Their definition of continuance commitment was redefined from Becker (1960)‟s prior research on side bet theory, which interpreted “commitment” as “consistent lines of activity” In

1984, Meyer and Allen argued that the accretion of “side bets” would consequently

be lost if the action ceased They came up with another clarification for “side bets” – they are both tangible and intangible and can be of value that a person has invested such as time, effort, or money that would be considered insignificant if an individual were to leave the organization

Seven years later, they expanded the term with the third component Consequently, organizational commitment could be described by three components, according to Meyer and Allen (1984, 1991), as follows:

 Affective commitment: “positive feelings of identification with, attachment to and involvement in the work organization”,

 Continuance commitment: “the extent which employees feel committed to their organization by virtue of the costs that they feel associated with leaving”, and

 Normative commitment: “the employee’s feelings of obligation to remain with the organization”

Then in 1996, they generalized the concept into a single sentence which

states that organizational commitment is “a psychological link between the employee and his or her organization that makes it less likely that the employee will voluntarily leave the organization”

O‟Reilly and Chatman, in 1986, developed the concept and came up with a three-dimensional model of organizational commitment, which includes:

 Compliance: it is said to occur when one accepts influence in hope of achieving a favorable reaction from another person or a group It is the

social effect that causes him/her to conform in order to gain specific rewards or approval, and to avoid specific punishments or disapproval

 Identification: it takes place when one accepts influence to establish or maintain a satisfying self-defining relationship with another person or a group There appears to be a desire for affiliation when an individual does

so

 Internalization: an individual would accept influence if he/she finds that the organizational values are congruent with his/her own And when it happens, there seem to be intrinsic rewards to that person

Figure 1.2 Organizational Commitment Model

Source: Meyer and Allen, 1997

Quijano et al (2000), cited by Rocha et al (2008), approached the term in a different way and stated that it was a theoretical concept with four dimensions, namely:

 Economic exchange

 Social exchange

RELATED

AFFECT- Attribution

 Rationalization

 Met expectation

 Person-job fit

 Need satisfaction

 Organization

 Union

 Team

CONTINUANCE COMMITMENT

 Organization

 Union

 Team

NORMATIVE COMMITMENT

 Turnover intention

 Turnover

PRODUCTIVE BEHAVIOUR

 Attendance

 Performance

 Citizenship

EMPLOYEE WELL-BEING

 Psychological health

 Physical health

 Career progress

 Value: the recognition of common goals and values between the organization and an individual,

 Affective: an individual‟s need for affiliation from the organization,

 Need: maintaining the job as a way of survival as one understands that there is no other work opportunity for him/her, and

 Exchange: this represents the intrinsic or extrinsic rewards that one could receive from the organization

The table below summarizes and compares three organizational commitment models:

Table 1.1 Comparison between different Organizational Commitment models

Three-component model

(Allen and Meyer, 1991)

Three-dimensional model (O’Reilly and Chatman, 1986)

Four-dimensional model (Quijano et al., 2000)

Identification (desire for affiliation)

Value (congruence of values and objectives)

Affective (need for affiliation) Continuance

(leaving costs and benefits)

Compliance (gain specific rewards)

Exchange (intrinsic/extrinsic rewards) Need

(maintaining job) Normative

(feeling of obligation)

Source: Rocha et al (2008)

It seems that Allen and Meyer‟s model covers the concept of organizational commitment the most comprehensively Therefore, their three-component model will be used as the definition in this research

Job commitment, or organizational commitment, is:

 the positive feeling of emotional attachment, congruence with the organizational goals and values, and involvement with the organization,

 the mandatory constraint of an employee towards his/her organization originating from weighing the costs and benefits associated with leaving, and

 the sense of obligation to maintain in the organization

1.2.2 Levels of job commitment:

Figure 1.3 describes three different levels of organizational commitment An employee‟s commitment may increase or decrease through these stages, either in one direction or irregularly

The higher level of organizational commitment is the result of “a strong acceptance of the organization‟s values and willingness to exert efforts to remain

with the organization (Reichers, 1985) As stated by Miller (2003), “high commitment means identifying with one’s employing organization” This level of

commitment is deemed to closely relate to affective commitment, where an employee stays because he/she wants to

Figure 1.3 Levels of Organizational Commitment

Higher level of

organizational commitment

Higher level of organizational commitment

Moderate level of

organizational commitment

Moderate level of organizational commitment

The lower level of commitment is characterized by “a lack of neither acceptance of organizational goals and values nor the willingness to exert efforts to remain with the organization” (Reichers, 1985) The only reason that makes employees stay is that they are taking the costs of leaving into consideration, in other words, they feel that they need to stay (Meyer and Allen, 1997) Should they

are offered a better opportunity, there is no doubt that they will leave the organization

1.2.3 Impacts of job commitment on organizational performance:

Job commitment, at each of its levels, may bring negative or positive impacts

on the organization‟s overall performance

1.2.3.1 Negative impacts of job commitment:

When the organizational performance suffers from negative consequences, it

is normally implied that the employees‟ level of commitment at that time is low Those with a low level of organizational commitment tend to be unproductive at work (Morrow, 1993) Morrow also stated that under certain circumstances, the high rate of staff turnover and absenteeism is associated with the low level of organizational commitment Cohen (2003) further confirmed the idea when he

claimed “lack of organizational commitment or loyalty is cited as an explanation of employee absenteeism, turnover, reduced effort expenditure, theft, job dissatisfaction and unwillingness to relocate”

Figure 1.4 Characteristics of under-commitment and over-commitment

• Overly loyal employees

• Job and occupational burnout

• Obsessive - compulsive patterns at work

• Neurotic compulsion to succeed

• Extreme high level of energy

Source: Lowman, 1993

On the other hand, the high level of commitment, when it exceeds what is normally expected of, can also bring about negative results This was developed by Lowman (1993), whose study found that organizational commitment can be

regarded as a “work dysfunction when it is characterized by under-commitment and over-commitment” Figure 1.4 lists out the characteristics of these two statuses

according to Lowman (1993)

Organizational commitment is regarded to be the best predictive indicator of employees‟ turnover rate, even better than the far more frequently used job satisfaction predictor (Miller, 2003) Bateman and Strasser (1994) suggested that organizational commitment has a direct relationship with low employee turnover and productivity In addition, research shows that commitment has a positive effect

on productivity, turnover and employees‟ willingness to help co-workers (Aryee, 1991) Therefore, fostering employee commitment should have a great impact on lowering turnover rates

1.2.3.2 Positive impacts of job commitment:

Job commitment provides benefits for both employers and employees (Mowday, 1998) Regarding employees, commitment to their work and

organization represents a positive relationship that could “potentially add meaning

to life” As for employers, the high level of commitment of their employees would

contribute to the increased performance and reduced turnover and absenteeism

Highly committed employees tend to contribute positively to their organizations, a behavior which cannot be seen in less committed ones In their

study, Cohen and Keren (2008) stated that “organizations whose members have higher levels of commitment show higher performance and productivity and lower levels of absenteeism and tardiness” In other words, employees with high level of

commitment are more likely to contribute more resources and greater effort to perform in the organizations

Other researchers also further confirmed the positive benefits that job commitment can bring It can result in a stable and productive workforce (Morrow, 1993) Not to mention that, employees‟ creativity and contribution towards organizational development initiatives would be triggered by the high level of job commitment (Walton, 1985) When employees reach a certain level of satisfaction and feel that their jobs are challenging enough, they would be highly committed and

therefore would not tend to leave the organizations (Meyer and Allen, 1997) Furthermore, those with high level of commitment are normally achievement and innovative oriented with the ultimate aim of engaging in and improving performance (Morrow, 1993) Organizational has been linked to an organization‟s efficiency, productivity, creativity and innovation (Hom and Griffeth, 1994), as well

as profitability (Raab and McCain, 2002)

1.2.4 Factors affecting job commitment:

There have been a number of research topics concerning the factors that decide the level of commitment among employees Previous researchers have established a multitude of labels to classify the determinants of organizational commitment Table 1.2 is a summary of major factors which were developed by researchers popular in the field

Table 1.2 List of factors affecting job commitment of employees

Researchers

Factors

Agarwal and Ramaswami (1993)

Benkhoff (1997)

Boselie and van der Wiele (2002)

Ahmad and Schroeder (2003)

Boles et al (2007)

Employee relations x x x x x Nature of job x x x

Salary and compensation on

Source: Adapted from Agarwal and Ramaswami (1993), Benkhoff (1997), Boselie

and van der Wiele (2002), Ahmad and Schroeder (2003), Boles et al (2007)

1.2.4.1 Leadership:

Leadership is defined as the ability to influence a group towards the achievement of goals (Robbins, 1993) In other words, it is a kind of influence of human relations Managers with high leadership skills would be more capable of guiding their followers to achieve specific goals through communication Fiedler (1967) stated that leadership is the ability to apply power and influence to make people work together and accomplish common goals So did Rauch and Rauch and Behling (1984), who defined leadership as the process of influencing a group to move towards a certain goal

Employees‟ organizational commitment is strongly impacted on by the support they receive from the managers in their organization, according to a study

by Eisenberger et al (1986) This relationship is also confirmed by other researchers In 1988, Mottaz observed among 1,385 employees from various occupations and found that employees who perceived a friendly and supportive relationship from the management were likely to have a strong and positive commitment to their respective organization Joiner and Bakalis could not agree more in their study in 2006, which proved that high level of commitment was a result of supervisor support

1.2.4.2 Employee relations:

According to Lee-Kelley et al (2007), the inter-relationship among employees could be achieved through working together in a daily basis Working in teams significantly improves employee relations and consequently leads to greater job satisfaction An effective team environment is where team members are helpful and friendly to others, as well as willing to share information and equipment

Several researchers shared the same view about the relationship between employee relations and organizational commitment Mottaz (1988), Hung et al (2004), Joiner and Bakalis (2006), all of them conducted their own studies which identified the positive influence of friendly and supportive relationship among employees on their commitment towards organization

1.2.4.3 Nature of jobs:

Nature of job is characterized as the type of work, level of challenge, freedom to work and the range of activities involved According to Agarwal and Ramaswami‟s study (1993), it consists of task variety and task autonomy which

“encompasses characteristics of a job which allows the employees to undertake a wide range of activities in their work and the extent an employee has a say in how their job is carried out, respectively”

Previous studies found that employees who are assigned with challenging, exciting and interesting work tend to be more committed to their organization and less likely to leave Organizational commitment is shown greatest among employees with considerable task variety and task autonomy (Hunt et al., 1985; Glisson and Durick, 1988; Agarwal and Ramaswami, 1993)

1.2.4.4 Performance management and promotion:

Performance management is claimed to include performance appraisal and evaluation, followed by rewards for enhancing skills and knowledge, rewards for business needs and gains, merit philosophy, and flexible benefit schemes which may be considered for promotion (Sparrow et al., 1994)

The significant influence of performance management and promotion on organizational commitment was found in the study of Benkhoff (1997) and Boles et

al (2007) Hung et al.‟s study (2004) further confirmed the theory when it claimed that career development and promotion opportunities is a predictive indicator of higher level of organizational commitment among employees

1.2.4.5 Salary and compensation on performance:

Salary and compensation, according to Willis (2000), is “the most critical issue when it comes to attracting and keeping talents” Parker and Wright (2000)

added in their study that some companies even offer remuneration benefits, including special pay premiums, stock options or bonuses that are above the market rate to attract and retain key employees Better still, talented employees are also

provided with profit sharing and group-based incentives in some organizations (Bassi and Van Buren, 1999)

Salary and compensation is recognized by Meyer and Allen (1997) as one antecedent that leads to organizational commitment In fact, employees may express higher level of commitment and tend to stay with the organization if they feel that their capabilities, efforts and performance contributions are recognized and valued, which is proved in their pay and compensation package (Boselie and van der Wiele, 2002; Ahmad and Schroeder, 2003; Boles et al., 2007) If employees do not perceive that their compensation is fair and adequate, the organization will risk losing them

1.2.4.6 Job satisfaction:

According to Locke (1969), job satisfaction is “a pleasurable or emotional state resulting from the appraisal of one's job or job experiences” Kreis and Brockopp (1986) regarded job satisfaction as “self-perception of needs fulfillment through work” These needs have been classified by Maslow (1943) into five

hierarchies, called the Maslow‟s hierarchy of needs

Figure 1.5 Maslow’s hierarchy of needs

Source: Maslow (1943)

Self- actualization

There have been mixed findings about the relationship between job satisfaction and organizational commitment According to Curry, Wakefield, Price and Mueller (1986), there was no significant relationship between the two variables However, other researchers, such as Benkhoff (1997) and Boles et al (2007), came

to a different conclusion They found out that job satisfaction would play a significant role in predicting organizational commitment It was also supported by Manheim (1997) that one of organizational commitment‟s determinants should be job satisfaction Having their needs satisfied, there would be no reasons for employees to leave the organization or to lose focus to any distractions

1.2.4.7 Training and development:

Training and development could be used to enhance job specific skills, correction of deficiencies in job performance and development of employees with abilities that the organization might need in the future (Wood and de Menezes, 1998)

Some people believe that employees who receive regular training and development may be more likely to leave the organization since they feel that their improved skills deserve better opportunities However, previous literatures have shown differently Training activities not only help to develop these employees but also help to enhance their commitment to the organization (Agarwal and Ramaswami, 1993) This perception is consistent with the findings of Bassi and Van Buren (1999), which confirmed that when the training and development needs

of employees are met, they will be more likely to stay with the organization

1.2.4.8 Role ambiguity and role conflict:

Jehn (1997) stated that employees are already subject to conflict, whether consciously or unconsciously, leading to unavoidable consequences, regardless of the fact that they are positive or negative According to Addae et al (2008), role

conflict occurs when “employees perceive conflicting demands or that carrying out one role expectation makes carrying out another more difficult” Role conflict is a

feeling of “being torn in multiple directions”, leading to failure in making every

role partner satisfied (Onyemah, 2008)

Role ambiguity happens when an employee feels uncertain about what is expected of him/her in the job or organization (Rizzo et al., 1970) Jones (2007) suggested that one reason for this was unclear definition of the employee‟s tasks and authority Other reasons were raised by Luthans (1989) which were: inadequate training, poor communication, and deliberate withholding or distortion of information by a co-worker or supervisor

Agarwal and Ramaswami (1993) conducted a study and came to a conclusion that only role ambiguity had a negative relationship with employees‟ commitment, while role conflict did not have any relationship with commitment However, other researchers have found that both role conflict and role ambiguity negatively affected organizational commitment (Fisher and Gitelson, 1983; King and Sethi, 1997)

1.2.4.9 Secondary working conditions:

The International Labor Organization (n.d.) defines working conditions as “a broad range of topics and issues, from working time (hours of work, rest periods, and work schedules) to remuneration, as well as the physical conditions and mental demands that exist in the workplace”

Several past researchers agreed that there was a significant relationship between working conditions and organizational commitment (Benkhoff, 1997; Boselie and Van der Wiele, 2002; Ahmad and Schroeder, 2003) Poor working conditions mean unfulfilled needs of employees, making them less involved in their work and less committed to the organization

1.2.4.10 Knowledge sharing and knowledge management:

Knowledge, an organizational element, includes practical knowledge, level technical capabilities, and perceptions of systems and creative abilities (Quinn, Anderson and Finkelstein, 1996) As defined by Sarmento (2005), knowledge is

high-“the combination of data and information, to which is added expert opinion, skills

and experience, resulting in a valuable asset which can be used to aid decision making”

The flow of knowledge from one individual or one group to another in an organization is called knowledge sharing (Lee, 2001) Regarding knowledge

management, it is the “exploitation and development of knowledge assets aiming to achieve organizational objectives” (Davenport and Prusak, 1998) Cardoso (2003),

cited by Rocha et al (2008), defined knowledge management as a series of efforts, which are dynamic and intentional, to make use of the internal organizational conditions in order to stimulate the knowledge-related processes Cardoso also pointed out the six knowledge processes, namely: creation/acquisition, sense making; share and spread, organizational memory, measuring and recovery

Positive benefits of knowledge sharing and knowledge management were supported by Song (2002), who stated that it would lead to efficiency improvement, cost reduction and risk avoidance

According to Hislop (2003), there might be a relationship between organizational commitment of employees and their attitude and behavior towards knowledge management initiatives However, he also stated that there were a limited number of researches on this relationship Still, knowledge sharing and knowledge management was proved to make impact on organizational commitment

by Boselie and van der Wiele (2002) and Ahmad and Schroeder (2003)

1.2.4.11 Organizational culture:

Organizational culture, according to Martins and Martins (2003), is “a system of shared meaning held by members, distinguishing the organization from other organizations” It is “a pattern of basic assumptions invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration that has worked well enough to be considered valid, and therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems” (Schein, 1985)

Different models have been established in order to describe the relationship between organizational culture and organizational development, one of which is

from Harrison (1993) The model shows that there are four dimensions of organizational culture corresponding to two modes of operation, namely formalization and centralization, each of which ranges from low to high scale

Organizational culture also has a significantly positive relationship with organizational commitment, as supported by past researchers (Ahmad and Schroeder, 2003; Boles et al., 2007) It seems to affect employees‟ work effort and commitment directly through cultural values and indirectly through human resources practices (Black, 1999)

Figure 1.6 Organizational culture model

Source: Harrison (1993)

1.2.4.12 Job security:

As defined by the International Labor Organization (n.d.), job security exists

when employees receive protection “against fluctuations in earned income as a result of job loss” Another term has been developed to contrast the meaning of job

security Greenhalgh and Rosenblatt (1984) stated that job insecurity represents an individual‟s perception of powerlessness to maintain a job under threatening situation It was conceptualized into four major factors:

 Job features: the importance of features in a job,

 Total job: the importance of the job itself,

 Threat to total job: the perceived threat to overall job, and

 Powerlessness: being powerless towards a loss at work

Therefore, any employees would wish for a secured job or employment opportunities They do not fancy risks and are willing to stay in an environment that provides satisfaction rather than optimized change (Kirmizi and Deniz, 2009)

Ahmad and Schroeder (2003) in their study discovered that job safety/ security significantly related to commitment and performance This finding was supported by the research finding of Abdullah and Ramay (2012) who reported a significant positive relationship between job security and organizational commitment of employees In other words, employees who perceive threat of job security may become less committed to the organization they are working for and may decide to quit the job

CHAPTER 2

RESEARCH ANALYSIS AND FINDINGS

2.1 Overview of employment in the hospitality industry:

2.1.1 In the world:

Before the Great Recession, the number of hotels increased steadily, leading

to a high level of employment in this industry From 1999 to 2001, the employment growth rate of hotels and restaurants industry in the EU-15 was 5.5%, in the Eurozone was 6.5%, and altogether accounting for 6% of service-sector employment in the European Union (Schmidt, 2003)

Then during 2008 – 2010, the situation saw significant changes, most of which were negative In general, most countries noticed an impact on employment from slower or negative growth, yet at EU level, total employment change rate seemed stable without any considerable growth or decline during the 3-year period

In other parts of the world, the hotel industry also showed its potential by stabilizing or even growing when other industries suffered from the sluggish situation of economy It is said to be growing at the fastest rate of any industry except for health care In the USA alone, it has added 273,700 new jobs in 2011 even though unemployment was spreading like a contagious disease all over the place From 2004 to 2014, the hospitality sector witnessed a 17% growth, 3% more than other industries (Evans, 2014)

The reason for the hotel industry‟s overcoming downturns of economy might come from the perks that make it different from other service sectors It is a labor-intensive industry, offering a wide range of job opportunities anywhere in the world Employees from different origins and educational backgrounds are now able

to find work anywhere and anytime they want

However, despite the high employment rate, the inevitably high stress due to highly demanding customers, long working hours, and the requisition to work overtime or even on holidays is commonly found in such kind of service industry like this, being a probable cause for high turnover rate among hotel employees In

fact, some researches have suggested that employee turnover in the hotel industry is one of the highest (CHA-International.com, n.d.)

Figure 2.1 U.S employee turnover rates by sectors in 2011

Source: Kaminski, 2011

In 2004, the American Hotel and Lodging Association, together with the

Hospitality Industry Diversity Institute, conducted a study called “Turnover and Diversity in the Lodging Industry” The overall estimated turnover rate of the

industry was 48.36% Among different employee groups, line-level supervisors reported the lowest turnover rate (Ahla.com, n.d.)

2.1.2 In Vietnam:

The tourism and hospitality industry is said to see positive development in recent years in Vietnam According to the General Statistics Office (2014), the number of first-time tourists to Vietnam gradually increased over the years In 2006,

first-time tourists accounted for 56.3%, then 60.4% in 2009 Two years later, the percentage rose modestly to 61.1% and then in 2003 it reached 66.1%

Figure 2.2 Percentage (%) of three types of international tourists

to Vietnam during 2006 – 2013

Source: General Statistics Office (2014)

The statistics on tourist expenditure also showed that, in 2013, an average foreign tourist to Vietnam spent the most on accommodations, followed by food and beverages, while spent the least on medication Figure 2.3 illustrated the average spending of each foreign tourist in Vietnam in 2013

Figure 2.3 Average expenditure of a foreign tourist to Vietnam in 2013 (USD)

Source: General Statistics Office (2003) These optimistic statistics prove that the hospitality industry in Vietnam has potential to grow further in the future In fact, it had created approximately 1.7 million jobs, 550.000 of which were direct labor and the rest were indirect labor force by 2013 (Vietnam National Administration of Tourism, 2014) Therefore, hotel employment could be considered as promising in the context of constantly growing tourism and hospitality industry in Vietnam

2.2 Proposed research model and hypotheses:

For the purpose of this research, six variables will be studied as key factors in affecting the job commitment of employees The six factors to be studied will be as follows: Leadership, Employee relations, Nature of jobs, Performance management and promotion, Salary and compensations on performance, and Training and development These six variables will be tested against job commitment to study if their influence is significant

 H1: Leadership has a positive relationship with the job commitment of Vietnamese employees in international hotels in Hanoi

 H2: Employee relations have a positive relationship with the job commitment of Vietnamese employees in international hotels in Hanoi

 H3: Nature of jobs has a positive relationship with the job commitment of Vietnamese employees in international hotels in Hanoi