Factors affecting organizational commitment and retention of key employees in small and medium sized firms in ho chi minh city

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business --- FACTORS AFFECTING ORGANIZATIONAL COMMITMENT AND RETENTION OF KEY EMPLOYEES IN SMALL AND MEDIUM SIZED FIR

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

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FACTORS AFFECTING ORGANIZATIONAL COMMITMENT AND RETENTION OF KEY EMPLOYEES IN SMALL AND MEDIUM SIZED

FIRMS IN HO CHI MINH CITY

MASTER OF BUSINESS (Honours)

Ho Chi Minh City - 2014

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

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PHAM THUY THUY DUNG

COMMITMENT AND RETENTION OF KEY

EMPLOYEES IN SMALL AND MEDIUM SIZED FIRMS

IN HO CHI MINH CITY

ID: 21110009

MASTER OF BUSINESS (Honours)

SUPERVISOR: DR DINH THAI HOANG

Ho Chi Minh City – 2014

TABLE OF CONTENT

ABSTRACT……….….1

CHAPTER 1: INTRODUCTION 1.1 Research background and problem statement 2

1.2 Research objectives 4

1.3 Research scope 4

1.4 Significance of the study 4

1.5 Research structure 5

1.6 Summary 6

CHAPTER 2: LITERATURE REVIEW 2.1Introduction 7

2.2Definition 7

2.3Previous Studies 9

2.4Research Model 15

2.5 Summary 16

CHAPTER 3: RESEARCH METHODOLOGY 3.1 Sample 17

3.2 Data Collection and Procedure 18

3.3 Question Design 31

3.4 Data analysis method 24

3.5 Summary 24

CHAPTER 4: DATA ANALYSIS 4.1 Respondent’s Demographics 26

4.2 Reliability Analysis 27

4.3 Exploratory Factor Analysis 29

4.4.5 Regression Analysis 32

CHAPTER 5: CONCLUSION, IMPLICATIONS AND LIMITATIONS

5.1 Conclusion 41

5.2 Managerial implications 41

5.2 Limitation and future research 43

REFERENCES 45

APPENDICES……… ……… 50

LIST OF FIGURES Figure 2.1: Research Model……….…… ….16

Figure 3.1: Research Process……… ……… 19

LIST OF TABLES

Table 3.1 Source of data collection……….……….….20

Table 4.1: Demography Sampling……….27

Table 4.2 Reliability Test Results……… ……28

Table 4.3 KMO and Bartlett’s Test of Independent Variables……… 30

Table 4.4 Rotated Component Matrix of Independent Variables……….31

Table 4.5 KMO and Bartlett’s Test of Dependent Variables……… ……… 31

Table 4.6 Rotated Component Matrix of Dependent Variables………… ……… 32

Table 4.7 Correlation matrix……… ………34

Table 4.8 Model Summary of multiple regression analysis……… ………35

Table 4.9 ANOVA of multiple regression………35

Table 4.10 Coefficients of multiple regression analysis……….36

Table 4.11 Model Summary of Simple Regression Analysis……… ….…38

Table 4.12 ANOVA of Simple Regression Analysis………38

Table 4.13 Coefficients of Simple Regression Analysis……… ………39

Table 4.14 Summary of testing hypotheses result……….40

ACKNOWLEDGEMENTS

First at all, I would like to express my sincere gratitude to my supervisor,

Dr Dinh Thai Hoang for his continuous support in the throughout process of my thesis

I would like to take this opportunity to thank leaders, professors and staffs at ISB who have helped me during my two year master course

My sincere thanks also go to the friends and colleagues at Bach Viet JSC, that participated in the initial trial survey stages that led to the development of the final survey questionnaire and their support over the time when I was busy to study

Last but not least, I would like to grant special thanks to my family members who have loved and supported me all over the time

Ho Chi Minh City, July 4, 2014

Pham Thuy Thuy Dung

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ABSTRACT

Retaining of key employees is one of the most important current matters of human resource management Employee’s turnover is a major threat to sustainability and development of organizations The problem is being faced by different organizations around the countries Intent to stay of key employee is one of the main factors that could help reinforce the labor force and achieve the targeted goal

This study examines the retention of key employees; its benefits and factors that may help to retain the best employees of the organization

Questions with five-point Likert scale are used to the research for investigating the needs of core employees Base on the previous research, the most affective factors among of factors: training and career opportunities; job characteristics, and work/life policies will be considered

The research findings prove significant relationship of training and career opportunities; job characteristics, and work/life policies that affect the staying decision

of core employees This study will help SMEs in HCMC to find out various human resource policies and to revise their current policies for further improvements

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CHAPTER 1: INTRODUCTION

1.1 Research Background and Problem Statement

Small and medium sized companies (SMEs) are important to almost all economies

in the world SMEs are main element in all economics, in Europe, there are 57 per cent

of 1- person enterprises, 34 per cent of micro enterprises (less than 10 employees); 7.7 per cent of small enterprises; 1per cent of medium, totally of SME is 99.7 per cent but there are only 0.27 per cent of large companies and 0.03 per cent of Stock Exchange (Agnès, 2010) SMEs in China account for 99.9 percent of the total number of firms, they provide 84 percent of total employment and account for 71 percent of total sales (Qimiao, 2003) General Statistics Office (2012) reported SMEs are approximately 97 per cent of 448.393 companies in Vietnam and they represent the main drivers in obtaining employment and VCCI (2012) reported SMEs contribute 60 percent GDP in Vietnam with the capital of 6 million billion VND

Although there is many important SME's distribution, they still face to many problems

in HR, the demand of the human resource is increasing and the lack of the right person, especially in the management personnel, prevents the SMEs from development One of the specifications of HR in SMEs is not clearly function between administration and human resource such as administration usually is responsibility for recruitment function in SMEs, but that are 2 different functions of HR in the organization (Torben., 2003) SMEs are very hard to compare with other organization type to attract qualified employees because there are not clear policies to keep them Recruitment firm Jobs Factory, which polled over 4,500 students, revealed that in this year’s survey, the top five employers of choice in the private sector are Apple, Singapore Airlines, Google, 3M and DBS Bank – all large companies with operations across the world It is not difficult to see why job seekers flock to Multinational Companies (MNCs) Besides the easily recognizable brand names, they are also seen as organizations that are more transparent, offer higher remuneration, superior benefits and strong organizational structure – all of which point to better career prospects

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Recent surveys have highlighted that work-life balance is important to the younger generation, and bigger firms are perceived to be more flexible – or at least, more open to suggestion – in these areas Conversely, SMEs are often seen to be non-transparent, authoritarian, and less professional More often than not, the founder/boss’ inner circle is made up of family and relatives, with competence a secondary consideration (Developing an Argument, 2010)

Employee retention is considered the greatest challenge for businesses in Vietnam and becomes a hot topic for discussions of human resource managers Vietnamese employees aggressively accelerate their career to better positions, challenging jobs and better pay In a survey of Navigos Group, the leading and largest executive recruitment solution provider reported in Vietnam Plus (2010) “63,8 percent

of respondents from 168 companies operating in Vietnam including foreign-invested ones ranked the employee retention as the number one human resource challenge in 2010” And it also confirmed “getting the right people into the right job with the right skills and to have them stay and grow are missions which will keep human resource personnel busy in 2010 As long as this is the fact, employee retention is hard work.” According to Towers Watson (2011) in a briefing of engagement indicator survey, Vietnam labor market has experienced a talent war in which Vietnamese employers are trying to engage their talent through some employee engagement programs In the Towers Watson’s data, it also showed that “employee engagement levels in Vietnam have remained steady over the last five years (currently 78% favorable) and higher than employee engagement levels in the overall Asia Pacific Region (currently 74% favorable) However, employee intent to continue working for their current companies is lower in Vietnam (54%) compared to Asia Pacific (61%) In other words, the war for talent is fiercer in Vietnam than elsewhere in Asia Pacific because employees are at higher risk of leaving.”

It is clear that organizational commitment has become one of the big matters to human resource managers and employers in organizations in general and small and medium sized organizations in particular today in Vietnam It is also the role of HR

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managers and employers to understand what are the critical factors affecting employees to get their higher commitment to the company Employee working life in SMEs is short; most of employees think SMEs is temporary place, so they do not have any long-term plan for the SME The other specification of employees in SMEs is that they are dependent on working, always waiting direction from leader Based on that, the employers at small and medium sized companies in Vietnam should come up with strategic action plans to engage their employees into the sustainability of the organization These requirements from the reality are important to the employers to find out what factors are affecting organizational commitment and intent to stay of key employees in small and medium sized firms in Ho Chi Minh City

1.2 Research objectives

In the thesis, we will review related theories and previous researches on factors that have impact on the organizational commitment of employees in SMEs Besides, this study will find out what factors are affecting the retention of key employees and measure how deep the influencing factors effect organizational commitment and retention of key employees in SMEs

1.3 Research Scope

The research was conducted in Ho Chi Minh City, a commercial and financial trading center of Vietnam Ho Chi Minh City has been chosen for this research due to its centricity for Economic and Industrial activities and being a silicon valley for many other activities (such as culture, education, sport) in which also gathers the largest number of small and medium enterprises in the country

This study focuses on small and medium sized enterprises in the area of Ho Chi Minh City

1.4 Significance of the study

HCMC is the biggest trading, financial and service center of Vietnam There are over 170.000 SMEs, among of 38 per cent of SMEs in Vietnam (HCMC Department of Planning and Investment, 2012) SMEs in HCMC are very flexible so they not only

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achieve the best result but also get bad influence with any negative chances According

to the Ho Chi Minh City department of planning and investment, there are many companies among 26.324 companies that quit in 6 months in the beginning of 2012

facing difficult situation in retaining their talent employees Because of the importance

of key employees, this research focuses on retention key employees in SMEs in HCMC

In general, key employees are normal employees with some special specification such

as working period, their importance in organizations, So besides normal desires as normal employees, they also need more request and to meet their demand They are key things to retain them in organizations

1.5 Research Structure

The study consists of five main parts:

Introduction: Research background, problem statement, research purposes, scope of

study and significances of the study

Literature review: Some relative concept and definition of the study will be explained

in this chapter such as small and medium firms, key employees, key employee retention as well as review of previous study about training and career opportunities; job characteristics, and work/life policy; organizational commitment and retention of employee Proposal research hypotheses will be introduced in this chapter

Methodology: Research process will be introduced in this chapter This chapter also

introduces the methodologies of questionnaire design, measure of variable, draft

questionnaire, pilot study as well as the way to collect data and methodologies of data analysis

Data analysis: Collected data will be analyzed in this chapter

Conclusion, implications and limitation: This is the result of the study distribution of

study for theory and applied, the limitation of the study and suggest to later study

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1.6 Summary

This chapter provides the background of the study, statement of the problem, research purposes of the study, and previous theoretical framework It also represents the scope and the structure of this study

2.2 Definition

2.2.1 Small and Medium Sized Firms

That is synonymous definition between small and medium firms and small and medium sized enterprises The abbreviation "SME" for small and medium sized companies is used in the European Union and by international organizations such as the World Bank (WB), and World Trade Organization (WTO) The term "small and medium businesses" (or SMBs) is mainly used in the USA Wikipedia (2012) defined that there are the companies whose personnel number fall below certain limit The certain limits are different from the countries The EC definite SMEs are three broad parameters which define SMEs: micro-entities are companies with up to 10 employees; small companies employ up to 50 workers, whilst medium-sized enterprises have up to

250 employees In Vietnam, Decree No 56/2009/ND-CP dated 30/6/2009 of the Government defined SMEs are the organizations that are less than 200 employees or capital less than 100 billion Vietnam Dong

2.2.2 Key employees

Key employees are permanent employees comprising the central and foundational group that provides the skills essential to the survival and growth of an organization Core employees are supported in their work by contingent or peripheral employees (Business Dictionary) Critical job functions will be retained by small group, relatively permanent "core" of employees with board skill allowing them to tackle a

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variety of jobs (Janet, 2004) As definition from Renee (2012) a core employee is a time attendance Key employees are usually required to work at least 40 hours per week Key employees are necessary for business to function Definition of key or core employee in the research is person who works full time (Renee, 2012), they are the persons who respond multi job and affect on other persons (Janet, 2004) and work for organization more than 6 months

2.2.3 Retention of key employees

Once a SME finds an employee, it's very hard to find knowledgeable people who are suitable to expected position because of some disadvantage of SMEs Hiring knowledgeable people for the job is essential for an employer However, retention is even more important than hiring In order to keep employees motivated and willing to stay with the organization, the company does not only pay more but also make motivation working environment Harvard Manage Mentor Journal (2012) said Core employee retention is to keep that people who will help the organization remain competitive to competitors in the market In the other hand, when key employee leaves, the organization will lose many things: the turnover is high so the cost of turnover (including hiring costs, training costs and productivity loss) is high; When an employee leaves, valuable knowledge about the company, customers, current projects and past history will go with him, employer must pay much time and money has been spent on the employee in expectation of a future return When the employee leaves, the investment is not realized; customers and clients do business with a company in part because of the employee When an employee leaves, the relationships that employee built for the company are severed, which could lead to potential customer loss When

an employee terminates, the effect is felt throughout the organization Co-workers are often required to pick up the slack The unspoken negativity often intensifies for the remaining staff Higher retention rates motivate potential employees to join the organization If an employee resigns, then good amount of time is lost in hiring a new employee and then training him/her and this goes to the loss of the company directly Moreover, even after this you cannot assure us of the same efficiency from the new

2.3 Previous Studies

There are several previous researches about employee retention topic with various result and ideas to apply to organizations Retention can be possible by many ways but one of the most used in organizations is paying more than they are earning Hansen (2002) argued that pay more to the employees in order to achieve better financial position and retain those employees who lead from the front to attain business goals Short and long term incentives should be given according to the goals of business that will help to have more organized and strong management team for long term results Lawler II (2005) stated that in these days organizations are competing for talent rather than counting employees loyalty They are focusing on attracting, hiring and retaining the required core persons For this purpose, organizations must utilize those practices, which are in favor of both employees and employers leading them towards higher performance levels

From 1975, Dubin et al., found a strong relationship between central life interests of workers and their commitment to the organization This research shows the relationship between work value and commitment to the organization

Ans et al., (2003) found employee’s staying in decision has found some positive effects on the job content, social atmosphere, work-life balance, career development

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Janet (2008) in her PhD thesis for retention of core employee in SMEs in Australia, argued that core employees retention higher if they get high human commitment: with human resource practice and organizational factors such as selection (organization fit), remuneration and rewards Training and career develop, challenging work and opportunities and organization commitment such as leadership, team work, organizational culture and policies, work environment;

Prateek et al., (2011) said Organization commitment (ownership, loyalty, attachment), Career Advancement (career needs, career path, career planning and management), quality of work life (fair compensation, working condition, job involvement) has some direct and independent effects organizational commitment and intention to stay of core employee Bhavna & Swati (2012) researched the quality of working relationships, workplace leadership, having a say, clear values, being safe, the built environment, recruitment, pay and conditions, getting Feedback, autonomy and uniqueness, a sense of ownership and identity, learning, passion, having fun, community connections, that can influence organizational commitment and intention to stay of core employee in the organization

2.3.1 Organizational Commitment

As Guest (1987) indicated, human resource management policies are designed

to maximize organizational integration, employee commitment, flexibility and quality

of work For the topic in question our focal interest refers to “Commitment” which can

be described as attachment and loyalty Individuals can display this attachment and loyalty at a variety of levels: their job, profession, department, boss or organization More specifically, organizational commitment has been defined by Mowdray (1992) as consisting of three components: identification with the goal’s and values of the organization, a desire to belong to the organization and a willingness to display effort

on behalf of the organization

2.3.2 Training and Career Opportunities

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Training is referred to as a planned effort to facilitate the learning of job-related knowledge, skills and behavior by employee (Noe, Holleneck, Gerhart, and Wright, 2006) Wan (2007) posits that the only strategy for organizations to improve workforce productivity and enhance their retention is to seek to optimize their workforce through comprehensive training and development To achieve this purpose, organizations will have to invest on their employees to acquire the requisite knowledge, skills and competencies that will enable them function effectively in a rapidly changing and complex work environment Batt (2002) argues that high-involvement practices such as autonomy, team collaboration, and training are related to reduce employee turnover and increase productivity Employees consider training, education and development as crucial to their overall career growth and goal attainment and will be motivated to remain and build a career path in an organization that offers them such opportunity (Samuel, 2008) A study by Babakus, Yavas, Karatepe and Avci (2003), reports that an organization that provides training sends a strong signal to its employees regarding management commitment to their retention and customer service The study by Steel, Griffeth, and Hom (2002) reveals that empirical data show that lack of training and promotional opportunities were the most frequently cited reasons for high performers to leave the company Also, the study by Bradley, Petrescu and Simmons (2004) reports that an increase in high-performance work practices is as a result of training which is converted to a decrease in employee turnover in organization This implies that when an organization provides training to its employees, it will reduce turnover and enhance employee retention

Career is the interaction of work roles and other life roles over a person’s lifespan including both paid and unpaid work in an individual’s life People create career patterns as they make decisions about education, work, family and other life roles (Post, Borgen, Amundson &Washburn,2002) A number of researches suggest that the role of employers and employees is changing with reference to career Ball(1997) argues that

as employers take less responsibility, employees need to take control of their own development in order to maintain and enhance their employability In this changed scenario what is the impact of career opportunities on organizational commitment of

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employees? Puah & Ananthram (2006) suggests, “Career development has a direct influence on the achievement of job satisfaction and career commitment Similarly, Johns (2005) suggests that employees that have advanced would put more effort into their work The company policies play an important role in providing career opportunities It seems that the organization may benefit from increasing commitment across all career stages Increasing commitment in the early career stage is important for decreasing turnover and in the mid- and late-career stages for reducing absenteeism and increasing performance (Cohen, 1991) Hence, the career opportunities do affect employee commitment with the organization Based on above findings, career opportunities have been identified as a determinant of organizational commitment From all points mentioned above, the author can conclude that training and career opportunities has some positive impact on organizational commitment

H1: Training and Career Opportunities is positively related to organizational commitment

2.3.3 Job Characteristics

Job characteristics, such as variety and autonomy, are well-established determinants of organizational commitment (Mottaz, 1988), and are known to be particularly important to management information systems employees (Cougar&Zawaski, 1980)

Job autonomy relates to increased feelings of personal responsibility It is defined as

“the degree to which the job providers’ substantial freedom, independence and discretion to the individual to schedule work and determine the procedures used in carrying it out” (Hackman & Oldman, 1980) The degree of freedom and independence enjoyed by employees and their participation in planning and organizing their work has

an influence on organizational commitment (Bailyn & Lynch, 1983) According to Marsh and Mannari (1977) the higher level of autonomy that the individual possesses, correlates negatively with turnover Therefore, it can be implied that the employees will feel more freedom to do and comprehensively develop themselves when they can work

in the working environment that job autonomy is highly considered Since then, the

a medium positive correlation between skill variety and organizational commitment One way that individuals may develop a sense of competency is by working in a job with high skill variety (Hackman & Oldman, 1975) Skill variety relates to feelings of belongings a sense of attachment to the organization (Meyer & Allen, 1991) When employees do their job with variety of skills or complex, they will feel that the job, which they are working highly related to what they have been trained or learned That creates a strong engagement between them and their job Hence, organizational commitment can be enhanced Based on the correlation between job autonomy, skill variety to organization commitment, we can see that job characteristics also has an positive impact on organizational commitment

H 2: Job characteristics is positively related to organizational commitment

2.3.4 Work/Life Policies

Friendly work life policies are required to reduce negative impacts of work life conflict which is defined by Greenhaus and Beutell (1985) as an incompatibility between responsibilities from the work and family Recently many researchers have attempted to highlight significance of work life policies Family-friendly policies should cater for the specific ‘family’ circumstances of all employees (Lilley, 2004) In developed and developing countries, rising proportions of dual earner families, increased female labor force participation and the growing number of aged dependents means that a higher proportion of employees have family responsibilities (Hall & Liddicoat 2005) Researchers also support the idea of flexible timing and working conditions Organizations need to accommodate these individuals with remote access for telecommuting, childcare centers, referral programs, and employee assistance

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programs (Dockel, 2003) Despite experiencing work–life conflict, employees may maintain relatively high levels of organizational commitment if they perceive the procedures used to plan and implement organizational decisions are fair (Siegel et al, 2005) Spending more time at work can be an outcome of employee commitment as Lee

& Hui (1999) argue, “work interference with family may be an indicator of how much devotion one has for work.” Some researchers consider organizational policies a source

of work life conflicts e.g Meyer, Stanley, Herscovitch & Topolnytsky (2002) argue that

it is possible that having a sense of being “trapped” in an organization is both stressful for employees and a source of conflict in the home Lilley (2004) argues that a corporate culture that focuses on ‘face time’ encourages employees to be on site but does not motivate them towards better performance It will penalize workers absent from the workplace through the taking of leave or the use of reduced or compressed hours Reward for ‘hard work’, often judged by the length of time a worker spends at the workplace, is rejected for recognition of performance outcomes There is increasingly call for employers to place less emphasis on ‘face-time’ and focus on work outcome These findings suggest that the organizational policies are affecting both, the employee performance in the organizations and their organizational commitment Many researchers favor flexible working hours e.g Roehling, Roehling & Moen (2001) suggests “flexible-time benefits are associated with increased loyalty for men and women at all life stages Grover and Crooker (1995) empirically tested the effects of work and family benefits on organizational commitment These benefits include parental leave, flexible schedules, childcare assistance, and childcare information Employees who had access to work/life polices showed significantly greater organizational commitment and expressed significantly lower intention to quit their jobs

H 3: Work/Life Policies is positively related to organizational commitment

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2.3.5 Intention to stay

According to Fishbein & Ajzen, "the best single predictor of an individual's behavior will be a measure of the intention to perform that behaviour" (1975, p 369) Empirical evidence strongly supports the position that intent to stay or leave is strongly and consistently related to organizational commitment (Dalessio et al., 1986; Griffeth & Hom 1988; Mathieu & Zajac., 1990) From the above research, we can realize the relation between organizational commitment and intent to stay of employees When an organization can commit with their employees positively, employees will have tendency of staying longer Thus, the following hypothesis is developed

H 4: Organizational commitment is positively related to intention to stay of employees

2.4 Research Model

From some hypotheses mentioned above, the author would like to point out that

in the scope of this research; there will be three factors that will be taken into consideration as the affecting factor of organization commitment at small and medium sized firms in Ho Chi Minh City: They are:

- Training and career opportunities

- Job characteristics

- Work/life Policies

From that, we have the research model:

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H1

H3

Figure 2.1: Research Model

H 1: Training and career opportunities is positively related to organizational

commitment

H 2: Job characteristic is positively related to organizational commitment

H 3: Work/Life Policies is positively related to organizational commitment

H 4: Organizational commitment is positively related to intention to stay of employees

2.5 Summary

Although there are many factors that influence organizational commitment and

retention of key employees in HCMC but the study focuses in three factors: training

and career opportunities, job characteristics and work/life policies

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CHAPTER 3: RESEARCH METHODOLOGY

This chapter introduces research method to evaluate the measurement scales, research model, and hypotheses This chapter includes four parts:

In term of sample size, the size of the sample needed to be big enough to assure the statistical significance Hair et al (2009) pointed out that the minimum sample for appropriate use for statistical analysis is equal to or greater than five times of number of variables, but not less than 100

n>= 100 and n>= 5k (k in this case is the number of variables)

The model in this research included five factors with twenty six variables, therefore the necessary sample size should be: 26 * 5 = 130 observations

For Exploratory Factor Analysis, a general rule is that the minimum sample size is to have at least five times as many observations as the number of variables to be analyzed and larger than 100 (Hair et al., 2009) Then, the minimum sample size that required for EFA in this study is n = 5*26 = 130 observations

To implement standard multiple regression analysis, Nunnally & Burnstein (as cited in Nguyen, 2011) emphasized that the sample size must fully meet:

n> 50 + 8m ( m in this case is the number of independent variables)

3.2 Data collection and procedure

Data collection process of this research was executed in Ho Chi Minh City area The present study included two stages: a qualitative phase and quantitative phase The questionnaire for surveying originated in English and then be translated into Vietnamese version by the writer Related to the qualitative phase, the Vietnamese version of survey questionnaire was pretested by the method direct and in depth interviewing during three weeks with five persons who were colleague, friend, or business partner of the writer to check whether they understood the scale clearly or not when it was translated from English to Vietnamese The in depth and direct interview helped the researcher to assure that the final questions were well understood by respondents and valuable in measuring observed variable before doing the main survey The process of performing the in depth and direct interviews got start by specifying the objectives of the study in terms of what information was needed to be collected Then the writer would show the detailed draft survey questionnaire to the interviewees for checking their understanding In the interview, the researcher also had a desired to find out whether the chosen measurement scales was suitable for conducting the research in Vietnam in general and in Ho Chi Minh City in particular The information, which was collected from this kind of interview, would be used to identify the influence of the independent factors (training and career opportunities, job characteristic and work/life policies) on organizational commitment as well as its impact on the intent to stay of employees at small and medium sized companies in Ho Chi Minh City All the comments from the interviewees were gathered with the aim to revise the measurement scales in the questionnaire

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Based on the feedback of the respondents, the English content of the survey questionnaire remained unchanged However, the Vietnamese content needed to be changed a little bit for the clearer understanding of the respondents (see Appendix 1) When the survey questionnaire was completely designed, the official survey was conducted widely in Ho Chi Minh City The qualitative phase has been clearly described above, and now is the processes of quantitative phase, see Figure 3.1 below:

Figure 3.1: Research Process

(Test reliability and validity of measurement scale)

Draft Scale

Final Scale

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Main survey was quantitative research to collect data for testing the research

hypotheses Respondents finished by themselves as questionnaire with most of items

were measured by five point Likert scale, including “strongly disagree” (=1), “disagree”

(=2), “neutral” (=3), “agree” (=4), and “strongly agree” (=5) The questionnaire was

mainly delivered to the interviewees via the internet in online version using Google

Survey Tool link Nevertheless, in some favorable cases, the author also delivered the

questionnaire in paper to the respondents The interviewees received questionnaire’s

link through email for social network (facebook) and they had one week to complete

the questionnaire Three days after a reminder email or message (for facebook

collecting) was sent to encourage the respondents to take part in as well as express the

author’s thanks for their help if they did it already Data collection was performed on

weekday and weekend during one month and a half

As mention in part 3.1, the minimum sample size needed for data analysis was 130,

then for this survey, 350 questionnaires were delivered directly in paper and indirectly

via email or messages on facebook via Google Survey Link to the respondents in Ho

Chi Minh City area In specific, 300 questionnaires were sent via email to the students

of International School of Business and the author’s colleagues, friends, and business

partner, 50 questionnaires were delivered in paper to the researcher ‘s friends and

customers in business The rest of 50 questionnaires were sent under the link of Google

Survey to the friends of the writer via Facebook After the data collection, total 307

responses were received, the responding rate was about 76,65% (see the Table 3.1

below):

Paper 48 15,64 Online 259 84,36 Total 307 100

Table 3.1 Source of data collection

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However, there were only 206 responses, which were qualified for data process Total 101 responses were deleted with 72 questionnaires were removed because the interviewees indicated that they were company owners or share holders, and the rest (29 questionnaires) was deleted out because they were invalid (the respondents did not really take part in the survey, they just chose one option for all of the questions in the questionnaire) Finally, 206 questionnaires were used as a suitable data for the research

In comparison with the required minimum sample size, this number is totally meet the demand

3.3 Questionnaire Design

3.3.1 Measurement Scale and Coding

The measurement of the factor is founded and developed by many researchers:

Training and Career Opportunities: Training adequacy, promotional chance This

measurement was developed by Blau (1989), Cammann at al., (1979), Hausknecht at al., (2002), Jones et al (2001), Warr at al., (1979)

Measurement of Training and Career Opportunities (TRA)

TRA1 - People are properly orientated and trained upon joining this organization TRA2 - This organization does provide regular opportunities for personal and

career development

TRA3 - The organization has career development activities to help an employee

identify/improve abilities, goals, strengths, & weaknesses

TRA4 – My chances for being promoted are good

TRA5 – There are enough career opportunities for me in this organization

Job Characteristics: One of the best conceptualizations of job context variables is in

the theory proposed by Hackman and Oldman (1975-1976) The job diagnostic survey was used with two items comprising each dimension, i.e skill variety and job autonomy

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Measurement of Job Characteristics (JOB)

JOB1 - The job requires me to use a number of complex or high level skills

JOB2 - The job denies me any chance to use my personal initiative of judgment in

carrying out the work

JOB3 - The job is simple and repetitive

JOB4 – The job gives me considerable opportunity for independence and freedom

in how I do the work

Work/Life Policies: Pare and colleagues (2001:5) developed work/life policies

questions to take into account the needs of employees and to minimize the consequences of conflict between the work and family issues The questions were based

on the work done by Honeycutt and Rosen (1997) and Kopelman and associates (1983)

Measurement of Work/Life Policies (POL)

POL1 – I often feel like there is too much work to do

POL2 – My work schedule is often in conflict with my personal life

POL3 – My job affects my roles as a spouse /or a parent

POL4 – My job has negative effects on my personal life

Organizational Commitment: That measures the feedback of employees for the

company's affection, it founded from Meyer & Allen (1997); Porter at al., (1974) with 5 items and Janet (2004) developed to 9 items

Measurement of Organizational Commitment (COM)

COM1- I feel a strong sense of belonging to this organization

COM2- I could just as well working for a different organization if the type

of work was similar

COM3- I find it difficult to agree with this organization's policies

COM4- This organization really inspires the very best in me in the way of

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job performance

COM5- My values and this organization’s values are very similar

COM6- There is little to be gained by sticking with this organization

Indefinitely

COM7- I am willing to put in a great deal more effort than normally

expected to help this organization be successful

COM8- I am proud to tell others that I am part of this organization

COM9- I really care about the future of this organization

Intention to stay: That is measurement the trend of stay or leave the organization of

employees That is 4 items, founded and developed by Cammann at al., (1979); Dalessio at al., (1986), Lambert at al., (2001) Mathieu & Zajac (1990), Seashore at al., (1982)

Measurement of intent to stay of employees (INT)

INT 1- I plan to work at my present job for as long as possible

INT 2- I will most certainly look for a new job in the near future

INT 3- I plan to stay in this job for at least two to three years

INT 4- I would hate to quit this job

The completed questionnaire in English version and Vietnamese version were presented

in Appendices 2 and 3

3.3.2 Draft questionnaire

The survey was divided into three sections with frame structure as follows:

PART A: This part is used to select out the key employees: There are 4 questions in this section The employees will be considered as the key employees as if they meet these following requirements:

1 Not company owner

2 Work for that company over than 6 months

3 Full-time employee

4 Support company’s organizational culture and vision

PART B: Demographic Profile is in this part: These data help the author understand about interviewees and know deeply research objective

PART C: Main questions: this part is base on designed Likert scales (include five Likert Scale from Strongly Disagree to Strongly Agree): this part shows the action and attitude

of key employee about their company such as training and career opportunities, job characteristics and work/life policies also

3.4 Data analysis method

The collected data was analyzed in SPSS software version 20 using enter method Many statistical tests were extracted by using SPSS Firstly, the validity and reliability

of scale instrument were examined by using Cronbach’s Alpha analysis and Exploratory Factor Analysis (EFA) The items, which were not satisfied the conditions

of reliability and validity would be deleted before running multiple and simple regression After that, the writer would use multiple regression analysis to identify the correlation and measure the influence level of each independent variable to the organizational commitment Finally, simple regression would be used to evaluate the impact of organizational commitment on the intent to stay of key employees at small and medium sized enterprises in Ho Chi Minh City area

3.5 Summary

To sum up, this chapter presented the choice of sample size, measurement scale and coding, and research methodology that used to analyze the collected date A survey questionnaire was developed for data collecting; it was delivered directly and indirectly via email and social network (facebook) to the targeted respondents This research was designed in two phases: the first one was qualitative phase (by in depth and direct interview), the second one was quantitative phase (main survey with n = 206 observations) The in depth and direct interview was executed to test the measurement

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scale Then, based on the qualitative step, the questionnaire would be adjusted before wide survey Main survey had the sample size with 206 observations that used for analyzing regression The next chapter will show the data analysis results of main survey

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CHAPTER 4: DATA ANALYSIS

Chapter 3 presented research methodology to test the scale validation and analyze the collected data In this chapter, the study’s results will be shown and analyzed with n = 206 observations Firstly, the demography information of respondents were analyzed by using SPSS Secondly, the author would present the results of scale validation The evaluation for the data of this study was executed through two steps: 1st step used Cronbach’s alpha and Exploratory Factor Analysis (EFA) to test the reliability and validity of scale measurement At 2nd step, author applied multiple regression to test hypotheses (H1, H2, H3) and simple regression to examine the last hypothesis (H4) Finally, the writer would discuss on the hypotheses testing based on those results

4.1 Respondents’ demographics

The writer also used SPSS to analyze the collected data for respondent’s demographics The purpose of this part was to supply the general information of the persons who made the suitable responses for the survey The results of the demographics analysis were shown in table 4.1 From this table, we could imply some important points:

1- The correspondents are key employees from various industries such as 19.9% for engineering, 15.5% for trading, 20.9% for banking, 34.5% for import and export, and the rest 9.2% for other fields

2- In terms of occupation, there were 83 salespersons, 60 officers, 21 managers, 18 engineers, and 24 persons from other occupation, who made the survey

3- The key employees who answered the survey are most of bachelor degree (84%), the rest part are 4.4% for college and 11.7% for upper bachelor degree

4- Among the respondents, there were 106 men and 100 women In addition, the percentage of single accounted for 62.1%, and 37.9% is married

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5- The age of employees who joined the survey, ranged from under 30 to 50 With under 30, it accounted for 61.6% From 31 to 40 were 26.7%, and the rest 11.7% for the age from 41 to 51

Frequency Percent Valid Percent Cumulative Percent

Industrial

Trading 32 15.5 15.5 35.4 Banking 43 20.9 20.9 56.3 Im&Export 71 34.5 34.5 90.8

Salesman 83 40.3 40.3 49 Officer 60 29.1 29.1 78.2 Manager 21 10.2 10.2 88.3

to make sure the reliability of construct built for this study, Cronbach’s Alpha must be examined as an indicator for internal consistency of measurement scales Cronbach’s Alpha Test helped to realize and remove unstandardized items in the scale The required value of Cronbach’s Alpha should be above or at least equal to 0.6 to assure the internal reliability (Nunnally & Burnstein, as cited in Nguyen, 2011)

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The Corrected Item – Total Correlation was also considered as a crucial indicator in reliability test An item would be assumed that most likely correlated with most of other scales items if the correlation of this item with the total of the other items

in the scale was higher than 0.3 (Nunnally & Burnstein, as cited in Nguyen, 2011) On contrary, If the corrected item – Total correlation of any item was low under than 0.3,

we would need to check that item again And, a modification or deletion of such items

in this case was suggested

The author presented the results of reliability test of each item of the research model in the Table 4.2 below

Table 4.2 Reliability Test Results

Observed

Variable

Scale Mean if Item Deleted

Scale Variance

if Item Deleted

Corrected Item- Total Correlation

Cronbach's Alpha

if Item Deleted

Training and Career Opportunities (TRA): Alpha = 0.792

As shown in Table 4.2, the results of Cronbach’s alpha of all scale items were significantly high, above 0.8 for job characteristics, organizational commitment and intent to stay Although the cronbach’s alpha of training and career opportunities, and work/life policies were a little bit lower than three scales mentioned above, they also over the minimum acceptance criterion Corrected Item-Total Correlation column also indicated significantly values for all items of five measurement scales of the survey

In conclusion, all five measurement scales were reliable in measuring the research concept because they had the cronbach’s alph higher than 0.6 The corrected item-Total correlation of all dimensions were also over the required value (higher than 0.3) Therefore, the wirter could conclude that all scales fit the requirement for reliability

The next step would be the test the validity of the measurement scale by doing exploratory factor analysis (EFA)

4.3 Exploratory Factor Analysis (EFA)

Exploratory Factor Analysis (EFA) was conducted for confirming the validity of measurement scales EFA could be described as orderly simplification for interrelated measures The main purpose of EFA was to check a large number of relationships among interval variable (Leech et al., 2005) By doing EFA, the author could realize

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how a large set of items group together under a cluster (Leech et al., 2005) In this research, the writer used Varimax rotation to conduct EFA to point out the items on the same scale but exposed low loading on the construct The scale items would be considered as validity if its loading factor was not lower than 0.5 and the Eigen value was higher than 1.0

4.3.1 EFA for independent variable

From the table 4.3, we could see that KMO value was 0.875 greater than 0.7 (Leech et al., 2005) showing that sufficient items to measure each construct The sig value was also less than 5% indicating that the variables were highly correlated Therefore, the author could conclude that based on the above - mentioned criterion the data were suitable for factor analysis

Table 4.3 KMO and Bartlett’s Test of Independent Variables

Bartlett's Test of Sphericity

Approx Chi-Square 1041.322

The cumulative of the three factors was 65.30 percent of variance (see Appendix

D, Table D1) It meant that more than a half of variance could be explained by these three factors

As presented in Table 4.4 below, the rotated component matrix showed the items and factor loading for factor after rotation The factor loading of all items was more than 0.5 All 12 items of three independent variables grouped into three components with high loadings The items in the same dimension after rotation also grouped in only one dimension with high loading It meant that the items of each dimension were conceptualized clearly