Performance appraisal fairness, work engagement, and intent to leave_ The study of employees in the private sector

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business --- Do Thi Tuyet Nhung PERFORMANCE APPRAISAL FAIRNESS, WORK ENGAGEMENT, AND INTENT TO LEAVE: THE STUDY OF EM

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Do Thi Tuyet Nhung

PERFORMANCE APPRAISAL FAIRNESS, WORK ENGAGEMENT,

AND INTENT TO LEAVE:

THE STUDY OF EMPLOYEES

IN THE PRIVATE SECTOR

MASTER OF BUSINESS (Honours)

Ho Chi Minh City - Year 2014

International School of Business

-

DO THI TUYET NHUNG

PERFORMANCE APPRAISAL FAIRNESS, WORK ENGAGEMENT,

AND INTENT TO LEAVE:

THE STUDY OF EMPLOYEES

IN THE PRIVATE SECTOR

ID: 21110013

MASTER OF BUSINESS (Honours)

Ho Chi Minh City – Year 2014

ACKNOWLEDGE

I would like to express my gratitude to supervisor Dr Nguyen Huu Lam for his guidance, support, motivation, and understanding in all the time of my research Besides my supervisor, I would like to thank ISB committee for their encouragement, and insightful comments

I would like to thank managers in HR Share and Care group and my classmates

at ISB.MBus 2.3 for their sharing honestly in item generation and other phases They have provided important comments for my questionnaire as well as data analysis methods Especially, I am debted to my classmate Thai Van Trung Hieu for his supporting and sharing about SEM analysis In addition, I would like to thank participants in my investigation without charge

In my daily work, I have been blessed with my chiefs and staffs at the Joton JSC for all their supports Especially, I am obliged to my direct chief Mr Hoang Minh Anh for his support and my subordinate Ms Nguyen Thi Hoang Anh for her assistant

at work for me to finish thesis conveniently

Finally, I would like to give my special thanks to my family whose love helped

me to complete this work

While Vietnam builds the Socio-Economic Development Strategy 2011-2020 with paying attention to human resource management and development, many organizations concern performance management and talent management in which performance appraisal, work engagement, and intent to leave are important concepts The study is conducted to identify whether perceived performance appraisal fairness can help employees to enhance their engagement at work as well as whether engaged employees can reduce their intent to leave organizations A sample of 170 employees from 15 organizations in the private sector was used to test hypotheses relating to these three concepts The results indicated that perceived performance appraisal fairness affected positively on work engagement and work engagement influenced negatively to intent to leave in Vietnam context Generally, the present study suggests important guidelines for private organizations to ensure fairness of performance appraisal system; thereby, it can help to enhance work engagement and manage

employee turnover by controlling intent to leave

Key words: performance appraisal fairness, work engagement, intent to leave

AKNOWLEDGE i

ABSTRACT ii

TABLE OF CONTENTS iii

LIST OF TABLES v

LIST OF FIRGURES vi

LIST OF ABBREVIATIONS vii

Chapter 1: INTRODUCTION 1

1.1 Research Background 1

1.2 Research Problem 3

1.3 Research Objectives 6

1.4 Scope and Contribution of the Study 6

1.5 Thesis Structure 7

Chapter 2: LITERATURE REVIEW 8

2.1 Perception of Performance Appraisal Fairness 8

2.1.1 Performance Appraisal Overall 8

2.1.2 Fairness of Performance Appraisal System 11

2.2 Work Engagement 14

2.3 Intent to Leave 16

2.4 Perceived Performance Appraisal Fairness and Work Engagement 18

2.5 Work Engagement and Intent to Leave 20

2.6 The conceptual model and hypotheses of the research 20

Chapter 3: RESEARCH METHODOLOGY 22

3.1 Research design 22

3.1.1 Research Method 22

3.1.2 Research Process 23

3.1.3 Population and Sampling Method 24

3.1.4 Measurement Instruments 25

3.1.5.Coding 27

3.1.6 Sample Size 27

3.1.8 Data Analysis Method 28

3.2 Item Generation 33

3.3 Pilot Study 34

3.4 Main Study 36

Chapter 4: RESULTS AND DISCUSSIONS 38

4.1 Participants’ Demographic 38

4.2 Assessment of Scales 39

4.2.1 Assessment of Scale by Cronbach’s Alpha Cofficient 40

4.2.2 Assessment of Scale by Exploratory Factor Analysis 41

4.2.3 Assessment of Scale by Confirmatory Factor Analysis 42

4.3 Saturated Measurement Model 45

4.4 Structural Model 48

4.4.1 Maximum Likelihood Method 48

4.4.2 Bootstrap Method 50

4.5 Testing the Hypotheses 51

4.6 Discussions for Findings 52

Chapter 5: FINDINGS AND IMPLICATIONS 55

5.1 Conclusions 55

5.2 Management Implications 56

5.3 Limitations and Directions for Further Researches 57 REFERENCES

APPENDICES

LIST OF TABLES

Table 4.1: Characteristics of the participants 38

Table 4.2: Correlation between constructs of perceived performance appraisal fairness 44 Table 4.3: Correlation between research concepts 46

Table 4.4: Results of reliability and average variance extracted 47

Table 4.5: Result of regression weights 49

Table 4.6: Regression weights by maximum likelihood and bootstrap 50

Table 4.7: Results of testing hypotheses 52

LIST OF FIGURES

Figure 2.1: Performance appraisal process 10

Figure 2.2: Greenberg's Taxonomy of Justice Perceptions Applied to Performance Appraisal 13

Figure 2.3: The conceptual model 21

Figure 3.1: Research process 23

Figure 4.1: CFA for perceived performance appraisal fairness scale 43

Figure 4.2: CFA for work engagement and intent to leave scale 45

Figure 4.3: CFA for saturated measurement model 47

Figure 4.4: Result of structural equation modeling 49

AMOS : Analysis of Moment Structures

AVE : Average variance extracted value

CFA : Confirmatory Factor Analysis

CR : Critical ratio value

EFA : Exploratory Factor Analysis

HRM : Human resource management

KMO : Kaiser-Meyer-Olkin measure of sampling adequacy

ML : Maximum Likelihood exploratory program

PAF : Principal Axis Factoring

PCA : Principal Component Analysis

SEDS : The Socio-Economic Development Strategy

SEM : Structural Equation Modeling

SPSS : Statistical Packed of Social Sciences

UWES : Utrecht Work Engagement Scale

Chapter 1 INTRODUCTION 1.1 Research Background

The fact that Viet Nam has been a member of the World Trade Organization since January 11, 2007 is a successful step in the efforts to integrate into the global marketplace The current economic development is believed to be attributable to the

political and economic reforms (Doi Moi), which was launched in 1986 (Nghiep &

Quy, 2000) The new policies have prompted Vietnamese economy from a closed system into a multi-sector, globally integrated market economy with socialist characteristics The World Bank reports that Vietnam has developed from one of the poorest countries in the world, with per capita income below 100 dollars, to a lower middle-income country within a quarter of a century with per capita income of 1,130 dollars by the end of 2010 (Vietnam overview, n.d) One of the most remarkable achievements of Vietnam’s economic transition is the emergence of more dynamic and stronger private sector (Hakkala & Kokko, 2007) Asian Development Bank defines the private sector as all individuals or groups of individuals who invest or use private capital to produce or trade goods or services Therefore, in Vietnam, this definition includes formal and informal enterprises and collectives, domestic and foreign (ADB, 2005) Bartram, Stanton, and Thomas (2009) states that the Vietnamese government encourages a multi-sector economy and actively promotes the growth of private enterprises as crucial factors shaping the development of the economy

As some other emerging economies seeking to compete in globalised markets, Vietnam is facing many challenges (Truong, Van der Heijden, & Rowley, 2010) Vietnam’s ability to succeed with low cost strategy is under threat and needs to change due involving a downward spiral around low cost competition is dangerous and harmful for long term and with impacts on key human resource management (HRM) policies and practices (Truong et al., 2010) Vietnam government builds the Socio-Economic Development Strategy (SEDS) 2011-2020 with paying attention to structural reforms, environmental sustainability, social equity, and emerging issues of macroeconomic stability Three main issues in SEDS include: (i) promoting human resources/skills development (particularly skills for modern industry and innovation), (ii) improving market institutions, and (iii) infrastructure development (Vietnam Overview, n.d) In the SEDS, the human resource development is placed first indicates that Vietnamese government has concern on the importance of this resource in the integration process Obviously, when entering the international arena, the competition among companies has become unprecedented level by the pressure of globalization, which is known as the increasingly close international integration of markets for goods, services and factors of production, labor and capital (Bordo, 2002) More globalization means more competition “to lower costs, to make employees more productive, and to do things better and less expensively” (Dessler, 2011, p 6) Therefore, to face the pressure of competition, an effective human resources management has been seen as a critical factor in creating competitive advantage (Pfeffer, 1999)

Under the growing pressure of globalization and integration, HRM in Vietnam

is becoming pragmatic in practices, particularly in relation to the widespread use of training and development as well as the use of performance appraisal and incentive payments (Bartram et al., 2009) Private companies in Vietnam are making efforts to formalize their human resource policies to meet foreign requirements, remain competition, attract good candidates, and keep talent employees (Bartram et al, 2009) While many Vietnamese companies apply difficultly foreign HRM theories and practices to enhance competitiveness, foreign invested companies face the fundamental question of the transferability of HRM practices into local settings (Thang, Rowley, Quang & Warner, 2007)

1.2 Research Problem

In an era of expanding globalization and increasing competition, organizations worldwide have recognized that the knowledge, skills, and abilities of their employees represent a major source of competitive advantage (Lewis & Heckman, 2006) Since the private sector grows and competes openly for experienced and skilled staff, HRM

is assumed as an important function to manage talents (Bartram et al, 2009) In Vietnam, although many managers in domestic private companies are extremely interested in experimenting with innovations in HRM (Bartram et al., 2009), the majority of these applications are still in the first phase of development and generally lack a strategic HRM focus and positioning (Truong et al., 2010) Whereas, foreign invested companies need to concern the adoptability of some Western HRM practices into the Vietnamese context because the import of foreign HRM practices demands a careful consideration of their compatibility with Vietnamese contexts and cultural

values (Thang et al., 2007) In addition, Thang et al (2007) suggest that the foreign practices that tend to offer compromise with the norms, beliefs, and assumptions of the existing Vietnamese culture have the best chance to be transferred to improving the rigid system in managing and motivating people Von Glinow and Clarke (as cited

in Thang et al., 2007) also indicate that the attempts to seek confrontation or to impose ethnocentric practices of HRM will fail, as an early warning for the prospective American companies aiming to Vietnam Thang et al (2007) implicate that performance management need to take a long-term view and gradually cultivate among its people a trusting, open and frank environment, as well as provide sufficient training to bring these knowledge into practice

When organizations talk about the performance management, they frequently mention the practice of formal performance appraisal as a primary vehicle for management change (Longenecker, 1997) Performance appraisal is one of the most important HRM practices in organizations as it yields critical decisions integral to various human resource actions and outcomes (Gupta & Kumar, 2013) However, performance appraisal systems in private companies face many disadvantages in Vietnam Long (2007) considers that some Vietnamese companies have allowed superior to assess performance and attitude of subordinate at the end of the year while others have used voting method relying on the results of emulation, commendation, and punishment for ranking employees in each department, and then proposed to the board of directors for approval By any manner, performance appraisal in Vietnamese companies often create controversy, discontent and disunity in the organizations because the assessment methods are not scientific, not transparent, unfair and results

of assessment had often based on comments by emotions, bias of the supervisor (Long, 2007) Tan (2011) presents that probably more than 80 percent of staff asked about performance management system will think that this system is unfair, meaningless, and a waste of time; whereas, many human resource managers are aware

of this issue but ignore and still proceed with their system knowing the actual consequences and results Therefore, Tan (2011) warns that the organizations need to look more closely at their performance management and appraisal systems because

there are many factors, such as obsolete system, wrong design, or poor rating, are not

only useless but can actually harm productivity and the relationships between employees and managers

In addition, as conditions have become more competitive, companies face pressure in recruiting skilled and talented people at the top of the labour market (Truong et al, 2010) Ruge (2011) shows that employee intent to continue working for current companies is lower in Vietnam (54%) compared to Asia Pacific (61%) Loose (2011) suggests that the engagement and retention strategies in Vietnam should focus

on a total reward strategy basing on employee performance beyond just compensation only historically to attract and retain talents

Generally, under the pressure of limitation of resources and competition, private companies need to improve talent management To deal with turnover, managers should build human resource strategies how to manage and control turnover

as well as to retain talent Some previous researches evoke relationship of work engagement with performance appraisal justice and with intent to leave (Schaufeli & Bakker, 2004; Saks, 2006; Cropanzano, Bowen, & Gilliland, 2007; Alam &

Mohammad, 2009; Gruman & Saks, 2011) in many countries that include transition economies such as India, Malaysia While perception of performance appraisal fairness is believed to significantly influence on work engagement (Gupta & Kumar, 2013), work engagement is received attention from researchers as an important determinant of employee performance recently (Gruman & Saks, 2011) Therefore, a study was conducted to examine the relationship between perceived performance appraisal fairness, work engagement, and intent to leave in Vietnam context under the pressure of globalization and integration

1.3 Research Objectives

The study is undertaken with the following objectives:

1 To identify relationship between perceived performance appraisal fairness and work engagement

2 To examine relationship between work engagement and intent to leave

1.4 Scope and Contribution of the Study

The study focused on employees working for local and foreign private companies in Ho Chi Minh City The respondents were white-collar officials including staff and manager, and they have experienced in performance appraisal

This study provides evidences about the relationship between perceived performance appraisal fairness, work engagement, and intent to leave in Vietnam context Findings from this study can be useful for managerial people to conduct programs and policies for preparing and maintaining HRM in private organizations The clearer understanding of three concepts may help to create stable and engaged work environment, reduce recruitment cost, and develop competitive advantages

1.5 Research Structure

This thesis includes five chapters Chapter 1 introduces research background and research problems providing general views about Vietnam market It also states research objectives and questions, scope and contribution of thesis, thesis structure Chapter 2 provides literature review relating to performance appraisal fairness, work engagement, and intent to leave From literature, a research model and two hypotheses are proposed Chapter 3 gives the research methodology applied to conduct this study

It includes research process, sampling method, and data analysis method In this chapter, the results from item generation and pilot phases are showed specifically Chapter 4 is for main study with output data analyzed via statistical software and discussions based on data analysis It also gives result of testing hypotheses Chapter 5 concludes the findings and managerial implications It also indicates limitations of study to direct for further researches

Chapter 2 LITERATURE REVIEW

This chapter provides literatures for present study It gives the understanding of performance appraisal system overall and perception of performance appraisal fairness from the organizational fairness approach The concepts of work engagement and intent to leave are also introduced in this chapter Moreover, this chapter provides

a research model with two hypotheses used to illustrate predicted relationships of concepts

2.1 Perception of Performance Appraisal Fairness

2.1.1 Performance Appraisal Overall

Definition of Performance Appraisal Dessler (2011) defines, “Performance

appraisal means evaluating an employee’s current and/or past performance relative to his or her performance standards” (p 187) Latham and Wexley (as cited in Al-Zawahreh & Khasawneh, 2013) define that appraisal is as any personal decision affecting the status of employee in term of retention, termination, promotion, demotion, transfer, salary increases or decreases admission into a training program Grote and Grote (as cited in Al-Zawahreh & Khasawneh, 2013) define performance appraisal as a formal management system providing for the evaluation of the quality

of an individual's performance in an organization

Purpose of Performance Appraisal Generally, many researchers and experts

concern to two extensive purposes of performance appraisal in organization (Gul & O'Connell, 2013) Firstly, it serves an administrative purpose in areas, such as reward allocation (salary raise, bonuses) and assignment decisions (transfers, promotions,

demotions) Secondly, it adapts developmental purpose that identifies employee’s strengths and weakness, provides performance feedback, and facilitates exchange with managers for improving performance and career development According to Baruch (1996), “performance appraisal systems are used for two main purposes: as a source for information for management; and as a feedback instrument for individuals employed by the organization” (p 50) The management purpose is to serve a variety

of management functions such as decision-making about promotions, training needs, salaries, and so on while the second purpose is to enhance developmental processes of employees or as an evaluation instrument This is similar to conceptualization of Boswell and Boudreau (2000) about two typical performance appraisal uses: evaluative and developmental The evaluative function includes the use of performance appraisal for salary administration, promotion decisions, retention-termination decisions, recognition of individual performance, layoffs, and the identification of poor performance Developmental functions include the identification

of individual training needs, providing performance feedback, determining transfers and assignments, and the identification of individual strengths and weaknesses Dundas (2009) condenses the purpose of performance appraisal into two general categories, evaluative and developmental The evaluative purposes include decisions

on pay, promotion, redeployment, retrenchment, and termination The developmental purposes include management development, career management, feedback, improvement, and communications Longenecker and Fink (1999) argue that there are two main reasons for performance appraisal The first reason is to justify human

resource decisions such as pay raise, promotion, demotion, termination, and selection validation The second reason is to maintain competitive advantage

Performance Appraisal Process The following four-step appraisal process

framework presented by Lussier and Hendon (2012) explains how the appraisal process is carried out and notes the connection between the organization’s mission and objectives and the performance appraisal process First step is job analysis to make what a job consists of clearly The job must be based on the organizational mission and objectives, the department, and the job itself Second step is to give standards of acceptable behavior and measurement methods Third step is informal performance appraisal: coaching and disciplining As its definition, performance appraisal is an ongoing process and people need regular feedback on their performance to know how they are doing Last step is to prepare for and conduct the formal performance appraisal once or twice a year using one or more of the measurement

Figure 2.1: Performance appraisal process (Lussier & Hendon, 2012)

Step 1:

Job analysis

Organizational mission and Objectives

Step 2: Develop standards

and measurement methods; communicate standards to workforce

Step 4: Prepare for and

conduct the formal

performance appraisal

Step 3: Informal

performance appraisal – coaching and discipline

Performance Appraisal Method Dessler (2011) describes some formal

methods conducted usually A graphic rating scale method lists a number of traits and

a range of performance for each used to identify the score that best describes an employee’s level of performance for each trait Alternation ranking method is to rank employees from best to worst on a particular trait, choosing highest, then lowest, until all are ranked Paired comparison method is to rank employees by making a chart of all possible pairs of the employees for each trait and indicating which is the better employee of the pair With the forced distribution method, manager places predetermined percentages of subordinates in various performance categories Critical incident method requires a supervisor to maintain a log of positive and negative examples of a subordinate's work-related behavior Behaviorally anchored rating scale method uses quantified scale with specific narrative examples of good and poor performance Narrative forms method requires the person’s supervisor to provide an assessment of employee’s past performance and required areas of improvement and write down into narrative form Management by objectives method involves setting specific measurable goals with each employee and then periodically reviewing the progress made

2.1.2 Fairness of Performance Appraisal System

Employees want fair dealing in performance appraisal system, which is a vital component of organization’s HRM The researcher groups such as Bernardin and Beatty as well as Latham and Wexley (as cited in Ikramullah, Shah, Sajjad ul Hassan, Zaman, & Khan, 2011) give that fairness perceptions about various components of performance appraisal system have very serious implications not only for employees,

but also for an organization Martin and Bartol (as cited in Ikramullah et al., 2011) state that appraisal system fairness is a significant topic of investigation among researchers in the field of organizational psychology Bretz, Milkovich, and Read (1992) indicate that the most important performance appraisal issue faced by organizations is perceived fairness of the performance review and the performance appraisal system Their findings suggest that most employees perceive their performance appraisal system as neither accurately nor fairly Skarlicki and Folger (as cited in Walsh, 2003) suggest that the appraisal process can become a source of extreme dissatisfaction when employees believe the system is bias, political, or irrelevant

Greenberg (as cited in Thurston, 2001) is one of the first to apply organizational justice theory to performance evaluation Greenberg's conceptualization

of the four types of justice provides a basis to the social perceptions related to organizational justice in systems It offers the opportunity to more comprehensively study and organize employees' perceptions of fairness concerning performance appraisal and appraisal systems Description of the perceptions of fairness allocated across the four categories may provide practitioners with valuable information to better manage the complex system of performance appraisal Figure 2.2 shows Greenberg's four-factor taxonomy of justice as applied to performance appraisal It includes systemic (procedural) justice, configural (distributive) justice, informational justice, and interpersonal justice

Procedural Justice Distributive Justice

Configural

Concerns about the norms that lead to ratings and the connection of ratings to administrative actions

Figure 2.2: Greenberg's Taxonomy of Justice Perceptions Applied to Performance

Appraisal (as cited in Thurston, 2001)

Configural justice perceptions (structural-distributive) can be applied to the decision norms associated with performance appraisals including equity and political pressures as well as to the relationships between performance appraisal and subsequent administrative decisions A performance appraisal judgment (configural) based on the quality of an employee’s work according to set performance standards (systemic) is considered fair based on the norm of equity in the performance evaluation context (Leventhal, as cited in Thurston, 2001) Distributive justice refers

to the fairness of outcomes or final decisions in comparison to what others receive (Colquitt, Conlon, Wesson, Porter, & Ng, 2001)

The social dimensions of appraisal practices can be represented by interpersonal and informational justice perceptions Perceptions of the way that the rater treats the person being evaluated, such as with respect and sensitivity, concerns interpersonal justice (social-procedural) Interpersonal justice can take the form any social rewards provided by the supervisor Informational justice (social-procedural) reflects fairness perceptions based on the clarification of performance expectations and standards, feedback received, and explanation and justification of decisions An

adequate explanation (informational) clarifying performance expectations or a rating

is considered fair based on the interactional/social component

2.2 Work Engagement

The concept of work engagement is becoming more popularly in today’s workplace Salanova (as cited in Gruman & Saks, 2011) claims that engagement is essential for contemporary organizations to face challenges and Macey, Schneider, Barbera, and Young (as cited in Gruman & Saks, 2011) argue that organizations can enhance competitive advantage through engagement

Kahn (1990) identifies the engagement term through introducing the concepts

of personal engagement Kahn (1990) defines personal engagement as “the harnessing

of organization members’ selves to their work roles; in engagement, people employ and express themselves physically, cognitively, and emotionally during role performances” (p 694) With this definition, Kahn (1990) notes that personal engagement refers to the behaviors which people bring in or leave out their personal selves during working role performances Kahn (1990) states personal engagement as

“the simultaneous employment and expression of a person’s ‘preferred self’ in task behaviors that promote connections to work and to others, personal presence (physical, cognitive, and emotional) and active, full performances” (p 700) People exhibit engagement when they are physically involved in tasks, whether by themselves or with others; are cognitively vigilant, focused, and attentive; and are emotionally connected to their work and to others in the service of their work (Kahn, 1990) Schaufeli, Salanova, Gonzalez-Roma, and Bakker (2002) note although Kahn (1990) presents a comprehensive theoretical model of psychological presence but not

propose an operationalization of the construct Rich, Lepine, and Crawford (2010) build on Kahn’s (1990) dimensions of physical, emotional, and cognitive engagement but proposed a 18-item scale to measure the these dimensions in such a way that the commonality of those dimensions adequately reflect job engagement

Leiter and Maslach (as cited in Simpson, 2009) define burnout as a psychological syndrome characterized by exhaustion, cynicism, and inefficacy, which

is experienced in response to chronic job stressors; whereas engagement is understood

to be the direct opposite of burnout and exist on a continuum Exhaustion (low energy), cynicism (low involvement), and inefficacy (low efficacy) are characteristic

of burnout; whereas, high energy, high involvement, and high efficacy are characteristic of engagement (Leiter & Maslach, as cited in Simpson, 2009) Engaged employees have a sense of energetic and effective connection with their work activities and they see themselves available to deal completely with the demands of their job (Leiter & Maslach, as cited in Simpson, 2009).Whereas, Schaufeli et al (2002) argue burnout and engagement are distinct concepts, thereby warranting independent assessment of one another Acknowledging engagement and burnout to

be opposite psychological states that can be measured independently with different instruments, Schaufeli et al (2002) suggest that an employee who experiences low burnout may not be experiencing high engagement Likewise, an employee who is highly engaged may not also be experiencing low burnout

Schaufeli et al (2002) define work engagement as “a positive, fulfilling, related state of mind that is characterized by vigor, dedication, and absorption” (p.74) Schaufeli, Bakker, and Salanova (2006) explain these three components as following:

work-Vigor is characterized by high levels of energy and mental resilience while working, the willingness to invest effort in one’s work, and persistence even

in the face of difficulties Dedication refers to being strongly involved in one’s work and experiencing a sense of significance, enthusiasm, inspiration, pride, and challenge Finally, absorption is characterized by being fully concentrated and happily engrossed in one’s work, whereby time passes quickly and one has difficulties with detaching oneself from work (p 702)

According to Schaufeli and Bakker (2004), engagement derives from access to job resources in the workplace, and serves as a motivational factor for employee performance, and then this subsequently leads to greater work satisfaction and commitment to the organization Engagement is viewed as the opposite of job burnout, a phenomenon resulting from heavy job demands in the presence of insufficient resources to meet these demands, and is linked to positive health and well-being (lower depression and fewer physical complaints) Schaufeli et al (2002) suggest the original 17-item Utrecht Work Engagement Scale (UWES-17), a self-report questionnaire, to measure three aspects of work engagement: vigor, dedication, and absorption However, Schaufeli, Bakker, and Salanova (2006) shorten it into a 9- item questionnaire (UWES-9)

2.3 Intent to Leave

With organizations is facing recruitment challenges today, it is even more critical to develop new strategies for reducing employee turnover Horn and Kinichi (as cited in Henryhand, 2009) believe turnover has a significant adverse effect on

organizational effectiveness By recognizing the determinants of turnover, organization needs to take the necessary steps in advance to prevent turnover Turnover is the movement of member across the boundary of an organization (Price,

as cited in Perez, 2008), yet most researches on turnover concentrate on members leaving rather than entering the organization (Perez, 2008) Although there is no standard framework for understanding the turnover process as a whole (Morrell, Loan-Clarke, & Wilkinson, 2001), many researches has shown the close relationship between intent to leave and actual turnover Using intent to leave attitudes instead of actual staying or leaving behavior because it is relatively less expensive to collect data

on turnover intention than actual turnover and the use of an individual level predictive model can create the problem of temporarily dispersed leaving episodes (Udo, Guimaraes, & Igbaria, 1997) Intent to leave has consistently been viewed by scholars

as the most important variable in predicting employee turnover (Morrell, Loan-Clarke,

& Wilkinson, 2001; Bigliardi, Petroni, & Dormio, 2005) According to Chiu and

Francesco (2003), intention offers a good explanation of turnover because it encompasses one’s perception and judgment Based on the literature, Henryhand (2009) uses intent to leave instead of actual turnover as the consequent variable in study Moreover, it is easier to measure turnover intent than voluntary turnover because administrative records may be unavailable, incomplete, or inaccurate (Mitchell, MacKenzie, Styve, & Gover, 2000) Administrative records often contain unreliable data, or, in the case of voluntary turnover, usually record only one reason for turnover (Campion, 1991)

According to Mobley et al (as cited Lambert, 2006), intent to leave, also known as turnover intention, is the cognitive process of thinking, planning, and

desiring to leave a job and there are four cognitive parts of turnover intent: 1) thinking

of quitting; 2) planning to stay or leave; 3) searching for alternative employment; and

4) a desire to leave current job Tett and Meyer (as cited Lambert, 2006) define intent

to leave as a conscious and deliberate wilfulness to leave the organization; whereas,

turnover is defined as the termination of an individual’s employment with a given

company Sousa-Poza and Henneberger (2002) define intent to leave as the reflection

of “the (subjective) probability that an individual will change his or her job within a certain time period” (p 113) Turnover intention captures the individual's perception and evaluation of job alternatives (Mobley et al., as cited in Lambert, 2006)

2.4 Perceived Performance Appraisal Fairness and Work Engagement

Gruman and Saks (2011) argue that one important way to enhance the performance management process is to focus on fostering employee engagement as a driver of increased performance Mone and London (as cited in Gruman & Saks, 2011) suggest that effectively applied performance management can help employee to create and sustain high levels of employee engagement leading to higher levels of performance

In order for employees to employ and express themselves physically, emotionally and cognitively during role performances (e.g displaying engagement), performance appraisal system must be perceived as fair by the employees (Latham, Almost, Mann, & Moore, as cited in Gupta & Kumar, 2013) Kahn (1990) mentions that people have their different personal engagements depending to their perceptions

of the benefits, or the meaningfulness, and the guarantees, or the safety, they perceive

in situations Kahn (1990) suggests that psychological safety is associated with elements of social systems that create non-threatening, predictable, and consistent social situations in which to engage Perceptions of justice help to create a sense of safety in the minds of employees as they begin to believe that even if they fail in their task, the organization will recognize their efforts and will treat them fairly (Kahn, 1990)

According to the social exchange theory (Blau, as cited in Gupta & Kumar, 2013), greater justice at workplace should be reciprocated with behaviors that benefit the source Macey and Schneider (as cited in Gupta & Kumar, 2013) propose that engaged employees trust that their time, energy investment will be rewarded (intrinsically or extrinsically) in meaningful way by the supervisors Greater justice perceptions will more likely be related to an employee performing effectively and contributing to organizational outcomes, leader-related outcomes and performance outcomes (Cropanzano, Bowen, & Gilliland, 2007) Spell and Arnold (as cited in Gupta & Kumar, 2013) find justice perceptions, within a primary appraisal role, to be

an effective tool for minimizing psychological distress, anxiety, and depression Gupta and Kumar (2013) conduct a research in India and find the positive and significant relationship between perceived appraisal justice and work engagement

From previous researches, this present study explores the following hypothesis:

Hypothesis 1 (H1): The higher the perceived performance appraisal fairness, the

greater the work engagement

2.5 Work Engagement and Intent to Leave

Bakker and Demerouti (2008) suggest that engaged employees are willing to work hard with a positive state of mind, thereby enabling them to accomplish much in the workplace Further, work engagement has shown its significant effects on work-related attitude and behavioral outcomes such as job satisfaction, turnover intention, and performance through its mediating role between aforementioned antecedents and outcomes Saks (2006) finds that engagement had a positive relationship with employees’ job satisfaction and a negative relationship with intent to leave Schaufeli and Bakker (2004) demonstrate that work engagement plays a mediating role in a motivational process that is driven by available resources and that might lead to organizational attachment or low turnover tendency Schaufeli and Bakker (2004) explain that employees increase work engagement through being satisfied basic needs, enhanced learning, growth and development as well as achieving work goals; therefore, engaged employees have a low tendency to leave the organization

Based on above argument, this study proposes the following hypothesis:

Hypothesis 2 (H2): The higher the work engagement, the lower the intent to leave

2.6 The conceptual model and hypotheses of the research

The conceptual model presented in figure 2.3 includes three concepts with two

hypotheses Three concepts are perceived performance appraisal fairness, work engagement, and intent to leave The concept of perceived performance appraisal fairness consists of four components being procedural justice, distributive justice, interpersonal justice, and informational justice Hypothesis H1 is to examine whether the relationship between perceived performance appraisal fairness and work

engagement is positive, whereas hypothesis H2 is to explore where the relationship between work engagement and intent to leave is negative

Figure 2.3: The conceptual model

In summary, this chapter presents literature review relating to concept of perceived performance appraisal fairness, work engagement, and intent to leave Based on these literatures, a research model with two hypotheses is given to illustrate the relationships of work engagement with perceived performance appraisal and with intent to leave The research methodology and findings will be discussed in next chapters

PERCEIVED PERFORMANCE APPRAISAL FAIRNESS

WORK ENGAGEMENT

Chapter 3 RESEARCH METHODOLOGY

While Chapter 2 provides literature review and a research model with two hypotheses, Chapter 3 presents the methodology for this study It shows a pilot study undertaken to refine measurement scales proposed from previous researches and a following quantitative research applied for main survey This chapter states population and sample size appropriate to purpose of study Moreover, the data collection and analysis method are also introduced in this chapter

3.1 Research Design

3.1.1 Research Method

According to Sekaran and Bougie (2009), hypothesis-testing study is used to

“examine whether or not the conjectured relationship between factors have been substantiated and an answer to the research question has been obtained” (p 103) Relationships are placed in non-contrived settings where work proceeds normally to establish cause-and-effect relationships between factors (Sekaran and Bougie, 2009) Therefore, in present study, two hypotheses were tested to examine the nature relationships between performance appraisal fairness, work engagement, and intent to leave Primary data were obtained by investigating individuals

Creswell (2003) considers that qualitative method is suitable for exploratory studies when the researcher does not know the important variables to examine; whereas, quantitative method is the best indentifying factors that influence an outcome, understanding the best predictors of outcomes, or testing a theory/explanation Therefore, this study applied quantitative approach mainly during

research process while qualitative method was used in item generation phase initially Survey is one quantitative strategy that “provides a quantitative or numeric description

of trend, attitudes, or opinions of a population by studying a sample of that population” (Creswell, 2003, p 153) For this reason, survey approach was used in pilot and main study of this study

3.1.2 Research Process

Figure 3.1: Research process (Nguyen, 2007)

To study, a research process adapted to Nguyen (2007) had three phases being item generation, pilot study, and main study Firstly, item generation was a qualitative step to generate items from literature reviews into first draft questionnaire The item

Literature

First Draft Questionnaire

Focus Groups

(n1=6; n2=10)

Revision Final Draft

Questionnaire

Pilot Survey

(n=76)

Reliability Analysis

Exploratory Factor

29 items

No item was deleted

Deleted 2 low factor loading items

Final Questionnaire

Main survey

(n=170)

Confirmatory Factor Analysis

Structural Equation Modeling

Pre-established

questionnaire

27 items

Composite reliability, average variance extracted, unidimensionality, convergent

and discriminant validity

Test the structural

model and hypotheses

Exploratory Factor Analysis

No item was deleted

Item generation (qualitative)

Pilot study

(quantitative)

Main study

(quantitative)

generation phase identified research problems, purpose of research, chose established questionnaire from literature review and generated a final draft questionnaire basing on group discussion This phase was finished in September to fix the number of items Secondly, pilot survey was undertaken in September 2013 This quantitative pilot step was performed to ensure the efficiency of main survey by testing out the questions In this step, the reliability and validity of scales was preliminarily assessed with a small sample in the same population Finally, a main survey basing on quantitative method was performed with a necessary sample size in October and November 2013 Data were collected, assessed reliability and validity, and then analyzed to test hypotheses

pre-3.1.3 Population and Sampling Method

According to Asia Develop Bank’s definition (ADB, 2005), private sector includes domestic private enterprises and foreign invested enterprises Therefore, the population of this study was white-collar staffs in both local private and foreign development invested enterprises in Ho Chi Minh City This group was predicted to response highly to the survey more than the worker group because the outcome of tasks can be measure individually and frequently, whereas the blue-collar group was evaluated about skills, competencies, and behavior in team’s performance more than individual performance

The convenience sampling method was applied in this study to investigate aspects of the performance appraisal fairness, work engagement, and intent to leave in the private sector in Vietnam Sekaran and Bougie (2009) consider that convenience sampling refers to “the collection of information from members of the population who

are conveniently available to provide it” (p 276) and it perhaps provide basis information quickly and efficiently Some human resource managers in a group named

HR Share and Care in Ho Chi Minh City who had experienced about practical

performance appraisal agreed to participate in phases of study Thereafter, some managers working at private companies and confirming about practical performance appraisal activities at work became representatives to investigate directly employees

in main survey, including staff and managerial officials

3.1.4 Measurement Instruments

Three pre-established instruments from previous researches were used in the present research to measure key variables including perceived performance appraisal fairness, work engagement, and intent to leave The interval scale were applied in these instruments to “perform certain arithmetical operations on the data collected from respondents” (Sekaran and Bougie, 2009, p 143)

The perceived performance appraisal justice items for distributive, procedural, interpersonal, and informational justices were adapted from study of Gupta and Kumar (2013) to reflect performance appraisal settings Procedural justice was

measured by using seven items with the sample item “I have influence the outcomes of performance appraisal procedures” Distributive justice was measured by using four items with the sample item “The outcome of performance appraisal process is appropriate for the work I completed” Interpersonal justice was measured by using four items with the sample item “My supervisor refrained from improper remarks or comments” Informational justice was measured by using five items with the sample item “My supervisor gave reasonable explanations regarding the procedures” The

responses were measured using a five-point Likert scale that ranges from 1= Strongly disagree to 5= Strongly agree

The UWES scales was used to measure the dimensions of work engagement for this study The UWES-17 of Schaufeli et al (2002) included 17 items while the UWES-9 (Schaufeli, Bakker, & Salanova, 2006) had 9 items after removing 8 items

from the UWES-17 Sample items includes “At my work, I feel bursting with energy”,

“I find the work that I do full of meaning and purpose” and “My job inspires me”, and

“I get carried away when I’m working” The responses were measured using a point Likert scale that ranged from 1= Strongly disagree to 5= Strongly agree

five-To measure the concept of intent to leave, a three - item construct was applied from Alam and Mohammad’s (2009) study in Malaysia context Respondents were to

indicate their level of agreement or disagreement on items such as “I intend to leave the organization in the near future” All items were measured on a five-point Likert scale (from 1= Strongly disagree to 5= Strongly agree)

Besides, based on previous researches, some demographic issues such as employee age, gender, job position, and job tenure were observed for descriptive

statistic of participants (Filipova, 2007; Gupta & Kumar, 2013) The age is

determined through four categories including “below 25”, “25 to 34”, “35 to 44”, and

“45 and above” The gender is categorized into “female” and “male” The job position

is measured by values: “employee supervising none”, “supervising less than five subordinates”, “supervising five to ten subordinates”, or “supervising more than ten

subordinates” The job tenure is determined through the following categories: “below

1 year”, “1-2 years”, “3-4 years”, “5-9 years”, and “10 years and above”

3.1.5 Coding

The 17-item scale of perceived performance appraisal fairness (PPAFA) had four unidimensional constructs coded PROFA, DISFA, INTFA, and INFFA Five items measuring procedural justice were coded from PROFA1 to PROFA5 Four items measuring distributive justice were coded from DISFA1 to DISFA4 Four items measuring interpersonal justice were coded from INTFA1 to INTFA4 Four items measuring informational justice were coded from INFFA1 to INFFA4

Two remaining scales were unidimensional coded WOENG and INTLE Nine items for work engagement being were coded from WOENG1 to WOENG9 Three items for intent to leave were coded from INTLE1 to INTLE3 (See Appendix I)

3.1.6 Sample Size

According to McQuitty (as cited in Shah, 2012), minimum sample size should

be determined before data collection, to achieve desired statistical power for a given model Sample size affects directly in the statistical power of the significance testing

and the generalizability of the result (Hair, Black, Babin, & Anderson, 2010) In

addition, Hair et al., (2010) state that multiple regression requires a minimum sample

of 50 and preferably 100 observations for most research situations and the minimum ratio of observations to variables is 5:1 Pallant (2011) consider that the overall sample size should be at least 150 and there should be a ratio of at least five cases for each of the variables Anderson and Gerbing (1988) recommend a minimum sample of 150

“to obtain parameter estimates that have standard errors small enough to be of practical use” (p 415) As these requirements, sample size for main survey of this present study was larger of 5 times the number of variables and minimum 150

3.1.7 Data Collection

To collect data, communication method was used in phases directly hand) and indirectly (via e-mail and representatives) In item generation, computer-based draft questionnaires were sent to the related people via e-mail before discussing and then paper-based draft questionnaires were ready in meetings In quantitative pilot study, both e-mail and paper were used to consider whether ways would be suitable for main study After one week for quantitative pilot, the former with e-mail was performed inefficiently due to low response rate (about 7%) with twenty-one responders out of more than three hundreds e-mails sent Thus, using hard-copy questionnaire was concentrated to assess and modify the draft questionnaire This way provided opportunity to able to discuss face-to-face and get more information from responders if necessary Finally, in main survey phase, indirect communication method was applied through representatives being human resource executives and managers in private companies Before investigating, representatives were explained about purpose of the study, selection process, maintenance of data collected, right to privacy, benefits and risks, and then guided how to choose samples and investigate efficiently Thereafter, these representatives surveyed directly employees at their

(hand-by-workplace for main study

3.1.8 Data Analysis Method

This study applied Exploratory Factor Analysis (EFA) in pilot study through SPSS software (version 16), as well as Confirmatory factor analysis (CFA) and Structural Equation Modeling (SEM) in main study through AMOS software (version 16)

In present research, EFA was conducted to test reliability and construct validity Firstly, reliability test is an important issue in measuring and refining scale Sekaran and Bougie (2009) consider that the reliability of a measure indicates the stability and consistency with which the instrument measures the concept In reliability test, the internal consistency reliability is a test of the consistency of respondents’ answers to all the items in a measure; and when items are independent measures of the same concept and there are correlations among them (Sekaran & Bougie, 2009) Sekaran and Bougie (2009) indicate Cronbach’s alpha is a reliability coefficient that computed in term of the average intercorrelations among the items measuring the concept; whereas the results of factor analysis confirms whether or not the theorized dimensions emerge Reliability is performed first to remove items with low item-total correlation (less than 0.30) (Pallant, 2011) In addition, the Cronbach’s alpha coefficient of a scale should be above 0.70 (Nunnally, as cited in Pallant, 2011)

Secondly, two important tests of conduct validity being convergent, discriminant validity were utilised to indicate the ability of the measurement items to

measure accurately the constructs of the study (Hair et al 2010) Convergent validity

is the degree to which two measures of the same concept are correlated; whereas discriminant validity is the degree to which two conceptually similar concepts are distinct (Hair et al, 2010) Nguyen (2011) suggests that convergent and discriminant validity are important for scales and assessed by factor analysis in EFA method Pallant (2011) considers that EFA can refine and reduce items in a large set of variables to form a smaller number of coherent subscales There are three main steps

in conducting factor analysis: (1) assessment of the suitability of the data with

Bartlett’s test of sphericity and the Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy, (2) factor extraction, and (3) factor rotation and interpretation (Pallant,

2011) In first step, Bartlett’s test of sphericity should be significant (p-value < 0.05)

to be considered appropriate (Hair et al, 2010); whereas, the KMO index ranges from

0 to 1, with 0.6 suggested as the minimum value for a good factor analysis (Tabachnick & Fidell, as cited in Pallant, 2011) In second step, Kaiser’s criterion, or the eigenvalue rule, is concerned to determine the smallest number of factors that can

be used to best represent the interrelationships among the set of variables The eigenvalue of a factor represents the amount of the total variance explained by that factor and only factors with an eigenvalue of 1.0 or more are retained for further investigation (Pallant, 2011) The total variance explained was required above 0.5, and 0.6 suggested as the good extraction (Nguyen, 2011) Once the number of factors has been determined, the third step is to try to interpret factors by rotating them (Pallant, 2011) When running EFA, Principal Component Analysis (PCA) via Varimax rotation is a widely used method for factor extraction to extract the maximum possible variance for further predictions; whereas, Principal Axis Factoring (PAF) via Promax rotation reflects the underlying structure of the data more accurately than other methods, such as Varimax rotation (Gerbing &Anderson, 1988) Because CFA and SEM was applied to test measurement and structural model in following steps, the principal axis factoring (PAF) extraction method via Promax rotation was used to reflect the structure of the data accurately In addition, factor loading is one important consideration for ensuring convergent validity (Hair et al., 2010) Factor loadings of 0.30 to 0.40 are minimally acceptable although factor

loadings greater than 0.50 are generally necessary for practical significance (Hair et al., 2010) In this pilot study, 0.4 was used as a factor loading cutoff point to ensure convergent validity Beside, items should show a 0.3 loading difference with other factor to ensure discriminant validity (Jabnoun & Al-Tamimi, 2003)

In main study, CFA and SEM were applied via AMOS solfware Anderson and Gerbing (1988) recommend a two-step modeling approach for SEM in which the measurement model provides assessments of convergent and discriminant validity; whereas the structural model provides an assessment of predictive validity Measurement and structural models generate model fit indices that are used to evaluate how well a model fits the sample data gathered based on these indices (Shah, 2012).The most model fit indices used widely are the Goodness of Fit Index (GFI), the Adjusted Goodness of Fit Index (AGFI), the Root Mean Residual (RMR), Comparative Fit Index (CFI), the Normed Fit Index (NFI), the Tucker-Lewis Index (TLI), the Non-Normed Fit Index (NNFI), the Incremental Fit Index (IFI), mean square error of approximation (RMSEA), the standardized root mean square residual

(SRMR), and the ratio of chi-square relative to the degrees of freedom (χ2/df) (Gefen,

Straub, & Boudreau, 2000; Fadlelmula, 2011; Shah, 2012)

In main study of present research, CFA was applied to measure concepts and research model Hair et al., (2010) states that CFA is used to test how well the measured variables represent the constructs Therefore, by running CFA in main study, reliability and construct validity were assessed through factor loadings, composite reliability, and average variance extracted