Impacts of human resource practices on organizational engagement and turnover intention case of business employees in ho chi minh city

ABSTRACT The purpose of this study is examining the relationship of HR practices Selection, performance appraisal, compensation and career management with Organizational engagement OE an

MINISTRY OF EDUCATION AND TRAINNING

UNIVERSITY OF ECONOMICS HCM CITY

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TRƯƠNG QUỐC CƯỜNG

IMPACTS OF HUMAN RESOURCE

PRACTICES ON ORGANIZATIONAL

ENGAGEMENT AND TURNOVER INTENTION:

CASE OF BUSINESS EMPLOYEES

IN HO CHI MINH CITY

MASTER OF BUSINESS ADMINISTRATION THESIS

Ho Chi Minh City – 2019

MINISTRY OF EDUCATION AND TRAINNING UNIVERSITY OF ECONOMICS HCM CITY

-  -

TRƯƠNG QUỐC CƯỜNG

IMPACTS OF HUMAN RESOURCE

PRACTICES ON ORGANIZATIONAL

ENGAGEMENT AND TURNOVER INTENTION:

CASE OF BUSINESS EMPLOYEES

IN HO CHI MINH CITY

Major: Business administration (research)

MASTER OF BUSINESS ADMINISTRATION THESIS

SUPERVISOR: Assoc.Prof Dr TRẦN THỊ KIM DUNG

Ho Chi Minh City - 2019

ACKNOWLEDGEMENT

I would like to express my deepest gratitude and appreciation to my research supervisor, Assoc Prof Dr Trần Kim Dung for her valuable ideas, guidance, suggestions and supports for this thesis

I would like to thanks all lectures of the MBA class who gave us all knowledge, guidance during the course And it was a memory time during the course studying with MBA class member, together we faced and overcame all difficulties and finished the course And I also would like to thanks all my friends and my colleagues who helped me during conducting survey and data analysis

Finally, I am grateful to my family for caring, encouraging and supporting

me during my studying till now

Ho Chi Minh City, March 7th 2019

Truong Quoc Cuong

COMMITMENT

I hereby declare that the thesis with title “Impacts of HR practices on organizational engagement and turnover intention, case of employees in Hochiminh City” is my study that was adviced by Assoc Prof Dr Tran Kim Dung

All information in this thesis has been obtained and presented in concordance with academic rules and ethical conduct

I am fully charged of responsibility for all content of this research

Hochiminh city, March 07th 2019

Truong Quoc Cuong

TABBLE OF CONTENT

COMMITMENT

LIST OF ABBREVIATION

LIST OF TABLES

LIST OF FIGURES

ABSTRACT

CHAPTER 1: INTRODUCTION 1

1.1 Research background 1

1.2 Objectives for study 5

1.3 Research scope and approach 5

1.4 Research methodology 5

1.5 Theoretical and practical significance of study 6

1.6 Structure for this study 7

CHAPTER 2: LITERATURE REVIEW AND RESEARCH MODEL 9

2.1 Concepts definition and concepts measurement 9

2.1.1 Organizational engagement 9

2.1.2 Human resource practices (HR practices) 15

2.1.3 Turnover and Turnover intention 21

2.2 Relevant researches and relationship of concepts 25

2.2.1 Relevant researches 25

2.2.2 The effects of HR practices on turnover intention 27

2.2.3 HR practices and engagement 28

2.2.4 Organizational engagement and turnover intention 31

2.2.5 Mediating role of organizational engagement 32

2.3 Hypotheses and research model 33

CHAPTER 3: RESEARCH METHODOLOGY 35

3.1 Method of research 35

3.2 Research design and process 35

3.3 Qualitative research 38

3.5 Method of data analysis 46

CHAPTER 4: RESULT OF DATA ANALYSIS 53

4.1 Descriptive data analysis 53

4.2 Normal distribution examining 54

4.3 Reliability of measurement scales 54

4.4 Explore Factors Analysis 55

4.5 Confirmatory Factor Analysis (CFA) 57

4.6 Checking hypothesis and research model 66

CHAPTER 5: CONCLUSIONS AND IMPLICATIONS 71

5.1 Research conclusions 71

5.2 Research contributions 73

5.3 Managerial implications 74

5.4 Limitations and recommendations for further research 74 REFERENCES

APPENDIX

LIST OF ABBREVIATION

Sig (p) Significance of Testing (p-value)

LIST OF TABLES

Table 2- 1: Summary researchers about engagement 12

Table 2- 2: Components of HR practices 18

Table 3- 1: PA scale 40

Table 3- 2: CD scale 41

Table 3- 3: SE scale 42

Table 3- 4: CP scale 43

Table 3- 5: OE scale 44

Table 3- 6: TI scale 44

Table 3- 7: Sample size 45

Table 3- 8: Fit index of CFA 50

Table 3- 9: Formula of CR, AVE 51

Table 4- 1: Description of sample 54

Table 4- 2: Summarized Cronbach Alpha test for all variables 55

Table 4- 3: EFA result with 4 factors 56

Table 4- 4: Discriminant validity and construct reliability of HR practices scale 58 Table 4- 5: Construct reliability of pooled model 62

Table 4- 6: Unidimensionalityality of the pooled model 62

Table 4- 7: Discriminant validity of pooled model 63

Table 4- 8: The relationship of all concepts 67

Table 4- 9: The total effect of HR practices on turnover intention 68

Table 4- 10: Comparing effect of HR practices on TI, OE 70

LIST OF FIGURES

Figure 2- 1: Research model of Juhdi et al (2013) 25

Figure 2- 2: Research model of Chughtai (2013) 26

Figure 2- 3: Proposed research model 34

Figure 3- 1: research process 37

Figure 4- 1: The CFA construct model of HR practices 59

Figure 4- 2: The CFA of pooled measurement model 65

Figure 4- 3: the analysis result of research model 66

ABSTRACT

The purpose of this study is examining the relationship of HR practices (Selection, performance appraisal, compensation and career management) with Organizational engagement (OE) and Turnover intention (TI) Basing on previous research frameworks, the study still tests the negative impact of both HR practices and OE on TI And tests positive impact of HR practices to OE and the mediating role of OE in relationship of HR practices and TI

The survey was conducted with total 405 employees who are working as staff in various sectors in Ho Chi Minh City and studying at UEH The data was collected by mainly face to face survey; then it was analyzed using SPSS and AMOS software The results were found that: all the adjusted, developed variables scales used to measure HR practices, OE and TI met the criteria of liability and fitness validity; HR practices with 4 componentes had significant effect on OE and

TI PA had strongest effect on OE (β=0.334) while SE had weakest effect on OE (β=0.083) Each component of HR practices had its own effect on TI SE had strongest negative effect on TI (β=-0.454) and CM had weakest negative effect on

TI (β=-0.017) OE had important role to predict TI (β=-0.424) The result proved

that OE played mediator in relationship between HR practices and TI

The study also discussed and proposed about contributions, limitations and managerial implications

Key words: HR practices, Organizational engagement, Turnover intention, employees

TÓM TẮT

Mục đích của bài nghiên cứu này nhằm khảo sát sự mối quan hệ của thực tiễn nguồn nhân lực (HR practices) (4 thành phần là tuyển chọn (SE), đánh giá thành tích (PA), phát triển nghề nghiệp (CM) và trả công lao động (CP)) với gắn kết tổ chức (OE) và ý định nghỉ việc (TI) của nhân viên văn phòng Dựa vào các nghiên cứu trước đây, bài nghiên cứu này sẽ khảo sát sự tác động âm của thực tiễn nguồn nhân lực cùng gắn kết tổ chức đến ý định nghỉ việc Đồng thời bài nghiên cứu cũng kiểm tra tác động dương của thực tiễn nguồn nhân lực đến gắn kết tổ chức; và kiểm tra sự tác động của thực tiễn nguồn nhân lực đến ý định nghỉ việc qua trung gian là gắn kết tổ chức

Bài nghiên cứu được thực hiện bằng phương pháp chọn mẫu thuận tiện thông qua chủ yếu khảo sát trực tiếp 405 đáp viên là nhân viên văn phòng thuộc nhiều lĩnh vực trong thành phố Hồ Chí Minh và đang học tại UEH Dữ liệu được phân tích bằng phần mềm SPSS và AMOS Kết quả cho thấy tất cả các thang đo đều đáp ứng các tiêu chuẩn giá trị và độ tin cậy cho phân tích 4 thành phần của HR practices có

tác động lên OE và TI Trong đó, PA (β=0.334) tác động mạnh nhất và SE (β=0.083) tác động yếu nhất lên OE Và SE tác động mạnh nhất (β=-0.454) và CM tác động yếu nhất (β=-0.017) lên TI OE tác động mạnh đến TI (β=-0.424) Kết quả

cũng minh chứng vai trò trung gian của OE

Bài nghiên cứu cũng đưa ra thảo luận kết quả và đưa ra những đánh giá về đóng góp, giới hạn của nghiên cứu và những hàm ý quản trị

Key words: HR practices, Organizational engagement, Turnover intention, employees

CHAPTER 1: INTRODUCTION 1.1 Research background

Human capital is one of the hottest topics in Vietnam and gets more attention

in context that we want to keep up with the fourth industrial revolution or called new economic 4.0 Quality and productive labor is the most important to get development and attraction investment Furthermore, human resource is a part of companies’s strategy to get competitive advantage and effectieness Its role is explained by the resource based view theory (RBV) (Armstrong and Taylor, 2014, p7) RBV states that competitive advantage can be achieved if a firm’s resource is valuable, rare and costly to imitate And human resource becomes significance because it can meet these criteria due to its distinctiveness (Chughtai, 2013) The organizations always make them efforts to find, develop and retain valuable workforce who are talent and skilled employees that are precious resources to afford competitive advantages Talent staff retainment has become more important than it used to be, and it became among most concerns of organization strategies about competitive advantages and organizational effectiveness with the best resources (Juhdi et al, 2013)

However, organizations have suffered the problems that they loss their developed employees leaving for other organizations, especially their competitors Losing talent employees will lead to reduce in quality, productivity and effectiveness of each department or all organization that affect to organization’s competitive advantage So, huge investment in training and developing human resource would be in vain if the employees leave and bring along their skills and experience for other organizations To counter this problem, employers are trying coming up organizational talent management programs and retaining employees by dealing with how to engage trained and highly experienced employees and reduce employee turnover The broad range of employee turnover studies (Ma et al, 2016;

well-Long and Perumal, 2014; Kim et al, 2014; Juhdi et al, 2013…) have shown that turnover is considered as the most popular researched phenomena in organizational behavior and indicated the significance and complexity of the issue impacting by its all dimensions (psychological, organizational significance and economic) They indicate that there are many major variables that impact on the turnover of employees and use turnover intention as an important predict for actual behavior of turnover Moreover, employee engagement is considered as a significant factors impacting to reduce turnover intention of employees By making employee more engaged to organization, employers can be not only continue to get effectiveness of developing employees programs but also to get the results of retaining skilled and experienced staffs So, the concerns of organization are paid more attention into increasing engagement level of employee

It is to say that HRM system is considered as play significant role to increasing engagemenet level and decreasing turnover intention of emplyees Human resource management are the policies and procedure involving HRM aspects of management regarding, planning, recruitment, selection, training and management, performance appraisal and labor relations (Dessler, 2006, cited from Armstrong and Ttaylor, 2014) Some researchers (Juhdi et al, 2013; Chughtai, 2013) suggested that HR practices should consider as good antecedents of employee engagement and turnover intention HR practices are more important because they exist and effect on daily operatations of organization in shaping employee’s attitude, cognition and behavior The HR practices concept is not a new one In 5-P model of Schuler (1992), there are 5P in strategy HRM and HR practices include activities that carry out in implement HR policies and programs Armstrong and Ttaylor (2014; p9) stated that HRM can be seen in a system that incorporated with:

HR strategies, HR policies and HR practices-“which consist of the HRM activities involved in managing and developing people and in managing the employment relationship” HR practices can help organizations enhance their performance, decrease absenteeism and turnover Researchers explain HR practices role that it

could impact on employee perception that the creation of a safety climate, motivation, meaningfulness, emotion According to Robbins and Judge (2010), human resource (HR) practices are one of the factors in the organization that could shape and determine employee responses at work HR practices can help for explaining how these practices influence employee engagement and turnover intention

So, examining the relationship of HR practices with employee engagement and turnover intention is necessary By searching on Proquest, EBSCO for studies about three concepts relationship, author just found out some results

Results of searching on Proquest, EBSCO:

Studies with abstract of:

 Human resource practices

Studies with abstract:

 Human resource practices

 Organizational engagement

 Turnover intention

8 results 27 results

The relationship of HR practices,

organizational engagement, turnover

From various researches, HR practices have been called with different labels and components But the basic components of HR practices which are applied in almost organizations will always be career management, performance appraisal, selection and recruitment, compensation and benefit management; and these components are easy to strongly effect on individuals, enhancing engagement and dereasing turnover intention (Juhdi et al, 2013) So, this study prefers to use basic function of HR practices (selection, career management, compensation and performance appraisal) in choosing the factors in the independent variable that hoping they will well explain to dependent variables (engagement and turnoer intention)

But employee engagement is multidimension concept Employee engagement

is not a new concept but it is to say that engagement is also a term that is got more attention and researches There are many studies research about it with mixing the meaning, dimension and facet approach Engagement can be easy to misunderstand

by many divided concepts into engagement, work engagement, job engagement and organizational engagement But these are different because of dimensions of engagement that researchers want to study employee engagement in specific aspects In general, these are engagement of employee and there are 4 approaches of engagement as Saks and Gruman (2014), Shuck et al (2011) argued that they are need-satisfying, burnout-antithesis engagement, satisfaction and mixed engagement approach As Saks (2008) stated about mixed engagement approach that its components (job engagement and organizational engagement) would explain better than other approachs However, Saks (2006) studied about engagement’s antecedents, HR practices weren’t addressed As Juhdi et al (2013) agreed with Saks (2006) about mixed engagement approach, but just organizational engagement

is used as onsequence of HR practices And Juhdi et al (20013) suggested and proven that HR practices have strong effect on organizational engagement

As some studies use engagement to explain the relationship of HR practices

and turnover intention (Juhdi et al, 2013; Chughtai, 2013…) and the results

supported very clearly about the mediator of employee engagement As Saks (2006) suggest that using employee engagement with social exchange theory could help clearly explaining the relationship of engagement with its antecedents and consequences So, this study also hope that using the engagement with Saks (2006) measurement scales as a mediator will have supportive results for the impact of HR practices on turnover intention

From above premises, this study suggests the title research is that: “Impacts of

HR practices on organizational engagement and turnover intention, case of business employees in HCM City”

1.2 Objectives for study

This study aims to three goals, they are:

Firstly, it is checking the impact of HR practices to turnover intention;

Secondly, it is examining the relationship of HR practices and organizational engagement;

Thirdly, it is testing the effect of organization engagement on turnover intention;

Lastly, the thesis is checking the mediator role of organizational engagement

in relationship of HR practices and turnover intention

1.3 Research scope and approach

As mention in the beginning, this research aims to explain clearly the situation

of the skilled and talent employees leaving their organization for others So, we choose business employees who have university degree in various business fields to investigate The research samples are working for companies as office staff with more than 6 months experience in their position They have age over 22 years old and they are studying for second university degree, evening course university degree and master degree

This study chooses Ho Chi Minh City because it is the biggest city in Vietnam and has immense skilled labor

By limit of resource and time, we just use convenient choosing sample method

by using data form attenders in University of Economic in HCM City for second degree and master degree who are working for organization as officer

Quantitative research is implimentated with questionnaire with the sample size

is 450 respondents working as employees in office departments of various companies in HCM city Convinience method is used To testing measurement scale and theorical model, data is analyzed with EFA, CFA ans SEM This study uses SPSS 23 and Amos 20 to analyze data

1.5 Theoretical and practical significance of study

About theoretical aspect, this study will examine the relationship of HR practices, organizational engagement and turnover intention of employee in context

of Hochiminh City, Vietnam This study also provides adjusted and developed measurement scales of concepts (HR practices, organizational, turnover intention)

to use for employees

About practical aspect, this study will provide more information about the relationship of HR practices, organizational engagement and turnover intention of employee Basing on model research, it can help organizational managers out of high turnover rate by using the mechanism of HR practices Employers should pay

attention to improve factors of HR practices in order to enhance organizational engagement and reduce turnover intention of employees

1.6 Structure for this study

This study contains 5 chapters, including of: introduction, literature review, research methodology, data analysis and conclusion Specifically:

Chapter 1: Introduction

This chapter introduces about the essence of this study in practice and theory, the main achieving goals of this study: Examing impacts of human resource practices on organizational engagement and turnover intention, case of employees

in HCM city

Chapter 2: Literature review and research model

In this chapter, author explains all theoretical concepts in this study, they are:

HR practices and its components, organizational engagement and its measurement, turnover intention; then explaining theory used in this study and proving the relationship of these variables Finally, theoretical hypotheses and research model are discussed

Chapter 3: Research methodology

This chapter describes the method to conduct the study including the research design, measurement scale building and process of research survey The method to analyze collected data and standard analysis are also presented in this chapter

Chapter 4: Results and data analysis

In this chapter, all collected data are analyzed by using SPSS, Amos software

to examine all hypotheses and the research model Depending on analysis results, the relationship of all factors as mentioned in this research will be examined

Chapter 5: Discussion, limitation and implementation

In this chapter, author will summary results and give practical meanings and advices for implement as well as theoretical attributions and limits of research and suggestions for future research

CHAPTER 2: LITERATURE REVIEW AND RESEARCH MODEL

Chapter 2 consists of 4 sections The first section presents all theoretical concepts including of organizational engagement, human resource practices, turnover intention and their role and measurement The next section presents relevant researches and theoretical concepts relationship The last one suggests hypotheses and research model

2.1 Concepts definition and concepts measurement

The first approach is need-satisfying engagement This concept of engagement was first time mentioned by Kahn (Armstrong and Ttaylor, 2014) In his researches, engagement of employees was defined that

“The harnessing of organization members’ selves to their work roles; in engagement, people employ and express themselves physically, cognitively, and

emotionally during role performances” (Kahn, 1990, as cited from Saks and Gruman, 2014, 157p)

And engaged employees mean that they themselves bring and display all their aspects and their full-self to the performance of their roles In this definition, employee engagement was defined in the relationship between individual of employee and his/her roles and tasks in order to focus on performance As Rich et al (2010) argued about engagement definition of Kahn (1990) that what engagement prefers to one-self in role that involves employees invest individually to complete and get the full self into their role performance We could consider definition of Kahn (1990) above as the first approach of engagement what is about psychological and cognitive dimension or need-satisfying approach (Shuck, 2010) In that, engagement is a multidimensional construct where employees can be psychological safety, psychologically available (or availability) and cognitively psychological

engaged (or meaningfulness)

The second one is about burnout- antithesis approach And there are various researches (Maslach and Jackson, 1997; Maslach et al, 2001, Macey and Schneider, 2008; Schaufeli and Bakker, 2004…) argued and defined about engagement as a big engagement approach or called as emotional dimension

Maslach and Jackson (1997) argued that engagement is relative to energetic, involvement and efficacy in their job And based on the literature on burnout, Maslach et al (2001) defined engagement by opposite of burnout As Maslach and Leiter (2008, 498p) defined engaged employees that is:

“An energetic state of involvement with personally fulfilling activities that enhance one’s sense of professional efficacy”

Engaged employees will feel emotional, involved and energetic to have ability

to finish their task Scholars study about the engagement such as Gilson and Harter (2004), Macey and Schneider (2008), also debate that employee engaged in their task will have a higher level of energy, enthusiasm with their work and loyalty to their job from day to day Schaufeli and Bakker (2004) also had definition about engagement It’s the psychological status which is relative with work positively and

satisfactorily It has characteristics with three levels: vigor, dedication and absorption They explained that vigor (the opposite pole of exhaustion) is a level of high energetic status, ready for efforts in their task consistently, stably to face difficult Dedication (the opposite pole of cynicism) is higher level than vigor It present the closed relationship between private task and important emotion and enthusiasm, feeling deserved for their position and motivation And the highest level is about absorption It shows that the completely satisfaction on their work, present their concentration to task, spare time, cognate and enjoy their feeling with their tasks and detaching themselves from work Robinson et al (2004) define engagement as “a positive attitude held by the employee towards the organization and its values” and state that “an engaged employee is aware of business context, and works with colleagues to improve performance within the job for the benefit of the organization”

The third approach, it is about behavioral dimension (or the physical manifestation of engagement), and Shuck (2011) called this perspective is satisfaction- engagement approach In this approach, Harter et al (2002) defined employees engagement was as their involvement and satisfaction with their job Engagement of employee is the tangible, overt manifestation of cognitive and emotional engagement (Shuck et al, 2011) For many researches, behavioral or physical engagement (Rich et al., 2010) is understood as the intention of increased levels of actual performance

In this approach, a model was proposed that Job demands- resources (JD-R model) and they are involved to engagement of employees (Saks, 2008) Job demands is relevant all physical, psychological, social, or organizational requirement of a job and job resource is about physical, psychological, social, or organizational function of a job in order to help them get the goals When job demands require low and employees are supplied enough necessary job resources to have good performance as their roles and tasks, they will become more engaged employees

And the fourth and last approach is mixed three approaches for a new component Saks (2006) was considered as the first fully establishing this perspective This definition was inclusive of previous literature suggesting that employee engagement was developed from cognitive, emotional, and behavioral factors; one is left wondering which of the three should be measured and be focused

of future research (Saks, 2006) It was developed from cognitive element (Kahn, 1990), emotional element with their energy to contribute to organization performance (Maslach et al, 2001; Schaufeli and Bakker, 2004; Robinson et al, 2004…) and from behavioral component (Rich et al, 2010; Harter et al, 2002…) Shuck and Wollard (2010) recently defined the term employee engagementas

“an individual employee’s cognitive, emotional, and behavioral state directed toward desired organizational outcomes”

Table 2- 1: Summary researchers about EE

approach

Emotional approach

Behavior approach

Mixed approach

(Source: Author summarizes)

 Organizational engagement

This study agrees with the definition of Saks (2006) that employee engagement is a multi-dimension concept It is consider with vary roles of employee and 2 components are concerned that job engagement and organization engagement

As Saks (2006) defined that engagement shouldn’t consider as an one’s work situation what encompassing aspects of one’s tasks, work/job, and organization, that means they don’t engage not only their in-role at work but also outside at work Engagement is likely to change from role to role, so mentioning about engagement should vary his/her roles that they are related organization (Saks, 2008)

In Saks (2006, 604p), he definited about organizational engagement that:

Organizational engagement reflects the extent to which an individual is psychologically present as a member of an organization

As Juhdi et al (2013) argued about organizational engagement that it is a desire to become as a member of organization and willing to conform organization values and norms They also make their effort for organization to get good performance

And Juhdi et al (2013) suggested that HR practices have strong influence to organizational engagement Organizational engagement is an important outcome of

HR practices

2.1.1.2 The important role of organizational engagement

These are various studies confirming that organizational engagement play an important in organization Scholars (Saks, 2006; Albretch et al, 2015; Rich et al, 2010; Juhdi, 2013; Chughtai, 2014…) have also be proven the relationship between engagement and important individual and organizational outcomes, eventually, competitive advantage of organization

 Engagement with individual outcomes

Engagement is direct link to individual outcomes Specificly, employee engagement impact to his/her outcomes throught effect on employee’s attitudes, intentions, cognitive and behaviors, for instance, job and organization engagement

are significantly positively effect to job satisfaction, organizational commitment, and organizational citizenship behavior, and negatively impact to intention to quit (Saks, 2006) As Rich, Lepine and Crawford (2010) proved that employees with highly engaged level have a good personal performance and have passion for their work, feel a deep connection to their company On the contrary, employees with lowly engaged level have essentially checked out- putting time or absenteeism and don’t put energy or attention to their work

Explaining for individual outcomes, Rich et al (2010) speculated that engaged employees have more energy including psychological, emotional energy to invest resources, efforts and behaviors to their role and tasks So, they have good performance and effective results

 Engagement with organizational outcomes

Engaged employees not only get the high individual performance but also contribute to business outcomes According to Harter, Schmidt and Hayes (2002) engagement and business outcomes have positive relationship These organizations whose employees had higher engagement level were more productive, more profitable than other organizations Rich, Lepine and Crawford (2010) indicated that the collective value behaviors of engaged employees would create good job performance, then it would directly and indirectly contribute to the organizational goals, and business outcomes Rich et al (2010) have shown that engagement is associated with individual employee task and extra‐role performance then it

effected to business performance

2.1.1.3 Measurement of organizational engagement

There are various measurements of engagement, such as Kahn (1990) first defined the engagement concept, then May, Gilson and Harter (2004) tested the 3 dimensions of need-satisfying engagement approach Maslach et al (1997) developed a burnout- antithesis approach of engagement scale, called the Maslach Burnout Inventory (MBI) or Schaufeli and Bakker (2004) proposed the Utrecht Work Engagement scale to measure engagement as vigor, dedication and

absorption In satisfaction- engagement approach, Hater, Schmidt and Hayes (2002) developed a measure scale including 12 items to access perception of employee about engagement In this study, researcher uses the employee engagement as Saks (2006) developed

The first academic research using the mixed concepts of employee engagement was Saks (2006) Saks believed employee engagement should use multi-dimension that is associated with different roles of employee and was the first

to separate employee engagement into 2 types of job engagement and organizational engagement

And in study of Juhdi et al (2013), organizational engagement of Saks (2006) was suggested just as consequence of HR practices

So, this study use organizational engagement with Saks (2006) measurement scale with Saks’s explaining and proving the bridge of engagement and its consequences (as turnover intention) and antecedents (as HR practices) by social exchange theory

At the core of the organizational engagement model of Saks (2006) are measured with 6 items Organization engagement was measured with 6 items by Saks (2006) in the way that individual want to repay their organization is through their level of engagement Bringing oneself more fully into one’s work roles and devoting greater amounts of cognitive, emotional, and physical resources as a member of his/her organization

2.1.2 Human resource practices (HR practices)

2.1.2.1 Definition of HR practices

HR practices are not a new conception HR practices come from Human resources management HRM as conceived in the 1980s had conceptual framework consisting of a philosophy underpinned by a number theories (Armstrong and Ttaylor, 2014, p6) Or Watson (2010, as cited from Armstrong and Ttaylor, 2014,

p5) offered about HRM: “the managerial utilization of the efforts, knowledge,

capabilities and committed behaviors which people contribute to coordinated human enterprises as a part of an employment exchange to carry out work task in a way which enables the enterprises to continue into the future”

Schuler (1992) considered HRM system as 5 parts and named them 5-P, including:

 HR- Philosophies: statements of an organization about how he regards his HR and treat to HR

 HR- Policies: guidelines for actions, programs and practices

 HR- Programs: shaping the HR policies and consisting efforts, initiates and management

 HR- Practices: activities carry out in implement HR policies and programs Including of resourcing, learning and development, performance and rewards management, employee relations and administration

 HR- Processes: procedures and methods to apply

And Armstrong and Ttaylor (2014, p36) argued about HRM that can be seen

in a system that start from HR philosophies that comprise overarching values and guiding principles to adopt in practices by managing people to reality activities The HRM system is incorporated: HR strategies, HR policies and HR practices which comprise all of HRM activities involved in managing and developing people and in managing the employment relationship

As Juhdi et al (2013) argued about HR practices that organizations could be able to achieve their objectives depending on human capital through HRM to manage and make employees act, behave and think in a way to get the goals And

HR practices could have significant influences on what kind of employee’s perception, attitude and behavior that can affect organizational performance

Briefly, this study considers suggestion about HR practices in research of Juhdi et al (2013) with its components to implement this research

2.1.2.2 HR practices and its components

Based on the main model of model research of Chugtai (2013) and the model

of Juhdi etal (2014), this thesis inherits the 2 models with combining HR practices,

OE and TI

However, HR practices have many dimensions Many studies suggested for their HR practices with different ways The dimensions of HR practices used into researches are different and change But there was a well known research of Michigan University of Fombrun et al (1984, cited from Tran Kim Dung et al, 2017) used HR practices with 4 basical components, they are: recruitment and selection, career management, performance appraisal and compensation with reason that thery are principle, universal and basical in every organizational

There are many ways to select component of HR practices and it depends on purposes of researchers

As Juhdi et al (2013) suggested in this study, researcher use HR practices with its elements such as: pay satisfaction, person-job fit, job control, performance appraisal, career management All these component items of measurement scale were adjusted according to the purposes of the research which used to measure the employee’s perception about HR practices in their organizations

According to Shah, Abbas and Qureshi (2016), HR practices were selected with motivation, empowerment and training and tested impact of HR practices components on turnover intention

Chughtai (2013) also proposed the HR practices components with 5 basic components: competency development, pay structure, recognition, empowerment and work life policies The impact of HR practices on turnover intention was test both directly and indirectly with mediating role of employee engagement

Rees, Mannan & Braik (2007) used HR practices with 3 main dimensions: training development, pay and benefit, performance appraisal While Collins ans Smith (2006) and Chew and Chan (2008) considered HR practices with selection, compensation and career management

As Saks (2006) suggested about antecedences of employee engagement should

be chosen by casual impact with SET And in this study, after selecting to use the

HR practices with components that Juhdi et al (2013) proposed and considering the suggest of Saks (2006), author proposed HR practices with 4 components: selection, compensation, performance appraisal and career management

Table 2- 2: Components of HR practices

No Researches about HR

practices Selection

Career management

Performance appraisal

Compensa tion

1 Shah, Abbas and Qureshi

(Source: author summarizes)

As Tran Kim Dung et al (2017) cited that traditional HRM has 4 basic

components what are studied in famous research of Michigan University of

Fombrun et al (1984, cited from Tran Kim Dung et al, 2017) 4 components, they are: recruitment and selection, career management, performance appraisal,

compensation that are used in almost studies about HRM

So, for the ability and time limitation of author, this thesis suggest to use the

4 basical components to use in this studies with the combining measurement scale and adjusting after qualitative research

2.1.2.3 Selection definition and measurement

 Selection definition

Recruitment and selection is the process of searching and attracting, encouraging qualified candidates to apply for job vacancies and through selection

techniques and method to select prospective employees (Tran Kim Dung, 2015) As

a part of this process, election is the process of choosing the most suitable persons out of all applicants, whose qualifications, abilities match with job requirements and organization Selection maybe involves test, interview and medical examination of the candidates Referrals of candidates are also checked for predicting their behavior and performance

But as Juhdi et al (2013) proposed to use selection as a component of HR practices in his study in order to measure the impact of choosing suitable employees who feel matching with the job role, fitting with the organization and engagement

In this study, author agrees and uses the measurement scale of selection as suggestion of Juhdi et al (2013)

 Measurement of selection

According to Juhdi et al (2013), selection measurement was implemented by testing the feeling of employees about matching and fitting their job role and their peers in organization Selection was measured by person-organization and person-job fit that was adjusted and developed by Cable and Judge (1996)

2.1.2.4 Career management definition and measurement

 Career management definition

Career management in an organization should be viewed as a very dynamic process to meet the needs the organization The organizations encourage employees

to develop their own careers, offer assistance feedback, performance evaluation and information about career opportunities and promotions (Chen et al, 2004) It is important to note that career management helps to retain valued employees (Chang

et al, 2007)

As Sturges, Guest and Davey (2000) indicated that there 2 types of career management such as: organizational career management and career self-management Organizational career management is that organization do thing to develop their staff career by offering training and development opportunities,

setting developing programs, and instituting employee development plans Career self- management is individuals themselves act to further their own careers The result of study presented that organizational career management had positive contribution to commitment but the other had little

And author of this research agrees that Juhdi et al (2013) proposed that organizational career management considered as career management had positive impact on employee engagement

 Career management measurement

This study uses the measurement as suggestion of Juhdi et al (2013) by using the scale of Sturges, Guest and Davey (2000) for organizational career management

2.1.2.5 Performance appraisal definition and measurement

 Performance appraisal definition

Performance is a formalized process in which we check work monitoring and it’s considered as a management tool to recover the employee performance and productivity (Shahzad, Bashir and Ramay, 2008)

Researchers (Tran Kim Dung, 2015; Fombrun et al, 1984) defined that it is a system to record, fairly evaluate personal performance in order to improve employee performance through that to achieve firm’s goals

According to Juhdi et al (2013), performance appraisal should be measured

by perception of employee about the justice of managers (or of organization) in evaluating performance As studies (Juhdi, 2013; Paré, Trembley and Lalonde, 2001), this study agree that performance appraisal has positive impact to engagement

 Performance appraisal measurement

This study bases on the study of Juhdi et al (2013) and uses the measurement suggested Performance appraisal was considered as procedural justice that perceived fairness of employees about the means, method or procedures used to

establish means, rules and/or procedures used to assign jobs as well as the determination of compensation conditions and performance evaluation criteria as well as the determination of compensation conditions and promotion (Paré, Trembley and Lalonde, 2001) So, performance appraisal measurement scales is used from Duldebohn and Ferris (1999)

2.1.2.6 Compensation

Employee compensation and benefits includes all form of pay, rewards, bonuses, commissions, leaves, recognition programs, flexible work hours and medical insurance Compensation is a system of payment that aims to fairness based

on job requirements, competences and performance (Tran Kim Dung, 2015) In a study of Chiu et al (2002), its results revealed that compensation was important factors to retain and motivate employees Compensation is considered as the way organization to keep employees believes about organizational cares their life and that is important factor for organization to encourage their employees

 Compensation measurement

As Juhdi et al (2013) proposed that compensation measurement used to measure aspects of satisfaction with pay In this study, we also use pay satisfaction measurement of Weiss, Dawis and England (1967) for compensation scale

2.1.3 Turnover and Turnover intention

2.1.3.1 Turnover and types of turnover

Employee turnover is a popular term and growing concerns to both academic and practical researchers As Hom et al (2017) stated that the first empirical study about employee turnover was conducted from 1925; the term employee turnover implies the context that employee stop to be a staff of an organization As Kirschenbaum & Weisberg (1990, as cited from Tanthasith, 2016) stated that

turnover is a popular phenomenon that occurs when an employee practically leaves/ quit his/her organization for others

There are 2 main approaches about turnover, they are:

 Decision to quit: many studies investigate turnover based on how the decision to quit is made So, turnover is mainly considered as voluntary and involuntary

 Functionality/Dysfunctionality of turnover: Functional turnover occurs when employee that leaves the organization are poor performers whose skills are easily replaceable And Dysfunctionality of turnover, it occurs when high performers choose to leave

But, voluntary turnover is associated with relatively higher organizational cost

as it is more difficult for the organization to predict So, voluntary turnover has become a primary concern in most turnover research (Tanthasith, 2016)

2.1.3.2 Impacts of turnover on organization

It is important for organizations to concern about employee turnover because

of its direct effects to organizational performance The impacts of turnover concern both individuals and organizations That is, employees may confront the uncertainties of job search and unemployment as well as threats to their income and retirement security, while organizations need to withstand the cost of operational disruption and personnel replacement (Batt & Colvin, 2011)

Chughtai (2013) stated that organization should make an effort to draw in and retain the valuable workforce With losing competitive workers, the company suffers competitive advantages loss then the company must incur hiring cost for new recruits

Long and Perumal (2014) stated about that turnover is a phenomenon that attacks interest because of its psychological and economic dimension and its significant role in organization And managers try to understand factors to affect turnover

Researchers and managers need to predict employee’s turnover But, employee’s turnover is complicated problem and there are many reasons that make

employee’s actual turnover action There are 4 factors that impact to voluntary turnover They are: Outside factors, functional factors, push factors and pull of rivals

There are 7 reasons that make employees leave their organization:

 Job responsibility or workplace condition was not as anticipated

 There was not match between job and person

 There was too little feedback and coaching that was provided

 There were not enough growth and advanced opportunity and promotion

 The employee felt devalued and un-recognized

 The employees felt stress and work-life imbalance

 There was a loss of confidence in senior management

Therefore, turnover intention is concerned for a predictable factor for actual turnover and it is used as an important factor to predict actual quitting (or turnover) (Griffeth and Hom, 2001)

2.1.3.3 Turnover intention (TI)

Turnover intention (or intention to leave/ intention to quit a job): was conceived to be a conscious and deliberate willfulness to leave the organization It

is often measured with reference to a specific interval, a set to which thinking of quitting and intent to search for alternative employment (Tett & Meyer, 1993) Many researches (Morell, Loan Clarke, Wilkinson, 2001), has shown the relationship between intention to leave and actual turnover that turnover intention has consistently been viewed as the most important variable to predict employee turnover

As Chiu and Francesco (2003) suggested turnover intention offers a good explanation of turnover because it concludes employee’s perception and judgement Employee’s turnover intention is a powerful predictor of his or her future behavior (Carmeli & Weisberg, 2006; Shuck et al., 2011) and the strongest precursor to

actual turnover (Egan et al., 2004).Shah et al (2016) argued that turnover and turnover intention are different Turnover refers to the actual turnover rate of employees who left the organization while the turnover intentions refer to the employee’s behavioral intentions to quit the current organization

So, in this study, turnover intention is consider as an intention of employee who want to leave his/her organization And turnover intention intends as a key element to predict the employee turnover behavior

2.1.3.4 Measurement of turnover intention

As Saks (2006) mentioned about the impacts of engagement on

individual-level outcomes, he proved that turnover intention has negative relation with engagement Employees who have higher level of engagement have more attachment and low intention to leave their organization (or low turnover intention level)

Turnover intention was measured by three stages in Saks (2006) research, they are:

 Firstly, they think of leaving their organization

 Secondly, they intend to look for another job in other organization

 Finally, they make decision to quit or turnover behavior if they have opportunity

In Bozeman and Perrewe (2001) measured turnover intention by two dimension, they are conditions and intentions of turnover to make the actual turnover behavior

In this study, after comparing component of 2 measurement scales of Saks (2006) and Bozeman and Perrewe (2001) and adjust them, author proposed a mixed measurement scale for turnover intention

2.2 Relevant researches and relationship of concepts

2.2.1 Relevant researches

2.2.1.1 Research of Juhdi et al (2013)

As Juhdi et al (2013) proposed mediating roles of organizational

commitment and organizational engagement in the relationship of HR practices and

turnover intention

The main survey was conducted in in a selected region in Malaysia,

respondents were employees working in various sectors and there were 457 valid

questionnaires used to analyze

The research model is that:

Figure 2- 1: Research model of Juhdi et al (2013)

Source: Juhdi et al (2013)

The results of research provide a strong support to the notion that HR practices

have significant influence on engagement Career management is the factor that has

the strongest predictor for organizational engagement This means that it is the main

reason for talented and professional staffs leaving for better career prospect in other

organizations if organizations have limited opportunity of management programs in

the organizations If their ability and talent are not identified, developed and

managed, they will not consider to staying and might as well as leave for better

development in other companies

In study of Juhdi et al (2013), engagement is just measured with 1 aspect: organizational engagement and it goes along with organizational commitment And this study just concentrates on the mediator of engagement, so we use engagement with 2 components: job engagement and organizational engagement

2.2.1.2 Research of Chughtai (2013)

The research paper seeks to identify the mediating role of employee engagement between HR practices and turnover intentions in the telecom sector of Pakistan

The research model is that:

Figure 2- 2: Research model of Chughtai (2013)

Source: Chughtai (2013)

This study use basic HRP with 5 components: career management, compensation, recognition, empowerment and worklife policies Using Social exchange theory (SET) explains about the impact of HR practices on turnover intention It’s preferred about the reciprocally benefits exchange between organization and employee leading to their strong relationship Employees who receive the benefits, rewards and concern, esteem from organization will, in their turn, respond in the way that brings benefits to organization

The purpose of this empirical study is to analyze the effect of human resource practices on turnover intentions of employees of banks in Pakistan In this research, HR practices can be described in 3 dimensions: motivation, empowerment and training

Motivation: direct shape the employee behaviors in order to achieve the organizational goals or satisfy the needs of employees and in return the employees will show more willing to work

Empowerment: manager give employees to make their decision related their work

Training: including training at work place and take place away from work environment to bring changes in knowledge, attitude and behavior That makes employees feel about organization caring about their career management

Results showed that motivation, empowerment has negative relationship with turnover intentions of employees Training is proved to be positively related with turnover intentions

2.2.1.4 Research of Saks (2006)

This study’s purpose was to test mediating role of engagement in the model of the antecedents and consequences of job and organizational engagement and explaining casual model based on social exchange theory A survey was completed

by 102 employees working in a variety This is the first study to make a distinction between job and organization engagement and to measure a variety of antecedents and consequences of job and organization The results indicated that engagement job and organization engagement mediated the relationships between the antecedents and consequences such as: job satisfaction, organizational commitment, intentions to quit, and organizational citizenship behavior

2.2.2 The effects of HR practices on turnover intention

Retaining skilled and good employees plays an important role in keeping organization’s competitive advantage There are many antecedents for turnover

intention And HR practices are considered as a good antecedent to predict turnover intention

Many scholars (Ma et al, 2016; Sha et al, 2016; Long and Perumal, 2014; Juhdi et al, 2013; Chughtai, 2013; Chang et al, 2007; Saks, 2006…) found that HR practices have negative impact to turnover intention

Selection as the perception of employee about person-job fit and person- organization fit that has effect on turnover intention, in that high fitness of P-O and P-J will be lower turnover (Juhdi et al, 2013; Saks, 2006) Career management is one the most important factors in making decision to enter an organization or leaving other organization for greater opportunities (Shah et al, 2016; Bambacas and Kulik, 2013; Chughtai, 2013; Juhdi et al, 2013) Compensation is assumed that adequate pay satisfaction decreases turnover intention (Juhdi et al, 2013; Prince, 2001) And performance appraisal that reflects how procedural justice in the organization, is another antecedent of turnover intention (Juhdi et al, 2013; Bambaas and Kulik, 2013; Saks, 2006)

In this study, author agrees that HR practices with 4 components have negative impact to turnover intention And the hypothesis is that:

H1: HR practices have negative effect on turnover intention

H1a: Selection has negative effect on turnover intention

H1b: Performance appraisal has negative affect on turnover intention

H1c: Career management has negative affect on turnover intention

H1d: Compensation has negative affect on turnover intention

2.2.3 HR practices and engagement

Wright et al (1994, cited from Amstrong and Taylor, 2014, p36 ) viewed HR practices as the means through which employee perceptions, attitudes, and behaviors are shaped Furthermore, investment in employee management is believed to facilitate greater obligation by employees towards the organization and

therefore increase employees’ motivation to work hard to support organizational effectiveness

HR practices play a pivotal role in engaging employees In his review on past literature on factors relate to employee engagement (Shah et al, 2016; Juhdi et al, 2013; Chughtai, 2013) that to be implies the critical role of HR practices as tools for organizations to make employees engrossed and engaged in their job performance

by providing challenging job with available resources and opportunities for growth and management As Juhdi et al (2013) proved the relationship of HR practices with employee engagement and suggestion of Saks (2006) using SET to explain effects

of employee engagement on antecedences, this study prefers about the reciprocal exchange relations between organization through HR practices and employee engagement In that, employees who receive and perceive the fitness, career concern, fairness and benefits satisfaction from organization, in their turn, they will respond in the way that bring more engaged to organization With 4 components of

HR practices (selection, career management, performance appraisal and compensation), this study clarify the exchange to make engagement of employee

 Selection and organizational engagement

Selection has positive affect to engagement of employees Macey and Schneider (2008) argued that organizations can improve their engagement level by selection process in order to choose suitable members who are best fitted to the job and the organization’s culture And Juhdi et al (2013) proved that selection with dimension of person- job and person- organization fit could increase organizational engagement The relationship of selection and employee engagement will be discussed through SET As Saks (2006) indicated that when employees perceive about the good fits between them with their job and organization, that means they find out a suit with values and norms, behave in their job and organization They perceive that organization gives them a good environment, this will encourage them becoming engaged with their job and organization Hence, in order to attract and