The impact of leadership style on recruitment and employee retention the case of rsm vietnam auditing and consulting company

ĐẠI HỌC QUỐC GIA HÀ NỘI TRƯỜNG QUẢN TRỊ VÀ KINH DOANH - ĐÀM THỊ THU HẰNG THE IMPACT OF LEADERSHIP STYLE ON RECRUITMENT AND EMPLOYEE RETENTION: THE CASE OF RSM VIETNAM AUDITING AND CONSULTING COMPANY ẢNH HƯỞNG CỦA PHONG CÁCH LÃNH ĐẠO ĐẾN TUYỂN DỤNG VÀ GIỮ NHÂN VIÊN, TRƯỜNG HỢP CỦA CƠNG TY TNHH KIỂM TỐN VÀ TƯ VẤN RSM VIỆT NAM LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH HÀ NỘI - 2022 ĐẠI HỌC QUỐC GIA HÀ NỘI TRƯỜNG QUẢN TRỊ VÀ KINH DOANH - ĐÀM THỊ THU HẰNG THE IMPACT OF LEADERSHIP STYLE ON RECRUITMENT AND EMPLOYEE RETENTION: THE CASE OF RSM VIETNAM AUDITING AND CONSULTING COMPANY ẢNH HƯỞNG CỦA PHONG CÁCH LÃNH ĐẠO ĐẾN TUYỂN DỤNG VÀ GIỮ NHÂN VIÊN, TRƯỜNG HỢP CỦA CÔNG TY TNHH KIỂM TOÁN VÀ TƯ VẤN RSM VIỆT NAM Chuyên ngành: Quản trị kinh doanh Mã số: 8340101.01 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS.TS NGUYỄN NGỌC THẮNG HÀ NỘI - 2022 DECLARATION The author would like to commit that this thesis is the product from the independence research There is no copy for the data and result The materials used for the research are collected from practice, from the report of RSM and the authorities The author confirms that any solution or suggestion in the thesis are withdrawn from the personal research and have not yet published in any other research before ACKNOWLEDGEMENT I would like to express my sincere thanks to Associate Professor, Dr Nguyen Ngoc Thang, who directly guided me in research methods and completed this thesis Next, I would also like to thank all the teachers and officers of Hanoi School of Business and Management for helping me during my learning time at the school I would also like to express my deep gratitude to the Board of Management and all colleagues at RSM Vietnam Auditing and Consulting Co., Ltd for helping me collect data and materials to complete this thesis Despite the great effort, but due to limited capacity and knowledge, the thesis may have inevitable errors I look forward to receiving the comments and contribution from you to complete the topic and put it into practical application in the management of audit firms TABLE OF CONTENT DECLARATION i ACKNOWLEDGEMENT ii LIST OF ABBREVIATION i LIST OF TABLES ii LIST OF FIGURE iii CHAPTER 1: INTRODUCTION 1.1 The urgency of the topic 1.2 Literature review and Theoretical framework 1.3 Objectives of the research 1.4 Research questions .7 1.5 Research object and scope 1.6 Thesis structure CHAPTER LITERATURE REVIEW ON LEADERSHIP STYLES, EMPLOYEE RETENTION AND EMPLOYEE RECRUITEMENT 2.1 Concepts of leadership styles 2.2 Employee retention, corporate reputation and recruitment success 13 2.3 The factors of leadership styles influence on employee retention and talent recruitment 18 CHAPTER 3: RESEARCH METHOD AND SITUATION OF RSM VIETNAM AUDTING AND CONSULTING CO., LTD .22 3.1 Research method and design .22 3.2 Secondary data collection 27 3.3 Data analysis method 29 3.3.1 Quantitative method 29 3.3.2 Descriptive statistics .30 3.3.3 Data quality test 30 3.3.4 Validity test 30 3.3.5 Reliability testing 30 3.3.6 Classical Assumption test .31 3.3.7 Multicollinearity test .31 3.3.8 Multiple Regression Analysis .33 3.3.9 Hypotheses Testing .34 3.3.10 F-test 35 3.3.11 Coefficient Determination 35 3.3.12 Qualitative method 36 3.3.13 Measures .38 3.4 Introduction about RSM Global and RSM Vietnam 42 CHAPTER 4: FINDINGS AND DISCUSSION 50 4.1 Findings .50 4.2 Discussion 51 CHAPTER 5: RECOMMENDATION AND SUGGESTION .56 5.1 Recommendation .56 5.2 Limitation and suggestion for future research 58 REFERENCE 61 APPENDIX 66 LIST OF ABBREVIATION Abbreviation Full term RSM RSM Vietnam Auditing and Consulting Co., Ltd FS Audit Financial statement audit division Consulting Consulting Division Construction Construction audit division HR Human Resource i LIST OF TABLES Table 3.1: Statement Score Assessment 23 Table 3.2 A Framework for Analysing the Relationship between leadership styles and employee retention, recruitment ability .25 Table 3.3: Sample proportion 26 Table 3.4: Cronbach‟s alpha 31 Table 3.5: Pearson‟s Correlation 33 Table 2.6: Reliability of Scales and Cronbach's Alpha of variables .39 Table 2.7: List of research questionnaire 39 Table 2.8: Employee retention and recruitment 41 Table 2.9: Respondent demographics of the study sample 41 Table 3.10: Employee turnover rate of RSM Vietnam for the year 01/10/2018 to 30/09/2019 .46 Table 3.11: Employee turnover rate of RSM for the year 01/10/2019 to 30/09/2020 47 Table 3.12: Employee turnover rate of RSM for the year 01/10/2020 to 30/09/2021 47 Table 4.1: Correlations, Means, and standard Deviations .50 Table 4.2: One - way Anova 51 Table 4.3: Result of regression analysis for leadership styles and employee retention & recruitment 51 ii LIST OF FIGURE Figure 2.1: Key attraction and retention factors – work culture 18 iii CHAPTER 1: INTRODUCTION 1.1 The urgency of the topic There are studies of the authors in the world that have shown the relationship between leadership styles and employee retention Organizations in all sectors are operating in a highly competitive environment which requires that these institutions retain their core employees to gain and retain competitive advantage Because of globalization and new methods of management, different organizations have experienced competition both locally and globally in terms of market and staff The role of leaders in employee retention is critical since their leadership styles impact directly the employees' feelings about the organization (Wakabi 2016) With organizations now understanding that people leave managers and not companies, more focus is made on understanding the level of leadership prevailing in the company Therefore, (Sareen and Agarwal 2016) performed research to explore the relationship between leadership styles and employee retention as it would help companies tackle attrition and provide them a sustainable competitive advantage In addition, leadership is positively mediating the relationship between recruitment and selection and employee satisfaction (Mahmud 2021) Besides, companies with strong leaders are more likely to be training their managers to assess candidates in an interview and have more confidence that they can make a smart hiring decision (Culture 2018) Another study was performed by (Rao et al 2018) indicated the role of leadership on employee retention The study shows that rewards and recognition, career enhancement, performance appraisal directly influence the retention of employees which is proved by the results of the hypotheses testing presented in the study Finally, the study suggested that an effective rewarded system, proper career advancement plans are required for the organization to retain the employees This is a study on the impact of leadership styles on employee retention and recruitment The purpose of carrying out this study is to identify the influence of different leadership styles on employee retention towards the organization This research examines the main leadership styles The proposed research solution is a Recruiting success is determined by two factors: the employer and the employee It is not only reliant on the decision of the employer (Khuong and Hoang 2015) implemented the study for effects on leadership styles on employee motivation in auditing companies in Ho Chi Minh city, Vietnam However, the study found no relationship between leadership styles and worker retention in auditing firms This study discovered a connection between leadership styles and employee retention in Vietnamese auditing organizations Despite the fact that numerous previous studies have demonstrated that leadership styles may impact followers' inclinations to quit a firm, this study contradicts that conclusion, according to (Long et al 2012) Leadership styles have minimal impact on academic staff turnover intentions in the education industry Meanwhile, according to one study, leadership styles have an influence on employee retention It's likely that the discrepancy stems from the study's industry selection Long et al (2012) focused on employees in the education business, whereas this study focused on employees in accounting firms Despite the fact that both studies are on the service business However, the characteristics of the employment differ from one another According to leadership theories, a successful leader raises staff morale, which leads to a high motivational level, which influences employee work satisfaction and retention (Govindaraju 2018) The structure, structure, activity style, and techniques of an organization set the tone for employee happiness and spirit (Houghton and Yoho, 2012) The ability of workers to their tasks is dependent on the administration's actions (Sikandar, 2013) Differentiated leader behaviors have been shown to affect job outcomes, such as work fulfillment, in unanticipated ways (Mosadeghrad and Yarmohammadian (2006) The use of specific initiative behavior by the boss has an impact on the employees' job satisfaction and efficiency (Sikandar, 2013) When a leader's style is undesirable, people are more likely to leave As a result, if companies want to maintain their best employees, they should focus on improving employee retention through the leadership style backed by CEOs Organizations should ensure that they adopt the proper leadership style and that they change based on subordinate input to achieve a high level of retention Leadership concepts have an impact on 53 employee retention A good boss might be a good leader, but it does not mean that a good leader is necessarily a good boss Because although a boss may tell you how to accomplish something, only a leader can teach you Bosses employ people, but leaders develop them According to the findings, leadership style has a significant impact on staff retention The study, on the other hand, did not properly illustrate and compare the effects of various leadership styles on staff retention On the other hands, the study was not be performed with the recruitment result The study only performed on IT industry of India The study of (Govindaraju 2018) only focus on framework of leadership style and the characteristic of the jobs for IT service different from audit job When implementing the detail analysis, I find out that the leaders who have democratic leadership style always recognize the contribution of their staffs and they bring happy working environment to employees On the other hands, democratic leadership style can create a good image in the thinking of employees, so they have good assessment on the managers Now a day, the communication channels are developing very fast, thus the employees who are working for the organization or even if leaving the company still can transfer their assessment on the manager and the company to other persons very easy On this study, I implement the survey with the audit firms which have the same level of income paid to employees to avoid the effect of this factor on the decision of the interviewees This study shows that transactional leadership style has no significant effect on employee retention and recruitment There may be some reasons for this Firstly, the leaders who have transactional leadership style only focus on assigning the target and schedule to employees, they not care about the other factors To keep employees working in long-time for the organizations, the other factors such as working environment, the reactions between managers and employees are also very important The transactional leaders may not really care about the contribution opinion and thinking of their employees On the other hands, this kind of leadership style does not 54 encourage maximum productivity of the employees, thus the employees not feel that the value created by them close to the value of organization Especially, Bureaucratic leadership style really has no positive significant on employee retention and recruitment To explain for this issue, we can easily recognize the reason is the leaders who with bureaucratic style always reject the innovation opinions of the young leaders Meanwhile, the young generation such as 9X always have different thinking and want to create new ideas Nowadays, telecommunication is developing very fast, the employees always discuss with their friends by many channels If young employee has no good feeling on the managers, it is very difficult for the company to attract talents 55 CHAPTER 5: RECOMMENDATION AND SUGGESTION 5.1 Recommendation After the study, some recommendation can be indicated for the audit firms as follows: Firstly, even though, each manager can choose different leadership style for himself We cannot insist which leadership style bring the best success The result of the study showed Democratic leadership style is the best choice for Managers who work in audit field To analyse and understand this result we need to see the nature of democratic leadership style as well the audit jobs As mentioned in the article of (Cherry 2020) Democratic leadership, also known as participative leadership or shared leadership, is a type of leadership style in which members of the group take a more participative role in the decision-making process Everyone is given the opportunity to participate, ideas are exchanged freely, and discussion is encouraged While the democratic process tends to focus on group equality and the free flow of ideas, the leader of the group is still there to offer guidance and control Everyone is given the opportunity to participate, ideas are exchanged freely, and discussion is encouraged While the democratic process tends to focus on group equality and the free flow of ideas, the leader of the group is still there to offer guidance and control In addition, for the audit jobs, team works is very important Because the auditors familiar with the team work style when auditing the clients, thus it is easier for them to accept the democratic style in the management of Managers and Partners Audit firms are operating in the service sectors, the main power play an important part in success of the companies If the companies can retain the staffs who are talents, the companies will have ability to provide high quality services to clients, the brand name of the companies will increase accordingly By this logic, the companies can attract new talents when having high brand value 56 In the case of RSM Vietnam, we discovered that the consulting department has the greatest employee turnover rate when compared to the FS and construction audits, thus the findings of this study could be relevant in this department Secondly, because of the above result, we can see obviously that organisation should pay more attention to the employee promotion, career growth and respect the opinion from employees To develop innovation and invention, companies should collect opinion and ideas from employees By this way, the employees will feel that the development and value of the company close with their values and their effort This will help to retain employees On the other hands, employees can feel happy to introduce their friends join the company, this creates the success of the talent recruitment as well Because many of RSM Vietnam's employees are from the 9X generation, the firm should solicit ideas from them in order to improve its working method This one is appropriate for RSM Global's initiative of empowering young leaders By doing so, the company may instill in young people a sense of connection between their worth and the company's worth, as well as the possibility of yearly promotion Thirdly, before issuing any new policy, organisation should survey and get contribution opinion from employee to understand the feeling from employees to avoid any conflict between employer and employee Because conflict always leads to employees leave the organisation Why this thing is though about, because the bureaucratic leadership style has negative influence on employee retention In particularly, for the auditors, they like team work and their jobs need team working at high requirement The employees like the respect from Bosses and Managers Currently, in the high competitive working environment, to keep employees working in long-time for the company, it is very difficult This requires managers need to choose suitable leadership style in management The study found the negative influence of transactional leadership style in the audit firms Whereas, this kind of leadership style is one of the successful one in the other industries through many studies before Because of the auditors who are at the same level always receive the job assignment equally Therefore, it is difficult for managers 57 to apply transactional leadership style in management of audit jobs If the rewards are given to employees in the unfair way, it results in losing coalition between employees Thus, the employees who feel unhappy will think about leaving the company RSM Vietnam uses revenue as one of its key performance indicators when evaluating its employees As a result, managers should think about assigning jobs to employees fairly and in a proportional manner in order to avoid any bias in the workplace In recent years, marketing is becoming a good channel for success in other operating of enterprises Especially, word of mouth marketing is one of the channels For the companies which have the senior managers with democratic leadership styles, their employees can spread out their thinking to their friends with the good assessment Because the employees feel that they are receiving the respect from Boss and higher level It can touch to the emotion of the staffs By this way, Company will have chance to call for and attract the talents in the recruitment program To address the issue of excessive staff turnover, RSM Vietnam should encourage employees to refer their friends to each of the company's recruitment programs in order to boost the company's success and make employees feel valued The result of this study contributes to find out the relationship between leadership styles and the success in retain employee as well as recruitment Especially, the study focuses on the leadership styles of audit Partners and Managers 5.2 Limitation and suggestion for future research The study has several limitation and recommendations for the future research First, this study collected information from 100 employees of audit companies The sample size may not represent for all of the audit companies Future researches need to collect data from larger and representative samples The larger samples will bring a more accurate data Thus, the analysis result give result which is near the fact Second, this study focused on investigating the effect of leadership style on employee retention and recruitment of audit companies only The further research can extent to study the effect of leadership styles on employee retention and recruitment of finance and other sectors I recommended that future research examine the relationship between leadership styles and employee retention as well as recruitment quality of 58 other sectors On the other hands, the result of this study shown that Bureaucratic leadership style has negative effect on the employee retention and recruitment quality The other research needs to be done to obtain better insight into the relationship between Bureaucratic leadership style and employee retention recruitment quality Third, the study just focuses to analyse three kinds of leadership styles, they are Democratic leadership style, transactional leadership style and Bureaucratic leadership style However, the other leadership styles have not been researched Therefore, the other leadership styles need to be surveyed and analysed to have the overall seeing on the affect of leaderships styles on employee retention and recruitment success The fourth, the study determines how leadership styles relate with employee retention for the audit firm in Vietnam However, the study was not able to increase the awareness among researchers and managers of organisations about the relationship between leadership styles and employee retention and the specific demographic variables that influenced the relationship that exists between leadership style and employees‟ retention in Vietnam In specific terms, this study has provided a platform for future research in this area Another limitation of the study is based on the data collected from the companies located in two big cities to be Hanoi and Ho Chi Minh city Because the requirement of the people who work in these cities are different from the persons who work in other provinces On the other hand, the opportunities for finding new jobs of the auditors work in Hanoi and Ho Chi Minh city are higher than people work in other provinces Because of that to implement the employee retention in the big cities are more difficult for the employers The fifth, this study provides deep insights of the impact of leadership styles on employee retention and recruitment However, to give the conclusion, the quantitative method was used mainly This has significantly reduced the scope and applicability of the research Therefore, the future researches should focus on using relevant research methods, along with qualitative methods, for determining the relationship between leadership style and employee retention 59 The sixth, similar to the results indicated by the literature review However, the literature review suggests that the transformational leadership also has a positive impact on employee retention, which has not been shown in the result of the survey A seventh limitation in the study was found in the use of Multifactor leadership questionnaire (MLQ) When the MLQ is used in its complete format, groups of three subordinates per supervisor rate their perceptions of that leader This adds inter-rater reliability and validity to the scores that each leader is given, which was missing in the present research due to the fact that only one subordinate rated one supervisor Also, in the answering google form questionnaires, supervisors fill out the forms also, which allows them to rate themselves on the various leadership behaviour, employee retention, talent recruitment These rating can then be compared to the ratings of their subordinates Again, this was not conducted in the present study, due to the lack of access to the subordinate‟s supervisors Therefore, when performing the future research should try to use one subordinates assess one supervisor and try to use some ways to avoid the supervisor rate themselves Additionally, this study gave the conclusion that leadership styles have no positive effect on talent recruitment This happens may be because of the limitation of sample size and the companies which were chosen being the companies in the top ten of the audit firms Future research and applied setting should consider about the link between leadership styles and 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No Question 10 11 12 13 14 _ years _ years Increase from strongly disagree (1) to strongly agree (5) My managers recognised my contribution in the jobs I feel happy when responding my Boss for the jobs My Boss respect me My managers highly appreciate and listen to my opinions? I understand all missions and responsibilities When working with the transactional leader, the manager has ability to encourage me to complete the jobs Transactional leadership style highly affects staff turnover Managers transfer the company‟s financial information well Manager listen to opinion of staffs but not highly appreciate When having manager with bureaucratic leadership style, I not satisfy with the his/her recognition for my contribution Bureaucratic leadership style does not make employees' satisfaction The relationship with manager is not good Assess the ability to keep talents of the company with the points from to If the time divided into years, the number of years for continuing to work for the company 66 15 16 The Company's staff turnover rate is high compare to the other companies in the same sector The company can attract many talents 67 ... question “which of leadership style is used by the senior managers of the division or the company? ” The second section consists of the questions about the satisfaction of the employees and their... between the leadership styles and employ retention, the questions to find out the linking of the leaderships style and the employees‟ satisfaction, employee retention, the reaction between leaders and. .. To study the influence of leadership styles on the employee retention  To study role of leader on employee retention  To study the impact of leadership style for the success of talent recruitment