Effectiveness of human resource management practices in small and medium enterprises in thai nguyen province

EFFECTIVENESS OF HUMAN RESOURCE MANAGEMENT PRACTICES IN SMALL AND MEDIUM ENTERPRISES IN THAI NGUYEN PROVINCE A DISSERTATION PAPER Presented to School of Graduate Studies Central Philippine University, Philippines In Collaboration with Thai Nguyen University, Vietnam In Partial Fulfillment Of the Requirements for the Degree DOCTOR OF MANAGEMENT PHAM THI THANH PHUONG JUNE 2020 i ACKNOWLEDGMENT This dissertation has been conducted in the Doctoral Program in Business Management in the framework of academic cooperation between Central Philippine University and Thai Nguyen University During the period of writing my dissertation, I have gained the precious knowledge for my job as well as my scientific research works First and foremost, I would like to express my sincere appreciation to my supervisors Prof Lee Song Kun and Assoc Prof Dr Do Anh Tai for giving me considerable time and guiding me enthusiastically through the completion of this research I would like to express my gratitude to officials who freely gave me their time for the interviews The interviews that were granted to me at the enterprises with managers that provided managers' perspective to the purpose of this study I am very thankful to Officials of Thai Nguyen province for providing me number of secondary information and much help to the interviews at the agencies I would like to thank to all of my professors of the Doctor Program in Business Management, managers and staffs of International Cooperation Center for Training and Study Abroad for their enthusiastic help in my research and dissertation I also would like to thank my interview partners who conducted the survey with me I would like to mention all of my colleagues who encouraged me to the dissertation Last but not least, I specially would like to give inmost thanks to my family who always encouraged and helped me through the time doing the dissertation Thai Nguyen, June 2020 Pham Thi Thanh Phuong ii LỜI CẢM ƠN Luận án thực khn khổ hợp Chương trình hợp tác học thuật Đại học Cetral Philippines Đại học Kinh tế Quản trị Kinh doanh, Đại học Thái Nguyên Trong thời gian viết luận văn, có nhiều kiến thức q giá cho cơng việc cơng trình nghiên cứu khoa học Đầu tiên, muốn bày tỏ cảm ơn chân thành đến Giáo sư Lee Song Kun Phó giáo sư, Tiến sĩ Đỗ Anh Tài dành thời gian hướng dẫn tơi nhiệt tình q trình hồn thành nghiên cứu Tơi muốn bày tỏ lòng biết ơn đến lãnh đạo, nhân viên công tác quan, ban ngành, doanh nghiệp tỉnh Thái Nguyên dành thời gian cung cấp cho thông tin thứ cấp Các nhà quản lý cung cấp quan điểm nhà quản lý cho mục đích nghiên cứu Tơi xin cảm ơn tất giảng viên, chuyên gia Chương trình đào tạo Quản trị kinh doanh, lãnh đạo nhân viên Trung tâm Hợp tác Đào tạo Quốc tế giúp đỡ nhiệt tình họ nghiên cứu luận án Tôi muốn cảm ơn đối tác vấn thực khảo sát với Tôi muốn gửi lời cảm ơn đến tất đồng nghiệp khuyến khích động viên tơi suốt q trình học tập làm luận án Cuối không phần quan trọng, đặc biệt muốn gửi lời cảm ơn sâu sắc đến gia đình tơi, người ln khuyến khích giúp đỡ tơi suốt thời gian làm luận án Thái Nguyên, tháng năm 2020 Phạm Thị Thanh Phương iii COMMITMENT I assure you that the data and research findings in this dissertation are honest and have not been used for publication in any other research I would like to assure you that all helps for the implementation of the dissertation has been thanked and the information cited in the dissertation is clearly indicated Thai Nguyen, June 2020 Author of dissertation Pham Thi Thanh Phuong iv LỜI CAM ĐOAN Tôi xin cam đoan rằng, số liệu kết nghiên cứu luận án trung thực chưa sử dụng để công bố cho nghiên cứu khác Tôi xin cam đoan rằng, giúp đỡ cho việc thực luận án cảm ơn thông tin trích dẫn luận án rõ nguồn gốc Thái Nguyên, tháng năm 2020 Tác giả luận án Phạm Thị Thanh Phương v TABLE OF CONTENTS ACKNOWLEDGMENT i LỜI CẢM ƠN ii COMMITMENT iii LỜI CAM ĐOAN iv TABLE OF CONTENTS v LIST OF TABLES vii LIST OF FIGURES ix ABSTRACT .x CHAPTER THE PROBLEM AND ITS SETTING 1.1 Background and Rationale of the Study .1 1.2 Objectives .4 1.3 Hypotheses 1.4 Theoretical Framework 1.4.1 Human Resources (HR) and Human Resource Management (HRM) 1.4.2 The model of human resource management and performance 1.5 Conceptual Framework 1.6 The operational definitions .12 1.6.1 The definition of HRM practices 12 1.6.2 HRM outcomes variables 14 1.6.3 Organizational Performance 14 1.6.4 Effectiveness of Human Resource Management Practice 15 1.7 Scope and Limitation 17 1.8 Significance of the Study 17 CHAPTER REVIEW OF RELATED LITERATURE AND STUDIES .19 2.1 Related Literature .19 2.1.1 Definitions of SMEs 19 2.1.2 Human resource management 21 2.1.3 Organizational performance of enterprises and relationship with HRM 30 2.2 Related Studies 33 CHAPTER METHODOLOGY 39 3.1 Research Design 39 vi 3.2 Population, Sample Size and Sampling Techniques 41 3.3 Research Instrument 42 3.4 Data Gathering Procedure 46 3.4.1 Secondary data 46 3.4.2 Primary data 46 3.5 Pilot Test 46 CHAPTER DATA PRESENTATION, ANALYSIS AND INTERPRETATION 50 4.1 The profile of the respondents 50 4.2 The Method of Data Analysis 51 4.3 Scale Purifications 52 4.3.1 Item Purification for Recruitment and Selection Scale 52 4.3.3 Item Purification for Training and Developing Scale .55 4.3.4 Item Purification for Job Evaluation Scale .56 4.3.5 Item Purification for Employee Commitment Scale .57 4.3.6 Item Purification for Organizational Performance Scale 58 4.3.7 Scale Reliability 60 4.4 Measurement Model 60 4.5 Hypothesis Testing .66 4.6 Summary of Hypothesis Testing 70 4.7 Evaluate the effectiveness of Human Resource Management 72 4.7.1 Effectiveness of Recruitment and Selection 72 4.7.2 Effectiveness of Salary and Welfare .73 4.7.3 Effectiveness of Training and Development 74 4.7.4 Effectiveness of Job Evaluation 75 4.7.5 Effectiveness of Employee Commitment 76 4.7.6 Effectiveness of Organizational Performance 77 CHAPTER SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 79 REFERENCES 94 APPENDIX 100 vii LIST OF TABLES Table 2.1: Classification of enterprises by total capital and number of laborers in VietNam 21 Table 2.2: Outcome of research on the link between HR and oragnizational performance 34 Table 3.1 The Sampling Tecknique by type of enterprise 41 Table 3.2 Items used for Measuring Variables 42 Table 3.3 The Scale and Standard to Evaluate the Effectiveness of Human Resource Management Practice 44 Table 3.3 The Criteria to Evaluate the Effectiveness of Human Resource Management Practice 44 Table 3.4 The EFA Results for Pilot Test 47 Table 4.1 Frequency and Percentage Distribution of the Respondents in Terms of the Business Organization Affiliated With 50 Table 4.2 Characteristics of Sample 51 Table 4.3 Values of Cronbach’s Alpha 51 Table 4.4 Descriptive Statistics of Recruitment and Selection Scale 52 Table 4.5 Item Purification for Recruitment and Selection Scale 53 Table 4.6 The Descriptive Statistic Results of Salary and Welfare Scale 54 Table 4.7 Item Purification for Salary and Welfare Scale 54 Table 4.8 The Descriptive Statistic Results of Training and Developing Scale 55 Table 4.9 Item Purification for Training and Developing Scale 56 Table 4.10 The Descriptive Statistic Results of Job Evaluation Scale 56 Table 4.11 Item Purification for Job Evaluation Scale 57 Table 4.12 The Descriptive Statistic Results of Employee Commitment Scale 57 Table 4.13 Item Purification for Employee Commitment Scale 58 Table 4.14 The Descriptive Statistic Results of Organizational Performance Scale 59 Table 4.15 Item Purification for Organizational Performance Scale 59 Table 4.16 Scale Reliability 60 Table 4.17 Measurement Model Results for Recruitment and Selection Scale 61 Table 4.18 Measurement Model Results for Salary and Welfare Scale 62 Table 4.19 Measurement Model Results for Training and Development Scale 62 Table 4.20 Measurement Model Results for Job Evaluation Scale 63 Table 4.21 Measurement Model Results for Employee Commitment Scale 63 viii Table 4.22 Measurement Model Results for Organizational Performance Scale 64 Table 4.23 Measurement Model Results 65 Table 4.24 Construct Correlation Matrix 66 Table 4.25 The Regression Values from Structural Equation Modeling 69 Table 4.26 Results of hypothesis 71 Table 4.27 The effectiveness of Recruitment and Selection 72 Table 4.28 The effectiveness of Salary and Welfare 73 Table 4.29 The effectiveness of Training and Development 74 Table 4.30 The effectiveness of Job Evaluation 75 Table 4.31 The effectiveness of Employee Commitment 76 Table 4.32 The effectiveness of Organizational Performance 77 ix LIST OF FIGURES Figure 1.1: The Human Resource Cycle Figure 1.2: The relationship between strategic HRM and performance Figure 1.3: HRM - performance linkage model Figure: 1.4: HRM activities, HRM outcomes and performance Figure 1.5: Research Paradigm 10 Figure 1.6: Research Model 11 Figure 3.1 The Research Procedure 40 Figure 4.1 Structural Equation Modeling for Research Model 70 92 The organization evaluated interview request evaluators to be smart and patient The evaluator must know that the staff need a chance to be evaluated and presented their views They must know how to compliment and criticism appropriately The staff compliment will match when a good reason to give but probably will not make sense if the employee does not deserve to be rewarded It is difficult to criticize the staff, even good reason to criticize When criticizing employees, managers should emphasize the positive aspects of the completion of the work, critique the actions / jobs that rather than the employee, and the employee will ask how to change these problems in order to improve the situation Interviews must end with the introduction of specific plans and agreement between the two parties on the development of employees and on the implementation of improved form work efficiency The manager must ensure employees have the training needs and support given by the company One thing to note is that during the interview process assessment, the evaluator must proactively record and listen to archive Project Program and adequate prices Tracking after evaluation helps managers understand the implementation of plans to improve work efficiency, the progress of employees, or provide support when necessary Managers have to consider records to ensure there was work to improve the efficiency of the staff In addition, company should: - be fair in job evaluation - choose suitable method in job evaluation - set up suitable and clear standard and criteria in job evaluation - choose effective procedure in job evaluation Performance evaluation is understood as a systematic and formal assessment of the performance of an employee's job in relation to established standards and discussion of that assessment with worker To evaluate the performance of work, it becomes a motivation tool for employees in the company The company needs to develop a formal and public performance evaluation system; The evaluation system must be scientific and clear; The assessor must have sufficient professional knowledge and professional ethics Performance evaluation systems should have clear, specific standards and be disseminated to each worker From there, employees can know the results of their work, 93 the company based on what criteria to evaluate the performance of their work so that they can take measures to adjust the work process to achieve the highest performance The performance evaluation system must be scientific and clear To apply any performance evaluation system to your business, the business must also clearly study the nature of the work to be 5.3 Limitations Although this research was carefully prepared, I am still aware of its limitations and shortcomings First of all, the population of the experimental group is small, the research was conducted in 400 respondents The number of respondents is not enough for the researcher to observe all of the employees' idea about policies of company It would be better if it was done in a longer time and with more respondents Second, the research based on effectiveness assessment according to the criteria of HRM practices, financial performance by perception of managers Therefore, the evaluation of financial criteria is subjective However, the purpose of the study was the influence of the human resource management activities in the enterprises so this does not affect the study results 94 REFERENCES Armstrong Michael (2014), and Stephen Taylor Armstrong's handbook of human resource management practice Kogan Page Publishers Armstrong Michael (2006), Strategic human resource management practice ThomsonShore, Inc Achian, A.A, & Demsetz, H., (1972) Production, information costs, and economic organization American Economic review, (pages: 62, 777-795) Arthur, J B (1994) ‘Effects of Human Resource Systems on Manufacturing Performance and Turnover’, Academy of Management Journal 37(3): 670-687 Barly (1991), Firm Resources and 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Female ? From 18 - 29 ? From 40 – 49 ? From 30- 39 ? Positions in the company: Working year: Over 50 ? Director ? Deputy director ? Under year ? From – years ? Average income/month: Under mils ? From – 10 mils ? Head ? Deputy head? From – 10 years ? Over 10 years ? From – mils ? Over 10 mils ? 101 III Answer direction You please mark X in the box of your choice Values from to equivalent levels of agreement and effectiveness increased Significance values are as follows: Strongly disagree Disagree Relatively agree Agree Strongly agree III Questionnaire Human resource management practices: No Criterion(s) Level of evaluation I Recruitment and selection The recruitment and selection systems in your company are highly scientific and rigorous In the company, line managers and HR managers participate in selection Valid and standardized test are used when required in the recruitment and 5 selection Recruitment and selection system in the company selects those having the desired knowledge, skill and attitudes II Welfare and salary Welfare policies of the company are clear and accurate Welfare policies demonstrate the careful caring of administrators for employees Employees receive full benefit and attractive welfare My current salary is in line with my capacities and my contribution to the 5 company My salary is equitable with other employees at work 102 III Job performance Performance of the employees is measured on the basic of objective 5 quantifiable results Job performance system in the company is growth and oriented development Employees are provided performance based feedback and counseling Employees have faith in the job performance system 5 Job performance system has a strong influence on individual and team behavior IV Training and developing I was fully trained all skills to perform my job The company has always facilitated for my learning to improve my knowledge and skills to work Promotion policies of the company are fair The company always creates advancement opportunities for qualified people V Relationships with colleagues My colleagues always support and advise me when necessary Co-workers are friendly, approachable and sociable My colleagues have devotion and dedication to complete the job Colleagues are reliable VI Relationships with managers I not have any difficulties in communication with leaders Leaders always encourage and support me when necessary Employees are treated fairly, regardlessly Leaders always recognize my contributions to the company My leaders are capable people 103 Human resource management outcomes: No Criterion(s) Level of evaluation I Commitment Employees have strong effective commitment stay the company because they want Employees perceive that the costs of leaving the company are greater than 5 the costs of staying in the company Employees with high levels of normative commitment stay with the company because they feel they ough to II Competence Employees understand the functions, duties and requirements related to my job Employees have the skills to complete the tasks in the company The jobs suit employees and have more opportunities to develop III Flexibility Employees easily assume responsibilities over tasks corresponding to other job Employees learn quickly new procedures and processes introduce in their job The flexibility of our employees’ work habits helps us to change according 5 to market demands Employees in this department share information and learn from one another Organizational performance: No Criterion(s) Level of evaluation The sales of the company is good in comparison with other companies The quality of the company's products is good The products of the company meet the needs of customers The profit of the company is good in comparison with other companies 104 Human Resource Management Effectiveness Code Items Level of Evaluation Effectiveness of Recruitment and Selection ERS1 You evaluate the effectiveness of determining the employee 5 recruitment demand in your company ERS2 You evaluate the effectiveness of in attracting the number of the employee as compared to employee recruitment demand in your company ERS3 You evaluate the suitable method of recruitment in your company ERS4 You evaluate the effectiveness of the process of employee selection ERS5 You evaluate the suitable method of selection in your company Effectiveness of Salary and Welfare ESW1 You evaluate the equality in salary policy of your company ESW2 You evaluate the clearance and transparent in salary policy of 5 in You evaluate the effectiveness of salary and welfare in creating 5 your company ESW3 You evaluate the effectiveness of salary and welfare policy in ensuring employee’s life in your company ESW4 You evaluate the effectiveness of salary and welfare motivating employee to work in your company ESW5 employee loyalty in your company Effectiveness of Training and Development ETD1 You evaluate the effectiveness of money spending for training and development in your company 105 ETD2 You evaluate the suitable content of training and development You evaluate the knowledge and skills of a group of people program in your company ETD3 who are in charge of training and development program in your company ETD4 You evaluate the necessary facility of training and You evaluate the suitable method in training and development 5 development program ETD5 program in your company ETD6 You evaluate the effectiveness of process in training and development program in your company Effectiveness of Job Evaluation EJE1 You evaluate the fairness of job evaluation in your company EJE2 You evaluate the suitable method of job evaluation in your 5 5 You evaluate the relationship with your coworkers in your 5 company EJE3 You evaluate the standard and criteria of job evaluation in your company EJE4 You evaluate the effectiveness of the procedure of job evaluation Effectiveness of Employee Commitment EEC1 You evaluate the level of satisfaction with the work you are doing now EEC2 You evaluate the level of support receiving from your coworkers in your company EEC3 company EEC4 You evaluate the level of responsiveness receiving your company 106 EEC5 You evaluate the level of linking between you and the core 5 You evaluate the suitable selected criteria in organization 5 values of the company Effectiveness of Organizational Performance EOP1 You evaluate the effectiveness of the process of organization performance EOP2 You evaluate the suitable method of selecting the organization performance in your company EOP3 performance of your company EOP4 You evaluate the effectiveness of evaluating organization performance of your company If you have any recommendations, please write down here: ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… ……………………………………………………………………………………………… Thank you and wish you a nice day!