FACTORS INFLUENCING ON THE JOB COMMITMENT OF EMPLOYEES AT INTERNATIONAL HOTELS IN HANOI: AN EXPLORATORY STUDY

FOREIGN TRADE UNIVERSITY FACULTY OF ECONOMICS AND INTERNATIONAL BUSINESS ====== GRADUATION THESIS Major: International Business Economics FACTORS INFLUENCING ON THE JOB COMMITMENT OF EMPLOYEES AT INTERNATIONAL HOTELS IN HANOI: AN EXPLORATORY STUDY Student’s name : Nguyen Nhu Ngoc Student ID : 1117150014 Class : A29 – High Quality Program Intake : 50 Supervisor : Nguyen Hai Ninh, PhD. Hanoi, May 2015 i TABLE OF CONTENTS LIST OF TABLES iv LIST OF FIGURES vi LIST OF ABBREVIATIONS vii INTRODUCTION 1 EMERGENCE OF THE STUDY 2 OBJECTIVES OF THE STUDY 2 SCOPE AND SUBJECTS OF THE STUDY 3 METHODOLOGY 4 BACKGROUND OF THE STUDY 4 STRUCTURE OF THE STUDY 5 CHAPTER 1: LITERATURE REVIEW 6 1.1. Hotel – accommodation 6 1.1.1. Definition of hotels 6 1.1.2. Classification of hotels 7 1.1.3. Factors affecting the performance of the hotel industry 9 1.1.3.1. External factors 9 1.1.3.2. Internal factors 11 1.2. Job commitment 12 1.2.1. Definition of job commitment 12 1.2.2. Levels of job commitment 17 1.2.3. Impacts of job commitment on organizational performance 18 1.2.3.1. Negative impacts of job commitment 18 1.2.3.2. Positive impacts of job commitment 19 1.2.4. Factors affecting job commitment 20 1.2.4.1. Leadership 21 1.2.4.2. Employee relations 21 1.2.4.3. Nature of jobs 22 1.2.4.4. Performance management and promotion 22 1.2.4.5. Salary and compensation on performance 22 ii 1.2.4.6. Job satisfaction 23 1.2.4.7. Training and development 24 1.2.4.8. Role ambiguity and role conflict 24 1.2.4.9. Secondary working conditions 25 1.2.4.10. Knowledge sharing and knowledge management 25 1.2.4.11. Organizational culture 26 1.2.4.12. Job security 27 CHAPTER 2: RESEARCH ANALYSIS AND FINDINGS 29 2.1. Overview of employment in the hospitality industry 29 2.1.1. In the world 29 2.1.2. In Vietnam 30 2.2. Proposed research model and hypotheses 32 2.3. Research design 33 2.3.1. Questionnaire design 33 2.3.2. Sampling design 39 2.3.3. Data collection procedure and analysis techniques 39 2.3.3.1. Data collection procedure 39 2.3.3.2. Data analysis techniques 40 2.4. Research results 43 2.4.1. Sample description 43 2.4.2. The overall job commitment level of employees at international hotels in Hanoi 47 2.4.3. Analysis of the factors influencing on the job commitment of employees at international hotels in Hanoi 48 2.4.3.1. The Kaiser-Meyer-Olkin (KMO) Measure of Sampling Adequacy and Bartlett's test of sphericity 48 2.4.3.2. Cronbach’s alpha reliability test 49 2.4.3.3. Exploratory Factor Analysis (EFA) 52 2.4.3.4. Adjusted research model and hypotheses 54 2.4.3.5. Correlation analysis 55 2.4.3.6. Multiple regression analysis 56 iii 2.4.3.7. One-way ANOVA test on demographic factors 59 2.5. Conclusions 60 CHAPTER 3: RECOMMENDATIONS 62 3.1. Recommendations 62 3.2. Future trends of the tourism and hospitality industry 77 CONCLUSION 79 REFERENCES 80 APPENDIX 90 APPENDIX 1: Questionnaire (Vietnamese version) 90 APPENDIX 2: Results of KMO Measure of Sampling Adequacy and Bartlett's test of sphericity 95 APPENDIX 3: The first two Rotated Component Matrixes 96 iv LIST OF TABLES Table 1.1. Comparison between different Organizational Commitment models 16 Table 1.2. List of factors affecting job commitment of employees 20 Table 2.1. Available options for demographic questions in Section A 35 Table 2.2. Measurement of Leadership 36 Table 2.3. Measurement of Employee Relations 36 Table 2.4. Measurement of Nature of jobs 37 Table 2.5. Measurement of Performance management and promotion 37 Table 2.6. Measurement of Salary and compensation on performance 38 Table 2.7. Measurement of Training and development 38 Table 2.8. Cronbach’s alpha reliability coefficient 41 Table 2.9. Distribution of educational level among different departments/divisions 46 Table 2.10. Frequency table of participants’ job position level, type of employment and length of service 47 Table 2.11. Descriptive statistics of job commitment 47 Table 2.12. Results of KMO Measure of Sampling Adequacy and Bartlett’s test of sphericity on proposed factors 48 Table 2.13. Item – total statistics of “Leadership” factor 49 Table 2.14. Item – total statistics of “Employee relations” factor 49 Table 2.15. Item – total statistics of “Nature of jobs” factor 50 Table 2.16. Item – total statistics of “Performance management and promotion” factor 50 Table 2.17. Item – total statistics of “Salary and compensations on performance” factor 51 Table 2.18. Item – total statistics of “Training and development” factor 51 Table 2.19. Cronbach’s alpha reliability coefficients of variables 52 Table 2.20. Final Rotated Component Matrix 53 Table 2.21. Results of correlation analysis between the dependent and independent variables 56 v Table 2.22. Results of the correlation analysis between five independent variables 56 Table 2.23. Model Summary 57 Table 2.23. ANOVA 57 Table 2.24. Coefficients 58 Table 2.25. Summary of the results of multiple regression analysis 58 Table 2.26. Summary of the results of one-way ANOVA test on seven demographic variables 59 Table 3.1. Possible training topics for several hotel departments 73 Table 3.2. Contents of a typical Orientation session 74 vi LIST OF FIGURES Figure 1.1. Different ways to classify hotels 8 Figure 1.2. Organizational Commitment Model 15 Figure 1.3. Levels of Organizational Commitment 17 Figure 1.4. Characteristics of under-commitment and over-commitment 18 Figure 1.5. Maslow’s hierarchy of needs 23 Figure 1.6. Organizational culture model 27 Figure 2.1. U.S. employee turnover rates by sectors in 2011 30 Figure 2.2. Percentage (%) of three types of international tourists to Vietnam during 2006 – 2013 31 Figure 2.3. Average expenditure of a foreign tourist to Vietnam in 2013 (USD) 31 Figure 2.4. Proposed research model 33 Figure 2.5. The 5-point Likert scale 39 Figure 2.6. Percentage of participants according to gender 43 Figure 2.7. Number of participants according to age 44 Figure 2.8. Number of participants according to highest educational background . 44 Figure 2.9. Number of participants according to departments/divisions 45 Figure 2.10. Frequency of responses to statement JC = "I am committed to this hotel.” 48 Figure 2.11. Adjusted research model 55 Figure 3.1. Training plan in January 2015 of Sunway Hotel Hanoi 72 vii LIST OF ABBREVIATIONS EFA Exploratory Factor Analysis ER Employee relations EU The European Union JC Job commitment KMO Kaiser-Meyer-Olkin LS Leadership NJ Nature of jobs PEST Political, Economic, Social and Technological analysis PM Performance management and promotion SC Salary and compensations on performance SCR Supportive and cooperative workplace relationships SPSS Statistical Package for the Social Sciences TD Training and development USA The United States of America 1 INTRODUCTION International hotels have been increasingly developing at a fast pace in Vietnam since their first emergence. Along with the promising development of the tourism industry in recent years, hospitality has become a desirable industry to work for. International hotels provide an international and professional working environment, as well as other advantages that, to some people, other organizations do not provide. However, those perks are just the tip of an iceberg. Hospitality is a labor-intensive industry, which accepts employees from any levels but requires them to comply with the long working hours and suffer pressure from highly demanding jobs. After several months, employees may lose their initial excitement when they realize that the hotels do not meet their expectations. They would be more willing to leave their current hotels for other places if they do not find any other reasons to cling onto. Therefore, this study aims at resolving the low commitment of employees in international hotels, particularly in Hanoi. By determining which factors significantly contribute to the level of job commitment, the study could thereafter give out recommendations to make employees stay with and commit to their hotels. I hereby wish to express my sincere gratitude and appreciation to Dr. Nguyen Hai Ninh for his valuable assistance and guidance during the progress. I also would like to give my most grateful thank to the Faculty of Economics and International Business for offering me the opportunity to conduct and complete this study. It has taught me a lot about doing a scientific research that helps me prepare for higher education in the near future. Due to the limitation of time and knowledge, this study certainly still contains shortcomings. All comments to help the study become more complete would be highly appreciated. Hanoi, May 2015 Nguyen Nhu Ngoc 2 EMERGENCE OF THE STUDY Recent years have witnessed a remarkable movement of the hospitality industry. Until 2014, there were 686 3 – 5 star hotels in Vietnam, 127 of which located in Hanoi. Ho Chi Minh City had the most 3 – 5 star hotels, 140 in particular. Da Nang was ranked third, following Hanoi, with the number of 3 – 5 star hotels of 114. The rest were sparsely distributed in popular tourism cities and provinces throughout the country (Grant Thornton Vietnam, 2014). Still the number is still increasing by years. As a result, it would become more difficult for the hotel management to retain their employees while there are more and more open opportunities. Employee‟s commitment has turned into a real problem among hotels in Vietnam. When they first come to work at hotels, they expect an international and professional work setting where they can fully employ their skills and knowledge as well as further develop themselves. “To the extent that the organization is perceived as facilitating these ends, organization commitment is likely to increase.” (Mottaz, 1988) The commitment issue has been regarded as a popular topic in the literatures of industrial and organizational psychology and organizational behavior. According to Mathieu and Zajac, 1990), “the concept has received a great deal of empirical study both as a consequence and an antecedent of other work-related variables of interest.” High level of job commitment would be more likely to benefit all parties, namely the employees, employers and the society. Therefore this study is expected to find ways to resolve the problem of international hotel employees‟ commitment so as to form and maintain a stable and highly qualified workforce for the hospitality industry in general and especially in Hanoi – a well-known tourist destination of Vietnam. OBJECTIVES OF THE STUDY The ultimate objective of this study is to have better understanding of job commitment among hotel employees, especially those working in international hotels in Hanoi, and the factors that could have influence on it. In particular, the study hopes to achieve the following objectives: [...]... organizational goals and values, and involvement with the organization,  the mandatory constraint of an employee towards his/her organization originating from weighing the costs and benefits associated with leaving, and  the sense of obligation to maintain in the organization 17 1.2.2 Levels of job commitment: Figure 1.3 describes three different levels of organizational commitment An employee‟s commitment. .. promotion positively affect job commitment?  To what extent do salary and compensations on performance influence on employees job commitment?  Does training and development affect the job commitment of employees at international hotels?  Is there a difference in the level of job commitment among distinctive groups of each demographic factor? SCOPE AND SUBJECTS OF THE STUDY The study was conducted on employees. .. determine the relationship between international hotel employees job commitment and six factors, namely Leadership, Employee relations, Nature of jobs, Performance management and promotion, Salary and compensations on performance, and Training and development,  To determine whether the demographic factors also contribute to different levels of job commitment among international hotel employees Based on. .. relate to affective commitment, where an employee stays because he/she wants to Figure 1.3 Levels of Organizational Commitment Higher level of organizational commitment Higher level of organizational commitment   Moderate level of organizational commitment Moderate level of organizational commitment   Lower level of organizational of organizational commitment Lower level of organizational of organizational... List of factors affecting job commitment of employees Researchers Factors Leadership Employee relations Nature of job Salary and compensation on performance Job satisfaction Performance management and promotion Training and development Role ambiguity Role conflict Secondary working conditions Knowledge sharing and knowledge management Organizational culture and policy on hiring Job security Agarwal and... and Allen, who defined organizational commitment as affective commitment and continuance commitment The components are considered to be independent of one another; such existence of one type of commitment does not guarantee the existence of the other Their definition of continuance commitment was redefined from Becker (1960)‟s prior research on side bet theory, which interpreted commitment as “consistent... Another term has been developed to contrast the meaning of job security Greenhalgh and Rosenblatt (1984) stated that job insecurity represents an individual‟s perception of powerlessness to maintain a job under threatening situation It was conceptualized into four major factors:  Job features: the importance of features in a job,  Total job: the importance of the job itself, 28  Threat to total job: ... different conclusion They found out that job satisfaction would play a significant role in predicting organizational commitment It was also supported by Manheim (1997) that one of organizational commitment s determinants should be job satisfaction Having their needs satisfied, there would be no reasons for employees to leave the organization or to lose focus to any distractions 1.2.4.7 Training and development:... organization by virtue of the costs that they feel associated with leaving”, and  Normative commitment: the employee’s feelings of obligation to remain with the organization” Then in 1996, they generalized the concept into a single sentence which states that organizational commitment is “a psychological link between the employee and his or her organization that makes it less likely that the employee... (maintaining job) Normative (feeling of obligation) Source: Rocha et al (2008) It seems that Allen and Meyer‟s model covers the concept of organizational commitment the most comprehensively Therefore, their three-component model will be used as the definition in this research Job commitment, or organizational commitment, is:  the positive feeling of emotional attachment, congruence with the organizational . TRADE UNIVERSITY FACULTY OF ECONOMICS AND INTERNATIONAL BUSINESS ====== GRADUATION THESIS Major: International Business Economics FACTORS INFLUENCING ON THE JOB COMMITMENT