Determinants of the loyalty of employees in businesses

Advisor’s assessment . . . . . . . . . . . . . . . . Advisor’s signature Table of contents Chapter 1: Introduction 1.1. Problem statement . 1.2. Research objectives . 1.3. Research questions 1.4. Research scope 1.5. Research methodology 1.6. Research structure . Chapter 2: Literature Review . 2.1. Theoretical literature . 2.1.1. Approaches in the study of the loyalty of employees 2.1.2. Benefits of building and maintaining the loyalty of employees 10 2.2. Empirical literature 11 Chapter 3: Research Methodology . 14 3.1. Data sources 14 3.1.1. Qualitative study 14 3.1.2. Quantitative study 15 3.2. Variables . 15 3.3. Research model . 19 3.4. Method of estimation 21 3.5. Method of testing 22 Chapter 4: Research Results 23 4.1. Synthesis of the survey result 23 4.2. Descriptive statistics . 26 4.3. Adjustment of scale . 28 4.4. Factor analysis . 30 4.5. Adjusted model . 33 4.6. Testing of the adjusted model . 35 4.7. Result of testing hypothesis 40 4.8. Testing the loyalty rate between male and female 42 4.9. Testing the loyalty among employees at different levels 43 4.10. Testing the loyalty among employees at different positions 45 4.11. Testing the loyalty among employees in different business types 47 Chapter 5: Conclusion, Recommendation and Limitation . 50 5.1. Performance and topic’s contributions . 50 5.2. Practical signification and recommendation . 52 5.3. Limitation and direction for coming studies . 55 References 58 CHAPTER 1: INTRODUCTION 1.1. Problem statement: Today, in the harsh conditions of the market, competition for human resources has always been a hot issue in the company. And so, to attract talent, companies constantly improve their policies of development of human resources under which compensations and benefits, and many other treatment regimes are always particularly interested by the company leaders. Human resources management (HRM) issues include aspects: attendance, payroll, screening, hiring, training, coaching, evaluating the work of staff, drafting the remuneration policy, the labor remuneration regime, etc. But one of the most important issues that should not be ignored by HRM professionals is the planning and implementation of strategic development of human resources, attracting talent to work for the company as well as not making them anxious with their thought “the grass is always greener on the other side of the fence”. According to results from a recent study by Walker Information and Hodson Institute that provided some information about the loyalty of workers in organizations as follows:  Only 24% of employees found that they were really loyal, true commitment of contribution to the objectives and activities of the company, and available to work for the firms in at least two years.  33% of employees had no commitment, no plan to survive in the firms in the long term.  Up to 39% of employees have to be seen as being reluctant to work. They worked only for a few specific reasons (wages, favoritism, waiting to find another job, etc.) but did not have a specific plan to benefit to the businesses. All business owners will admit that they have to always pay very high prices for the leave of key employees. One of the problems often seen is the leave of the key employees will entail the leave of key customers. The study showed that 70% of customers leave because of the leave of key staff. Moreover, if there is continuous passing of the key staff, it may cause underground waves of exit of all staff remaining. Currently, the problem of how to retain employees is a headache for business owners and managers of enterprises in Vietnam. Especially after Vietnam joined the WTO, the domestic enterprises need to expand production and business; in addition to the need of high quality of human resources, they also have to know how to retain qualified employees. It’s a matter of business survival. Thus, the business must identify, consider and evaluate accurately factors that affect the loyalty of employees, on the basis that the business will have appropriate direction in the management of human resources, in order to have positive move to retain talent for the business to avoid brain drain phenomenon in the future. That's why I chose the topic “Determinants of the loyalty of employees in businesses”. The paper attempts to identify the most important determinants of the loyalty of employees and provide an integrated analysis on the identified determinants. 1.2. Research objectives: The general objective of this study is to identify factors which affect the loyalty of employees in businesses in Ho Chi Minh (HCM) city. To achieve the general objective, the study is designed to meet the following specific objectives: (1) Find out determinants of the loyalty of employees in businesses in HCM city. (2) Suggest implications to improve the management of human resources of the businesses. 1.3. Research questions: The research aims to address the following questions: (1) What are the determinants of the loyalty of employees in businesses in HCM city? (2) What suggestions can this study have to improve the loyalty of employees in businesses in HCM city? 1.4. Research scope: Research objects who are currently working in the economic organizations; including Limited Liability Company, Joint Stock Company, State-owned Company, Joint Venture Company, Private enterprise and Enterprise 100% foreign capital. Since the time constraint, the study is focused on investigating the objects who are currently working in businesses in HCM city in positions of staff, team leaders, supervisors and middle managers. 1.5. Research methodology: The research is conducted over phases:  Phase 1: using qualitative research methods to confirm and supplement the criteria of assessment, adjust scales and questionnaires to support the quantitative research process.  Phase 2: using quantitative research methods, using the measured variables in qualitative research phase to determine the factors and the measurement properties; after adjustment, final scale is used for formal interview. Samples and sample information: Quantitative survey was conducted in the area of HCM city. Sample objects are currently working in businesses in HCM city, conducted by direct interviews with the questionnaires, selecting a random sample of students in night classes (in-service, degree 2, master, etc.) at some universities in HCM city like University of Economics HCM City, Open University of HCM City, University of Natural Sciences, University of Social Sciences and Humanities, University of Industry, etc. Measurement model included 29 observed variables, using 5-level Likert scale range (1: totally disagree to 5: completely agree) to quantify; and hypotheses according to minimum rule x = 15 samples for each measurement variables (Bentle & Chou, 1987). So that the original sample was calculated: 29 x 15 = 435. Collecting and analyzing data: Using data processing techniques by SPSS software, testing conducted through the following steps: (1) preliminary assessment of the scale and reliability of variables measured by Cronbach Alpha coefficients, and the values (factor loading) by EFA (Exploratory Factor Analysis); (2) testing the hypothesis and the overall model fit. After that, T-Test would be used for testing and ANOVA (Analysis of Variance) would be used for analyzing to find out significant differences of a few specific groups. 1.6. Research structure: Chapter 1: Introduction Chapter 2: Literature review Chapter 3: Research methodology Chapter 4: Empirical results and discussion Chapter 5: Conclusion, recommendation and limitation CHAPTER 2: LITERATURE REVIEW 2.1. Theoretical literature: 2.1.1. Approaches in the study of the loyalty of employees: There are many approaches in the study of the loyalty of employees in businesses. Loyalty can be considered as a component of organizational commitment, or an independent concept. Allen & Mayer (1990) focused on three psychological states of employees associated with the organization. Employee loyalty to the organization can derive from their true feelings: (1) they will stay with the organization despite elsewhere higher salaries, better working conditions, (2) they can be loyal to their organizations just because they not have the opportunity to earn a better job, and (3) they can be loyal to their organizations because the moral standards of the organizations that they pursue. According to Mowday, Steers and Poter (1979), loyalty is the "intention or desire to maintain membership of the organization". Mowday's famous definition of loyalty is similar to the concept of "Maintain" in the research of Aon Consulting Institute for many years in US: employees who intend to stay with the organization in the long term will stay with the organization even though they get more relatively attractive offers from other organizations. According to Johnson (2005), today employees are more loyal to their profession than loyal to their employer; and the nature of the relationship between employees and employers has changed fundamentally, and it is necessary to revaluate the loyalty concepts. By the Loyalty Research Center (2004), employee loyalty is as commitment of employees associated with the organization's success, and they believe that working for this organization is the best choice of them. According to the scale model of employee loyalty of Man Power (2002), the evaluation criteria of loyalty include: (1) be willing to recommend their company as a good place to work; (2) be willing to introduce the products and services of the company; and (3) Intend long-term commitment to the company. In the scope of this study, definition of Mowday et al. (1979) and the scale of employee loyalty of Man Power (2002) are used. 2.1.2. Benefits of building and maintaining the loyalty of employees: The value of employee loyalty is extremely large, reducing employee turnover cost is just one visible example; and the benefit of retaining experienced and reliable staff is invaluable. Seniority, experience and stability of the organization will be the things we think of first, but beyond the personal experience will give us an overview of the benefits to the organization of the construction and maintenance of employee loyalty in today's economic situation.  On the revenue side: The loyal employees tend to work better than what customers expect and always have high morale in their best ability. Both of these characteristics are very important for the company to retain loyal customers and bring in more sales.  On the expense side: The loyal employees will stay working with the company in long term, refuse offers from the opponents, not actively look for a new job and always present the company as a good workplace. All four of these attitudes have a positive impact to the operating cost of the company, because the company will avoid a significant cost for replacing staff. In other words, instead of just focusing on holding the employees (try to keep the employees who were laid off), managers need to be more positive and proactive in 10 Chapter summary: This chapter presents analysis results including the following contents:  Evaluation of reliability of scale through Cronbach’s alpha, there are six factors resulted in analyzing factors after removing variables not meet requirements and a new model is adjusted after naming new variables of factors, they are: high income, favorable working conditions, target suitability and management decisions, fair reward and empowerment.  Multi-variables regression analysis and hypothesis testing of the model was confirmed as follows: the loyalty of employees was influenced by the six factors mentioned above.  Testing of T-test and ANOVA analysis result as followings: The loyalty of male and female is the same; There are differences in loyalty between group of college level and university level, and groups of college degrees and master degrees; There are differences in loyalty between staff group and leaders / experts group, and staff group and management group; There is no difference in the level of loyalty of employees working in different types of businesses. 49 CHAPTER 5: CONCLUSION, RECOMMENDATION AND LIMITATION 5.1. Performance and topic’s contributions: 5.1.1. Performance: Research model originally includes seven factors affecting employees’ loyalty to the organization, they are: high income, favorable working conditions, target suitability, support from management, support from colleagues, fair reward and empowerment with 26 observed variables. After evaluation of scale reliability and factor analysis, the results of observed variables are put into the regression analysis of factors group. In which, a new factor was created based on the combination of the observed variables of two components: support from management and support from colleagues, and it was named as management decision factor. Results of multi-variables regression analysis identified that the employees’ loyalty influenced by six factors, they are: high income, favorable working conditions, target suitability, management decisions, fair reward and empowerment. In which, “management decisions” component has the most important influence on the loyalty of employees, followed by target suitability component, favorable working conditions, empowerment, fair reward and the last one is high income component. Hypothesis testing of the model was confirmed these six factors make employees more loyal to the businesses. Testing of T-test and ANOVA showed results as follows: The loyalty of male and female is the same. There are differences between group of college level and group 50 of university level, between group of university level and group of master level. There are differences between staff group and leaders / experts group, between staff group and managers group. The loyalty of employees working in different types of businesses is the same. 5.1.2. Topic’s contributions: Today, in the market economy, competition is fierce, so any business who wants to survive and thrive in this race must have preparations in many aspects, such as finance, reputation, facilities . but the most important one is human resource. The establishment of competitiveness policies to retain employees and attract qualified talents will lead to other consequences that organizations will have new ideas for better handling; loyal employees with organization will make businesses increase sales and significantly reduced costs of some factors. Those are is competitive factors comparison with their enemies. Human resource management policies, if built based on the actual situation, will have objective and high feasibility. Scope of topics only focuses on identifying factors affecting loyalty of employees and on that basis it is required to held and re-adjust towards a common goal is: when employees are loyal to the organization, they will focus their whole heart on the jobs and try their best to make contributions to the organization development. The results are to build a positive working environment, to improve equal competition among employees in working, to reduce the cost of recruiting and training new employees. In addition, employees tend to work better than what customers expect and always have high morale in their best abilities. Both characteristics are important in keeping loyal customers and bringing high sales to the company. 51 5.2. Practical signification and recommendation: 5.2.1. Practical signification: The result of regression research shows that the employees’ loyalty depends on: High income, favorable working conditions, target suitability, management decisions, fair reward and empowerment. In addition, the study also identifies the importance of the independent variables to dependent variables as follows: management decisions component has the most important influence on the loyalty of employees, followed by target suitability component, favorable working conditions component, empowerment component, fair reward component and the last one is high income component. Testing of T-test results show that the loyalty of male and female is the same. ANOVA results show that there are differences between group of college level and group of university level, between group of university level and group of master level. There are differences between staff group and leaders / experts group, between staff group and managers group. The employees’ loyalty working in different types of businesses are the same. Also, according to ANOVA results, employees working at different types of businesses have the same loyalty level. These results help managers develop HR policies that are suitable for their business conditions. Employees who are loyal to the company will make increasing sales and reducing significant costs. 5.2.2. Recommendation: 52 According to research findings, we have identified the factors that affect employees’ loyalty, they are: high income, favorable working conditions, target suitability, management decisions, fair reward and empowerment. On base of these results, we implement a number of solutions aiming at improving the efficiency of the personnel management as follows: Firstly, enterprises have to build a competitive salary system, it depends on type of business in order to plan surveys, analyze and determine the appropriate level of income. The distribution of income must be linked to the nature and complexity of the job. Salary must be linked to economic development and living standards of labors. Every year, enterprises should consider and evaluate for suitable salary adjustments and direct to improve labors’ life. In addition, businesses need to build a system of fair, uniform and clearly salary in order to avoid the existing of two systems of salary in the same company but differences in treatment between new employees and old employees. Fair is expressed in fair among groups and among individuals in the same working environment. In term of spirit, employees tend to make comparison their performance with other people's income, therefore unfair payment make them feel not satisfied and they will not be loyal to the organization. On the other hand, businesses need to make accurate and scientific assessments to their employees; salary must be paid according to their ability and working efficiency associated with specific working conditions and circumstances. Secondly, businesses need to provide employees with an ideal working environment as well as appropriate equipments such as: a cool and clean working environment, appropriate temperature and light, equipments for the jobs in order 53 that employees invest more talent for the business. Especially enterprises must create a working environment where all employees feel safe at workplaces. Thirdly, enterprises must build a specific and clearly development target and they have to transmit this message to every employee. This action has important meaning for employees as well as enterprise to reach goals. In addition, enterprises need to implement different ways to guide all employees towards business objectives that were set out. Fourthly, managers must look after and support for their employees because these interests are very important. A good manager must know how to fully promote all employees’ energy and enthusiasm in working. In addition to professional skills, managers must be good at gaining popularity as well as empathizing and grasping their employees’ mentality. HR managers should regularly consult employees in solving problems that arise in their work, share your business information with employee in order that they can see the relationship between the work they are doing and the results the company is achieving. Thus, employees will feel that they are respected they are making a partly contribution to the enterprise’s development. Besides the interests and respects, HR managers should organize activities for relax at the company to mark special occasions and try to create a friendly environment so that everyone can feel comfortable in the office as well as take a short time to learn a little about their family and private life. And not only HR employees need to be equipped with knowledge and necessary management skills, but also management people in general and head of departments in particular perform personnel jobs in their managing scope in order to promote his employees to reach common goals. Fifthly, enterprises must consider and conclude in a fairly and objectively manner 54 regarding to whether employees perform their tasks in accordance with the requirements set out or not, since it deserved a reward to best individuals for their efforts on the job. Enterprises need to build a system of income distribution and promotion policies in accordance with employees’ wishes; because should the income distribution is based on job requirements, personal skills, and other distribution standards in the community . the employees will feel more satisfied. In addition, enterprises should offer promotion opportunities for all employees, because if employees recognize that if the promotion decisions in the organization are fair, the employees will feel more satisfied. Sixthly, enterprises need to create an environment of mutual trust for both sides. Employees need to be recognized and respected from managers through the empowerment for self-determination, opportunity creation for studying and contributing to the common success of the business. Managers need to delegate tasks based on the weaknesses and strengths of employees. It is required for employees to learn professional knowledge they need. If managers understand what requirement the job is, they should empower employees who can take the job well. Managers should realize that the job cannot be completed when it done by one person. When assigning employees, it is required to understand that an effective empowerment also means that unwanted occurs can be attached and they should accepted them. The managers cannot get the results as expected, but they need to accept it and accept occurred errors. 5.3. Limitation and direction for coming studies: 5.3.1. Limitation: Besides the contributions mentioned above, this study also exist some certain 55 limitations as follows: Firstly, the loyalty of employees affected by many factors, but this study only focused on six factors including: high income, favorable working conditions, target suitability and management decisions, fair reward and empowerment. Besides, the object of the study is limited to classes in evening in HCM city. Secondly, the limitations of the data analysis method, this study used method of multi-variables regression analysis to determine the relationship between the independent variables including: high income, favorable working conditions, target suitability, management decisions, fair reward and empowerment and the dependent variable is the loyalty. However, this analysis method does not identify the relationship between this independent variable with the others, so the results may not accurately reflect the relationship between these factors. 5.3.2. Direction for coming studies: The purpose of the following studies after measuring the loyalty of employees is to consider in terms of revenue and costs to confirm:  When employees are loyal to the enterprises, employees tend to work better than what customers expect and always have high morale in their best ability. Both of these characteristics are very important for the company to retain loyal customers and bring higher revenue to enterprises.  The loyal employees will stay working for the company in long term and refuse offers from competitors; they not actively look for new jobs and always present their companies as the best workplaces. All four of these attitudes have positive impacts to cost column in the balance sheet of the company, because the company will 56 reduce the significant costs for replacement employees.  The loyalty of employees affected by many factors, but this study only focused on six factors including: high income, favorable working conditions, target suitability, management decisions, fair reward and empowerment. Besides, the object of the study is limited to classes in evening in HCM city. Further studies will be certainly continued, because this is a very important theory tool on human resource management.  Because regression analysis does not identify the relationship between this independent variable with the others, the results may not accurately reflect the relationship between these factors. Therefore, this study repeated with higher quality tools will show more accurate result. 57 References: 1. Abbas J. Ali, Ahmed Azim, Thomas W. Falcone (1993), International Journal of Manpower, 14 (6). 2. Albert S. King, Barbara J. Ehrhard (1997), Empowering the workplace: a commitment cohesion exercise, Empowerment in Organizations, (3). 3. Alison Davis-Blake, Joseph P. Broschak, Elizabeth George (2003), Happy Together, How Using Nonstandard Workers Affects Exit, Voice, and Loyalty Among Standard Employees, Academy of Management Journal, 46 (4), 475485. 4. Arsi M.,Nikoli D. , ivkovi Z. , Uroevi S. and Mihajlovi I. 2012. The effect of TQM on employee loyalty in transition economy, Serbia, Total Quality Management & Business Excellence, 23(5/6): 719-729. 5. Artz, B. 2010. Fringe benefits and job satisfaction. International Journal of Manpower, 31(6): 626-644. 6. B.A.K. Rider, ed. (1998), Trust, Loyalty and Cooperation, The Realm of Company Law, Kluwer Law International, London, Pp. 53-80. 7. Bhote, K.R. (1996). Beyond Customer Satisfaction to Customer Loyalty: The Key to Greater Profitability. New York: American Management Association (AMA) Membership Publications Division. 8. Brian P. Niehoff, Robert H. Moorman, Gerald Blakely, Jack Fuller (2001), The Influence of Empowerment and Job Enrichment on Employee Loyalty in a Downsizing Environment, Group & Organization Management, 26 (1), 93-113. 9. Brooks, R. (2000). Why loyal employees and customers improve the bottom line. The Journal for Quality & Participation, 23 (2), 40-44. 10. Chang C., Chiu C. and Chen A. C. (2010). The effect of TQM practices on employee satisfaction and loyalty in government, Total Quality Management & 58 Business Excellence, 21(12): 1299-1314. 11. Chen, C. (2006). Job satisfaction, organizational commitment, and flight attendants turnover intentions: a note, Journal of Air Transport Management, Vol. 12, pp. 274-6. 12. Cunha, Miguel Pina e (2002). The best place to be: managing employee loyalty in a knowledge-intensive company, Management Decision, 39 (2). 13. David J. Therkelsen, Christina L. Fiebich (2003). The supervisor: The linchpin of employee relations, Journal of Communication Management, (2). 14. Duboff, R., & Heaton, C. (1999). Employee loyalty: A key link to value growth. Strategy & Leadership, 27 (1), 8-13. 15. Ellickson, M. and Logsdon, K. (2001). Determinants of job satisfaction of municipal government employees. State and Local Government Review, 33 (3), 173-184. 16. Eskildsen, J.K., & Dahlgaard, J.J. (2000). A causal model of employee satisfaction. Total Quality Management, 11 (8), 1081-1094. 17. Eskildsen, J.K., & Nussler, M.L. (2000). Th e managerial drivers of employee satisfaction and loyalty. Total Quality Management, 11 (4,5&6), 581-588. 18. Fletcher, C. and Williams, R. satisfaction and (1996). Performance management, job organizational commitment, British Journal of Management, 7(2), 169-179. 19. Gary W. Loveman (1998), Employee Satisfaction, Customer Loyalty, and Financial Performance, Journal of Service Research, (1), 18-31. 20. Griffin, M., Patterson, M., and West, M. (2001). Job satisfaction and teamwork: the role of supervisor support. Journal of Organizational Behavior, (22), 537550. 21. Harris, J. (1997). Regaining loyalty. Executive Excellence, 14 (6), 16-25. 22. Heskett, J.L., Sasser, W. Earl, & Schlesinger, L.A. (1997). The Service Profit 59 Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction, and Value. New York: The Free Press. 23. Homburg, C., & Stock, R.M. (2005). Exploring the conditions under which salesperson work satisfaction and lead to customer satisfaction. Psychology and Marketing, 25 (5), 393-420. 24. Johnson, M.D., & Gustafsson, A. (2000). Improving Customer Satisfaction, Loyalty, and Profit: An Integrated Measurement and Management System. University of Michigan Business School Management Series, San Francisco, California: Jossey-Bass Inc. 25. Josée Bloemer, Gaby Odekerken-Schröder (2006). The role of employee relationship proneness in creating employee loyalty, International Journal of Bank Marketing, 24 (4). 26. Kim, W.G., Leong, J.K. and Lee, Y. (2005). Effect of service orientation on job satisfaction, organizational commitment, and intention of leaving in a casual dining chain restaurant. Hospitality Management, 24, 171-93. 27. Kristensen, K., Martensen, A., & Grønholdt, L. (2000). Customer satisfaction measurement at Post Denmark: Results of application of the European Customer Satisfaction Index methodology. Total Quality Management, 11 (7), S1007S1015. 28. Kyle LaMalfa (2007). The Top 11 Ways to Increase Your Employee Loyalty, Business Week Technology Research, White Paper. 29. Larmen, R.A. (1992), Whistle-blowing and Employee Loyalty, Journal of Business Ethics, 21 (4). 30. Maslow, A.H. (1954). Motivation and Personality. New York: Harper & Row. 31. McCusker, D., & Wolfman, I. (1998). Loyalty in the eyes of employers and employees. Work-force, 77 (11), 12-14. 32. Meyer, J.P., & Allen, N.J. (1997). Commitment in the Workplace: Theory, 60 Research and Application. London: Sage Publications Ltd. 33. Moorman, R.H., Niehoff, B.P., & Organ, D.W. (1993). Treating employees fairly and organizational citizenship behavior: Sorting the effects of job satisfaction, organizational commitment, and procedural justice. Employee Responsibilities and Rights Journal, 6, 209-225. 34. Parvin, M. (2011). Factors affecting employee job satisfaction of pharmaceutical sector. Australian Journal of Business and Management Research, 1(9), 113-121. 35. Pritchard, M.P. Havitz, M. E., & Howard, D.R. (1999). Analyzing the commitment-loyalty link in the service context. Academy of Marketing Science, 27 (3), 333-348. 36. Rachel s. Arnow-richman (2001). Bargaining for Loyalty in the Information Age: A Reconsideration of the Role of Substantive Fairness in Enforcing Employee Noncompetes, Oregon Law Review, 80 (4). 37. Rhian Silvestro (2002), Dispelling the modern myth: Employee satisfaction and loyalty drive service profitability, International Journal of Operations & Production Management, 22 (1). 38. Selnow, G.W., & Gilbert, R.R. (1997). Charge managers with inspiring loyalty. Workforce, 76 (10), 85-87. 39. Spector, P.E. (1997). Job Satisfaction – Application, Assessment, Causes and Consequences. London, UK: Sage Publications Ltd. 40. Talley, J. (1998). Help with work/life balance earns employee loyalty. Business Insurance, 32 (25), 33-35. 41. Voyles, B. (1999). Are satisfied employees loyal employees? Potentials, 32 (9), 69-70. 42. Yee, R., Yeung, A., and Cheng, E. (2009). An empirical study of employee loyalty, service quality and firm performance in the service industry. 61 Appendix Questionnaire Kindly access by circling the number of points for each of the following statements, with the conventions of scale as follows: Scale of level of agreement 1: strongly disagree 2: somewhat disagree 3: wondering if agree or not (neutral) 4: somewhat agree 5: strongly agree I – Factors affecting the loyalty of employees: Level High income / salary My current salary is commensurate with my working capacity. My life is totally well with my current salary. I think that the company I am working for pay a fair salary. Level Favorable working conditions Equipments at my workplace are very well-equipped. Rooms at my workplace are very airy to make me feel very comfortable. Temperature, light and noise at my workplace are very suitable for my job. I feel safe at my workplace. Level Target suitability I feel my capabilities are suitable to organization’s working requirements. I commit to implement the goals set by organization. I agree with the organization’s business line. My development targets are similar to the organization’s targets. 1 2 3 4 5 62 Level Support from management I always gain supports from my direct senior in all respects. Senior always supports me when the problems have just arisen. I often gain supports from my direct senior when the problems become worse. Support from colleagues My senior / colleagues always listen to and support me. My senior / colleagues are always good understanding persons, friendly and easily accessible. Fair reward I get a fair reward in completing my role. I get a fair reward through my job duty. I get a fair reward through my spent efforts. I get a fair reward when working under high pressure. I get a fair reward when I complete well my job. Level Level 1 2 3 4 5 Level Empowerment Senior assign my job and let me implement it by myself. Senior empowers me to make decisions. Senior believes in my capability of making decisions. Senior promotes me to utilize empowerment that he gave me. Senior believes in my working performance evaluation. 1 2 3 4 5 Level Loyalty I'm willing to introduce to people about my company as a good working place. I am proud to introduce to people about the product / service of the company. I will stay working with the company in long term although others suggest more attractive salary. 63 II – Personal information: Kindly indicate the following personal information: 1. Business types you are working for.  Not working  Limited Liability Company  Joint Stock Company  Private enterprise  State-owned  100% foreign capital  Joint Ventures 2. Gender  Male  Female 3. Age  =41 4. Working position  Staff  Leader / Expert  Manager 5. Education level  High school  Intermediate  College  University  Post-university 64 [...]... intention of leaving the company for another job while they are satisfied with their current income  They are more responsible for the work they are in charge  They have more discipline in observing the rules of the company So the hypothesis is set out: H1: High income / salary will make employees more loyal to the businesses (2) Favorable working conditions The working environment has always been interested...recognizing the benefits of understanding, managing and enhancing the loyalty of employees Thus, despite the loyalty of employees is recognized as one of the factors which is most crucial to the success of the business, it is not surprising to note that companies are facing with the critical challenges in developing a team of enthusiastic and dedicated 2.2 Empirical literature: Herzberg (1968): In this... decisions will make employees more loyal to the businesses H5: Fair reward will make employees more loyal to the businesses H6: Empowerment will make employees more loyal to the businesses 4.6 Testing of the adjusted model: After completing stage of factor analysis, there are six factors put into testing of model The factor value is the average value of the component of observed variables of that factor... The observed variations of the remaining five factors including High income / salary, Favorable working conditions, Targets suitability, Fair reward and Empowerment have no change from baseline 4.4.3 Explanation of results: The results of analyzing factors gave the measurement model of the loyalty of employees to the organization that is a combination of scale: High income / salary; Favorable working... -.563 -.743 115 229 -.260 5 5 4.2.2 The loyalty of employees: 5 5 The observed5variables in the scale of the loyalty of employees, Y1 (I'm willing to 5 introduce to people about my company as a good working place), Y2 (I am proud 5 5 to introduce to people about the product / service of the company), Y3 (I will stay 5 working with5 the company in long term although others suggest more attractive 5 27... meeting customer requirements (Bowen & Lawler, 1992) Thus the hypothesis is set out: H7: Empowerment will make employees more loyal to the businesses 3.3 Research model: This study uses a linear regression model to test the influence of the determinants on the loyalty of employees in businesses Loyalty = β0 + β1*High income + β2* Favorable working conditions + β3* Target suitability + β4* Support from... data entry Therefore, the number of formal questionnaire was conducted to analyze input only remaining 453 sets, accounting for 76% of the sent questions 21 3.5 Method of testing: Using data processing techniques using SPSS 11.5 software, testing through the following steps:  Preliminary assessment of the scale and reliability of variables measured by Cronbach’s alpha coefficients, and the values... Adjusted model: 33 High income Favorable working conditions Target suitability Loyalty of employees Management decisions Fair reward Empowerment 34 Hypotheses of the adjusted model: H1: High income will make employees more loyal to the businesses H2: Favorable working conditions will make employees more loyal to the businesses H3: Target suitability will make employees more loyal to the businesses H4: Management... methods of Principal axis factoring with Promax rotation will be done and stops when extracting factors of Eigenvalue greater than 1  Finally, test the hypothesis of a structural model and the level which fit the overall model 3.2 Variables: (1) High income / salary: Remuneration has always been one of the most challenging issues for managers in every business Businesses often have multiple points of view,... notice the multi-collinearity problem as regression analysis According to matrix of correlation, variables are correlated and significant at the level of 0.01 The correlation coefficient of the dependent variables are the loyalty of employees and the other independent variables is relatively high, we can preliminarily conclude that the independent variables can be put into the model to explain for . Determinants of the loyalty of employees in businesses . The paper attempts to identify the most important determinants of the loyalty of employees and provide an integrated analysis on the. REVIEW 2.1. Theoretical literature: 2.1.1. Approaches in the study of the loyalty of employees: There are many approaches in the study of the loyalty of employees in businesses. Loyalty can. make employees more loyal to the businesses. 3.3. Research model: This study uses a linear regression model to test the influence of the determinants on the loyalty of employees in businesses.