Factors impact employer attractiveness among IT engineers in ho chi minh city

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY LE TIEN THANH FACTORS IMPACT EMPLOYER ATTRACTIVENESS AMONG IT ENGINEERS IN HO CHI MINH CITY MASTER OF BUSINESS ADMINISTRATION THESIS HO CHI MINH CITY- 2011 MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY LE TIEN THANH FACTORS IMPACT EMPLOYER ATTRACTIVENESS AMONG IT ENGINEERS IN HO CHI MINH CITY MAJOR: BUSINESS ADMINISTRATION MAJOR CODE: 60.34.05 MASTER OF BUSINESS ADMINISTRATION THESIS SUPERVISOR: DR HO TIEN DUNG MSc TA THI BICH THUY HO CHI MINH CITY- 2011 i ACKNOWLEDGEMENT I would like to thank my supervisors Dr Ho Tien Dung and MSc Ta Thi Bich Thuy for their intensive guidance and encouragement during the course of my study I would like to express my sincere thanks to Dr Pham Quoc Hung and Dr Nguyen Thi Nguyet Que for their reviews and constructive suggestions I would like to extend my sincere thanks to Professor Nguyen Dinh Tho, Dr Tran Ha Minh Quan, Dr Nguyen Thi Mai Trang, members of the proposal examination committee, for their valuable comments and feedbacks I would like to express my sincere gratitude to all of my teachers at Faculty of Business Administration and Postgraduate Faculty, University of Economics Ho Chi Minh City for their teaching and guidance during my MBA course Finally, I would like to specially express my thanks to my wife, my family, all of my classmates and my friends and for their support and encouragement Ho Chi Minh City, 10th December 2011 Le Tien Thanh ii Abstract Master Thesis in Business Administration, Summer 2011 Economics University Ho Chi Minh City Attracting and selecting the right types of employees, especially high quality resources have always been a challenge for organization But recruiting qualified applicants may become increasingly difficult over the next 15 years as demographic and economic factors are expected to create a “war for talent” A recent global survey from McKinsey in 2006 revealed that managers ranked “finding talented people” as the single most important managerial preoccupation for the rest of the century Therefore, talented and skilled person will become rare and precious in the labor market Thus, knowing what these candidates value in an organization and what attracts them to a company is an important prerequisite for successful recruitment activities Both qualitative and quantitative approaches were considered in this research First, the qualitative research is conducted through making in-depth interview with eight managers of IT/Telecommunication companies to check the content and meanings of words using in the measurement scales Then the main research is quantitative with 258 engineers who currently work in IT sector The Cronbach’s alpha is used to measure reliability, the Exploratory Factor Analysis attempts to identify underlying variables and regression analysis is used to test the research model and hypotheses The result confirms that Interest value, Social value, Economic factors, Development value, and Application value have positive impacts on Employer Attractiveness among IT engineers in Ho Chi Minh City Therefore, the benefit of this study will help IT companies to prioritize these critical factors when they want to enhance their attraction and attract talented IT engineers Key words: Employer Attractiveness, interest value, social value, development value, economic value iii Contents Page CHAPTER 1: INTRODUCTION 1.1 The problem statement 1.2 Research questions 1.3 Research objectives 1.4 Research methodology 1.5 Scope and delimitations of the study 1.6 Structure of the study CHAPTER 2: REVIEW OF RELEVANT LITERATURE 2.1 Concepts 2.1.1 Job choice and uncertainty 2.1.2 Job choice determinants 2.1.3 Employer knowledge 2.1.4 Instrumental and Symbolic attributes 2.1.5 Employer Attractiveness from employee perspective 10 2.2 Research Model 11 2.2.1 Variables and Hypotheses 11 2.2.2 Research model 12 CHAPTER 3: RESEARCH METHODOLOGY 13 3.1 Research process 13 3.2 The pilot research 14 3.3 The main research 14 3.3.1 The scales 15 3.3.2 The questionnaire 18 3.3.3 Measurement 18 3.3.4 Data collection 18 3.3.5 Population and sampling 19 CHAPTER 4: RESULTS AND DISCUSSION OF THE FINDINGS 20 4.1 Descriptive statistics 20 iv 4.2 Cronbach’s Alpha Analysis 24 4.3 EFA Analysis 27 4.4 Correlation analysis 31 4.5 Regression analysis 31 CHAPTER 5: CONCLUSIONS AND IMPLICATIONS 37 5.1 Conclusions of the research 37 5.2 Implications of the research 37 5.3 Limitations and suggestion for further researches 38 REFERENCES 40 APPENDIX i v LIST OF TABLES & FIGURES Table 4.1: Demographic statistics of the respondents 21 Table 4.2: Descriptive statistics 22 Table 4.3: Cronbach’s Alpha of all variables 25 Table 4.4: Cronbach’s Alpha of Employer Attractiveness after removing variable V53 26 Table 4.5: KMO and Bartlett’s Test 27 Table 4.6: Total Variance Explained 28 Table 4.7: Rotated Component Matrix 29 Table 4.8: The final measurement scale 30 Table 4.9: Mean, Standard Deviation and Correlation Coefficient 31 Table 4.10: Regression analysis on data of 258 responses 33 Table 4.11: Results 36 CHAPTER 1: INTRODUCTION 1.1 The problem statement Organizations have always been concerned with attracting and selecting the right types of employees, Schneider (1987) Yet, recruiting qualified applicants may become increasingly difficult over the next 15 years as demographic and economic factors are expected to create a “war for talent”, Axelrod et al (2001) Two recent global surveys from McKinsey Quarterly strongly support this view While the first, in 2006, found that managers ranked “finding talented people” as the single most important managerial preoccupation for the rest of the century, the second, in 2007, revealed that nearly half of the respondents expect intensifying competition for talent to have a major effect on their companies over the next five years, Guthridge, Komm & Lawson (2008) Therefore, talented and skilled person will become rare and precious in the labor market Consequently, knowing what these candidates value in an organization and what attracts them to a company is an important prerequisite for successful recruitment activities Due to the above mentioned cause, it has become increasingly important for organizations to make themselves stand out from their competitors so that they are seen as attractive employers for prospective applicants Undoubtedly, this is a challenge because jobs and organizations within the same industry are often very similar, Maurer, Howe, & Lee (1992); Taylor & Collins (2000); Thomas & Wise (1999) According to Barber (1998), early recruitment stages are characterized by an extensive search and screening, the gathering of rudimentary information about multiple opportunities, and little or no personal contact between the parties involved Considering the importance of applicants’ early impressions of organizations as employers, research by Barber (1998); Cable & Graham (2000); Cable & Turban (2001); Highhouse & Hoffman (2001); Rynes (1991); Lievens, Highhouse, (2003); Lievens at al (2005) were exploring the content or basis of these impressions As in Lievens, Highhouse (2003), organizational attraction was influenced by applicants' perceptions of job and organizational characteristics such as pay, opportunities for advancement, location, career programs, or organizational structure (Cable & Graham, 2000; Highhouse, Zickar, Thorsteinson, Stierwalt, & Slaughter, 1999; Honeycutt & Rosen, 1997; Lievens, Decaesteker, Coetsier, & Geirnaert, 2001; Turban & Keon, 1993) Besides that, in the early stages of the recruitment process, prospective applicants ascribed traits to organizations (Slaughter, Zickar, Highhouse, Mohr, Steinbrenner, & O'Connor, 2001) For example, people referred to some employing organizations as trendy, whereas other employing organizations were seen as prestigious These studies also discovered that these trait inferences about organizations were related to the image of organizations as employers, with applicants being more attracted to employing organizations having traits similar to their own personality For a better refinement from employee perspective, Berthon, Ewing and Hah (2005) suggest five items of Interest value, Social value, Economic value, Development value and Application value to evaluate how an organization is attractive as an employer to potential employees Vietnam is now one of the 10 most attractive global services locations in the world (A.T Kearney, 2009) and the IT (Information Technology) industry is estimated to grow at a compound annual growth rate of 16% over the period of 2011-2015 With around 10,000 licensed firms to provide services, with around 2000,000 resources (Ministry of Information and Communication, 2011) On May 2011, German-based Bosch Group, a leading global supplier of IT services, opened a center focusing on embedded software and mechanical engineering services in Ho Chi Minh City This US$4.5-million center, located at the Saigon High-tech Park in District 9, is expected to employ around 500 local engineers by 2015 This recently setup, together with the rising presence of other big IT names like HP, Aricent, Sigma Designs, Texas Instruments, and Simax Global Services in Vietnam lead to competition with local entrepreneurs in terms of human resources Although many researches in the field of employer attractiveness have been conducted so far, few researches are available in the local context, especially for IT industry For this reason, it is necessary to conduct research on factors impacting employer attractiveness among IT engineers in Ho Chi Minh City, especially with factors such as Interest, Social, Development, Economic, Application From this study, companies can make suitable plans in order to enhance themselves and become more attractive to qualified candidates 1.2 Research questions This paper attempts to determine “What major factors impact employer attractiveness among IT engineers in Ho Chi Minh City?” 1.3 Research objectives The objective of the research is to identify critical factors that affect Employer Attractiveness among IT engineers in Ho Chi Minh City The lessons learned from this study would be useful for IT companies in their efforts to attract the best candidates available in the market 1.4 Research methodology The purpose of this research is to identify the factors impacting employer attractiveness among IT engineers in Ho Chi Minh City by using the EFA method, hence both pilot research and quantitative research are considered The pilot research is conducted by making an in-depth interview with eight managers of four IT companies in Ho Chi Minh City in order to get their ideas about employer attractiveness factors and meaning of words using in the questionnaires The questionnaire is adapted from the literature as well as the comments gathered from the interviews 35 The results of the multi-linear regression in Table 4.10 showed that the standardized coefficient beta between Economic and Employer Attractiveness was positive, and significant (β =0.365, t =5.047, sig =0), meaning that hypothesis was accepted by the data In conclusion, there was significant impact of Economic value on Employer Attractiveness among IT engineers in Ho Chi Minh City And it is shown that Economic value has the highest impact on Employer Attractiveness among IT engineers in Ho Chi Minh City with Standardized Coefficients Beta =0.365 H4: Development has a positive impact on Employer Attractiveness among IT engineers in Ho Chi Minh City This hypothesis suggested that IT engineers in Ho Chi Minh City would find an employer attractive if they had a positive Development value in that firm The results of the multi-linear regression in Table 4.10 showed that the standardized coefficient beta between Development and Employer Attractiveness was positive, and significant (β =0.241, t =4.526, sig =0), meaning that hypothesis was accepted by the data In conclusion, there was significant impact of Development value on Employer Attractiveness among IT engineers in Ho Chi Minh City And Development value has the second most impact Employer Attractiveness among IT engineers in Ho Chi Minh City with Standardized Coefficients Beta =0.241 H5: Application has a positive impact on Employer Attractiveness among IT engineers in Ho Chi Minh City This hypothesis supposed that IT engineers in Ho Chi Minh City would find an employer attractive if they had a positive Application value in that firm The results of the multi-linear regression in Table 4.10 showed that the standardized coefficient beta between Application and Employer Attractiveness was positive, and significant (β =0.122, t =4.804, sig =0.005), meaning that hypothesis was accepted by the data In conclusion, there was significant impact of Application value on Employer Attractiveness among IT engineers in Ho Chi Minh City 36 So the author has conclusion about the hypotheses test of the research model as shown in the Table 4.11 Table 4.11: Results Hypothesis Result Interest has a positive impact on Employer H1 Attractiveness among IT engineers in Ho Chi Accepted Minh City Social has a positive impact on Employer H2 Attractiveness among IT engineers in Ho Chi Accepted Minh City Economic has a positive impact on Employer H3 Attractiveness among IT engineers in Ho Chi Accepted Minh City Development has a positive impact on H4 Employer Attractiveness among IT engineers Accepted in Ho Chi Minh City Application has a positive impact on Employer H5 Attractiveness among IT engineers in Ho Chi Minh City Accepted 37 CHAPTER 5: CONCLUSIONS AND IMPLICATIONS 5.1 Conclusions of the research This research makes a theoretical contribution to verify the construct measurement scales of Employer Attractiveness among IT engineers and relevant factors from employee perspective within Ho Chi Minh City context The testing results of the measurement scales using Cronbach alpha and Exploratory Factor Analysis (EFA), which show that they meet the reliability and validity criteria The aim of this research was to explore factors impact on Employer Attractiveness among IT engineers in Ho Chi Minh City Five independent variables such as Interest value, Social value, Economic value, Development value and Application value, are examined in this research The findings of the research will help local enterprises, especially IT enterprises on spending effort and attention to appropriate factor, in order to attract more talented employee and be the winner in the increasingly competitive labor market 5.2 Implications of the research The finding of the study has implications for local enterprises, especially IT enterprises, to anticipate and allocate resources and effort across those factors in order to create an attractive image as employer and positioned themselves in the mind of potential applicants as the best place to work This study provide evidence to confirm Interest value, Social value, Economic value, Development value and Application value are positively impact Employer Attractiveness among IT engineers in Ho Chi Minh City But Economic value has the highest influence than the other factors, following by the Development value Therefore, enterprises need to in this factor is to review and consider to provide above-average salary, a good compensation package and equipped with promotional opportunities or providing potential employee opportunities to gain experience to further their career 38 In the IT industry, Interest value, which highlight the ability to create innovative and high quality products and services play a rather important role to employee So in the effort to attract skilled and proficient workforce, IT companies would need to send the clear message to potential employee of this difference to make itself more attractive to IT engineers Application value, which represents the attraction to employee of the opportunity to apply the knowledge they have studies, or share what they known with the other and giving back to society was proved to be less important than the above-mentioned factors The similar result is observed from the research that Social value, which represents the organization’s working environment, in terms of relaxed, fun collegial relationships and a team atmosphere are well less important than Economic, Development and Interest value 5.3 Limitations and suggestion for further researches The limitations of this study are restrictions in the research scope Firstly, the research is limited to IT engineers in Ho Chi Minh City context If it is conducted at different contexts, the results might be different Thus, future research should attempt to examine the impact of factors Employer Attractiveness but on different places would make the research more representative Secondly, a limitation of this research is the survey subjects were limited by ability to use computer and internet The questionnaire itself was designed to answer on the internet under the support of the software Google Docs - Forms and sent via email/social network Although, IT engineers are considered to be computer and internet proficient, but including the more traditional approach such as mail or site visit would help to create a more representative sample Thirdly, this research finds out that the impact of the factors such as Economic and Development value are stronger on Employer Attractiveness among IT engineers in Ho Chi Minh City But little is known on the causes of difference between these 39 two factors with the remaining three (Interest value, Social value and Application value), further research may examine in more detail to clear this suggestion Finally, this research just studies about the factors from the employee perspective From literature, Employer Attractiveness may be influenced by other factors such as: employer reputation, employer image, trait preferences, corporate social responsibility, word of mouth; or else, in the context of recruitment which includes factors of: source of job advertisement, employer website, etc These may serve as ideas for future research 40 REFERENCES Awang, Z.H and K Jusoff, 2009 “The Effects of Corporate Reputation on the Competitiveness of Malaysian Telecommunication Service Providers”, J Business and Management, 4(5): 173-178 Backhaus, K and S Tikoo, 2004 “Conceptualizing and Researching Employer Branding”, Career Development International, (5): 501-517 Cable, D.M and D.B Turban, 2003 “The Value of Organizational Reputation in the Recruitment Context: A Brand-Equity Perspective”, J Applied Social Psychology, 33 (11): 2244-2266 Berthon, P., Ewing, M and Hah, L (2005): “Captivating company: dimensions of attractiveness in employer branding”, International Journal of Advertising, 24(2): 151-173 Collins, C.J and C.K Stevens, 2001 “Initial Organizational Images and Recruitment: A Within-Subjects Investigation of the Factors 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