Impact of human resource management practices on organizational performance in small and medium enterprises in thai nguyen city

IMPACT OF HUMAN RESOURCE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFORMANCE IN SMALL AND MEDIUM ENTERPRISES IN THAI NGUYEN CITY _ A DISSERTATION Presented to the Faculty of the Graduate School Southern Luzon State University, Lucban, Quezon, Philippines in Collaboration with Thai Nguyen University, Socialist Republic of Vietnam _ In Partial Fulfillment of the Requirements for the Degree Doctor of Business Administration _ By LE KIM ANH (MAY) December 2013 i APPROVAL SHEET The Dissertation of LE KIM ANH entitled IMPACT OF HUMAN RESOURCE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFORMANCE IN SMALL AND MEDIUM ENTERPRISES IN THAI NGUYEN CITY, VIETNAM Submitted in Partial Fulfilment of the Requirements for the Degree DOCTOR OF BUSINESS ADMINISTRATION A program offered by Southern Luzon State University, Republic of the Philippines in collaboration with Thai Nguyen University, Socialist Republic of Vietnam has been approved by Oral Examination Committee MELCHOR MELO O PLACINO, PhD Expert WALBERTO A MACARAAN, EdD Expert CONRADO L ABRAHAM, PhD Expert EDWIN P BERNAL, DBA External Panel CECILIA N GASCON, PhD Chairman Endorsed by: Recommended by: ALICE T VALERIO, PhD Adviser APOLONIA A ESPINOSA, PhD Dean Accepted in Partial Fulfilment of the Requirements for the Degree Doctor of Business Administration _ Date WALBERTO A MACARAAN, EdD Vice President for Academic Affairs ii CERTIFICATE OF ORIGINALITY This is to certify that the research work / dissertation entitled “Impact of Human Resource Management Practices on the Organizational Performance of the Small and Medium Enterprises in Thai Nguyen Province”, orally defended/ presented under the DBA Program jointly offered by Southern Luzon State University of the Republic of the Philippines and Thai Nguyen University of the Socialist Republic of Vietnam, embodies the result of original and scholarly work carried out by the undersigned This dissertation does not contain words or ideas taken from published sources or written works by other persons which have been accepted as basis for the award of any degree from other higher education institutions, except where proper referencing and acknowledgement were made _ Researcher/Candidate Date Orally Defended: iii ACKNOWLEDGMENT I would like to extend my sincerest gratitude and thanks to the following people who made this piece of work a reality DR Cecilia N Gascon, President of the Southern Luzon State University in the Republic of the Philippines, for her untiring effort and belief that this collaboration is possible thus enabling us to pursue the DBA degree; Dr Dang Kim Vui President of Thai Nguyen University in the Socialist Republic of Vietnam, for his untiring effort and belief that this collaboration is possible thus enabling us to pursue the DBA degree; Dr Alice T Valerio, for her support and supervision during my study; her kindness and daily instructions in the last three years are highly appreciated and this dissertation is as much her work as mine; Prof Nordelina Ilano, Director, Office for International Affairs for her support to DBA1 students; Dr Tran Thanh Van, the Dean of Graduate School; Dr Dang Xuan Binh, Director of International Training Center; and Dr Nguyen Thanh Hai, Vice Director of International Training Center of Thai Nguyen University, for their assistance and encouragement to pursue this study; All the SLSU and TNU Professors, for their support and guidance throughout the study in Thai Nguyen University, Vietnam; My dearest friends for their kindness and remarkable support; and My family, for their support and encouragement – my source of greatest inspiration for my success; Le Kim Anh iv DEDICATION This research is wholeheartedly dedicated with all sincerity and love to my FAMILY… To my Mom and my son who provided me with love and care To ALL OF THEM…I humbly dedicate my work and success in life Le Kim Anh v TABLE OF CONTENTS PAGE TITLE PAGE ……………………………………………………………… i APPROVAL SHEET ……………………………………………………… ii CERTIFICATE OF ORIGINALITY ……………………………………… iii ACKNOWLEDGEMENT ………………………………………………… iv DEDICATION ……………………………………………………………… vi TABLE OF CONTENTS ………………………………………………… vii LIST OF TABLES ………………………………………………………… ix LIST OF FIGURES ……………………………………………………… x LIST OF APPENDICES ………………………………………………… xi ABSTRACT ………………………………………………………………… xiii CHAPTER I II III IV INTRODUCTION …………………………………………… Background of the Study ………………………………… Objectives of the Study …………………………………… Hypotheses of the Study ……………………… ………… Significance of the Study ………………………………… Scope and Limitations of the Study ……………………… Definition of Terms ………………………………………… REVIEW OF LITERATURE ……………………………… 12 Conceptual Framework ………………………………….… 66 METHODOLOGY Locale of the Study ………………………………………… 69 Research Instrument ……………………………………… 69 Populations, Sample Size & Sampling Technique …… 70 Data Gathering Procedure ………………………………… 70 Statistical Treatment ……………………… …….…… 71 RESULTS AND DISCUSSIONS ………………………… 74 vi V SUMMARY, FINDINGS, CONCLUSIONS AND RECOMMENDATION Summary…………….……………………………………… 97 Conclusions ………………………………………………… 101 Recommendations ………………………………………… 102 REFERENCES ……………………… ………………………………… 107 APPENDICES …………………………………………………………… 114 CURRICULUM VITAE …………………………………………………… 122 vii LIST OF TABLES TABLE PAGE Numerical and Adjectival Ratings for Organizational Performance 71 Percentage Distribution of Respondents’ Profile in Terms of Type of Industry and Ownership 75 Percentage Distribution of Respondents’ Profile in Terms of Business Characteristics 76 The Assessment of Respondents on HRM in Terms of Recruitment and Selection 77 The Assessment of Respondents on HRM in Terms of Training and Development 78 The Assessment of Respondents on HRM in Terms of Career Planning System 79 The Assessment of Respondents on HRM in Terms of Participation and Involvement 80 The Assessment of Respondents on HRM in Terms of Compensation and Benefits 81 The Assessment of Respondent on HRM in Terms of Performance Appraisal 82 10 Perceived Organizational Performance 83 11 Variables Included in Analyses 85 12 Descriptive Statistics 86 13 Correlations amongst Variables 90 viii LIST OF FIGURES FIGURE PAGE The Category of Micro, Small and Medium-Sized Enterprises 13 General Features of the SMEs Organization System 16 The Impact of the Factors of SMEs’s HR Practices on the Organizational Performance 68 Distribution of Respondents’ Profile by Type of Industry 75 Distribution of Respondents’ Profile by Type of Ownership 76 ix LIST OF APPENDICES APPENDIX PAGE A Letter to Respondents 115 B Questionnaire - Checklist 116 ` x 109 Ferris, G.R., Hochwarter, W.A., Buckley, M.R., Harrell-Cook, G., and Frink, D.D (1999) Human Resource Management: Some New Directions Journal of Management 25 (3), 385-415 Ferris, G.R., Hochwarter, W.A., Buckley, M.R., Harrell-Cook, G., and Frink, D.D.(2000) Human Resource Management: Some New Directions Journal of Management 25 (3), 385-415 Ferris, G.R., Hall, A.T., Royle, M.T., and Martocchio, J.J (2004) 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Journal of Management Studies 32(2), 215-247 Wright, P.M., Dunford, B.D and Snell, S.A (2001) Human resources and the 113 resource based view of the firm Journal of Management 27(6), 701721 Wright, P.M., Garder, T.M., Moynihan, L.M., and Allen, M.R (2005) The relationship between HR practices and firm performance: Examining causal order personnel Psychology 58(2), 409-446 Wright, P M., McCormick, B., Sherman, W.S and McMahan, G C (1999) The role of human resource practices in petro-chemical refinery performance, International Journal of Human Resource Management 10(4),551-571 Wright, P.M., McMahan, G.C., McCormick, E., and Sherman, W.S (1998) Strategy, core competence and HR involvement as determinants of HR effectiveness and refinery performance Human Resource Management 37(1), 17-29 Zacharatos, A., Barling, J and Iverson, R.D (2005) High performance work systems and occupational safety.Journal of Applied Psychology 90(1) 77-93 114 APPENDICES 115 APPENDIX A Letter to Respondents Dear Respondents, I am currently conducting a study about “Impact of Human Resource Management Practices on Organizational Performance in Small and Medium Enterprises in Thai Nguyen City”: An input to an action plan is a requirement for the degree of Doctor of Business Administration The objective of this research survey is to identify and explain the extent of HRM Practicesin the organizations of SMEs in Thai Nguyen and their impact on organizational performance The results of this study will facilitate the organizations to address their growth and performance and will help to design effective HRM strategies for future goals achievement You are requested to take 25 minutes out of your busy schedule to fill this questionnaire that comprises three parts Please fill both parts completely Your cooperation is highly appreciated If you need findings of this research please send a request tominhkhanganh@gmail.com Respectfully yours, Le Kim Anh Researcher 116 APPENDIX B Questionnaire - Checklist Directions: Please answer the questionnaire checklist by putting a checkmark on the item that corresponds to your choice or by filling in the answer on the space provided Rest assured that any information will be treated with trust and confidentiality Part I PROFILE OF THE RESPONDENTS What type of enterprise? Manufacturing Trading Service Others……………… The form of ownership Private enterprise Limited company Joint stock company State company Other…………………… Length of service Below years -5 years - 10 years More than 10 years 4 Amount of employees -10 employees 11 - 30 employees 31 - 50 employees 51 - 100 employees 101 - 250 employees More than 250 employees 117 Part II THE LEVEL OF HRM PRATICES Please use the scale below to indicate the extent to which you agree with the following question regarding your company’s current performance Scale Verbal Interpretation Strongly agree (SA) Agree (A) Neutral (N) Disagree (DA) Strongly disagree (SdA) RECRUITMENT AND SELECTION Recruitment& selection system followed in our organization is well defined merit In our organization, line managers and HR managers participate in recruitment & selection Valid and standardized tests are used in the selection process of employees Selection system in our organization selects those having the desired knowledge, skills and attitudes Our organization uses comprehensive selection process before rendering a decision The organization uses assessment centers for selection Our organization uses unbiased test and interviewing techniques for employee selection Our organization selects employees without any bias We have strong merit criteria for employee selection 10 We use attitude and desire to work in a team and individual as a criterion in employee selection 118 TRAINING & DEVELOPMENT 5 Our organization conducts extensive (T&D) programs for Employees Employees at each job normally go through T&D programs every year Training needs are identified through a formal performance appraisal mechanism There are formal training programs to teach new employees the skills they needed Trainings need identified are realistic, useful and based on the organizational strategy There are formal training evaluation methods to assess the effectiveness of the training The organization has a system for calculating the cost and benefit of training T&D has helped reduce employee turnover in our organization T&D has resulted in higher employee performance in our organization 10 T&D has resulted in higher productivity and financial returns for the organization CAREER PLANNING SYSTEM Employees at each level in our organization have clear career ladder Employees at each level in our organization are aware about their career ladder Organizational and individual growth needs are aligned in this organization Our organization takes career planning and succession planning very seriously In our organization internal hiring is preferred over external New employees always get inspired by our career planning and development system Minorities and women have comparable opportunities of growth and development Organization is helping employees develop skills needed for their career Our organization provides opportunities to develop skills needed to attain career goal 10 Employees get career guidance from their supervisor without any hesitation 119 PARTICIPATION AND INVOLVEMENT 5 Employees at each level in org take part in decision-making process up to an extent Employees are asked by superiors to participate in related decisions Employees are provided opportunity to suggest improvements in the way things are done here Employees are trusted to make decisions for themselves and the organization Our organization gives rewards for making appropriate suggestions We have culture that promotes employee involvement in our organization We meet voluntarily to identify, operational problems relevant to the organization Our organization consults employees in strategic decision-making Employees decision freedom improves their satisfaction in our organization 10 Employees having liberty to organize their job tasks as per their convenience produce more output COMPENSATION AND BENEFITS Compensation offered by our organization matches the expectancy of employees In our organization, salary and other benefits are comparable to the market In our organization, compensation is decided on the basis of competence of the employee The compensation for all employees is directly linked to their performance In our organization, profit sharing is used as a mechanism to reward higher performance Our organization offers both financial and non-financial rewards without discrimination The compensation plan is revised accordingly with the economic situation We allow employees to work flexible hours We provide opportunities for employees to continue to learn and grow 10 Employee bonuses are based mainly on how the organization as a whole is performing 120 PERFORMANCE APPRAISAL Performance of the employees is measured onthe basis of objectives and quantifiable results Appraisal system in our organization is growthand development oriented Employees are provided performance based feedback and counseling Appraisal system is unbiased and transparent Appraisal information is used for bonuses, promotions and selected training Everybody working in the organization knows clear objectives of performance appraisal Appraisal system is modern and uses the latest techniques and technology Appraisal system has a strong influence on individual and team behavior Our organization conducts performance appraisal on a regular bases 10 In our company, performance appraisal is not used for penalization PART III: ORGANIZATION’S PERFORMANCE Please use the scale below to indicate the extent to which you agree with the following question regarding your company’s current performance Scale Verbal interpretation Strongly agree (SA) agree (A) Neutral (N) Disagree (DA) Strongly disagree (SdA) 121 How would you compare your organization’s performance over the past three years in comparison with other organizations in the same industry, in relation to the following; ORGANIZATION’S PERFORMANCE Quality of our products/services has been improved Development of new products or services is a major activity in our organization Organizational ability to attract employees has improved Ability to retain employees is a major strength of our organization Satisfaction of customers/clients is preferred concern of our organization Management and employees are having trustful relationship with each other Market Share of organization has been increased Our company has better standing in the market now, as compared to last years Organizations’ shares are improving in the stock exchange 10 My organization sets SMART targets for the employees 122 CURRICULUM VITAE I PERSONAL INFORMATION Full name : LE KIM ANH Sex Female : Date of Birth: September 1978 Birthplace : Thai Nguyen City, Thai Nguyen province, Viet Nam Civil Status: Marriage Children: Nguyen Le Minh Khang, male, years old Address: Current residence: No.397 Minh Cau Street - Thai Nguyen - Vietnam Phone: 09-83-171-387 Email address: minhkhanganh@gmail.com.vn II EDUCATIONAL QUALIFICATION Institution Date from - Date to Degree(s) or Diploma(s) obtained The Hanoi Orient University, Vietnam 1996-2000 Bachelor of Business Administration Hanoi University of Science and Technology, Vietnam 2000-2003 Master of Economic Management 2009-present Doctorate Program Southern Luzon State University 123 III CIVIL SERVICE, ELIGIBILITY AND GOVERNMENT Working history Date from to 2000- 2010 Company/Project Position Thai Nguyen College of Economics and Finance ( TCEF) Lecturer Description - Teach in Accounting, and Business Administration 2010- 2013 TCEF Head of Business - Teach and Administration manage the Faculty Faculty 2013- present TCEF Head of Scientific Management Department - Manage the Dep Professional membership: Member of Association technical and economic colleges I, the undersigned, certify that to the best of my knowledge and belief, this data correctly describes me, my qualifications and my experience Le Kim Anh ... conducted to assess impact of human resource management practices on the organizational performance of the small and medium enterprises in Thai Nguyen Province A total of 290 managers of the small. .. Dissertation of LE KIM ANH entitled IMPACT OF HUMAN RESOURCE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFORMANCE IN SMALL AND MEDIUM ENTERPRISES IN THAI NGUYEN CITY, VIETNAM Submitted in Partial... perceptions of high-involvement work practices defined as training, contingent compensation, participation decision making and information-sharing, in relationship to a number of organizational