EMPLOYEE TURNOVER AND RETENTION STRATEGIES OF SMALL AND MEDIUM ENTERPRISE SERVICE BUSINESSES IN HANOI

EMPLOYEE TURNOVER AND RETENTION STRATEGIES OF SMALL AND MEDIUM ENTERPRISE SERVICE BUSINESSES IN HANOI _ 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 NGO THI MAI (SUSAN) December 2013 i APPROVAL SHEET The Dissertation of NGO THI MAI entitled EMPLOYEE TURNOVER AND RETENTION STRATEGIES OF SMALL AND MEDIUM ENTERPRISE IN SERVICE BUSINESSES IN HANOI 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 WALBERTO A MACARAAN, EdD Expert JOANNA PAULA A ELLAGA, DBA Expert NELLY I MENDOZA, DBA Expert EDWIN P BERNAL, DBA External Panel CECILIA N GASCON, PhD Chairman Endorsed by: Recommended by: CONRADO L ABRAHAM, 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 iii ACKNOWLEDGMENT I would like to express my sincerest gratitude to the Management Board of the Southern Luzon State University, Thai Nguyen University, and to the teachers who taught me all the academic competencies necessary for me complete this study I would like to express my gratitude to Professor Conrado L Abraham, my enthusiastic teacher, for the encouragement, and for the time he spent guiding me in the conduct of this research I would like to express my sincere thanks to the Department of Employment - Ministry of Labor, Invalids and Social Affairs, Department of Labor, Invalids and Social Affairs Hanoi, and to the SMEs service business in Hanoi that helped me collect the data for the study I sincerely appreciate the Board of the University of Labor and Social Affair (ULSA), my colleagues in ULSA, and my classmates in DBA1 for helping me accomplish this study Finally, I would like to give thanks to my family who shared with me their enthusiasm and who encouraged me to complete my dissertation Ngo Thi Mai iv DEDICATION To my family and friends This piece of work is for you NTM v TABLE OF CONTENTS PAGE TITLE PAGE ……………………………………………………………… i APPROVAL SHEET ……………………………………………………… ii CERTIFICATE OF ORIGINALITY ……………………………………… iii ACKNOWLEDGEMENT ………………………………………………… iv DEDICATION ……………………………………………………………… v TABLE OF CONTENTS ………………………………………………… vi LIST OF TABLES ………………………………………………………… viii LIST OF FIGURES ……………………………………………………… ix LIST OF APPENDICES ………………………………………………… x ABSTRACT ………………………………………………………………… xi CHAPTER I II III INTRODUCTION …………………………………………… Background of the Study ………………………………… Statement of the Problem ………………………………… Objectives of the Study …………………………………… Significance of the Study ………………………………… Scope and Limitations of the Study ……………………… Definition of Terms ………………………………………… REVIEW OF LITERATURE ……………………………… Theoretical Framework ………………………………….… 37 Conceptual Framework ………………………………….… 39 METHODOLOGY ………………………………………… 40 Locale of the Study ………………………………………… 40 Research Design …………………………………………… 40 Population, Sample and Sampling Technique ………… 40 Research Instrument ……………………………………… 41 Data Gathering Procedure ………………………………… 41 Statistical Treatment ……………………… …….…… 42 vi IV RESULTS AND DISCUSSIONS ………………………… 43 4.1 Profile of SME Respondents ………………………… 43 4.2 Evaluation of Expected Turnover and Retention in Enterprise in Hanoi 44 4.3 The Relationship Evaluation of Expected Turnover and Retention with Personal Factors ……………… 46 4.4 Analysis of Factors Affecting the Expected Turnover and Retention ………………………………………… V 59 SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS Summary of Findings ……………………………………… 61 Conclusions ………………………………………………… 66 Recommendations ………………………………………… 68 BIBLIOGRAPHY …….……………… ………………………………… 70 APPENDICES …………………………………………………………… 74 CURRICULUM VITAE …………………………………………………… 78 vii LIST OF TABLES TABLE PAGE 4.1 Age and Gender of Respondents 43 4.2 Qualifications of the Respondents 44 4.3 Expected Turnover and Retention Rate in SMEs Service Businesses in Hanoi 45 4.4 The Voluntary Turnover Rate 45 4.5 Cross-Tabulation of Expected Employees Turnover and Gender 46 Cross-Tabulation of Expected Employees Turnover and Age 47 Cross-Tabulation of Expected Employees Turnover and Education 48 Cross-Tabulation of Valuation of Job Title and the Satisfaction from Benefits 49 4.9 Cross-Tabulation of Work Satisfaction and Gender 50 4.10 Cross-tabulation of Work Satisfaction and Age 51 4.11 Cross-Tabulation of Work Satisfaction and Education 52 4.12 Cross-Tabulation of Emotional Attachment and Gender 53 4.13 Cross-Tabulation of Emotional Attachment and Age 54 4.14 Cross-Tabulation of Emotional Attachment and Education 55 4.15 Cross-Tabulation of Valuation of Job Title and Gender 56 4.16 Cross-Tabulation of Valuation of Job Title and Age 57 4.17 Cross-Tabulation of Valuation of Job Title and Education 58 4.18 Result of the Logistic Regression 60 5.1 Employee Retention Strategy 69 4.6 4.7 4.8 viii LIST OF FIGURES FIGURE PAGE 2.1 Types of Employee Turnover 2.2 Summary of Indirect Expenses Related to Employee Turnover 16 2.3 Adam' Equity Theory 37 2.4 Conceptual Framework Showing the Factors Influencing the Expected Turnover of Employees in SMEs Service Businesses in Hanoi, Vietnam 39 ix LIST OF APPENDICES APPENDIX A PAGE Questionnaire 75 ` x 64 24 respondents with higher education degree accounted for 17% The significance level is 0.961, greater than 0.05 The figure shows that there is no significant relationship between levels of job satisfaction with the education 11 A total of 152 respondents with 38% are not satisfied with their job, 91 are female and 61 are male The significance level is 0.966, higher than 0.05 This means that the emotional attachment has no significant relationship with gender factor 12 A total of 152 respondents with 38% are not satisfied with their job; in which 95 fall in the age range from 18-30, 29 respondents from 31-40, and 18 respondents from 41-50 The significance level is 0.339, higher than 0.05 This means that the emotional attachment has no significant relationship with the age factor 13 A total of 152 respondents with 38% are not satisfied with their job, 96 have graduate school degree and 28 have higher education degree The significance level is 0.991, higher than 0.05 This means that the emotional attachment has no significant relationship with the education factor 14 In terms of job title, 256 respondents with 64% find no increase in satisfaction in case increasing benefit, 151 of them are female and 105 are male The significance level is 0.306, greater than 0.05 This figure means that there is no significant relationship between the job title and the gender factor 15 In terms of job title, 256 respondents with 64% find no increase in satisfaction in case increasing benefits, 157 of them are from the age 65 bracket of 18-30, 41 from the age bracket of 31-40, and 47 from the age bracket of 41-50 The significance level is 0.029, less than 0.05 This figure means that there is a significant relationship between the job title and the age factor 16 In terms of job title, 256 respondents with 64% find no increase in satisfaction in case increasing benefits, 167 of them have graduate school degree and 52 are have higher education degree The significance level is 0.020, less than 0.05 This figure means that there is a significant relationship between the job title and the education factor 17 Based on the regression coefficients, it is easy to see from the six (6) variables there are only three variables: SAT (Work satisfaction), EA (Emotional attachment) and VAL (Valuation of job title) that are significantly relevant In the SAT variable (Work satisfaction), when work satisfaction has a value of one (1) (the employee is not satisfied, the ability of the employee who want to leave will get higher) For the EA variable (emotional attachment), when the emotional attachment has a value of one (1) (If not emotionally attached to the company), the ability of the employee who want to leave will get higher For the VAL variable (valuation of job title), when valuation of job title has a value of one (1) (If they not value job title), the ability of the employee who want to leave will get higher 66 Conclusions Of the total respondents, the female outnumbered the male by 20% At the same time, the respondents were mostly within the age bracket of 18 to 30 years old implying that majority (63%) of the workers in Hanoibased SMEs were still young The respondents with higher education degree have the highest rate (64%) The total number of respondents who want to stay is higher than those who want to leave However, the difference is very high This implies that there must be some issue with companies’ people policy Female employees want more stable job and have a tendency to stay with existing jobs than that of male employees But the difference is not much high The significance of Chi-square is greater than 0.05 (Sig = 0.458) This means that there is no significant relationship between gender and expected turnover Employees with age range from 18-30 are 250, which accounted for 62.5% of the total respondents, 57.6% want to stay and 42.4% want to leave The expected retention rates for the age ranges 31-40, 41-50 and over 50 are 62.5%, 49.1% and 60%, respectively However, the significance of Chi-square is greater than 0.05 (Sig = 0.478) This means that there is no significant relationship between age and expected turnover The significance of Chi-square is greater than 0.05 (Sig = 0.933) for education and turnover This means that there is no significant relationship between education and expected turnover 67 In terms of job title, the significance level of 0.000 is less than 0.05, meaning there is a significant relationship between valuation of job title and the satisfaction of benefits The significance level of 0.608 is greater than 0.05 which implies that there is no significant relationship between levels of job satisfaction and gender The significance level of 0.359 is greater than 0.05 which implies that there is no significant relationship between levels of job satisfaction and age The significance level of 0.961 is greater than 0.05 which implies that there is no significant relationship between levels of job satisfaction and education 10 The significance level of 0.966 is greater than 0.05 which implies that the emotional attachment has no significant relationship with gender factor 11 The significance level of 0.339 is greater than 0.05 which implies that the emotional attachment has no significant relationship with age factor 12 The significance level of 0.991 is greater than 0.05 which implies that the emotional attachment has no significant relationship with education factor 13 The significance level of 0.306 is greater than 0.05 which implies that there is no significant relationship between the job title and the gender factor 14 The significance level of 0.029 is less than 0.05 which implies that there is a significant relationship between the job title and the age factor 68 15 The significance level of 0.020 is less than 0.05 which implies that there is a significant relationship between the job title and the education factor 16 From the results, it is showed that the model is consistent The regression coefficients shows that out of the six (6) variables there is only three variables, SAT (Work satisfaction), EA (Emotional attachment) and VAL (Valuation of job title), are significantly relevant Recommendations Based on the conclusions, it is recommended that companies should develop workable retention strategies that reflect all variables including work satisfaction, emotional attachment and valuation of job title Based on the results of this study, the general strategic management process, a set of retention strategy and recommendations were proposed: 69 Table 5.1 Employee Retention Strategy Factors Strategy categories Human resource planning and selection Job title Work satisfaction - Designing effective promotion programmed Employees who are recruited at the starting stage should be given promotion to have a higher position when their qualifications are met Also, vacancies for higher job titles should be declared to every employee so that they can apply and compete equally - Launching job expansion and job enrichment to help workers be able to use their potential skills and knowledge effectively - Establishing realistic job requirements and expectations for different employees Training and development Compensation scheme and promotion Effective communication -Creating chances for people to learn and develop while working The perception of having opportunities can derive satisfaction with job and improve work performance - Careful evaluation of staff with clear criteria for proper promotion of higher position when they deliver outstanding performance Emotional attachment -Enhancing the recruitment procedure by frequent training and updating to assess the company objectives, and working conditions, thereby making sure only those who are suitable and passionate about the job are recruited -Operating effective orientation for new employees -Giving employee efficient training to help them have necessary skills to cope with difficulties that might arise from works -Offering attractive -Giving staff greater and fair wages as rights, and authority well as other benefits as they have such as insurance, successfully accommodation or completed their task vacation for high thereby making them performing feel more attached to employees the work -Focusing on open communication for complete commitment and participation of every person in the company This will aid in contributing to a more inspiring, creative and satisfied workforce -Sending positive messages to motivate employees and clearly state what should be done -Making sure of a transparent process with willingness of the managers to receive any complain or feedback from people at the lower level 70 BIBLIOGRAPHY Abdel-Hamid, T.K (1992) 'Investigating the Impacts of Managerial Turnover/Succession on Software Project Performance' Journal of Management Information Systems, 9(2), pp 127-144 Akinboye, J.O (2001) Executive behavior battery Ibadan: Stirling-Horden Publishers Alexander Hiam, Motivating & Rewarding Employee, year 1999 Allen, J.P (2010) 'Knowledge-Sharing Successes in Web 2.0 Communities' IEEE Technology and Society Magazine, Spring, pp 58-64 Anantatmula, V.S (2010) 'Impact of cultural differences on knowledge management in global projects' The journal of information and knowledge 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What is your 18 - 30 31-40 age? What is your Graduate qualification for Other School your job? If you will look for a new job, No Improvement what will be improvement in Position your in Position preference? 41-50 >50 Higher Education MBA DBA 76 Response No 10 11 Question What is your opinion about replacing No Improvement the old improvement in benefits with in satisfaction new benefits satisfaction from on a from the the benefits monthly basis benefits in your organization? Are you satisfied with Not at all Very little you current job? To what extent you feel that quitting the Not at all Very little present job will give you a satisfied job? To what extent you are emotionally Not at all Very little attached to your company? Is there any inside With one communication No channel channel channel in your organization? What is the frequency of the inside None at all Very little communication in your organization? Do you have access to the communication channels No access Very little present in your organization? Moderate Fairly enough Very high Moderate Fairly enough Very high Moderate Fairly enough Very high With two channels With Three channels With Four channels and above Moderate Fairly enough Very high Moderate Fairly enough Very high 77 Response No Question 12 What is your opinion about creating awareness on company values and employee benefits to its own employees to retain them? Not useful Very little use Moderate Good Very high The total score of questions 6, 7, will be calculated and the region will be specified by the researcher on the scale given below result .4 12 Retention Indifference Attrition Reference table Common Internal Communication Channels In the Organizations E-mail/printed circulars Employee meetings Celebration of special occasions of Channels the employee Print media Others 78 CURRICULUM VITAE I Personal Information Full name : NGO THI MAI Date of birth : June, 11th 1979 Gender : Female Marital Status : Married Nationality : Vietnamese Contact address: • Current residence No.17/10 Vong Thi street - Tay Ho district – Hanoi- Vietnam • Phone: o Mobile +849-83-102-992 o Home phone +844-38-363-983 Email Address : ngomai116@yahoo.com II Education Qualification: Institution Date fromDate to Degree(s) or Diploma(s) obtained Vinh Education University 1997-2001 Degree of Bachelor of Mathematics Hanoi Education University 2001-2003 Degree of Master of Mathematics III Civil Service, Eligibility and Government Company : The University of Labor and Social Affairs (ULSA) Position : Teacher I, the undersigned, certify that to the best of my knowledge and belief, that the above mentioned data correctly describes me, my qualifications and my experience Ngo Thi Mai