Performance appraisal fairness, work engagement, and intent to leave, the study of employees in the private sector

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Do Thi Tuyet Nhung PERFORMANCE APPRAISAL FAIRNESS, WORK ENGAGEMENT, AND INTENT TO LEAVE: THE STUDY OF EMPLOYEES IN THE PRIVATE SECTOR MASTER OF BUSINESS (Honours) Ho Chi Minh City - Year 2014 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business DO THI TUYET NHUNG PERFORMANCE APPRAISAL FAIRNESS, WORK ENGAGEMENT, AND INTENT TO LEAVE: THE STUDY OF EMPLOYEES IN THE PRIVATE SECTOR ID: 21110013 MASTER OF BUSINESS (Honours) SUPERVISOR: Nguyen Huu Lam, Dr Ho Chi Minh City – Year 2014 ACKNOWLEDGE I would like to express my gratitude to supervisor Dr Nguyen Huu Lam for his guidance, support, motivation, and understanding in all the time of my research Besides my supervisor, I would like to thank ISB committee for their encouragement, and insightful comments I would like to thank managers in HR Share and Care group and my classmates at ISB.MBus 2.3 for their sharing honestly in item generation and other phases They have provided important comments for my questionnaire as well as data analysis methods Especially, I am debted to my classmate Thai Van Trung Hieu for his supporting and sharing about SEM analysis In addition, I would like to thank participants in my investigation without charge In my daily work, I have been blessed with my chiefs and staffs at the Joton JSC for all their supports Especially, I am obliged to my direct chief Mr Hoang Minh Anh for his support and my subordinate Ms Nguyen Thi Hoang Anh for her assistant at work for me to finish thesis conveniently Finally, I would like to give my special thanks to my family whose love helped me to complete this work i ABSTRACT While Vietnam builds the Socio-Economic Development Strategy 2011-2020 with paying attention to human resource management and development, many organizations concern performance management and talent management in which performance appraisal, work engagement, and intent to leave are important concepts The study is conducted to identify whether perceived performance appraisal fairness can help employees to enhance their engagement at work as well as whether engaged employees can reduce their intent to leave organizations A sample of 170 employees from 15 organizations in the private sector was used to test hypotheses relating to these three concepts The results indicated that perceived performance appraisal fairness affected positively on work engagement and work engagement influenced negatively to intent to leave in Vietnam context Generally, the present study suggests important guidelines for private organizations to ensure fairness of performance appraisal system; thereby, it can help to enhance work engagement and manage employee turnover by controlling intent to leave Key words: performance appraisal fairness, work engagement, intent to leave ii TABLE OF CONTENTS AKNOWLEDGE i ABSTRACT ii TABLE OF CONTENTS iii LIST OF TABLES v LIST OF FIRGURES vi LIST OF ABBREVIATIONS vii Chapter 1: INTRODUCTION 1.1 Research Background 1.2 Research Problem 1.3 Research Objectives 1.4 Scope and Contribution of the Study 1.5 Thesis Structure Chapter 2: LITERATURE REVIEW 2.1 Perception of Performance Appraisal Fairness 2.1.1 Performance Appraisal Overall 2.1.2 Fairness of Performance Appraisal System 11 2.2 Work Engagement 14 2.3 Intent to Leave 16 2.4 Perceived Performance Appraisal Fairness and Work Engagement 18 2.5 Work Engagement and Intent to Leave 20 2.6 The conceptual model and hypotheses of the research 20 Chapter 3: RESEARCH METHODOLOGY 22 3.1 Research design 22 3.1.1 Research Method 22 3.1.2 Research Process 23 3.1.3 Population and Sampling Method 24 3.1.4 Measurement Instruments 25 3.1.5.Coding 27 3.1.6 Sample Size 27 iii 3.1.7 Data Collection 28 3.1.8 Data Analysis Method 28 3.2 Item Generation 33 3.3 Pilot Study 34 3.4 Main Study 36 Chapter 4: RESULTS AND DISCUSSIONS 38 4.1 Participants’ Demographic 38 4.2 Assessment of Scales 39 4.2.1 Assessment of Scale by Cronbach’s Alpha Cofficient 40 4.2.2 Assessment of Scale by Exploratory Factor Analysis 41 4.2.3 Assessment of Scale by Confirmatory Factor Analysis 42 4.3 Saturated Measurement Model 45 4.4 Structural Model 48 4.4.1 Maximum Likelihood Method 48 4.4.2 Bootstrap Method 50 4.5 Testing the Hypotheses 51 4.6 Discussions for Findings 52 Chapter 5: FINDINGS AND IMPLICATIONS 55 5.1 Conclusions 55 5.2 Management Implications 56 5.3 Limitations and Directions for Further Researches 57 REFERENCES APPENDICES iv LIST OF TABLES Table 4.1: Characteristics of the participants 38 Table 4.2: Correlation between constructs of perceived performance appraisal fairness 44 Table 4.3: Correlation between research concepts 46 Table 4.4: Results of reliability and average variance extracted 47 Table 4.5: Result of regression weights 49 Table 4.6: Regression weights by maximum likelihood and bootstrap 50 Table 4.7: Results of testing hypotheses 52 v LIST OF FIGURES Figure 2.1: Performance appraisal process 10 Figure 2.2: Greenberg's Taxonomy of Justice Perceptions Applied to Performance Appraisal 13 Figure 2.3: The conceptual model 21 Figure 3.1: Research process 23 Figure 4.1: CFA for perceived performance appraisal fairness scale 43 Figure 4.2: CFA for work engagement and intent to leave scale 45 Figure 4.3: CFA for saturated measurement model 47 Figure 4.4: Result of structural equation modeling 49 vi LIST OF ABBREVIATIONS AMOS : Analysis of Moment Structures AVE : Average variance extracted value CFA : Confirmatory Factor Analysis CR : Critical ratio value EFA : Exploratory Factor Analysis HRM : Human resource management KMO : Kaiser-Meyer-Olkin measure of sampling adequacy ML : Maximum Likelihood exploratory program PAF : Principal Axis Factoring PCA : Principal Component Analysis SEDS : The Socio-Economic Development Strategy SEM : Structural Equation Modeling SPSS : Statistical Packed of Social Sciences UWES : Utrecht Work Engagement Scale vii Chapter INTRODUCTION 1.1 Research Background The fact that Viet Nam has been a member of the World Trade Organization since January 11, 2007 is a successful step in the efforts to integrate into the global marketplace The current economic development is believed to be attributable to the political and economic reforms (Doi Moi), which was launched in 1986 (Nghiep & Quy, 2000) The new policies have prompted Vietnamese economy from a closed system into a multi-sector, globally integrated market economy with socialist characteristics The World Bank reports that Vietnam has developed from one of the poorest countries in the world, with per capita income below 100 dollars, to a lower middle-income country within a quarter of a century with per capita income of 1,130 dollars by the end of 2010 (Vietnam overview, n.d) One of the most remarkable achievements of Vietnam’s economic transition is the emergence of more dynamic and stronger private sector (Hakkala & Kokko, 2007) Asian Development Bank defines the private sector as all individuals or groups of individuals who invest or use private capital to produce or trade goods or services Therefore, in Vietnam, this definition includes formal and informal enterprises and collectives, domestic and foreign (ADB, 2005) Bartram, Stanton, and Thomas (2009) states that the Vietnamese government encourages a multi-sector economy and actively promotes the growth of private enterprises as crucial factors shaping the development of the economy Thurston, Jr P W (2001) Clarifying the structure of justice using fairness perceptions of performance appraisalpractices Unpublished doctoral dissertation, University at Albany, State University of New York Retrieved from http://search.proquest.com/docview/304760141/accountid=45905 Truong, Q., Van der Heijden, B.I.J.M & Rowley, C (2010) Globalisation, competitiveness, and human resource management in a transitional economy: The case of Vietnam International Journal of Business Studies, 18(1), 75–100 Udo, G.J., Guimaraes, T., & Igbaria, M (1997) An investigation of the antecedents of turnover intention for manufacturing plant managers International Journal of Operations and Production Management,17(9), 912–930 Van Teijlingen, E R., & Hundley, V (2002) The importance of pilot studies Nursing Standard, 16 (40), 33-36 Vietnam Overview (n.d.) Retrieved May 10, 2013, from http://www.worldbank.org/en/country/vietnam/overview Walsh, M B (2003) Perceived fairness of and satisfaction with employee performance appraisal Unpublished doctoral dissertation, The Louisiana State University Retrieved from http://search.proquest.com/docview/305320208/accountid=45905 65 APPENDICES APPENDIX I: Source of measurement scales Measurement scale Code Source PERCEIVED PERFORMANCE APPRAISAL FAIRNESS Procedural justice I have influence the outcomes of performance appraisal procedures PROFA1 (*) The procedures followed during performance appraisal process PROFA2 have been applied consistently in my organization The procedures followed during performance appraisal process are PROFA3 free of bias Gupta and Kumar (2013) The performance appraisal procedures are based on accurate PROFA4 information I can appeal against the outcomes arrived at by the performance appraisal procedures Distributive justice The outcome of performance appraisal process reflects the effort I have put into my work The outcome of performance appraisal process is appropriate for Gupta and the work I completed Kumar (2013) The outcome of performance appraisal process reflects what I have contributed to the organization The outcome of performance appraisal process is justified, given my performance Interpersonal justice 10 During the performance appraisal meeting, my supervisor treated me in a polite manner 11 My supervisor treated me with dignity during the performance INTFA2 appraisal meeting Kumar (2013) 12 My supervisor treated me with respect during the performance INTFA3 appraisal meeting 13 My supervisor refrained from improper remarks or comments (*) Gupta and INTFA4 APPENDIX I: Source of measurement scales (continuous) Measurement scale Code Source Informational justice INFFA1 14 My supervisor was candid in (his/her) communications with me 15 My supervisor explained the procedures of the performance INFFA2 appraisal process thoroughly 16 My supervisor gave reasonable explanations regarding the procedures 17 My supervisor tailored (his/her) communications to my specific needs WORK ENGAGEMENT At my work, I feel bursting with energy At my job, I feel strong and vigorous When I get up in the morning, I feel like going to work I am enthusiastic about my job My job inspires me I am proud of the work that I I feel happy when I am working intensely I am immersed in my work I get carried away when I am working TURNOVER INTENTION Presently, I am actively searching for other job In the last few months, I have seriously thought about looking for a new job I intend to leave the organization in the near future Note: (*) the items were removed after pilot survey APPENDIX II: VIETNAMESE QUESTIONNAIRE PHIẾU KHẢO SÁT Kính chào Anh/ Chị, Tơi tên Đỗ Thị Tuyết Nhung, học viên Viện Đào Tạo Quốc Tế (ISB) thuộc Trường Đại Học Kinh Tế TP HCM (UEH) Hiện nay, nghiên cứu mối liên hệ công hoạt động đánh giá thực công việc cá nhân với gắn kết nhân viên công việc ý định nghỉ việc nhân viên khu vực kinh tế tư nhân Việt Nam Rất mong quý Anh/chị dành thời gian để trả lời Bảng khảo sát Anh/Chị người làm có trãi nghiệm việc đánh giá thực công việc cá nhân doanh nghiệp Việc tham gia khảo sát hồn tồn tự nguyện khơng thể danh tính Tôi cam kết đảm bảo thông tin Anh/chị cung cấp giữ bí mật sử dụng cho nghiên cứu Tác giả sẵn lòng hồi đáp Anh/Chị qua email: do.tuyetnhung2012@gmail.com điện thoại 0916809157 q trình thực khảo sát có nhu cầu tham khảo kết khảo sát Tôi chân thành cảm ơn giúp đỡ hợp tác Anh/Chị! Nếu Anh / Chị làm việc tại: Doanh nghiệp có vốn góp Nhà nước 50% Anh/Chị vui lịng dừng khảo sát Các loại hình doanh nghiệp khác Anh/Chị vui lòng tiếp tục tham gia khảo sát NỘI DUNG KHẢO SÁT (Lưu ý thuật ngữ “đánh giá” dùng để hoạt động đánh giá thực công việc cá nhân Đánh giá thực công việc cá nhân hoạt động có liên quan đến việc đo lường kết công việc mà cá nhân thực so với tiêu chuẩn, tiêu công việc đề ra.) Hồn tồn khơng đồng ý 1 Tơi có ảnh hưởng tồn việc thiết lập thủ tục đánh giá (*) Toàn thủ tục đánh giá áp dụng quán tổ chức tơi Tồn thủ tục đánh giá tổ chức công Các thủ tục đánh giá xây dựng sở liệu xác Tơi khiếu nại thủ tục đánh giá Kết đánh giá phản ánh nỗ lực cơng việc Kết đánh giá thích đáng cơng việc mà tơi hồn thành Kết đánh giá phản ánh đóng góp tổ chức Kết đánh giá công chứng minh cho thành công việc tơi 10 Người quản lý có thái độ hịa nhã với tơi họp đánh giá 11 Người quản lý có thái độ nghiêm túc với tơi họp đánh giá 12 Người quản lý có thái độ tôn trọng với họp đánh giá 13 Người quản lý cố gắng tránh đưa nhận xét bình luận khơng thích hợp(*) 14 Người quản lý thẳng thắn trao đổi với 15 Người quản lý giải thích thấu đáo thủ tục đánh giá 16 Người quản lý trả lời hợp lý vấn đề liên quan đến thủ tục đánh giá 17 Người quản lý hướng trao đổi vào vấn đề cụ thể tơi Hồn tồn không đồng ý 18 Tôi cảm thấy tràn đầy lượng làm việc 19 Tôi cảm thấy hăng hái hưng phấn làm việc 20 Tôi mong muốn làm việc thức dậy vào buổi sáng 21 Tơi nhiệt tình với cơng việc tơi 22 Công việc tạo cho hứng khởi 23 Tôi tự hào công việc 24 Tôi cảm thấy hạnh phúc làm việc hăng say 25 Tôi say mê công việc 26 Công việc lơi tơi 27 Tơi tích cực tìm chọn công việc khác 28 Trong tháng gần đây, nghiêm túc nghĩ việc tìm kiếm cơng việc 29 Tôi dự định rời bỏ tổ chức thời gian tới PHẦN 2: THÔNG TIN CÁ NHÂN Anh/Chị vui lịng cho biết vài thơng tin cá nhân: Độ tuổi khoảng: Dưới 25 tuổi Từ 25 - 34 tuổi Từ 35 - 44 tuổi Trên 45 tuổi Giới tính: Nam Nữ Vị trí cơng việc: Nhân viên (khơng quản lý ai) Quản lý nhân viên Quản lý từ đến 10 nhân viên Quản lý 10 nhân viên Thời gian làm việc công ty: Dưới năm Từ - năm Từ - năm Từ - năm Trên 10 năm Note: (*) the items were removed after pilot survey APPENDIX III: Reliability test before removing PROFA1 and INTFA4 in pilot survey Item Procedural justice (Cronbach’s alpha: 0.75) PROFA1 PROFA2 PROFA3 PROFA4 PROFA5 Distributive justice (Cronbach’s alpha:0.85) DISFA1 DISFA2 DISFA3 DISFA4 Interpersonal justice (Cronbach’s alpha: 0.79) INTFA1 INTFA2 INTFA3 INTFA4 Informational justice (Cronbach’s alpha: 0.81) INFFA1 INFFA2 INFFA3 INFFA4 Work engagement (Cronbach’s alpha:0.90) WOENG1 WOENG2 WOENG3 WOENG4 WOENG5 WOENG6 WOENG7 WOENG8 WOENG9 Intent to leave (Cronbach’s alpha: 0.91) INTLE1 INTLE2 INTLE3 APPENDIX IV: Results of EFA after removing PROFA1 and INTFA4 in pilot survey Item PROFA2 PROFA3 PROFA4 PROFA5 DISFA1 DISFA2 DISFA3 DISFA4 INTFA1 INTFA2 INTFA3 INFFA1 INFFA2 INFFA3 INFFA4 TVE Eigenvalue Principal Axis Factoring Method with Promax Rotation Item WOENG1 WOENG2 WOENG3 WOENG4 WOENG5 WOENG6 WOENG7 WOENG8 WOENG9 INTLE1 INTLE2 INTLE3 TVE Eigenvalue Principal Axis Factoring Method with Promax Rotation APPENDIX V: Results of reliability by EFA in main survey Item Procedural justice PROFA2 PROFA3 PROFA4 PROFA5 Distributive justice DISFA1 DISFA2 DISFA3 DISFA4 Interpersonal justice INTFA1 INTFA2 INTFA3 Informational justice INFFA1 INFFA2 INFFA3 INFFA4 Work engagement WOENG1 WOENG2 WOENG3 WOENG4 WOENG5 WOENG6 WOENG7 WOENG8 WOENG9 Intent to leave INTLE1 INTLE2 INTLE3 APPENDIX VI: Results of validity by EFA in main survey Item PROFA2 PROFA3 PROFA4 PROFA5 DISFA1 DISFA2 DISFA3 DISFA4 INTFA1 INTFA2 INTFA3 INFFA1 INFFA2 INFFA3 INFFA4 WOENG1 WOENG2 WOENG3 WOENG4 WOENG5 WOENG6 WOENG7 WOENG8 WOENG9 INTLE1 INTLE2 INTLE3 TVE (%) Eigenvalue Principal Axis Factoring Method with Promax Rotation APPENDIX VII: Computation of composite reliability and average variance extracted Standardized loadings PROFA PROFA5 PROFA4 PROFA3 PROFA2 DISFA4 DISFA3 DISFA2 DISFA1 INTFA3 INTFA2 INTFA1 INFFA4 INFFA3 INFFA2 < < < < < < < < < < < < < < - PROFA PROFA PROFA PROFA DISFA DISFA DISFA DISFA INTFA INTFA INTFA INFFA INFFA INFFA INFFA1 WOENG1 WOENG2 WOENG3 WOENG4 WOENG5 WOENG6 WOENG7 WOENG8 < < < < < < < < < - INFFA WOENG WOENG WOENG WOENG WOENG WOENG WOENG WOENG WOENG9 INTLE1 INTLE2 INTLE3 < < < < - WOENG INTLE INTLE INTLE 0.731 0.757 0.75 0.781 AVE 0.570 Composite reliability 0.841 APPENDIX VIII: Results of regression weights (standardized) by ML method WOENG PROFA DISFA INTFA INFFA INTLE PROFA5 PROFA4 PROFA3 PROFA2 DISFA4 DISFA3 DISFA2 DISFA1 INTFA3 INTFA2 INTFA1 INFFA4 INFFA3 INFFA2 INFFA1 INTLE1 INTLE2 INTLE3 APPENDIX IX: Results of regression weights (standardized) by bootstrap method Parameter WOENG PROFA DISFA INTFA INFFA INTLE PROFA5 PROFA4 PROFA3 PROFA2 DISFA4 DISFA3 DISFA2 DISFA1 INTFA3 INTFA2 INTFA1 INFFA4 INFFA3 INFFA2 INFFA1 WOENG1 WOENG2 WOENG3 WOENG4 WOENG5 WOENG6 WOENG7 WOENG8 WOENG9 INTLE1 INTLE2 < -PPAF < -PPAF < -PPAF < -PPAF < -PPAF < -WOE < -PROF < -PROF < -PROF < -PROF < -DISF < -DISF < -DISF < -DISF < -INTF < -INTF < -INTF < -INFF < -INFF < -INFF < -INFF < -WOE < -WOE < -WOE < -WOE < -WOE < -WOE < -WOE < -WOE < -WOE < -INTL < -INTL INTLE3 < -INTL ... method was applied in this study to investigate aspects of the performance appraisal fairness, work engagement, and intent to leave in the private sector in Vietnam Sekaran and Bougie (2009) consider... intent to leave, also known as turnover intention, is the cognitive process of thinking, planning, and desiring to leave a job and there are four cognitive parts of turnover intent: 1) thinking of. .. following hypothesis: Hypothesis (H2): The higher the work engagement, the lower the intent to leave 2.6 The conceptual model and hypotheses of the research The conceptual model presented in figure