a @OUM OPEN UNIVERSITY MALAYSIA OC EFA RESEARCH PROJECT BMBR5103
Factors influencing Organizational
Commitment and Intention to Stay of Leaders
in Orient Commercial Joint Stock Bank (OCB) HUTECH LIBRARY A~ 6793 Name in full: LE VAN PHAN Student ID: 244 9529 Program: MBA Intake: September 2012
Subject: BUSINESS RESEARCH
Advisor: DR KHAI NGUYEN
Trang 2ACKNOWLEDGEMENTS “2 Grab pal Mfr vecvaln nw od
I would like to express my sincere gratitude to my advisor Dr Khai Nguyen for his fruitful guidance, useful materials and especially his great lecturing sessions as
foundation for my research, for his motivation, enthusiasm, and profound knowledge His
guidance helped me to deeply understand the powerful knowledge on the business research, especially the approach to conduct a business research effectively and efficrently
Besides my advisor, I would like to thank Mr Nguyen Dinh Tung, CEO of OCB for
sharing with me some great insights into OCB’s business situation and for his very
productive feedback during my doing this research I would ltke to thank my subordinates
Tri Tran, Khanh Neuyen for the stimulating discussions, questionnaires and useful
reference materials Last but not the least, | would like to thank my family my parents Dam Le and Thuyen Pham, for giving birth to me at the first place and supporting me spiritually throughout mv life
Phan Le Van
Trang 3banking industry This research proposal is the first one to conduct on Organizational
Commitment and Intention to Stay of leaders of OCB In the labor market, competitors are always attracting key personnel who are considered to help create competitive
advantages With the key focus on the leaders of OCB, this research explores the current situation of Organizational Commitment of its leaders and figures out the antecedent factors, which Organizational Commitment Finally, managerial implications are withdrawn for improving the level of Organizational Commitment and level of retention of leaders in OCB
This research proposal comprises of 5 chapters The first chapter presents the research
background, problem statements, research objectives, scope of study and research
structure The second chapter introduces about OCB, about its history and development as the background for this research The third chapter focuses on the related literature review, research model and its hypotheses Next, the Chapter 4 introduces about the research methodology to be conducted in the course of research and the final chapter presents the expected research results, managerial implications, limitations and recommendations for further studies
Trang 4TABLE OF CONTENT Page ACKNOWLEDGEMENTTS n2 HH2 1x ke 03 L0 04 I.))00249)0609)100110101157757 05 IDkYN9)V.3202.1111ẺẼẺ8Ẻe8 07 I309)32600).42 10 5 08 II389)0.33u209)/95 110010155 09 CHAPTER 1: INTRODUCTIƠN Ăn nhe hờ 11 1,1Background -. - -c s snnnnH ng kg tư kh cờ 11 1.2 The Problem statement .- cà nành sư, 13 1.3 Research obj€CfV€S HH nh nh nen 14 1.4 Scope of the research con nọ nh kh chư 15 1.5 ThesIs struCfur€ -. cọ SH» nen nh nh che hưến 15 1.6 Chapter conclusion - - nàn Hình nh sư, 16
CHAPTER 2: INTRODUCTION TO OCB - cà 17 2.1 OCB at a gÌ]anCe cu HH Hy n HH Hy nh kh nhà 17
2.2 Vision — Mission- Core Value c cà 18
2.3 Network- Staff & Strategic Partner ccceeeee eee cence eens 19
2.4 Milestone 0 cece cece cece ng TH nh nen nh nen nhe 19 2.5 AchieVemenfs ch nhe nh nhà ch 21
Trang 5CHAPTER 3: LITERATUE REVIEW nhe eeeee 23 3.1 Chapter introduction and Maslow’s hierarchy of needs 25 3.2 Intention fO SEAY ch nen nh kh kh se 26 3.3 Organizational Commitment and antecedent factorS 27 3.4 Research model . -. cà cà nh nh nh, 28 3.5 Chapter concÌuSion cà nàn nen nh ty he 35
CHAPTER 4: RESEARCH DESIGN - -Ặ c2 se 38
4.1 Type Oofres€arCH cu nh Hà khe nh Hh nh nh nh 38 4.2 Research procedure cà sàn n* nh nhe nhìn 38
4.3 Measurement scales - .- sàn nành Hà nh ren 39 4.4 Method of data collection - chen ee een eee ens 40
4.5 Method of anaÌySis nàn HH nh nh nh the 41 4.5.1 Assessment of measurement scale - 42 4.5.2 Multiple regression - sành nhe xen 44
CHAPTER 5: EXPECTED RESEARCH RESULTS - 45
5.1 Expected reSuÌfS - cu n nh HH kh như nh kh 45 5.2 Managerial Implicatlons - cành nhe se 46 5.3 Limitations & further rescarch recommendations - 47
REFERENCES -.-QQSQẶ sen nh nh tre 48 APPENDICES QC cà nàn nh nh nh ni nhìn nh hề 52
Trang 6LIST OF TABLES
Table name Page
(Table 2.1 OCB at a glance 17
[Fable 4.1 Cronbach's alpha reliability coefficient 38 [Table 5.1 Expected Results of the Proposed Hypothesis 45
Trang 7
LIST OF FIGURES
Name of figures Page
Figure 1 | Research Structure of the Research Proposal 15 - Overview
Figure 3.1 Maslow’s hierarchy of need 25
Figure 4.1 Research model 39
Figure 4.2 Research Procedure 40
Trang 8
LIST OF APPENDICES Appendix name Page APPENDIX 1: QUESTIONAIRE 52 APPENDIX 2: CODING 57
[APPEAPPENDIX 3: SUMMARY OF SCALES OF 7 58 (CONSTRUCTS IN THE MODEL
Trang 9
CHAPTER I: INTRODUCTION
1.1
This chapter presents an overview of the research, including background of the study, the problem statement, research objectives, and scope of the research, significance of the research as well as the structure of the thesis
Background of the research
One of the most important objectives of any business organization is to creating high productivity so as to achieve the highest possible business performance in pursuit of sustainable development To make such objectives become true, business organizations have to outline so many strategies and the most important strategy is the strategy on capitalizing its strength of human resources to make the difference and create competitive
advantages The focus here is on people One challenge here is how to determine and
develop the best people for the job? The answer is simply to find the good leaders Leaders are not just the top people in the organization, they exist on all levels
The attraction and retention of good leaders in Vietnam has been put top priorities by the top Management of in commercial banks In past 10 years, the system of financial
institutions and commercial banks in Vietnam has been developed with the increasing number of credit institutions and wide diversification of banking services According
to the recent report by the SBV, the whole banking system has reached at number of 52
local commercial banks, 51 foreign bank branches and 31 non-bank credit
institutions Regarded as the "blood" of the Vietnamese economy, the banking industry
Trang 10has remarkably grown and made significant contributions to the economic development of Vietnam
Orient Joint Stock Commercial Bank ( OCB) was established under the Licence of
operation no 0061/NH-GP dated 13/04/1996 issued by the State Bank of Vietnam OCB
has its Head office in 45 Le Duan Boulevard, District 1, Hochiminh City, Vietnam With
17 years of operations, OCB has become one of joint stock commercial banks with high growth rate in recent years With its big ambition to become the Top 15 commercial
banks in Vietnam by 2015, OCB has done its strategic management with the strong
support from its strategic partner- BNP Paris Bas- one of the 6 leading banks in the world to strengthen its branding and position in the Vietnamese Banking Industry To fulfill
these challenging objectives, OCB has put top priorities on attracting and developing
talented leaders to help OCB competitively penetrate in depth into the market and widen its market share Since 2012, OCB has recruited many leaders for key positions in the
Bank However, some of them have left the Banks to join other competitors for a short
period of time The retention rate has been declined over the past year from 91% in September 2012 to only 87% in September 2013 It is obvious that one big challenge for OCB is how to keep these leaders and make them have strong organizational commitment and have intention to stay together with the development of OCB
1.2 The problem statement
The Board of Management of OCB is strongly aware of the crucial role of talented leaders Various human resources strategies have been focused on attracting and retaining leaders as their key employees and invaluable assets Various measures have been applied such as increasing salary and allowance, conducting intensive
Trang 11traming courses, offering more opportunities for career promotion and incentive abroad trips for outstanding leaders However, the high turnover rate remains a big challenge to address with for OCB Management There are various questions to be
raised: Why is turnover still high after the Bank’ efforts? What are the leaders’
demands? What are possible factors influencing the leader’s organization commitment?
Is there relationship between organizational commitment and leader retention?
A great deal of literature on human resource management has provided some general
hints in addressing with this managerial challenge of employee retention (e.g Maslow,
1943, 1954; Bame, 1993; Becker & Gerhart, 1996; Hom & Griffieth, 1995) Nevertheless, the right solution under the current social-economic context, organization leaders need to understand in more details as higher salary, promotion opportunities, and related other factors as motivation, recognition, working environment, training and leadership What are the affected important factors?
To satisfactorily answer these tough questions, the Management truly needs to have a
deep insight into their leaders’ thinking and motivation On the background of sound
understanding of the issue, the Management can outline suitable HR strategies in attracting and keeping them loyal and committed to purse corporate development objectives in both short run and long run
In theory, there are many reasons (or factors) that influence leaders Many previous studies have been focused on factors of employee satisfaction or retention in general However, to my best knowledge, I ascertain that there is no study that researches on key factors affecting OCB’s leaders to have organization commitment and have intention to stay As one leader in OCB, I find it very significant to have an empirical research to
determine key factors that have influence on OCB leaders to have organizational
Trang 12commitment and intention to stay with OCB This is my first research on this issue with
a full focus on OCB’s case
1.3 Research objective
In this study, we will review relevant theories and previous researches on factors that have impact on the intention to stay of OCB leaders The study will investigate key factors influencing the organizational commitment and intention to stay of OCB leaders
and measure how deep these factors have their impact on organizational commitment
and intention to stay of OCB leaders
With the clear objectives in mind, this research is conducted with below aims:
° To determine quantitatively antecedent factors and their relative contributions to
the organizational commitment and intention to stay of OCB leaders
° To estimate the impact of organizational commitment on the retention (intention to stay) of OCB leaders in the field
1.4 Scope of the research
The purpose of this research is to investigate and determine the factors affecting
organizational commitment and intention to stay of leaders in OCB The research will
exam the possible influencing factors and identify the key factors with the high impact
on the organizational commitment and intention to stay of OCB leaders The result of
this research can be applied directly in OCB in outlining and selecting the best possible HR strategies in the course of its development
° Given the limited resources and time, the empirical data for the research is to
Trang 13be collected from OCB
° Examinees on this study are senior-officers, supervisors and managers, directors of OCB
° Only work — related factors will be investigated in this study As such, other possible factors (e.g social or cultural factor) are not in the scope of this study
1.5 Significances of the research
Like many commercial banks in Vietnam, OCB has done its strategic management to have stronger positions in the banking industry and put enormous efforts to make greater business performance so as to create higher value for its shareholders, employees and the Vietnamese community as a whole To fulfill its vision and mission, OCB needs to have in place the appropriate HR strategies, especially strategies on its most important
asset — leaders as its invaluable intangible asset The right HR strategy must lead to the
importance issue: How to make organizational commitment and intention to stay of OCB leaders
It is obvious that no best solutions can be created without the true understanding of what really matters This research is greatly significant in the way that it helps the
Management to determine the key factors having strong impact on leaders’
organizational commitment and intention to stay With the deep understanding of its leader’s inside motivation, OCB’s Management can develop HR strategies on developing
and keeping their leaders to have strong organizational commitment and intention to stay with OCB in the long run
1.6 Structure of the thesis
Trang 14This research proposal is organized as follows:
° Chapter I presents the research background, problem statements, research objectives, scope of study and research structure
° Chapter 2 introduces about OCB, about its history and development
o Chapter 3 focuses on the related literature review, research model and its hypotheses
° Chapter 4 introduces about the research methodology to be conducted in the course of research
° Chapter 5 presents t!-: pected research results, managerial implications, limitations and recommendations for further studies
Figure: 1.1 Research Structure of the Research Proposal — Overview
Chapter 1: Chapter 2: Chapter 3: Chapter 4: hi INTRODUCTION Pave Background tơ titerature Review Research Design Conclusion
In: 2 Ce 4.1 Type of LÊN 1.2The problem 2.1 OCBata hierarchy of needs Do ey mua
glance
statement 3.2 Retention CƯ cole) 5,2 Managerial
1.3 Research ra 2.2.Vision~ Mission ~ Core 3.3 Organizational teste ‡rplications
A
objectives rae Commitment 4.3 Measurement 5.3 timitations &
1.4 Scope of the VI to L4 3.4 Antecedents eos recomrmmendations
DỤ T3 Networ "- Peer iy
1.5 Significance of eT Sd model data collection
the research 2.5 Achievements EM marty 4.5 Method of
Trang 15CHAPTER 2: BACKGROUND ON ORIENT JOINT STOCK COMMERCIAL BANK ( OCB) 2.1 OCB at a glance English name in full ORIENT COMMERCIAL JOINT STOCK BANK Name in abbreviation: OCB Head office: 45 Le Duan Boulevard, District 1, Hochiminh City, Vietnam
Licence and Business registration Licence of operation no 0061/NH-GP dated 13/04/1996
issued by the State Bank of Vietnam
Certificate of business registration no 059700 issued by
Trang 16Table 2.1 OCB at a glance Shareholder: At present shareholder structure and equity ratio are as follows: No Shareholder Ratio 1 State-owned corporation 9,2% 2 Foreign institution 12,52% 3 Individual 49,77%
4 Trade union and other Shareholders 28,51%
2.2 Vision- Mission- Core Value OCB’s vision
Committed to building OCB into a universal bank as retail banking at its core business, to be in
the top ten joint stock banks by 2015 and a financial group by 2020
OCB’s mission
° To provide the best service to customers and partners with the principle of equality, mutual
benefit and development
° To increase share value for shareholders
° To harmoniously provide benefits to customers, shareholders, employees, and communities
Trang 17Core value: ° Clients first ° Creativity ° Ambition Professionalism 2.3 Network — Staff- Strategic Partner Network:
° Up to December 2013, network of OCB presents in 20 provinces and cities throughout the country with 95 branches and Transaction Offices
Staff:
By the end of March 2011, total head count of OCB is 1,661 people Strategic partner: BNP Paribas
° BNP Paribas is a European leader in global banking and financial services and one of the six strongest banks in the world (Rated AA by Standard & Poor's i.e 3rd rating on a scale of
22) Present across Europe through all its business lines, the Group has four domestic retail
banking markets in France, Italy, Belgium and Luxembourg It has one of the largest international networks with operations in 83 countries and 205,300 employees, including
162,200 in Europe 15,100 in North America and 11,000 in Asia
2.4 Milestones
Trang 1801/10/2010 : OCB joins hands with Liberty
24/05/2010 : OCB completed the data conversion and put T24 Core Banking System in use in the whole bank
10/03/2010 : Cooperation signing ceremony between OCB — Diebold 29/12/2009 : Increased charter capital to VND 2.000 billions
13/11/2009 : Within the framework of Vietnam — France Entrepreneur forum which was organized by the France Embassy in cooperation with VCCI in Hanoi, Orient
Commercial Bank (OCB) has signed memorandum of understanding in regard to the increase of capital contribution of BNP Paribas (France) in OCB to 20% in the appropriate time in the year 2010 and following the approval of the State Bank of Vietnam and the Government
16/09/2009 : OCB and Ernst & Young Vietnam has officially signed a contract to provide support services to perfect the system of internal credit ratings
26/08/2009 : Orient Commercial Bank signed agreement with BNP Paribas to increase OCB’s capital contribution from 10% to 15%
05/02/2009 : OCB started the implementation of Core Banking System Project 30/12/2008 : Increased charter capital to VND 1.474.477 millions
19/12/2008 : Signing ceremony for the implementation of core banking system between
OCB and Temenos
28/02/2008 : Strategic alliance between Orient Commercial Bank - BNP Paribas was
signed in Paris, France
29/12/2006 : Increased charter capital to VND 567 billions 20/12/2005 : Increased charter capital to VND 300 billions 06/06/2005 : Launched Lucky Oricombank Card
Participated in express remittance system of Western Union
Trang 19° Participated in Society for Worldwide Interbank Financial Telecommunication (SWIFT) 10/06/1996 : Orient Commercial Joint Stock Bank (OCB) was granted license of
operation in 13/04/1996 with initial charter capital of VND 70 million by the State Bank of Vietnam HUTECH LIBRARY 2.5 Achievements 4- 6 3 g 2
° OCB receive the award “Prestige Security Trademark — 2010”
Emulation Flag for “Best Performance in Banking 2009”, awarded by the State Bank of Vietnam
° Certificate for “Model of Strong and Transparent union Party 2009” granted by the Party Committee of District 1
Representative Entrepreneur of Commerce and Service Cup granted by Industry and
Trade Journal - Ministry of Industry and Trade
° Enterprise of Social Responsibility Cup by Commerce Journal ~ Ministry of Industry and Trade
° OCB receive the award “Prestige Security Trademark — 2009” and “The Typical Public Security Business”
Certificate of “Excellent Local union” for achievements in labor emulation movement granted by the Labor union of Ho Chi Minh City
° Certificate of excellent international settlement in 2008 awarded by Citi Group
° OCB achieved golden star award granted by the Vietnam Young Entrepreneur Association
° OCB achieved golden star award granted by the Southern Young Entrepreneur Association
° In the top 500 largest enterprises voted by reader of Vietnamnet
Trang 20One of the 10 commercial banks of Vietnam in 2008 for satisfactory service provider voted by consumers through survey conducted by consumers & business research center Leading flag holder presented by the State Bank for successful completion of task in
2007
Golden Global Prize in 2007 presented by Vietnam Small and Medium Enterprises Association
Certificate of excellent international settlement in 2007 awarded by Citi & HSBC Group Golden cup for Vietnam Trademark awarded by Union of Science and Technology of Vietnam
Golden trophy for community development by Vietnam general Trade Union and Vietnam SME association
Certificate for OCB as well-known Vietnam brand in 2006 by ACNielSen Vietnam and Chamber of Commerce and Industry of Vietnam
Traditional flag holder of Hochiminh City People Committee and banking association on the occasion of the 10" year anniversary of the bank
Certificate of merit from Chairman of Hochiminh City People Committee for the bank in
successful completion of the task in 2005, for 04 branches and 06 individuals that successfully complete its task in 2005
Certificate of merit from Prime Minister to the bank staff for excellence completion of the tasks from 2003 to 2005
Certificate of merit from Governor of the State Bank of Vietnam for successful completion of the task in 2004
Party organization “Integrity — Solidarity - Excellence” from 1996 up to present
Trang 21CHAPTER 3: LITERATURE REVIEW
This chapter presents the theoretical framework of the research chapter introduction with
the focus on Maslow’s hierarchy of needs, Retention ( Intention to Stay), Organizational
Commitment and its antecedents, research model as well as the chapter conclusion
3.1 Chapter introduction
There is a great deal of previous studies on the influencing factors of organizational commitment and intention to stay of employees in the world and in Vietnam The
literature indicated that some important influencing factors of organizational commitment and employee retention are remuneration and rewards, training and
development, promotion opportunities, leadership & support, and working
environment
The research model of organizational commitment and intention to stay will be
proposed for this specific study, which provides a sound basis for the development of research hypotheses Over the years, many studies relating to personnel in terms
of human needs, job satisfaction, organizational commitment and retention have
been conducted In this literature review, Maslow hierarchy of needs, retention,
organizational commitment and its antecedent factors will be presented On that
foundation, the model of organizational commitment and intention to stay of leaders in
OCB will be proposed for this specific study This proposed research model in turn
provides a basis for the development of hypotheses
One of the most well-known theories of individual motivation is Maslow’s theory of
Trang 22hierarchy of needs (Table 3.1) According to Maslow, it is advocated there lays a hierarchy of needs within every human being These needs are:
Physiological needs: related to essential factors to survival, such as food, water, and shelter With regards to employees in organization, these needs are mainly presented as monthly income ( salary and bonus)
Safety needs: refers to security, safety in workplace and life At this level, the
individual tends to look for the safe environment and to be free from external dangers At work, these needs are presented via hygiene factors, social and medical insurance
policies and HR policies to ensure employment such as labor contracts
Social needs: are those associated to people relationships, being a team member, being a part of the organization, being liked In organizations, these needs are related to relationship with coworkers, with subordinates and with leaders
Esteem: refers to the drives for feelings of self-worth and individual importance, needs
of respect in workplace and in daily life Organizations often pay incentives through rewards, recognition, bonus, promotions etc
Self-actualization: is at the highest level of the hierarchy, the
motivator is a sense of fulfillment that allows individuals to contribute, maximize
their own personal development and reach their full potential In workplace, these needs are satisfied by opportunitiesof training, development, empowerment and innovation
It is important to note that once each of these needs is satisfied, the individual moves
up to the higher level of the hierarchy
Trang 23Figure 3.1: Maslow’s hierarchy of
3.2 Retention ( Intention to stay)
Over the past decades, the way in which people are managed and developed in the
workplace has been widely recognized as one of the primary factors in achieving improvement in organizational performance (BQF, 1998; Marchington and Wilkinson, 1997; Phillips, 1997) It has become a common sense to say “people are our most important asset’ (Accenture, 2001) With regards to the literature review, it was
acknowledged that the employees of successful organizations were shared a
fundamental philosophy of valuing and investing (Anand, 1997; Maguire, 1995) In
fact, various studies have stated human resource management as a means of
achieving competitive advantage (Delery, 1998; Walker, 2001) With the same
philosophy, the retention of leaders are of great significance for business organizations
Retention is about developing strategies that make employees to be committed to and
have consistent intention to stay with the organization In other words, that is about
Trang 24reducing the number of people who leave the organization for avoidable reasons Organizations need to retain employees, especially talented leaders with the required
competencies to ensure that business can be maintained (Stucberry, 2003) It is not simple to have smart solutions to retain good leaders Obviously, there are various factors affecting leaders to have the intention to stay with the organizations The Management cannot retain their talented leaders without solid understanding of these
influencing factors These factors are the very drivers for leaders to have business
performance and make contributions to the organization they are working for
Today almost organizations have to address with the challenge of keeping good leaders Capitalizing leaders effectively is, at the initial step, about identifying their needs Leaders bring their needs, aspirations, and desires to their career and working environment where their personal abilities can be capitalized on and their personal needs should be satisfied
3.3 Organizational commitment
In this research, organizational commitment is considered as antecedents as they have direct impact on intention to stay
The concept of organizational commitment has attracted remarkable attention over the
past decades and has become a central objective of human resource management
According to Guest (1987), HRM policies are designed to maximize organizational integration, employee commitment, flexibility and quality of work For the topic in question, our focus is on “Commitment ” which can be described as attachment
Trang 25and loyalty Individuals can display this attachment and loyalty More specifically, as
defined by Mowdray (1992), organizational commitment consists of three components:
identification with the goal’s and values of the organization, a desire to belong to the
organization and a willingness to display effort on behalf of the organization
The concept organizational commitment has grown in popularity in the literature on
industrial and organizational psychology (Cohen, 2003) Early studies on organizational commitment viewed the concept as a single dimension, based on an attitudinal
perspective, embracing identification, involvement and loyalty (Porter, Steers, Mowday & Boulian, 1974) According to Porter et al (1974), an attitudinal perspective refers to the psychological attachment or affective commitment formed by an employee in relation to his identification and involvement with the respective organization
Porter et al (1974, p 604) further defines organizational commitment as “an attachment to the organization, characterized by an intention to remain in it; an identification with the values and goals of the organization; and a willingness to exert extra effort on its behalf’ Individuals consider the extent to which their own values and goals relate to that of the organization as part of organizational commitment, therefore it is
considered to be the linkage between the individual employee and the organization
Meyer and Allen (1984) initially viewed organizational commitment as two- dimensional namely, affective and continuance Meyer and Allen (1984) defined affective commitment as “positive feelings of identification with, attachment to and involvement in the work organization” while they viewed the continuance commitment as “the extent which employees feel committed to their organization by virtue of the costs that they feel
Trang 26are associated with leaving” Allen and Meyer (1990) with their further research added a
third dimension, namely normative commitment Allen and Meyer (1990) define
normative commitment as “the employee's feelings of obligation to remain with the
organization” As a result, the concept of organizational commitment is viewed with
three dimensions characterized by the affective, continuance and normative dimensions
(Meyer & Allen, 1991)
Although there are different explanations on organizational commitment, the common
view is that organizational commitment is a psychological state that characterizes
organizational members' relationship with the organization and has implications for the decision to continue or discontinue membership in the organization (Meyer & Allen, 1997)
On the ground of the above related literature review on organizational commitment, we can possibly hypothesize that:
Hi: There is a positive impact of Organization Commitment on the Intention to
Stay of leaders in OCB
3 4 Antecedent factors of Organizational commitment 3.4.1 Remuneration and Rewards
Remuneration and Rewards has many different names in different words Compensation and rewards was called by Waleed (2011) Muhammad (2011) Kazi &
Trang 27called it is pay and conditions, Muhammad (2011) called it is salary and wages rewards, Janet (2004) named it as remuneration and rewards
The term ‘reward’ is greatly discussed in the literature as something that the organization gives to the employees in return to their contributions and performance It is also
something that is desired by the employees (Agarwal, 1998) A reward can be extrinsic or intrinsic in term of value On one hand, it can be in cash or cash equivalents On the other hand, it can be a form of spiritual recognition such as naming a worker employee of the month, leader of the year etc In addition, reward also refers to a tangible incentive An employee or a leader is given a reward by their organization to recognize
their contribution or appreciate their performance so that they become motivated for
future positive behavior
In a corporate environment, there are many forms of rewards It includes cash bonuses, recognition awards, gifts or free holiday trips It is very important that the rewards
should have a lasting impression on the employee and it will continue to substantiate the
employee’s perception that they are valued (Silbert, 2005)
From the above views, we can make the following hypotheses:
H2: Remuneration _and_ Rewards has positive impact on Organizational Commitment
3.4.2 Training & Development
Trang 28Training and development is about developing employees or leader’s competencies
In other words, it is about helping them to reach a next level of their potential
Training is regarded as a form of human capital investment whether that investment is made by the individual or by the firm (Goldstein, 1991; Wetland, 2003) Training programs enhance employee job skills when they are employed Employees are expected to acquire new skills and knowledge, apply to the current job, and share them with other employees (Noe, 1999) Employees who participate in training course will be provided specific skills or correct deficiencies in their performances, while development is only an effort to provide employee abilities which the organization will
need in the future (Gomez-Mejia, Balkin and Cardy, 1995)
Huselid (1995) suggested that progressive HR practices that embrace career-related
practices could improve knowledge, skills and the abilities of an organization’s current
and potential employees, and enhance the retention of quality employees Skill development could include improving basic literacy, technological know-how, interpersonal communication, or problem solving abilities Training and development is viewed as a symbol of the employer's commitment to staff ( Storey and Sisson,
1993), training can help lead to lower turnover (Frazis et al., 1998; Wetland, 2003) In a competitive context today, leading companies have acknowledged that providing employees, especially leaders with professional training and development program is the key to attract and retain the kind of flexibility, technologically sophisticated workforce that companies need to succeed in the digital economy (Accenture, 2001;
Bassi and Van Buren, 1999)
On the above background, the following hypothesis is made:
Trang 29HỆ: There is a positive impact of the training and development on organizational commitment
3.4.3 Career Promotions
The advancement of an employee from one job position to another job position that has a higher salary range, a higher level job title, and, often, more and higher level job
responsibilities, is called a promotion From the leader’s perspective, promotion is a next
step of their career leader with more power and responsibilities Visually, a promotion moves a leader’s career up one level on an organizational chart
Promotion within an organization shows evidence of formal recognition of one’s
performance and ability rewarded with a rise in pay, work challenges, responsibility, status, and autonomy Leaders view promotion as an achievement of their proven
performance record towards career success (Kim, 2005) Promotion carries recognition from the management, helping leaders to expand their network within the profession through a wider job scope and perspective (Gaertner & Nollen, 1989; Wayne et al., 1997)
Career promotion connects a leader’s career interest with the current organization, while
through performance recognition, the organization encourages leaders to stay and extend their organizational goals in the future The perception of future advancement opportunities within the organization acts as motivation for employees and leaders to perform up to expectations (Vroom, 1964), and stay with the company to demonstrate their skills and ability Consistent with the organizational support theory, promotion delivers favorable treatment to employees, indicating that an organization is recognizing and appraising the employees’ performance via formal promotion It also demonstrates
Trang 30the organization’s commitment to developing leaders’ career path and learning
opportunity (Guest et al., 2002)
What is more, the perception of the availability of promotion within the organization
could also be viewed as a discretionary decision to reward performing leaders As leaders feel appreciated, they reciprocate with loyalty and extend extra effort (Eisenberger et al.,
1986) A promotion is viewed as desirable by leaders because of the impact a promotion has on pay, authority, responsibility, and the ability to influence broader organizational
decision making A promotion raises the status of the leader who receives a promotion which is a visible sign of esteem from the employer
Theoretically, employees with promotional opportunities tend to connect their career
opportunities and interest to seek self-fulfillment with the organization Wayne et al (1997) found positive relations between promotion and organizational commitment The
hypothesis is
4: There is a positive impact of Career Promotion on Organizational Commitment
3.4.4 Leadership
Leadership refers to related to relationship between leaders and the management or leaders of higher levels There are many definitions on leadership Leadership is conceptualized in terms of four tasks that need to be accomplished in any organization: providing orientation, assuring alignment, building commitment and facing adaptive challenges (Risher and Stopper, 2002) Leaders are seen to be central to the process of creating corporate cultures, systems, and structures that foster knowledge creation,
sharing, and cultivation (Bryant, 2003) The impact of leaders have been examined
Trang 31by numerous leadership studies in a wide variety of organizations, and results show that
leadership styles in a high-level of follower motivation and commitment as well as well-
above-average organizational performance (Bryman, 1992; Elby et al., 1999: Podsakoff and Steyrer, 1998)
Leadership has a strong ability to affect employee (Bethel,1990) According to Bohn and leadership is defined in a new way that it creates a new vision; increase the self
confidence in employees through coordination and communication One of the most recent published theories of leadership is the one in leadership is divided into two types
transactional and transformational leadership (Burn, 1978; Bass 1997) Leadership
undoubtedly has the major role in the outcome of any project Both the identified
behaviors have variable outcomes under different circumstances Under certain situations, transactional style of leadership lead to a successful working of the organizations even
though it doesn’t give the followers as much liberty as transformational leadership does (Boseman, 2008) but it gives the follower a sense of identity and job satisfaction whilst in other cases, transformational style of leadership has been found to work better for the followers and the organization Transactional leadership style gives more work pleasure
as compared to transformational leadership style as fulfilling the given task is
synonymous to reward in that leadership structure (Wu, 2009; Epitropaki & Martin, 2005)
Several researchers have thought highly of the positive influence of leaders in organizational outcomes, which resulted in increased organizational behavior and higher intention to stay (Alimo-Metcalfe and Alban-Metcalfe, 2001) Therefore, based on the literature review, the hypothesis is:
Trang 32HS: There is a positive impact of Leadership on Organizational Commitment
3.4.5 Working environment
Working environment relates to the atmosphere in which an individual works in an organization Working environment is called with different names It is named as the quality of working relationships (Bhavna & Swati, 2012), the built environment, work place environment (Bhavna & Swati, 2012., Waleed, 2011), work place culture (Waleed, 2011), work environment (Muhammad, 2011), trust in company (Fleischlin, 2008), being
safe (Bhavna & Swati, 2012), positive and negative situations (Waleed, 2011),
having fun (Bhavna & Swati, 2012), freedom and autonomy (Petra, 2011), highly incentive work (Petra 2011), having job security (Elizabeth et al., 2008), internal communications (Andy et al, 2003), Social atmosphere (Ans et al., 2003)
The study by Nadeem et al., (2011) was to aim at determining relationships between working environment and organizational commitment That is support of the organization for flexible time working, working stress It’s very important to recognize the emerging needs of individuals to keep them committed and provide the work environment as expected (Ramlall, 2003) Organizations need to promote social
activities, so that friendly relations can improve between the employees; and in turn,
their commitment towards the organization excels (Kirmizi & Deniz, 2009) Low performing employees are committed and comfortable in a less or non-threatened environment, whereas high performing employees need a challenging environment (Steers, 1977)
Milory (2004) reported that people enjoy working, and strive to work in the organization that provide positive working environment where they feel they are making difference
Trang 33and where most people in the organization are proficient and coordinating together to move the organization forward As such, the hypothesis is
H6: Working environment has positive impact on Organizational Commitment,
3.5 Research hypotheses & model
In this study, the hypothesized research model is built upon the following 7 factors Figure 3.2: Research model Renewmeration & Rewards Training & Development Career Promotion Organizational Intention Commitment to stay Leadership & Support Working Environment
H 1: Organizational Commitment is positively correlated to Intention to Stay H 2: Remuneration and Rewards has positive impact on Organizational Commitment H3: Training and Development has positive impact on Organizational Commitment
H 4: Career Promotion has positive impact on Organizational Commitment
Trang 34H 5: Leadership has positive impact on Organizational Commitment
H 6: Working Environment has positive impact on Organizational Commitment
3.6 Chapter conclusion
There are many factors leading to organizational commitment Because of characteristics of keeping leaders in OCB, the study only focuses on key factors such as: remuneration
and rewards; training & development, promotion, leadership and working environment
The influencing factors to organizational commitment and intention to stay of leaders
in OCB will be introduced in Chapter 4
Trang 35CHAPTER 4: RESEARCH DESIGN
This chapter presents the research design with the focus on type of research, research procedure, measurement scales, method of data collection and method of data analysis as well
4.1 Type of Research
The type of this research is descriptive research because our research objectives are to test
the relationship between variables According to Jame ( 1997), descriptive research is
used to obtain information concerning the current status of the phenomena to describe
"what exists" with respect to variables or conditions in a situation The methods involved range from the survey which describes the status quo, the correlation study which investigates the relationship between variables, to developmental studies which seek to
determine changes over time
4.2 Research procedure
The research follows the procedure illustrated in Figure 4.1
Trang 36Figure 4.1: Research procedure * Research objective * Literature review * Model * Research Method * Data collection * Data analysis * Conclusions & recommendation 4.3 Measurement scales
The research participants are supervisors, team-leaders, managers, directors from all departments and business units of the OCB network
They will be asked to respond to the survey questions by using five point Likert scale ranging from:
Trang 37oO 1 equals totally disagree, 2 equals disagree, 3 equals either disagree or agree, 4 equals agree, 5 equals totally agree
© or | equals leave surely, 2 equals leave, 3 equals unclear intention, 4 equals stay, 5 equals stay surely
Q Age is divided into 4 groups and coded such those 1 equals under 30 years old, 2 equals 31to 40 years old, 3 equals 41 to 50 years old, 4 equals over 50 years old
o Gender is coded 1 equals male, 2 equals female
o Years in leadership: are coded 1 equals less than 1 year, 2 equals less than 2
years 3 equals less than 3 years, 4 equals over than 3 years 4
The scales for 7 constructs in the model have been developed on the basis of previously
established studies, in conjunction with the adjustment for contextual situation (i.e
banking industry in Vietnam and especially in OCB) Multiple item scales will be used
in the form of five point Likert type The coded items and sources of reference for each scale are presented in Appendix 3
4.4 Method of data collection Sample size :
All 315 leaders ( supervisors, Team-Leaders, managers, Directors ) of OCB nationwide will be approached directly or via email to answer the constructed questionnaire for the
surveys
=" Method for data collection:
- In-depth interview: to get qualitative data from these leaders of the whole network of OCB The results are used as additional inputs into the process of questionnaire design - Questionnaire: using quantitative/structured questions to measure various constructs
Trang 38in the model in order to empirically test the hypotheses
- Data collection process: One official letter will be sent via email to the 315 leaders
of OCB to communicate about the purpose of the research, and to guide them how to do
the survey and make the respondent to feel comfortable as all the answer are treated with top confidential for the sake of the research only In this introduction email, there
will be the link so that the respondents will find it easy to do the survey To answer the
survey, the respondents will follow the following link and start providing the answers in
the internet:
https://www.surveymonkey.com/eaders-surveys/OCB
The response rate is estimated to be over 90% The respondents will have one week to
answer the surveys and send back the answer via email Two days before the deadline,
one reminder will be sent to those who have not responded to the surveys yet to reach
the estimated response rate
Once the respondent answers the survey, the answers report will be generated with the
aid of www.surveymonkey.com tools 4.5 Method of analysis
Descriptive and inferential statistics (Cronbach Alpha, EFA, Correlation,
Multiple regression analysis) using SPSS software package will be conducted The analysis process to be implemented is described below
Trang 39a<0.5 Unacceptable
4.5.1 Assessment of measurement scale
The multi-item scales developed above have to be evaluated for their unidimensionality , teliability, and validity
¥ Unidimensionality is defined as the existence of one construct underlying a set
of items (Garver and Mentzer, 1999) Unidimentionality should be tested before doing reliability tests because reliability such as Cronbach Alpha does not ensure unidimensionality but instead assumes it exists
Y Reliability: Cronbach Alpha is widely used approach to test reliability Cronbach Alpha will be high if the scale items are highly correlated
In this research, the main assessment method is exploratory factor analysis (EAF) using SPSS 11.5 There are two basic methods used for extracting factors in EFA, common factor analysis and principal components factor analysis While principal component factor analysis is used mainly for item reduction and test
unidimensionality, reliability, common factor analysis is for exploring the latent
dimensions represented in the original variables (Conway and Huffcutt, 2003) and test convergent validity, discriminant validity The analysis process will be implemented through the two respective steps:
2 EFA with principal components, eigenvalue > 1 and VARIMAX rotation will be applied to each of the 7 constructs under investigation (Conway and
Huffeutt, 2003) The main purpose of this step is to see whether the scale
for each construct under investigation is unidimensional (i.e first-order
construct) or multidimensional (i.e second-order construct) For a scale to be
Trang 40empirically unidimensional, the factor analysis must result in only one factor
extracted Moreover, items with low factor loadings <0.40 are to be eliminated
because they do not converge properly with the latent construct they are designed
to measure (Garver and Mentzer, 1999) Then, reliability analysis (Cronbach
Alpha) will be applied to each set of items (i.e each scale) to assess and refine the
measurement items Items having low Cronbach Alpha < 0.60, item-to-total correlation coefficients < 0.35 will be eliminated
o A joint EFA with the same setting (i.e principal axis factoring, eigenvalue > | and VARIMAX rotation) is performed Given the result of step 1 where each item loads highly on the factor representing its underlying construct, this jomt EFA
allows all items to correlate with every factor without being constrained to correlate only with its underlying factor (Kline, 1998) Consequently, it allows
the investigation of the general correlation pattern of the measurement items
(Fabrigar et al., 1999) First no item load highly on more than one factor to
indicate unidimensionality measurement, i.e one item measures only one
construct (Anderson and Gerbing, 1988) Second, all items comprising a scale
must load highly on one factor representing the underlying construct High
loadings of all items indicate convergent validity, while loading on only one
factorindicates unidimensionality construct Third, no factor consists of two
sets of items loading highly on it to indicate discriminant validity (Hair et al.,
1998; Garver and Mentzer, 1999)
4.5.2 Multiple regressions
After completing the refinement the multiple regressions will be implemented to identify quantitative the relation of antecedent factors and job satisfaction, the relation