Tài liệu Impact of human resource management practices on the organizational performance of the small and medium enterprises in thai nguyen province

Southern Luzon State University Republic of Philippines IMPACT OF HUMAN RESOURCE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFORMANCE IN SMALL AND MEDIUM ENTERPRISES IN THAI NGUYEN CITY A Dissertation Presented to The Faculty Graduate School Southern Luzon State University Lucban, Quezon In Partial Fulfillment of the Requirements for the Degree Doctor of Business Administration by LE KIM ANH (MAY) 2013 APPROVAL SHEET In partial fulfillment of the requirements for the degree Doctor of Business Administration, this research study entitled “Impact of Human Resource Management Practices on the Organizational Performance of the Small and Medium Enterprises in Thai Nguyen Province” has been prepared and submitted by Le Kim Anh and is hereby recommended for oral examination. ............, 2013 Alice T. Valerio, Ph.D. Adviser Approved by the Oral Examination Committee, in partial fulfillment of the requirements for the degree Doctor of Business Administration offered by Southern Luzon State University, Republic of the Philippines in collaboration with Thai Nguyen University, Socialist Republic of Vietnam. (NAME OF PROFESSOR) (NAME OF PROFESSOR) Member Member (NAME OF PROFESSOR) Chairman Accepted in partial fulfillment of the requirements for the degree Doctor of Business Administration offered by Southern Luzon State University, Republic of the Philippines in collaboration with Thai Nguyen University, Socialist Republic of Vietnam. ____________ Date APOLONIA A. ESPINOSA, Ed.D. Dean, Graduate School ACKNOWLEDGMENT Writing a doctoral dissertation is a gratifying but difficult and sometimes nerve wrecking endeavor that only few engaged in because it requires a lot of sacrifices and hard work from the researcher. However, at the end of the task, one experiences a wonderful feeling of joy, happiness, relief and fulfillment. The researcher would like to extend her sincerest gratitude and thanks to the following people who were very instrumental in the fulfillment of this research study. 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. NGUYEN TUAN ANH, Ph.D., former Director of the International Training Center, Thai Nguyen University of the Socialist Republic of Vietnam, for his enormous pursuit to provide the Vietnamese people an opportunity to grow through education; DR. ALICE T. VALERIO her adviser, for the guidance and endless support for the improvement of this study. PROFESSORS ………….., ………………., and ……………, who composed the Oral Defense Committee, for their suggestions, comments and corrections to improve this study; ITC STAFF, for providing the necessary research materials; HER FAMILY and FRIENDS, for the love and support in one way or the other; And TO ALL who have contributed to make this study a success. iii DEDICATION This research is wholeheartedly dedicated with all sincerity and love to my FAMILY….. To my Mum and Sun who provided me with love and care. To ALL OF THEM…I humbly dedicated my work and success in life. iv Table of Contents Page Title Page Approval Sheet ii Acknowledgment iii Dedication iv Table of Contents v List of Tables vii List of Figures viii Abstract ix Chapter I: Introduction 1 Background of the Study 1 Objectives of the Study 5 Hypothesis 6 Significance of the Study 6 Scope and Limitation of the Study 7 Definition of Terms 7 Chapter II. Review of Literature and Related Studies Conceptual Framework 10 57 58 Chapter III. Methodology Locale of the Study 58 Research design 58 Population and sampling 58 Instrumentation 59 Data gathering procedure 60 Statistical treatment 60 Chapter IV. Presentation, Analysis and Interpretation of Data v 62 Chapter V. Summary, Findings, Conclusions and Recommendations 77 Summary 77 Findings 77 Conclusions 79 Recommendations 80 Bibliography 81 Appendices 90 vi LIST OF TABLES No. Name of tables 1 Table 4.1.1. Percentage Distribution of Respondents’ Profile in Terms of Type of Industry and Ownership 2 Table 4.1.2. Percentage Distribution of Respondents’ Profile in Terms of Business Characteristic 3 Table 4.3.1. The Assessment of Respondents on HRM in Terms of Recruitment and Selection 4 Table 4.32. The Assessment of Respondents on HRM in Terms of Training and Development 5 Table 4.3.3. The Assessment of Respondents on HRM in Terms of Career Planning System 6 Table 4.3.4. The Assessment of Respondents on HRM in Terms of Participation and Involvement 7 Table 4.3.5. The Assessment of Respondents on HRM in Terms of Compensation and Benefits 8 Table 4.3.6. The Asessment of Respondent on HRM Performance Appraisal 9 Table 4.3.7. Perceived Organizational Performance 10 Table 4.4.1. Variables Included in Analyses 11 Table 4.4.2. Descriptive Statistics 12 Table 4.4.3. Correlations Amongst Variables vii Page in Terms of LIST OF FIGURES No. Name of tables 1 Figure 1. Percentage Distribution of Respondents’ Profile in Terms of Type of Industry 2 Figure 2. Percentage Distribution of Respondents’ Profile in Terms of Type of Ownership viii Page Title: IMPACT OF HUMAN RESOURCE MANAGEMENT PRACTICES ON THE ORGANIZATIONAL PERFORMANCE OF THE SMALL AND MEDIUM ENTERPRISES IN THAI NGUYEN PROVINCE Researcher: LE KIM ANH Degree Doctor of Business Administration Name/ Address of the Southern Luzon State University Institution Graduate School Lucban, Quezon Date Completed October, 2013 Adviser DR. ALICE T. VALERIO ABSTRACT The study was 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 and medium-sized enterprises in Thai Nguyen City were selected to be the respondents of the study. It specifically explored on the profile of the respondents in terms of Types of enterprise; Form of owner ship; Time of operated; Number of employees. The study was limited to determine the perception of the respondents on the human resource practices of the small and medium enterprises in Thai Nguyen City which are classified in aspects namely: Recruitment and Selection; Training and development; Career planning System; Participation and Involvement; Compensation and Benefit; and Performance appraisal. ix The 290 selected respondents were given a questionnaire designed by the researcher and complete the questionnaires after being explained and instructed by the researcher. The researcher floated the questionnaire to the respondents after it had been validated by her advisor in June 2013. Recruitment and selection, based on well-defined merit and unprejudiced system developed through managerial expert opinions, using standardized test to scrutinize the exact required attitude, skills and knowledge in potential candidates showed notable significant correlation with employee performance and Perceived Organizational Performance that identification of the right candidate with required skills to perform the job for achieving organizational performance is the output of sophisticated selection system. Training and development programs in organizations based on training need assessment, performance appraisal, customization and practically applicable with skills imparting capability are indicating positive correlation with employee performance and Perceived Organizational Performance. A perception that the Career Planning System (CPS) is significantly correlated with employee performance and Perceived Organizational Performance is true if, the Career Planning System is based on clear career ladder, aligned goals with organizational vision, used for succession planning, transparent internal hiring, and equal unambiguous employment opportunity. Employee participation related to decision-making process based on opportunities to make company and self-related decisions, suggestion collection for the betterment of organization and employee wellbeing as also on appreciation strategy has significant positive correlation with perceived organizational performance. x Compensation system based on expectancy of employees, comparable with market packages, competency based, performance based, profit sharing based mechanism, covering both financial and non-financial dimensions, is positively correlated with perceived organizational performance. There is a significant relation between Perceived Organizational Performance and performance appraisal system, that seems based on focused counseling, employee feedback, transparent disbursement of bonuses, performance based promotions, training selections and clarity of objectives. xi CHAPTER I INTRODUCTION Introduction Human Resource Management is the process of developing, applying and evaluating policies, procedures, methods and programs relating to the employment, motivation, maintenance, and management of people in the organization. Human resources management include activities like strategic HRM, human capital management, corporate social responsibility, human resource planning, recruitment, selection, training and development, reward management, performance management, employee relations, health safety and employee well-being as well as provision of employee services. It comprises a set of practices and policies designed to maximize organizational integration, employee commitment, flexibility and quality of work (Armstrong, 2009). Effective human resource practices relate to company performance by contributing to employee and customer satisfaction, innovation, productivity, and development of a favorable reputation of the firm in the industry. A number of researchers have reported that HR practices are positively linked with organizational and employee performance. Researchers have argued that human resources may be seen as a source of sustained competitive advantage for organizations (Barney, 1991; Becker & Gerhart, 1996). The underlying assumption is that human resources are unique to the extent that competitors cannot imitate them. Research has led to the identification of a number of human resource management practices that contribute to company performance across different organizations (Huselid, 1995). In a literature review, Delery & Doty (1996) identified seven such practices that have been consistently considered HRM practices. 1 They defined HRM practices as those that are theoretically or empirically related to overall organizational performance. These practices include internal career opportunities, formal training systems, results-oriented appraisals, employment security, participation, job descriptions, and profit sharing. This approach has come to be known as the “best practices” or universalistic approach. Within the best practices approach to strategic HRM, the first practice, internal career opportunities, refers to the organizational preference for hiring primarily from within. Second, training systems refers to whether organizations provide extensive training opportunities for their employees or whether they depend on selection and socialization processes to obtain required skills. Third, appraisals are conceptualized in terms of outcome-based performance ratings and the extent to which subordinate views are taken into account in these ratings. Fourth, employment security reflects the degree to which employees feel secure about continued employment in their jobs. Although formalized employment security is generally on the decline, organizations may have either an implicit or an explicit policy. Fifth, employee participation, both in terms of taking part in decision making and having opportunities to communicate suggestions for improvement, has emerged as a strategic HRM practice. Sixth, job description refers to the extent jobs are tightly and clearly defined so that employees know what is expected of them. Finally, profit sharing reflects the concern for overall organizational performance on a sustainable basis (Delery & Doty, 1996). Over the years, researchers have suggested many HRM practices that have the potential to improve and sustain organizational performance. These practices include emphasis on employee selection based on fit with the company’s culture, emphasis on behaviour, attitude, and necessary technical skills required by the job, compensation contingent on performance, and employee empowerment to foster team work, among others. Purcell et al., (2003) pointed out that the most successful companies had 'the big 2 idea', they had a clear vision and a set of integrated values. They were concerned with sustaining performance and flexibility which reveals a clear evidence of positive attitudes towards HR policies and practices, level of satisfaction, motivation and commitment, as well as overall operational performance. Background of the study Small and Medium Enterprises (SMEs) have been recognized as important factor of the economy of many countries and Vietnam is not an exception. According to the data from the ministry of planning and investment of Vietnam SMEs occupied for nearly 85% of the total of enterprises in Vietnam and contribute nearly 45% of annual GDP of the nation. There is no single theory, which can sufficiently explain growth of an SMEs. The aim of this thesis is to investigate the effect as well as the ration between the growth of business of SMEs and the policies, orientation, create advance condition for the development of SMEs issued by the Government and local authority of Thai Nguyen province. The research was conducted with aspiration to describe the role of the HRM practices in helping SMEs in their business. Based on a report by Thai Nguyen Office of Planning and Investment at the end of June, 2012, there are more than 2,090 enterprises currently doing their business in Thai Nguyen City, more than 98% of which are belonging to small and medium enterprises (SMEs). It is believed that SMEs play an important role in the economic growth of Thai Nguyen and they are currently using around 50% of workforce and contribute more than 40% of GDP. Amongst them, only 50% are relatively stable and capable of development, 30% are operating in moderation, and the remainders are lossmaking or have given up business. According to statistics from the Department of Planning and Investment of Thai Nguyen province, there were 114 SMEs established while the number of dissolved 3 businesses is 117 and 20 companies had to temporarily stop their businesses during the first four months of 2012. Many key businesses did not achieve the expected growth, production and business revenue only reached 50-70% that of the same period last year. Prior research suggests that HRM systems as a resource can lead to competitive advantage (Wright, Dunford & Snell, 2001). A number of studies have demonstrated relationships between different bundles of HR practices or philosophies and firms performance in larger firm (see Wright et al., 2005 review). In spite of the significant research in the area of SHRM in large firms, little has been done to test similar relationship in small businesses (Heneman, Tansky, & Camp, 2000). Employees and employee management practices appear to be one way that companies are able to improve their performance. SHRM scholars have argued that an organization’s success is at least partially depends on its employees and their behaviors in carrying out the strategies of the business (Becker & Gerhart, 1996; Delery & Doty, 1996). Organization that can effectively influence the behaviors and motivation of their employee through HRM system will be to increase their performance and viability (Huselid, 1995). Small firms should also be able to leverage their employees through HRM to improve their performance, but very little research has addressed the role of HRM in SME. Therefore, in this research the researcher addressed the relationship between HRM and Firm performance of SME for the study of SHRM. A significant amount of research has been conducted examining the relationship between HRM and firm performance. In a recent review of the literature, Wright et al., (2005) found a total of 68 empirical studies looking at relationship between HRM and some aspect of firm performance. The review focused specifically on published, empirical studies testing a relationship between an HRM system and performance. Notably, all of the review studies reported at least one significant relationship between 4 HRM system and performance. Clearly from this review of the literature, there is an increasing agreement that a relationship does exist between HRM and firm performance. While it is clear that past research on SHRM has consistently shown a positive relationship between various conceptualization of HRM and firm performance (Wright et al., 2005), this research has focused almost exclusively on large multidivisional, multiproduct, multinational corporation. Very little research has examined the generalizability of these finding to SME is limited (Cardon & Stevens, 2004) For all the reasons above, the researcher would like to conduct the study: “Impact of Human Resource Management Practice on Organizational Performance in Small and Medium Enterprises in Thai Nguyen City” Objectives of the Study This study aimed to analyze the “Impact of Human Resource Management Practices on Organizational Performance in Small and Medium Enterprises in Thai Nguyen City”. Specifically, it sought to answer the following questions 1. What is the profile of the enterprises, in terms of: 1.1. Types of enterprise; 1.2. Form of owner ship; 1.3. Time of operated; and 1.4. Amount of employees? 2. What are the SMEs’s HR practices as to: 2.1. Recruitment and Selection; 2.2. Training and Development; 2.3. Career Planning System; 2.4. Participation and Involvement; 2.5. Compensation and benefits; and 5 2.6. Performance Appraisal? 3. What are the perceptual SMEs’s managers in organizational performances? 4. What are the effects of these HR practices on the financial performance of SMEs? Hypotheses H1. Recruitment and Selection positively effects SME’s performance. H2. Training and Development positively effects SME’s performance. H3. Career Planning System positively effects SME’s performance. H4. Participation and Involvement positively effects SME’s performance. H5. Compensation and Benefits positively effects SME’s performance. H6. Performance Appraisal positively effects SME’s performance. Significance of the study Completing this study brings together aspects of theory and practice. For theory, this study is an expansion of previous studies on HRM practices of SMEs by focusing on examining the simultaneous impacts of HRM practices on SME’s performance. In addition, utilizing data from Thai Nguyen city, one of the emerging economies, contributes to the literature of SME HRM. In practice, this study is significant for HRM practices in Thai Nguyen SMEs. Results will indicate relationships between HRM practices and SME performance will assist owner manager and HR managers to improve performance and profitability of their businesses by managing human resource matters efficiently and effectively. Scope and Limitation The study was 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 and medium-sized enterprises in Thai Nguyen City were selected to be the respondents of the study. It specifically 6 explored on the profile of the respondents in terms of Types of enterprise; Form of owner ship; Time of operated; Number of employees. The study was limited to determine the perception of the respondents on the human resource practices of the small and medium enterprises in Thai Nguyen City which are classified in aspects namely: Recruitment and Selection; Training and development; Career planning System; Participation and Involvement; Compensation and Benefit; and Performance appraisal. The 290 selected respondents (college teachers) were given a questionnaire designed by the researcher and complete the questionnaires after being explained and instructed by the researcher. The researcher floated the questionnaire to the respondents after it had been validated by her advisor in June 2013. Definition of terms Compensation refers to the total cash and non-cash payment offered by the small and medium enterprises to an employee in return for the services rendered to the enterprises. Apart from salary and wages, compensation also includes: Sales commission, Overtime pay, bonuses, Profit sharing, Recognition checks and rewards, Non-cash benefits, such as company-paid accommodations, certain stock options, a companyfinanced car and other non-cash taxable items. The value of compensation received by an employee depends on a number of factors such as the availability of relevant skills, the employer’s desire to retain the employee, the profitability of the enterprises, and salaries for comparable jobs in the marketplace. Financial capital refers to the money used by the small and medium enterprises to buy what they need to make their products or provide their services or to that sector of the economy based on its operation, i.e. retail, corporate, investment banking, etc. Form of ownership refers to the method of owning real estate, which affects income tax, estate tax, continuity, liability, survivorship, transferability, disposition at 7 death and at bankruptcy. Ownership forms include: corporation; joint tenancy; limited partnership; partnership; corporation; limited liability company; limited liability partnership; tenancy by the entireties; tenancy in common; and tenancy in severalty. Number of employees refers to the number of people the small or medium enterprises employ at the time of joining, including any part-time workers. Performance appraisal refers to a review and discussion of an employee's performance of assigned duties and responsibilities. The appraisal is based on results obtained by the employee in his/her job, not on the employee's personality characteristics. The appraisal measures skills and accomplishments with reasonable accuracy and uniformity. It provides a way to help identify areas for performance enhancement and to help promote professional growth. It should not, however, be considered the supervisor's only communication tool. Open lines of communication throughout the year help to make effective working relationships. Each employee is entitled to a thoughtful and careful appraisal. The success of the process depends on the supervisor's willingness to complete a constructive and objective appraisal and on the employee's willingness to respond to constructive suggestions and to work with the supervisor to reach future goals. Promotion refers to the primary elements used in the marketing mix. Thus, promotional efforts should work in harmony with product marketing, pricing, and distribution actions that target prospects and customers. When assembling a promotional plan, marketers typically employ one or more of the following five promotional subcategories: personal selling, advertising, sales promotion, direct marketing, and publicity (or public relations). These communication tools serve as tactics within the promotional plan to accomplish objectives such as: increasing sales; launching new products; creating and building brand equity; establishing market positioning; retaliating 8 against competition; and strengthening brand image. Recruitment refers to the process of finding and hiring the best-qualified candidate (from within or outside of an organization) for a job opening, in a timely and cost effective manner. The recruitment process includes analyzing the requirements of a job, attracting employees to that job, screening and selecting applicants, hiring, and integrating the new employee to the organization. After the job description has been approved, the recruitment begins. Each organization has a different recruitment process, but it typically includes posting the job opening internally and externally. Jobs are posted on the organization's Internet site, Internet job boards, newspapers and industry professional organizations. Recruiting can also include representatives from the organization attending college and career fairs. Time of operated refers to the duration of time that the enterprises have been being run since their foundation. Training and development refers to the official and ongoing educational activities within an organization designed to enhance the fulfillment and performance of employees. Training and development programs offered by a business might include a variety of educational techniques and programs that can be attended on a compulsory or voluntary basis by staff. Training and development is one of the key HR functions. Most organizations look at training and development as an integral part of the human resource development activity. The turn of the century has seen increased focus on the same in organizations globally. Many organizations have mandated training hours per year for employees keeping in consideration the fact that technology is deskilling the employees at a very fast rate. Types of enterprise refers to specialization field that an enterprise is focusing on. 9