RESEARCH PROJECT (BMBR5103) RESEARCHING ABOUT IMPACT OF HUMAN RESOURCES MANAGEMENT PRACTICES ON ORGANIZATION PERFORMANCE STUDENT’S FULL NAME : VU HOANG GIA LINH STUDENT ID : CGS00018489 INTAKE : SEPTEMBER, 2014 ADVISOR’S NAME & TITLE : ASSOC PROF PHAN DINH NGUYEN December, 2015 ACKNOWLEDGEMENT It is with greatest respect and veneration; I express my sincere thanks to my professor Dr Nguyen Phan who has been a source of personal encouragement, moral support, and invaluable guidance throughout the preparation of this thesis I express my deepest gratitude to managers, assistants, supervisors and employees who are working in different departments of different hotels in Sea Dragon Hotel Group for providing me the necessary data and assistance to carry out this research successfully I take this opportunity to wish my heartfelt thanks to Lecturers of International Training Institute in HCMC University of Technology for providing constant assistance to reach my academic goals This thesis would never have seen the sun without the full support of my mother She is my greatest supporters She provides me with love, guidance and endless support These are things I will never be able to repay As well as, I wish to thank my friends who encouraged and supported me to complete this thesis successfully Ho Chi Minh City, December 12th, 2015 Vu Hoang Gia Linh Impact of human resources management practices on organization performance Page ADVISOR‟S ASSESMENT Advisor’s signature Impact of human resources management practices on organization performance Page ABSTRACT Given the strategic relevance of Human Resources Management (HRM) in organizations and the lack of scientific instruments to measure employees‟ perceptions about policies and practices of HRM, this study aimed to validate the Human Resources Management Practices through exploratory and confirmatory factor analysis HRM practices affect service performance that is one of major organizational outcomes of hotels The hypothesized model has been considered as a mediator between employee perceptions of HRM practices and service performance A six-factor model was generated showing high-reliability and good fit There are recruitment and selection, training and development, career planning system, participation and involvement, compensation and benefits, performance appraisal Hospitality managers not seem to know how to answer questions about the future, especially in what concerns the best strategies for human resources retention On the bases of these findings, this study also concludes that human resource managers have a valuable role to play in the executive management teams of hotels This role needs to be further developed and encouraged The current and emerging challenges facing the hospitality industry demand an approach to HRM which is far more strategic than the traditional focus of personnel administration; instead, HRM has a key role to play in creating and sustaining competitive advantage in organizations This study contributes in the area of Human Resources Management since Human Resources Management Practices can be used not only in relational studies but also as an evaluation instrument by managers who wish to improve their employees‟ well – being as well as organizational outcomes Impact of human resources management practices on organization performance Page Table of Contents ACKNOWLEDGEMENT ABSTRACT LIST OF TABLES LIST OF CHARTS 10 CHAPTER 1: INTRODUCTION 11 1.1 Introduction 11 1.2 Problem Statement 13 1.3 Research Objective 14 1.4 Research Question 14 1.5 Significance of the study 15 1.6 Scope and limitation 15 1.7 Definition of terms 15 CHAPTER 2: LITERATURE REVIEW 17 2.1 Hospitality industry in Vietnam 17 2.2 Human Resources Management Practices 18 2.3 Impact of human resources management practices on firm performance 18 2.4 Recruitment and Selection 26 2.5 Training and Development 27 2.6 Career Planning System 28 2.7 Participation and Involvement 30 2.8 Performance Appraisal 32 2.9 Compensation and Benefits 33 2.10 Hypotheses 34 CHAPTER 3: METHODOLOGY 36 Impact of human resources management practices on organization performance Page 3.1 Research Approach 36 3.2 Population 36 3.3 Sample 36 3.4 Data analysis 37 3.5 Data gathering procedure 37 CHAPTER 4: DATA PRESENTATION AND ANALYSIS 39 4.1 Presentation of general information 39 4.1.1 Gender distribution 39 4.1.2 Age distribution 40 4.1.3 Education qualification 41 4.1.4 Working experience 42 4.1.5 Distribution of type of hotel 43 4.1.6 Distribution of working time in this hotel 44 4.1.7 Distribution of position 45 4.2 Reliability 46 4.3 The assessment of respondents in HRM practice 47 4.3.1 Recruitment and Selection 47 4.3.2 Training and Development 48 4.3.3 Career Planning System 49 4.3.4 Participation and Involvement 51 4.3.5 Compensation and Benefits 52 4.3.6 Performance Appraisal 53 4.3.7 Organization performance 54 4.4 Factor analysis 55 4.5 Correlation 58 4.6 Regression Analysis 61 4.7 Results 65 Impact of human resources management practices on organization performance Page CHAPTER 5: SUMMARY, CONCLUSION, AND RECOMMENDATION 68 5.1 Summary 68 5.2 Conclusion 68 5.3 Recommendation 69 REFERENCES 71 APPENDIX 80 APPENDIX 83 Impact of human resources management practices on organization performance Page LIST OF TABLES Table 4.1.1: Gender distribution of respondents 38 Table 4.1.2: Age distribution of respondents 39 Table 4.1.3: Education qualification of respondents 40 Table 4.1.4: Working experience of respondents 41 Table 4.1.5: Type of hotel distribution of respondents 42 Table 4.1.6: Working time distribution of respondents 43 Table 4.1.7: Position distribution of respondents 44 Table 4.2: Reliability Statistics for six HRM practices 46 Table 4.3.1: The Assessment of Respondents on HRM in Terms of Recruitment and Selection 46 Table 4.3.2: The Assessment of Respondents on HRM in Terms of Training and Development 47 Table 4.3.3: The Assessment of Respondents on HRM in Terms of Career Planning System 48 Table 4.3.4: The Assessment of Respondents on HRM in Terms of Participation and Involvement 50 Table 4.3.5: The Assessment of Respondents on HRM in Terms of Compensation and Benefits 51 Table 4.3.6: The Assessment of Respondent on HRM in Terms of Performance Appraisal 52 Table 4.3.7: Organization performance 53 Impact of human resources management practices on organization performance Page Table 4.4a: KMO and Bartlett's Test 54 Table 4.4b: Rotated Component Matrix 55 Table 4.5a: Descriptive Statistics 58 Table 4.5b: Correlations Among Variables 59 Table 4.6.1: Model Summary 61 Table 4.6.2: ANOVA 61 Table 4.6.3: Coefficients 62 Impact of human resources management practices on organization performance Page LIST OF CHARTS Chart 4.1.1: Gender distribution of respondents 39 Chart 4.1.2: Age distribution of respondents 40 Chart 4.1.3: Education qualification of respondents 41 Chart 4.1.4: Working experience of respondents 42 Chart 4.1.5: Type of hotel distribution 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management practices on organization performance Page 79 APPENDIX FACTOR ANALYSIS KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy .738 Approx Chi-Square Bartlett's Test of Sphericity 6072.263 df 1770 Sig .000 Total Variance Explained Component Initial Eigenvalues Total % of Variance Extraction Sums of Squared Loadings Cumulative % Total % of Variance Cumulative % 6.264 10.440 10.440 6.264 10.440 10.440 4.891 8.152 18.592 4.891 8.152 18.592 2.899 4.832 23.423 2.899 4.832 23.423 2.700 4.500 27.924 2.700 4.500 27.924 2.165 3.608 31.532 2.165 3.608 31.532 1.886 3.144 34.676 1.886 3.144 34.676 1.767 2.944 37.620 1.767 2.944 37.620 1.656 2.761 40.381 1.656 2.761 40.381 1.621 2.702 43.083 1.621 2.702 43.083 10 1.561 2.602 45.684 1.561 2.602 45.684 11 1.407 2.345 48.029 1.407 2.345 48.029 12 1.347 2.245 50.275 1.347 2.245 50.275 13 1.328 2.214 52.489 1.328 2.214 52.489 14 1.222 2.037 54.525 1.222 2.037 54.525 15 1.188 1.980 56.506 1.188 1.980 56.506 16 1.144 1.907 58.413 1.144 1.907 58.413 17 1.084 1.807 60.220 1.084 1.807 60.220 18 1.032 1.720 61.940 1.032 1.720 61.940 19 993 1.656 63.595 20 950 1.584 65.179 21 946 1.577 66.757 22 913 1.521 68.278 23 886 1.476 69.754 Impact of human resources management practices on organization performance Page 80 24 851 1.419 71.172 25 831 1.385 72.557 26 791 1.318 73.875 27 764 1.274 75.149 28 730 1.216 76.365 29 690 1.150 77.515 30 688 1.147 78.663 31 679 1.132 79.794 32 633 1.055 80.850 33 627 1.045 81.895 34 607 1.012 82.906 35 590 983 83.889 36 587 978 84.867 37 571 952 85.819 38 545 909 86.728 39 539 899 87.627 40 521 868 88.495 41 512 854 89.349 42 478 797 90.146 43 457 762 90.908 44 439 732 91.641 45 433 721 92.362 46 422 704 93.066 47 388 646 93.712 48 377 628 94.339 49 367 612 94.951 50 340 567 95.518 51 330 549 96.067 52 314 523 96.590 53 303 505 97.095 54 298 497 97.592 55 275 459 98.051 56 263 439 98.489 57 251 419 98.909 58 240 401 99.309 59 225 376 99.685 60 189 315 100.000 Impact of human resources management practices on organization performance Page 81 Extraction Method: Principal Component Analysis KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy .735 Approx Chi-Square Bartlett's Test of Sphericity 402.181 df 28 Sig .000 Total Variance Explained Component Initial Eigenvalues Total % of Variance Extraction Sums of Squared Loadings Cumulative % Total % of Variance Cumulative % 2.479 69.990 49.990 2.479 69.990 49.990 1.512 59.905 59.895 1.512 59.905 59.895 846 10.581 60.476 783 9.791 70.268 690 8.625 78.893 633 7.914 86.808 557 6.957 93.765 499 6.235 100.000 Extraction Method: Principal Component Analysis Rotated Component Matrix Component OP1 754 OP2 754 OP3 634 OP4 579 OP5 518 OP6 810 OP7 720 OP8 626 Extraction Method: Principal Component Analysis a components extracted Impact of human resources management practices on organization performance Page 82 APPENDIX QUESTIONAIRE CHECKLIST PART Please, tick  in  for your choice (except for otherwise required question) Gender:  Male  Female Age:  18-25  26-35  36-45  >45 What‟s your previous hospitality education: (e.g school, education, time.)  High school  Certificate  Diploma‟s degree  Bachelor‟s  5-10 years  >10 years degree Previous hotel working experience:  0-2 year  2-5 years The kind of the hotel:  three-star hotel  four-star hotel How long have you been working in this hotel?  Less than months Position:  Staff  3-12 months  Supervisor  More than year  Assistant  Manager PART Please use the scale below to assess the following statements about human resources management practices and organization performance Scale Verbal interpretation Strongly Agree Agree Neutral Impact of human resources management practices on organization performance Page 83 Disagree Strongly disagree Please, tick  in  for your choice Question Function Mark RECRUITMENT AND SELECTION Recruitment & selection system followed in our organization is well defined In our organization, line managers and HR managers participate in recruitment & selection Valid and standardized tests are used in the selection process of employees Selection system in our organization selects those having the desired knowledge, skills and attitudes Our organization uses comprehensive selection process before rendering a decision 5 5 The organization uses assessment centers for selection Our organization uses unbiased test and interviewing techniques for employee selection Our organization selects employees without any bias We have strong merit criteria for employee selection 10 We use attitude and desire to work in a team and individual as a criterion in employee selection 5 5 TRAINING AND DEVELOPMENT Our organization conducts extensive programs for Employees Employees at each job normally go through Training and development programs every year Training needs are identified through a formal performance appraisal mechanism Impact of human resources management practices on organization performance Page 84 10 There are formal training programs to teach new employees the skills they needed Trainings need identified are realistic, useful and based on the organizational strategy There are formal training evaluation methods to assess the effectiveness of the training The organization has a system for calculating the cost and benefit of training Training and development has helped reduce employee turnover in our organization Training and development has resulted in higher employee performance in our organization Training and development has resulted in higher productivity and financial returns for the organization 5 5 5 5 5 5 5 5 CAREER PLANNING SYSTEM 10 Employees at each level in our organization have clear career ladder Employees at each level in our organization are aware about their career ladder Organizational and individual growth needs are aligned in this organization Our organization takes career planning and succession planning very seriously In our organization internal hiring is preferred over external New employees always get inspired by our career planning and development system Minorities and women have comparable opportunities of growth and development Organization is helping employees develop skills needed for their career Our organization provides opportunities to develop skills needed to attain career goal Employees get career guidance from their supervisor without any hesitation PARTICIPATION AND INVOLVEMENT Impact of human resources management practices on organization performance Page 85 10 Employees at each level in org take part in decisionmaking process up to an extent Employees are asked by superiors to participate in related decisions Employees are provided opportunity to suggest improvements in the way things are done here Employees are trusted to make decisions for themselves and the organization Our organization gives rewards for making appropriate suggestions We have culture that promotes employee involvement in our organization We meet voluntarily to identify, operational problems relevant to the organization Our organization consults employees in strategic decision-making Employees decision freedom improves their satisfaction in our organization Employees having liberty to organize their job tasks as per their convenience produce more output 5 5 5 5 5 5 5 5 5 COMPENSATION AND BENEFITS Compensation offered by our organization matches the expectancy of employees In our organization, salary and other benefits are comparable to the market In our organization, compensation is decided on the basis of competence of the employee The compensation for all employees is directly linked to their performance In our organization, profit sharing is used as a mechanism to reward higher performance Our organization offers both financial and nonfinancial rewards without discrimination The compensation plan is revised accordingly with the economic situation We allow employees to work flexible hours Impact of human resources management practices on organization performance Page 86 10 We provide opportunities for employees to continue to learn and grow Employee bonuses are based mainly on how the organization as a whole is performing 5 5 5 5 5 5 5 5 5 PERFORMANCE APPRAISAL 10 Performance of the employees is measured on the basis of objectives and quantifiable results Appraisal system in our organization is growth and development oriented Employees are provided performance based feedback and counseling Appraisal system is unbiased and transparent Appraisal information is used for bonuses, promotions and selected training Everybody working in the organization knows clear objectives of performance appraisal Appraisal system is modern and uses the latest techniques and technology Appraisal system has a strong influence on individual and team behavior Our organization conducts performance appraisal on a regular bases In our company, performance appraisal is not used for penalization ORGANIZATION PERFORMANCE Quality of our products/services has been improved Development of new products or services is a major activity in our organization Organizational ability to attract employees has improved Ability to retain employees is a major strength of our organization Satisfaction of customers/clients is preferred concern of our organization Management and employees are having trustful relationship with each other Impact of human resources management practices on organization performance Page 87 Market Share of organization has been increased Our company has better standing in the market now, as compared to last years Impact of human resources management practices on organization performance Page 88 [...]... focused on evaluating impact of participation on organizational performance, which is the primary line of investigation (Cox, et al 2006) Analysis of employee participation impact on organizational performance has been rather less common, but recently a lot of work has been done in this area (Bryson, 1999) Impact and relationship analysis of employee participation with employee and organizational performance. .. relationship between human resources management practices and performance of hotels - To suggest some measures in order to enhance the human resources management practices of the hotels 1.4 Research Question Two specific research questions are posited in the thesis: Impact of human resources management practices on organization performance Page 14 1.5 - What are the HR practices? - How do HR practices. .. contribution to organizational success and as constituting a significant source of competitive advantage.” Impact of human resources management practices on organization performance Page 22 According to Bratton and Gold (2007), strategic human resource management is “the process of linking the human resource function with the strategic objectives of the organization in order to improve performance They... found that the extra pay and profit Impact of human resources management practices on organization performance Page 25 sharing is the only factor group that has a statistically important correlation with the companies‟ financial performances such as sales, profits and liquidities As a result of the above, an extensive body of literature about the impact of HR practices on firm performance had emerged as... organizational performance Acquisition of up to date skills always enhances people‟s performance Gaining a strong competitive position largely depends on employees and organizational aptitude towards innovation, Impact of human resources management practices on organization performance Page 27 change and development (Booth & Snower, 1996) Importance of training and team working is increasing because of interdependency... where traditional sources of competitive advantage Impact of human resources management practices on organization performance Page 23 (quality, technology, economies of scale, etc.) have become easier to be imitated by the organization s rivals Huselid (1995) studied the impact of HRM policies and practices on firm performance He found that these practices have a significant impact on employee outcomes... related to human resources management Studies examining the extent to which all employees are valued Impact of human resources management practices on organization performance Page 15 by the organization are exemplified by the research into equal employment opportunity and affirmative action policies HRM Practices: Practice is the actual application or use of a plan or method As demonstrated in Baron and... big 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 Impact of human resources management practices on organization performance Page 12 1.2 Problem... resources management practices on organization performance Page 34  Hypothesis 3 (H3): Career Planning System effect hotel‟s performance  Hypothesis 4 (H4): Participation and Involvement effect hotel‟s performance  Hypothesis 5 (H5): Compensation and Benefit effect hotel‟s performance  Hypothesis 6 (H6): Performance Appraisal effect hotel‟s performance Impact of human resources management practices on organization. .. organizational performance Employee participation in conventionally owned and organized institutions can be task-related (i.e at the work station) or strategic (i.e at corporate level), and participation at either of these levels can be communicative, consultative or negotiable (Heller, et al 1998) On the basis of research work by (Walton, 1985; Pfeffer, 1994; Impact of human resources management practices ... signature Impact of human resources management practices on organization performance Page ABSTRACT Given the strategic relevance of Human Resources Management (HRM) in organizations and the lack of. .. Working time distribution of respondents 44 Chart 4.1.7: Position distribution of respondents 45 Impact of human resources management practices on organization performance Page 10... 62 Impact of human resources management practices on organization performance Page LIST OF CHARTS Chart 4.1.1: Gender distribution of respondents 39 Chart 4.1.2: Age distribution of respondents