Impacts of organizational culture on employee engagement with organizations in vietnamese enterprises

Nội dung text: Impacts of organizational culture on employee engagement with organizations in vietnamese enterprises

1. IMPACTS OF ORGANIZATIONAL CULTURE ON EMPLOYEE ENGAGEMENT WITH ORGANIZATIONS IN VIETNAMESE ENTERPRISES MA. Can Huu Dan University of Labor and Social Affairs dankhanh81@gmail.com Assoc. Prof. Dr. Le Quang Canh National Economics University canh@neu.edu.vn Abstract Using qualitative and quantitative methods, this study investigates impacts of organizational culture on employee engagement in Vietnamese enterprises. The research model is based on Recardo & Jolly (1997) and Zain (2009) by adding an aspect of "leadership behavior" as one component of organizational culture. With the survey sample of 267 employees working in different types of Vietnamese enterprises, the empirical results show that nine aspects of organizational culture have strongly positive impacts on employee engagement; the aspect of “leadership behavior” has the strongest impacts and the “reward and recognition” has smallest impacts on engagement of employees. Based on the results, some recommendations should be proposed to improve the employee engagement with the organization in the enterprises in Vietnam. Keywords: Organizational culture; employee engagement, enterprises 1. Introduction The Industrial Revolution 4.0 is now pervading in many fields of study. Despite the outstanding development in technology with Artificial Intelligence, Internet of Things, robotics, the importance of human resources has been affirmed. Human resources contain more special elements than machines. When comfortable, people can work more efficiently than usual, and when not finding comfort, the workers do not achieve the usual efficiency. In the economy with fierce competition, people play a key role, and development of human resource strongly associated with the organization is an important goal. There are many ways to enhance employee engagement with the organization, of which organizational culture is considered a viral and impressive tool. The influence of organizational culture on perceptions, thoughts, feelings, and behaviors 493
2. of organizational members is mentioned in Chow et al. (2001), and it has a direct impact on employee engagement. The organizational culture in Vietnamese enterprises manifested in the cultural aspects has certain differences, so the model of inheritance and supplementation will be tested as an important basis to draw on the aspects of organizational culture that influences employee engagement. Some practical studies have suggested that strong organizational culture will be the foundation for improving the position, brand image, market share of the organization and a factor to attract employees passionately to the organization. Using qualitative and quantitative methods with a survey sample of 267 employees working in different types of enterprises, this study investigates the impacts of organizational culture on employee engagement with organization in enterprises. By adding aspect of "leadership behavior" as one component of organizational culture of Vietnamese enterprises, the empirical results show that nine aspects of organizational culture have a positive impact on employee engagment; the aspect of leadership behavior has the strongest impacts and reward and recognition has smallest impacts on engagement of employees. The results shed light on understanding organizational culture in enterprises and improving engagement of employees to the firms in Vietnam. 2. Literature review Organizational culture After three decades, the definition of organizational culture has been increasingly developed, and a large number of studies on organizational culture have been conducted (Barney, 1986; Schein, 2004). Although they are not clearly-cut identified, those studies still demonstrate two different directions. The first one is to approach organizational culture from the perspective of business executives (micro- approach), focusing on exploring the management nature of cultural factors in business management (Deal and Kennedy, 1982; Martin, 2003). The other approaches from the perspective of the cultural factors’ impacts on business management (macro approach), focusing on the outcome of cultural factors on enterprises, especially for businesses with an organized or multicultural environment (Denison, 1990; Recardo and Jolly, 1997; Zain, 2009). Organizational culture includes a system of key values, beliefs, awareness, traditional habits and thinking methods, which are supported by all members, and how these interpretations influence their behaviors. Measurement of organizational culture has been done by many researchers, but two most popular measures are developed by Recardo & Jolly (1997) and Zain (2009). According to Recardo & Jolly 494
3. (1997), eight dimensions of organizational culture is developed and tested, including: (i) Organizational communication, (ii) Training and developing, (iii) Reward & recognition; (iv) Teamwork; (v) The effect of making decision; (vi) Innovation and risk taking; (vii) Fairness in governance policies, (viii) Orientation on future plans. While Zain (2009) mentions organizational culture measurement as 4 aspects: Teamwork, Training and development, Organizational communication, and Reward and recognition. Employee Engagement Employee engagement has become a crucial element in the research of organizations, managers and in the knowledge of labors’ behavior at work. Mowday, Steers & Porter (1979) argued that engagement, which referred to a positive relationship with the organization that made them willing to invest their efforts to the success and development of the organization, was a strong commitment of employees to the organization and the active involvement of employees in a given organization. According to Meyer & Allen (1991), organizational engagement is a psychological state that expresses employees' relationships with the organization, closely related to the decision to remain as a member of the organization. Legge (1995) argued that employee engagement, which was maintained by the imposition control system that led to more responsive and proactive feedback behaviors, was completely different from patiently submissive behavior that was characterized by traditional human resource management. Mathis and Jackson (2000) argued that employee engagement with organizations was the level that employees believe and accept organizational goals and desire to stay. Jex (2002) identified that engagement represented both "emotions and behavioral trends" that toward organization. With variety of approaches and perspectives in research, researchers do not have a consistent concept of employee engagement with the organization. From the author's observation, "employee engagement is a psychological state of the individual, which creates emotions that make individuals bind themselves to the organization and endeavor to perform a task, or that individual's actions to the organization because of personal vibrations, responsibilities or needs”. There are many different studies on measurement of employee engagement. Angle and Perry (1981) proposed two components of engagement: engagement of values and engagement for maintain. Mowday, Porter & Steer (1979), proposed three components: coherence or consistency, loyalty, commitment. O’reilly & Chapman (1986) proposed three components of psychological commitment to an organization: 495
4. compliance, identification, and internalization. Penley & Gould (1988) proposed three components of engagement: morality, calculation, indifference (Alimentative). Meyer and Allen (1991) proposed three components: affective, continuance, and normative commitment. The impact of organizational culture on employee engagement with the organization Many previous studies have shown that organizations with strong culture have the opportunity to attract people with the same vision and belief, accept challenges and contribute for long-term goals. A positive organizational culture will increase the employee engagement, thereby strengthen the operational efficiency of the organization and creating the competitive advantage of the organization. According to Lok and Crawford (1999), organizational culture performs a virtual function as creating connection and enhancing efficiency. Deal and Kennedy (1982) argued that organizational culture influenced employee engagement in the organization and the strength of connection with the organization that correlated with the power of organizational culture. Tran Huu Ai, Nguyen Minh Duc (2014) measured the impact of organizational cultural factors on employee engagement including (i) teamwork, (ii) organizational communication, (iii) training and development, and (iv) reward and recognition, (v) fairness and consistency in governance policies. The Naidoo Study (2014) argued that there were 7 elements of organizational culture that had a strong effect on employee engagement: leadership styles, needs and goals of employees; means to achieve goals; regulatory process; vision and mission; towards the outside environment; and diversification strategy. Experimental results influenced the organizational culture on employee engagement are different. Therefore, it is necessary to find out the law, which the impact of organizational culture on employee engagement is essential for Vietnamese enterprises. 3. Analytical framework and research methods Analytical framework In the literature review on impacts of organizational culture on employee engagement with the organization, eight cultural aspects appropriated for Vietnamese businesses are selected. In addition, this study has developed a component of “Leadership Behavior”. This is the important component of organizational culture in Vietnamese enterprises. The scales are inherited and adjusted to fit Vietnamese enterprises. 496
5. Organizational Culture Employee Engagement • Loyalty • Organizational • Innovation and Risk • Pride Communication Taking • Effort • Training and • The Effect of Making Developing Decision • Reward and • Leadership Behavior Recognition • Fairness in Governance • Teamwork Policies • Future Plans • Gender • Age • Working position • Education • Seniority • Figure 1: Research framework The research framework is shown as Figure 1, in details, organizational culture consists of 9 aspects, in which 8 variables that represent organizational cultural aspects inherited from Recardo & Jolly (1997) and a new independent variable that measures leadership behavior. The employee engagement with the organization consists of three components as Loyalty, Pride, and Effort, developed by Mowday et al. (1979). In addition, control variables for individuals and businesses include personal characteristics such as: gender, experience, working position, and control variables for businesses including type, regulation tissues and occupations, are also specified in the estimated models. Each organizational culture aspect is measured by questions and statement. The measurement of organizational culture variables is based on studies of Zeffane (1995); Recardo & Jolly (1997); Bass (1997); Nijhof (1998); Ooi & Arumugam (2006); Zain (2009); Huma (2014). The measurement of employee engagement with an organization is based on the famous measurement of Mowday, Steers, & Porter (1979); Tran Kim Dung (2006). 497
6. According to the theory and analytical framework used to measure the impacts of organizational culture on employee engagement with the organization, the estimation model can be described as follows: Y = α + βX + γZ + ϵ (1) in which, Y is the employee engagement measured through three aspects (i) Loyalty, (ii) Pride, (iii) Effort. X is a vector consisting of 9 aspects of organizational culture. Z is a vector representing the characteristics of individual employees and characteristics of enterprises; and ϵ is random error in the model. Research methods Survey method The study was conducted a survey of workers in Vietnamese enterprises. The sample was selected based on the multi-stage random sampling method. First, the author selects the provinces to participate in the survey. Second, the author chooses the enterprise then sent an email to the business and asked 3 to 5 people with different positions (senior managers, middle managers and employees) in each enterprise to respond to pre-designed questionnaire on GoogleDoc. The number of votes used in the study was 267 votes from 126 enterprises (with a response rate of 12.6%). The survey results showed that the number of survey respondents was mainly women, accounting for 73%, Kinh people accounted for 98.1% with the average age of respondents is 29 years old. Most respondents had university and postgraduate degrees, which accounted for 79% of respondents; 71% of respondents were employees, while senior managers accounted for 3.4% of respondents. Participants who answered mainly working in enterprises less than 5 years accounted for 76.7% of the total number of respondents. For enterprises, small-scale enterprises accounted for 40.8%, large-scale enterprises accounted for 38.6% in the survey sample. Enterprises shared in a relatively equal proportion in the fields of manufacturing, trade and services, of which production accounted for 36.3%, trade accounted for 24.7%, services accounted for 39%. The participating enterprises were mainly domestic private enterprises (56.6%), 12.4% were state- owned enterprises, 15.4% were foreign-invested enterprises and other enterprises accounted for 15.7%. Most of them were enterprises with operating time of over 10 years (accounting for 56.2%). The questionnaire is designed into three parts. The first part asks about the characteristics of respondents and businesses where respondents work. The second part mentions organizational culture, which includes 9 aspects of organizational culture. The third part deals with the association with the three built-in factors. 498
7. Scale reliability test The test results showed that the criteria fully the requirements of the reliability of the scale. Cronbach’s Alpha shows that all observed variables had the average interitem covariance greater than 0.3 and Cronbach’s Alpha coefficient greater than 0.8. The results of scale reliability tests showed that all measures and observed variables are satisfactory (Table 1). Table 1: Results of reliable assessments of the measurement with Cronbach’s Alpha coefficient Indicator Average interitem Cronbach’s Factor Number covariance Alpha Organizational communication 5 0.398385 0.8694 Training and development 5 0.3922925 0.8814 Reward and recognition 5 0.474498 0.8857 Making decision 4 0.4223949 0.8787 Orientation on future plans 5 0.3782983 0.8758 Fairness in governance policies 5 0.5250458 0.9224 Innovation and risk taking 5 0.3857622 0.8905 Orientation on teamwork 6 0.3297419 0.8419 Leadership behavior 7 0.4448736 0.8758 Loyalty 7 0.3162876 0.8214 Pride 5 0.3922193 0.8833 Effort 5 0.3649883 0.8738 Source: Results extracted from SPSS The results of the EFA analysis show that engagement measures ensure reliability and validity. Of the 17 original observed variables, there are 15 satisfactory observations of authenticity used to measure employee engagement with organizations within the enterprise. Verifying multicollinearity The study carried out multicollinearity test to check the linear relationship among independent variables, using the Pearson correlation coefficient matrix. The results show that there is no multicollinearity among the independent variables used in the model that estimates the impact of organizational culture on employee engagement with the organization. 5. Empirical estimation results The study is conducted an estimation of three models. Model 1 is a full model consisting of nine aspects of organizational culture and control variables affecting engagement. Meanwhile, model 2 only includes variables that reflect organizational 499
8. culture without control variables, and model 3 includes a variable that reflects general organizational culture and control variables. Experimental estimation results are presented in Table 3. Table 3: Results of estimating the impact of organizational culture on employee engagement in the organization Model 1 Model 2 Model 3 Communication 0.0535 0.0495 (0.0247) (0.0240) Training 0.0892 0.0950 (0.0264) (0.0262) Reward 0.0422* 0.0465 (0.0221) (0.0216) Effectiveness 0.0609 0.0762 (0.0218) (0.0213) Future orientation 0.119 0.117 (0.0258) (0.0257) Fairness 0.0565 0.0602 (0.0252) (0.0247) Innovation and risk 0.0624 0.0686 (0.0282) (0.0282) Orientation on teamwork 0.0999 0.0954 (0.0258) (0.0255) Leadership Behavior 0.154 0.167 (0.0156) (0.0149) Control variables Yes No Yes Organisationnel culture 0.671 (0.0258) Constant 0.756 0.804 1.040 (0.1460) (0.0946) (0.1440) Observations 267 267 267 Adjusted R-squared 0.798 0.791 0.775 Source: Results extracted from SPSS Note: Numbers in parentheses are standard deviations; The symbol *, and represent the significance level at 10%, 5% and 1% respectively. 500
9. The estimation models have quite high adjusted R-squared values, approximately 80%. If comparing the adjusted R-squared in model 1 and model 2, it is clear that most of the change in employee engagement in the enterprise is explained by the changes in organizational culture. The characteristics of employees and businesses do not contribute significantly to the change of employee engagement with the organization in the enterprises. If comparing the adjusted R-squared in model 1 and model 3, the model 1 gives a greater adjusted R-squared. Estimated results from model 1 show that aspects of organizational culture have an impact, which is statistically significant at the significant level of 1% to 10%. In model 3, the estimation results also affirmed that organizational culture has an impact on employee engagement with the organization in the enterprise at the 1% significance level. This result confirms the importance of organizational culture to the engagement of employees in the enterprises. The standardized coefficients of cultural aspects to employee engagement are presented in order from high to low in Table 4. Table 4: The importance of organizational culture aspects to employee engagement in organization Aspects of employee engagement Standardized coefficient Leadership behavior 0.154 Orientation on future plan 0.119 Orientation on teamwork 0.0999 Training and developing 0.0892 Innovation and risk taking 0.0624 The effect of making decision 0.0609 Fairness in governance policy 0.0565 Organizational communication 0.0535 Reward and recognition 0.0422 Source: Results extracted from SPSS The results of multiple linear regression analysis can provide some conclusions. All nine elements/ aspects of organizational culture positively influence and are closely related to employee engagement with the organization in Vietnamese enterprises. The stronger these factors are, the higher the intensity of engagement, in which leadership behavior is seen as an important factor to improve employee engagement. The findings also show the importance of other factors in the model such as: Training and development, employees can participate in training courses, improve professional skills and, expand vision and knowledge formula to build a team 501
10. of qualified professionals; Reward and recognition, recognition of employees' dedication, satisfactory rewarding is the motivation for employees to associate with the workplace. Moreover, rewarding aspects such as fair, transparent assessment, implementation of committed policies, high wages and timely encouragement of employees, bringing high efficiency to impact engagement of employees in this study. 6. Discussion and conclusion This study provides evidence that organizational culture aspects positively impact employee engagement with the organization, which means that these factors are predictable and improve level of engagement of employees. Recommendations for administrators in building and developing organizational culture promote positive behaviors of employees, improve labor efficiency, create competitive advantages for businesses. Based on the empirical results, the study provides policy implications for enterprises in development of organizational culture according to the following specific orientations: First, enterprises need to focus on encouraging leadership behavior in the organization. In today's competitive socio-economic environment, good expertise and dedication to work are not enough to bring success for workers. Without the support, sharing and orientation of business leaders, it is difficult for employees to achieve success. Therefore, the behavior of leaders in enterprises is an indispensable secret in a dynamic working environment. Business leaders need to consider organizational culture as intangible assets that cannot be replaced; always maintain and develop cultural organization as development of enterprises. Second, businesses need to an orient future plan. This represents the long-term vision of the organization and has positive implications for employees. When employees are shared and know future plans, they will better understand the organization's activities, feel that they are part of the organization, from which each employee is aware her role and work to contribute and try her best in success of the enterprises. Third, businesses need to focus on teamwork orientation to improve the performance of employees. The enterprise should provide the necessary conditions for effective operating groups, actively help groups promoting creativity, autonomy and self-responsibility. In addition, applications of group-working and paid help increase the sharing, cooperation and mutual support among employees. Fourth, enterprises need to pay attention to training and development. In order to create a competitive labor force in the labor market, training is considered as a long-term investment and an important instrument to achieve the organization's goals. In the process of international economic integration, quality of human resources is one of the important competitive advantages in a modern business environment and 502
11. is one of the motivational factors for employees at the workplace. In order to promote the effectiveness of training, enterprises need to assess training needs carefully, based on the goals and future development direction of the business. Enterprises need to create conditions for employees to participate in training courses, improve skills and build high-quality staff. Fifth, businesses need to encourage innovation and accept risks, which is really important and necessary in a competitive environment. To survive and develop, enterprises must constantly innovate in practical activities. Enterprises always encourage new and creative ideas in doing their work. Effective innovations and innovations should be noted and rewarded in many ways. In the common thinking of employees, the salary is only the minimum level of payment stipulated by the State, businesses pay very low main salary to reduce the social insurance premium for the state. Thus, incentive and benefit policies are considered. Sixth, the efficiency of decision making in the business process is important to the success of individual, group and the whole organization. In the operating process, many decisions that need to be made and implemented timely such as price decisions, packaging, customer services, operating machines, To achieve the efficiency in decision making, businesses must pay attention to their decision making. Enterprises must build a strategic goal, thereby breaking down smaller goals; giving rights and responsibilities for each employees. Businesses make employees aware and understand the values and losses when deciding on a problem; trust and give employees autonomy. When employees make the wrong decisions, businesses should share the damage. It would make employees contribute and devote themselves to the organization. Seventh, fairness in governance policy requires enterprises to have effective policy development and implementation. Human resource management policies should be implemented consistently and synchronously for employees. When workers find that businesses are not fair, especially policies related to employees' rights, they feel discontented, frustrated, or even want to leave the business. That makes workers more passive in work, reduce support, discontent. Moreover, the fairness within the enterprise will create positive environment, satisfaction with work and increase the engagement of employees with the organization. Eighth, businesses encourage and promote communication in organizations. In particular, enterprises develop communication channels so that have sufficient information to carry out their work. It also emphasizes the importance of communication between upper and lower levels. If they encounter difficulties, they can receive timely guidance from their superiors, and eventually increase 503
12. performance of employees. It is necessary to focus on adjusting and harmonizing the organizational culture, creating a friendly working environment, sharing and cooperating, mutual respect, and creating cultural links. Finally, enterprises should reward and recognize timely the contributions of employees. They need internal communication for employees to understand the financial incentives and organization benefits. Helping employees understand and to be recognized and rewarded, they would work hard and have a better contribution. Reward and recognition should be fairly applied as worth as value of labor that employees; thus it would help the organization maintain employee engagement. The empirical results have affirmed that human factors need to be concerned by businesses. In order to create and develop organizational culture, human factors should be placed in the centre, as the most important resource for sustainable development. Research results help business leaders, managers to recognize, evaluate and select their decisions to develop a more sustainable corporate culture. This also provides business leaders understanding that organizational culture is an irreplaceable asset. The empirical findings provide evidence to build, develop and renew the organizational culture so that to fit the enterprises in each period of development; to stimulate the employees enthusiastically devote their capacity for themselves and the organization. Moreover, organizational culture also creates a competitive advantage, intangible values that help customers and partners distinguish businesses from others. In other words, this is an determinant of the existence and sustainable development of enterprises during the era of the industrial revolution 4.0. References 1. Angle, H. L., & Perry, J. L. (1981), An empirical assessment of organization commitment and organizational effectiveness. Administrative Science Quarterly, 26, pp. 1-13 2. Barney, J. (1986), “Strategic Factor markets: Expectations, Luck, and Business Strategy”, Management Science, 32,1231-41. 3. Bass, Bernard M. (1997), The Ethics of Transformational Leadership, Transformational Leadership, Academy of Leadership Press, University of Mary Land ‘s website, [ ], Aug 25, 2007. 4. Chow, C.W., Harrison, G.L., McKinnon, J .L., & Wu, A. (2001), Organizational Culture: Association with Affective Commitment, Job Satisfaction, Propensity to Remain and Information Sharing in a Chinese Cultural Context’, CIBER Working paper, pp. 24-25, San Diego State University. 504
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