The Impact of the Working Environment and Welfare on Human Resources Maintenance: An Empirical Study in Vietnam

Abstract

Human resources play a key role in developing and enhancing the manner in which an organization change. In fact, the role of human resource-related quality management has contributed greatly to the growth of the organization in both the short and long term. The purpose of the current study is to identify factors that influence human resource retention in Hanoi in the backdrop of growing economic performance of Hanoi in Vietnam's economy. Primary data was collected through questionnaires of 280 respondents from the four districts in Hanoi, including 25.2% of respondents working in Cau Giay district, 21.2% in Dong Da district, 34.2% in Ha Dong district, and 19.4% in Thanh Xuan district. After applying Cronbach's Alpha and Explore Factor Analysis (EFA) analysis, Durbin-Watson test, empirical results demonstrate that relationship among co-workers has a significant and positive contribution on the maintenance of human resources in the organization. Additionally, higher welfare facilities for an employee are more likely to impact the maintenance of human resources in the organization. Factors such as working environment, job placement, and leadership relationship have no adverse effect on the maintenance of human resources, although a positive impact could be established in all cases.

1. Introduction

Hanoi, capital of Vietnam has contributed significantly to the economic growth of Vietnam. As a result, the average growth rate of the city during 2016–2020 was nearly 7% while the scale of capital city economy was estimated at $44 billion U.S. dollars. According to Nguyen (2021), and Ministry of Planning and Investment (2020) the number of firms in Hanoi have greatly increased in both quality and quantity in recent years. Particularly, Hanoi has predominantly focused on maintaining its place among the top ten localities in the provincial competitive index (PCI), and continuing improvement of business environment, as well as start-up and business support for businesses in the area (Ao & Nguyen, 2020).

In the context of increasing firm performance in particular, and economic growth in general, human resource quality has greatly contributed in promoting the development of businesses (Ajzen & Fishbein, 1980; Ajzen, 1991; Howard & Sheth, 1969; Nguyen & Nguyen, 2020; Abbas & Yanfu, 2020). There are numerous, earlier studies on human resource maintenance (Decenzo & Robbins, 1988; Antwi & Phillips, 2013; Neog & Barua, 2014; Parmenter & Barnes, 2021). According to Alker and McHugh (2000) who conducted a study in organizations in the UK and concluded that there was more support likely for organizational change where better welfare can play an important role in the business. Therefore, a business should have an appropriate strategic human resource management (Fahim, 2018). More specifically, the engagement of the best human resource management is considered a remarkable strategic tool for retention of the core workforce. In addition, the desirability of highly skilled employees is more pressing today than ever before (Tran & Vu, 2019). Therefore, organizations have been increasingly attracted by the strategic tool of human resource maintenance (Embuhira, 2011; Fahim, 2018). Having said that, the lack of quality in human resource maintenance training has become a serious problem for further development (Kanunakaran et al., 2021). Further, Cowin et al. (2008) propose that human resource quality can be enhanced by educational programs, improving communication and general self-concept by creating learning opportunities for staff. According to Efthymiou et al. (2021), competitive salary and job security must also be considered as important factors in the organization. In another study, Degbey et al. (2020) endorse the importance of the role of psychological attributes, and perceptions on human resource retention.

In the case of Vietnam, there are no studies on human resource maintenance in the organization, especially in recent years. Vietnam gained a miracle economic performance, as a result of massive economic reforms. Economic reforms, called Doi Moi with the goal of a socialist-oriented market economy came into being in 1986. Per capita GDP grew from $95 U.S. dollars in 1990 to $390 U.S. dollars in 2000, and approximately $3500 U.S. dollars in 2020, surpassing that of Philippines and reaching on par with that of Indonesia. From a closed economy, Vietnam has joined a number of free trade agreements (FTAs), but the country has faced many difficulties regarding human resource management in the business community. The aim of this study is to illuminate the main factors affecting human resource maintenance via a case study in an emerging economy. Using a mass questionnaire and SPSS software in the analysis, it was concluded that the relationship between co-workers and their welfare significantly impacted human resource maintenance.

For more discussion in this research, the remainder of this study will be organized as follows: In Section 2, we analyze the literature review. In Section 3, and Section 4, we discuss data collection, methodology and main results. We further demonstrate the discussions, implications and conclusions in Section 5.

2. Literature Review

Theoretically, the quality of human resources has greatly contributed to promoting the effectiveness, and development of business enterprises. The objective of human resource maintenance is to ensure that employees stay with the organization and are loyal to it. This can be achieved by positive reinforcement strategies and other activities to engender motivation to work enthusiastically and with responsibility to complete the job in a superlative manner. As suggested in Decenzo and Robbins (1988), maintaining good human resources have created a working environment for employees that they can feel excited and passionate about their work, and consider it as an integral part of their lives. Antwi and Phillips (2013) indicate that Ghana is the major source of migrant, skilled healthcare professionals in the context of a correlation between aggregate immigration and wages. In the case of Ghana, an increase in wages could improve employee retention by reducing emigration. In another case, in the hospitality sector, in the context of association between employee satisfaction and commitment to the organization, in India, Bangwal and Tiwari (2019) discuss that the job environment has a significantly positive impact on the intention of staying via job satisfaction.

Parmenter and Barnes (2021) conducted a study on a developed economy, and state that in the Australian mining industry, local employment is key to company and local relationships. Against this backdrop of a growing proportion of indigenous employees in the mining workforce - key retention factors can be found by creating support mechanisms, a culturally safe environment and a career growth path for local labour. In this study by including competent non-local workforce, suitable support methods, and having access to professional development opportunities creating more suitable outcomes.

In a study on employee’s job satisfaction in Assam, Neog and Barua (2014) with the objective of assessing factors influencing job satisfaction and tracing the linkages between fair compensation and job satisfaction, supervisor support, working environment, job security and job satisfaction. Results demonstrate that the salary seems to be the most important factor that affects job satisfaction of employees in the automotive service workshops. In addition, Albanese and Cockx (2019), have a study on permanent wage cost subsidy on employment retention in Belgium, and use a semi-parametric weighted difference-in-difference method for treatment of endogenous stratification for the period 1941–1950. Albanese and Cockx (2019), point out that a small positive impact on working time in the short run and a large one on retention rate in employment in relation to employee with high risk of early retirement.

According to Delores (2020), on a study of home nursing job satisfaction and retention in the context of increasing need for home healthcare nurses in the USA with an expected growth rate in employment at 5% in the 2014–2024 period and a growing prediction of 60.7% number of home health nurses needed by 2024. Delores (2020) indicates that job satisfaction is the main factor of retention. However, these three factors such as patient and peer relationships, autonomy and flexibility are consistent with high job satisfaction, while low job satisfaction factors are for workload and uncompensated time, documentation requirements, and wages.

Examining a relationship between self-concept, job satisfaction and retention of nurses, Cowin et al. (2008) use a random sample data of 2000 nurses and conduct a survey over 8 months. The findings indicate that self-concept has a greater impact on retention plans than job satisfaction. In addition, the aspect of pay, and work are not related to retention plans while a relationship between professional status, or organization policies and retention plans could be found. Cowin et al. (2008) propose that in order to improve the general self-concept of nurses, educational programs, greater competencies in communication and professionals of health sector, increased learning opportunities, and friendly organizational policies should be implemented in the future. Similarly, in the trends of becoming Asia’s center regarding maintenance of human factor training, Kanunakaran et al. (2021) discuss that the lack of quality in human resource maintenance training has seriously become a bottleneck for development in future. Therefore, Indian organizations have invested a huge amounts of $900 million U.S. dollars in order to overpass the hard obstacle that can negatively influence long-run development.

By a study in the aviation industry, Efthymiou et al. (2021) investigate factors affecting entry level airline pilot retention, by using a sample data of 394 Ryanair pilots, and nine in-depth interviewers. Efthymiou et al. (2021) discuss that proper human resources maintenance has a significant impact on the aviation industry. A notably significant result was found, that is, a competitive salary and job security are significant and have a positive effect on human resource retention. Accordingly, the organization can immediately update their financial and non-financial policies, as well as amend work practices in order to stimulate motivation of employees in their organization. Furthermore, Degbey et al. (2020) studied the retention of employees in mergers and acquisitions and also confirm that employee retention is likely to be understood by focusing on psychological attributes and perceptions of M&As in recent years. In this case, Degbey et al. (2020) found a positive relationship between psychological ownership and employee’s retention via the direct and mediating impact of their commitment and involvement to the organization.

3. Data and Methodology

3.1. Data Collection

In this study, we use one-on-one discussions with managers by using the questionnaire according to the proposed research model above. The sample size of mass interviewers is approximately 280. To examine the firm type, the sample will conduct the research on all kinds of enterprises including foreign, joint venture, state-owned and domestic private companies. The proportion of respondents has been classified as follows: 25.2% of respondents working in Cau Giay district, 21.2% in Dong Da district, 34.2% in Ha Dong district, and 19.4% in Thanh Xuan district. There are four main sectors such as footwear and garment, real estate and construction, financial institutions (banking, insurance, stock exchange) and financial leasing.

Through survey questionnaires, we will correct the data, particularly missing, and errors of data. The final sample size is 280, approximately 92% of total survey questionnaires.

3.2. Research Model

Previous findings in employees’ retention have been studied by Antwi and Phillips (2013). After factoring to the context of Vietnam, the regression equation will be written as follows:

\(\begin{aligned} \mathrm{HRM} &=\beta_{0}+\beta_{1} \mathrm{WE}+\beta_{2} \mathrm{JP}+\beta_{3} \mathrm{WF}+\beta_{4} \mathrm{CC} \\ &+\beta_{5} \mathrm{LR}+\beta_{6} \mathrm{SC}+u_{i} \end{aligned}\)

Where

WE, JP, WF, CC, LR, SC, are independent variables including working environment, job placement, career development opportunities, welfare, corporate culture, leadership relationship, and support from co-workers (SC).

MHR is an independent variable, represented for maintaining human resources.

u_it is the error term.

The proposed research model can be shown in the Figure 1 below.

Figure 1: Proposed Research Model

According to the studies of Antwi and Phillips (2013) the variables and its measurement will be shown in Table 1.

Table 1: Variables, and Measurement Variables

4. Empirical Findings and Discussion

4.1. Empirical Results

Table 2 depicts the specific results of the survey. Results indicate that 49.28%, and 50.72% employees in this survey are male, and female, respectively. There are three age groups including 28.57% under 30 years, 26.78% between 30 and 45 years of age. Regarding occupation, approximately 7.14% of employees are managers while 44.64%, and 48.21% of employees have 1–3 years, and more than three years of experience. Therefore, a large sector of the workforce in this analysis is young.

Table 2: Characteristics of the Samples

Verifying the reliability of the entire scale in Tables 3 and 4, after running Cronbach’s alpha, it is evident that the variable of SC should be eliminated because Cronbach’s alpha is under 0.4 (Hair et al., 1998). In addition, the total variable correlation coefficients of the variables in the scales were all greater than 0.3. Accordingly, after assessing the reliability of the scale, the new model included 22 observed variables, which were contained in 5 factors including: WE, JP, WF, CC, LR, and SC.

Table 3: EFA Analysis

Table 4: EFA Results of the Dependent Variable

Regression results are found by using regression techniques on SPSS software and the Enter method to put the strong-impact variables, gradually removed the weak-impact variables into the regression equation. The results are shown in Tables 5 and 6.

Table 5: Results of Testing Research Model

Table 6: Regression Results

In the analysis, when VIF is more than 10, it meant that the multi-collinearity may be present. Here is the formula for calculating the VIF for X_i

\(\mathrm{VIF}=\frac{1}{1-R^{2}}\)

R² in this formula is the coefficient of determination from the linear regression model with independent and independent variables.

Regression coefficients in Table 6 show that two variables such as SC, and WF have significant and positive impact on maintaining human resources (MHR) in the case in Hanoi, Vietnam. Other variables as WE, JP, and LR have insignificant and positive impact on maintaining human resources (MHR). The regression results of the human resource maintenance can be written as follows:

MHR = 0.112 * LR + 0.012 * SC + 0.143 * WF + 0.035 * JP + 0.265 * WE + u_i

In which,

SC, and WF, respectively, are support from co-workers, welfare that can significantly impact on maintaining human resources (MHR).

WE, JP, and LR, respectively, are working environment, job placement, leadership relationship.

4.2. Discussion

Support from co-workers (SC) - this evidence indicates that an employee with a greater support from co-workers will be able to maintain better human resources in the organization. In fact, if an employee feels that he is supported by his coworkers, he will develop a stronger professional bond with the organization. This interdependence between the company and the employee will grow in both the short and long term. This finding is also supported by Dao et al. (2021). An individual who contributes to the organization will in turn be recognized by the organization leading to a greater incentive to develop the organization and promote its growth.

Welfare - this evidence depicts that an employee with a greater welfare is likely to stay on in the organization. Organizations with a stronger sense of welfare to their employees were better able to retain talent. As a result, the organization always has high quality human resources who are loyal to the organization, they feel secure at work and dedicate their efforts to the development of the organization. This finding is also supported by Antwi and Phillips (2013), in the case of Ghana for skilled health professional migrants, an increase in wages in Ghana will also improve attrition by reducing international migration.

5. Conclusion

The aim of the study is to examine factors affecting human resource retention in the case of Hanoi, a capital city of Vietnam in the context of greater economic contribution of Hanoi in the Vietnam’s economy. The study used one-on-one discussions with managers through using questionnaires, and a mass interview of 280 staff and managers in four districts in Hanoi, including 25.2% of respondents working in Cau Giay district, 21.2% in Dong Da district, 34.2% in Ha Dong district, and19.4%inThanhXuandistrict.Afteranalyzing by Cronbach’s Alpha and EFA analysis, using regression, empirical results indicate that support from co-workers is positive and has a significant impact on the maintenance of human resources in the organization. In addition, an employee with greater welfare is likely to be loyal to the organization. In contrast, working environment, job placement, and leadership relationship have insignificantly impacted the maintenance of human resources in an organization although the positive impact could be found in all these cases.

This study has some implications for the businesses in order to maintain human resources well. First, the organization needs to create a favorable environment for employees to easily cooperate and support each other at work. This would be a prerequisite for profitability and sustainable development in both the short and long term for both the employee and organization. Second, the organization needs to create a competitive income based on the results of fair staff evaluation, which would motivate individuals to be loyal and committed to the organization and dedicate themselves to the job.

*Acknowledgments:

The authors thank the editor and two anonymous reviewers for their constructive comments on this paper.