Chapter one describes the background of the study problem, introduces Formosa HaTinh Steel Vietnam and outline an important and significance for further research in turnover intention affecting of POS, job satisfaction and organizational reputation with research questions and research objectives.
1.1 Research Background
In recent years, Vietnam has strong economic growth with the workforce has continued to expand then resulting in the rise in competition within job market and the rate of turnover at many companies is increasing. There is an enormous brain drain problem in reality, especially highly skilled employees, they have been leaving state organizations to work for private and foreign companies. Although the levels of Vietnamese employee engagement is higher than Asia Pacific Region, the level of employee intent to stay is lower (Ruge, 2011). In fact, it is not unusual to see Vietnamese applicants who have worked at a multitude of companies over a short span of time (Lacey & Hoang, 2014)
Figure 1.1 Vietnam voluntary turnover trend 2010-2015
Figure 1.1 clearly described a turnover trend in Vietnam recently. The 2015 voluntary staff turnover rate of well- established multinational companies (MNC) is higher than 2014 and slightly increasing from 2013 due to the gradual economic recovery. Although, the staff turnover rate of Local companies in 2015 is slightly lower than 2014 the average voluntary staff turnover rate of local companies was higher than MNCs 17.0% compared with 13.7%
(Talentnet, 2016)
According to senior employment trends survey, conducted by the domestic online network in 2013, the turnover rate among senior-level workers is growing by 54 percent of 3,361 white-collar workers reported they were unsatisfied with their current jobs and want to change. 82.2 percent of respondents have participated one to three online networks in Viet Nam and foreign to seek for job opportunities (Việt Nam News, 2013). Another survey has revealed Vietnamese employee usually concerned about business reputation, stable working environment, and good developing opportunities not only big enterprises to settled down (Anphabe, 2016)
In this case, job satisfaction and the perceived how each company evaluates employee's performance has been confirmed to be important factors to organizational survival and development. An organization has employees who are satisfied and feel valuable within their workplace are likely to be productive workers and embedded with their job. So the effective management of employee job satisfaction and organizational practices are crucial factors to decrease employee turnover intention of organizations. Furthermore, to have an adequate evaluation of the value, the attitude of employees before making decision to quit a job, perspective of external factor related to organizational such as how external people evaluate their organization, a positive or negative external reputation of organization which are trusted and assessed favorably or not by outsider should be considered. The reality seems like different with the idea that all occupations and organizations are equally valuable. People tend to judge someone by the organization where he or she works, rather than the person per them, especially,
in Vietnamese culture people pay a lot of attention in social status and treat each other by judging their occupation. Working for an organization with a favorable reputation maybe can enhance social identification and employee satisfaction then keeps them continue to stay with their job but will the turnover intention of those people whose work for “bad company” and has been unfavorable judged by external society get affected even though they are satisfied with their job? This study will investigate the real case from Formosa Ha Tinh Steel, Vietnam to know the answers.
In an overall view, Vietnam is a rare regional market enjoying a strong rise due to a number of factors which are mostly driven by foreign investments, at least in the country’s large economic sectors like construction, mechanical engineering, processing and steel industries. The booming Vietnamese market for steel products is one of the most interesting markets in Asia, except China. In 2015 apparent steel consumption in Vietnam reached 18.5 million ton, surging by an unprecedented 30%. Construction is the main steel-consuming sector in the country amid its strong increase over recent years. In 2016 the consumption is expected to add around 8% coming to 20 million ton but the figure is still much higher than in other SE Asian countries. The rapidly growing demand for steel and favorable investment climate are opening opportunities for a number of international steel companies, especially from Asia, to invest in their business in Vietnam. (Andrey, 2016)
Formosa Ha Tinh Steel Corporation is a Taiwanese company that formed in June 2008 to establish a large iron and steel making plant at a deepwater port in Ha Tinh, Vietnam and started acting on 2016. That is currently the biggest foreign direct investment (FDI) project in Vietnam which has the capacity to get about 200 thousand tons vessels and the labor needed from related enterprises up to 100 thousand people (Tuoitrenews, 2015). In the as same case with any foreign companies, Formosa Ha Tinh Steel aspires to dominate their industries and market so need to attract and retain a talented employees pool with offer high salary, good working environment, many attractive benefits to help them satisfied and stay long over with their job.
But they have been become “bad company” from a mass fish poisoning in the sea near off the Vietnam coast in April, 2016 with an estimated 100 tonnes of dead fish washed ashore along more than 200 km (125 miles) of Vietnam’s central coastline include four affected provinces Ha Tinh, Quang Binh, Quang Tri and Thua Thien Hue (Theguardian, 2016 ). This disaster happens because the waste from Formosa containing toxins such as cyanide and carbolic acids was directly released into the sea during a test run of the plant. Formosa admitted it and has pledged $500 million to clean up the environment and compensate affected people from June 2016 but the consequence they have done with Vietnam citizen, environment, fishing, tourism industries … still can’t heal, it has been a lot of anti-Formosa protests in Hanoi, Ho Chi Minh City, Ha Tinh and now Formosa becomes a “black name” company in Vietnamese people concept (see Appendix 1).
1.2 Problem Statement and Research Objectives
Because of “people” component has become the most important predictor of organizational success and organizations with talent pool will have a competitive advantage (Brown et al., 2003), so improved understanding of the psychological process underlying employee satisfaction, make them elicit commitment, superior performance and prevent them from fostering withdrawal and turnover cognitions from organization become more and more important in management.
Based on these concerning above there are the questions addressed in this research:
(1) How does POS affect job satisfaction?
(2) How does job satisfaction affect turnover intention?
(3) What is the relationship between POS, job satisfaction and turnover intention?
(4) How does organizational reputation influent job satisfaction and turnover intention?
The researcher investigates Formosa Ha Tinh Steel case to achieve some purposes below:
(1) Exploring the role of perceived organizational support to job satisfaction (2) Examining the impact of job satisfaction on turnover intention
(3) Figuring out how perceived organizational support affects turnover intention through employee job satisfaction.
(4) Figuring out the moderate effect of organization reputation on job satisfaction and turnover intention process.
1.3 Research Significance
This study enhances theoretical understand of turnover intention and expands the current knowledge in several ways. Firstly, it brings tentative explanations as for how perceived organizational support and job satisfaction influence to turnover intention by using social exchange theory, that elucidates the manner how employee perceive their organizational support through the mediating effect of job satisfaction to predict the intention to quit a job.
Furthermore, working for an ill-reputed organization can lead to discomfort and decrease self-esteem then potentially lead to withdrawing. So secondly, one of the most important external aspects is organizational reputation which is examined in this study by using Formosa Ha Tinh Steel case in Vietnam to assess its influence on intending to make withdrawal decisions of the employees.
Through the research, the researcher wish can build a clear picture for manager understanding how important of organizational support, rewards or job conditions in order to satisfy and embed their employee with the job and understanding organizational reputation is also strongly recommended when it comes to preventing valuable employees from going brain-drain by making them feel proud of being part of the company.