ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH

---------------------

PHẠM THANH NAM

A RESEARCH OF FACTORS AFFECTING EMPLOYEE
RETENTION IN TOPICA EDTECH GROUP
NGHIÊN CỨU CÁC YẾU TỐ ẢNH HƯỞNG ĐẾN VIỆC
GIỮ CHÂN NHÂN VIÊN TẠI TỔ HỢP CÔNG NGHỆ
GIÁO DỤC TOPICA

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2020


ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH

---------------------

PHẠM THANH NAM

A RESEARCH OF FACTORS AFFECTING EMPLOYEE
RETENTION IN TOPICA EDTECH GROUP
NGHIÊN CỨU CÁC YẾU TỐ ẢNH HƯỞNG ĐẾN VIỆC
GIỮ CHÂN NHÂN VIÊN TẠI TỔ HỢP CÔNG NGHỆ
GIÁO DỤC TOPICA
Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02
LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS.TRẦN KIM HÀO

HÀ NỘI - 2020


DECLARATION
The author confirms that the research outcome in the thesis is the result of author‟s
independent work during study and research period and it is not yet published in other‟s
research and article.
The other‟s research result and documentation (extraction, table, figure, formula,
and other document) used in the thesis are cited properly and the permission (if required) is
given.
The author is responsible in front of the Thesis Assessment Committee, Hanoi
School of Business and Management, and the laws for above-mentioned declaration.

i


ACKNOWLEDGEMENT

During my MBA course, I have gained various knowledge, skill and insights of
management. This course significantly grows up my capacity of administration and
management and support me manage my company effectively.
I declare that this is a true copy of my thesis. The content of this thesis has been
approved by the committee of Vietnam National University, Hanoi – Hanoi School of
Business and Management (HSB). This thesis has not been submitted for a higher degree
to any other University or Institution.

In order to finish this project successfully, I have received many helps, supports
and guidance from many people who I would like to thank sincerely.
First of all, I would like to thank all the professors of MBA program, especially Dr.
Tran Kim Hao – my supervisor. Then I would like to thank deeply to class assistant team
of HCC center, respondents who allowed me to gather enough data for this research.
Finally, I would like to express my thanks to my family, my colleges and my fellow
friends who always stand by me during the past two years and encourages me to keep
moving from the beginning of my study.

ii


ABBREVIATION

EFA

Exploratory Factor Analysis

iii


LIST OF FIGURES
Figure 1.1: HRM Practices and Employee Retention in Thailand research model ............. 14
Figure 1.2: Determinants of academic staff retention in Public universities in Kenya
research model ..................................................................................................................... 15
Figure 1.3: Research conceptual model of Employee retention .......................................... 16
Figure 3.1: TOPICA organizational chart ........................................................................... 28
Figure 3.2: TOPICA Growth and Funding History ............................................................. 30
Figure 3.3: TOPICA global competitor ............................................................................... 31
Figure 4.1: Gender statistic.................................................................................................. 34

Figure 4.2: Age statistic ....................................................................................................... 35
Figure 4.3: Working seniority analysis................................................................................ 35
Figure 4.4: Employee referral intention .............................................................................. 36
Figure 4.5: Model after calibrating retention ...................................................................... 41

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LIST OF TABLES
Table 3.1: Table of summary in TOPICA product position in ASEAN.............................. 27
Table 3.2: Table of the payment raising rate in TOPICA ................................................... 31
Table 4.1: Table of Cronbach analysis result of the research .............................................. 64
Table 4.2: Table of reliable variables after running Cronbach analysis .............................. 37
Table 4.3. Table of KMO and Bartlett's Test result ............................................................ 65
Table 4.4. Total Variance Explained test result................................................................... 65
Table 4.5. Table of rotated Component Matrixa test result ................................................. 66
Table 4.6: Summary table of observed variables that are reliable after running exploratory
factor analysis ...................................................................................................................... 39
Table 4.7: Table of Descriptive statistic of grouped factor after running EFA ................... 68
Table 4.8: Table of correlation test result ............................................................................ 68
Table 4.9: Model Summaryb test result ............................................................................... 68
Table 4.10: ANOVAa test result .......................................................................................... 68
Table 4.11: Coefficientsa test result ..................................................................................... 68
Table 4.12: Levene Statistic of gender group test result ..................................................... 69
Table 4.13: T-test of gender group test result ...................................................................... 69
Table 4.14: Levene Statistic of age group test result ........................................................... 70
Table 4.15: Levene Statistic of working seniority group test result .................................... 70
Table 4.16: ANOVA Statistic of working seniority group test result ................................. 70

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TABLE OF CONTENT
INTRODUCTION ................................................................................................................. 1
1.

Research rationale.......................................................................................................... 1

2.

Literature review............................................................................................................ 2

3.

Aim of research ............................................................................................................. 3

4.

Research objects ............................................................................................................ 4

5.

Research scope .............................................................................................................. 4

6.

Thesis structure .............................................................................................................. 4

CHAPTER I. LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT .............. 6
1.1.


Employee retention .................................................................................................... 6

1.1.1.

Definition ................................................................................................................ 6

1.1.2.

The importance of employee retention ................................................................... 6

1.2.

Factors affect employee retention.............................................................................. 7

1.2.1.

Compensation and benefits ..................................................................................... 8

1.2.2.

Reward and recognization ...................................................................................... 9

1.2.3.

Training and development .................................................................................... 10

1.2.4.

Organizational culture ........................................................................................... 10


1.2.5.

Leadership style .................................................................................................... 11

1.2.6.

Working environment ........................................................................................... 13

1.3.

Theoretical framework and hypothesis development .............................................. 14

1.3.1.

Review relevant theoretical framework ................................................................ 14

1.3.2.

Research theoretical framework ........................................................................... 16

1.3.3.

Hypothesis development ....................................................................................... 16

CHAPTER II: RESEARCH METHODOLOGY ................................................................ 20
2.1.

Research Objectives ................................................................................................ 20


2.2.

Research approach ................................................................................................... 20

2.3.

Research strategy ..................................................................................................... 20

2.4.

Research instrument ................................................................................................ 21

2.5.

Survey design .......................................................................................................... 22

2.6.

Sampling method and size ....................................................................................... 22

2.7.

Data Collection ........................................................................................................ 23

2.8.

Data analysis ............................................................................................................ 24

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CHAPTER III: THE CURRENT SITUATION OF CUSTOMER RETENTION IN
TOPICA EDTECH GROUP ............................................................................................... 26
3.1.

The current turnover rate situation in Vietnam ....................................................... 26

3.2.

Current situation of TOPICA Edtech Group ........................................................... 27

3.2.1.

General information .............................................................................................. 27

3.2.2.

Organizational Chart ............................................................................................. 28

3.2.3.

TOPICA products ................................................................................................. 28

3.2.4.

TOPICA Growth and Funding History ................................................................. 30

3.2.5.

TOPICA competitor overview .............................................................................. 31


3.3.

TOPICA efforts to raise the employee retention ..................................................... 31

3.3.1.

Compensation, Reward & Recognization ............................................................. 31

3.3.2.

Working environment ........................................................................................... 32

3.3.3.

Organizational culture ........................................................................................... 32

3.3.4.

Leadership Style ................................................................................................... 33

3.3.5.

Training & development ....................................................................................... 33

CHAPTER IV: RESEARCH RESULTS ............................................................................ 34
4.1.

Demographic analysis.............................................................................................. 34


4.2.

General working information of employee ............................................................. 35

4.3.

Employee retention questionnaire analysis ............................................................. 36

CHAPTER V. RESEARCH DISCUSSION AND RECOMMENDATION ...................... 44
5.1.

Discussion................................................................................................................ 44

5.2.

Recommendation ..................................................................................................... 45

CONCLUSION, LIMITATION AND IMPLICATION ..................................................... 48
1.

Conclusions ............................................................................................................. 48

2.

Limitations ............................................................................................................... 49

2.1.

Sampling ............................................................................................................... 49


2.2.

Respondent bias .................................................................................................... 49

2.3.

Option of answers ................................................................................................. 49

2.4.

Explanation rate of the research model ................................................................... 49

3.

Implications ............................................................................................................. 50

REFERENCES .................................................................................................................... 51
APPENDIX I ....................................................................................................................... 58
APPENDIX II ...................................................................................................................... 62

vii


INTRODUCTION

1. Research rationale
Turnover is a relevant topic for organizations all over the world. According to
Khatri, Budhwar, and Chong (2010), most organizations in Asian countries such as
Malaysia, Singapore, Hong Kong, Taiwan and South Korea have been facing the same
turnover problems as Western countries. In Vietnam, there are several academical research

about the topic of employee retention of a specific enterprise but no research has been done
in a larger scale such as an industry despite the problems of the high turnover rate have
been faced by most of the organizations and enterprises, especially small and medium
enterprises. According to Jones et al (2016), although the laws on minimum wages and
social security, as well as commissions, incentives and bonuses, most Vietnamese
companies have a high staff turnover rate. Additionally, 67.8% of young local Vietnamese
staff reported wanting to quit their jobs after “Tet”. This issue can cause serious problems
to Vietnam companies, especially in Vietnam‟s growing software industry, where hiring
new staff mid-project can add months to the completion date. The Talentnet and Mercer
Total Remuneration Survey Report 2016 showed that “the average voluntary staff turnover
rate of local companies was higher than multinational companies (17.0% compared with
13.7%). Sales manager, senior sales executive and marketing manager continue to be in the
top list of hot jobs to recruit. The most difficult positions to retain are senior sales
executive, sales manager and marketing manager.”
There has not been any official internal research about the turn-over rate situation
in TOPICA throughout these year but several unofficial statistics worth mentioning here
are the overall drop-out rate is around 40% and specialist and part-time employee are 2
major groups that are recorded the most number of turnover staffs. Several reasons for the
serious turnover percentage are because those employees are not suitable for the working
culture and do not reach the required working performance for the company. The manager
and senior executive level have been seen a lower turnover rate and the predicted main
reason is to run their own business or startup.
Thus, it can be maintained that understanding employees‟ retention of the highskilled workforce is crucial for an organization‟s viability to reduce employee turnover
rate. For this reason, the author selected the topic: “A research of factors affecting
employee retention in Topica Edtech Group” to fulfilment the master thesis.
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2. Literature review
Employee retention is one of the main challenge encountered by any industry. In

today‟s growing competitive global economy, retaining intellectual assets is one of major
concern encountered by most of the industries. However, it still remains one of the
understudied issues by the Human Resource and large organizations. Employee retention is
the most overlooked aspect of the organizations which are growth-oriented. Firstly,
McKeown (2002) outlined his opinion about employee retention, which focuses primarily
on retaining people who are the best performers and not those with a lower performance.
McKeown said that there was no precise definition of employee retention because people‟s
perception of retention varies. But McKeown (2002, p2) found that some managers
explained employee retention as “reducing the employee turnover rate to an acceptable
level whilst others think retention is about compensation and benefits, moreover, some
think of it as a component of culture, that is, how people are treated within the
organization.” Browell (2003, p5) stated that the definition of employee retention is
“Keeping those members of staff that one wants to keep and not losing them from the
organization for whatever reason, especially to the competitors.” Browell also further
explained that the key employees who hold positions are critical for the success of the
organization.
According to a survey across the United States which involved around 1000
organizations, over 89% of those organizations declared that employee retention had
become a strategic business issue. Fifteen elements were found in corporate retention
programmes, as follows:
 Innovative compensation and benefits packages
 Effective rewards and recognition
 Performance management, aligning employee goals with business goals
 Strategies for increasing employee satisfaction
 Measures of employee satisfaction
 Career planning
 Work-life strategy
 Building new-hire commitment
 Competency-based strategies
 Employee needs

 Mentoring programs
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 Defining role of the corporate culture
 Use of coaching for career development
 An employee strategy to support growth and loyalty
 Merger and acquisition retention strategy
According to Kavitha et al. (2011) research, they found that the retention of
employee has become one of the most controversial issues for human resource
professionals facing in recent times. The increasingly leaving problem of workforces
creates a weak loyalty index in the establishment. Kavitha et al. also discussed that
“Employee retention is the conscious and deliberate effort to retain quality individuals on
the company payroll.” In other words, a successful organization seeking to decrease the
drain of company profits, are better to reduce the turnover rate of the employee.
Furthermore, Ratna and Chawla (2012) stated that retention plays a more important role
than recruitment, although hiring knowledgeable people is necessary for any employer.
By researching employee retention, organization also recognize the appropriate
methods to encourage people to stay in the organization as long as possible. Ratna and
Chawla summarized that “The process of employee retention will benefit an organization
as the cost employee turnover adds hundreds of thousands of money to a company‟s
expense.” It means that if a company has a higher rate of employee retention, it will inspire
potential staffs to apply to the company.
Retaining the high-performance employees is crucial for the economic
development of the industry in general and of an organization in particular by spending
more time in creating and less time training them (Vasquez, 2014). By contrast, according
to Whitcomb (2012), attracting, engaging and retaining the staffs generates high quality
results for the industry which leads to high level of customer satisfaction. It is also stated
that well-trained and well-engaged staffs have a substantial influence on the employee
retention rate.

3. Aim of research
The principal objective of this research is to analyze the factors affecting
employee retention in Topica Edtech Group. The researcher will examine what the
employees feel about their work and what factors mainly influence them to stay in the
organization. This research also figures out what factors make staffs feel unsatisfied to
improve.
3


4. Research objects
This research will focus on the workforce in Topica Edtech Group who have
worked until August of 2019
5. Research scope
- Scope of contents: Employee retention and factors affect it
- Scope of space: TOPICA Headquarter in Hanoi
- Scope of time: The research questionnaire was surveyed in August of 2019.
- Scope of sample: Approximately 150 responses from individual staffs who are
working in TOPICA in Hanoi,
6. Thesis structure
Introduction
The first part of the study will overview the research rationale, literature review,
research objectives, research objects, research scope, research methodology and thesis
structure.
Chapter 1: Literature Review and Hypothesis Development
Chapter one will review previous literatures, relevant theoretical models and
propose theoretical/ conceptual framework and hypotheses development.
Chapter 2: Research methodology
Chapter two of the study will discuss research methodology with research
objectives, research approach, research strategy, research instrument, survey design,
population and sample, data collection, data analysis and limitations

Chapter 3: The current situation of customer retention in TOPICA Edtech Group
Chapter three describes the detailed overview of turnover rate in Vietnam and the
current situation of TOPICA Edtech Group.
Chapter 4: Research results and discussion
Chapter four will shows the analysis results of the research survey which will be
constructed, in the form of charts and tables. The analytical results which get through
SPSS version 20.0 will be also discussed specifically.
Chapter 5: Research discussion and recommendation
Chapter five will discuss statistical analysis results in the chapter four and
recommend solutions to improve variables that have the lowest score in the questionnaire
analysis.
Conclusion, Limitation and Implication
4


This part will relate to chapter three and deliberate on final conclusion of the study.
To be specific, synopsis of statistical analyses, discussion of major findings, implication of
the study, limitations of the study will be indicated in this section.

5


CHAPTER I. LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT

First of all, this chapter introduces the variety of definition of employee retention,
describes the characteristics of the employee that need to retain, and the cost of their
leaving. Then, this chapter provides the definition for both independent variables which are
compensation and benefits, Reward and recognition, training and development,
organizational culture, leadership and working environment and a dependent variable
which is employee retention. Next, the details about the dimensions of the independent

variables will also be discussed in this part. Furthermore, this study gives a more detail
understanding of the correlation among independent variables and the dependent variable.
After that, this chapter will also provide relevant theoretical models and at the end of this
chapter, conceptual framework and hypothesis of the study will be developed to give a
clearer picture and idea for the reader.
1.1. Employee retention
1.1.1. Definition
Employee retention can be defined as the ability to retain talented and valuable
employees in the company from leaving their current job for a longer period of time than
the competitors (Johnson, 2000). It also can be described as the commitment to work with
a company or establishment (Zineldin, 2000). Otherwise, the retention of staff is referred
to the policies or practices of a particular organization or company applies for preventing
well-performed employees from leaving. Additionally, it would consider the promotion of
the sustaining of workforces in a single company for a maximum duration (Hong, Hao,
Kumar, Ramendran, & Kadiresan, 2012).
With the growing competition of the global economy, employee retention
absolutely is one of the main challenge encountered by any industry. However, it still
remains as one of the understudied issues by the Human Resource Management in
particular and the science of management in general.
1.1.2. The importance of employee retention
In the talent war which is crucial for organizations nowadays, the employees who
should be retained in the organization must be those who could contribute to the
organization‟s survivorship sustention. They should be those staffs who play an important
role for the organization while the organization will suffer a great lost without them, and
they are hard to be replaced and more precisely they are the most precious catalyst for the
6


business strategy of the organization (Leign, 2002). For instance, retaining talented and
skillful employees plays a great role in the process of sustaining a company due to the

extraordinary importance of those employees in order to prosper the company‟s
competitiveness in global market (Frank, Finnegan, & Taylor, 2004). If the organization or
company failed in retaining of those skillful ones, understaff issues will stay; and the
leaving of talented workforce will directly decrease the competitive advantage of the
company in its industry (Rappaport, Bancroft, & Okum, 2003).
Therefore, the recruitment of talented employee might be one of the most
significant issues for the sustainability of an organization; however, retaining the valuable
employees would be a much more effective and cost-saving method for each organization.
As Ahlrichs (2000) mentioned, it could be an issue in current which plenty of the
employers had neglect the costs involved with the leaving or turnover of the main key
employees. The high intrinsic cost of hiring new staff including costs of attractive
compensation and the following benefits, training had driven the increasing value of
talented employees because of the scarce resources of an organization. Moreover, Rossi
(2018) stated that people leaving their current employer can also do long-term damage for
the customer relationships, especially for direct sales companies this is a major problem
since sales personnel have their own customer portfolios and many clients are doing
business with the company because of personal relationship with their customer
representatives. Additionally, if former employee starts a new career with direct competitor
of the company, they will take existing customer base away from their previous company.
It also can be seen as a risk of employees leaving during project-type work which could
also damage the outcome of the project since there is loss of information regarding the
project details as well as there is a new person coming from outside the project who neither
be having the up-to-date information nor understanding of the situation. If the project
needs special and uncommon knowledge, there can be occasions where no suitable person
is found and thus leaving the project on pending for a long period that resulting financial
damage to all parties involved in the projects.
1.2. Factors affect employee retention
Fitz-enz (1990) recognized that employee retention is not influenced by a single
factor, but there are a variety of factors which are responsible for retaining employees in an
organization. It is also stated in this research that management needs to pay attention to

factors such as compensation & rewards, job security, training & developments, supervisor
support culture, work environment and organization justice etc. According to Osteraker
7


(1999), employee satisfaction and retention are the key factors for the success of an
organization. The retention factor can be divided into three broad dimensions, i.e., social,
mental and physical. Specifically, the mental dimension of retention consists of work
characteristics, employees always prefer flexible work tasks where they can use their
knowledge and see the results of their efforts which, in turn, helps in retaining the valuable
resources. The social dimension consists of the contacts that the employees have with other
people, both internal and external. The physical dimension consists of working conditions
and pay. Similarly, Walker (2001) identified seven factors that can enhance employee
retention: (i) compensation and appreciation of the performed work, (ii) provision of
challenging work, (iii) chances to be promoted and to learn, (iv) invitational atmosphere
within the organization, (v) positive relations with colleagues, (vi) a healthy balance
between the professional and personal life, and (viii) good communications. Additionally,
Stein (2000), Clarke (2001), Parker and Wright (2001) have appropriately observed that
organization must utilize an extensive range of human resource management factors to
influence employee commitment and retention. Together, these suggestions refer to a set of
workplace norms and practices that might be taken as engaging employee retention.
This research focuses on the most considerable factors that affect employee
retention including compensation, reward and recognition, training and development,
organizational culture, leadership and work-life balance and working environment.
1.2.1. Compensation and benefits
According to the American Compensation Association's (1995) definition,
"compensation is the cash and non-cash remuneration provided by an employer for
services rendered" (ACA). Ivancevich (2004) also defined compensation as the human
resource management function that deals with every type of reward individuals receive in
exchange for performing organizational tasks, with a desired outcome of an employee who

is attracted to the work, satisfied, and motivated to do a good job for the employer. Belcher
(1997) described it as a double input-output exchange between an employee and an
employer.
Adeniji and Osibanjo (2012) stated that compensation can be described as direct
and indirect compensation received by employees in an organization that serves to achieve
employee satisfaction and retention as well as improve performance. To be specific, direct
compensation includes wages, salaries, bonuses or commission based on performances,
overtime work, holiday premium, while indirect compensation (benefits) is paid as medical
8


benefits, housing allowance, meal allowance, utility allowances, incentive bonus, shift
allowances, hospitalization expenses, out of station allowance, vehicle loan benefits,
annual leave allowances, car basic allowances, etc.
1.2.2. Reward and recognization
According to Tiwari (2015), rewards can be described as an award given to an
employee on their achievement and contribution towards their organization, this can be
gifts or incentives in any form. Whereas, recognition can be defined as to praise the
employee on their achievements and involvement in the company. The employees‟
motivation is improved toward reward and recognition and it also lessens the turnover rate
of staffs. Several previous studies have stated that the employees get attached and
committed to their organization when they are acknowledged for their work and get
rewarded (Salie & Schlechter, 2012). On the other hand, London and Higgot (1997)
provided that the reward and recognition process for the employees always remained a
controversial part. The impartial rating for employees are difficult in this approach because
of some factors like manager preferences, work competition and politics in the company.
The reward, recognition and incentive process also doesn‟t work because the organizations
have no records to display the long-term benefits, the manager setup the internal
competition, the teamwork and collaboration is weakened by the reward process, this
system also develops a failure in the employee. It is believed that if the organization take

care of their employees then automatically customer service will be adequate (Bursch,
1999).
1.2.2.1. Financial rewards
The Financial rewards are given to the employees depending on their work
performance and performance of the group including incentives, bonuses, promotion,
salary increment or different vouchers and there is a special advantage for the front-line
staff that they get tips as a reward by the customers (Connolly & McGing, 2007). When an
individual get selected for this reward, then the pay doesn‟t include in their basic pay. As a
result, these rewards are remunerated in the consequent time period when an individual
staff achieve their performance objectives. Additionally, the monetary reward for
employees not only leads to fewer chances of the employee to leave the organization and
but also increases their performance with time (Chauvin & Ash, 1994). Whereas on the
other hand Armstrong (2012) stated that, the financial reward can demotivate the

9


employees as well because those employees who do not get the financial rewards in any
form are discouraged that leads to the intent of leaving the organization.
1.2.2.2. Non-Financial Reward
The non-financial rewards can be listed in a variety form such as recognition as the
employee of month/quarter/year, personal tribute letters or emails, acknowledgement of
achievements, written appraisal, verbal praising in public and training. Tredget (2002)
affirmed that this type of reward is being seen as important as the financial incentives, and
the employee remains motivated, are more encouraged to do better job and stay with the
organization. Non-financial recognition is a great way to expose to the staff how well they
performed and what areas they need to concentrate to improve. As a result, this reward is
created the confidence, encouragement and positive reinforcement in the rewarded
employee. Moreover, non-financial reward process also supports the managers to analyze
the work environment and make changes that increase the quality of the employee working

performance.
1.2.3. Training and development
In any organization, especially the service product sector, training and development
of employees play an important role in achieving the organizational goals. These trained
employees‟ qualities will contribute to how far an organization will go among its rivals.
Rosti and Shipper (1998) summarized that training and development enables the
organization to achieve its objectives by which well-trained staffs will exploit all the
obtainable resources to bring about the expansion in the company.
Armstrong (2003) outlined that training as an appropriate and orderly modification
of behavior through learning, development, which happen as a result of teaching, coaching,
development and design experience. Training is being seen as a process to equip skills,
knowledge that employees need to handle their specific tasks. In addition, he stated that
employee's development helps to enhance staff ability for future requirements and
adaptability prospect.
1.2.4. Organizational culture
Schein (2010) stated that organizational culture has three different components or
levels: the surface artifacts, share or adopted values and the basic underlying assumptions.
Surface artifacts refer to the physical elements of the firm that show cultural differentiation
and visibility includes the dressing, employee status in organization, sign, physical
arrangement and interpersonal relations. Another element of organizational culture are the
10


values collectively owned by the staffs of the organization. Schein (2001) affirmed that
even through values are often unseen, they come up in discussions about why the company
was established and where the establishment is going. The values of the organization
become clearer as the founders define and develop the organization‟s vision and mission.
Finally, the third element and the very intrinsic level of culture are the principal
assumptions. Schein (2001) said that these begin as firm joint values but later become
embedded that they become strong beliefs about the way work is done. These assumptions

act as a control on how decisions are made and how the organization structure is created
and the creation of a proper strategy that helps in achieving an advantage over the
competition and the appropriate tools for recruitment and selection and considering all the
requirement of the numerous stakeholders. However, the characteristics of the working
environment vary across different sectors due to the differentiation in clients and
customers.
1.2.5. Leadership style
Undoubtedly, there are various literatures about entrepreneurial leadership. Each
theory discussed here endeavor to the precise explanation of the effect of leader behaviors
on employee satisfaction and retention. The literature gives several assumptions about the
recommended leader‟s behavior in specific situations. Several of them are said to be the
“one-best-way” for every situation and every kind of job position while other theories are
situational which consider characteristics of the situation rather than individual concepts.
Leadership is most often associated with supervising, managing and controlling.
However, there is a detectable difference. According to Jago (1982, p.330) leading is an
interpersonal process “without resort to the authority or power derived from an
employment contract”. On the other hand, he says that supervision considers the influence
in team members by using formal rewards and sanctions. A leader is commonly assumed
to express a sense of authority, it is the fact that leadership actually not happens that way,
because leadership is behavior, not position (Bass and Stogdill 1990). It fits very well for
Startups which are almost all characterized by no sense of authorities and hierarchies.
1.2.5.1. Autocratic leadership
The autocratic leadership type influences people the most by forcing ideas through
the subordinates who have to accept even if they like it or not. Cremer‟s study (2006)
stated that the autocratic leadership obviously has a negative influence on emotions and
relationships within the company because the employees and the leader cannot really bond
11


with each other. Otherwise, his research showed that emotion and motivation are

intrinsically linked.
1.2.5.2. Democratic leadership
In Fullan‟s book (2001, p.35,42) a democratic leader is described as “forges
consensus through participation”, which includes “seeking and listening to doubters”. This
leading way enables subordinates to demonstrate and fulfil individual needs and encourage
to share a sense of constructive conflict within the help of power (Jago 1982). Although
this can be a time-consuming task the leader decisions are acknowledged and
communicated easily because the outcomes are based on a common belief and will be
widely accepted.
Crowe, Bochner et al. (1972) summarized that leaders become more democratic
when subordinates offer ideas, set objectives and implement proactively. By contrast,
leaders become more autocratic when followers are inactive, unquestionable and
dependable.
1.2.5.3. Situational leadership
Situational leadership concept means that different situations require different
approaches to leadership. In other words, there is no all-purpose leadership style. The
leader must evaluate the situation and adapt his knowledge, skills and decisions basing on
that. This concept aims to match the leadership style with the required conditions (Hall
2007). The situational approach allows managers to diagnose the demands of their specific
situations. “It is built on an intersection of the amount of direction a leader gives, the
amount of socio-emotional support a leader offers, and the readiness level that followers
exhibit on a specific task” (Hersey, Blanchard et al. 1979).
In startup company, the leaders usually have to make decisions very quickly
without enough necessary background knowledge. Moreover, those leaders are mostly
inexperienced and have not yet handled with such situations before.
1.2.5.4. Transformational leadership
The transformational leadership style can be understood as the style that achieves
by highlighting the importance and value of desired outcomes”. This style sets a require to
the leader to know his employees personally and clearly. Otherwise, the transformational
leader thrives on their staffs‟ welfare as he/she can make sure this will lead to higher

performance and productivity of employees. In other words, the good working
communication and fair beneficial exchange between employers and their staffs will
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automatically lead to the rise in participation and the engaged working environment. In
order to apply this style of leadership, the prerequisite is reliability and honesty between
leaders and their team members. Therefore, transformational leadership style can be seen
as a significant similar to supportive leadership style.
1.2.5.5. Supportive leader
According to House (1981), “a supportive leader is one who provides emotional,
informational, instrumental and appraisal support to followers” where emotional support is
stated as the most intuitive meaning. House attempts that a leader expresses support when
he shows his consideration to follower‟s needs and priorities whenever he makes a
decision. This is closely linked to development approaches including career counselling,
carefully observing and encouraging staffs to attend further education (Bass 1985). The
literature made by Wofford and Liska (1993) concluded that the supportive leadership
style is linked to effective outcomes, because the socio-emotional support leads to the
increasingly positive influence and pleasure in the workplace.
1.2.5.6. Entrepreneurial leadership
Previous researches have defined entrepreneurial leadership as “leadership that
creates visionary scenarios that are used to assemble and mobilize a „supporting cast‟ of
participants who become committed by the vision to the discovery and exploitation of
strategic value creation” (Slevin and Covin 1990, McGrath and MacMillan 2000). This
idea includes the concept of “entrepreneurial orientation” (Miller 1983) and
“entrepreneurial management” (Stevenson 1983).
The most obvious difference between the entrepreneurial attitude of large and small
companies lies in their innovativeness. Being innovative depends highly on the firm‟s
structure and corporate culture. The literature found that size is positively correlated with
innovativeness. Since Startups are in the search for their organizational structure and

identity they are rather flexible and able to outmaneuver the bureaucracies (Pearson 1989).
Startups are experiencing and living the whole entrepreneurial spirit. This means
that Corporations see entrepreneurial leadership rather as a means to an end in order to be
ahead of the competition and the market demands it, whereas Startups pursue this from the
beginning onwards.
1.2.6. Working environment
Working environment is a place employees expect to utilize their best abilities and
satisfy their basic needs (Narang, 2013). According to Tourangeau et al (2010), the
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psychological social dimension of the working environment may include work support,
workload and job stressors.
The characteristics of the working environment vary across different sectors due to
interacting with different clients and customers (Tourangeau et al, 2010). Healthy working
environment involves good collaborative and communication culture, the presence of
competent leadership, practice environment, professional advancement and the presence of
adequate staffs (Ritter, 2011).
1.3. Theoretical framework and hypothesis development
1.3.1. Review relevant theoretical framework

Independent Variables

Mediating Variable

Dependent Variable

Figure 1.1: HRM Practices and Employee Retention in Thailand research model
Source: Tangthong et al., 2014
In the above research model, it shows that HRM practices included training &

development, System of compensation, benefit and reward are the research independent
variables; employee engagement is the observed variables while the dependent variables
are employee retention (Tangthong et al., 2014). In this model, employee retention is
affected by compensation and reward system; therefore, compensation could be a tool for
organizations to retain one of the most valuable assets of the company which are their
employees (Tangthong et al., 2014). It also propounds that training and development need
to be conducted parallel with the system of compensation, benefit and reward which could
affect employee retention effectively.

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Figure 1.2: Determinants of academic staff retention in Public universities in Kenya
research model
Source: Ng„ethe, Iravo, & Namusonge, (2012)
According to Ng„ethe, Iravo, & Namusonge, (2012), employee retention is
concerned by the employers due to the increase of the turnover intention of the employee.
The study also stated that the factor which will affect retention of employees such as career
path opportunity, work environment, family and flexible time. The author argued that the
intention of employees to stay within a company could be affected by 3 major sets of
variables which are employee demographics, including gender and age; the current nature
of job of an employee; and adequate working arrangements such as training availability,
promotion‟s opportunities, and the quality of communication within the organization.
These findings revealed that the factors are consisted of intrinsic and extrinsic factors.
Intrinsic factors are included leadership, distributive justice, remuneration and working
environment while extrinsic factors consist of promotional chances, training and
development, independence and acknowledgement which will directly affect employee
retention (Ng„ethe, Iravo, & Namusonge, 2012).

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1.3.2. Research theoretical framework

Training and
Development

Organizational
culture

Reward and
Recognition

Compensation
and Benefits

Leadership
style

Employee
Retention

Working
environment

Figure 1.3: Research conceptual model of Employee retention
Source: Author (2019)
With the previous literature review of the most popular factors that affect employee
retention, there will be 6 dimensions included in the model of this study which are
compensation and benefits, reward and recognition, training and development,

organizational culture, leadership style and working environment. In this research, a
framework had been proposed in order to investigate the relationships between the
independent dimensions and employee retention. Furthermore, this study also intends to
determine the consequences of the variables on employee retention in details.
1.3.3. Hypothesis development
1.3.3.1.

The Relationship between Compensation and Benefits and Employee

Retention
According to Lawler (1996), designing a compensation program is crucial in
personnel management as its direct influence on employees' satisfaction and performance
in the company. Compensation impacts everyone in the organization to an extent and can
prove to be a very valuable and powerful tool - either intentionally or unintentionally. This
compensation tool also has the ability to achieve employee retention, because of it
comprises of financial and non-financial rewards that attract, motivate and satisfy valuable

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