Job Satisfaction and Organizational Commitment on Employee Turnover Intention: A Case Study of Textile and Garment Industry in Vietnam

Huynh Linh Lan^*
*Correspondence: Huynh Linh Lan, Department of Economics, International School, Duy Tan University, Da Nang 550000, Vietnam, Tel: +0982712659, Email:

Keywords

Job satisfaction • Organizational commitment • Employee turnover intention • Textile and garment industry • Vietnam

Introduction

Vietnam currently ranks as one of the top five global garment–exporting countries besides China, India, Myanmar, and Bangladesh, with the main exporting markets, which are the United States, the European Union, and Japan. This is the second-largest export turnover in the country and a key contributor to the country’s economic growth in Vietnam. In 2019, Vietnamese textile and garment exports increased 7.55% per year and achieved about USD 39 billion in total in 2020, accounting for 15% of the GDP and 18% of the total exports of the country. In the first six months of 2021, Vietnam’s garment-textile export turnover achieve nearly US $19 billion, up more than 20% compare to 2020 and many orders have been received for the fourth quarter of fiscal 2021 (Vietnam Textile and Apparel Association - VITAS, 2020). These results are originated from the political crisis in Myanmar who is the main competitor of Vietnam, the economic recovery after coronavirus in some major markets such as the US, China, and Europe. In addition, at the end of 2020, Vietnam signed two important trade agreements including the European Union Vietnam Free Trade Agreement (EVFTA) and the Regional Comprehensive Economic Partnership (RCEP) in which tariffs imposed on Vietnam’s textile and apparel products will be eliminated in the European market as well as ASEAN and five large economies in the Asia-Pacific region including China, Japan, South Korea, New Zealand, and Australia (Figure 1).

The major driving force for growth in Vietnam’s textile and garment industry is low - cost labor force. Employing approximately 2.7 million people in 2020, accounting for more than 12% of the Vietnamese labor force (VITAS, 2020) because the textile and garment sector is characterized by intensive labor and manual processes with three main sub-sectors including fiber production, fabric production, and dyeing, garment manufacturing. However, the most challenging issue which the Vietnamese textile and garment industry faces is a high employee turnover rate. According to VITAS, the employee turnover rate of this industry in 2020 is nearly 36% which causes a lot of difficulty in meeting the clients’ demand in quantity and quality because new employees need the training courses to get well with the manufacturing process and improve the labor productivity. For many years, this problem becomes worse after every Lunar New Year vacation, million garment workers choose to work in industrial parks in their hometowns instead of returning to their old firms in the city where their incomes could not afford high living expenses. Thus the first and foremost aim of this study is to examine the factors affecting job satisfaction at textile and garment firms in Vietnam which is not mentioned in previous studies, then help minimize the employee turnover intention and gain a competitive advantage for Vietnam’s textile and garment industry before competitors including Myanmar, Bangladesh, China.

Literature Review and Hypothesis Development

Spiritual well-being at the workplace

According to Paloutzian RF, et al. [1] spiritual well-being is the people’s perception of the quality of their spiritual life, it is also the state of being happy, healthy, or prosperous. At the workplace, this concept is linked with emotion and psychology in employees’ personal life which affects their performance and job satisfaction because it happens to have a positive influence on most aspects of mental and physical health [2]. Employees will have more energy to work, boost their productivity, and be committed to companies when they are released from the stress of their lives and works. Therefore, it is hypothesized that:

Hypothesis 1 (H1): Spiritual well-being has a significant and positive effect on job satisfaction.

Training and development: Training and development are the critical activities in human resources management that help increase the needed skills and knowledge in work [3]. Therefore training and development are planned to improve the capacity, productivity, and performance of employees when helps businesses to adapt to innovation [4,5]. The trained workers are more satisfied than untrained ones when the training and development courses supply chances to improve their skills needed in the future. Moreover, in training and development sessions, employees will re-evaluate their strengths and weakness which make them satisfactory or dissatisfactory to the job. Accordingly, it is hypothesized that:

Hypothesis 2 (H2): Training and development has a significant and positive effect on job satisfaction.

Job characteristic: The job characteristic model was developed by Morgeson FP, et al. [6] including skill variety - the number of skills used by the job holder, task significance – the extent to which a job has an impact on the work of other people, autonomy – the degree of independence to the individual in scheduling and determining the procedures in carrying out the work and feedback from job – the amount of clear information received from supervisor to improve the effectiveness of performance [7].

The characteristic of job has been considered the key contribution to motivation and job performance which have a direct impact on the job satisfaction of employees [8]. Therefore, it is hypothesized that:

Hypothesis 3 (H3): Job characteristic has a significant and positive effect on job satisfaction.

Coworker relationship: The coworker relationship contains two concepts including the vertical relationship with the leader and a horizontal pair with partners. On the subject between coworker relationships and job satisfaction, studies found that the factor of group interactions and co-workers’ support has a positive correlation to job satisfaction [9]. This relation is explained by the effectiveness of communication as well as the coordination between the two parties to achieve the tasks [10]. When the employees are given favorable conditions by supervisors and coworkers to finish their works, they feel more satisfied and committed to the organization. Therefore, the following hypothesis is framed:

Hypothesis 4 (H4): Coworker relationship has a significant and positive effect on job satisfaction.

Compensation: Most employees must work for life, thus compensation is a crucial part of human resources practices or without compensation, the majority of workers would not perform the tasks [11]. In a study by Mishel L [12] labor productivity could be improved when companies change their payroll scheme. The study showed that changing the compensation scheme could have large effects on economic terms which dated back from a higher level of job satisfaction. Thus compensation can encourage passion and increase job satisfaction [13]. From this analysis, the following hypothesis is proposed:

Hypothesis 5 (H5): Compensation has a significant and positive effect on job satisfaction.

Safety climate: Safety climate refers to an organizational climate in which the employees perceive the organization's policies as well as management practices to ensure psychological health and safety [14,15]. Accordingly, workers who perceive a positive occupational environment tend to be more compliant and avoid occupational accidents [16]. Luria G [17] stressed the importance of the manager in promoting trust and avoiding risky behaviors at work. Employees who receive a safe working environment and trust their senior managers will be more satisfied which being associated negatively with the drop-out rate. Job satisfaction drops significantly in stressful working conditions and overload [18]. The hypothesis is presented as follows:

Hypothesis 6 (H6): Safety climate has a significant and positive effect on job satisfaction.

Job satisfaction, organizational commitment, and turnover intention: According to Aziri B [19] job satisfaction is the combination of psychological, physiological, and environmental circumstances that cause a worker being satisfied with his job or the feelings of individuals about their jobs. Under this approach, job satisfaction combines the positive and negative feelings that employees hold toward their works. Previous studies have shown that job satisfaction leads to some consequences including higher productivity, higher product quality [20]. Organizational commitment is the degree to which an employee is involved with the organization when an individual shares the organization’s values and desire to remain in the organization [21]. And according to Gunlu E, et al. [22], job satisfaction correlates with organizational commitment because when a worker has positive emotion toward the job, he will develop some positive responses toward his organization. Besides, job satisfaction also affects the probability of staying or leaving an organization which is called turnover intention, Employees with a high intention of withdrawal will leave the organization shortly. Thus the early detection of job dissatisfaction is a great idea to resolve the problem of turnover intention [23,24].

On the other hand, turnover intention also has a negative relationship with organizational commitment which includes three components such as affective commitment, continuance commitment, and normative commitment [25]. This means the workers who are committed to the organization because of affective attachment are unlikely to leave the organization or when they are aware of costs associated with leaving the organization or they feel the obligation to remain with the organization Allen and Meyer, 1990. Based on the above analysis, the following hypotheses are framed:

Hypothesis 7 (H7): Job satisfaction has a significant and positive effect on organizational commitment.

Hypothesis 8 (H8): Organizational commitment has a significant and negative effect on turnover intention.

Hypothesis 9 (H9): Job satisfaction has a significant and negative effect on turnover intention.

Hypothesis 10 (H10): Personal information (age, tenure, and marital status) moderates the relationship between organizational commitment and turnover intention. From the literature review above, the study suggests the research theoretical framework.

Methodology

Data collection

This research was conducted using a quantitative method with a questionnaire and convenience sampling was used to collect data due to the geographical proximity, time available, and willingness. In Vietnam’s textile and garment industry, there are nearly 2000 manufacturers in which the number of domestic companies’ accounts for 75.2%, and FDI companies led by Hong Kong, Singapore, China, and South Korea occupy 24.8% (VITAS, 2020). This study only concentrates on the domestic companies and the questionnaires were delivered to the workers at top ten textile and garment firms in Vietnam namely Nhabe Corporation, Vietnam National Textile, and Garment group, Viet Tien Garment Corporation, Song Hong Garment Joint Stock company, March 29 Textile Garment Joint Stock company, Ha Noi Textile, and Garment Joint Stock Corporation, Dong Nai Garment Corporation, Gia Dinh Textile, and Garment one-member limited company, Thai Son Garment, and Sai Gon Garment Joint Stock company through the Internet.

Data was collected through 3 phases. In the first phase, a focus group interview with the heads of the Personnel Department at large firms was used to generate ideas about the factors that affect the job satisfaction of employees. In this exploratory research, 10 human resource managers were interviewed online. Then the questionnaire was designed and distributed to 50 employees to catch the spelling mistakes.

The research questionnaire consists of four sections, section A is about personal information, section B assesses the factors affecting job satisfaction, the job satisfaction items were divided into six components including spiritual well-being, training, and development, job characteristic, coworker relationship, compensation, and safety climate. Section C and D contain the questions about the employees’ organizational commitment and turnover intention respectively. Likert scale is used in this study which consists of five response alternatives including 1: Strongly agree, 2: Agree, 3: Moderate extent, 4: Disagree, 5: Strongly disagree (Table 1).

The third phase was started by redistributing the questionnaire in large quantities. 1028 questionnaires were returned for a total of 10 firms which is satisfied the number of observations [26].

Data Analysis

This study utilized the partial least squares (PLS) path modeling considered “the silver bullet” when is widely used in marketing and management [27]. According to Henseler J, et al. [28] some steps of this model can be solved.

Results and Findings

Descriptive statistics

Descriptive statistics of the respondents is presented in Table 2 and according to VITAS, the employee turnover rate in the textile and garment industry is 36% in 2020, This Figure 2 explains why the largest number of tenure in current job is 1 -2 years. The high turnover rate makes the companies recruiting new employees constantly. This is also reasonable because most of the employees are at very young age (under 30 years old) and single who do not hesitate to seek a flexible working environment with a well-paid job. The employees at 31- 40-year–old group usually quit this industry because of the flexible working-condition and well-paid jobs in other sections such as online selling and real estate. The smallest number belongs to the above – 50 year old group because tasks in the textile and garment industry require carefulness and good health (Tables 2 and 3).

Goodness of fit

To assess the goodness of model fit, the study used the standardized room mean square residual (SRMR). From Table 3, the SRMR of both the estimated and saturated models are lower than 0.08 and considered a good fit. Moreover, the Normed Fit Index (NFI) is close to 1 which is acceptable [28].

Validity of constructs

The second result in this study is examining the factor loadings, AVE, CR, Cronbach’s α, cross-loading, and discriminant validity. In this study, to test the reliability of the model, the items which have the factor loading lower than 0.7 are eliminated and all the values for Cronbach’s as well as CR αre more than 0.7. Also in the personal information factor, age and tenure in current position are deleted and only marital status item is kept. Furthermore, the AVE values for all constructs that represent the convergent validity are well above the minimum required level of 0.5 [28] (Table 4).

In addition, the discriminant validity of the constructs, Fornell and Larcker (1981), and cross-loading criteria were used. Referring to Table 5, all the indicator’s loadings in each column are higher than their cross-loadings with other variables; this demonstrates there is no relation between the constructs [29-40], (Table 5).

Besides, the Heterotrait – Monotrait ratio (HTMT) and cross loadings are also required for assessing the discriminant validity in the PLS approach. The HTMT value is required to be below 0.85. Referring to Table 6, all the values are lower than 0.85 and, in Table 7a, all the cross loadings of each construct are ranged from 0.7 to 0.9. Therefore, the discriminant validity of all constructs meets the requirement.

Structural model

After confirming the validity of constructs, the next step is to assess the structure of the model.

In this study, the adjusted R2 for job satisfaction is 0.792 (see Table 7b), this indicates that the five independent variables including compensation, job characteristics, safety climate, coworker relationship, and spiritual wellbeing explain 79.2% of the variance in the job satisfaction. Similarly, the organizational commitment variance is explained by 64.2% of job satisfaction and the 63.3% variance of turnover intention is explained by organization commitment and job satisfaction (Table 8).

Examining the β- value column in Table 8, organizational commitment and job satisfaction have the negative effect on turnover intention as predicted (p-value = 0.000 >0.05, β- value = - 0.336 and - 0.462, T = 05.110 and 7.399). Similarly, among the remaining five factors affecting job satisfaction, safety climate and compensation have the stronger effect than three other factors. About the turnover intention, job satisfaction has the greater effect than organizational commitment.

Lastly, there is a positive relationship between marital status and turnover intention (p-value = 0.000, β- value = 0.196, T = 4.702) and marital status moderates the relationship between organizational commitment and turnover intention (p-value = 0.000, β- value = 0.090, T = 2.483) (Figure 3).

As shown in Table 8, the effect size of job satisfaction on organization commitment and turnover intention are 1.798 and 0.426 respectively which are considered strong and the other remaining have a moderate effect (Table 9).

Figure 4 shows that the Q2 values for job satisfaction, organizational commitment, and turnover intention are 0.250, 0.383, 0.411 respectively are higher than the threshold limit and demonstrate that the predictive relevance is adequate for the endogenous construct.

Multi-group analysis

From Table 10, p-value = 0.000 <0.05, there is a significant difference in marital status in moderating the relationship between organizational commitment and turnover intention. And Single (β = 0.763) has a stronger path coefficient than Married (β = 0.548).

Discussion

In the research findings, employee turnover intention is affected by organizational commitment and job satisfaction. Moreover, job satisfaction is formed by many variables from the largest to smallest effect including safety climate, compensation, spiritual well-being, coworker relationship, job characteristic respectively.

This research is in line with previous studies that found the positive relationship between job satisfaction and safety, compensation spiritual well-being coworker relationship job characteristic. Besides the relationship between job satisfaction, organizational commitment, and turnover intention are also confirmed in other studies including Bateman G [38], Nielsen MB, et al. [30] and Nawab S and Bhatti KK [40].

Conclusion

Managerial implications

From the study’s results, the author suggests some recommendations to gain the loyalty of employees through job satisfaction.

About the safety climate: Recently, although the working environment of Vietnamese labor in the textile and garment industry has been improved, the professions in this industry affect the mental and physical health of workers such as byssinosis, diffuse lung disease, dry cough, chest constriction, chronic bronchitis, noise-induced hearing loss. This is the result of sitting in a single position, not leaving the workstations until lunchtime and working in dusty spaces. Although workers are provided with boots, masks, and hats they are not good enough to protect them from infection and risk, the working space needs more modern facilities such as vacuum cleaners, specialized face masks, and gloves for ones who working in dying and cutting factories to avoid the injuries. Besides, according to the Better Work Vietnam report (2019), 15% of employers did not keep chemical safety records for hazardous chemicals used in the workplace and 26% of assessed factories either had their emergency exits locked during working hours. Thus employers should pay attention to these issues to ensure a safe workplace for workers. Furthermore, employers should organize periodic medical check-ups to prevent occupational diseases as well as setting breaks in the middle of working hours for employees to lessen the physical aches. Not only the physical health companies but also should pay more attention to mental health by recruiting psychiatrists who help workers deal with stress and depression.

About the compensation: Low compensation with a high consumer price index in the big cities is the major concern of workers in textile and garment. With the monthly salary of VND 6 million (approximately US $300) – VND 7 million (approximately US $350), it is very hard to support their families, especially for employees who are married and have children. Some workers have to send children to live with grandparents in their hometowns to save living expenses and could not visit their children until the Lunar New Year holiday. Living condition is another concern related to compensation. Because most workers come from rural areas in Vietnam so they have to live in very poor and small motels which are about 15 square meters including the bathroom and indoor kitchen without furniture. However, the rent ranges from VND 1.6 million (approximately US $80) - VND 2.0 million (approximately US $100), account for one-third of their income. In addition, low income could not ensure the needed nutrient for their works.

Thus to improve the turnover intention rate, besides monthly wage, employers should establish more allowances for the tuition fee and insurance cost for workers’ children and rent. This solution will help reduce the shortage of labor after the Lunar New Year holiday because workers choose to work in the industrial zones in their hometowns instead of returning to old companies. Besides, companies could cooperate with the farms to supply the pricestabilization food and vegetables to employees to help migrant workers deal with the high living expenses.

About the spiritual well-being and coworker relationship: With the high-pressure working hours of 48 hours per week and during peak production seasons, workers may be required more than four hours beyond their regular working hours, and the labor shortage in this industry makes this situation worse when 78% of factories were non-compliant with monthly limits on overtime hours worked (BetterWork Vietnam, 2019). After an exhausting workday, employees do not have time and energy to make friends; this is unreasonable to young employees. Thus organizing the parties, competitions on weekends, holidays, birthdays should be done to bring the employees together to get well with each other. Besides, spiritual well-being is also related to the personal life of the employee, and employers could set up tours in which employees could go with their family members.

About the job characteristic: The tasks in the textile and garment industry are based on specialization and the output of one stage will be the input of the other stages. Thus companies should establish an internal communication channel in which employees could understand the stages in the production process as well as allow them to get feedback from the supervisor to finish their tasks appropriately. Furthermore, the repetitive tasks day after day could make workers feel bored and quit. To solve this problem, employers could empower to encourage them to make their own decisions in outfit (rather than uniform), food (instead of having lunch at the canteen). Besides, managers could motivate subordinates to create innovation and reward efficient methods. Finally, there are many ways to build a good relationship and involvement with workers without bearing the cost. And until laborers are treated as internal customers, they still leave the company. The recommendations above aim to create organizational commitment and once workers develop good relationships toward firms, labor productivity and turnover intention rate will decrease.

Limitations and Future Research

Some major limitations may be presented in this study although the author made many efforts to ensure the research findings. Because of COVID – 19 pandemics, the surveys were distributed through Internet, no open-ended question was used to collect more information from workers and more concentration on qualitative research methods will generate more ideas for solutions. In addition, future researches could focus on the impacts of culture and organizational culture on organizational commitment and turnover intention; this will provide an insightful prospect about these associations.

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