The effects of empowerment and job enrichment on employee loyalty in a downsizing and reducing salary enviroment empirical evidence from the banking industry in vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

Huynh Thi Kim Hanh

THE EFFECTS OF EMPOWERMENT AND
JOB ENRICHMENT ON EMPLOYEE LOYALTY IN A
DOWNSIZING AND REDUCING SALARY
ENVIRONMENT
EMPIRICAL EVIDENCE FROM THE BANKING INDUSTRY IN
VIETNAM

MASTER OF BUSINESS (Honours)

Ho Chi Minh City – Year 2014


UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

Huynh Thi Kim Hanh

THE EFFECTS OF EMPOWERMENT AND
JOB ENRICHMENT ON EMPLOYEE LOYALTY IN A
DOWNSIZING AND REDUCING SALARY
ENVIRONMENT
EMPIRICAL EVIDENCE FROM THE BANKING INDUSTRY IN
VIETNAM

ID: 21120003

MASTER OF BUSINESS (Honours)
SUPERVISOR: Dr. VO XUAN VINH

Ho Chi Minh City – Year 2014


Running head: EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE
LOYALTY

i

ACKNOWLEDGEMENTS
Firstly, I would like to express my sincere gratitude to my research advisor, Dr. Vo
Xuan Vinh, who made me believe in myself and gave me the possibility to
complete this thesis. He has supported me a lot with the thesis preparation and
motivated me throughout the journey of the thesis. His guidance helped me in all
the time of research and writing this thesis. I am sure that this thesis would not have
been possible without his support.
I also thank Dr. Nguyen Thi Mai Trang. I am extremely grateful and indebted to her
for her expert, valuable guidance, insightful comments, and encouragement
extended to me.
I would like to express my grateful thanks to my friends and colleagues in my bank
and others who participated in filling the questionnaires and provided the valuable
information for this study.
I would like to extend deep senses of gratitude to lecturers who have taught and
transferred me valuable knowledge and experience during the period of Master of
Business course at International School of Business. Besides, I would like to
express my gratitude to all ISB staffs that supported necessary materials and helped

summit my papers.
Personally, I would like to give my special thanks my family for supporting me
spiritually throughout my life.

Huynh Thi Kim Hanh
Ho Chi Minh City, December 8th, 2014


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

ii

ABSTRACT
Maintaining and increasing the loyalty of the survivors in a downsizing and
reducing salary background is a complex problem for management trainees. The
study tests the affection of the empowerment and job enrichment policies to
employees in the downsizing and post-retrenchment context using a case of the
banking industrial sector in Vietnam. It focuses on the impact of lossing job and
reducing salary on the survivors (those who remain in the organization after
downsizing), and organization. This study was designed with the primary objective
of determining the relationship between empowerment behaviors of management,
awareness of job enrichment, and loyalty behaviors of the staffs, who had survived
in a downsizing and reducing salary environment on the specific case to employees
of the Vietnam’s Banks. A sample of population will be selected using random
sampling technique. So, the purpose of the current research thesis is to investigate
the direct and indirect relationship between empowering managerial practices and
employee loyalty as mediated by job enrichment, particularly, review in a
downsizing and reducing salary environment of the Vietnam’s banking sector. The
results show that loyalty is affected more by empowering loyalty through indirect
effects by job enrichment, rather than a direct relationship. The study ends with a

discussion of limitations and suggestions for future research.

Keywords: Employee Loyalty, Empowerment, Job Enrichment


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

iii

TABLE OF CONTENTS
ACKNOWLEDGEMENTS .........................................................................................i
ABSTRACT ................................................................................................................ii
TABLE OF CONTENTS .......................................................................................... iii
LIST OF FIGURES..................................................................................................... v
LIST OF TABLES ...................................................................................................... v
CHAPTER I: INTRODUCTION ................................................................................ 1
1.1.

Background of the Study ............................................................................... 1

1.2.

The Research Problem ................................................................................... 3

1.3.

Research Objectives and Research Questions ............................................... 5

1.4.

Research methodology .................................................................................. 6

1.5.

Scope of the study.......................................................................................... 7

1.6.

Thesis structure .............................................................................................. 7

CHAPTER 2: REVIEW OF LITERATURE .............................................................. 9
2.1.

Empowerment, Job Enrichment and Employment Loyalty .......................... 9

2.1.1.

Employee Empowerment......................................................................... 9

2.1.2.

Job enrichment ...................................................................................... 13

2.1.3.

Employee loyalty ................................................................................... 16

2.2.

Literature review and Empirical studies ...................................................... 19

2.2.1.

The relationships between empowerment and loyalty .......................... 19

2.2.2.

The relationships between empowerment, job enrichment and loyalty 20

2.2.3.

The relationships in a downsizing and reducing salary environment .. 21


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

2.3.

iv

The Research Model and Hypotheses ......................................................... 25

CHAPTER 3: METHODOLOGY ............................................................................ 28
3.1.

Research process.......................................................................................... 28

3.2.

Measurement scales ..................................................................................... 32

3.3.

Pilot Study Design – Qualitative Research ................................................. 35

3.4.

Main Study Design – Quanlitative Research............................................... 37

3.4.1.

Sampling methods ................................................................................. 37

3.4.2.

Data analysis methods .......................................................................... 39

CHAPTER 4: RESULTS AND DISCUSSION ........................................................ 42
4.1.

Decriptive analysis ...................................................................................... 42

4.2.

Measurement Assessment............................................................................ 44

4.2.1.

Scale validation..................................................................................... 44

4.2.2.

Model fitness......................................................................................... 51

4.2.3.

Hypotheses Testing ............................................................................... 53

4.3.

Disscussions of the findings ........................................................................ 55

CHAPTER 5: SUMMARY AND CONCLUSIONS ................................................ 58
5.1.

Findings of the Study................................................................................... 58

5.2.

Managerial implications .............................................................................. 62

5.3.

Limitations and directions for future research............................................. 63

REFERENCES .......................................................................................................... 66
APPENDICES........................................................................................................... 79
APPENDIX A: Questionnaire (English Version) ................................................. 79

EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

v

APPENDIX B: Questionnaire (Vietnamese Version) ........................................... 83
APPENDIX C: Pilot Study .................................................................................... 86
APPENDIX D: List some of result tables and figures .......................................... 89
LIST OF FIGURES
Figure 2.1: Proposed Research Model ...................................................................... 26
Figure 3.1: The research process ............................................................................... 31
Figure 4.1: Saturated model of the first CFA............................................................ 94
Figure 4.2: Saturated model of main survey ............................................................. 49
Figure 4.3: SEM result of research model ............................................................... 52
Figure 4.4: SEM result of research model (Standardized) ........................................ 95
LIST OF TABLES
Table 3.1: The Empowerment Measurement Scale .................................................. 32
Table 3.2: The Job Enrichment Measurement Scale................................................. 33
Table 3.3: The Employee Loyalty Measurement Scale ............................................ 34
Table 4.1: Descriptive statistics of the data Sample size = 336 observations .......... 43
Table 4.2: Standardized Regression Weights (The first CFA factor loading of items).... 46
Table 4.3: Confirmatory factor analysis of measurement model .............................. 50
Table 4.4-1: Standardized Regression Weights: (Group number 1 - Default model).... 90
Table 4.4-2: Regression Weights: (Group number 1 - Default model) .................... 91
Table 4.5: Relationship between constructs of research ........................................... 92
Table 4.6: Relationship between constructs in research model (standardized) ........ 53
Table 4.7: Result of hypotheses testing .................................................................... 55


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

1

CHAPTER I: INTRODUCTION
This chapter is starting point of this study. In this chapter, the research
background of thesis is first introduced. Subsequently, the research problem is
discussed. Research objectives as well as research questions are presented in the
next section. Then, methodology and scope of this research is introduced
summarily. Final, structure of this study is presented. This chapter aims at
specifying the purpose of this research and the research content.
1.1.

Background of the Study
Due to the continued economic downturn, many organizations have

difficulties to maintain a large workforce. The organization had to restructure their
operations apparatus, cutting the excess staffing and poor morale in a difficult
position, which is one of the measures used by the organization during the past. Due
to economic constraints, most organizations are required to make difficult decisions
about the distribution of human capital as they try to control costs and competition.
One of cost-cutting program is usually used by companies including reducing the
number of employees, reduce salaries and decrease the budget, reduce hiring and
cut bonuses (Datta, Guthrie, Basuil, & Pandey, 2010).
For the bank financial system, the crisis can occur in cycles or irregular,
causing major damage to a bank, or even lead to bankruptcy or cripple the system.
Specifically, customers can withdraw mass money from a bank because of bad
information, then the bank fall into the inability to pay. For example, in 2003, the
rumor which Asia Commercial Bank’s director general had fled caused a confusion


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

2

and panic psychological for customers who had deposits at Asia Commercial Bank.
In all the causes of bankruptcy of a bank, the liquidity can cause the fastest crash.
The crisis occurs in practice is certainly a very bad thing, because there are no
banks to withstand the crisis and went bankrupt, insolvent. But with the banks to
overcome difficulties and to restore the crisis as an opportunity to test their stamina
practical difficulties, as well as the lessons learned in order to pass the next crisis.
One of the core issues to overcome crisis is reorganized, in which, only maintain
sufficient workforce, reducing operation costs, streamlined operational procedures,
emphasizing the importance of work efficiency.
In the context of near the end of 2012, many banks in Vietnam falls into the
difficult situation, in order to survive it must restructure and cut operating costs.
One immediate solution is often used by organizations such as salary cuts and
layoffs. Many weaknesses are eliminated first, this makes the job productivity per
capita increased, leading to downward pressure on the rest. Additionally wage cuts,
leading to the willpower, motivation decreases. This is the time when the rate
jumped employee's banking sector is quite high, suggesting that the loyalty of
employees in the organization dropped at an alarming rate. Surviving employees
perceive that the organization is not loyal to its own employees, reducing the
survivors' motivation to remain loyal to the organization and dealing a crushing
blow to employee citizenship and other support behaviors (Chambel & Alcover,
2011; Xuan & Park, 2012). Given that the employer has invested time and money
significantly to the recruitment and training of staff and management need to be


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

3

considered in developing strategies to protect protection of their investment
(Leghari, Suleman, Leghari, & Aslam, 2014; Yamamoto, 2013).
In general, the problem to maintain the loyalty of employees is a matter of
survival of an organization, especially in difficult contexts, when an organization
has undergone a process of restructuring the organization. Maintaining and
promoting the loyalty of a workforce survived the filtering and sizing is a difficult
issue for many businesses. Therefore, the task of these organizations is how to
promote the loyalty of the individual remaining after the process of restructuring the
corporate structure.
1.2.

The Research Problem
In the last year, when the economic sector in general and the banking sector

in particular are faced with many difficulties, such as bad debt, credit growth is
difficult, higher operating costs, while profits decline even losses. Not only cut
dividends, which previously sluggish credit situation, shrunken profits, banks have
aggressively cut wage costs and staff layoffs to reduce costs. Previously, many
commercial banks aggressive expansion and network operation, including major
banks now forced to cut staff at most. Specifically related to Tran Duc Kien
arrested, this has directly affected the operation of the banking sector in Vietnam,
not only Asia Commercial Bank. Asia Commercial Bank is severely one of the first
banks affected most, the leaders of this bank has aggressively cut jobs. Thus, in
2013, the bank's employees have been laid off 1271 people, accounting for 11.1
percent compared to 2012, this is a significant concern for those who are doing


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

4

work in the banking sector. Along with the layoffs, many banks also cut salaries and
bonuses. Compared with the end of 2012, while salaries and allowances for each
employee average 15.28 million VND / month, wages and allowances in the past 6
months has fallen 29.8% (Anh, 2013).
ACB is not the only case to aggressively cut jobs amid the economic
downturn. Techcombank has fallen by more than 1,000 workers in 2012 and
continued restructuring of personnel towards streamlining, by profit fell by 83.9%
compared with FY2012. While Eximbank also restructure staffing and reduce
payroll by 30%, in difficult situation, the results fail to achieve business and
restructuring, restructuring personnel, plans to reduce 1,000 employees in the
department to direct to indirect boost retail strategy, aimed at increasing fund
salaries for the sales department directly. Eximbank to terminate the contract with
48 people and more than 300 employees transferred from the departments of the
Head Office to branches to strengthen the sales team in order to promote retail
operations, generate revenue (Anh & Dang, 2013). Once the market is difficult to
screening personnel is difficult to avoid. Recognizing the wave of layoffs, wage
cuts in the banking sector, many experts say, the difficulties and the cost reduction
is essential for enterprises, and as needed for the banking sector, while rising bad
debt, credit growth, reduced profits.
Since the crisis in August 2012, many banks have repeatedly reduced
workforce. The reason given by the bank's profit fell sharply before the difficult
situation, the economic downturn, plans to expand its branch network was tightened


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

5

and banks themselves must restructure apparatus, so the layoffs are unavoidable.
However, according to experts, the staff has gone out of the banking sector in recent
years not all have the same reasons as banks cut jobs, but also due to other causes.
In particular, there is an income source of bank employees are no longer as
attractive as before, many employees resigned to seek other employment
opportunities better.
So far, the study by Ugboro (2006) examined the influence of empowerment
and job redesign on affective commitment - the survivors in the organizations that
happened downsizing and restructuring is one of the research was done in a given
market in a context of previous. However, no studies to indicate the influence of
empowerment and job enrichment on the employee loyalty of survivors in
downsizing and reducing salary environment, particularly in Vietnam transition
market. Therefore, there is an urge to study is done, however, only a review of the
research object is the bank’s employee in Vietnam. This study fills the gap in
research on empowerment and job enrichment on the survivors of Vietnam banking
sector at the moment.
1.3.

Research Objectives and Research Questions
The purpose of the study is to investigate the effects of empowerment and

job enrichment on the loyalty of surviving employees of the Vietnam banking sector
in reducing salary and downsizing background. Because survivors play an
important role in the future success of the downsized-organization, it is important to
more fully understand the strategy can improve their loyalty and commitment. This


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

6

study conducts to check the specific contributions if managers can offset the decline
in the ability loyal employees after downsizing if they simultaneously empower and
enrich their works.
Especially in a study by S. S. Lee (2008) suggests that empowering impact
on the increase of employee loyalty and an easy thing to notice is that the
employees have enriched the response to the news this concept through operations
in the future to prove their loyalty. However, it is clear that downsizing has been
found to have a negative impact on the loyalty of the survivors (Datta et al., 2010;
Kiran, Noor, & Khan, 2014; Ng, Feldman, & Butts, 2014; Wagar, 2001). So, some
question whether empowerment influences affecting promote loyalty in the context
of organizations – banks in Vietnam - that was sizing and reducing wages or not?
Besides, the impact of empowerment to employee loyalty is a direct relationship or
indirect through job enrichment? In order to further understand how the objectives
of this study will be achieved, two following research questions are introduced:
1. Empowering really affect promote employee loyalty in the context of
downsizing and reduce wages or not?
2. The impact of empowerment to employee loyalty has influenced more
strongly by the case through job enrichment at work.
1.4.

Research methodology
White (2002) stated that research methodology is a philosophical framework

for any research (p.20). It contains the data and techniques used to collect research
data. For this thesis, primary data was collected by the researchers through both


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

7

qualitative methods and quantitative. An in-depth interview was conducted in the
branch offices to gain insight about the working spirit, the will to stick with the
organization. A question was also designed and delivered to all of them to learn
more about the characteristics and practices of respondents.
1.5.

Scope of the study
In the current study, the sample used had a skew towards a south banking

staff, especially in Ho Chi Minh City and some province in the south area rather
than Ha Noi City and other big city like Da Nang, Hai Phong in the north area; the
sample also has the bias of Internet. These findings therefore may not be construed
representative of the entire population of banking staffs.
In summary, except for the limited sample size, no generalizations are whole
groups of all Vietnamese banks that have large fluctuations in staffing and the
dynamics of the restructuring, regional differences, limited the time and cost of
research, in addition to mention, the ability to exclude those additional factors such
as the impact of leadership competencies, management mechanism and operation of
the apparatus of individual banks, capacity of each employee is empowered, fair
factors and some other factors.
1.6.

Thesis structure
Structural thesis includes five chapters. The report is presented as follows:
Chapter 1: Introduction
This first chapter provides background information and rationale for the

research. This chapter introduces the necessity of research, research objectives, the

EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

8

scope and objective of research, research methodology and the structure of the
subject.
Chapter 2: Review of Literature
Chapter 2 follows with an emphasis on the theories supporting this thesis and
give hypotheses, including present the theoretical issues empowerment and loyalty,
the effects of the empowerment and job enrichment on employee loyalty in a
downsizing and reducing salary environment.
Chapter 3: Methodology
Chapter three presents research process in which is the way to conduct
research will be presented; after that measurement scales which are presented to
develop questionnaire; then the results of in-depth qualitative research interviews
which are discussed to contribute for measurement scales; and sampling methods
and introduces the methods to analyze data. The purpose of this chapter is to
identify the research process, methods using in research, sampling design and data
collection method.
Chapter 4: Results and Discussion
This chapter presents and analyzes the results of studies on the impact of
empowerment and job enrichment on employee loyalty in a dowsizing and reducing
salary environment.
Chapter 5: Summary and Conclusions
Chapter 5 presents the results and the limitations of the thesis, as well as
recommendations for further research directions of the authors.

EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

9

CHAPTER 2: REVIEW OF LITERATURE
2.

This chapter mainly introduces theoretical background and research model.

This section is going to cover definitions of several key words that will certainly be
repeated many times throughout this paper. First the readers will have a chance to
get themselves familiar with empowerment concept, job enrichment and employee
loyalty in section 2.1. Then, the next section will show some experimental studies
on the relationship of the concepts in section 2.2. Finally, research model, its
constructs and relationship hypothesized among the constructs are discussed.
2.1.

Empowerment, Job Enrichment and Employment Loyalty

2.1.1. Employee Empowerment
The original meaning of empowerment has been referred to as to "authorise,
give power to" by Tulloch (1993) as cited by Greasley et al. (2005). The use of the
term "power" appears to be common throughout the definitions of empowerment;
for example, Legge (1995) argued that empowerment should be seen in terms of a
redistributive model whereby power equalisation is promoted for trust and
collaboration. One of the most frequently referenced definitions of employee
empowerment is that offered by Conger and Kanungo (1988). Conger and Kanungo
(1988) focused on power as the central point of empowerment, "either to strengthen
this belief or to weaken belief in personal powerlessness". They define
empowerment as a process of enhancing feelings of self-efficacy among

organizational members through the identification of conditions that foster
powerlessness, and through their removal by both formal organizational practices


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

10

and informal techniques of proving efficacy information. This definition implies
strengthening the effort-to-performance expectancy or increasing employee feeling
of self-efficacy. According to Conger and Kanungo (1988), the effect of
empowerment is the initiation and persistence of behavior by empowered
employees to accomplish task objectives. This definition is rooted in management
theory of power and authority delegation that gives an employee the right to control
and use organizational resources to bring about desired organizational outcomes.
The work of Conger and Kanungo (1988) is often used as a starting point in
literature on psychological empowerment, for they claimed that empowerment
involves a motivational concept of self-efficacy. However, Thomas and Velthouse
(1990) argued that the concept of empowerment is much more complex and could
not be fully explained in a one dimensional construct such as self-efficacy. This
notion was further refined by Thomas and Velthouse (1990) who developed a
cognitive model of empowerment. They therefore define empowerment as an
intrinsic task motivation that manifests itself in four cognitions (meaningfulness,
competence, impact and choice or self-determination), reflecting an individual’s
orientation to his or her work roles. By intrinsic task motivation, they mean, a
positively valued experiences that an individual derives directly from a task that
produces motivation and satisfaction. A very similar definition of empowerment
was outlined by M. Lee and Koh (2001) - who described these four dimensions
(listed below) as describing the psychological state of the subordinate - stated that:

EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

11

Meaningfullness: the meaning of a value of a task goal or purpose judged in
relation to an individual’s own ideals or standards. Competetence: competence is
an individual’s belief in his/her capability to perform task activities skillfully. Selfdetermination (or choice): autonomy in the indivitation and continuation of work
behaviours and processes. Impact: the perception of the degree to wich an
individual can influence certain outcomes at work (p. 687).

A practical and process oriented definition of empowerment was offered by
(Bowen & Lawler, 1994). They define employee empowerment as sharing with
front-line employees, information about an organization’s performance, information
about rewards based on the organization’s performance, knowledge that enables
employees to understand and contribute to organizational performance, and giving
employees the power to make decisions that influence organizational direction and
performance. Employee empowerment means turning the front-line loose, and
encouraging and rewarding employees to exercise initiative and imagination.
Empowerment is similar to participative decision making but is also very
distinct from it. Empowerment is not simply sharing power but distributing power
(Hollander & Offermann, 1990), whereby employees may be given power or
control over some or all aspects of the task, from scheduling jobs to making
decisions to implementing ideas (Robbins & Judge, 2012; Schermerhorn, Hunt, &
Osborn, 1998). Empowerment strengthens employees, providing them with a sense
of ownership and control over their jobs (Bass, 1995; Kouzes & Posner, 2006).


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

12

The other explanation of empowerment takes the viewpoint of the followerempowerment is the perception of being empowered (Hardy & Leiba-O'Sullivan,
1998; Honold, 1997). Theorists (Laschinger, Finegan, Shamian, & Wilk, 2004; M.
Lee & Koh, 2001; Spreitzer, 1995; Thomas & Velthouse, 1990) have identified
perceived empowerment to include four components: (a) the work has personal
meaning for the employee, (b) the employee feels competent in the ability to
perform the task, (c) the employee has a degree of self-determination in his or her
ability to choose and regulate task action, and (d) the employee feels the work has
impact beyond the immediate job.
In summary, theorists and practitioners discuss the concept of empowerment
from two different perspectives. First, some consider empowerment a set of
activities and practices of managers that give power, control, and authority to
subordinates (Cattaneo & Chapman, 2010; Conger, 1989; Dubrin, 2012; Ford &
Fottler, 1995). The measurement of empowering practices focuses on managerial
behaviors that act to empower employees. Such behaviors include providing a
positive emotional atmosphere, rewarding and encouraging in visible and personal
ways, expressing confidence, fostering initiative and responsibility, and building on
success (Conger, 1989; Dubrin, 2012). The second interpretation of empowerment
takes the viewpoint of the follower-empowerment is the perception of being
empowered. Because the purposes of the present study were concerned with how
management can influence the loyalty of followers, we used the both of view of


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

13

empowerment, focusing our attention on the leadership activities that empower
employees and perceived empowerment.

2.1.2. Job enrichment
Job enrichment is a tool that enables innovation in the organization. It’s
based on expectation of every people. Job enrichment is one of main tools of
manager beside with praise, recognition, approval etc. It allows people in
organization to grow up, to organise, to take responsibility, to give suggestions and
to be important. Job enrichment refers to expansion in vertical side of job that
provides responsibility of workers be increased (Kamery, 2004; Robbins & Judge,
2012). It and empowerment should be combined to have overview of whole process
of a task. The job should be arranged in order that worker can do a complete
activity, increasing responsibility as well as freedom and independence of worker.
Hence they can review their performance and improve it.
Job enrichment give opportunities for changes, utilizing personnel,
encourage staff in work, services can be improved. Drucker and Drucker (2001)
points out that experiment in job enrichment seem particularly applicable to
knowledgeable work positions (p. 84). Job enrichment makes complexity in works,
increasing responsibility of employee, do not need the role of supervisor (Mullins,
2010). This has more recently been linked to the related concept of employee
engagement, employee empowerment and high performance working system
(Zhang & Bartol, 2010). When employees take responsibility for their own action,
they always put in their mind such thinking on each action. Then employee


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

14

becomes a better judge of its own actions brings active engagement as well as
creative thinking. Having more control over a task the employee is more disposed
and more open to innovativeness (Dodd & Ganster, 1996; Saavedra & Kwun,
2000).

There are many ways of job enrichment. According to Mohr and Zoghi
(2008), that should be rotation, sharing information, teamwork and training.
Robbins and Judge (2012) opinion that should be combining task, building
relationship with big partners, expanding job vertically ang giving more feedback
(p.177). McShane (2003) also has same opinion about combining task and buidling
relationship. Focusing on self-teams; engagement; and feedback is opinion of
Dauda (2009). Kehinde, Abiodun, and Osibanjo (2012) points out that no need
control subordinate, assign to do a whole process of work, giving feedback to
employees directly etc. They use of techniques to enrich the following: remove the
control of a subordinate; specify a complete unit of work that can be done by a
subordinate, but not in work processes; provide feedback directly to employees by
monitoring; assign new tasks or subjects; rotational assignments or work schedules;
implementation of participatory management; remove the hard part of the exercise;
adjusted performance targets; reduced control of a subordinate; provide more power
to subordinates; increase the level of decision making of the subordinate; encourage
increased use of the technique; increase the amount recognized for a job well done;
the participation of employees in identifying and addressing issues that affect them
and the organization; provide employees with feelings of dependent; and the


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

15

combination and / or rearrange the task more difficult. Or simply job enrichment
stresses the humanizing and self-fulfilling potential of an expanded organizational
role, as stated by Prester and Bozac (2012) including: scheduling (when you do
what during the day); decision making (meaningful involvement in the decisions
that affect your tasks, your job, and your role); meaning (who does your work help
and how important does it seem to you); and feedback (the information that you

receive on how your efforts contribute to the goals of your unit, users, etc.). But
Robbins and Judge (2012) suggest that the best ways is have to be supported by job
dimension as skill variety, task identity, task significance, autonomy and feedback
(p.177).
According to this theory, the organization encourages increased quality of
works by enhancing the size of the task in particular: (a) skill variety, the degree to
which a job requires the use of different skills, abilities and talents of a person, (b)
task identity, the extent to which a job requires completion of a "full" part of the
job, such as after a task or from beginning to end with tangible results, (c) task
significance, the degree to which a job and its duties have "a significant impact on
the lives of people, even those in the organization immediately immediately or in
the world at large" (Hackman & Oldham, 1976;. p 79), (d) autonomy, the degree to
which a job for freedom, independence, or as decided to arrange the work, decision,
or select the method used to perform the job duties, and (e) feedback, the degree to
which a job offer clear information on how a being done.


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

16

In summary, the objective of this study was to establish the role of job
enrichment as an impact to change to improve the work experience and jurisdiction
of the staff and its impact on employee loyalty to the organization function.
However, it should be noted that this study be considered in the context of Vietnam
banks are in the process of restructuring and downsizing. Since the syndrome of
survivors entail different effects to workers' perceptions, attitudes and behavior, this
study because it is done in a restructuring and narrow environmental organizations.
Accordingly, in this study, the survivors are defined as employees who remain in
the organization, ie the employee is not fired during the company cut staff, as well

as the members who survived and exist in the organization after the reduce wages
and staffing.
2.1.3. Employee loyalty
Many organizations recognize that employees are valuable assets of the
business; and for the business, the loyalty of customers or employees has become
one of the critical issues. The firm has tried to take the opportunity and support
given to their employees, but they still face difficulties in keeping staffs in the
organization (Voyles, 1999).
The term "loyalty" and "employee loyalty" has special relevance. Ewin
(1993) explained loyalty is "an emotional attachment and an emotional reaction to
its objects" (p.389). Morrall (1999) said that the concept of loyalty is "a
commitment to something or someone" (p.95). Hajdin (2005) describes that "the
concept of loyalty analogously creates a need for a theory that explains how doing


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

17

something other than what should otherwise be done can be a good thing when it is
a manifestation of loyalty"(p.261). Loyalty is as devotion and an emotional
attachment of a person to specific things, which may be related to a person, a group
or purpose (Powers, 2000). According to Allen and Grisaffe (2001), loyalty is a
psychological state and it characterizes the relationship of an employee with the
organization for which they work and that has implications for their decision to
remain with the organization.
In contrast, the "employee loyalty" has been identified related to work,
coworkers, supervision and organization. Employee loyalty has been identified by
many researchers (Drizin & Schneider, 2004; Ewin, 1993; Hajdin, 2005; Meyer,
Irving, & Allen, 1998; Powers, 2000; Solomon, 1992; Voyles, 1999). (Powers,

2000) identified the loyalty of employees such as actions and specific behavior
(participation in the activities of their superiors, willing to stay late to finish the
project or organizational goals, or helping colleagues). (Drizin & Schneider, 2004)
reported that loyal employees tend to show commitment and stay in the
organization and willing to help organizations overcome difficulties regardless of
their assigned work outside described work.
Naus, van Iterson, and Roe (2007) provided another view of loyalty with an
exit - voice - loyalty - cynicism - neglect construct which is model of responses to
dissatisfaction. Naus et al. (2007) propose that there are five ways in which
employees may respond to adverse organizational circumstances: exit (some
members leave the organization - this is the exit option - quitting the job or leaving


EFFECTS OF EMPOWERMENT AND JOB ENRICHMENT ON EMPLOYEE LOYALTY

18

the organization voluntarily, searching for a different job and thinking about
quitting), voice (actively and organization constructively trying to improve
conditions for changing the status of the opposition by discussing the issue with all
involved such as management or higher authorities), loyalty (passively but
optimistically waiting for conditions to improve, by giving public and private
support to the organization, waiting and hoping for improvement), organizational
cynicism (a negative attitude toward one’s employing organization), and neglect
(reducing efforts, lax behaviors, demonstrated through lateness, absenteeism, error
rates and using company time for personal business). They found that the higher the
satisfaction with the problem, the more likely the employee will choose either voice
or loyalty reactions (Leck & Saunders, 1992).
Loyalty to the organization of two active and passive forms (Withey &
Cooper, 1992). Graham and Keeley (1992) suggested that there are three aspects of

loyalty in situations where there is dissatisfaction occurs: the unconscious, passive,
and reform. To deal with the problem of work, employees may remain silent
without receiving a proposal for another answer (loyalty - unconscious), trying to
keep silent to see what happens (loyalty - passive), or actively protects
organizations by offering a positive alternative solutions and dissect the problem
(loyalty - reform).
For the purposes of this study, loyalty is defined as behavior to demonstrate
pride and support for the organization. Protecting organizations against criticism,
emphasizing the positive aspects of the organization, and limited complained about