The personnel recruitment of small and medium enterprises in ha noi area in the international integration period

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

NGUYỄN THANH TÙNG

THE PERSONEL RECRUITMENT OF SMALL AND
MEDIUM ENTERPRISES IN HANOI AREA IN THE
INTERNATIONAL INTEGRATION PERIOD

CÔNG TÁC TUYỂN DỤNG NHÂN LỰC
TẠI CÁC DOANH NGHIỆP VỪA VÀ NHỎ
TRÊN ĐỊA BÀN HÀ NỘI TRONG THỜI KỲ HỘI NHẬP

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2018


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

NGUYỄN THANH TÙNG

THE PERSONEL RECRUITMENT OF SMALL AND
MEDIUM ENTERPRISES IN HANOI AREA IN THE
INTERNATIONAL INTEGRATION PERIOD

CÔNG TÁC TUYỂN DỤNG NHÂN LỰC
TẠI CÁC DOANH NGHIỆP VỪA VÀ NHỎ

TRÊN ĐỊA BÀN HÀ NỘI TRONG THỜI KỲ HỘI NHẬP
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. TRỊNH NGỌC HUY

Hà Nội - 2018


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,
formulaand 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 the laws for above-mentioned declaration.

Hanoi, date of …… / …… /……..


ACKNOWLEDGEMENT

I hereby certify that I am the sole author of this thesis and no part of this
thesis has been published or submitted for publication. I certify that, my thesis does
not violate anyone‟s copyright. Additionally, all ideas, quotations, or material from
the work of other people included in my thesis, published or otherwise, are fully

acknowledged with the standard of references.
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 (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. Trinh Ngoc Huy – my suporvisor. Then I would like to thank deeply
the respondents and interviewees 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 created convenient conditions and give me encouragement
and understanding for me to complete this degree.
I sincerely thank you!

Hanoi, date of …… / …… /……..


MỤC LỤC

ABBREVIATION ............................................................................................ i
LIST OF FIGURES ........................................................................................ ii
LIST OF TABLES ......................................................................................... iii
INTRODUCTION ........................................................................................... 1
1. Rationale ................................................................................................. 1
2. Aims of research ..................................................................................... 3
3. Objects of research.................................................................................. 3
4. Scope of research .................................................................................... 3
5. Research methodology ............................................................................ 3
6. Thesis structure ....................................................................................... 6

CHAPTER I. THEORETICAL BACKGROUND ON RECRUITMENT
AND SELECTION .......................................................................................... 7
1.1. Literature review of recruitment and selection in SMEs...................... 7
1.2. Small and medium sized enterprises .................................................. 10
1.3. Employee Recruitment ....................................................................... 12
1.4. Recruitment process ........................................................................... 14
1.4.1. Employee recruitment ..................................................................... 15
1.4.2. Employee selection.......................................................................... 26
1.5. Recruitment in small and medium enterprises ................................... 30
1.5.1. Limited resources ............................................................................ 31
1.5.2. Formality of HRM ........................................................................... 32
1.5.3. Source of candidate ......................................................................... 33
1.5.4. Selection practices ........................................................................... 33
1.5.5. Challenges facing SMEs in recruitment and selection .................... 34
1.6. Impact of recruitment and selection ................................................... 34
1.6.1. Positive impacts of recruitment and selection practices ................. 34


1.6.2. Negative impacts of poor recruitment practices.............................. 36
1.7. Proposed model .................................................................................. 37
CHAPTER 2: RECRUITMENT AND SELECTION PRACTICE IN
SMALL AND MEDIUM SIZED ENTERPRISES .................................... 39
2.1. Overview of SME in Vietnam ............................................................ 39
2.2. Description of data.............................................................................. 44
2.2.1. Survey methodology........................................................................ 44
2.2.2. Description of sample ...................................................................... 45
2.3. Recruitment practices in SMEs .......................................................... 47
2.3.1. Human resource planning and recruitment policy .......................... 47
2.3.2. The use of job analysis .................................................................... 49
2.3.3. Multiple source of candidates ......................................................... 53

2.4. Selection practices in SMEs ............................................................... 55
2.4.1. The use of application screening and preliminary interviews......... 55
2.4.2. Use of selection tests ....................................................................... 57
2.4.3. The use of interviews ...................................................................... 60
2.4.4. Reference check............................................................................... 62
2.5. The impact of recruitment practice on employees attitude and
performance ................................................................................................. 64
2.5.1. Reliability analysis of dependent variables ..................................... 64
2.5.2. Reliability analysis of recruitment and selection variables ............. 66
2.5.3. Multiple regression analysis ............................................................ 67
CHAPTER 3: IMPLICATIONS AND SUGGESTIONS TO IMPROVE
RECRUITMENT AND SELECTION PRACTICES IN VIETNAM
SMEs ............................................................................................................... 72
3.1. The role of small and medium sized enterprise in Vietnam............... 75
3.2. Human Resource Challenges facing SMEs in Vietnam ..................... 76


3.2.1. Human Resource Planning .............................................................. 76
3.2.2. Job analysis ...................................................................................... 77
3.2.3. Recruitment and selection ............................................................... 77
3.3. Summary of research findings ............................................................ 78
3.3.1. Human resource planning ................................................................ 78
3.3.2. Job analysis ...................................................................................... 79
3.3.3. Sources of candidates ...................................................................... 79
3.3.4. Use of preliminary screening .......................................................... 80
3.3.5. Use of delection test ........................................................................ 80
3.3.6. Use of interviews ............................................................................. 80
3.3.7. Reference check............................................................................... 81
3.4. Suggesttions for SMEs in improving recruitment and selection
practices ....................................................................................................... 81

3.4.1. More attention should be paid on HR planning .............................. 81
3.4.2. Establish recruitment policy ............................................................ 82
3.4.3. Conduct thorough job analysis ........................................................ 86
3.4.4. Ultilize multiple sources of candidates ........................................... 89
3.4.5. Conduct effective selection interview ............................................. 92
3.4.6. Doing proper reference check ......................................................... 94
3.5. Limitations .......................................................................................... 96
CONCLUSTION ........................................................................................... 97
REFERENCE ................................................................................................ 98
APPENDIX. QUESTIONNAIRE IN VIETNAME ................................. 106


ABBREVIATION
SME

Small and medium sized enterprise

HR

Human Resource

HRM

Human Resource Management

GSO

General Statistical Office

WTO

World Trade Organization

TPP

Trans-Pacific Partnership

GDP

Gross Domestic Product

.

i


LIST OF FIGURES
Figure 1.1. Recruitment and selection process .........................................................14
Figure 1.2. Research model .......................................................................................37
Figure 2.1. Size of enterprises in Vietnam ................................................................40
Figure 2.2. Total number of SMEs by year ...............................................................41
Figure 2.3. Allocation of SMEs in Vietnam by industry ..........................................42
Figure 2.4. Size of the enterprises in the sample ......................................................45
Figure 2.5. Types of the firms in the sample by ownership ......................................46
Figure 2.6. Distribution of firms in the sample by industry......................................46
Figure 2.7. The implementation of HR planning by SMEs ......................................48
Figure 2.8. How often does your company use formal job analysis .........................49
Figure 2.9. The availability of job descriptions and job specification ......................50
Figure 2.10. The use of job descriptions and job specifications for recruitment and
selection .....................................................................................................................52

Figure 2.11. The use of multiple source of candidates .............................................53
Figure 2.12. Uses of preliminary screening by SMEs ..............................................56
Figure 2.13. Use of reference check with candidate-nominated referees .................63
Figure 2.14. Use of reference check with candidate-nominated referees .................64
Figure 3.1. Link between HR planning and organization‟s mission .........................82

ii


LIST OF TABLES
Table 2.1. Presents details of the average income of workers in SMEs by type of
ownership and economic activity. .............................................................................42
Table 2.2. The availability of recruitment and selection policy ...............................48
Table 2.3. ANOVA with firm characteristics as factors and dependent variable:
How often does your company use formal job analysis ...........................................50
Table 2.4. ANOVA with firm characteristics as factors dependent variable: the
availability of job descriptions and job specifications ..............................................51
Table 2.5. ANOVA with firm characteristics as factors and dependent variable use
of JD and JS for selection and recruitment ...............................................................52
Table 2.6. ANOVA of dependent variables with firm characteristics as factors ......54
Table 2.7. Adoption of selection tests by SMEs .......................................................58
Table 2.8. ANOVA of dependent variables with firm characteristics as factors ......58
Table 2.9. Adoption of selection interview by SMEs ...............................................60
Table 2.10. Reliability of dependent variables .........................................................65
Table 2.11. Reliability analysis of independent variables ........................................66
Table 2.12. Results of regression analysis ................................................................67
Table 2.13. Results of regression analysis ................................................................68
Table 2.14. Results of regression analysis ................................................................69

iii

INTRODUCTION
1. Rationale
Small and medium enterprises (SMEs) typically account for a large
proportion (about 90% numbers of enterprises) worldwide. In Vietnam, this rate at
about 98% so SMEs play a very important role in national economy. While big
enterprises are often located in the economic centers of the country, the SMEs are
present in all locals, regions… and contribute a great deal to government budget,
generate mass of local jobs, and significantly contribute to the national GDP in
value. According to Vietnam General Statistic Office (GSO, 2016), small and
medium enterprises employ 51% social workers and contribute over 40% of GDP
for the country.
In the status of national economic renovation and international integration,
(especially while Vietnam was official member of WTO (2007), TPP (2016) and
lots of important free trade agreements - FTA), Vietnam‟s enterprises (especially
SMEs) catch up several big business opportunities and enormously challenges, vice
versa. Economic researchers and experts affirm that the key visible challenge for
domestic enterprises is the competitive pressure from multinational corporations
and international groups. Under this pressure, SMEs is the mostvulnerable. Because
SMEs are in lack of finance, naturally, have less ability in capital mobilization, and
possess not-good-enough human resource and technology for survival.
Once again, the shortage of highly qualified personnel and skilled workers
are the most worrying problems of SMEs. In addition, the experience of
international market access and understanding of the common conventions and
international charters of SMEs is also very limited. Therefore, innovation and
improvement of business capacities are imperative requirement for SMEs to seek a
position in the market in the current period.The task of innovation and improvement
of business capacities of SMEs are not only focused on the issue of organizational
structure, financial, technical infrastructure ... but also towards the content of human

resources in business. Especially when the competitiveness in finance, technology

1


cannot be easily changed, the problem of human resources is the most important
requirements and able to change than other factors.
SMEs are having many difficulties in both recruitment and maintainance
high quality workforce throughout the whole their business process. One part due to
restrictive in the ability to pay for high-quality employment of SMEs is not possible
due to financial constraints, another because these businesses do not have effective
strategies in labor recruitment.In order to maximize the human resources, SMEs
must pay attention to recruitment of employees to attract a qualified and qualified
workforce in line with the objectives, work nature work position.
This requires SMEs need to build their own suitable recruitment policy
because a suitable recruitment policy will be an important material for good human
resource. In fact, most ofSMEs now are facing with many difficulties in the
recruitment of human resources.
Hanoi is the capital city of Vietnam and is one of the most improtant drivers
of the country‟s economic development. As a result, there have been dramatic
development in the number of of enterprises including SMEs. While there were
about 69,000 enterprises in Hanoi in 2008, the total number of enterprises in Ha Noi
was 142,000 by 2014 (GSO, 2015). A very large proportion of SMEs in Hanoi
operate in the field of services and construction and therefore they mostly employ
skilled workers. Because there are also many FDIs and other large enterprises in the
area of Hanoi, many of the SMEs find it difficult to find qualified candidates
because of fierce competitions. Results from a survey by CIEM (2016) indiacted
that 79% of SMEs face difficulties with recruitment. The main reasons included low
pay, poor working conditions and lack of career advancement opportunity. From
that actual situation, the author decides to choose the theme "The personnel

recruitment of small and medium enterprises in Ha Noi area in the international
integration period" to complete the master thesis.
With research content as above, the author poses research questions for his
topic as follows:

2


- How is the current status of recruitment and selection practice among SMEs
in Hanoi?
-What is the impact of recruitment and selection practices on SMEs
performance and human resource?
2. Aims of research
2.1. General objective
The overall objective of this study is to assess the current status of
recruitment and selection practices in SMEs and to provide recommendations to
improve recruitment and selection practices in these SMEs.
2.2. Detail objectives
- Survey and evaluate the current actual situation of personnel recruitment
and selection in SMEs in Hanoi area.
- Investigate the inpact of recruitment and selection practices on individual
and SMEs performance.
- Propose suggestionss in order to improve effectiveness of personnel
recruitment activity for SMEs in Hanoi in the near future.
3. Objects of research
Objects of research are Personnel recruitment and selection activities of SMEs in Hanoi
4. Scope of research
Location scope: This study will be carried out at level of SMEs in Hanoi area
- Scope of contents: the current study only focuses on recruitment and selection
practices of SMEs but not on other aspects of human resource management.

- Scope of space: The research focuses on SMEs in Hanoi Metropolitan areas and
not all SMEs in Vietnam.
- Scope of time: the data were collected from 8/2017 to 9/2017, the analysis was
based on current data. Suggestions are valid until 2020.
Research methodology
Data collection method
* Secondary Data Collection: Secondary data will be collected through the

3


GSO, and data from previous research on HRM and SMEs. In addition, the thesis
will use some documents as well as information about SMEs and recruitment &
selections from books, dissertations, magazines, internet.
* Primary data collection: Primary data collection methods are
questionnaires surveys, expert indepth-interviews. In addition, synthetic analytical
methods will be applied.
The questionnaire survey is the most important method in the study, which is
described in detail as follows:
-

Sampling:



Sample size: 150 by random sampling



Sampling objects: SMEs located in the areas on Hanoi. Name and

address as well as telephone numbers of the SMEs were collected from enterprises
database extracted from the website thongtindoanhnghiep.co
-

Design of questionnaires: Questionnaires are designed to be in line with the

objectives of the thesis and theoretical framework in a clear and concise manner. To
ensure accuracy, the questionnaire will be designed according to the following process:


Based on research objectives and frameworks to identify the information

needed: factors, variables and metrics;


Determine the type of question;



Determine the content of each question;



Determine the terms used for each question;



Determine the logic of the questions;



Draft questionnaire;



Submit a questionnaire to the instructor;



Carry out pilot survey to receive feedback on questionnaires



Review and finalize questionnaires;

Data analysis method
The dissertation uses two methods of data analysis: qualitative and
qualitative.

4


* Quantitative methods
- Statistical aggregation: Collected data and information collected, selected
and statistical information needed.
- Comparison: After collecting and analyzing the necessary data, comparison
will be made over time.
- Processing survey data using SPSS software 18.0
Cronbach Alpha

Assess the scale reliability by using the Cronbach Alpha coefficient. Variables
with an item-total correction factor less than 0.3 will be excluded and the criterion of
scale selection is that it has Cronbach Alpha reliability of 0.6 or higher (Nunnally &
Bernstein, 1994). In this study, Cronbach Alpha must be from 0.6 to be retained.
Oneway Anova Analysis
Assumptions for one-way analysis of variance (One-Way Anova):
- Comparative groups should be independent and randomly selected.
- Comparative groups must have standard distribution: use the KolmogorovSmirnov test.
- The variance of the groups should be the same: use the Levene test to look
at the equality of variance. The Levene test was conducted with the hypothesis H0
that the variance of the groups were the same, if the test result for the significance
level was less than 0.05 then rejected the Hypothesis H0.
If one of the above assumptions does not meet, the Kruskal-Wallis nonparametric test will be used instead of ANOVA. Hypothesis:
- H0: There is no difference between the mean of the groups classified by
variables.
- H1: There is a difference between the mean of the groups classified by
variables.
If:
+ Sig. (2-tailed)> 0.05 is not sufficient basis to reject the Hypothesis H0
should accept Hypothesis H0, which means that the average value is different from
the test value.

5


+ Sig. (2-tailed) <0.05 is sufficient basis to reject Hypothesis H0 and accept
Hypothesis H1, meaning that the mean is different from the test value.
* Qualitative method: regression method
In statistics, regression analysis is a statistical tool for the investigation of the
relationships between variables. It includes many techniques for modeling and

analyzing several variables, when the focus is on the relationship between a
dependent variable and one or more independent variables. More specifically,
regression analysis helps one understand how the typical value of the dependent
variable (or 'criterion variable') changes when any one of the independent variables
is varied, while the other independent variables are held fixed. The investigator
assembles data on the underlying variables of interest and employs regression to
estimate the quantitative effect of the causal variables upon the variable they
influence. The investigator also typically assesses the “statiscal significance” of the
estimated relationships, that is, the degree of confidence that the true relationship is
close to the estimated relationship.
5. Thesis structure
In addition to the introduction, conclusion, references, appendixes; the
contents of the dissertation is divided into three chapters:
Chapter 1: Theoretical background on recruitment and selection
Chapter 2: Recruitment and selection practice in small and medium sized
enterprises
Chapter 3: Implications and suggestions to improve recruitment and selection
practices in SMEs

6


CHAPTER I. THEORETICAL BACKGROUND ON RECRUITMENT AND
SELECTION
1.1. Literature review of recruitment and selection in SMEs
Ravi and SantoshKumar (2015) explore the relationship between human
resource management measures and SME financial results in Mysore and
Bangalore, India. Human resource management practices used by research firms
include recruitment and selection, training, performance appraisal, remuneration
and bonus, and welfare. The financial results are also measured based on the

subjective assessment of the participating companies. The results show the positive
relationship between the five measures of human resource management practices
and the financial results of enterprises including recruitment and selection, training,
performance based pay.
The research by Kauanui, Dang Ngoc Su and Ashley-Cotleur (2005)
explores the relationship between three aspects of human resource management
including training, performance appraisal, and incentive pay. The authors collected
data from 200 SMEs in Hanoi for analysis. Results of the study show that the
positive relationship between the control measures and the results of enterprises in
which the incentive fee has the greatest impact.
Nguyen Tung (2014) in his article on "Human Resource Management
Practices and Performance of Small and Medium Enterprises in Vietnam" has
identified five human resource management teams to be used, including (i)
personnel recruitment channel, (ii) personnel selection, (iii) remuneration and
compensation, (iv) personnel training and development, and (v) personnel
assessment. The results of the standard survey used for the study included 96
randomized enterprises in nine northern provinces, including Hanoi. The total
number of formal employees in each surveyed enterprise was no more than 300.
The author's conclusion is that the application of professional business management
practices in small and medium enterprises in Vietnam is limited to all operations
related to personnel recruitment channels, personnel selection, compensation and

7


training, human resources development and training, and personnel assessment.
There are a number of human resource management practices that are new or are
not / are rarely applied in businesses such as recruitment through job fairs
(recruitment channels), psychological tests (selection of candidates), the program
encourages groups and individuals to work, share profits, supplement financial

benefits (compensation and benefits); training programs by outsourced trainers, the
use of formal training programs, management development training (personnel
development and training) and personnel assessment criteria (personnel
assessment).
Le Thi Kim Anh (2013) in the thesis on the impact of human resource
management on production and business activities of small and medium enterprises
in Thai Nguyen province, has achieved specific results. Firstly, the thesis proposed
methods, analytical tools and questionnaire system to assess the impact of human
resource management practices on small and medium enterprises' production and
business activities. Secondly, the thesis has shown that the good practice of human
resource management will help small and medium enterprises improve their
profitability as well as business efficiency. Third, the thesis indicates that the
training programs of small and medium enterprises based on the needs assessment,
the evaluation of the work of employees, the direct application to the work of the
staff will bring the impact on the efficiency of production and business activities.
Fourth, the thesis has pointed out the human resource management factors affecting
production and business activities: (1) Recruitment and selection; (2) training and
development;

(3)

professional

planning

system;

(4)

Participation

and

companionship; (5) Compensation for damages and benefits; (6) Performance
evaluation. Finally, the thesis proposes the necessary solutions to improve the
efficiency of production and business activities by improving the efficiency of
human resource management, namely: (1) recruitment and selection: transparent
system should be applied through the assessment of individual capacities; (2) The
training program should continuously update the new skills required for production

8


and business activities to meet the challenges of modern competition; (3) In order to
improve the efficiency of production and business activities, small and medium
enterprises should have appropriate career planning systems for employees and
workers; (4) The compensation and reward system for workers should be based on
market prices, which will help retain more qualified employees in the business.
Cuc (2016) studied HRM at small and medium sized enterprises in Vietnam
and found that HRM in these enterprises was still weak and underdevelped. She
found that there are few SMEs planning human resources in the long run.
According to statistics, 85% of total enterprises forecast demand based on the
number of employees to replace, only about 15% is based on changes in science,
technology, demand products and services, scale capital. Even more, many
Vietnamese SME owners have not identified the need for human resources in the
short term. Only medium-sized enterprises (50-300 employees) are interested in and
set up a human resource management strategy. However, human resource training
and development strategies are not closely linked to vision and objectives. Human
resources management, due to the lack of interest in development, in SMEs are not
effective. The author also cited from survey that most Vietnamese SMEs now carry

out job analysis, however, this work is only carried out when there are recruitment
needs in the enterprise. For recruiting staff, the source from the training institute and
mass media play an important part to ensure that the company recruited the right
people to work. However, this form of recruitment is mainly applied in mediumsized enterprises, as the human resources of small and medium enterprises are
small, the advantage for recruiting through training institutions and mass media is
not much. According to statistics, 25% of enterprises recruited through mass media,
this number is low compared to developed countries as well as some countries in
the region. As for recruitment, each SME has its own way of recruiting, but the
whole process is done through the following steps: receiving dossiers and research;
Select qualified candidates for interview. Candidates who pass the interview will be
admitted to the trial within 3-6 months, then the company will sign official contract.

9


However, the reality is that many small and medium-sized enterprises have limited
awareness about the need for assessing recruitment practice. Only about one-fourth
of the SEMs evaluate the effectiveness of selection. Most SMEs use the point-based
methodology, however, the criteria are often subjective but not based on the job
descriptions.
1.2. Small and medium sized enterprises
The definition of small and medium sized enterprises varies across countries.
In Japan, the criteria for small and medium sized enterprises are different between
manfacturing and non-manufacturing sectors. In manufacturing sectors, SMEs are
those which employee less than 300 employees and have capital of less than 300
million Yen. While in non-manufacturing sector, SMES are enterprises with less
than 100 employees and capital of less than 100 million Yen. Similarly, in Taiwan a
firm with less than 200 employees is classified as SMEs if it is operating in
manufacturing sector, in non-manufacturing sector, however, the total number of
employees less than 50 is the threshold. In the United State of America, the only

criterion for SMEs is that the total of employees less than 500.
In Vietnam, there have been many different concepts of small and medium
enterprises. However, since the issuance of Decree No. 90/2001/NĐ-CP dated 23
November 2001 on SME development assistance, the definition of SMEs has been
understood as follows: "Small and medium enterprises are independent business
establishments, having registered business under the current law, with the registered
capital of not more than 10 billion or average number of employees does not exceed
300 employees per year.
Thus, the criteria for determining SME are:
+ Registered capital of less than VND 10 billion (approximately USD
650,000), or
+ Having a workforce of less than 300 people.
According to Article 4: "This Decree applies to SMEs, including: Enterprises
established and operating under the Enterprise Law, Enterprises established and

10


operating under the Law on State-owned Enterprises; and operate under the Law on
Cooperatives; Individual business households registered under the Government's
Decree No. 02/2000/ ND-CP of February 3, 2000 "(This Decree is replaced by
Decree 109 / 2004 / ND-CP).
According to Vietnam Chamber of Commerce and Industry:"Small and
micro enterprises are production and business establishments with fewer than 50
employees. Enterprises with 10 to 49 employees are small enterprises, enterprises
with 1 to 9 employees are considered as very small enterprises.
With this concept, medium enterprises are the remaining enterprises in the
concept of Decree No 90, which means that enterprises have between 50 and 299
employees. However, over the past seven years, the SME concept of Decree No. 90
has revealed unreasonable points. "There are enterprises with a workforce that

exceeds 300 (500-600 employees), but because the registered capital is less than 10
billion VND, so it is still considered SMEs. In contrast, there are enterprises with
hundreds of billions of VND registered capital but the number of regular employees
less than 300 is also classified as a SME.
Therefore, the Government has issued the new SME definition in Decree
56/2009 / NĐ-CP dated June 30, 2009 on support for development of small and
medium enterprises. According to this Decree, SMEs are classified by business
sector and have specific classification for microenterprise, small business and
medium enterprise.
"Small-and medium-sized enterprises are business establishments which
have registered their business according to law provisions, divided into three levels:
micro, small and medium, depending on the total capital source (total capital
equivalent to total assets as defined in the enterprise's balance sheet) or average
number of employees (total capital is a priority criterion), as follows:

11


Table 1.1. Vietnam’s definition of SME

Source: Decree 56/2009/NĐ-CP
1.3. Employee Recruitment
Recruitment is one of the major functions of HRM. It helps the manager to
attract and select best candidates for the organization.
Barber (1998) defines employee recruitment as “practices and activities
carried on byan organization for the purpose of identifying and attracting potential
employees”. Many large corporations have employee recruitment plans that are
designed to attract potential employees that are not only capable of filling vacant
positions but also add to the organization‟s culture.
According to Costello (2006) recruitment is described as “the set of activities

and processes used to legally obtain a sufficient number of qualified people at the
right place and time so that the people and the organization can select each other in
their own best short and long term interests”.
Jovanovic (2004) said “recruitment is a process of attracting a pool of high
quality applicants so as to select the best among them”. For this reason, top
performing companies devoted considerable resources and energy to creating high
quality selection systems. Due to the fact that organizations are always fortified by

12


information technology to be more competitive, it is natural to also consider
utilizing this technology to re-organize the traditional recruitment and selection
process through proper decision techniques, with that both the effectiveness and the
efficiency of the processes can be increased and the quality of the recruitment and
selection decision improved.
Parry & Wilson (2009) stated that “recruitment includes those practices and
activities carried out by the organization with the primary purpose of identifying
and attracting potential employees”. As success of service sector as in case of civil
aviation industry depends upon the human capital, recruitment & selection of the
right people into the service business is crucial to achieve organizational success
(Zheng, 2009).
Raymond J. Stone (2005) defines recruitment as the “process of „seeking and
attracting a pool of applicants from which qualified candidates for job vacancies
within an organization can be selected.‟
According to Edwin B. Flippo (1979), “Recruitment is the process of
searching the candidates for employment and stimulating them to apply for jobs in
the organization”. Recruitment is the process of attracting individuals within and
outside the organization who are eligible to participate in the selection process to
select qualified applicants who meet the requirements of the organization. Then

orient, and guide new employees to integrate with the organization ' environment.
Recruitment is an activity that links the employers and the job seekers. So we
can say that recruitment is a process of finding and attracting capable applicants for
employment. The process begins when new recruits are sought and ends when their
applications are submitted. The result is a pool of applications from which new
employees are selected.
In simple terms, recruitment is understood as the process of searching for and
obtaining applicants for jobs, from among whom the right people can be selected.

13


Though, theoretically, recruitment process is said to end with the receipt of
applications, in practice the activity extends to the screening of applications so as to
eliminate those who are not qualified for the job.
1.4. Recruitment process
For Bratton and Gold (2007), recruitment and selection practices involve two
interrelated processes. Recruitment is the process of generating a pool of capable
people to apply for employment to an organisation whiles selection is the process by
which specific instruments are employed to choose from a pool of applicants‟ most
suitable for the job taking into consideration, management goals and legal
requirements. Recruitment therefore provides the organisation with a pool of
potentially qualified candidates from which selection can be made to fill job
openings. Recruitment and selection are therefore a crucial part of organisational
success. Spencer (2004) mentioned that effective recruitment and selection are
strategically important to any firm. Recruiting and selecting the wrong candidates
can have extensive negative cost implications, while effective processes can
contribute to a reduction in turnover and therefore increase in productivity.
Figure 1.1. Recruitment and selection process

Source: Gary Dessler (2010)

14


As stated earlier, recruitment refers to the process of identifying and
attracting job seekers so as to build a pool of qualified job applicants. The process
comprises of five interrelated stages: (i) planning, (ii) strategy development, (iii)
searching, (iv) screening, and (v) Evaluation and control. The ideal recruitment
program is the one that attracts a relatively large number of qualified applicants who
will survive the screening process and accept positions with the organization when
offered. Recruitment program can miss the ideal in many ways: by failing to attract
an adequate applicant pool, by under/over selling the organization, or by
inadequately screening applicants before they enter the selection process.
(Heneman, 1986; Tran Xuan Cau & Mai Quoc Chanh, 2008). Thus, to approach the
ideal, individuals responsible for recruitment process must know how many and
what types of employees are needed, where and how to look for individuals with the
appropriate qualifications and interests, what inducements to use or avoid for
various types of applicants groups, how to distinguish applicants who are
underqualified from those who have a reasonable chance of success, and how to
evaluate their work.
1.4.1. Employee recruitment
1.4.1.1. Recruitment Planning
The first stage in recruitment process is planning. Planning involves the
translation of likely job vacancies and information about the nature of these jobs
into a set of objectives or targets that specify the (i) number and (ii) type of
applicants to be contacted.
+ Number of Contacts
Organizations, plan to attract more applicants than they will hire. Some of
those contacted will be uninterested, unqualified or both. Each time a recruitment

program is contemplated, one task is to estimate the number of applicants necessary
to fill all vacancies with qualified people. (Heneman, 1986)

15