The Study on Human Resource Practices and AMO Model and Its Impact on Employee Commitment among Gen Y SMEs Employees in Selangor, Malaysia

Abstract

Researchers and practitioners have been very enthusiastic and spend the most determinations to study all possible means in order to grab the most advantage from their human resources (HR) especially the Gen Y employees. These employees are pertinent to the part of organisation’s strategic business plan and contribute to the organisation’s performance as well as sustainable competitive advantage. Hence, employee commitment remains a key challenge especially in small and medium enterprises (SMEs) in Malaysia. The purpose of this paper is to investigate the relationship of compensation, training, employee involvement as well as the ability, motivation and opportunity (AMO) model towards employee commitment. The study also seeks to provide the theory-based empirical evidence that the role of AMO model as a mediator in achieving the commitment of employees and used Social Exchange Theory (SET) in order to explain the theoretical rationale of the study model. A total of 168 Gen Y employees representing SMEs service sectors in Selangor, Malaysia participated in this study. Partial Least Square-Structural Equation Modelling (PLS-SEM) was utilised in order to explain the relationship among HR practices towards employee commitment as well as AMO model as a mediator. A key finding that emerged from the analysis showed that only training has direct relationship toward the employee commitment and AMO model plays an important role in gaining employee commitment as it mediates the relationship of employee involvement. However, compensation has no effect in any relationship. Particularly, this study has helped to place the human resource practices, AMO model and employee commitment in the SET by giving a new perspective theoretically that the correct approach of gaining commitment of employees by providing the appropriate practices that employee will reciprocate in return. Also, it showed that Gen Y employees are seeking more involvement than compensation in order to commit themselves. SMEs should involve employees in their daily activities or any decision-making and offers other recognition programs, as money and remuneration are no longer a motivational urge for employees to become committed. Moreover, the findings could therefore serve as a turning point for SMEs to start concentrating and provide more job-related training so that employees can upgrade their skills particularly in this Industrial 4.0 era, where everything changes greatly in the way they deal with others.