INTRODUCTION
Background of the research
Every organization relies on two fundamental assets: labor and capital While capital is crucial for success, labor is indispensable, as it drives daily operations and sustains the organization However, the mere presence of skilled employees does not guarantee success; the key lies in how effectively they apply their knowledge and skills Employee performance significantly influences an organization's success or failure and is shaped by various internal and external factors, including leadership, promotion opportunities, work environment, and employee-employer relationships In the context of Vietnam's developing economy, which encompasses diverse sectors—foreign, joint, private, and public—the contributions of each sector are vital for national development As Vietnam reforms its economic system, the state sector's proportion appears to be decreasing, while the presence of other sectors is on the rise, highlighting the evolving landscape of the economy where both state and non-state sectors play critical roles.
The success of each sector heavily relies on employee performance, yet the state sector exhibits unique characteristics that differentiate it from others While all sectors are influenced by common determinants, the impact varies in significance and degree, warranting a thorough analysis and comparison Identifying the key factors that affect employee performance across different sectors is crucial for enhancing productivity and effectiveness This understanding is particularly vital in the context of Vietnam's rapidly evolving economy, which presents numerous opportunities and challenges for leadership and workforce development.
In the competitive landscape of business, motivation plays a crucial role in organizational success, as emphasized by Lenin's assertion that victory in battle hinges on the morale of the soldiers In Vietnam, low labor productivity has become a pressing issue acknowledged by both government officials and the public, despite the intelligence and skill of the workforce Many foreign managers have noted that while Vietnamese employees possess potential, their output lags behind that of neighboring countries, pointing to a need for effective motivation strategies Unfortunately, many managers overlook the importance of motivating their teams, either ignoring known methods or lacking knowledge of effective practices With Vietnam's accession to the World Trade Organization and the intensifying competition during economic crises, enhancing employee performance and motivation has become essential for improving the quality and competitiveness of Vietnamese products.
3 enhancing the productivity of each employee, as a result the quality of products could improve and price could be reduced that help Vietnamese products have chances to win in competition
Understanding the impact of various factors on employee performance is crucial for managers in enhancing productivity within their sectors and strengthening the overall Vietnamese economy in global competition This study will examine earnings, working environment, and promotion opportunities to assess their effects on employee performance, while also comparing these effects between state and other sectors Additionally, the research will explore the interrelation of these three determinants in influencing employee performance.
Research problem, research objective, and research questions
Earnings, working environment, and promotion opportunities significantly influence employee performance, with distinct effects observed between the state sector and other sectors in Vietnam's economic landscape Competitive salaries and benefits enhance motivation and productivity, while a positive working environment fosters collaboration and job satisfaction In the state sector, promotion opportunities may be more structured but can also be limited, affecting employee morale differently than in private sectors, where merit-based promotions are often more prevalent Understanding these dynamics is crucial for improving overall performance and job satisfaction across various sectors.
This research aims to analyze the impact of earnings, work environment, and promotion opportunities on employee performance It will also compare and discuss how these factors differently influence performance in the public sector versus other sectors within the Vietnamese economy.
How do earning, working environment, and promotion opportunities affect employees’ performance?
How do earning, working environment, and promotion opportunities affect employees’ performance differently between the state sector and other sectors in Vietnamese economic system? h
Numerous studies have explored the determinants affecting employee performance globally, including factors such as workplace environment, earnings, and performance-related pay Notable research includes "Workplace Environment and Its Impact on Employees’ Performance" by Nowier Mohammed Al-Anzi (2009) and "Effects of Wage and Promotion Incentives on the Motivation Levels of Japanese Employees" by Kiyoshi Takahashi (2006) However, there is a lack of comparative studies in Vietnam examining how these determinants influence employee performance across state and other sectors This research aims to analyze previous findings on earnings, working conditions, and promotion opportunities, focusing on their impact on employee performance in Vietnam By comparing these factors between state and non-state sectors, this study seeks to contribute valuable insights to both academic literature and practical applications.
Justification for the research
Employees are the backbone of all organizations, directly influencing their success or failure through their performance Understanding key factors such as earnings, work environment, and promotion opportunities is crucial for enhancing employee performance Recognizing how these determinants impact different sectors within the Vietnamese economic system can provide valuable insights for leaders and managers This knowledge enables the development of tailored strategies to improve employee performance and increase the efficiency and effectiveness of their organizations These reasons underscore the importance of conducting this research.
Methodology
This research will employ a quantitative approach to gather data by surveying employees from both state and other sectors in Ho Chi Minh City The data collection will be conducted through questionnaires distributed in printed form and via email.
The sample for surveying was 280 employees
Questionnaires: The participants completed a questionnaire with 20 questions; the questions were designed to survey about three determinants that are earning, working environment, and promotion opportunities affect employees’ performance
Procedure: the participants were informed about the questionnaires The questionnaires were provided to participants by printed papers or emails
The survey analyzed the factors influencing employee performance in both state and private sectors, highlighting the differences between these two groups It focused on three key determinants that affect employee performance, providing insights into how these factors vary across sectors.
Outline of the report
This research article is structured into five chapters, beginning with an overview of the study in Chapter 1 Chapter 2 reviews existing literature on how earnings, working environment, and promotional opportunities impact employee performance, while also introducing hypotheses and a conceptual model In Chapter 3, the research methodology is thoroughly discussed, detailing sample selection, research instruments, procedures, and statistical techniques for data analysis Chapter 4 presents the data analysis and key findings from the study Finally, Chapter 5 discusses the results, drawing conclusions and exploring practical implications based on the findings.
6 implications of the research findings The conclusion comes with some recommendations for further researches.
Definitions/concepts
Employee” (The Legal Dictionary) a person who has agreed by contract to perform specified services for another, the employer, in exchange for money/benefits
“Performance” (Business Dictionary) the accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed
In a contract, performance is deemed to be the fulfillment of an obligation, in a manner that releases the performer from all liabilities under the contract
Earnings refer to the compensation received by employees for their work, encompassing salaries, wages, and additional benefits provided by employers or organizations According to the Oxford Dictionary, earnings are defined as the money earned through one's professional efforts.
The work environment, as defined by the business dictionary, refers to the location where tasks are performed, encompassing both the physical geographical setting and the immediate surroundings of a workplace, such as an office building or construction site Key factors influencing the work environment include air quality, noise levels, and additional employee benefits, such as free childcare, unlimited coffee, and convenient parking.
When look at working environment should consider about its culture aspect as whether it is a creative or conventional environment which is very important to productivity of its staff h
A promotion in a career context signifies an employee's advancement within a hierarchical structure, often accompanied by a new job title, increased responsibilities, and a salary boost Additionally, promotions may entail enhanced benefits and greater managerial authority over colleagues Typically, job promotions are awarded based on an individual's performance or length of service.
Delimitations of scope and key assumptions
This research focuses on Vietnam, a rapidly evolving developing economy, and its findings may not be applicable to other economic contexts The study's sample size is limited to a few provinces and cities, which may affect the relevance of the results to the entire country.
Conclusion
This chapter presents a comprehensive overview of the research, outlining the research objectives and questions while justifying the need for the study It highlights the data collection methods and analysis techniques employed, along with definitions of key terms The chapter concludes by discussing the delimitations of the research.
Numerous studies worldwide have identified various determinants that influence employee performance, encompassing both internal and external factors unique to each organization and individual These determinants, which can be either tangible or intangible, may have varying positive or negative impacts on employee performance depending on the specific context of each firm This study focuses on three key determinants—earnings, working environment, and promotion opportunities—previously recognized in research for their significant effects on employee performance, aiming to develop hypotheses that contribute to a model for analysis.
2.2 Classification models of literature review
The author of this study has extensively reviewed existing literature to identify the determinants influencing employee performance Notably, few studies have examined more than three determinants simultaneously, with most focusing on one or two Additionally, there is a lack of research comparing the effects of these determinants across state and other sectors within the Vietnamese economic system This section will explore prior research on earnings, working environment, and promotion opportunities to assess their individual impacts on employee performance and to develop hypotheses for further analysis and comparison.
Most employees seek various benefits, both tangible and intangible, with income being a primary consideration across public and private sectors Many companies leverage financial compensation as a key incentive to boost employee performance, ultimately enhancing individual productivity and overall organizational success.
Performance-related pay (PRP) is an effective tool for enhancing labor productivity for two main reasons First, it addresses asymmetric information regarding workers' abilities and efforts, motivating them to exert the appropriate level of effort Second, PRP can serve as a screening mechanism during the hiring process, attracting only the most capable candidates Consequently, this payment structure incentivizes employees to work harder and improve their performance, ultimately boosting productivity across the organization.
In today's workforce, individuals are primarily motivated by two key benefits: financial compensation and personal fulfillment Most employees seek jobs that offer these advantages, as financial incentives, particularly performance-related pay, can significantly enhance their motivation and productivity Research by Van Eerde and Thierry (1996) indicates that individuals are more likely to exert effort when they anticipate valuable outcomes from their work Reinforcement theory further supports this notion, highlighting the direct link between desired behaviors, such as high performance, and their rewards (Perry, Mesch, and Paarlberg, 2006) However, it's important to note that the effectiveness of payment as a motivator can vary across different contexts and individuals.
Incentive programs aimed at enhancing performance and productivity must be carefully considered, as the relationship between payment and performance is not always straightforward According to Gielen et al (2009), while performance-related pay (PRP) can have positive effects on productivity, it does not guarantee improvements in all situations In team settings, measuring individual performance becomes challenging, which can lead to free-riding behaviors, diminishing the effectiveness of group-based incentives Furthermore, multitasking can create perverse incentives, where employees prioritize rewarded tasks at the expense of other important responsibilities Consequently, the implementation of PRP schemes does not always result in increased productivity.
Employees with stable jobs view wage increases differently than those pursuing short-term career goals, as wage increases serve as short-term incentives in uncertain employment situations (Kiyosh Takahashi, 2006) Consequently, the impact of wages on employee performance may vary significantly between state sector workers and those in other industries, given that individuals in non-state sectors tend to change jobs more frequently.
Hypotheses H1: There is a positive impact of earning on employees’ performance
2.2.2 Working environment and employees’ performance
In daily life and business, individuals are influenced by both natural and social environments The surrounding workplace environment, encompassing physical and behavioral elements, significantly impacts productivity and performance.
The workplace environment significantly influences employee motivation and performance, affecting error rates, innovation, collaboration, absenteeism, and job tenure (Nowier Mohammed Al-Anzi et al., 2009) Key factors that enhance employee performance include engaging work that employees enjoy, opportunities for skill development, access to adequate information, sufficient authority, supportive colleagues, visibility of work results, effective supervision, and clearly defined responsibilities (Chandrasekar, 2011).
The physical layout of a workspace, including factors such as furniture, noise levels, lighting, temperature, and overall comfort, significantly impacts employee performance A well-designed workplace enhances productivity, while a poor environment can lead to increased complaints and absenteeism By improving elements like air quality, meeting areas, quiet zones, privacy, and personal storage, organizations can create a more conducive work environment that boosts employee performance and satisfaction.
The quality of a company's physical workplace significantly impacts its ability to attract and retain top talent Key behavioral factors, such as employee engagement, productivity, morale, and comfort, play a crucial role in overall performance A positive workplace environment not only motivates employees but also leads to improved results Conversely, unfavorable working conditions can result in decreased performance and increased risks of occupational health issues, contributing to higher absenteeism and turnover rates Creating a harmonious environment where employees feel comfortable and supported is essential for fostering productivity and well-being.
Supportive employers foster an environment of equality where team members actively engage and assist one another This culture of enthusiasm and knowledge sharing significantly enhances individual and organizational performance According to Haynes (2008, in Demet Leblebici, 2012), the office environment's behavioral components greatly influence productivity, with interaction being the most beneficial factor, while distractions negatively impact performance.
In short, it is widely accepted that both physical and behavioral factors have great impact on employees’ performance or productivity
Hypotheses H2: There is a positive impact of working environment on employees’ performance
2.2.3 Promotion opportunities and employees’ performance
Promotion serves as a significant reward for employees who demonstrate exceptional performance and possess the skills necessary for higher positions within an organization Achieving promotions aligns with the aspirations of many employees, fulfilling their ambitions and desires for career advancement It acts as a recognition of their hard work and dedication, making the pursuit of higher promotions a common goal for individuals in various organizational settings.
Promotions are often viewed as valuable opportunities that provide both tangible and intangible benefits to individuals Advancing to higher positions allows employees to showcase and enhance their skills, leading to increased motivation and improved performance Additionally, promotions serve as a form of compensation to motivate employees, although their impact may vary across different organizations.
LITERATURE REVIEW AND HYPOTHESES
Introduction
Numerous studies globally have identified various determinants that influence employee performance, encompassing both internal and external factors specific to each organization and individual These determinants can be tangible or intangible, and their effects on performance may vary significantly based on the context of each firm This study focuses on three key determinants—earnings, working environment, and promotion opportunities—previously recognized for their impact on employee performance, aiming to develop hypotheses for a comprehensive analytical model.
Classification models of literature review
The author of this study has extensively reviewed literature to identify the determinants affecting employee performance Notably, most existing research focuses on one or two determinants, with limited studies examining more than three simultaneously Furthermore, there is a lack of comparative research on the impact of these determinants in state versus non-state sectors within the Vietnamese economic system This section will explore prior studies on earnings, working environment, and promotion opportunities to assess how each factor influences employee performance, ultimately formulating hypotheses for analysis and comparison.
Most individuals seek employment for a range of benefits, both tangible and intangible, with income being a primary factor valued by employees across various sectors Many companies leverage financial incentives to boost employee performance, ultimately enhancing productivity at both the individual and organizational levels.
Performance-related pay (PRP) is an effective tool for enhancing labor productivity due to two main factors Firstly, it addresses asymmetric information regarding worker abilities and effort, motivating employees to exert optimal effort Secondly, during the hiring process, piece rates serve as a screening mechanism, attracting only the most capable candidates Consequently, PRP not only drives individual employees to work harder but also boosts overall organizational productivity.
In the workplace, individuals are primarily motivated by two key benefits: financial compensation and personal satisfaction Most employees do not work without these incentives, as financial rewards, especially bonuses, significantly influence their performance and productivity According to Van Eerde and Thierry (1996), individuals are more likely to exert effort when they anticipate valuable outcomes Performance-related pay can drive employees to work harder if they perceive monetary rewards as a direct result of their efforts Reinforcement theory further supports this notion, indicating a strong link between desired behaviors, such as high performance, and the consequences of those behaviors (Perry, Mesch, and Paarlberg, 2006) However, it's important to note that financial incentives may not be effective in every context, as their impact can vary across different situations.
Incentive schemes aimed at improving performance and productivity must be carefully considered, as the relationship between payment and productivity is not always direct Gielen et al (2009) noted that while performance-related pay (PRP) can have positive effects, it does not guarantee increased productivity In teamwork settings, measuring individual performance can be challenging, leading to potential free-riding behaviors Consequently, group-based incentives may have minimal impact on individual productivity Moreover, multitasking can create perverse incentives, where employees prioritize rewarded tasks over others, potentially neglecting important responsibilities Thus, the effectiveness of PRP schemes in enhancing productivity is not always assured.
Employees in stable jobs view wage increases as more significant compared to those pursuing short-term career goals, as wage increases serve as a temporary incentive in unstable employment situations (Kiyosh Takahashi, 2006) Consequently, the impact of wages on employee performance may vary between state sector workers and those in other sectors, with the latter experiencing more frequent job changes.
Hypotheses H1: There is a positive impact of earning on employees’ performance
2.2.2 Working environment and employees’ performance
In daily life and business, individuals are influenced by their natural and social environments The surrounding workplace environment significantly impacts productivity and performance This environment encompasses both physical and behavioral elements, each playing a crucial role in shaping employee effectiveness.
The workplace environment significantly influences employee motivation and performance, affecting factors such as error rates, innovation, collaboration, absenteeism, and job tenure (Nowier Mohammed Al-Anzi et al., 2009) Key elements that enhance employee performance include engaging work that employees enjoy, opportunities for skill development, access to adequate information and resources, supportive coworkers, visibility of work results, effective supervision, and clearly defined responsibilities (Chandrasekar, 2011).
The physical layout of the workspace, including factors such as furniture, noise levels, lighting, temperature, and overall comfort, significantly impacts employee performance A well-designed workplace enhances productivity, while a poor environment can lead to increased complaints and absenteeism By improving aspects like air quality, meeting areas, quiet zones, privacy, and personal storage, organizations can foster a more conducive work environment that boosts employee performance.
The quality of the physical workplace environment significantly impacts a company's ability to attract and retain talent Key behavioral factors, such as employee engagement, productivity, morale, and comfort, play a crucial role in influencing performance A positive workplace environment not only motivates employees but also leads to improved outcomes Conversely, employees in unfavorable conditions may experience decreased performance and health issues, resulting in increased absenteeism and turnover rates Creating a harmonious environment with friendly interactions among employees is essential for fostering a productive workplace.
Supportive employers foster an environment of equality, where team members actively engage and assist one another This enthusiasm for collaboration and knowledge sharing enhances individual performance and benefits the organization as a whole According to Haynes (2008, in Demet Leblebici, 2012), the office environment's behavioral components significantly influence productivity, with interaction being the most beneficial factor and distractions having detrimental effects.
In short, it is widely accepted that both physical and behavioral factors have great impact on employees’ performance or productivity
Hypotheses H2: There is a positive impact of working environment on employees’ performance
2.2.3 Promotion opportunities and employees’ performance
Promotion serves as a significant reward for employees who demonstrate strong performance and possess the necessary skills for higher roles within an organization Achieving promotions aligns with the aspirations of many employees, fulfilling their ambitions and recognizing their dedication and commitment to their work Ultimately, the pursuit of advancement is a common goal for individuals across various organizations, reflecting their desire for career growth and acknowledgment of their contributions.
Promotions are often viewed as valuable opportunities that offer both tangible and intangible benefits to individuals Advancing to higher positions allows employees to showcase and enhance their skills, leading to increased motivation and improved performance Additionally, promotions serve as a form of compensation that can effectively motivate employees However, the impact of promotions may vary across different organizations.
Employee perceptions of promotions vary significantly, influenced by factors such as age, individual aspirations, and organizational context For some, promotions represent a critical goal to strive for, while others may be less motivated by such advancements Consequently, the impact of promotions on employee performance is not uniform and depends on individual characteristics and the specific dynamics of each organization.
Achieving a higher position within a company not only brings benefits but also entails greater responsibilities for the employee Hardworking individuals who meet and exceed expectations deserve promotions, which serve as recognition of their excellence A promotion signifies that the employee is prepared for increased responsibilities and is capable of taking on a larger role within the organization However, it's important to note that promotions may not always stem from positive performance reviews, as employers may have various factors influencing their decisions.
Conclusion
This chapter provides a comprehensive overview of existing literature regarding three key determinants that influence employee performance: earnings, working environment, and promotion opportunities Based on these determinants, a model was developed that includes three hypotheses: H1 posits a positive impact of earnings on employee performance, H2 suggests a positive impact of the working environment on performance, and H3 indicates that promotion opportunities positively affect employee performance.
This chapter outlines the approach to addressing the research problem, detailing the participant selection process and data collection procedures It will also examine the measurement tools employed for data gathering Finally, the chapter will conclude with an overview of the statistical techniques used for data analysis.
This research utilizes a quantitative approach to examine how earnings, working environment, and promotion opportunities affect employee performance in Vietnam, while also comparing these impacts across state and other sectors.
Before doing an official survey, a pilot test was conducted with 30 employees in both state sectors and other sectors
From May to November 2012, a survey was conducted targeting employees in various sectors, including state organizations, in Ho Chi Minh City A total of 280 questionnaires were distributed to selected respondents, providing a sufficient sample size for the study.
The study involved 20 questions, significantly exceeding the minimum requirement of four to five times the number of questions Participants were evenly divided into two groups, comprising over 100 individuals each from the state and other sectors, ensuring a robust sample size that is five times larger than the number of questions This distribution meets the minimum criteria for effective data collection.
A questionnaire was developed with guidance from my supervisor and adapted from prior research This study utilized three scales to assess employee performance, focusing on earnings, working environment, and promotion opportunities The questions related to these three factors were inspired by Nguyen (2011), specifically incorporating four questions pertaining to the earnings determinant.
Presence of salary that reflects my performance
Current income presence of attractive and competitive compensation system
My company has transparent and equitable policy of salary
Presence of salary that encourages better performance
There are six questions for working environment determinant:
My company organizes stable working time
In my workplace, staff is equipped and provided enough equipment for doing their work
My superiors encourage and help me in doing my work so much
I receive support from colleagues so much
Relationships between colleagues at my workplace are friendly and relaxed
My workplace is safety and convenience
There are five questions for promotion opportunities determinant:
My company has variety training programs to improve ability of employees
I have been trained all skills that need for doing my work
The company has created many opportunities for me to learn and improve
I have many opportunities for promotion
I have equal opportunities of getting promotion with other colleagues with similar qualification h
Questions for measuring employees’ performance borrow from Rego and Cunhan
I believe I am an effective employee
I am happy with the quality of my work output
My manager believes I am an efficient worker
My colleagues believe I am a very productive employee
My performance is better than that of my colleagues with similar qualification
The questionnaire consists of twenty scales and is available in both English and Vietnamese versions It utilizes a 5-point Likert scale, where responses range from 1 (strongly disagree) to 5 (strongly agree) For further details, refer to Appendix A and B at the end of this thesis.
The data collection instruments were personally delivered to the selected employees for this study Research assistants handled the delivery and collection of these instruments, returning them to the author for subsequent coding and analysis.
Participants in the survey will receive an email at their personal addresses, allowing them to complete the questionnaires at their convenience, even if they cannot respond immediately.
Validation and pilot test of the instrument
To establish the highest degree of reliability, the jury-validated instrument was pre-tested on a small sample (n = 30) of randomly selected employees who are working in Ho Chi Minh City
Mean comparisons was used to determine whether there was a significant difference between the impact of those determinants on employees’ performance and different impact on state employees and other employees h
Using the SPSS to analyzing the data and make the data analyzing:
1- Testing reliability of scales by using Cronbach’s Alpha and Coefficient:
The study evaluated the reliability of each scale factor by testing Cronbach’s Alpha and the beta of factor loading in the model Cronbach’s Alpha coefficient measures the correlation between questions within the scale, allowing researchers to identify and eliminate inappropriate or irrelevant variables Variables with a Corrected Item-Total Correlation coefficient below 0.3 were disqualified, while scales with a Cronbach’s Alpha coefficient of 0.7 or higher were deemed reliable.
Factor analysis is employed to investigate the relationships between independent variables, particularly when the Kaiser-Meyer-Olkin (KMO) value exceeds 0.7; values below 0.5 are deemed inadequate (Nancy L, Leech, Karen C Barret, George A Morgan, 2005) Additionally, factors with loading coefficients under 0.5 or a difference of less than 0.3 between two factors are disqualified The analysis also considers Eigenvalues, which indicate the variance explained by each factor.
1 and the total variance extracted (Cumulative% Extraction Sum of Squared loadings) greater than 50% Extract method "Principal Axis Factoring" rotation
"Varimax" is used in the factor analysis scale independent variables
To examine the relationship between independent and dependent variables, a Linear Regression analysis was conducted This analysis compared the impact of various independent factors on the dependent variable across the state sector and other sectors By assessing key factors such as earnings, working environment, and promotion opportunities, we aimed to evaluate their influence on employee performance through regression analysis.
20 enter The variables included in the same time to select based on the selection criteria variables with a significance level of