RETENTION OF PROFESSIONAL BANKERS AT COMMERCIAL BANKS IN HO CHI MINH CITY

1 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Doan Duc Minh R R E E T T E E N N T T I I O O N N O O F F P P R R O O F F E E S S S S I I O O N N A A L L B B A A N N K K E E R R S S A A T T C C O O M M M M E E R R C C I I A A L L B B A A N N K K S S I I N N H H O O C C H H I I M M I I N N H H C C I I T T Y Y ID: 60340102 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. LE NGUYEN HAU Ho Chi Minh City – Year 2012 RETENTION OF PROFESSIONAL BANKERS i ACKNOWLEDGEMENTS Beginning of my thesis, I would like to express all my sincere thanks to those people who made this thesis possible and an unforgettable experience for me. First of all, I would like to show my deepest sense to my supervisor Dr. Le Nguyen Hau, who offered his continuous advice and encouragement throughout the course of this thesis. Dr. Hau has offered me the systematic guidance and great inspiration in putting into me toward the scientific field. Then, I am thankful to all my colleagues and Board of Management in Shinhan Bank Vietnam, United Overseas Bank, Hong Leong Bank, Vietnam Commercial Bank, Asia Commercial Bank, Saigon Commercial Bank, Dong A Commercial Bank for the consultation, orientation and support during my research process. Last but not least, this is a great time for a son of family, husband of wife to take this opportunity to express the profound gratitude from my deep heart to my beloved family for their love and continuous support both spiritually and materially. RETENTION OF PROFESSIONAL BANKERS ii ABSTRACT Employees retaining is an important goal of every corporate organization, which drives company to hit the target. This thesis explores the factors that can significantly impact employee retention in an organization, and specializes in field of commercial banks in Ho Chi Minh City. It attempts to relate some of the factors discovered to major theories in employee retention. The literature surveyed by this study mention employee motivation and job satisfaction as the main factors that influence employee retention rates. This survey implies that still significant for managing employee retention in today’s rapidly expanding banking industry. Human resources is definitely one of the most valuable assets in the organizations, however, high turnover is currently being mentioned recently. There are a lot of researches around this topic because retaining employees were realized to be very costly to the organizations. Therefore, retention of key personnel is a precedent issue for all banks and it seems not many research reports conducted in Vietnam banking industry. In the labor market, competitors are always attracting key personnel who are valued core and not satisfied with their current job. This research explores the current situation of job satisfaction of key personnel and figures out the antecedent factors, which impacts job satisfaction. Finally, managerial implications are withdrawn for improving the level of satisfactions, retaining key personnel. Employing a quantitative approach, in which, the data were collected from 160 professional bankers (“bankers”) in commercial banks in Ho Chi Minh City, multiple regression analysis has resulted in the determinants of job satisfaction, and a significant impact of job satisfaction on job satisfaction. Pay and leadership support are found to be two most important factors, other factors include benefit, opportunities of training and promotion, work challenges. The analysis results RETENTION OF PROFESSIONAL BANKERS iii also show that bankers in selected commercial banks are currently not completely satisfied with their jobs. Based on the statistical results, managerial implications have been discussed and recommendations are provided to improve the retention rate of the banking industry in Ho Chi Minh City. RETENTION OF PROFESSIONAL BANKERS iv TABLE OF CONTENTS ACKNOWLEDGEMENTS i ABSTRACT ii TABLE OF CONTENTS iv LIST OF TABLES vi LIST OF FIGURES vii CHAPTER 1: INTRODUCTION…………………………………….………… 1 1.1Background…………………………………………………….….… …1 1.2 Problem statements……………………………………………… ….… 2 1.3 Research objectives……………………………………………….…… 3 1.4 Scope of study…………………………………………………….…… 3 1.5 Thesis structure…………………………………………….…….….……3 CHAPTER 2: LITERATUE REVIEW………………………………….….…… 4 2.1 Maslow’s hierarchy of needs…………………………………… ………4 2.2 Retention………………………………………………………….…… 5 2.3 Job satisfaction and antecedent factors………………………… …… 7 2.4 Moderating factors……………………………………………… …….12 2.5 Research model ……………………………………………….……… 13 2.6 Summary of hypotheses…………………….………………… … … 13 CHAPTER 3: RESEARCH METHOD…………………………….……….……15 3.1 Research procedure…………………………………………….….……15 3.2 Measurement scales……………………………………………….……15 3.3 Method of data collection…………………………………………… 19 3.4 Method of analysis…………………………………………….…….….19 3.4.1 Assessment of measurement of scale……………………….….…20 3.4.2 Multiple regression………………………………………….… …21 CHAPTER 4: RESEARCH RESULT……………………………………… 22 4.1 Introduction……………………… ……………………………………22 4.2 Sample characteristics…………………………… ……………………22 4.3 Assessment of measurement of scales…………….……….……….… 23 RETENTION OF PROFESSIONAL BANKERS v 4.3.1 EFA for individual scales of antecedent factors…………….……23 4.3.2 EFA for all scales together of antecedent factors……….……… 26 4.3.3 Assessment for job satisfaction……………………………….… 29 4.4 Assessment of theoretical model and hypotheses……………….…… 30 4.4.1 Assessment of theoretical model………………………….…… 30 4.4.2 Assessment level of overall job satisfaction………………….… 32 4.4.3 Assessment of influences of organization/ employee characteristics to impact of antecedent factors on job satisfaction…… 33 4.4.4 Test of hypotheses…………………………………………… … 35 4.5 Discussion………………………………………………………….… 39 4.6 Managerial implications…………………………………………… ….40 CHAPTER 5: CONCLUSION AND RECOMMENDATIONS……….……… 46 5.1 Conclusion……………………………………………………….…… 46 5.2 Recommendations……………………………………………… …… 46 5.3 Limitation and further research directions………………………….….48 REFERENCES…………………………………………………….…… ……viii QUESTIONAIRRES………………………………………………….….………xii RETENTION OF PROFESSIONAL BANKERS vi LIST OF TABLES Table 2.1: Maslow‘s hierarchy of needs 5 Table 3.1: Summary of scales for 8 constructs in the model 17 Table 4.1: Sample characteristics 21 Table 4.2: EFA and reliability test result for scales 23 Table 4.3: EFA and reliability test result for three scales refined 25 Table 4.4: Result of joint factors analysis for 7 scales 27 Table 4.5: Characteristics of 7 scales for re-assessment of reliability 28 Table 4.6: Assessment for job satisfaction scale 28 Table 4.7: Multiple regression result of antecedent factors to job satisfaction 29 Table 4.8: R square value 29 Table 4.9: F and Sig. value 30 Table 4.10: Regression result between job satisfaction and retention 30 Table 4.11: R square value 30 Table 4.12: F and Sig. value 30 Table 4.13: Means values of different factors 31 Table 4.14: Differences of impact of antecedent factors by gender 32 Table 4.15: Differences of impact of antecedent factors by age 33 Table 4.16: Differences of impact of antecedent factors by ownership 33 Table 4.17: Differences of impact of antecedent factors by size 34 Table 4.18: Regression coefficients 35 RETENTION OF PROFESSIONAL BANKERS vii LIST OF FIGURES Figure 2.1: The research model 13 Figure 3.1: Research procedure 15 Figure 4.1: Regression coefficients model 38 RETENTION OF PROFESSIONAL BANKERS 1 CHAPTER 1 INTRODUCTION This chapter is an introduction and intended to provide background information on the nature of the present study and its objectives and purpose. It is divided into four sections. The first section presents background of the research, the second part presents the problem statement, the third part presents the objective, and the final section presents the scope of study. 1.1 Background The retention of bankers has been shown to be significant to the development and the accomplishment of the organization’s goals and objectives. In recent years, the system of financial institutions and banks in Vietnam has been developed in increasing quantity of credit institutions and quality in diversity of ownership and banking services. Currently, the whole banking system has reached at number of 52 local commercial banks, 51 foreign bank branches, 31 of non-bank credit institutions. As the "blood" of the economy, the banking sector has been grown remarkable and contributed to the stable development of Vietnam. The local commercial banks in Ho Chi Minh City (the banks) were established along with the development process of Vietnam economy. In the first years of development, the banks have developed gradually, with small and medium scale, and not really pay attention to human resource management (HRM). Due to the development of economy, the banks have boomed and developed remarkably. Especially in 5 years recently, the banks has set up with the wide network branches and the number of bankers in this industry increased by more than 20,000 bankers, growth of the average number of bankers more than 15% per year. Along to the stable development, HRM requires improvement and upgrade to professional level. However, HRM practices in the banks have not been focused and still applied the old-fashion method. Board of management faced the serious issue that employee turnover increased about 9.5% per year within recent RETENTION OF PROFESSIONAL BANKERS 2 three years (Asia Banker Forum, 2011). The banks has been conducting a campaign to reform human resources management system to improve the effectiveness of HRM, high labor productivity, raise incomes and policies to retain bankers. The banks also do understand that the professional bankers are the key factor in competition in the banking market and this may cause a threat to the success of long-term businesses. For this reason, the banks rose up a query how to retain professional staff and satisfy their work-related needs would help. 1.2 Problem statements Board of management of the banks are aware of the critical role of talent workforce and striving to attract and retain their bankers by various measures such as increasing salary and allowance, conducting intensive training courses, offering more opportunities for career promotion and incentive abroad trips for high performance bankers. However, the high turnover rate still exceeds their expectations in spite of bank efforts. Why is turnover still high after those efforts? What are bankers’ demands? How much percent are the bankers satisfied with their current job? Is there relationship between job satisfaction and employee retention? Literature on human resource management provides some general hints in coping with this managerial problem of employee retention (e.g. Maslow, 1943, 1954; Bame, 1993; Becker & Gerhart, 1996; Hom & Griffieth, 1995). Nevertheless, the right solution under the current social-economic context, organization leaders need to understand in more details as higher salary, promotion opportunities, and related other factors as motivation, recognition, working environment, good relationships with the manager and colleagues, corporate culture. What are the affected important factors? Due to answer these questions, management board not only has an insight into the issue of HRM in Vietnam, but also provides specific formation for managers in the fields to solve the problem of retaining their talent bankers. [...]... collection  Sample size : - 250 bankers in commercial banks in Ho Chi Minh City were approached for surveys Respondents include male and female; young and old; state-own banks and private banks (limited banks and foreign bank branches); big-scale or medium-scale banks in Ho Chi Minh City - Respondents are selected with high grade as senior-officers, supervisors and managers holding bachelor, master degree... working in major sections as Loan, Trade, Remittance, Card, Teller, Cashier, Accounting and Deposit  Method for data collection: - In- depth interview: to get qualitative data from bankers at commercial banks in Ho Chi Minh City The results were used as additional inputs into the process of questionnaire design - Questionnaire: using quantitative/structured questions to measure various constructs in. . .RETENTION OF PROFESSIONAL BANKERS 3 1.3 Research objectives In response to the above stated problems, this research is conducted with below aims:  Determine quantitatively antecedent factors and their relative contributions to the overall satisfaction of bankers in the local commercial banks  Estimate the impact of job satisfaction on the retention (intent to stay) of bankers in the field... 646 402 26.08 2.086 Refined scale Factor loading Item-total 1 2 correlation 407 Eliminated 560 832 467 Eliminated 536 779 403 760 62.55% 1.876 699 Eliminated 504 Eliminated 478 574 Eliminated Eliminated 842 877 689 65.08% 1.952 725 Eliminated Eliminated 582 65 42 673 694 Eliminated 783 759 792 759 755 61.07% 3.981 870 573 594 Eliminated 683 716 691 650 640 4.3.2 EFA for all scales of antecedent factors... colleagues, and majority of questionnaires sent to Human Resource Department in selected commercial banks directly The response rate is 76% or 190 respondents which were considered fairly encouraging where commercial banks in Ho Chi Minh City were not familiar with such kind of surveys After filtering, a number of questionnaires were eliminated due to many missing values The data were based on 160 questionnaires... of antecedent factors EFA results (Table 4.5) show that out of seven scales, four were immediately accepted while three scales needed some refinements The scales that did not 24 RETENTION OF PROFESSIONAL BANKERS require any modification are shown in Table 4.5 These include salary-pay (4 items), benefit (3 items), opportunities of training and promotion (6 items), colleague relationship Using the latent... teamwork, being loved In organization, these needs are identified by colleague relationship, leader relationship… 5 RETENTION OF PROFESSIONAL BANKERS  Esteem: the drives for feelings of self-worth and individual importance, need of respect in workplace and daily life are took place at this level Organizations often pay incentives through rewards, bonus, promotions…  Self-actualization: at the top of the... correlation coefficients ≤ 0.35 were eliminated  A joint EFA with the same setting (i.e principal axis factoring, eigenvalue ≥ 1 and VARIMAX rotation) was performed Given the result of step 1 where each 21 RETENTION OF PROFESSIONAL BANKERS item loads highly on the factor representing its underlying construct, this joint EFA allows all items to correlate with every factor without being constrained to... structure of the whole population which is dominated by private sector The sample consists of 49 (equivalent to 30.6%) bankers working for commercial banks which have 20 to 50 staffs; 34 (equivalent to 21.3%) bankers working for commercial banks which have 51 to 100 staffs; 17 (equivalent to 10.6%) bankers working for commercial banks which have 101 to 200 staffs, 60 (equivalent to 37.5%) bankers working... involved in intent to leave and gaining job satisfaction Therefore, it is posited that: H7: There is a positive impact of benefits on job satisfaction  Working environment: this factor refers to work equipments and resources provided by the organization, work strain, work overload Researchers have shown that organizational obstacles in relation to inadequate equipment or insufficient training may be . satisfactions, retaining key personnel. Employing a quantitative approach, in which, the data were collected from 160 professional bankers ( bankers ) in commercial banks in Ho Chi Minh City, multiple. explores the factors that can significantly impact employee retention in an organization, and specializes in field of commercial banks in Ho Chi Minh City. It attempts to relate some of the factors discovered. OF BUSINESS (Honours) SUPERVISOR: Dr. LE NGUYEN HAU Ho Chi Minh City – Year 2012 RETENTION OF PROFESSIONAL BANKERS i ACKNOWLEDGEMENTS Beginning of my thesis, I would like to express all my sincere