THE IMPACT OF ORGANIZATIONAL FACTORS ON EMPLOYEES’ PERFORMANCE IN VIETNAMESE COMPANIES

This research is carried out with the objectives to identify the measurement scale of employees’ performance, identify the organizational factors that impact on employees’ performance an

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

NGO CONG TRUONG

THE IMPACT OF ORGANIZATIONAL FACTORS

Secondly, I would like to thank my dear colleagues, friend and classmates for their invaluable advice, help, encouragement and support during the time I was doing this thesis

Last but not least, I would like to express my great thanks to my beloved wife and my family for their support, assistance and encouragement for my study and thesis fulfillment

ABSTRACT

Vietnam is a developing country and has the emerging market, so the employees' performance in Vietnamese companies plays a significant role to increase the competitive advantages However, so far the study for employees' performance in Vietnamese companies has not yet been thoroughly conducted This research is carried out with the objectives to identify the measurement scale of employees’ performance, identify the organizational factors that impact on employees’ performance and measure the strength of relationship between organizational factors and employees’ performance in the Vietnamese companies This research is done by a thorough literature review on concepts relating to employees' performance from which the initial research model and hypotheses are constructed Research process has three steps including Generation of Items, used to assure the appropriateness of the initial research model and its components; Pilot Survey, used to verify the initial questionnaires and see if there should be any adjustment or modification needed; Survey and data analysis used to collect the answer for the survey on various employees in the South organizational factors Vietnam with the sample size of 175 for data analysis

Number of statistical analysis techniques are used to analyze the data collected via SPSS program Factor analysis results in the identification of factors having significant impact to employees' performance, and the extraction of four factor groups named as Organizational Culture, Leadership, Communication and Working Environment Regression analysis proved that these four groups have statistically significant influence to the employees' performance in Vietnamese companies, which Communication has the highest impact

The research results can be used as a reference for the team leaders, managers, supervisors in Vietnamese companies to enhance and better the employees' performance in the future

TABLE OF CONTENTS

ACKNOWLEDGEMENTS i

ABSTRACT ii

TABLE OF CONTENTS iii

ABBREVIATION v

LIST OF TABLES vi

LIST OF FIGURES vii

LIST OF EXHIBITS viii

LIST OF FORMULA ix

THE IMPACT OF ORGANIZATIONAL FACTORS ON EMPLOYEES' PERFORMANCE IN VIETNAMESE COMPANIES 1

CHAPTER 1 .1

INTRODUCTION 1

1.1 Background 1

1.2 Research questions and objectives 2

1.3 Research scope 3

1.4 Research contribution 3

1.5 Research structure 4

CHAPTER 2 .5

LITERATURE REVIEW 5

2.1 Introduction 5

2.2 Theoretical review 5

2.2.1 Employees’ performance 5

2.2.2 Organizational factors 7

2.2.3 Relationship between organizational factors and employees' performance 14

2.3 Research model 16

2.4 Hypotheses summary 17

2.5 Summary 18

CHAPTER 3 19

RESEARCH METHODOLOGY 19

3.1 Introduction 19

3.2 Research design 19

3.3 Measurement scale 20

3.4 Sample size 22

3.5 Sampling techniques 22

3.6 Data collection methods 22

3.6.1 Primary data collection 22

3.6.2 Secondary data collection 22

3.7 Data quality control 23

3.7.1 Validity 23

3.7.2 Reliability 23

3.8 Data analysis method 23

3.9 Summary 24

CHAPTER 4 25

DATA ANALYSIS 25

4.1 Introduction 25

4.2 Pilot testing 25

4.3 Descriptive statistics 27

4.4 Assessment and refinement of measurement scale 28

4.4.1 Refinement of measurement scale 28

4.4.2 Exploratory Factor Analysis (EFA) 31

4.4.3 Refined research model and hypotheses 35

4.5 Hypotheses testing 36

4.5.1 Regression analysis 36

4.5.2 Hypotheses testing 39

4.6 Summary 40

CHAPTER 5 42

CONCLUSIONS 42

5.1 Introduction 42

5.2 Findings 42

5.3 Managerial implications and recommendations 43

5.4 Limitations and future research direction 45

REFERENCE 46

APPENDICES 51

APPENDIX A: QUESTIONNAIRE IN VIETNAMESE 51

APPENDIX B: DESCRIPTIVE STATISTICS 57

APPENDIX C: SURVEY RESULTS 59

APPENDIX D: SURVEY RESULTS 62

APPENDIX E: SURVEY RESULTS 64

ABBREVIATION

ORGF: Organizational Factors

ORGC: Organizational Culture

WENV: Working Environment

LIST OF TABLES

Table 2.1: List of variables 8

Table 3.1: Measurement scale 21

Table 4.1: Reliability analysis of pilot survey 26

Table 4.2: Descriptive statistics 28

Table 4.3: Reliability analysis of official survey 30

Table 4.4: KMO and Barlett’s Test 31

Table 4.5: Refined rotated component matrix 31

Table 4.6: Reliability analysis of refined model 32

Table 4.7: KMO and Barlett;s test for employees’ performance 32

Table 4.8: Component matrix 33

Table 4.9: Variables in Leadership 34

Table 4.10: Regression analysis of employees' performance 37

Table 4.11: Hypotheses summary 37

LIST OF FIGURES

Figure 2.1: Research model 17

Figure 3.1: Research process 19

Figure 4.1: Refined research model 36

Figure 4.2: Result of refined research model 38

LIST OF EXHIBITS

Exhibit 1.1: Vietnam competitiveness ranking, 2010-2011 3

LIST OF FORMULA

Formula 3.1: Cronbach’s alpha coefficient 23

THE IMPACT OF ORGANIZATIONAL FACTORS

ON EMPLOYEES’ PERFORMANCE

IN VIETNAMESE COMPANIES

CHAPTER 1 INTRODUCTION

This chapter includes five sections The first section introduces the background of the research, where and why this research takes place The second and third sections introduce research questions and objectives of research respectively while the fourth and fifth sections introduce the scope of the research and the research structure

1.1 Background

As Mohamad Salim Zahargier, Nimalathasan Balasundaram, (2011), employees are the most valuable asset in any organization A successful and highly productive business can be achieved by engaging them in improving their performance Not all employees are equal in their working and they have different modes of working in that some have the highest capability regardless of the incentive while others may have an occasional jump-start If they are handled effectively, the result can be greater productivity and increased employee morale Employees in a firm are required to generate a total commitment to desired standards of performance to achieve a competitive advantage and improved performance for sustaining that competitive advantage at least for a prolonged period of time, if not forever

According to Judge & Ferris (1993), perhaps there is no human resources system more important in companies other than performance evaluation and the ratings of employees’ performance represent critical decisions that highly influence a variety of subsequent human resources actions and outcomes

According to General Statistics Office of Vietnam (2007) (citation by McKinsey (2012)), Vietnam’s economy continues to grow strongly, with GDP in 2006 growing 8.2 percent (IMF, 2006) and in 2007 at 8.4% Both the industry and service sectors (which include trade, hospitality and tourism, banking, education, real estate, and consulting services) contributes

40 percent to the total country GDP while the portion for agricultural sector (where 57 percent of the total population is employed) was merely 20 percent At the end of 2005, the population of Vietnam was 83.1 million Seventy percent of this population is living in rural areas versus 30 percent living in urban areas Overall, 95 percent of the country’s population

is in the labor force

To facilitate a transition toward higher productivity operations, Vietnam needs to replace low wage costs with new sources of comparative advantage Though Vietnam has clearly established itself as an attractive investment location for foreign investors, it lags behind many of its Asian peers in overall international competitiveness rankings In the World Economic Forum global competitiveness ranking, 2010-2011, Vietnam’s ranked 50 out of

139 countries Many of the areas showing the largest gaps when compared with other Asian economies are well recognized, and Vietnam has already started to address many of these shortcomings It showed that the employees’ performance of Vietnamese companies have the low efficiency versus other Asian countries That’s a big issue that Vietnamese companies need to solve in the near future in order to have the high competitive with others The Vietnam competitiveness ranking is showed in the Exhibit 1.1

Employees’ performance is an essential part for the success of any organization, and it is affected by number of factors The performance of employees is affected by many factors which come from both inside and outside such as leadership, earning, promotion opportunities, working environment, employee employer relationship, leadership commitment, organizational factors and etc

1.2 Research questions and objectives

This research is to identify, measure factors affecting employees' performance and determine the relationship among them The research questions are presented as:

- Are there identifiable factors affecting employees' performance?

- How is the relationship between these factors and employees' performance? Which will influence employees’ performance the most?

The objectives of this research are to:

- Identify the organizational factors that impact employees’ performance in Vietnamese companies

- Determine the impact of each factor on employees' performance

Exhibit 1.1: Vietnam competitiveness ranking, 2010-2011

Source: World Economic Forum Global Competitiveness Report 2010–11;

McKinsey Global Institute analysis

1.3 Research scope

Vietnamese companies are numerous and of different types However due to the limitations

of data availability, research funds and time, the scope of this research is therefore limited to all kinds of Vietnamese companies in the Southern Area of Vietnam

Respondents of this research include department head, managers, team leaders and supervisors

The employees’ performance will be evaluated by the result at the end of 2011 The research duration is six months

1.4 Research contribution

The contribution of this research is finding the way to improve the employees' performance in Vietnamese companies by focusing on improving the organizational factors defined in measurement scales

1.5 Research structure

This thesis comprises five chapters Chapter 1 named as “Introduction” generally introduces the subject area interest with defined problems, research questions, research objectives, scope

of the research and sources of information to be collected for the research Chapter 2 named

as “Literature Review” summarizes concepts and theories relating to employees’ performance

in previous studies which are linked to this research From such review, basic theories for studying will be synthesized to develop an initial research model and hypotheses used for the research Chapter 3 named as “Research Methodology” introduces and reports the research process together with the analyzed results of pilot survey Chapter 4 named as “Data Analysis” reports the analysis results of data collected from the survey Chapter 5 named as

“Conclusions” discusses the main finding in Chapter 4 the implications of the result, based on which conclusions and recommendations are provided

CHAPTER 2 LITERATURE REVIEW 2.1 Introduction

In this chapter, theoretical background and review on previous studies are presented This Chapter includes three sections The first section is theoretical review relating to critical factors and employees’ performance The second section presents the Research model The last section describes the hypotheses development for this research

2.2 Theoretical review

In this part, theoretical review of employees' performance and organizational factors on previous studies are presented In addition, the relationship between employees' performance and organizational factors is also presented

2.2.1 Employees’ performance

According to Armstrong and Baron (1998), performance management is a strategic and integrated approach to delivering sustained success to organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors It supports the rationale that people and not capital provide organizations with a competitive advantage (Reynolds & Ablett, 1998) The purpose of performance management is to transform the raw potential of human resource into performance by removing intermediate barriers as well as motivating and rejuvenating the human resource (Kandula, 2006) Competitive capacity of organization can be increased by building strong people and effectively managing and developing people (Cabrera & Banache, 1999) which is in essence performance management

According to Kandula (2006) the key to good performance is a strong culture He further maintains that due to difference in organizational culture, same strategies do not yield same results for two organizations in the same industry and in the same location A positive and strong culture can make an average individual perform and achieve brilliantly whereas a negative and weak culture may demotivate an outstanding employee to underperform and end

up with no achievement Therefore organizational culture has an active and direct role in performance management Murphy and Cleveland (1995) believe that research on culture will contribute to the understanding of performance management Magee (2002) contends that

without considering the impact of organizational culture, organizational practices such as performance management could be counterproductive because the two are interdependent and change in one will impact the other

Employees are the most valuable asset in any organization A successful and highly productive business can be achieved by engaging them in improving their performance Not all employees are equal in their working and they have different modes of working in that some have the highest capability regardless of the incentive while others may have an occasional jump-start If they are handled effectively, the result can be greater productivity and increased employee morale Employees in a firm are required to generate a total commitment to desired standards organizational factors performance to achieve a competitive advantage and improved performance for sustaining that competitive advantage at least for a prolonged period of time, if not forever

According to Judge & Ferris (1993), perhaps there is no human resources system more important in organizations other than performance evaluation and the ratings of employees’ performance represent critical decisions that highly influence a variety of subsequent human resources actions and outcomes

Performance is the important term used in the modern organizational structure It has been identified from different meanings According to process view, performance is defined as the conversion of efforts into productivities in order to achieve some particular results

Performance means both behavior and result Behavior emanates from the performer and transforms performance from abstraction into action Not just a means to an end, the behavior

is also an outcome in itself, the product of mental and physical effort applied to the task, which can be judged apart from the result (Armstrong, 2000)

Bates & Holton (1995) have pointed out that performance is a multidimensional construct, the measurement of which varies depending on a variety of factors (Armstrong, 2000) A more comprehensive view of performance is achieved if it is defined as embracing both behavior and outcomes (Armstrong, 2000) Employees’ performance (EP) is an important factor that contributes to improve the outcomes, behavior and traits of the employees It helps

to improve the productivity of the organization

Nickols (2003) and Fort& Voltero (2004) identify similar factor that are closely related and affect provider performance in the workplace They include: clear goals and job expectations,

suitable repertoire, immediate feedback, skills to perform, knowledge of the organizational structure, functional feedback system, sound metal models, sufficient motivation through self-satisfaction and incentives

As Waleed Ahmed Abdel-Razek (2011) mentioned, job performance is one of the most important activities that reflect both the goals and the means necessary to achieve it and represents the specialist efficiency or reaching our the desired level of achievement in that work It is the effort made by the employee within the organization in order to achieve a particular goal The actual results that companies desire objectively measure This study has pointed out the effectiveness of job performance through six elements: planning, goal and objectives, organizing, decision making, individual abilities and characteristics

2.2.2 Organizational factors

According to Mohamad Salim Zahargier & Nimalathasan Balasundaram (2011), there are a number of factors that may be affecting the employees’ performance Each employee may have a different impact from different things at the workplace Their attitude and behavior can play a vital role in their performance Employees do not perform in a vacuum There are

a variety of organizational factors, such as:

2.2.2.1 Organizational culture

Literature on organizational culture is reviewed using sources which specifically address issues relevant to librarians as well as sources from other disciplines The information gathered is ordered thematically and includes investigations into different models used for typologies, the affects organizational culture has on performance, the measurability of organizational culture, and ways in which organizations can manage cultural change Organizational culture was once seen as “how things are done around here” (Drennan, 1992)

The list of variables using for these above factors is summarized in Table 2.1

Table 2.1: List of variables

evaluation-australia/

ontracts/employee-You are effective in managing your own time

You have many problems with prioritization

Assigns priorities exceptionally well http://www.thehealthcaregr

oup.com/pdf/90585.pdf

2 EP2 Goals and

Objectives

Performance goals for my work group are clearly

Questions Clear priorities are established for my

department Accomplishes tasks efficiently Able to complete tasks quicker as the employee gains experience Newly developed

4 EP4 Individual

Abilities

You meet all the requirements of the job

http://www.samplequestion naire.com/employee- evaluation.html

You serve as a role model

The university of Alabama Annual employee performance evaluation You often miss deadlines

http://www.lawdepot.com/c ontracts/employee- evaluation-australia/

You are familiar with the technical requirements of your job

You can initiate, manage and bring to a close a completed project

You are able to correctly use or operate the technology required to do your job

completed, rather than waiting for a manager to give further direction

om/employee-engagement-Everybody is treated fairly in this organization This organization respects its employees The leaders of this organization know what they are doing

The environment in this organization supports a balance between work and personal life

http://www.custominsight.c om/employee-engagement- survey/sample-survey- items.asp

Information and knowledge are shared openly within this organization

http://www.custominsight.c om/employee-engagement- survey/sample-survey- items.asp

I have enough information to do my job well

http://www.opm.gov/surve ys/results/Employee/2011E mployeeSurveyResults.asp

4 TEAM Teamwork

There is emphasis on teamwork in this organization UTS Employee Survey

Questions Management is supportive of its employees http://www.performancepro

grams.com/surveys/What_ Employers-Ask.html

I get the cooperation I need from those outside my department

The people I work with cooperate to get the job done

http://www.opm.gov/surve ys/results/Employee/2011E mployeeSurveyResults.asp

but has since evolved into a facet of management with a robust range of literature affording a far deeper understanding Schein’s definition (1985) remains one of the most often used and can be summed up as the learned product of group experience which affects the behavior of individuals Organizational culture is differentiated from organizational climate in that it is not as overt Organizational culture is also differentiated from organization structure in that structure has more to do with the relationships between individuals in an organization

Whilst many different models exist for the categorization of cultures, the next area to explore

is whether any one culture type is better than any other Early research suggested that strong cultures, or those with widely accepted beliefs within the organization, performed better than those with a lack of shared values (Peter and Waterman, 1982; Pascale and Athos, 1986; Deal and Kennedy, 1982) However, when culture is too strong it can lead to stagnation and a reduced ability to adapt to changes in the environment (Cloke and Goldsmith, 2002) Schein (1985) actually predicts in Organizational Culture and Leadership that the culture of the future would be the one that heavily promoted active learning and training For librarians, before the idea of what constitutes the best culture can even be considered, the idea of what is meant by performance must be addressed Early papers on the link between culture and performance show that the culture of libraries was effectively one without goals (DuMont, 1980) This prompted Martell (1989) to advocate libraries adopting a business model in order

to increase productivity However, a business model is too incongruent since performance for commercial organizations is often so tied to profits For libraries, performance is best related

to service quality Holloway (2004) makes a case for the use of LibQUAL+ or the Balanced Scorecard to measure the service quality, and thus performance, of academic libraries Edgar (2006) is a little more cautious, emphasizing the need for libraries to balance LibQUAL+ results with other factors which affect them uniquely However, one problem concerning culture’s effect on performance remains Even if performance is clearly defined and links are established, organizations do not exist in a vacuum Amidst the overall organizational culture are a series of subcultures and demographic cultures, which can cause members to experience

a limited adherence to the dominant culture (Tsui, 1992)

Organizational culture and performance relation has been examined by many researchers (Ogbonna & Harris, 2000; Rousseau, 1990; Kotter & Heskett, 1992; Marcoulides & Heck, 1993), not much research has been done on organizational culture as a contextual factor of performance management (Magee, 2002) Therefore the second purpose of this paper is to determine the relationship between components of organizational culture and performance

management practices, a pervasive human resource development and management practice This study is indented to fill these gaps

H1: There is a positive relationship between Organizational Culture and Employees’

performance

2.2.2.2 Working Environment

Many enterprises limit their productivity enhancement of employees to the acquisition of skills The type of work environment in which employees operate determines the way in which such enterprises prosper According to Akinyele (2010), about 80% of productivity problems reside in the work environment of organizations Business is full of risks and uncertainties and the ability of any organization to respond successfully to the challenges posed by the present dynamic nature of economic situations will largely depend on how well the organization can effectively and efficiently utilize the human resources at its disposal It

is a generally accepted fact that the success of any business organization will largely depend upon the effective and meaningful utilization of its financial and physical resources The performance of a corporate organization, which determines its survival and growth, depends

to a large extent on the productivity of its workforce Yesufu (2000) asserted that the wealth

of the nation as well as socio-economic well-being of its people depends on the effectiveness and efficiency of its various sub-components However, labour is generally regarded as the most dynamic of all the factors that are employed for the creation of wealth, having the potential to energize and serve as catalyst to all the other resources

Conducive work environment ensures the well-being of employees which invariably will enable them exert themselves to their roles with all vigour that may translate to higher productivity (Akinyele, 2007)

The need to provide a safe work environment for employees has had a long history in human resource management Spector and Beer (1994) acknowledged that work systems cannot only affect commitment, competence, cost effectiveness and congruence but also have long term consequence for workers’ well-being; there are some evidences to indicate that work systems designs may have effects on physical health, mental health and longevity of life itself Conducive work environment ensures the well-being of employees which invariably will enable them exert themselves to their roles with all vigour that may translate to higher productivity (Akinyele, 2007)

Kohun (1992), defines work environment as an entirely which comprises the totality of forces, actions and other influential factors that are currently and, or potentially contending with the employee’s activities and performance Work environment is the sum of the interrelationship that exists within the employees and the employees and the environment in which the employees work Brenner (2004) was of the opinion that “the ability to share knowledge throughout organizations depends on how the work environment is designed to enable organizations to utilize work environment as if it were an asset This helps organizations to improve effectiveness and allow employees to benefit from collective knowledge” In addition, he argued that work environment designed to suit employee’s satisfaction and free flow of exchange of ideas is a better medium of motivating employees towards higher productivity However, work environment when appropriately designed, motivates employees toward higher productivity

Work environment, according to Opperman (2002), is a composite of three major environments via: the technical environment, the human environment and the organizational environment Technical environment refers to tools, equipment, technological infrastructure and other physical or technical elements The technical environment creates elements that enable employees perform their respective responsibilities and activities

sub-The human environment refers to peers, others with whom employees relates, team and work groups, interactional issues, the leadership and management This environment is designed in such a way that encourages informal interaction in the work place so that the opportunity to share knowledge and exchange ideas could be enhanced This is a basis to attain maximum productivity Organizational environment include systems, procedures, practices, values and philosophies Management has control over organizational environment Measurement system where people are rewarded on quantity, hence workers will have little interest in helping those workers who are trying to improve quality Thus, issues of organizational environment influence employee’s productivity

It is generally agreed that the more manager can answer the question of what motivates their employees accurately, the more effective they will be at enhancing performance and advancing the notion of organizational accountability (Chernis & Kane, 2004) Lambart (2005) opines that “labour productivity is rarely measured directly but inferred from changes

in employees’ attitude and behaviour such as organization commitment, organizational citizenship behaviour and job satisfaction” An effective work environment management

entails making work environment attractive, creative, comfortable, satisfactory and motivating to employees so as to give employees a sense of pride and purpose in what they

to transmit Many of problems that occur in an organization are the direct result of people failing to communicate Leaders of organizations who keep everything inside or can’t communicate a message leave individuals to their devices to try and figure out what they may, or may not want This is a failure of leadership and communication (Baldoni, 2003) Faulty communication causes the most problems It leads to confusion and can cause a good plan to fail

The probable future impact on the organization will continue to be detrimental and further distance the relations between line and staff personnel if communication barriers are not identified and alternatives for internal organizational communications cannot be evaluated and implemented In hundreds of surveys at different companies, employees cite poor communications as the greatest source of wasted time, effort and material as well as internal and external conflict (Ladew, 1998, p.101) Organizational mistrust, decreased employee morale, lack of production, and quality of service being provided could all be contributed to ongoing poor internal communications if not corrected or improved upon

H3: There is a positive relationship between Communication and Employees’ performance

2.2.2.4 Teamwork

Teamwork is defined by Scarnati (2001, p 5) “as a cooperative process that allows ordinary people to achieve extraordinary results” Harris & Harris (1996) also explain that a team has a common goal or purpose where team members can develop effective, mutual relationships to achieve team goals Teamwork replies upon individuals working together in a cooperative

environment to achieve common team goals through sharing knowledge and skills The literature consistently highlights that one of the essential elements of a team is its focus toward a common goal and a clear purpose (Fisher, Hunter, & Macrosson, 1997; Johnson & Johnson, 1995, 1999; Parker, 1990; Harris & Harris, 1996) Teams are an integral part of many organizations and should be incorporated as part of the delivery of tertiary units Successful teamwork relies upon synergism existing between all team members creating an environment where they are all willing to contribute and participate in order to promote and nurture a positive, effective team environment Team members must be flexible enough to adapt to cooperative working environments where goals are achieved through collaboration and social interdependence rather than individualized, competitive goals (Luca & Tarricone, 2001)

J Cannon-Bowers et al divide human teamwork into three dimensions: cognitions, skills, and attitudes The cognition or knowledge category includes information about the task such

as a team mission, objectives, norms, problem models, and resources Teamwork skills include behaviors such as adaptability, performance monitoring, leadership, communication patterns, and interpersonal coordination Attitudes measure the participants’ feelings about the team: team cohesion, mutual trust, and importance of teamwork

H4: There is a positive relationship between Teamwork and Employees’ performance

2.2.3 Relationship between organizational factors and employees'

performance

An organization is a set of elements in interaction, organized level and decision making units (Martinelli, 2001) Identification of these elements has always been one of the most important issues facing organizational researchers Richard L.Daft categorized contextual dimension of organization including size, technology, environment, aims, strategy, and culture (Gholampourrad, 2003) There has been a large volume of studies that examine how the fitness between organizational contexts explains variances in organizational performance What is lacking in existing literature is an understanding of the intervening mechanism that explains the path of the influence from organizational context to organizational effectiveness Knowledge management plays a potentially mediating role in connecting organizational context with effectiveness (Zheng et al., 2010) Many researchers have emphasized three major factors for managing knowledge: enablers, processes, and organizational performance Knowledge management enablers (or influencing factors) are organizational mechanism for

fostering knowledge consistently Enablers, in fact, are some organizational elements that influence knowledge management processes Knowledge process can be thought of as a structured coordination for managing knowledge effectively Typically knowledge processes include activities such as creation, sharing, storage, and usage that direst knowledge throughout the organization and the third factor is organizational performance (Lee and Choi, 2003)

Every organization has been established with certain objectives to achieve These objectives can be achieved by utilizing the resources like men, machines, materials and money All these resources are important but out of these the manpower is the most important It plays an important role in performing tasks for accomplishing the goals The question arises that how these resources are utilizes by manpower Further, the business environment is changing drastically The environmental factors are uncontrollable These are beyond control of management of the firms One has to adjust with the external factors to do the business in the market Every environmental factor like social, cultural, legal, political, economic, technology and competition gets changed very fast For effective working the knowledge of these factors is must otherwise the plan will misfire In present situation it is difficult to predict about anything It is uncertain to say that what will happen tomorrow Again the need for highly skilled and dedicated manpower is felt who can give the best output Nowadays the markets are also very competitive and there is cut throat competition For every organization

it is difficult to start, survive, stabilize and excel in the business The firm that gets the advantage over other competitors through their talented and dedicated manpower can take the lead in the market The contribution of employees on job is the most important factor for development and excellence in business The performance of employees on different jobs in close coordination is needed for success of the unit Employees are performing different jobs

in an organization depending upon the nature of the organization They mainly perform tasks like production, storage, manufacturing, transportation, marketing, purchasing, distribution, promotion of business, finance and accounting, human resource, research and public relations All these activities are inter-related to achieve the targets These are to be performed by the employees properly so they can give their best output at the job This will have great impact on the total production, sales, profit, progress and market position of the company in the market Various factors like skills, training, motivation, dedication, welfare, management policies, fringe benefits, salary and packages, promotion, communication etc are responsible to encourage the people to work sincerely and give their best output The

importance of employees’ performance must be understood by the management and sincere efforts must be put in that direction The management of the company taking timely steps in that direction will be in position to develop and motivate the people to do so Finally the company may take the lead the market and grab the opportunities available in the market

In summary, this part presented the theoretical review of employees' performance, organizational factors and the relationship between employees' performance and organizational factors on previous studies are presented

Most previous studies consider that organizational factors should be based on Organizational Culture, Working Environment, Communication and Teamwork Many studies in the field people management have presented list of organizational factors

There is limited research on the strength of the relationship between organizational factors and employees' performance, and the intercorrelations among these factors There are even less analysis on the causal effects between these factors and employees' performance, especially in Vietnamese companies

Based on the theoretical review, there are four hypotheses developed and the research model will be developed and presented in the next part

2.3 Research model

In order to access how the influence of critical factors to the employees’ performance in Vietnamese companies, three factors including Individual Related Factors, Job Related Factors, Organization Related Factors will be used as potential predictors of employees’ performance as presented in Figure 2.1

From the theoretical review, the previous session has introduced the critical factors identified

in previous study This session will present a Research framework that will be used to explore the direct relationship between the critical factors and employees’ performance in Vietnamese companies The contents mentioned below are research hypotheses based on study model To implement the study various dependent, independent and moderating variables will be defined for this model The independent variable is critical factors and the dependent variable is employees’ performance

These four variables have been chosen because we want to see the relationship between them For example, if the critical factors are implemented then does they affect to the employees’

performance To study these four variables, their tools are also identified through which the relationship between the two would be studied It is evident from the existing literature that there are identified variables which influence the employees’ performance The research framework model is mentioned in Figure 2.1

Figure 2.1: Research model

ORGC: Organizational Culture

WENV: Working Environment

COM: Communication

TEAM: Teamwork

Organizational Factors

EP: Employees’ performance

H1+

H2+

H3+

H4+

2.5 Summary

In order to determine the organizational factors that affect the employees' performance, a number of factors have been proposed to be potential predictors These factors are Organizational Culture, Working Environment, Communication and Teamwork The research model that takes into account the direct relationships between the organizational factors and employees' performance was developed

This chapter presented a summary of definitions and perceptions in literature for the concepts

of employees' performance Given there has no previous research conducted to determine the organizational factors or identify the set of criteria used to measure the employees' performance in Vietnamese companies Based on the findings of this chapter on organizational factors, this research will attempt to find out the set of organizational factors and set of employees' performance in Vietnamese companies as well as measure the relationship between them

The research methodology developed to test the hypotheses derived from the proposed research model is presented in the next chapter

CHAPTER 3 RESEARCH METHODOLOGY 3.1 Introduction

This chapter will introduce research methodology that is used to test the Research framework developed in previous session It will present research design, how to generate surveyed questionnaires, how to survey for research data, how to access this data set to know if it is reliable and analyze the data from pilot survey by reliability and factor analysis and how to conduct the final survey to collect the data for analysis

3.2 Research design

Research process includes three steps as illustrated in Figure 3.1

Generation of Items

Pilot survey

Survey and data analysis

Figure 3.1: Research process

Step 1: Generation of items

The purpose of this step is to create a set of draft questionnaires for pilot survey to measure independent and dependent variables which were defined in research model This step is used

to make sure that the initial Research framework, its variables and the concepts regarding the critical factors developed in previous session are suitable with Vietnamese companies

Research

Objectives

Literature Review

In-depth Interviews

Revision First Draft

Questionnaire

Pilot Survey Reliability

Analysis

Factor Analysis

Final Questionnaire

Reliability Analysis

Factor Analysis

Regression Analysis

Official

Survey

Conclusions &

Recommendations

Step 2: Pilot survey

The purpose of pilot survey is to preliminarily test the reliability of the factors used, the logicality and suitability of the questionnaires and see if there should be any modification or improvement needed Reliability analysis was used to test for the consistency of the measurement

The pilot survey is mainly conducted by qualitative method with group discussion technique via the conversations with employees

Step 3: Official survey and Data analysis

In this step, the official questionnaire is finalized following the findings from the pilot survey The official questionnaire is made in both English and Vietnamese version with Likert scale

of 5 points given the targeted respondents are all employees’ levels who should have a deep view on the questions asked The measures are presented in Table 2.1 The measurement scale of indicators is Likert scale from 1 to 5 such as strongly disagree, disagree, neutral, agree, and strongly agree

The questionnaire was designed to study the impact of critical factors on employees’ performance in Vietnamese companies The questionnaire included a total of 20 questions and was designed on Likert scale type from 1 to 5 such as strongly disagree, disagree, neutral, agree, and strongly agree

3.3 Measurement scale

All the factors from the model in this research are original from many previous studies with citing Based on the literature review briefing, the most appreciate measurement scale is a multivariate scale applied for this research

In summary, based on the previous research and after refinement, 20 variables are selected and grouped according to their characteristic, namely: individual related factors, job related factors, organizational related factors and employees’ performance The list of variables and measurement scale using for this research is summarized in Table 3.1

Table 3.1: Measurement scale

Measurement Scale Sources

1 ORGC Organization

al Culture

ORGC 1 The Organization's policies for promotion and

advancement are always fair http://www.custominsight.c

survey/sample-survey- items.asp

om/employee-engagement-ORGC 2 Everybody is treated fairly in this organization ORGC 3 This organization respects its employees

ORGC 4 The leaders of this organization know what they are

doing

2 WENV Working

Environment

WENV 1 This organization has a real interest in the welfare and

satisfaction of those who work here

UTS Employee Survey Questions

WENV 2 I recommend my organization as a good place to work

http://www.opm.gov/survey s/results/Employee/2011Em ployeeSurveyResults.asp

WENV 3 The environment in this organization supports a

balance between work and personal life

http://www.custominsight.c om/employee-engagement- survey/sample-survey- items.asp

3 COM Communicati

on

COM 1 Compared to other organizations, this organization has

useful method of communication

UTS Employee Survey Questions

COM 2 Overall, information in this organization is

communicated well

http://www.performancepro grams.com/surveys/What_ Employers-Ask.html

COM 3 Information and knowledge are shared openly within

this organization

http://www.custominsight.c om/employee-engagement- survey/sample-survey- items.asp

COM 4 I have enough information to do my job well

http://www.opm.gov/survey s/results/Employee/2011Em ployeeSurveyResults.asp

4 TEAM Teamwork

TEAM 1 There is emphasis on teamwork in this organization UTS Employee Survey

Questions TEAM 2 Management is supportive of its employees http://www.performancepro

grams.com/surveys/What_ Employers-Ask.html TEAM 3 I get the cooperation I need from those outside my

department

TEAM 4 The people I work with cooperate to get the job done

http://www.opm.gov/survey s/results/Employee/2011Em ployeeSurveyResults.asp

5 EP Employees’

Performance

EP 1 I believe I am an effective employee

Rego and Cunhan (2008)

EP 2 I am happy with the quality of my work output

EP 3 My manager believes I am an efficient worker

EP 4 My colleagues believe I am a very productive

employee

EP 5 Accomplishes tasks efficiently Able to complete

tasks quicker as the employee gains experience

3.4 Sample size

The sample size is determined according to technique of multi variable analysis Factor analysis and multi regression methods are used for this research In factor analysis, the sample size should be as large as possible with the minimum should be at least five times as many observations as the number of factors to be analyzed and preferably not less than 100

As there are 20 variables used for the factors analysis, the minimum sample size should be

100 (20x5) In addition, for the multi regression model, minimum sample size should be equal to n=50+8m, which m are number of independent variables (Tabachnick and Fidell, 1996) With the initial Research model, there are 3 independent variables; minimum sample size for this should be 170 (50+8x15) In light of the above two requirements, this research choose the biggest sample size Therefore, sample size used for this research should be 170

3.5 Sampling techniques

In quantitative researches, it is believed that if the sample is carefully obtained, it is then possible to generalize the results to the whole population as suggested by The researcher used simple random sampling techniques where for each company, the speaker was contacted first and lists of permanent employees were obtained through which employees in different departments were randomly chosen

3.6 Data collection methods

3.6.1 Primary data collection

The primary data collection method explored the originality of data through gathering information relevant to the study Primary data was obtained from respondents in Vietnamese companies By using of the questionnaires and interview manuals, the research gathered data from the respondents which in fact were the primary concern of this survey de sign approach

3.6.2 Secondary data collection

Secondary data collection explored methods supplementary to the above method where data was obtained from Vietnamese companies records (obtained from heads of various departments and speakers), dissertations, text books, the internet and other materials (such as journals, newspapers, etc.) as found useful to the study This kind of data collection method was also important to the study especially in the literature review and session five of this study

3.7 Data quality control

This section was important in assuring the validity and reliability of the instruments and thus controlling data generated through questionnaires and interviews

3.7.1 Validity

After collecting data from main survey, the Exploratory Factor Analysis (EFA) method was applied to explore the inter relationship between the variables

· Barlett’s test was smaller 0.05 (p<0.05)

· The KMO index was greater than 0.6 (the range from 0 to 1)

3.7.2 Reliability

To assess the internal consistency of the data used for the survey, Cronbach’s alpha, and the item-to-total Correlation coefficients will be used to reject the inappropriate item The formula for the standardized Cronbach’s alpha is presented in Formula 3.1 In that, N is equal

to the number of items, c-bar is the average inter-item covariance among the items and v-bar equals the average variance From this formula, if increasing the number of items, alpha will

be increased Additionally, alpha will be low if the average inter-item correlation is low Conversely, Cronbach’s alpha will increase if the average inter-item correlation increases In most Social Science research situations, Cronbach’s alpha of 0.60 or higher is considered

“acceptable”

Formula 3.1: Cronbach’s alpha coefficient

3.8 Data analysis method

The technique used to analyze data was by use of SPSS (statistical package for social scientists) however personal coding and categorizing data was done manually Data analysis was conducted on respondents’ data in two perspectives: Descriptive data analysis and inferential data analysis Descriptive statistics provides us with the techniques of numerically and graphically presenting information that gives an overall picture of the data collected The researcher used Pearson’s correlation co-efficient calculation after data was aggregated to turn categorical data to numerical representation that required numerical methods from such,

descriptive statistics, frequency tables, graphics, and correlation Tables Were developed to help describe the data gathered Inferential statistics were obtained and data was present in descriptive statistics of each objective where percentages were used to infer to the data collected Techniques were applied such as histogram curves, to numerical data making inferences or predictions to the population based on data collected from only part of the population This meant that the researcher drew generalizations based on authentic data coupled with interviews (qualitative data) and personal observations made by the researcher

3.9 Summary

This chapter presented the research methodology for conducting the study There are three main phases of the study The first phase was conducted via literature review and interviews The purpose of this phase was to assess, on a preliminary basis, the content and applicability

of each measure was specified based on the literature Also, the interviews helped identify key informants for the research Second, a pilot survey was conducted with 34 potential respondents came from Vietnamese companies in Ho Chi Minh City, to refine the measures Most of the constructs used were measured by multiple-items and were refined via reliability analysis (item-total correlation and Cronbach’s alpha) and factor analysis Modification of the measures after the refining process was also undertaken The results of the preliminary assessment revealed that the scales used to measure the theoretical constructs in the study had acceptable levels of reliability The next chapters will present the data analysis of main survey and explain the statistical results of the hypothesis testing

CHAPTER 4 DATA ANALYSIS 4.1 Introduction

This chapter will present the assessment of measurement scales and result of hypotheses testing about organizational factors on employees’ performance in Vietnamese companies in HCMC The content of this chapter is as follows:

- Pilot testing

- Sample descriptive statistics

- Assessment and refinement of measurement scale

In this part, the measurement scales are assessed and refined by Cronbach’s alpha to test the reliability of measurement scales

The Cronbach’s alpha test is carried out in order to test the reliability of the measurement scales The condition of each scales are over 0.6 is acceptable for the reliability of them Besides, in order to increase the Cronbach’s alpha of the scales, the variables which the item-total correlation are smaller than 0.3 are considered to be deleted

Reliability of Organizational Culture

As the result of Cronbach’s Alpha of Organizational Culture is shown in the Table 4.1 above,

it is (0.816) which is larger than 0.6, and all the Corrected Item-Total Correlation in the Table 4.1 are larger than 0.3 Therefore, these variables are accepted for Exploratory Factor Analysis (EFA) later

Table 4.1: Reliability analysis of pilot survey

Variables Scale Mean if

Item Deleted

Scale Variance

if Item Deleted

Corrected Total Correlation

Reliability of Working Environment

As the result of Cronbach’s Alpha of Working Environment is shown in the Table 4.1 above,

it is (0.722) which is larger than 0.6, and all the Corrected Item-Total Correlation in the Table 4.1 are larger than 0.3 Therefore, these variables are accepted for Exploratory Factor

Analysis (EFA) later

Reliability of Communication

As the result of Cronbach’s Alpha of Working Environment is shown in the Table 4.1 above,

it is (0.795) which is larger than 0.6, and all the Corrected Item-Total Correlation in the Table 4.1 are larger than 0.3 Therefore, these variables are accepted for Exploratory Factor

Analysis (EFA) later

Reliability of Teamwork

As the result of Cronbach’s Alpha of Team Work is shown in the Table 4.1 above, it is

(0.739) which is larger than 0.6, and all the Corrected Item-Total Correlation in the Table 4.1 are larger than 0.3 Therefore, these variables are accepted for Exploratory Factor Analysis

(EFA) later

Reliability of Employees' Performance

As the result of Cronbach’s Alpha of Employee’s Performance is shown in the Table 4.1 above, it is (0.865) which is larger than 0.6, and all the Corrected Item-Total Correlation in the Table 4.1 are larger than 0.3 Therefore, these variables are accepted for Exploratory

Factor Analysis (EFA) later

With all the results above, there was the high reliability, and the pilot testing had a very good result Therefore, the author can continue with the official survey