Impact of rewards management system on employees job performance through work motivation a study in companies in ho chi minh city

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyen Thi Ngoc Suong IMPACT OF REWARDS MANAGEMENT SYSTEM ON EMPLOYEE'S JOB PERFORMANCE THROUGH WORK MOTIVATION: A STUDY IN COMPANIES IN HO CHI MINH CITY MASTER OF BUSINESS (Honours) Ho Chi Minh City - Year 2014 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyen Thi Ngoc Suong IMPACT OF REWARDS MANAGEMENT SYSTEM ON EMPLOYEE'S JOB PERFORMANCE THROUGH WORK MOTIVATION: A STUDY IN COMPANIES IN HO CHI MINH CITY ID: 22120069 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr TRAN HA MINH QUAN Ho Chi Minh City - Year 2014 Page |1 ACKNOWLEDGEMENT I would like to express my sincere appreciation and gratitude to the people who supported and provided me necessary encouragement to complete the thesis To my supervisor, Dr Tran Ha Minh Quan for his kindly continuous support, guidance, advise and correction of my thesis To colleagues and staffs who willingly participated in the study and provided necessary data for the study to be completed Lastly to my partner, family and friends who encouraged and believed in me Page |2 ABSTRACT Nowaday’s all firms or business entities are facing so many issues related to employee’s job performance and employee’s work motivation Getting people feel motivated to their best work, is always one of the most challenges of managers in any organization And without motivation employees will not put up their best and the companys performance would be less efficient especially in developing countries where working conditions are unattractive As rewards have much impact on employees, which increase the level of job performance, this study was conducted to is to find out "Impact of rewards management system on employee’s job performance through work motivation" in companies in Ho Chi Minh City With the analysis of data collected through Questionnaires distributed by respondents, this study indicates that there is a positive relationship of four mainly focused factors: pay factor, benefits, promotion and recognition of rewards management system, motivation and job performance of employees Keywords: impact, rewards, rewards management system, work motivation, job performance Page |3 TABLE OF CONTENTS Contents ACKNOWLEDGEMENT ABSTRACT TABLE OF CONTENTS Chapter I INTRODUCTION 1.1 Research background 1.2 Management problem 1.3 Research gap 1.4 Research objective 1.5 Research question 1.6 Research significance 1.7 Research scope 1.8 Research structure CHAPTER LITERATURE REVIEW 10 2.1 Motivation 10 2.2 Theories of motivation 11 2.3 Total rewards management system 15 2.4 Employee job performance 17 2.5 Relationship among rewards management system, motivation and employee’s job performance 18 2.6 Hypotheses 18 CHAPTER RESEARCH METHODOLOGY 23 Page |4 3.1 Research design 23 3.2 Data source and collection method 23 3.3 Measurement scale 24 3.4 Sampling design 26 3.5 Data analysis 26 CHAPTER DATA ANALYSIS 29 4.1 Descriptive statistics of sample 29 4.2 Measurement scale 30 4.3 Exploratory Factor Analysis (EFA) 31 4.4 Correlation Analysis 36 4.5 Regression Analysis 38 4.5.1 Regression assumption checking 38 4.5.2 Hypothesis testing 40 4.6 Analysis of Variance (ANOVA) 44 CHAPTER CONCLUSION AND RECOMMENDATION 47 5.1 Conclusion 47 5.2 Recommendations 48 5.3 Limitations 49 REFERENCES 50 APPENDIX 55 Page |5 Chapter I INTRODUCTION This chapter represents about introduction of the research which includes research background, management problem, gap, objectives, questions significance, scope and structure of the research 1.1 Research background Nowadays, it is considered that human resource is the most important factor leading to the success or failure of a business all over the world, especially in Vietnam Development of human resource is one of the most important works in the development strategy in any organization A company can have a modern technology, good quality of service, and even good infrastructure, etc but it may hardly survive and build competitive advantages in the long term period if lacking of labor force doing work effectively As Lawler (2003) said, the way that people are treated increasingly determines whether an organization will prosper or even survive An effective organization has to make sure that there is a strong cooperation and satisfaction among employees And in order to make employee perform their best in the organization, there is a need of effective motivation at various employee’s levels (Bedeian, 1993) Motivation is a process that energizes, directs, arouses and sustains the behavior and performance of the employees (Luthans, 1998) Thus, motivation is the process that stimulates the employees to put their full efforts in order to achieve a desired task (Ishfaq Ahmed, 2011) And one considerable way to make employees motivated and perform the best in their job is using rewards management system (Deeprose, 1994) Because, the rewards have major impact on organizations capability to catch, retain and motivate high potential employees (Fay and Thompson, 2001) 1.2 Management problem As the largest commercial and economic center of Vietnam, the economic activities of Ho Chi Minh City are always vibrant, and strongly attractive for foreign investments The economy in this city has grown at a rate of approximately 10% per year Page |6 of GDP each year However, there is a fact that, in the current context of global economic crisis, many companies in Ho Chi Minh City have to think about how to survive themselves and where to make necessary cuts so that the business will survive To the cuts, they have to reduce staffs, but also keep core employees stay during the recession In a meanwhile, there is always a fierce competition among companies to attract employees, especially those who are skillful and have good experiences through motivational programs That leads to difficulties of unstable human resource of a company when employees try to jump to other places where they think have better benefit and working mode like Vansteenkiste (2005) used to say: "Today employees are involved in their working activities which are for their benefits and feel intrinsic motivation in their behaviors as their activities are enjoyable and satisfactory" Facing such situation, the big question for management of most companies in Ho Chi Minh City is how to make employees motivated to work most productively? It is really a big problem that any managers and leaders in Ho Chi Minh City concern about 1.3 Research gap As a motivational method, rewards management system is being applied in many companies located in Ho Chi Minh City, especially those which have a big capital invested from abroad However, should the manager use financial aspects like bonuses, higher payrolls, pensions, sick allowances, and risk payments, etc as motivators in order to enhance employee's job performance? If financial motivation has been failed, which aspect will come? While most managers tend to believe that they can adequately motivate their workers by offering rewards such as higher pay or bonuses, money may not work as a motivation for all people because different people will act in different ways (Armstrong & Stephens, 2005) In fact, there are only few employees who truly contribute their best to the company but they have been just treated equivalently to those who work less effectively And some of employees feel demotivated when benefits of the company have been suddenly decreased due to the tough economic situation Hence, it leads to the less motivation on employees (Hai Anh, 2013) It means the important point is how to Page |7 recognize which kind of rewards should be applied for which kind of employee Undoubtedly, employees with different attitudes, behaviors, experiences, they need different way to promote their creativity and capacity as well Therefore, in order to motivate an employee so that he can perform his best in the job, it requires a flexible rewards system Although there are many studies about employee’s motivation and job performance in Viet Nam context, there is no official study mentioning about how to apply rewards management system effectively for various kinds of employees so that they all can be motivated This study is try to fulfill this gap by re-measuring the relationship as well as impact of rewards management system on employee’s performance with the mediating role of motivation, focusing on four main factors of rewards named pay factor, benefits, promotion and recognition 1.4 Research objective As a consequence of above issue, objective of the study is to investigate the impact of rewards management system on employee’s performance with the mediating role of motivation then provides the support to management level on how to apply rewards management system effectively 1.5 Research question The research will address the following specific questions: Is there any relationship between rewards management system, employee's work motivation and job performance? How does rewards management system impact on work motivation? How does work motivation impact on employee’s job performance? How to apply rewards management system effectively? 1.6 Research significance In this changing world, employee’s motivation and job performance play important roles in the development of a company Therefore, this study tries to find out the answers of research questions and basing on that helps companies located in Ho Chi Page |8 Minh City could approach the effective rewards management system which would enable their employees motivated to show the best job performance 1.7 Research scope This study is limited to research on impact of rewards management system on employee’s performance with the mediating role of motivation in companies in Ho Chi Minh City To be convenient, and directly accessible to the objective, this study aims to employees who are currently working in companies in Ho Chi Minh City as the respondents for the questionnaire survey The questionnaire is distributed by respondents within July, 2014 The study will be ended by September 2014 1.8 Research structure The structure is organized with five parts The first part is about the introduction of the study The second one is an integration of literature and hypotheses The third is the discussion on research method Following that, the data analysis process and its findings are presented in the next parts And, conclusion of the research is consisting in the last part Chapter provides overview of research background, management problem that companies in Ho Chi Minh City are facing As a result, research gap, research objectives, significances as well as research scope and research structure are identified It provides a brief insight into the study Chapter provides understanding of rewards management system, motivation and employee’s job performance This chapter provides an insight into these concepts by focusing on previous research in this area and presents reviewed literature relevant to this study After that, hypotheses of the research are mentioned Chapter describes the research design which is utilized Specifically, the chapter describes the sample of the study, measurement approached, how to follow to collect the data, and the technique used for data analysis P a g e | 63 Component Analysis a components extracted 2.2 Job performance KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Approx Chi-Square Df Sig .705 282.033 000 Communalities Initial Extraction PER1 1.000 753 PER2 1.000 763 PER3 1.000 858 Extraction Method: Principal Component Analysis Total Variance Explained Component Initial Eigenvalues % of Total Variance Cumulative % 2.375 79.158 79.158 403 13.440 222 7.402 Extraction Method: Principal Component Analysis Component Matrixa Component PER1 PER2 PER3 Extraction Method: Principal Component Analysis a components extracted .868 874 926 92.598 100.000 Extraction Sums of Squared Loadings % of Total Variance Cumulative % 2.375 79.158 79.158 P a g e | 64 APPENDIX C REGRESSION ANALYSIS Regression Analysis with dependent variable: Motivation Variables Entered/Removed(b) Model Variables Entered Variables Removed M_REG, M_BEN, M_PRO, M_PAY(a) a All requested variables entered b Dependent Variable: M_MOT Method Enter Model Summary(b) Model R R Square 768(a) 0.59 Adjusted R Square Std Error of the Estimate 0.581 0.59915 a Predictors: (Constant), M_REG, M_BEN, M_PRO, M_PAY b Dependent Variable: M_MOT ANOVA(b) Sum of df Squares Model Regression 92.942 Residual 64.617 180 Total 157.559 184 a Predictors: (Constant), M_REG, M_BEN, M_PRO, M_PAY b Dependent Variable: M_MOT Coefficients(a) Mean Square 23.235 0.359 F 64.725 Sig .000(a) P a g e | 65 Unstandardize d Coefficients Model Std Error B (Constant) -0.431 M_PAY 0.31 M_BEN 0.243 M_PRO 0.24 M_REG 0.247 a Dependent Variable: M_MOT Model Stand ardize d Coeffi cients Dimensio n Eigen value 4.904 0.033 0.026 0.021 0.017 a Dependent Variable: M_MOT t Collinearity Statistics Sig Toleran ce Beta 0.25 0.073 0.062 0.068 0.069 0.29 0.219 0.228 0.221 -1.725 4.271 3.895 3.528 3.587 0.086 0 0.001 VIF 0.496 0.718 0.546 0.602 2.018 1.393 1.833 1.661 Collinearity Diagnostics(a) Variance Proportions Conditi (Con on M_PA M_PR stant M_BEN Index Y O ) 0 0 12.166 0.02 0.93 0.05 13.857 0.88 0.16 0.02 0.09 15.359 0.07 0.02 0.03 0.38 16.987 0.04 0.8 0.02 0.49 M_REG 0.11 0.8 0.09 Residuals Statistics(a) Minimum Maximum Std Deviation Mean N Predicted Value Residual 0.6074 -1.97781 4.6234 1.62965 3.4959 0.71072 0.59261 185 185 Std Predicted Value -4.064 1.586 185 2.72 0.989 185 Std Residual -3.301 a Dependent Variable: M_MOT P a g e | 66 P a g e | 67 Regression Analysis with dependent: Job Performance Variables Entered/Removeda Variables Variables Model Entered Removed Method M_MOTb Enter a Dependent Variable: M_PER b All requested variables entered Model Summaryb Adjuste dR Model R R Square Square 614a 377 373 a Predictors: (Constant), M_MOT b Dependent Variable: M_PER Std Error of the Estimate 74419 ANOVAa Model Regressio n Residual Sum of Squares 61.268 101.348 Mean Square 61.268 183 554 df F 110.630 Sig .000b P a g e | 68 Total 162.616 a Dependent Variable: M_PER b Predictors: (Constant), M_MOT 184 Coefficientsa Unstandardize d Coefficients Std B Error 1.26 214 624 059 Model (Consta nt) M_MO T a Dependent Variable: M_PER Standar dized Coeffici ents Beta 614 t 5.91 10.5 18 Sig .000 000 Correlations Zero- Parti order al Part 614 Collinearity Diagnosticsa Variance Proportions Conditi Eigenval on M_MO Model ue Index (Constant) T 1 1.967 1.000 02 02 033 7.706 98 98 a Dependent Variable: M_PER Residuals Statisticsa Maximu m Mean 4.3848 3.4468 Minimum Predicte 1.8904 d Value Residua -3.22886 3.10959 l Std -2.697 1.625 Predicte d Value Std -4.339 4.179 Residua l a Dependent Variable: M_PER Std Deviation 57704 N 185 00000 74216 185 000 1.000 185 000 997 185 614 614 Collinearity Statistics Toler ance VIF 1.00 1.00 P a g e | 69 P a g e | 70 P a g e | 71 APPENDIX D QUESTIONNAIRE Questionnaire in English QUESTIONNAIRE IMPACT OF REWARDS MANAGEMENT SYSTEM ON EMPLOYEE’S JOB PEFORMANCE WITH THE MEDIATING ROLE OF WORK MOTIVATION: A sutdy in companies in Ho Chi Minh City Dear Colleague, I am in the process of completing my Master's degree in ISB institute of University of Economy of Ho Chi Minh City I have to conduct research for my thesis with the topic of "Impact of rewards management system on employee’s job performance with the mediating role of work motivation: A study in companies in Ho Chi Minh City" The aim of the study is to determine whether four factors of rewards: pay, benefits, promotion and recognition have an impact on employee’s job performance through work motivation Please be assured that your response will be treated as confidential Thank you for your kind co-operation Yours sincerely BIOGRAPHICAL INFORMATION Gender o Male o Female Marital Status o Single o Married Age o 22 –30 years o 31 – 40 years P a g e | 72 o 41 – 50 years Education o High school o University o Posted graduated Job Classification o o o o Staff Specialist Manager/Leader Other What is your company that you are working for? At present, which department that you are belonging to? How long have you been employed at this company? o o o o o Less than year year – years years – years years – 10 years > 10 years QUESTIONNAIRE Please think about the work you and express the degree of your agreement with statements given below (by circling the number): Strongly disagree Disagree Not sure Agree Strongly agree P a g e | 73 Pay factor My salary is satisfactory in relation to what I I earn the same as or more that other people in a similar job 5 The basis of payment, for example overtime payment, is reasonable Salary increases are decided on a fair manner 5 The benefits we receive are as good as most other organizations offer The benefit package we have is equitable There are benefits we have which we should have 1 2 3 4 5 12 I am praised regularly for my work 13 I receive constructive criticism about my work 5 14 I get credit for what I 15 I am told that I am making progress 5 1 2 3 4 5 18 I am satisfied with the amount of free time activity that my employer arranges 5 1 2 3 4 5 Benefits I am satisfied with the benefits I receive Promotion I will be promoted within the next two years 10 Everyone has an equal chance to be promoted 11 Staffs are promoted in a fair and honest way Recognition Motivation 16 My employer encourages me to work 17 I am satisfied with my salary 19 I get enough feedback from my employer Job performance 20 I believe I am an effective employee 21 I am happy with the quality of my work output P a g e | 74 22 Accomplishes tasks efficiently Able to complete tasks quicker as the employee gains experience Questionnaire in Vietnamese BẢNG KHẢO SÁT TÁC ĐỘNG CỦA HỆ THỐNG QUẢN LÝ THƯỞNG LÊN HIỆU SUẤT CÔNG VIỆC CỦA NHÂN VIÊN VỚI VAI TRÒ TRUNG GIAN CỦA ĐỘNG CƠ LÀM VIỆC: Một so sánh lĩnh vực công nghệ cao công nghệ thấp thành phố Hồ Chí Minh Chào anh/chị, Tơi q trình hồn thành luận văn tốt nghiệp thạc sĩ viện ISB, trường đại học Kinh tế, thành phố Hồ Chí Minh Chủ đề nghiên cứu tơi "TÁC ĐỘNG CỦA HỆ THỐNG QUẢN LÝ THƯỞNG LÊN HIỆU SUẤT CƠNG VIỆC CỦA NHÂN VIÊN VỚI VAI TRỊ TRUNG GIAN CỦA ĐỘNG CƠ LÀM VIỆC: Nghiên cứu lĩnh vực công nghệ cao công nghệ thấp thành phố Hồ Chí Minh" với mục tiêu nhằm xác định liệu bốn nhân tố thưởng: việc chi trả, chế độ đãi ngộ, thăng tiến công nhận lực có tác động đến hiệu suất cơng việc nhân viên thông qua động lực làm việc hay không Hãy yên tâm phản hồi anh/chị giữ bí mật Xin cảm ơn hợp tác anh/ chị THƠNG TIN CÁ NHÂN Giới tính o Nam o Nữ Tình trạng nhân o Độc thân o Kết hôn P a g e | 75 Tuổi o 22 –30 tuổi o 31 – 40 tuổi o 41 – 50 tuổi Trình độ học vấn o Trung học phổ thông o Đại học o Sau đại học Nghề nghiệp o o o o o Nhân viên Chuyên gia Giám đốc Thứ ký/ hành Khác:…………………………… Anh/chị làm việc lĩnh vực nào? o Công nghệ cao o Công nghệ thấp ( sản xuất, ) Công ty anh/chị làm việc? Hiện tại, anh/chị làm việc phận nào? Anh/chị làm việc công ty bao lâu? o o o o o o < năm – năm – 10 năm 11 – 15 năm 16 – 20 năm > 21 năm BẢNG CÂU HỎI Anh/chị vui lòng suy nghĩ công việc cho biết mức độ đồng ý với câu phát biểu bênh (bằng cách khoanh trịn số) Hồn tồn khơng đồng ý Khơng đồng ý Đồng ý Hồn tồn đồng ý Khơng P a g e | 76 Nhân tố chi trả 23 Lương tơi thoả đáng so với tơi làm 24 Tôi kiếm hay nhiều người khác công việc tương tự 25 Tiền làm ngồi tốn hợp lý 26 Tăng lương định cách công 5 1 2 3 4 5 Chế độ đãi ngộ 27 Tôi thoả mãn với chế độ đãi ngộ mà nhận 28 Chế độ đãi ngộ nhận tốt hầu hết tổ chức khác cung cấp 29 Chúng tơi có chế độ đãi ngộ hợp lý 30 Chúng nhận đãi ngộ mà chúng tơi nên có Sự thăng tiến 31 Tôi thăng tiến hai năm tới 32 Mọi người có hội thăng tiến 33 Nhân viên thăng tiến cách công chân thực 5 5 1 2 3 4 5 5 1 2 3 4 5 1 2 3 4 5 5 5 Sự công nhận lực 34 Tơi thường xun khen cho cơng việc 35 Tơi nhận lời phê bình mang tính xây dựng cơng việc 36 Tơi cơng nhận cho tơi làm 37 Tơi cho tiến Động lực làm việc 38 Cơng ty khuyến khích tơi làm việc 39 Tơi thoả mãn với mức lương 40 Tơi thoả mãn với hoạt động rảnh rỗi mà công ty xếp 41 Tôi nhận đánh giá từ ông chủ Hiệu suất cơng việc 42 Tơi tin tưởng nhân viên làm việc hiệu 43 Tơi hài lịng với chất lượng cơng việc tơi 44 Tơi hịan thành cơng việc cách hiệu hồnh thành nhanh nhân viên có kinh nghiệm P a g e | 77 ... employee''s work motivation and job performance? How does rewards management system impact on work motivation? How does work motivation impact on employee’s job performance? How to apply rewards management. .. really a big problem that any managers and leaders in Ho Chi Minh City concern about 1.3 Research gap As a motivational method, rewards management system is being applied in many companies located... promotion and recognition of rewards management system, motivation and job performance of employees Keywords: impact, rewards, rewards management system, work motivation, job performance Page |3 TABLE