Key factors affecting employee satisfaction in the banking industry evidences from ho chi minh city

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business -HA NGUYEN MINH TAM KEY FACTORS AFFECTING EMPLOYEE SATISFACTION IN THE BANKING INDUSTRY – EVIDENCES FROM HO CHI MINH CITY MASTER OF BUSINESS (Honours) SUPERVISOR: DR DINH THAI HOANG Ho Chi Minh City - 2014 TABLE OF CONTENTS ACKNOWLEDGEMENT ABSTRACT LIST OF TABLES LIST OF FIGURES CHAPTER 1: INTRODUCTION 1.1 Research background 1.2 Research problem 1.3 Research objectives 10 1.4 Scope of study 10 1.5 Thesis structure 11 CHAPTER 2: LITERATURE REVIEW AND HYPOTHESES 12 2.1 Employee satisfaction 12 2.1.1 Definition of employee satisfaction 12 2.1.2 Employee satisfaction and its dimensions 13 2.2 Previous research about employee satisfaction and identifying hypotheses in this study 14 2.2.1 Salary and Benefits 14 2.2.2 Work environment 15 2.2.3 Management system 16 2.2.4 Career progression 17 2.2.5 Supervisor support 18 2.2.6 Moderated variable: Bank type 19 2.3 The research model 20 CHAPTER 3: RESEARCH METHODOLOGY 21 3.1 Research process 21 3.2 Measurement scale 22 3.3 Qualitative pilot research 24 3.4 Quantitive research 25 3.4.1 Sample size 25 3.4.2 Data collection 26 3.4.3 Data analysis method 26 3.5 Conclusion 29 CHAPTER 4: DATA ANALYSIS 30 4.1 Sample descriptive statistics 30 4.2 The reliability test: The Cronbach’s Alpha Test 31 4.3 Exploratory Factor Analysis 33 4.4 Hypothesis testing 35 4.4.1 Pearson Correlation Coefficient 35 4.4.2 Testing assumptions of multiple regression 35 4.4.3 Regression analysis 36 4.4.4 Chow Test for moderating variable 40 4.5 Discussion of research findings 45 4.6 Conclusion 46 CHAPTER 5: CONCLUSIONS, IMPLICATIONS AND LIMITATIONS 48 5.1 Conclusions 48 5.2 Managerial Implications 49 5.3 Limitations and recommendations for future research 51 REFERENCES 52 APPENDIX 58 ACKNOWLEDGEMENT First of all, I would like to express my sincere gratitude to my supervisor Dr Dinh Thai Hoang, who offered his continuous support and useful advices throughout the course of this thesis His guidance helps me over the time of research and writing this master thesis Secondly, I would like to thank the ISB Research Committee for their encouragement and valuable comments Last but not least, I am thankful to all my colleagues, friends for the consultation and support during my research process ABSTRACT This study aims to determine the different impacts of five independent variables (Salary & Benefits, Work environment, Management system, Career progression and Supervisor support) on dependent variable, employee satisfaction in the Vietnamese banking industry, and explores the moderating role of the bank type variable on these relationships A survey was conducted by utilizing a sample of 171 employees working in both local and foreign banks in Ho Chi Minh City Multiple regression and Chow Test were used to analyze these impacts on employee satisfaction as well as compare those effects between two groups The result indicates that all determinants which are Salary & Benefits, Work environment, Management system, Career progression and Supervisor support positively influence employee satisfaction Career progression and work environment are found to be the most important factors Furthermore, the analysis results also support that the bank type moderates the relationship between these factors and employee satisfaction Accordingly, in the local bank type, career progression still has the strongest effect on employee satisfaction, whereas, work environment has the highest impact on employee satisfaction in the foreign bank type Based on the statistical results, managerial implications have been discussed and recommendations are provided to enhance the employee satisfaction in the banking industry in Ho Chi Minh City Keywords: Employee satisfaction, salary & benefits, work environment, management system, career progression, supervisor support LIST OF TABLES Table 3.1: Measurement scale 22 Table 4.1: Descriptive Statistics 30 Table 4.2 Reliability Statistics of Salary & Benefits variable 68 Table 4.3 Reliability Statistics of Work environment variable 68 Table 4.4 Reliability Statistics of Management system variable 69 Table 4.5 Reliability Statistics of Career progression variable 70 Table 4.6 Reliability Statistics of Supervisor support variable 70 Table 4.7 Reliability Statistics of Employee Satisfaction variable 71 Table 4.8: KMO and Bartlett’s Test 33 Table 4.9: Total Variance Explained 72 Table 4.10: Rotated Component Matrix 73 Table 4.11: KMO and Bartlett’s Test for employee satisfaction 34 Table 4.12: Total Variance Explained for employee satisfaction 34 Table 4.13: Pearson Correlation Coefficient 74 Table 4.14: Coefficients 75 Table 4.15: Variables Entered/Removed 36 Table 4.16: Regression analysis 37 Table 4.17: Hypothesis testing results 38 Table 4.18: The summary of hypotheses testing results 39 Table 4.19: Regression analysis for local bank 41 Table 4.20: Coefficients (local bank) 42 Table 4.21: Regression analysis for foreign bank 43 Table 4.22: Coefficients (foreign bank) 43 Table 4.23: Differences of impact of determinants on employee satisfaction by bank type 44 LIST OF FIGURES Figure 2.1: Research model 20 Figure 3.1: Research process 21 Chapter INTRODUCTION This chapter provides background information on the nature of the present study and its objectives It consists of four sections The first section introduces the background of the research, the second and third part present the research problem, and the final section present the scope of study 1.1 Research background In present, along with the globalization, increasingly competitive markets, organizations are forced to offer their best products and services to customers Therefore, delivering the premium service quality plays a critical role on the service providers’ success and survival In addition, some papers point that high service quality results in customer satisfaction and loyalty, greater willingness to recommend to someone else, decrease in complaints (Bitner, 1990; Danaher, 1997; Headley and Miller, 1993) With regard to such a service business line as banking employees are the service providers in the banks The performance of a bank depends not on the various services/products it launches, but on the employees who provide those services to the customers In order to enhance the productivity and profitability of the bank, the performance of employee should be considered Therefore, huge interest has been gained by organizations as well as researcher to examine factors that foster employee satisfaction and it and became a critical issue within the last two decades (Matzler and Renzl, 2007) In service industry, specifically the banking sector, service employees are often representatives of the whole bank and are vital to sharping customer’s perception of service quality (Hartline and Ferrell, 1996) Business dictionary defined bank as an establishment authorized by a government, act as a financial intermediary to channel those who have capital surpluses to those who have capital deficits Bank also provides a variety of services such as payments and collections, funds transferring and foreign exchange dealing Take a closer look at the Vietnam economy, banking industry is the heart of the economy and is at growth stage of its cycle life According to the report of VietinbankSc, the industry’s contribution to the economy grew from 2008 to 2012 In just a few years recently, the whole banking industry has been developed remarkably and plays a significant role in Vietnamese economic structure As of 2013, the whole banking system includes: state-owned commercial banks, 35 commercial banks, fully foreign-owned banks, 11 foreign banks have investment in Vietnamese banks, 54 foreign bank branches, 04 joint venture banks, 17 financial firms, 12 financial leasing companies and nearly 1,100 credit funds The appearance of a lot banks makes the banking industry in Vietnam intensively competitive, each bank tries its best to set up the wide network branches that leads to the increase in the number of bankers 1.2 Research problem A global economic crisis in 2008 has affected negatively the entire Vietnamese economy as well as the banking industry As the report of VietinbankSc in November 2013, over 60% enterprises reported negative net income and the profit after tax of commercial banking industry in Vietnam declining from VND47 trillion to VND36 trillion (as of 2012) In 2012-2013, the State bank of Viet Nam restructured the banking industry by making a series of large-scale M&A deals of nine commercial banks because of their weak operation and management (SCB, Ficombank, TinNghiaBank, Habubank, Tienphongbank, GP Bank, Navibank, TrustBank and Western Bank) Besides, the other banks have suffered from the downtrend of economy and forced to cut expenses by dismissing employees, salary’s reduction… Based on the report of Vietnam News in May 2014, Exim bank has slashed nearly 500 workers and cut the salary for employees by 31.65% in the first quarter of this year DongA bank laid off 168 employees as well as SHB also dismissed off 100 jobs in this period Appendix B: Questionnaire (in English) Dear participants, I am a member of Master of Business Class, a Master Program in English of University of Economics Ho Chi Minh city At the present, I have been doing a research to identify some factors that impact on employee satisfaction in the banking industry Participant in this survey is voluntary and no individual data will be reported Please indicate the extent of your agreement or disagreement with each statement by circling a number from to Rating scale: Strongly disagree Strongly agree Salary & Benefits My company has good salaries systems My company has good retirement systems I feel that my job is secure I am satisfied with amount of health care paid for I am satisfied with amount of vacation I received 7 for my benefit package Work environment I am provided materials & equipment to job well My physical working conditions are good Provision of educative and training environment Provision of abundant resources & advanced information Management system 10 My company has fair promotion systems 11 My company has good management systems 61 12 My company has a clear system of rewards and penalties 13 My company has smooth communication channels 14 Provision of high quality service processes I have a clearly established career path at this Career progression 15 company 16 I have opportunities to learn & grow 17 I have achieved or I will achieve the level or 7 position I had hoped to achieve Supervisor support 18 My supervisor helps his/her team members identify and develop their skills and potential 19 My supervisor celebrates his/her team’s successes 20 My supervisor deal effectively with multiple 7 demands and conflicting priorities 21 My supervisor make timely decisions, without unnecessary delay 22 My supervisor demonstrates high ethical standards 23 My supervisor treats me fairly and with respect 7 work I am satisfied with the company’s management 7 Employee Satisfaction 24 I am satisfied with the company’s pay and benefits 25 I am satisfied with the company’s environment 26 system 27 I am satisfied with the company’s career progression 62 28 I am satisfied with the company’s supervisor 7 support 29 Overall, I am satisfied as an employee of this company Demographic questions Gender:  Male  Female Age:  40 Bank types:  Local bank  Foreign bank Tenure:  5 years THANK YOU FOR YOUR COOPERATION! 63 Appendix C: Questionnaire (in Vietnamese) NHỮNG NHÂN TỐ TÁC ĐỘNG ĐẾN SỰ HÀI LÒNG CỦA NHÂN VIÊN TRONG LĨNH VỰC NGÂN HÀNG – TẠI TP HCM Xin chào Anh/Chị, Hiện nghiên cứu đề tài: “Những nhân tố tác động đến hài lòng nhân viên lĩnh vực ngân hàng – TP.HCM” Do đó, tơi tiến hành khảo sát nhằm tìm hiểu ý kiến Anh/Chị vấn đề Rất mong Anh/Chị bớt chút thời gian trả lời số câu hỏi Tất ý kiến Anh/Chị có giá trị nghiên cứu Trân trọng cám ơn Anh/Chị vui lòng khoanh tròn số chọn cho câu hỏi sau Chú ý: (1) Rất không đồng ý (2) Không đồng ý (3) Hơi không đồng ý (4) Trung lập (5) Hơi đồng ý (6) Đồng ý (7) Rất đồng ý Tiền lương phúc lợi nhân viên Ngân hàng có chế độ lương tốt Ngân hàng có sách nghỉ hưu tốt Công việc nhân viên đảm bảo ổn định Nhân viên hài lịng với sách chăm sóc sức 7 khỏe ngân hàng Nhân viên hài long với số ngày nghỉ phép năm Môi trường làm việc Nhân viên cung cấp đầy đủ dụng cụ làm việc 7 Không gian làm việc thoải mái tiện nghi Ngân hàng cung cấp môi trường học tâp đào tạo 64 nhân viên Nhân viên cung cấp đầy đủ thông tin liên 7 7 7 7 Cấp hỗ trợ việc đào tạo, phát triển quan công việc Hệ thống quản lý 10 Ngân hàng tạo môi trường thăng tiên công 11 Ngân hàng có hệ thống quản lý cơng việc hiệu 12 Ngân hàng có chế độ khen thưởng xử lý vị phạm minh bạch 13 Ngân hàng có kênh giao tiếp, trao đổi thơng tin hiệu 14 Quy trình làm việc Ngân hàng hiệu quả, thống Sự phát triển nghề nghiệp 15 Ngân hang nơi để định hướng phát triển nghề nghiệp 16 Tơi có nhiều hội học hỏi phát triển thân 17 Tôi đạt vị trí mà tơi mong đợi Cách điều hành cơng việc 18 lực kỹ nhân viên 19 Cấp khen thưởng thành công nhân viên 20 Cấp giải hiệu yêu cầu mâu 7 thuẫn cơng việc 21 Cấp có định xác, kịp thời cơng việc 65 22 Cấp cư xử mực, minh bạch 7 công việc 23 Cấp đối xử nhân viên cơng tơn trọng Sự hài lịng nhân viên 24 Tơi hài lịng với sách lương bổng phúc lợi ngân hàng 25 Tôi hài lịng với mơi trường làm việc ngân hàng 26 Tôi hài lịng với sách quản lý ngân hàng 27 Tơi hài lịng với kế hoạch phát triển nghề nghiệp 7 ngân hàng 28 Tơi hài lịng với cách điều hành cơng việc cấp 29 Tơi cảm thấy hài lịng làm việc ngân hàng THÔNG TIN CÁ NHÂN Giới tính:  Nam/Male  Nữ/Female Tuổi:  40 Loại hình ngân hàng:  Ngân hang nước 66  Ngân hàng nước ngồi Thời gian cơng tác:  Ít năm  Từ – năm  Từ – năm  Trên năm XIN CHÂN THÀNH CẢM ƠN SỰ ĐÓNG GÓP Ý KIẾN CỦA ANH CHỊ! 67 Appendix D: Table 4.2: Reliability Statistics of Salary & Benefits variable Reliability Statistics Cronbach's Alpha N of Items 898 Item-Total Statistics Corrected Item- Cronbach's Scale Mean if Scale Variance Total Alpha if Item Item Deleted if Item Deleted Correlation Deleted LUONG1 14.60 15.454 770 871 LUONG2 14.34 15.849 743 877 LUONG3 14.55 15.837 701 886 LUONG4 14.63 15.671 726 881 LUONG5 14.61 15.003 802 864 Table 4.3: Reliability Statistics of Work environment variable Reliability Statistics Cronbach's Alpha N of Items 877 Item-Total Statistics Corrected Item- Cronbach's MOITRUONG Scale Mean if Scale Variance Total Alpha if Item Item Deleted if Item Deleted Correlation Deleted 10.69 10.592 672 869 68 MOITRUONG 10.24 10.383 790 821 10.25 10.963 780 828 10.60 10.501 711 852 MOITRUONG MOITRUONG Table 4.4: Reliability Statistics of Management system variable Reliability Statistics Cronbach's Alpha N of Items 875 Item-Total Statistics Corrected Item- Cronbach's HTQUANLY HTQUANLY HTQUANLY HTQUANLY HTQUANLY Scale Mean if Scale Variance Total Alpha if Item Item Deleted if Item Deleted Correlation Deleted 12.35 7.439 784 832 12.23 7.554 619 870 12.25 7.319 676 856 12.30 7.246 706 849 12.30 7.307 757 837 69 Table 4.5: Reliability Statistics of Career progression variable Reliability Statistics Cronbach's Alpha N of Items 824 Item-Total Statistics Corrected Item- Cronbach's Scale Mean if Scale Variance Total Alpha if Item Item Deleted if Item Deleted Correlation Deleted PTNGHE1 6.44 2.118 629 812 PTNGHE2 6.89 2.135 689 748 PTNGHE3 6.80 2.184 727 714 Table 4.6: Reliability Statistics of Supervisor support variable Reliability Statistics Cronbach's Alpha N of Items 898 Item-Total Statistics Corrected Item- Cronbach's Scale Mean if Scale Variance Total Alpha if Item Item Deleted if Item Deleted Correlation Deleted DHCONGVIEC1 18.47 12.439 694 885 DHCONGVIEC2 18.82 12.334 704 883 DHCONGVIEC3 18.89 12.476 701 883 DHCONGVIEC4 18.90 12.937 679 887 70 DHCONGVIEC5 18.75 12.189 755 875 DHCONGVIEC6 18.77 11.921 811 866 Table 4.7: Reliability Statistics of Employee Satisfaction variable Reliability Statistics Cronbach's Alpha N of Items 888 Item-Total Statistics Corrected Item- Cronbach's Scale Mean if Scale Variance Total Alpha if Item Item Deleted HAILONGNV 16.02 if Item Deleted Correlation Deleted 13.058 652 877 12.657 722 866 13.798 611 882 12.871 742 863 12.470 742 862 12.628 754 860 HAILONGNV 16.33 HAILONGNV 16.25 HAILONGNV 16.19 HAILONGNV 16.20 HAILONGNV 16.18 71 Table 4.9: Total Variance Explained Total Variance Explained Extraction Sums of Squared Rotation Sums of Squared Initial Eigenvalues Compo % nent Total 6.280 27.303 Loadings of Cumulati Variance ve % % Loadings of Cumulati % of Cumulati Total Variance ve % Total Variance ve % 27.303 6.280 27.303 27.303 4.029 17.516 17.516 4.010 17.437 44.740 4.010 17.437 44.740 3.630 15.783 33.299 2.443 10.624 55.364 2.443 10.624 55.364 3.427 14.902 48.201 2.145 9.325 64.688 2.145 9.325 64.688 3.007 13.072 61.273 1.411 6.133 70.821 1.411 6.133 70.821 2.196 9.548 70.821 718 3.120 73.941 636 2.765 76.707 621 2.701 79.408 515 2.241 81.649 10 464 2.019 83.668 11 438 1.904 85.572 12 430 1.871 87.443 13 394 1.713 89.156 14 351 1.524 90.680 15 316 1.375 92.055 16 300 1.304 93.359 17 283 1.229 94.588 18 262 1.139 95.727 19 236 1.027 96.754 20 228 993 97.747 21 211 918 98.666 22 179 780 99.446 23 127 554 100.000 72 Extraction Method: Principal Component Analysis Table 4.10: Rotated Component Matrix Rotated Component Matrixa Component DHCONGVIEC6 885 DHCONGVIEC5 821 DHCONGVIEC2 802 DHCONGVIEC3 779 DHCONGVIEC1 773 DHCONGVIEC4 747 LUONG5 834 LUONG1 830 LUONG2 808 LUONG4 803 LUONG3 789 HTQUANLY5 858 HTQUANLY1 858 HTQUANLY4 815 HTQUANLY3 775 HTQUANLY2 718 MOITRUONG2 885 MOITRUONG3 837 MOITRUONG4 815 MOITRUONG1 786 PTNGHE3 822 PTNGHE2 821 PTNGHE1 757 73 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a.Rotation converged in iterations Table 4.13: Pearson Correlation Coefficient Correlations F_LUONG Pearson Correlation F_LUO F_MOITR F_HTQU F_PTN F_DHCO F_HAILO NG UONG ANLY GHE NGVIEC NGNV 237** 201** 413** 319** 475** 002 009 000 000 000 171 171 171 171 171 171 237** 289** 365** 011 501** 000 000 881 000 Sig (2-tailed) N F_MOITRU Pearson ONG Correlation Sig (2-tailed) 002 N 171 171 171 171 171 171 201** 289** 290** 021 409** Sig (2-tailed) 009 000 000 788 000 N 171 171 171 171 171 171 413** 365** 290** 243** 629** Sig (2-tailed) 000 000 000 001 000 N 171 171 171 171 171 171 319** 011 021 243** 348** Sig (2-tailed) 000 881 788 001 N 171 171 171 171 171 171 475** 501** 409** 629** 348** F_HTQUA Pearson NLY Correlation F_PTNGHE Pearson Correlation F_DHCON Pearson GVIEC Correlation F_HAILON Pearson 000 74 GNV Correlation Sig (2-tailed) 000 000 000 000 000 N 171 171 171 171 171 171 ** Correlation is significant at the 0.01 level (2tailed) Table 4.14: Coefficients Coefficientsa Standardize Unstandardized d Collinearity Coefficients Coefficients Statistics Toleranc Model B Std Error (Constant) -.439 270 F_LUONG 116 042 F_MOITRUO 184 F_HTQUANL 201 Beta t Sig e VIF -1.629 105 159 2.767 006 761 1.315 037 276 4.981 000 816 1.226 057 189 3.534 001 870 1.150 363 060 359 6.063 000 712 1.404 F_DHCONGV 207 055 203 3.790 000 869 1.151 NG Y F_PTNGHE IEC a.Dependent Variable: F_HAILONGNV 75 ... investigate key factors affecting employee satisfaction in both developed and developing countries This thesis is focused on the investigating factors influence employee satisfaction in the banking industry. .. This chapter presents the assessment of measurement and results of hypotheses testing about key factors on employee satisfaction in the banking industry in Ho Chi Minh city The content of this... research The purpose of this study is to investigate key factors affecting overall employee satisfaction in the Vietnamese banking industry by surveying the employees The target population of the