Critical factores of employees motivation in manufacturing firms evidence from vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY INTERNATIONAL SCHOOL OF BUSINESS ooOoo VO TRUNG TINH Critical factors of employee's motivation in manufacturing firms: Evidence from Vietnam ID: MBUS111041 Master of Business and Commerce (Honors) Supervisor: Dr TRAN HA MINH QUAN HO CHI MINH CITY 02.11.2013 Critical factors of employee's motivation in manufacturing firms in Vietnam ACKNOWLEDGEMENTS First, Iwould like to express appreciation to some people, who continuously supported and helped to complete this thesis I am extremely grateful to Dr Minh Quan Tran Ha on the relentless guide, who has taken the timely guidance and support to help me solve the problems encountered during the implementation of the thesis I would also like to thank my colleagues at Wipro Unza Vietnam, and the staffs working in VSIP, AMATA, etc who helped me in providing the responses to the questionnaire and the helpful comments on the some parts of the study Finally, I want to express the special thanks and sincere to my family, especially my parents, who were always anxious and continuously encouraged me in difficult times and uninterrupted support material and love The support helped me enough courage and confidence to be able to firmly overcome difficulties and successful completion of this thesis Vo Trung Tinh Critical factors of employee's motivation in manufacturing firms in Vietnam ABTRACTS Motivation of employees at workplace was topic mentioned continuously by management of these companies in Vietnam This thesis aims to specify the key factors affecting to motivation of employees, who has been working in manufacturing firms in Vietnam By adopting quantitative method, five factors include advancement, salary, working condition, challenge, management were extracted Moreover, this study also investigated on motivational profiles for some focus viewpoints of employee such as gender, age and material status At the end of thesis, some recommendations were drawn to increase the motivation and satisfaction of employees at workplace Key terms: Key motivation factors, manufacturing firms, motivational profiles Vo Trung Tinh Critical factors of employee's motivation in manufacturing firms in Vietnam Table of Contents Chapter 1: Introduction I.1 Overview about the Vietnamese economic and labor in Vietnam I.2 Significance of the research 10 I.3 Thesis structures 10 Chapter 2: Literature review and hypothesis 12 II.1 Literature review 12 II.1.1 Motivation theories 12 II.1.2 Motivation profiles 15 II.2 Demographics for employee's motivation 16 II.2.1 Roles of demographic in organization 16 II.2.2 Age 17 II.2.3 Gender 18 II.2.4 Marital status 19 II.3 Hypothesis and conceptual model 19 II.3.1 Motivation factors and hypothesis 19 II.3.2 Conceptual model 23 Chapter 3: Research method 25 III.1 Research procedures 25 III.2 Measurement scales 26 III.3 Pilot research 28 III.4 Main research 28 III.5 Data analysis 29 III.5.1 Specify key factors 29 III.5.2 Ranking motivators 29 Chapter 4: Data analysis and Results 30 IV.1 Sample characteristics 30 IV.2 Assessment of measurement of scales 32 IV.2.1 Reliability check for measurement scales 33 IV.2.2 Validity assessment for measurement scales 34 IV.2.3 Assessment for reliability and validity motivation scales 40 IV.2.4 Assessment for assumptions of regression 40 IV.3 Assessment of theoretical model and hypotheses 42 IV.3.1 Assessment of theoretical model 42 Vo Trung Tinh Critical factors of employee's motivation in manufacturing firms in Vietnam IV.3.3Test of hypotheses 43 IV.4 Extract and rank for motivators in motivational profiles 45 IV.4.1 Gender 46 IV.4.2Maritalstatus 47 IV.4.3 Age groups 48 IV.5 Interpreting the results 49 IV.5.1 Regression model 49 IV.5.2 Employees' demographics 49 Chapter 5: Conclusion and recommendation 53 V.1 Conclusion 53 V.2 Recommendations 53 V.2.1 Advancement 53 V.2.2Management 54 V.2.3Salary 55 V.2.4 Work Challenge 55 V.2.5Working condition 56 V.2.6Motivation profiles based demographics 56 V.3 Limitation and further research directions 57 REFERENCES 59 APPENDIX 63 Vo Trung Tinh Critical factors of employee's motivation in manufacturing firms in Vietnam List of tables TABLE SUMMARY OF HYPOTHESIZES 24 TABLE LIST OF SOURCES FOR ITEM SCALES 28 TABLE SAMPLE CHARACTERISTICS 31 TABLE ASSESSMENT THE RELIABILITY OF MEASUREMENT SCALES 34 TABLE RELIABILITY FOR NEW FACTORS 35 TABLE FACTOR LOADING RESULTS 36 TABLE KMO AND BARTLETT'S TEST 36 TABLE COMPARE FOR ORIGINAL AND REFINED SCALES 39 TABLE SUMMARY FOR CONSTRUCT AFTER RE-ASSESSMENT SCALES 39 TABLE 10 RELIABILITY ASSESSMENT FOR MOTIVATION SCALE 40 TABLE 11 EFA FOR MOTIVATION 40 TABLE 12 DURBIN-WATSON VALUE 41 TABLE 13 COLLINEARITY STATISTICS 41 TABLE 14 MULTIPLE REGRESSION RESULTS 42 TABLE 15 MODEL SUMMARY 42 TABLE 16 SUMMARY FOR HYPOTHESIS TESTING 43 TABLE 17 MOTIVATION PROFILE FOR MALE AND FEMALE 46 TABLE 18 MOTIVATION PROFILE FOR MARITAL STATUS WISE 47 TABLE 19 MOTIVATION PROFILE FOR SUBGROUP OF AGE WISE 48 Vo Trung Tinh Critical factors of employee's motivation in manufacturing firms in Vietnam List of figures FIGURE 1: MASLOW'S HIERARCHY OF NEEDS 13 FIGURE TWO FACTORS THEORY 14 FIGURE CONCEPTUAL MODEL 24 FIGURE RESEARCH PROCEDURE 25 FIGURE REGRESSION COEFFICIENT MODEL 45 Vo Trung Tinh Critical factors affecting employees’ motivation of manufacturing firms in Vietnam Chapter 1: Introduction I.1 Overview about the Vietnamese economic and labor in Vietnam Vietnam economic, in recently, been facing to the problem that growth rate of GDP is slow down Economic growth fell sharply in the period from 2006 to 2011.GDP in 2006 was 8.23%; a 0.23% increase was recorded in the following year reached 8.46%.Next two years 2009 and 2010, the GDP growth rate has fallen sharply and bottomed out in 2010 at 5.32%.The economy recovered and the GDP growth rate increased to 6.78 percent before falling to 5.89% as the summary of Le Xuan Nghia (2012).With developing economies such as Vietnam, the GDP growth rate below 7% is indicated for the slow growth and signs of instability in the economy Three factors such as capitals, labor and productivities contribute the different proposition in the Vietnam economic The contribution of labor into the growth rate of GDP has slightly decreased in recently year According to the statistics on the proposition of factors on the growth of GDP of Bui Trinh (2012 ) and cited by Le Xuan Nghia (2012), the contribution rate of labor factors into growth rate of GDP of Vietnam had decreased about 5% in 2006 to 2010 in comparison with period 2000 to 2005 Total factor of productivity had also gone down deeply On the other hand, capital factor had become the main factor in the growth of the economy In developing countries, the economy relies heavily on the development of investment dynamics are easily hurt when economic events occur The government and policy makers need to create a driving force for development from the labor factor Moreover, today, in the era of knowledge-based edge elements and creative labor has become the main factor of competition between economies The strength of the economy is conducted from power of the enterprises in the economy To get the strong business and competitive with foreign firms, especially in the context of our country joined the World Trade Organization; Vietnamese firms need to improve further capacity competition and firm innovation in the field of professional activity In order to keep pace with the requirements of the new situation, enterprises need to focus on solving the internal problems of the business such as technology, management, labor productivity and especially the need to further improve employee motivation and their retaining The success of an organization, during the time of history, is developed by the goods relations with employees by fulfill their needs and expectation, in a return, to apply the rules and regulations, work under the standard and achieved goals (Khan, et al., 2010) Management has to address and understand employees' needs and expectation, in order to maintain the high growth rate in business Many Vo Trung Tinh Critical factors affecting employees’ motivation of manufacturing firms in Vietnam scholars had determined many theories and tools to satisfy this aim and help management to build strong relationship with their staffs.Managers discuss how to motivate their employees in order to increase productivity as well as the moral at the workplace Each individual is different and motivated differently and is depends on what stage in life as person is at Motivation has been defined as "the amount of effort that an employee is willing to put into work to accomplish an organizationally valued task" (Phatak, Bhagat & Kashlak, 2005, p.418), but it can be defined as "the processes that count for an individual's intensity, direction, persistence of effort toward attending a goal" (Robbins, 2005, p.170) Motivation is not something that is observable in the organization ( Phatak, et la 2005) and most managers not understand what motivates their employees because they not aware that individuals in the organization has unique motives for working (Hiam, 2003) Motivation is a key organizational concept, organizations are willing to hire and continuously seek motivated employees and managers with ability to motivate others Most of people think rewards will motivate people better, but due to culture differences in the world, it is important to recognize that rewards might be valued differently (Francesco & Gold, 2005) Most studies in the past have been conducted on job satisfaction intrinsic work motivation and these studies have focused on specific countries or even specific firms The outcomes of these studies indicated that there are differences on motivation of employees based on their characteristics such as gender, people color, age, etc.(Enskildsen, Kristensen & Westlund, 2002) Motivating for key people is a foundation leaded to the success in business of organization There are lots of paper and researches over the world on employee motivation Although the organization has policies to encourage for all employees of the company, managers of firms needs to customize and adjust the policy to adapt with different demographic of employees because they own the differences in characteristics, psychologies and variety of needs Therefore,a customized HR practices need to be carried out to reach to gaps inunique HR strategyfor many group of employees in organization Each employee should be encouraged and motivated by different ways and methods Kim Dung (2005) figured out six factors to motivate employees who work in small enterprises in Ho Chi Minh City of Vietnam However, Kim Dung and other scholars has not investigated in different weight of motivating factors affecting to motivationadapted with different demographics of employees in a focused industry,like to manufacturing industry,as well as in Vietnam.Manufacturing industry is one of leading industries in Vietnamese economy in some next years Therefore, the author chose this industry to conduct further investigation on employee motivation Moreover, the goal is this Vo Trung Tinh Critical factors affecting employees’ motivation of manufacturing firms in Vietnam study is not only to test motivating factors, but also to investigate the importance of those motivating factors on manufacturing industry in Vietnam In response to the above stated problem, this research is conducted with below aims: - To determine key factors for employee in manufacturing firms in Vietnam - To draw the importance of motivation profiles between each sub group in age, gender and marital status - To compare and test the difference in motivation profiles within demographic of employees - To suggest recommendations for HR managersin manufacturing industry to maintain the highest staff’s motivation Regarding to the limited resources and short time frame, the empirical data for the research was collected from the manufacturing firms located in Ho Chi Minh City and provinces around of this city This area will be selected because many industrial zones and manufacturing firms located here and they can take a representative role for population of firms belonged to manufacturing industry in Vietnam During the research, we focus on a arrange of employees as mentioned below - Respondents on this study include labor staffs, officers, supervisors and managers and who hold bachelor and higher - Only work – related factors will be investigated in this study Other possible factors (e.g social or cultural factor) are out of scopes of this study I.2 Significance of the research To give out the order of some observed motivators focused on sub groups under age, gender and material status The outcomes research will help the managers in manufacturing firms relocate the HR practices to satisfy with the need of their staffs in the term of optimizing the labor cost and maintain the highest motivation of employees The results from the present study might have high importance for managers of Vietnamesefirms in terms of choosing best motivation strategy, towards, maintaining the high staff's retain rate I.3 Thesis structures This research will be structured on some chapters as the following Vo Trung Tinh 10 Critical factors affecting employees’ motivation of manufacturing firms in Vietnam REFERENCES Abercromby, M (2007), A Report on the Importance of Work-Life Balance: [On Line], Available From: http://www.bia.ca/articles/AReportontheImportanceofWorkLifeBalance.htm, Accessed: 10.10.2013 Ahmad, H.M (2010), Personality Traits Among Entrepreneurial and CEOs Professionals in SMEs, International Journal of Business Management,5(9), p.203-213, [On Line], Available From: http://web.ebscohost.com/, Accessed: 28.09.2013 Banibaker, A (2008), Motivation: concept and application, [On Line], Available From: http://www.scribd.com/doc/7627373/Motivation, Accessed: 03.12.2013 Beck-Taucher, 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0.669 ADV2 0.66 ADV4 0.577 ADV5 0.559 CHA2 0.753 CHA5 0.68 CHA4 0.611 CHA1 0.598 CHA6 0.571 SAL2 0.823 SAL5 0.634 SAL1 0.57 SAL3 0.563 WOR6 0.826 WOR7 0.69 WOR9 0.659 WOR2 0.759 WOR1 0.649 WOR3 0.618 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in iterations Total Variance Explained Factor Initial Eigenvalues Vo Trung Tinh Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings 63 Critical factors affecting employees’ motivation of manufacturing firms in Vietnam Total % of Variance Cumulative % Total % of Variance Cumulative % Total % of Variance Cumulative % 9.136 30.452 30.452 9.136 30.452 30.452 4.457 14.858 14.858 2.109 7.031 37.483 2.109 7.031 37.483 3.458 11.526 26.384 1.958 6.527 44.010 1.958 6.527 44.010 3.014 10.046 36.429 1.576 5.252 49.262 1.576 5.252 49.262 2.360 7.868 44.297 1.383 4.611 53.873 1.383 4.611 53.873 2.034 6.781 51.078 1.299 4.330 58.203 1.299 4.330 58.203 1.802 6.006 57.084 975 3.753 61.956 955 3.185 65.140 891 2.970 68.111 10 804 2.680 70.791 11 786 2.620 73.411 12 673 2.243 75.653 13 649 2.162 77.816 14 619 2.063 79.878 15 553 1.845 81.723 16 534 1.781 83.504 17 500 1.668 85.173 18 466 1.553 86.726 19 457 1.522 88.248 20 435 1.452 89.699 21 425 1.417 91.117 22 374 1.248 92.364 23 352 1.174 93.539 24 339 1.130 94.669 25 319 1.063 95.731 26 301 1.002 96.733 27 281 937 97.670 28 258 858 98.529 29 235 782 99.311 30 207 689 100.000 Extraction Method: Principal Component Analysis Communalities Initial Extraction SAL1 1.000 704 SAL2 1.000 734 SAL3 1.000 554 SAL4 1.000 616 SAL5 1.000 665 WOR1 1.000 698 WOR2 1.000 622 WOR3 1.000 639 Vo Trung Tinh 64 Critical factors affecting employees’ motivation of manufacturing firms in Vietnam WOR4 1.000 529 WOR5 1.000 598 WOR6 1.000 692 WOR7 1.000 678 WOR8 1.000 562 WOR9 1.000 630 MAN1 1.000 637 MAN2 1.000 678 MAN3 1.000 659 MAN4 1.000 544 MAN5 1.000 446 MAN6 1.000 458 MAN7 1.000 657 MAN8 1.000 561 MAN9 1.000 551 ADV1 1.000 719 ADV2 1.000 576 ADV3 1.000 513 ADV4 1.000 564 ADV5 1.000 655 ADV6 1.000 657 ADV7 1.000 674 CHA1 1.000 567 CHA2 1.000 711 CHA3 1.000 445 CHA4 1.000 542 CHA5 1.000 595 CHA6 1.000 580 Extraction Method: Principal Component Analysis APPENDIX 3: Reliability and validity assessment for motivation scales KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Approx Chi-Square Bartlett's Test of Sphericity df Sig Vo Trung Tinh 834 435.525 21 000 65 Critical factors affecting employees’ motivation of manufacturing firms in Vietnam APPENDIX: REGRESSION Assessment criteria of regression 2.2 Linear relationship 2.3 Homoscedasticity of residuals Residuals Statisticsa Minimum Predicted Value Vo Trung Tinh 1.9057 Maximum 4.7338 Mean 3.3241 Std Deviation 54538 N 235 66 Critical factors affecting employees’ motivation of manufacturing firms in Vietnam Residual -1.31651 1.32924 00000 45924 235 Std Predicted Value -2.601 2.585 000 1.000 235 Std Residual -2.836 2.863 000 989 235 a Dependent Variable: MOTIVATION 2.5 Outliers filter: Casewise Diagnosticsa Case Number Std Residual MOTIVATION Predicted Value Residual 93 3.303 4.17 2.5464 1.62027 143 3.777 4.67 2.8137 1.85296 a Dependent Variable: MOTIVATION 2.6 Normality of the residuals Vo Trung Tinh 67 Critical factors affecting employees’ motivation of manufacturing firms in Vietnam Regression analysis result Descriptive Statistics N Mean Statistic Statistic Skewness Statistic Kurtosis Std Error Statistic Std Error WORCON 235 3.4993 -.921 159 1.117 316 CHALLENGE 235 3.3753 -.493 159 513 316 MANAGE 235 3.2134 -.363 159 -.131 316 ADVANCE 235 3.1879 -.241 159 019 316 SALARY 235 3.0457 063 159 -.408 316 Valid N (listwise) 235 Model Summaryb Model R a 765 R Adjusted Std Error of Square R Square the Estimate 585 576 Change Statistics 46423 R Square F Change Change 585 64.592 df1 df2 DurbinSig F Watson Change 229 000 2.085 a Predictors: (Constant), WORCON, CHALLENGE, SALARY, MANAGE, ADVANCE b Dependent Variable: MOTIVATION Model Unstandardized Coefficients Std B Error Vo Trung Tinh Standardized Coefficients Beta Collinearity Statistics t Sig Tolerance VIF 68 Critical factors affecting employees’ motivation of manufacturing firms in Vietnam (Constant) 275 196 1.406 161 SALARY 136 046 149 2.962 003 719 1.391 ADVANCE 382 CHALLENGE 142 054 417 7.046 000 517 1.933 060 129 2.356 019 602 1.662 MANAGE 190 054 189 3.537 000 636 1.572 WORCON 092 045 097 2.032 043 789 1.267 a Dependent Variable: MOTIVATION Coefficient of regression Descriptive Statistics N Mean Std Deviation Variance Skewness Kurtosis Statistic Statistic Std Error Statistic Statistic Statistic Std Error Statistic Std Error SALARY 235 3.0457 05081 77885 607 063 159 -.408 316 ADVANCE 235 3.1879 05073 77764 605 -.241 159 019 316 CHALLENGE 235 3.3753 04223 64734 419 -.493 159 513 316 MANAGE 235 3.2134 04611 70684 500 -.363 159 -.131 316 WORCON 235 3.4993 04905 75194 565 -.921 159 1.117 316 MOTIVATION 235 3.3241 04651 71298 508 -.412 159 -.167 316 Valid N (listwise) 235 Descriptive Statistics ANOVAa Model Sum of Squares df Mean Square Regression 69.601 13.920 Residual 49.351 229 216 118.952 234 Total F 64.592 Sig .000b a Dependent Variable: MOTIVATION b Predictors: (Constant), WORCON, CHALLENGE, SALARY, MANAGE, ADVANCE Vo Trung Tinh 69 Critical factors affecting employees’ motivation of manufacturing firms in Vietnam SURVEY FOR STUDY Dear Sir/ Madam, I am Vo Trung Tinh, a fellow of Master of Business and Commerce program in International School of Business of University of Economics Ho Chi Minh city I am conducting a study "Critical factors of employee's motivation in manufacturing firms: Evidence from Vietnam" I really need your help to response for some questions and statements in the table below in order to complete the research All information from your responses is confidential and is used on non-profit objectives I would like to say thank for your participation and response for the survey Once again, I deeply appreciate for your support Base on your own working, kindly answer for your acceptance level of some following statements Please mark "x" into cell corresponding with your agreement on each statement Strongly disagree Disagree Agree Strongly agree Neutral I General information Strongly disagree Disagree Neutral Agree Strongly agree My salary is fair for the work done I am satisfied with the amount of companies that pay for health care 5 Rate your acceptant level for each statement below No Salaries 5 The company has good welfare policies (unemployment insurance, health insurance, social security) The company has policies to support employees in difficult circumstances The income is enough to pay for my monthly living Overall, I am satisfied with the company's wage policy 5 5 Working conditions I am happy to work with my colleagues every day Employees of companies are often exceeded the expectations of their tasks There is always teamwork and cooperation among employeesIn my company Vo Trung Tinh 70 Critical factors affecting employees’ motivation of manufacturing firms in Vietnam Rate your acceptant level for each statement below Strongly disagree Disagree Neutral Agree Strongly agree My company provides the necessary resources to help me complete the job effectively 1 2 3 4 5 No 10 14 My colleagues have adequate skills to perform the job effectively I am willing to work overtime to get the job done without extra cost My company is creating a physical safe working environment for employees I owned personal sustainable relationships with the others in companies 15 I feel safe at work 16 Overall, working environment is good for me 11 12 13 Management 17 The supervisor maintain fairness for all employees 18 Superior promptly recognized the efforts and achievements for me 19 My superiors helped me develop my full potential 20 I know what the company expects from me 21 Superior assess my performance regularly (at least a time per year) 22 23 24 I received timely feedback to improve my work My supervisor maintain the open-talk and sincerity in communication I received timely feedback to improve my work My supervisors pay attention to my feelings In general, managers motivate me to work effectively 1 1 2 2 3 3 4 4 5 5 25 26 Advancement 27 The company provides training courses suit my workneeds 28 The company provides information, tools necessary to complete the work 29 The company indicated to me that what is needed to advance 30 I believe what the company told me that the conditions necessary to promote my career 31 I have the opportunity to attempt new things at work 32 I was encouraged to cultivate and develop new skills 33 34 I was trained to perform the best Overall, advancement motivate me to work 1 2 3 4 5 1 2 3 4 5 5 Working position 35 36 37 The movement takes much of my time Working remotely help me get the job done better In general , flexible work place motivate for my work Challenges 38 My current job is enjoyable Vo Trung Tinh 71 Critical factors affecting employees’ motivation of manufacturing firms in Vietnam Strongly agree 45 Agree 43 44 Neutral 42 Current work is challenging Timeline to complete my task is specified clearly I recognize my values in the success of the organization I have the opportunity to apply the skills and develop their capacity at work My Job require to work with high sense of responsibilities Overall, work challenge motivates me at work Overall, I am working with high motivation Disagree No 39 40 41 Strongly disagree Rate your acceptant level for each statement below 1 2 3 4 5 5 5 II Detail information Your academic status is □ Postgraduate□ Bachelor □ College □ High schools□Others Your departments is □ Finance and Accounting □ Logistics □ Quality controls □ Research and Development □ Production □ IT □ Sales □ Purchasing □Other department Please specify Your working position is □ Staffs □Executive □ Manager □Function Head □Director □Other Year of service in the current company is How many employees are there in your company? Gender □ Male □ Female Age □ Under 30 years-old □From 30 to 40 years-old □From 41 to 50 years-old □ Over 51 years-old Vo Trung Tinh 72 Critical factors affecting employees’ motivation of manufacturing firms in Vietnam Marital status □ Single □ Married Appreciate for your helps!!! Vo Trung Tinh 73 ... different demographics of employees in a focused industry,like to manufacturing industry,as well as in Vietnam .Manufacturing industry is one of leading industries in Vietnamese economy in some next years... expectation, in order to maintain the high growth rate in business Many Vo Trung Tinh Critical factors affecting employees’ motivation of manufacturing firms in Vietnam scholars had determined many... following Vo Trung Tinh 10 Critical factors affecting employees’ motivation of manufacturing firms in Vietnam ƒ Chapter contains the overview of this research including the aims, signification of