The effect of work-life conflics, working environment and compensation on employee performance im Vietnamese domestic banks

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyen Thi Anh Ngoc THE EFFECT OF WORK-LIFE CONFLICTS, WORKING ENVIRONMENT AND COMPENSATION ON EMPLOYEE PERFORMANCE IN VIETNAMESE DOMESTIC BANKS MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2014 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyen Thi Anh Ngoc THE EFFECT OF WORK-LIFE CONFLICTS, WORKING ENVIRONMENT AND COMPENSATION ON EMPLOYEE PERFORMANCE IN VIETNAMESE DOMESTIC BANKS ID: 21110038 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr TRAN HA MINH QUAN Ho Chi Minh City – Year 2014 ACKNOWLEDGEMENT This thesis could not have been accomplished without the help, advice, support, guidance and encouragement of many people I wish to explain my sincere gratitude to my advisor, Dr Tran Ha Minh Quan, for his kind guidance, intensive support, valuable suggestions, instructions and encouragement during the time of doing my research I also would like to thank my dear colleagues, friends and classmates for their invaluable advice, help, support during the time I was doing this thesis Last but not least, I would like to express my special thanks to my man and my family for their great support, assistance and encouragement for my study and thesis fulfillment Nguyen Thi Anh Ngoc November 2014 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS ii ABSTRACT Vietnam, like the rest of Asia, has entered a period of slower growth Besides the manufacturing and agricultural sectors, other industry sectors are being adversely affected by the slower growth and the Banking sector is no exception Series of banks restructure itself with human resource as an important part: layoffs the ineffectives and higher employees’ performance for the remains It is clear that employees take a key figure for banks’ performance Go along with the issue, managers should control what contribute for higher employees’ performance to enhance the competitive advantages of banks As a result, all three determinants which are work-life conflicts, working environment and compensation impact on employee performance in Vietnamese domestics banks whereas compensation has the highest impact on performance of banking staff in significantly high level Imbalance in work-life negatively impact on performance bank in turn Working environment also has positively impact on bank staff productivity but with the lowest significance The result of the study can contribute for human resource management for enhancing productivity and performance of banking staff in the future Key words: Employee performance (EP), work-life conflicts, working environment (WE), compensation (COM), Vietnamese domestic banks (VDBs) EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS iii LIST OF FIGURES Figure 1: Conceptual research model 18 Figure 2: Research process 20 LIST OF TABLES Table 1: Income of bank staffs by year 03 Table 2: Income and average profit of bankers in 2013 04 Table 3: Distribution system of banks in 2013 19 Table 4: Demographic information 21 Table 5: Measurement scale 22 Table 6: Reliability statistics of compensation variable 29 Table 7: Reliability statistics of COM variable with factors 30 Table 8: Reliability of Work-life conflicts variable 31 Table 9: Reliability statistics of WLC variable with factors 32 Table 10: Reliability of working environment variable 32 Table 11: Reliability of WE variable with factors 33 Table 12: Reliability statistics of Employee performance variable 33 Table 13: KMO and Barlette’s test 36 Table 14: Total Variance Explained 37 Table 15: Rotated Component Matrix 38 Table 16: KMO and Barlette’s test & Total Variance Explained of second EFA 38 Table 17: KMO and Barlette’s test & Total Variance Explained 38 Table 11: Coefficient 41 Table 19: ANOVA 41 Table 20: Model Summary 42 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS LIST OF ABBREVIATIONS EP Employee Performance COM Compensation WE Working Environment WLC Work-Life Conflicts VSBs Vietnamese Domestics Banks HRM Human Resource Management SOCBs State-Owned Commercial Banks JSCBs Joint-Stock Commercial Banks S&D Sales and Distributors iv EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS v CONTENTS ACKNOWLEDGEMENT i ABSTRACT ii LIST OF FIGURES iii LIST OF TABLES iii LIST OF ABBREVIATIONS iv CHAPTER INTRODUCTION 1.1 Research background 1.2 Research objectives and questions 1.3 Scope of the research 1.4 Conclusion CHAPTER LITERATURE REVIEW, HYPOTHESIS AND RESEARCH MODEL 2.1 Introduction 2.2 Theoretical review 2.2.1 Employee performance 2.2.2 Work-life Conflicts (WLC) or Work-life Imbalance 2.2.3 Working Environment 10 2.2.4 Compensation 11 2.3 Hypothesis development 13 2.3.1 Work-life conflicts and employees’ performance 13 2.3.2 Working Environment and employee performance 14 2.3.3 Compensation and employees’ performance 14 2.4 Research model 15 2.5 Conclusion 16 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS vi Chapter 17 METHODOLOGY 17 3.1 Introduction 17 3.2 Research design 17 3.3 Research sample size and techniques, sample discription 18 3.3.1 Sample size 19 3.3.2 Sample technique 20 3.3.3 Sample description 21 3.4 Measurement 22 3.5 Data analysis methods 24 3.5.1 Testing reliability of scales by using Cronbach’s Alpha and Coefficient 24 3.5.2 Exploratory Factor Analysis 25 3.5.3 Multiple regression analyses 26 3.6 Conclusion 27 Chapter 28 RESULTS 28 4.1 Brief description of subjects 28 4.3 Patterns of data for each research question 29 4.3.1 Preliminary evaluation scale with Cronbach’s Alpha 29 4.3.2 Exploratory Factor Analysis (EFA) 35 4.3.3 Regression analysis 40 4.4 Conclusion 43 Chapter 44 CONCLUSIONS AND IMPLICATIONS 44 5.1 Discussions 43 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS 5.2 vii Managerial implications 44 5.3 Limitations and recommend for further research 47 5.4 Conclusions 47 REFERENCES 49 APPENDIX A: SURVEY QUESTIONAIRE 54 ENGLISH SCALE 61 APPENDIX B – DATA ANALYSIS RESULTS 63 Factor Analysis 63 Regression 74 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS CHAPTER INTRODUCTION This chapter presents the introduction to the study It contains the research background, research problems, research objective, the significant of research and research structure 1.1 Research background The objective of business owners is profitability Organization’s success depends on employees’ performance Poor performance is detrimental to company’s success Even employee performance can make or break an organization’s success Banking industry has sufficiently undergone rapid changes and with the entry of foreign players and strong private players the face of industry was redefined completely Indeed, according statistics from Vietnamwork, demand for labor force of banking used to be always at the top job hunter and top most desirable jobs in the period of 2006-2007 due to its rapidly development both vertically and horizontally, however, in time of economics deficit, this became against in the later period, begun from 2011 In wake of these changes, the changes in fundamentals and structure of banking industry majorly also affected the role of internal customers - the employees of the industry Besides several other changes took place in the industry which led to huge churning of employees in the industry thus the need for caring for the satisfaction of employees also became important There are several antecedents of employee satisfaction found in various studies conducted in different areas of different industries and sectors The cost of employee turnover to firms to firms has been estimated to be up to 150% of the employees remuneration package (Schlesinger &Heskett, 1991)…This number, once again, raises up a warning of improving job satisfaction for effective use of resource There has had number of studies about determinants affect on employee performance worldwide such as Impact of Compensation, Performance Evaluation and Promotion EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS 63 APPENDIX B – DATA ANALYSIS RESULTS Factor Analysis Appendix B: Table 1: FA - Descriptive Statistics Mean Std Deviation Analysis N COM1 3.68 845 260 COM2 3.75 826 260 COM3 3.75 835 260 COM4 3.70 866 260 COM6 4.08 507 260 WLC2 3.84 787 260 WLC3 3.38 855 260 WLC4 3.75 816 260 WLC5 3.69 818 260 WLC6 3.43 896 260 WE1 3.90 828 260 WE3 3.92 816 260 WE4 3.84 813 260 WE5 3.88 859 260 Appendix B: Table 2: FA - Correlation Matrix COM1 COM2 COM3 COM4 COM6 WLC2 WLC3 WLC4 WLC5 WLC6 WE1 WE3 WE4 WE5 Correlation COM1 1.000 664 656 687 573 132 139 198 180 145 152 121 171 080 COM2 664 1.000 704 722 858 105 141 287 223 273 206 252 239 175 COM3 656 704 1.000 746 639 192 145 221 215 264 209 227 247 222 COM4 687 722 746 1.000 642 152 106 208 192 241 201 197 211 196 COM6 573 858 639 642 1.000 069 128 214 150 232 129 229 171 128 WLC2 132 105 192 152 069 1.000 474 396 422 273 313 372 250 343 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS WLC3 139 141 145 106 128 474 1.000 WLC4 198 287 221 208 214 WLC5 180 223 215 192 WLC6 145 273 264 WE1 152 206 WE3 121 WE4 WE5 64 384 483 302 207 286 150 204 396 384 1.000 609 427 295 430 254 305 150 422 483 609 1.000 431 262 358 250 272 241 232 273 302 427 431 1.000 293 336 325 268 209 201 129 313 207 295 262 293 1.000 577 624 640 252 227 197 229 372 286 430 358 336 577 1.000 616 570 171 239 247 211 171 250 150 254 250 325 624 616 1.000 635 080 175 222 196 128 343 204 305 272 268 640 570 635 1.000 Appendix B: Table 3: FA - KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling 861 Adequacy Bartlett's Test of Approx Chi- Sphericity Square 1.944E3 df Sig Appendix B: Table 4: FA Communalities Initial Extraction COM1 1.000 677 COM2 1.000 839 COM3 1.000 743 COM4 1.000 766 COM6 1.000 741 WLC2 1.000 494 WLC3 1.000 575 WLC4 1.000 607 WLC5 1.000 681 91 000 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS WLC6 1.000 397 WE1 1.000 715 WE3 1.000 668 WE4 1.000 749 WE5 1.000 724 65 Extraction Method: Principal Component Analysis Appendix B: Table 5: FA - Total Variance Explained Extraction Sums of Squared Rotation Sums of Squared Loadings Loadings Initial Eigenvalues Component Total % of Cumulative Variance % Total % of Cumulative Variance % Total % of Cumulative Variance % 5.173 36.948 36.948 5.173 36.948 36.948 3.773 26.954 26.954 2.677 19.124 56.073 2.677 19.124 56.073 2.852 20.372 47.326 1.526 10.901 66.973 1.526 10.901 66.973 2.751 19.648 66.973 813 5.809 72.782 609 4.347 77.129 566 4.039 81.168 504 3.597 84.765 411 2.934 87.699 394 2.813 90.512 10 352 2.516 93.027 11 334 2.389 95.416 12 274 1.956 97.372 13 245 1.750 99.122 14 123 878 100.000 EMPL LOYEE PE ERFROMA ANCE IN V VIETNAM MESE DOM MESTIC BA ANKS Appen ndix B: Table e 3: FA - KMO and Bartle ett's Test Kaiser Meyer-Olkin Measure of Sampling S 861 Adequa acy Bartlettt's Test of Approxx Chi- Sphericcity Square e 1.944E3 df Extraction Method: Principal Com mponent Analysiis 91 66 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS Appendix B: Table 6: FA - Component Matrixa Component COM1 607 -.555 COM2 729 -.554 COM3 705 COM4 685 COM6 646 -.568 WLC2 WLC3 WLC4 598 WLC5 568 WLC6 551 WE1 591 WE3 646 WE4 600 WE5 580 Extraction Method: Principal Component Analysis a components extracted 67 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS Appendix B: Table 6: FA - Rotated Component Matrixa Component COM1 816 COM2 899 COM3 839 COM4 861 COM6 854 WLC2 659 WLC3 756 WLC4 737 WLC5 807 WLC6 WE1 822 WE3 733 WE4 847 WE5 828 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in iterations 68 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS Appendix B: Table 7: FA - Component Transformation Matrix Compon ent 663 531 527 -.747 508 428 -.040 -.678 734 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization Appendix B: Table 8: FA - Rotated Component Matrixa Component COM1 816 COM2 899 COM3 839 COM4 861 COM6 854 WLC2 659 WLC3 756 WLC4 737 WLC5 807 WLC6 WE1 822 69 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS WE3 733 WE4 847 WE5 828 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in iterations Appendix B: Table 9: FA - Component Transformation Matrix Compon ent 663 531 527 -.747 508 428 -.040 -.678 734 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization Appendix B: Table 10: FA - Component Score Coefficient Matrix Component COM1 232 -.056 -.013 COM2 249 -.020 -.026 COM3 230 -.004 -.026 COM4 240 -.010 -.041 COM6 242 -.033 -.034 WLC2 -.054 -.016 265 70 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS WLC3 -.044 -.129 349 WLC4 -.016 -.061 301 WLC5 -.032 -.102 351 WLC6 006 -.002 197 WE1 -.031 333 -.080 WE3 -.031 260 015 WE4 -.014 354 -.119 WE5 -.041 335 -.074 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization Component Scores Appendix B: Table 11: FA - Descriptive Statistics Mean Std Deviation Analysis N EP1 3.38 1.054 260 EP2 3.62 997 260 EP3 3.78 827 260 Appendix B: Table 12: FA - Correlation Matrix EP1 Correlation EP2 EP3 EP1 1.000 372 480 EP2 372 1.000 571 EP3 480 571 1.000 71 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS 72 Appendix B: Table 13: FA - KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity 650 Approx Chi-Square 173.656 df Sig .000 Appendix B: Table 14: FA Communalities Initial Extraction EP1 1.000 560 EP2 1.000 652 EP3 1.000 741 Extraction Method: Principal Component Analysis Appendix B: Table 15: FA - Total Variance Explained Initial Eigenvalues Compon ent Total % of Variance Extraction Sums of Squared Loadings Cumulative % 1.953 65.106 65.106 639 21.299 86.404 408 13.596 100.000 Extraction Method: Principal Component Analysis Total 1.953 % of Variance 65.106 Cumulative % 65.106 EMPL LOYEE PE ERFROMA ANCE IN V VIETNAM MESE DOM MESTIC BA ANKS Append dix B: Table 16: Componeent Matrixa Component EP1 748 EP2 808 EP3 861 Extractiion Method: P Principal Compponent Analyssis a com mponents extraacted App pendix B: Ta able 17: Com mponent Scoree Coefficient M Matrix Component EP1 383 EP2 413 EP3 441 Extractiion Method: P Principal Compponent Analyssis Rotationn Method: Vaarimax with Kaaiser Normalizzation Componnent Scores 73 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS 74 Appendix B: Table 18: Component Score Coefficient Matrix Component EP1 383 EP2 413 EP3 441 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization Component Scores Appendix B: Table 19: Component Score Covariance Matrix Compon ent 1 1.000 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization Component Scores Regression Appendix B: Table 20 - Descriptive Statistics Mean Std Deviation N employees' performance 0000000 1.00000000 260 compensation 0000000 1.00000000 260 work-life conflicts 0000000 1.00000000 260 1.00000000 260 working environment 2.9036602 E-17 Appendix B: Table 21 - Correlations employees' performance Pearson Correlation employees' performance 1.000 compensation 730 work-life working conflicts environment 228 155 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS Sig (1-tailed) compensation 730 1.000 000 000 work-life conflicts 228 000 1.000 000 working environment 155 000 000 1.000 000 000 006 compensation 000 500 500 work-life conflicts 000 500 500 working environment 006 500 500 employees' performance 260 260 260 260 compensation 260 260 260 260 work-life conflicts 260 260 260 260 working environment 260 260 260 260 employees' performance N 75 Appendix B: Table 22 - Variables Entered/Removedb Model Variables Variables Entered Removed Method working environment, work-life Enter conflicts, compensationa a All requested variables entered b Dependent Variable: employees' performance Appendix B: Table 23 - Coefficient Correlationsa working Model environment Correlations working environment work-life conflicts compensation 1.000 000 000 work-life conflicts 000 1.000 000 compensation 000 000 1.000 EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS Covariances 76 working environment 002 000 000 work-life conflicts 000 002 000 compensation 000 000 002 a Dependent Variable: employees' performance Appendix B: Table 24 - Collinearity Diagnosticsa Variance Proportions Dimensi working Model on Eigenvalue Condition Index 1 1.000 1.000 00 1.00 00 00 1.000 1.000 00 00 1.00 00 1.000 1.000 00 00 00 1.00 1.000 1.000 1.00 00 00 00 a Dependent Variable: employees' performance (Constant) compensation work-life conflicts environment EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS 77 Appendix B: Table 25 - Residuals Statisticsa Minimum Predicted Value Maximum Mean Std Deviation N 1.6092342E 3.0260215E 0000000 78019879 260 62553165 260 0 Residual - 2.46158433 1.45067143 5.90072862 E0 E0 E-17 Std Predicted Value -3.879 2.063 000 1.000 260 Std Residual -2.306 3.912 000 994 260 a Dependent Variable: employees' performance