Factors affecting employee commitment in banking industry in Ho Chi Minh

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyễn Thị Minh Thuyên FACTORS AFFECTING EMPLOYEE COMMITMENT IN BANKING INDUSTRY 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 Nguyễn Thị Minh Thuyên FACTORS AFFECTING EMPLOYEE COMMITMENT IN BANKING INDUSTRY IN HO CHI MINH CITY ID: 21110023 MASTER OF BUSINESS (Honours) SUPERVISOR: DR NGUYỄN ĐÔNG PHONG Ho Chi Minh City – Year 2014 Acknowledgements The time of studying MBus program in International School of Business (ISB) and the time of doing this master thesis, I had chances to work with many great professors and be supported from ISB staff Finishing this program, I not only learn more knowledge, skills and experience of the economy and management, but also provide many aspects of social life such as very nice friendship with many new interesting members of the program who work in many other fields Therefore, I would like to express my sincere gratitude and deepest appreciation to my supervisor, Dr Nguyen Dong Phong, for his continuous support of my thesis And I would like to thank all professors, leaders and members of ISB for their enthusiastic supporting me during whole program Last at all, I would like to thank my friends and colleagues not only for their enthusiastic supporting, participation and launching to help me finish research survey, but also take the best advantages during all my studying period Ho Chi Minh City, April, 2014 Nguyen Thi Minh Thuyen Abstract Employee retention is one of the most important practices of human resources management It contributes to achieve the target and it’s also an important factor to identify the sustainable development of an organization Especially in recent crisis stage, the banking sector is going down, employee’s turnover is a serious problem of some vietnamese banks Because employee’s turnover is an human resource organizational threat, so it’s worth to research We also have many theories and study for employee retention or commitment in many fields but there is not any closed research for vietnamese banking industry in Ho Chi Minh city, especially in this crisis period Purpose – This study analyzes the impact of the five variables based on reliable previous research are training, leadership, working environment, remuneration and policy to the employee commitment in banking industry in Ho Chi Minh city The result may help bankers have suitable HR practices to motivate, encourage and retain their employees Design/ methodology/ approach – A five-point Likert survey was conducted involving 170 banking employees in Ho Chi Minh city Scale reliability (Cronbach’s Anpha), Factor Analysis and Regression were performed to test and analyze the relationship between independents variables and dependent variable Findings – This study prove the significant impact of Effectiveness of Leadership practices, Employee’s Utility, Elements of Career Development to the Employee Commitment Basing on this research, bankers will have more alternative suitable HR practices depending on their conditions and their strategies Keywords – Human resource practices, employee, commitment, retention, leadership, working environment, remuneration Table of Contents CHAPTER 1: INTRODUCTION 1.1 Research background 1.2 Research problems 1.3 Research objectives and questions 1.4 Research scope 1.5 Research methodology 1.6 Structure of the Thesis CHAPTER 2: LITERATURE REVIEW AND HYPOTHESIS 2.1 Original theories 2.2 Previous researches and conceptualization 11 2.3 The conceptual model and hypotheses of the research 21 CHAPTER 3: RESEARCH METHODOLOGY 23 3.1 Research design 23 3.1.1 Qualitative research 23 3.1.2 Quantitative research 26 3.2 Data analysis method 27 3.3 Research process 31 CHAPTER 4: RESEARCH RESULT 32 4.1 Demographic Sampling 32 4.2 Testing of reliability by Cronbach's alpha coefficient 34 4.3 Exploratory factor analysis (EFA) 36 4.3.1 Scale of employee commitment 36 4.3.2 Scale of research factors 37 4.4 Regression analysis 39 CHAPTER 5: IMPLICATION AND CONCLUSION 46 5.1 Discussion of finding 46 5.2 Practical implication 48 5.3 Limitation and suggestion for further research 54 REFERENCE 56 APPENDIX Group discussion outline 61 APPENDIX Questionaire 64 APPENDIX Descriptive Statistics 68 APPENDIX Testing reliability by Cronbach’s Alpha 72 APPENDIX Exploratory Factor Analysis (EFA) 73 APPENDIX Regression Analysis 76 List of Figures Figure 1.1 Components of operating costs of Vietnamese banks in 2012 Figure 2.1 Maslow’s original hierachy of needs five-stage pyramid Figure 2.2 Research model 22 Figure 3.1 Research design process 31 Figure 4.1.1 Gender structure 32 Figure 4.1.2 Marital status 32 Figure 4.1.3 Age group structure 33 Figure 4.1.4 Education structure 33 Figure 4.1.5 Type of Bank structure 33 Figure 4.4.1 Final research model 45 List of Tables Table 3.1 Adjusted measurement scale and scale encoding 25 Table 4.2.1 Cronbach’s Alpha reliability coefficient of employee commitment 34 Table 4.2.2 Cronbach’s Alpha reliability coefficient of research factors 35 Table 4.3.1 KMO and Bartlett’s Test for employee commitment 36 Table 4.3.2 EFA result of employee commitment 36 Table 4.3.3 KMO and Bartlett’s Test for research factors 38 Table 4.3.4 EFA result of research factors 38 Table 4.4.1 Pearson Correlation model 41 Table 4.4.2 ANOVA Testing result 42 Table 4.4.3 Model Summary 42 Table 4.4.4 Regression Coefficients 43 Table 4.4.5 Testing hypotheses 44 Table 5.2.1 Descriptive statistics of COM 49 Table 5.2.2 Descriptive statistics of EUTI 49 Table 5.2.3 Descriptive statistics of ELEA 51 Table 5.2.4 Descriptive statistics of ECAR 52 List of Abbreviations HR Human resource HRM Human resource management SPSS Statistical Package for the Social Sciences – a statistic software EFA Exploratory Factor Analysis Tơi khó mà gắn bó lâu dài với ngân hàng There is little to stick with this bank indefinitely (negative) Tôi sẵn sàng nỗ lực để giúp ngân hàng thành cơng I am willing work hard to help this bank be successful Tơi tự hào thành viên ngân hàng I am proud to tell others that I am a member of this bank Tôi thật quan tâm đến tương lai ngân hàng I really care about the future of this bank 63 APPENDIX 2: QUESTIONNAIRE IN ENGLISH Dear participants, I am Nguyen Thi Minh Thuyen, a student of the program "Master of Business Administration and Commerce" of International School of Business - University of Economics in Ho Chi Minh City At the present, I have been doing a research to indentify some factors to affect to organizational commitment of core employees in Vietnamese banking industry Please kindly share your own thinking on the issues given in this questionnaire All your ideas will help for the success of my research A INDIVIDUAL INFORMATION Please kindly provide some information about yourself by tick  in the appropriate box: Gender:  Male  Female Age:  Under 30 years old  Single Marital status:  Married  Other Education:  Colleges  30 - 40 years old  Bachelor  Over 40 years old  Under bachelor Type of the ownership of your current bank:  State - Owned Bank  Joint - Stock Commercial Bank Branch  Joint - Venture Bank  Wholly Foreign - Owned Bank/ Foreign Bank‟s Your current professional position:  Teller  Credit officer  Back officer  Manager Experience time at your current bank:  Under years  2- years  6- 10 years  Over 10 years Your current average gross salary per month:  Under millions/month  - 11 millions/month  12 - 20 millions/month  Over 20 millions/month 64 B CONTENT OF THE QUESTIONNAIRE Please kindly rate your agreement with the following statements by tick  in the appropriate box: Rating scale: [1] Strongly disagree [2] Disagree [3] Neutral [4] Agree [5] Strongly agree Measurement of Scale Rating TRAINING AND CAREER DEVELOPMENT I am properly orientated and trained upon joining this bank This bank has career development activities for employees LEADERSHIP Leadership practices help me to become a high performing employee Leadership practices enhance my job satisfaction 5 Leadership practices make a positive contribution to the overall effectiveness Employees are well informed on matters important to them This bank has sufficient effort to determine the thought and responses of employees Organisational structure encourages horizontal & vertical communication WORKING ENVIRONMENT My working life balances with my family life 10 Overall this bank is a harmonious place to work 11 The physical working conditions are pleasant REMUNERATION AND REWARDS 12 Employees are given positive recognition when they have high performance 13 This bank pays well 14 This bank offers a good benefits package compared to other organizations 15 This bank offers good opportunities for promotion ORGANIZATIONAL CULTURE AND POLICIES 16 Policies and procedures are helpful, well understood and up to date 17 Progress towards meeting planned objectives is periodically reviewed 18 The organizational structure facilitates the way we things 19 This bank has a defined vision/mission to meet its goals ORGANIZATIONAL COMMITMENT 20 I feel a strong sense of belonging to this bank 21 This bank really inspires me best to my job performance 22 My values and this bank's values are very similar 23 I will stick with this bank indefinitely 24 I am proud that I am a member of this bank 65 IN VIETNAMESE Xin chào Anh/Chị, Tôi tên Nguyễn Thị Minh Thuyên, học viên Cao học ngành Quản Trị Kinh Doanh Viện Đào tạo Quốc tế - Trường Đại học Kinh tế TP Hồ Chí Minh – Khóa năm 2011 Hiện thực đề tài nghiên cứu yếu tố ảnh hưởng đến gắn kết nhân viên với tổ chức (phạm vi Ngân hàng thương mại Việt Nam) Rất mong anh/chị dành thời gian thực bảng khảo sát bên Tất ý kiến Anh/Chị có ý nghĩa với thành công nghiên cứu A THƠNG TIN CÁ NHÂN Anh/Chị vui lịng cung cấp số thông tin cá nhân cách đánh dấu  vào tương ứng: Giới tính:  Nam  Nữ Tình trạng nhân:  Độc thân  Đã kết hôn  Khác Độ tuổi:  Dưới 30  30 – 40  Trên 40 Trình độ học vấn:  Dưới Đại học  Đại học  Trên Đại học Loại hình Ngân hàng thƣơng mại Anh/Chị làm việc (phân loại theo hình thức sở hữu):  Nhà nước  Cổ phần  Liên doanh  100% vốn nước ngoài/ Chi nhánh Ngân hàng nước ngồi Cơng việc Anh/Chị Ngân hàng:  Giao dịch viên  Nhân viên kinh doanh  Nhân viên nghiệp vụ hỗ trợ  Cấp quản lý Thời gian công tác Anh/Chị Ngân hàng tại:  Dưới năm  2- năm  6- 10 năm  Trên 10 năm Mức lƣơng binh quân Anh/Chị:  Dưới triệu đồng/ tháng  -11 triệu đồng/ tháng  12 – 20 triệu đồng/ tháng  Trên 20 triệu đồng/ tháng 66 B NỘI DUNG NGHIÊN CỨU CHÍNH Anh/Chị vui lịng cho biết mức độ đồng ý phát biểu sau việc đánh dấu  vào tương ứng: [1] Hồn tồn khơng đồng ý [2] Khơng đồng ý [4] Đồng ý [5] Hồn tồn đồng ý Tiêu chí đánh giá [3] Trung hịa (khơng có ý kiến) Mức độ đồng ý ĐÀO TẠO VÀ PHÁT TRIỂN Tôi định hướng đào tạo gia nhập vào Ngân hàng Ngân hàng có chương trình phát triển nghề nghiệp cho nhân viên LÃNH ĐẠO Lãnh đạo Ngân hàng giúp tơi thể tốt đạt hiệu suất công việc cao Lãnh đạo Ngân hàng làm tăng hài lòng với công việc 5 Lãnh đạo Ngân hàng có đóng góp tích cực đến hiệu chung Ngân hàng thông tin đầy đủ với nhân viên vấn đề quan trọng liên quan đến họ Ngân hàng quan tâm, ghi nhận suy nghĩ phản ứng nhân viên Cơ cấu tổ chức Ngân hàng giúp phát huy hệ thống thông tin dọc ngang MÔI TRƢỜNG LÀM VIỆC Cơng việc hài hịa, cân sống 10 Nhìn chung Ngân hàng nơi hài hoà để làm việc 11 Điều kiện, công cụ làm việc trang bị tốt, đầy đủ LƢƠNG THƢỞNG 12 Nhân viên ghi nhận đánh giá tích cực đạt hiệu cao 13 Ngân hàng có chế độ đãi ngộ hợp lý 14 Ngân hàng có chế độ đãi ngộ cạnh tranh 15 Ngân hàng tạo điều kiện tốt để nhân viên thăng tiến CHÍNH SÁCH 16 Chính sách, quy trình Ngân hàng hữu ích, dễ hiểu tân tiến 17 Tiến độ thực mục tiêu xem xét định kỳ 18 Cơ cấu tổ chức Ngân hàng hỗ trợ tốt cho công việc 19 Ngân hàng có định hướng rõ ràng để hồn thành mục tiêu đề SỰ GẮN KẾT VỚI TỔ CHỨC 20 Tơi thấy thuộc tổ chức 21 Ngân hàng tạo động lực tốt để hồn thành cơng việc 22 Các quan điểm, giá trị Ngân hàng phù hợp với 23 Tôi gắn bó lâu dài với Ngân hàng 24 Tơi tự hào thành viên Ngân hàng 67 APPENDIX 3: DESCRIPTIVE STATISTICS Gender Percent Frequency Valid Male Female Total 74 96 170 43.5 56.5 100.0 Valid 103 65 170 Valid Percent 60.6 38.2 1.2 100.0 60.6 38.2 1.2 100.0 Age Percent Valid Percent Frequency Cumulative Percent 43.5 100.0 Cumulative Percent 60.6 98.8 100.0 Cumulative Percent 121 71.2 71.2 71.2 30 - 40 43 25.3 25.3 96.5 Over 40 3.5 3.5 100.0 170 100.0 100.0 Under 30 Valid 43.5 56.5 100.0 Married Percent Frequency Singel Married Other Total Valid Percent Total Edu Frequency College Valid Bachelor Upper bachelor Total Percent Valid Percent Cumulative Percent 1.8 1.8 1.8 145 22 170 85.3 12.9 100.0 85.3 12.9 100.0 87.1 100.0 68 Type Frequency Percent State - Owned Bank Joint - Stock Commercial Bank Joint – Venture Bank Valid Wholly Foreign - Owned Bank/ Foreign Bank‟s Branch Total Frequency Valid Teller Credit officer Back officer Manager Total 28 121 16.5 71.2 16.5 71.2 Cumulative Percent 16.5 87.6 13 4.7 7.6 4.7 7.6 92.4 100.0 170 100.0 100.0 Job Percent 34 61 47 28 170 Valid Percent 20.0 35.9 27.6 16.5 100.0 Experience Frequency Percent Valid Under years - years - 10 years Over 10 years Total 37 94 36 170 20.0 35.9 27.6 16.5 100.0 Valid Percent 21.8 55.3 21.2 1.8 100.0 Salary Frequency Percent Under millions/ month - 11 millions/ month Valid 12 - 20 millions/ month Over 20 millions/ month Total 44 79 36 11 170 Valid Percent 25.9 46.5 21.2 6.5 100.0 21.8 55.3 21.2 1.8 100.0 Valid Percent 25.9 46.5 21.2 6.5 100.0 Cumulative Percent 20.0 55.9 83.5 100.0 Cumulative Percent 21.8 77.1 98.2 100.0 Cumulative Percent 25.9 72.4 93.5 100.0 69 Descriptive Statistics of COM N Com3 Com1 Com4 Com2 Com5 Valid N (listwise) Rem4 Led5 Env2 Led6 Pol1 Rem3 Rem2 Valid N (listwise) Statistic 170 170 170 170 170 170 N Statistic 170 170 170 170 170 170 170 170 N Led3 Pol3 Led1 Led2 Pol2 Pol4 Tra2 Led4 Env1 Valid N (listwise) Statistic 170 170 170 170 170 170 170 170 170 170 Minimum Maximum Statistic Statistic 1 5 5 Mean Statistic Std Error 3.41 048 3.26 058 3.36 062 3.26 053 3.76 053 Std Deviation Statistic 630 758 812 693 691 Descriptive Statistics of EUTI Minimum Maximum Mean Std Deviation Statistic Statistic Statistic Std Error Statistic 3.48 053 690 3.34 061 793 3.59 055 718 3.50 060 779 3.44 058 753 3.12 072 935 3.51 058 756 Descriptive Statistics of ELEA Minimum Maximum Mean Statistic Statistic 1 1 1 5 5 5 5 Statistic Std Error 3.38 059 3.25 067 3.29 062 3.32 063 3.38 061 3.59 050 3.57 055 3.31 054 3.34 069 Std Deviation Statistic 770 871 810 824 800 649 720 705 904 70 Tra1 Env3 Rem1 Valid N (listwise) Descriptive Statistics of ECAR N Minimum Maximum Mean Std Deviation Statistic Statistic Statistic Statistic Std Error Statistic 170 3.68 063 818 170 3.64 058 751 170 3.51 054 707 170 71 APPENDIX 4: TESTING RELIABILITY BY CRONBACH’S ALPHA Item-Total Statistics Scale Mean if Item Deleted Scale Variance if Item Deleted Corrected Item-Total Correlation Cronbach's Alpha if Item Deleted Tra1 3.57 519 546 Tra2 3.68 670 546 Led1 Led2 Led3 Led4 Led5 Led6 Env1 Env2 Env3 Rem1 Rem2 Rem3 Rem4 Pol1 Pol2 Pol3 Pol4 Com1 Com2 Com3 Com4 Com5 16.85 16.82 16.75 16.83 16.79 16.64 7.22 6.98 6.93 10.11 10.11 10.50 10.14 10.22 10.28 10.41 10.08 13.80 13.80 13.66 13.70 13.30 9.231 8.576 9.359 9.326 9.419 9.630 1.536 2.082 1.971 3.788 3.271 2.808 4.035 4.459 3.955 3.640 4.604 4.279 4.729 4.688 4.259 5.051 626 769 641 730 601 566 597 527 548 528 694 657 444 663 798 824 758 623 530 632 564 412 843 815 840 826 848 854 593 672 647 739 652 674 777 888 838 829 860 706 739 710 730 776 Times Group Variable 1st Training and cereer development 1st Leadership 1st Working Environment 1st Remuneration and reward 1st Organizational culture and policies 1st Organizational commitment Cronbach's Alpha N of items 703 861 729 771 887 775 72 APPENDIX 5: EXPLORATORY FACTOR ANALYSIS (EFA) EFA result of commitment scale KMO and Bartlett's Test 790 217.437 10 000 Kaiser-Meyer-Olkin Measure of Sampling Adequacy Approx Chi-Square Bartlett's Test of df Sphericity Sig Total Variance Explained Component Initial Eigenvalues Total Extraction Sums of Squared Loadings % of Cumulative Variance % 53.300 53.300 15.300 68.600 2.665 765 684 13.678 82.278 488 9.751 92.029 399 7.971 100.000 Total 2.665 % of Cumulative Variance % 53.300 53.300 Extraction Method: Principal Component Analysis Component Matrixa Component Com3 Com1 Com4 Com2 Com5 792 788 750 712 590 Extraction Method: Principal Component Analysis a components extracted 73 EFA result of research factors KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Approx Chi-Square Bartlett's Test of Sphericity df Sig .912 2072.212 171 000 Total Variance Explained Initial Eigenvalues Component Total Extraction Sums of Squared Loadings % of Cumulative Variance % Total % of Cumulative Variance % Rotation Sums of Squared Loadings Total % of Cumulative Variance % 9.246 48.666 48.666 9.246 48.666 48.666 5.277 27.772 27.772 1.719 9.049 57.715 1.719 9.049 57.715 4.052 21.328 49.100 1.006 5.294 63.009 1.006 5.294 63.009 2.643 13.909 63.009 901 4.745 67.754 881 4.635 72.389 706 3.716 76.104 652 3.432 79.536 613 3.224 82.761 502 2.643 85.404 10 419 2.206 87.610 11 397 2.087 89.697 12 344 1.808 91.505 13 323 1.700 93.205 14 292 1.539 94.744 15 261 1.371 96.115 16 228 1.202 97.318 17 201 1.059 98.376 18 165 870 99.246 19 143 754 100.000 Extraction Method: Principal Component Analysis 74 Rotated Component Matrixa Component Led3 840 103 121 Pol3 736 368 240 Led1 679 239 369 Led2 664 477 051 Pol2 663 252 390 Pol4 658 444 239 Tra2 627 -.053 596 Led4 615 434 169 Env1 568 344 368 Rem4 172 749 -.051 Led5 285 743 -.043 Env2 -.012 714 432 Led6 235 664 216 Pol1 456 584 239 Rem3 498 564 132 Rem2 412 482 467 Tra1 114 006 789 Env3 337 255 555 Rem1 489 170 493 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in iterations 75 APPENDIX 6: REGRESSION ANALYSIS Pearson Correlations COM COM ELEA EUTI ECAR COM ELEA EUTI ECAR COM ELEA EUTI ECAR Pearson Correlation Sig (1-tailed) N ELEA 1.000 472 664 229 000 000 001 170 170 170 170 EUTI 472 1.000 000 000 000 500 500 170 170 170 170 ECAR 664 000 1.000 000 000 500 500 170 170 170 170 229 000 000 1.000 001 500 500 170 170 170 170 Model Summary Mod el R R Adjusted R Std Error Square Square of the Estimate 846a 715 R Square Change 710 53834025 Change Statistics F df1 df2 Change 715 139.047 Sig F Change 166 000 F 139.047 Sig .000b a Predictors: (Constant), ECAR, EUTI, ELEA ANOVAa Model Regression Residual Total Sum of Squares 120.892 48.108 169.000 df Mean Square 40.297 166 290 169 a Dependent Variable: COM b Predictors: (Constant), ECAR, EUTI, ELEA 76 Coefficientsa Model Unstandardized Coefficients B Standardized Coefficients Std Error 1.002E-013 041 ELEA 472 EUTI 664 ECAR 229 a Dependent Variable: COM 041 041 041 (Constant) t Sig Beta 472 664 229 000 1.000 11.394 16.024 5.527 000 000 000 77