Impact of motivatiors on employee retention : a study of banking industry in Vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business TANG LE HUY IMPACT OF MOTIVATORS ON EMPLOYEE RETENTION: A STUDY OF BANKING INDUSTRY IN VIETNAM ID:21110011 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr PHAM NGOC THUY Ho Chi Minh City - Year 2014 Acknowledgement Firstly, I would like to express my appreciation to my research supervisor, Dr Pham Ngoc Thuy for her support, suggesting, guidance during time of my dissertation Secondly, I would like to express my gratitude to ISB committee thoroughly guidance, support to every student in each steps of this study Thirdly, I would warmly thank my family, who has continued to be a source of inspiration and encouragement throughout this program, especially my parents, and my wife who give a motivator for me to accomplish the MBA degree Last, ISB staff helped, supported with their best for convenience of MBUS I am greatly appreciated for their contribution to my present result Tang Le Huy February 2014 I ABSTRACT Employees retaining is very important for surviving of any organization The study identifies and measures the impact level of motivator factors on employee retention in banking industry in Vietnam Data was collected from 228 persons, who work in three commercial banks in Binh Duong province A likert-scale questionnaire was used to detect motivated factor and employee‘s retention The measurement scales were refined and tested unidimentionality, reliability and validity by Cronbach‘s alpha and exploratory factor analysis Multiple regression analysis was used to analyze the data of the study Research results suggested that Growth, Advancement, Recognition, Responsibility, and Achievement have positive impacts on employee retention in banking industry Key words: motivated factors, employee‘s retention II TABLE OF CONTENT LIST OF TABLES VI LIST OF FIGURES VI CHAPTER 1: INTRODUCTION 1.1 Background 1.2 Problem statement 1.3 Research Objectives 1.4 Research scope 1.5 Thesis structure CHAPTER 2: LITERATURE REVIEW 2.1 Predictors of employee retention 2.2 Motivators of Employee retention 2.2.1 Advancement 2.2.2 Responsibility 10 2.2.3 Recognition 10 2.2.4 Achievement 11 2.2.5 Growth 11 2.3 Model and Hypothesis 12 2.4 Chapter summary 13 CHAPTER 3: RESEARCH METHODOLOGY 14 3.1 Research design 14 3.2 Research methodology 15 3.2.1 Sampling : 15 3.2.2 Method of analysis 16 3.3 Measuring instrument 17 3.3.1 Minesota satisfaction Questionnaire (MSQ) 17 III 3.3.2 Employee retention 18 3.4 Chapter summary 19 CHAPTER : DATA ANALYSIS AND FINDINGS 20 4.1 Sample characteristics 20 4.1.1 Gender: 20 4.1.2 Age: 20 4.1.3 Working position: 21 4.2 Assessment of measurement scales 21 4.2.1 Testing reliability of scales 22 4.2.2 Exploratory Factor Analysis (EFA) 24 4.3 Testing model and hypotheses 26 4.3.1 Testing model 26 4.3.2 Testing hypotheses 28 4.3.3 Description of statistics of overall employee retention 31 4.4 Discussions 31 4.4.1 Levels of importance of motivators 31 4.4.2 Differentiation among three groups of working duration 33 4.4.3 Comparing the level of retention between managers and staff 35 4.6 Chapter summary 37 CHAPTER : CONCLUSIONS AND RECOMMENDATIONS 38 5.1 Conclusion 38 5.2 Managerial implication and Recommendation 39 5.3 Limitation and further research direction 42 IV REFERENCES 43 APPENDIX : SURVEY QUESTIONNAIRE 47 APPENDIX : CRONBACH'S ALPHA TEST RESULTS 51 APPENDID 3: EXPLORATORY FACTOR ANALYSIS TEST RESULTS 55 APPENDID 4: RESULTS OF REGRESSION ANALYSIS 58 V LIST OF TABLES Table 1: The turnover rate of Vietinbank in 2012-2013 Table 2: Maslow vs Hertzberg - Comparative Analysis: Table : The result of job enrichment program by Herzberg 1976 Table : Descriptive Statistics by gender 20 Table 7: Descriptive Statistics by age 21 Table 8: Descriptive Statistics by working position 21 Table 9: Cronbach's Alpha test results 22 Table 10: KMO and Bartlett's Test 24 Table 11: Total Variance Explained 24 Table 12: Rotated Component Matrix(a) 24 Table 13: Result of EFA Retention 25 Table 14: Summary results of testing scales 26 Table 15: Correlations (a) 27 Table 16: Model Summary (b) 27 Table 17: ANOVA(b) 27 Table 18: Coefficients(a) 28 Table 19: Regression coefficients 29 Table 20: Descriptive statistics for the dimensions of employee retention 31 Table 21: Levels of importance factors on employee retention 31 Table 22: Descriptive statistics for employee‘s working time 33 Table 23: Model Summary(b) of three groups employee's working time 34 Table 24: Coefficients of three groups employee's working time 34 Table 25: Retention of employees 36 Table 26: Retention of managers, supervisors 36 VI LIST OF FIGURES Figure 1: Research model 12 Figure 2: Research procedure 14 Figure 3: Regression coefficients of model 30 VII CHAPTER 1: INTRODUCTION This chapter is an introduction and to provide background information of the present study and its objectives and purpose It includes five sections The first section is background of the research, the second is the problem statement, the third is the research objective, the fourth is the scope of study and the final section is the structure of study 1.1 Background The retention of employees is very important for the development and the accomplishment of an organization‘s goals and objectives Retention of employees can be a vital source of competitive advantage for any organization Today, changes in technology, global economics crisis, are directly affecting the relationships between employee and employer Outstanding employees may leave an organization because they become dissatisfied, underpaid or unmotivated (Coff, 1996) Besides these problems, asymmetric information or lack of information about the employees‘ performance may make a challenge for organization to retain productive employees Without adequate employees‘ performances, an organization may not be able to distinguish productive workers from non-productive ones Insufficient information about employees‘ performance may result in adverse selection by them (Grossman & Hart, 1986) The employees who perform better may move to other organizations for better opportunities The employees who cannot improve their positions are more likely to stay This is a problem when nonproductive and productive workers receiving the same or nearly the same compensation and package of perks because of management‘s inability to distinguish talented employees from the rest of the labor force in the organization The problem of attempting to keep talented members of the workforce is further complicated because of bounded rationality (Simon, 1976) High turnover rate is the reason for increasing cost in training and recruitment because the new employees don‘t have experiences and organization will spend a lot of time and cost on training them Moreover, high turnover rate has a negative influence on the emotion of retention people 1.2 Problem statement In 2013, Vietnamese government continues their objects: curbing inflation, stabilizing macro economy As a result, banking sector has faced with a difficult problem for reaching their target on credit growth and profit According to State Bank of Vietnam, total revenue of banking industry in 2012 is 28.600 billion dong, decreasing 50% compare to 2011 (InfoTV, 2013) and annual report in 2012 of Vietinbank, Vietcombank, Eximbank, Seabank showed that their employee‘s salary decreased comparing to 2011 Moreover, Nguyen Tri Hieu, expert in banking finance, who said that ―in 2012, salary of banking sector is average comparing to the rest sector‖ Thus, employees in banking sector have been faced with high pressure in work, lacking time for themselves, their family, and salary is not high, so the turnover rate in this sector is very high According to survey of Towers Watson in 2012 (Company provides support services, human resources management, financial and risk in Vietnam) reported that the turnover rate in banking sector is highest, 16% comparing to the rest sectors A result by interviewing the human resources managers of Vietinbank showed that Vietinbank‘s voluntary turnover rate in 2012 and the first six month of 2013 is 7.3% in average APPENDIX : SURVEY QUESTIONNAIRE PHIẾU KHẢO SÁT Kính chào Anh/Chị! Tơi tên Tăng Lê Huy - học viên cao học Viện ISB, ĐHKT-HCM - nghiên cứu yếu tố động viên nhân viên làm việc ngân hàng Kết nhằm xác định yếu tố động viên giúp nâng cao gắn bó nhân viên tổ chức Rất mong Ông/Bà dành thời gian trả lời Phiếu khảo sát Lưu ý khơng có câu trả lời hay sai, tất ý kiến phản hồi có giá trị cho nghiên cứu PHẦN I: THÔNG TIN TỔNG QUÁT Anh/Chị làm việc Ngân hàng:  Vietcombank  Vietinbank  Eximbank  Khác (xin ghi rõ):……… Chi nhánh (xin ghi rõ): ……………………………………………………… Thời gian Anh/Chị làm việc ngân hàng này:  < năm  1-3 năm Vị trí cơng tác Anh/Chị:  Quản lý  > năm  Nhân viên Gọi ―X‖ nơi Anh/Chị làm việc để trả lời cho câu hỏi phần sau Hồn tồn khơng đồng ý Khơng đồng ý Trung dung Đồng ý Hồn tồn đồng ý PHẦN II: THÔNG TIN VỀ CÁC YẾU TỐ ĐỘNG VIÊN … có hội thăng tiến cơng việc … có hội học hỏi tiến công việc … có hội thăng chức … có hội phát triển nghề nghiệp 5 … tự hoạch định công việc … tự định cho cơng việc … có trách nhiệm cơng việc của người khác … tự đánh giá công việc … tự chịu trách nhiệm cơng việc Xin cho biết mức độ đồng ý Anh/Chị với phát biểu sau ngân hàng ―X‖ đánh dấu (√) vào ô tương ứng, với: Ơ số 1: Hồn tồn khơng đồng ý Ơ số 5: Hồn tồn đồng ý Cịn với mức độ khác đánh vào số 2, Làm việc ngân hàng “X”, tơi cảm thấy mình: 47 Làm việc ngân hàng “X”, cảm thấy: 10 … tổ chức ý đến làm việc tốt 11 … tổ chức đánh giá cao công việc 12 … tổ chức cơng nhận việc tơi hồn thành 13 … tổ chức thường thể nhận biết làm tốt công việc 14 … tổ chức khen ngợi làm tốt công việc Làm việc ngân hàng “X”, 15 … tơi thấy kết cơng việc tơi làm 16 … thấy tự hào hồn thành tốt cơng việc giao 17 … tơi làm cơng việc có giá trị 18 … tơi ln có hội làm việc tốt 19 … cảm nhận thành đạt từ công việc làm 20 Tôi tự hào làm việc ngân hàng X cảm nhận tiến 21 Công việc giúp phát triển trưởng thành nghề nghiệp 22 Cơng việc giúp tơi hồn thiện kĩ khả làm việc 23 Tơi có kế hoạch làm việc cho ngân hàng khác khoảng thời gian ba năm 24 Tơi hài lịng với công việc ngân hàng X 25 Nếu tơi muốn tìm kiếm vị trí làm việc khác, xem xét ngân hàng X 26 Tơi thấy có tương lai làm ngân hàng X 27 Nếu định, định tiếp tục làm việc cho ngân hàng X 28 Nếu nhận lời mời làm việc tốt từ ngân hàng khác, chấp nhận 29 Công việc mà làm quan trọng với 30 Tôi thích làm việc cho ngân hàng X PHẦN III: THÔNG TIN KHÁC Xin Anh/Chị cho biết số thông tin cá nhân khác nhằm phục vụ cho việc phân loại trình bày liệu thống kê: Giới tính:  Nam  Nữ Nhóm tuổi:  < 25  25-35  36-45  >45 tuổi Thu nhập bình quân/ tháng (Triệu đồng):  < tr  - < 10 tr  10 – 20 tr  > 20 tr Tình trạng nhân:  Độc thân  Có gia đình & có  Có gia đình & chưa có Xin chân thành cám ơn hợp tác Anh/Chị! 48 PERSONNEL SURVEY QUESTIONNAIRE Dear All of You I'm Tang Le Huy, are studying for Master of Business Administration of ISB We're conducting research motivate factors affecting employee retention in banking industry The results identify the motivators which increase level of employee retention in organization Would you please help me take a moment to fill out the questionnaire below Please note that none of the answers right or wrong All responses are the opinions of value and you will be kept absolutely secret PART 1: GENERAL INFORATION You are working on:  Vietcombank  Vietinbank  Eximbank  other:……… Branch: ……………………………………………………… Timeserving in this bank:  < year  1-3 year Working Position:  > year  Manager/supervisors  officer Suppose ―X‖ is bank where you are working for answering the question below Completely Agree Agree No comment Disagree Guide replied: marked X in the box shows the extent agreed by you from to 5, in which: = Strongly Disagree, = Disagree, = Not sure you agree ordisagree / neutral, = Agree, = Strongly Agree Completely Disagree PART 2: INFORMATION ABOUT MOTIVATOR FACTORS Working in the bank “X” I have … The opportunities for advancement on this job … The chances of getting ahead on this job … The way promotions are given out on this job … The chances for advancement on this job 5 … The chance to be responsible for planning my work … The chance to make decisions on my own … The chance to to responsible for the work of others … The freedom to use my own judgment … The responsibility of my job Working in the bank “X” I feel 49 10 … The way I am noticed when I a good job 11 … The way I get full credit for the work I 12 … The recognition I get for the work I 13 … The way they usually tell me when I my job well 14 … The praise I get for doing a good job Working in the bank “X” , I 15 … Being able to see the result of the work I 16 … Being able to take pride in a job well done 17 … Being able to something worthwhile 18 … The chance to my best at all times 19 … The feeling of accomplishment I get from the job 20 I am proud to work in the bank “X” because I feel I have grown as a person 21 My job allows me to grow and develop as a person 22 My job allows me to improve my experience, skills and performance 23 I’m planning on working for another bank within a period of three years 24 Within “X” my work gives me satisfaction 25 If I wanted to another job or function, I would look first at the possibilities within “X” 26 I see a future for myself within “X” 27 If it were up to me, I will definitely be working for “X” for the next five years 28 If I received an attractive job offer from another bank, I would take the job 29 The work I’m doing is very important to me 30 I love working for X PART 3: OTHER INFORMATION Gender:  Male Age :  < 25  Female  25-35  36-45 Average income/ month (million VND dong): 45  10 – 20  > 20  Married Thank for you cooperation! 50 APPENDIX : CRONBACH'S ALPHA TEST RESULTS  ADVANCEMENT Reliability Statistics Cronbach's N of Items Alpha 915 Item-Total Statistics Scale Mean if Scale Variance Corrected Item- Cronbach's Item Deleted if Item Deleted Total Alpha if Item Correlation Deleted Adv01 9.95 6.314 848 874 Adv02 9.68 6.561 808 888 Adv03 9.96 6.773 788 895 Adv04 9.64 6.303 781 899  RESPONSIBILITY Reliability Statistics Cronbach's N of Items Alpha 884 Item-Total Statistics Scale Mean if Scale Variance Corrected Item- Cronbach's Item Deleted if Item Deleted Total Alpha if Item Correlation Deleted Res05 13.53 7.686 807 841 Res06 13.63 7.539 730 858 Res07 13.58 7.840 688 867 Res08 13.65 7.813 700 865 Res09 13.17 7.940 690 867 51  RECOGNITION Reliability Statistics Cronbach's N of Items Alpha 894 Item-Total Statistics Scale Mean if Scale Variance Corrected Item-Total Cronbach's Alpha if Item Deleted if Item Deleted Correlation Item Deleted Rec10 12.84 7.949 692 882 Rec11 12.85 8.612 680 884 Rec12 12.88 8.126 769 865 Rec13 13.00 7.555 787 860 Rec14 13.03 7.625 782 861  ACHIEVEMENT Reliability Statistics Cronbach's N of Items Alpha 910 Item-Total Statistics Scale Mean if Scale Variance Corrected Item-Total Cronbach's Alpha if Item Item Deleted if Item Deleted Correlation Deleted Ach15 13.97 8.017 703 905 Ach16 13.91 7.578 819 881 Ach17 14.02 8.127 721 901 Ach18 13.92 7.760 814 882 Ach19 13.86 7.513 811 882  GROWTH Reliability Statistics Cronbach's N of Items Alpha 894 52 Item-Total Statistics Scale Mean if Scale Variance Corrected Item- Cronbach's Item Deleted if Item Deleted Total Alpha if Item Correlation Deleted Gro20 7.29 2.656 815 828 Gro21 7.23 2.714 830 816 Gro22 7.12 2.989 733 898  RETENTION (FIRST TIME) Reliability Statistics Cronbach's N of Items Alpha 778 Item-Total Statistics Scale Mean if Scale Variance Corrected Item- Cronbach's Item Deleted if Item Deleted Total Alpha if Item Correlation Deleted Ret23 22.87 23.921 015 833 Ret24 22.19 18.394 761 708 Ret25 22.20 18.849 655 725 Ret26 22.27 19.186 667 725 Ret27 22.03 18.202 657 721 Ret28 22.35 24.202 -.007 835 Ret29 22.09 19.446 654 728 Ret30 22.10 17.933 731 709  RETENTION (SECOND TIME) Reliability Statistics Cronbach's N of Items Alpha 917 53 Item-Total Statistics Scale Mean if Scale Variance Corrected Item- Cronbach's Item Deleted if Item Deleted Total Alpha if Item Correlation Deleted Ret24 16.53 16.717 825 894 Ret25 16.54 17.016 733 906 Ret26 16.61 17.051 796 898 Ret27 16.36 16.584 705 912 Ret29 16.42 17.699 722 908 Ret30 16.43 16.026 825 893 54 APPENDID 3: EXPLORATORY FACTOR ANALYSIS TEST RESULTS  EFA for all scale of antecedent factors KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Approx Chi-Square Bartlett's Test of Sphericity df Sig Adv01 Adv02 Adv03 Adv04 Res05 Res06 Res07 Res08 Res09 Rec10 Rec11 Rec12 Rec13 Rec14 Ach15 Ach16 Ach17 Ach18 Ach19 Gro20 Gro21 Gro22 929 3889.158 231 000 Communalities Initial Extraction 1.000 859 1.000 805 1.000 802 1.000 767 1.000 811 1.000 741 1.000 639 1.000 658 1.000 647 1.000 682 1.000 674 1.000 734 1.000 765 1.000 761 1.000 650 1.000 781 1.000 699 1.000 809 1.000 796 1.000 834 1.000 888 1.000 756 Extraction Method: Principal Component Analysis Total Variance Explained Component Initial Eigenvalues Total 10.990 1.848 1.411 1.285 1.023 Extraction Sums of Squared Loadings % of Variance Cumulative % 49.955 8.399 6.413 5.839 4.651 49.955 58.354 64.767 70.606 75.257 Total 10.990 1.848 1.411 1.285 1.023 % of Variance 49.955 8.399 6.413 5.839 4.651 Cumulative % 49.955 58.354 64.767 70.606 75.257 Rotation Sums of Squared Loadings Total 3.733 3.602 3.488 3.265 2.468 % of Variance 16.970 16.371 15.855 14.843 11.218 Cumulative % 16.970 33.341 49.196 64.039 75.257 Extraction Method: Principal Component Analysis 55 Rotated Component Matrixa Component 816 796 761 694 672 225 129 234 303 269 300 268 027 204 264 128 292 195 191 228 216 295 Ach18 Ach19 Ach16 Ach15 Ach17 Res05 Res06 Res07 Res08 Res09 Rec14 Rec11 Rec10 Rec12 Rec13 Adv01 Adv03 Adv02 Adv04 Gro21 Gro20 Gro22 268 209 304 214 245 840 796 700 697 678 178 130 219 252 314 203 166 230 148 121 183 252 155 193 231 191 291 179 275 149 177 155 760 744 717 710 704 225 215 192 336 287 260 164 094 167 174 200 316 134 102 242 125 200 215 088 303 215 270 833 796 785 705 221 305 264 196 233 159 217 055 070 076 116 182 226 127 153 168 278 168 239 095 246 314 831 770 713 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in iterations Component Component Transformation Matrix 488 463 471 439 407 605 -.262 -.547 -.705 536 372 049 -.159 328 -.752 535 -.272 157 -.074 -.469 365 -.317 -.274 122 822 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization  EFA for Retention KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Approx Chi-Square Bartlett's Test of Sphericity df Sig .894 933.031 15 000 56 Communalities Initial Extraction Ret24 1.000 783 Ret25 1.000 664 Ret26 1.000 747 Ret27 1.000 629 Ret29 1.000 657 Ret30 1.000 789 Extraction Method: Principal Component Analysis Total Variance Explained Component Initial Eigenvalues Total % of Variance Extraction Sums of Squared Loadings Cumulative % 4.269 71.153 71.153 557 9.278 80.432 405 6.746 87.177 316 5.267 92.444 239 3.984 96.428 214 3.572 100.000 Total 4.269 % of Variance 71.153 Cumulative % 71.153 Extraction Method: Principal Component Analysis a Component Matrix Component Ret30 888 Ret24 885 Ret26 864 Ret25 815 Ret29 811 Ret27 793 Extraction Method: Principal Component Analysis a components extracted 57 APPENDID 4: RESULTS OF REGRESSION ANALYSIS Descriptive Statistics Mean Std Deviation N RET 3.2961 81421 228 ADV 3.2686 83721 228 RES 3.3781 68672 228 REC 3.2298 69674 228 ACH 3.4842 69047 228 GRO 3.6067 81338 228 Pearson Correlation Sig (1-tailed) N RET 1.000 697 618 688 659 745 000 000 000 000 000 228 228 228 228 228 228 RET ADV RES REC ACH GRO RET ADV RES REC ACH GRO RET ADV RES REC ACH GRO Variables Entered/Removed Model Variables Variables Entered Removed Correlations ADV RES 697 618 1.000 522 522 1.000 629 587 565 632 640 509 000 000 000 000 000 000 000 000 000 000 228 228 228 228 228 228 228 228 228 228 228 228 REC 688 629 587 1.000 609 603 000 000 000 000 000 228 228 228 228 228 228 ACH 659 565 632 609 1.000 592 000 000 000 000 000 228 228 228 228 228 228 GRO 745 640 509 603 592 1.000 000 000 000 000 000 228 228 228 228 228 228 a Method GRO, RES, ADV, ACH, Enter b REC a Dependent Variable: RET b All requested variables entered 58 b Model Summary Model R 841 R Square a Adjusted R Std Error of the Square Estimate 707 700 44581 a Predictors: (Constant), GRO, RES, ADV, ACH, REC b Dependent Variable: RET a ANOVA Model Sum of Squares Regression Residual Total df Mean Square 106.367 21.273 44.121 222 199 150.489 227 F Sig 107.039 000 b a Dependent Variable: RET b Predictors: (Constant), GRO, RES, ADV, ACH, REC a Coefficients Unstandardized Coefficients Standardized Coefficients B Std Error Beta Model (Constant) ADV RES REC ACH GRO -.431 173 203 165 212 158 352 051 060 063 063 052 209 139 182 134 352 t Sig Collinearity Statistics Tolerance -2.495 013 3.976 2.764 3.386 2.518 6.735 000 006 001 012 000 478 524 459 465 485 VIF 2.094 1.910 2.181 2.152 2.062 a Dependent Variable: RET Collinearity Diagnostics Model Dimension Eigenvalue a Condition Index Variance Proportions (Constant) ADV RES REC ACH GRO 5.897 1.000 00 00 00 00 00 00 034 13.240 32 39 04 01 01 05 021 16.881 41 00 33 07 05 27 019 17.704 25 52 00 00 05 56 017 18.898 01 08 16 92 07 01 014 20.890 00 00 47 00 82 10 a Dependent Variable: RET 59 a Residuals Statistics Minimum Predicted Value Maximum Mean Std Deviation N 1.4687 4.7520 3.2961 68453 228 -1.48095 1.37185 00000 44087 228 Std Predicted Value -2.669 2.127 000 1.000 228 Std Residual -3.322 3.077 000 989 228 Residual a Dependent Variable: RET 60 61