The impact op transformational and transactional leadership on employee engagement

MINISTRY OF EDUCATION AND TRAINING HCMC UNIVERSITY OF ECONOMICS TRAN MINH PHUONG THE IMPACT OF TRANSFORMATIONAL AND TRANSACTIONAL LEADERSHIP ON EMPLOYEE ENGAGEMENT MASTER OF BUSINESS ADMINISTRATION THESIS Ho Chi Minh City – 2011 MINISTRY OF EDUCATION AND TRAINING HCMC UNIVERSITY OF ECONOMICS TRAN MINH PHUONG THE IMPACT OF TRANSFORMATIONAL AND TRANSACTIONAL LEADERSHIP ON EMPLOYEE ENGAGEMENT Major: Business Administration Major Code: 60.34.05 MASTER OF BUSINESS ADMINISTRATION THESIS SUPERVISOR: DR NGUYEN HUU LAM Ho Chi Minh City – 2011 ACKNOWLEDGEMENT I would like to express my heartfelt thanks and appreciation to my research Supervisor, Dr Nguyen Huu Lam for his valuable ideas, guidance and suggestions for my thesis My sincere thanks to all lecturers of the eMBA class who have given us knowledge, and guidance during the course My special thanks to all commentators Dr Nguyen Trong Hoai, Dr Nguyen Huu Dung, Dr Ho Viet Tien, and Dr Nguyen Van Ngai for valuable advice and suggestions It is my pleasure to be an eMBA class member as we had a memorable time studying together although we faced many difficulties during our course My sincere thanks to our class monitor Mr Cuong for his contribution to our class, and Ms Hien my classmate for her support, encouragement and helping on data collection I would like to thank all of my friends and colleagues who enthusiastically helped me during the data collection, and special thanks to my manager who encouraged and let me have necessary time for my thesis Finally, I am deeply grateful to my parents, especially my mother who always care for me, all best things and support for my studying until now i ABSTRACT The Vietnam economy continues to grow quickly, especially after Vietnam has become a member of WTO, and in fact this is driving a war on talent Results from research organizations and corporate results have demonstrated there may be a strong link between engagement, employee performance and business outcomes However, how to increase employee engagement level so that they can contribute with high performance for organizations in Vietnam is not much explored The research investigates the impact of transformational and transactional leadership behaviours on employee engagement level, particularly in manufacturing industry in the south of Vietnam representative by HCMC, Dong Nai and Binh Duong provinces Data analysis was done for valid 223 returned questionnaires collected from employees who are currently working at least one year for the companies in manufacturing sector The results showed that transformational leadership behaviour has significant and positive influence on employee engagement On the other hand, transactional leadership has no influence on employee engagement This result leads to the same finding with previous researches that transformational leadership would enhance employee engagement level, while transactional leadership behaviour does not significantly connect to employee engagement For transformational leadership components, the results of research data analysis demonstrated that the first three components Idealized Influence (Attributes), Idealized Influence (Behaviour), Inspirational Motivation did not have impact on employee engagement; only did the last two components Intellectual Stimulation and Individualized Consideration have positive impact on employee engagement For transactional leadership components, research practical data showed that Contingent Reward; however, has positive relationship with employee engagement while Management by Exception: active did not have significant relationship with ii employee engagement, and Management by Exception: passive and Laissez Faire leadership behaviour have week negative relationship with employee engagement Keywords: transformational leadership, transactional leadership, employee engagement, the south of Vietnam iii CONTENTS Acknowledgement i Abstract ii Contents iv List of Tables vi List of Figures vii CHAPTER1: INTRODUCTION 1.1 Research background 1.2 Research objective 1.3 Research scope and design 1.4 Research structure CHAPTER 2: LITERATURE REVIEW AND RESEARCH MODEL 2.1 Leadership behavior 2.2 Employee engagement 11 2.3 Important of engagement 15 2.4 Leadership and employee engagement 16 CHAPTER 3: RESEARCH METHOD 25 3.1 Research model 25 3.2 Research question 25 3.3 Research hypotheses 26 3.4 Research variables 26 3.5 Sample and data collection 27 3.6 Questionnaire 27 3.6.1 Leadership behavior questionnaire 27 3.6.2 Employee engagement questionnaire 30 CHAPTER 4: ANALYSIS RESULT AND CONCLUSION 35 4.1 Data analysis 35 4.1.1 Sample profile 35 4.1.2 Statistical analysis 37 iv 4.2 Conclusion 49 4.2.1 Question 49 4.2.2 Question 49 4.2.3 Question 51 CHAPTER 5: IMPLICATION AND LIMITATION 53 5.1 Implications of the research 53 5.2 Limitation of the research and some suggestion for future research 54 References 56 Appendix Appendix Appendix Appendix Appendix Appendix Appendix Appendix v LIST OF TABLES Table 4.1: Demographic analysis 37 Table 4.2: Descriptive analysis 38 Table 4.3: Descriptive analysis – Transformational leadership 39 Table 4.4: Descriptive analysis – Transactional leadership 40 Table 4.5: Reliability analysis 40 Table 4.6: The factor loading 42 Table 4.7: The final elements of measurement scale for employee engagement 43 Table 4.8: Correlation analysis 44 Table 4.9: Regression of transformational leadership on employee engagement .45 Table 4.10: Regression of transformational leadership components on employee engagement 46 Table 4.11: Regression of transactional leadership on employee engagement 47 Table 4.12: Regression of transactional leadership components on employee engagement 47 Table 4.13: Conclusion of research hypotheses 48 vi LIST OF FIGURES Figure 3.1: Research model 25 Figure 4.1: Respondents – company categories 35 Figure 4.2: Respondents – job categories 36 Figure 4.3: The result of regression analysis of transformational leadership on employee engagement 49 Figure 4.4: The result of regression analysis of transformation leadership component on employee engagement 51 Figure 4.5: The result of regression analysis of transactional leadership component on employee engagement 52 vii CHAPTER INTRODUCTION 1.1 Research background Engagement is an emerging psychological construct that purports to measure how much a person is into his job The concept of work engagement has gained momentum because of its predictive value for job performance (Bakker, 2009; Schaufeli & Salanova, 2007, cited in Tims, Bakker & Xanthopoulou, 2011) Instead of traditional organizational structures that heavily rely on management control and economic principles of cost reduction, efficiency, and cash flow, the focus in modern organizations is on the management of human capital Currently, organizations expect their employees to be proactive and show initiative, collaborate smoothly with others, take responsibility for their own professional development, and to be committed to high quality performance standards It is convinced that the people who form the strength of the company and that nothing can be achieved without their commitment and their energy, which makes people the most important asset Thus employees are needed who feel energetic and dedicated, and who are absorbed by their work In other words, organizations need engaged workers Therefore, employee engagement has become a hot topic in recent years Although there is a great deal of interest in engagement, there is also a good deal of confusion as many different definitions make the knowledge of employee engagement difficult to determine So far none of the definitions has come to dominate the field either as a definition or as a methodology (Wefald, 2008) There are many predictors lead to engagement; however, one of the most concerned factors is leadership behaviors, especially the contemporary concept transformational and transactional leadership It is found numerous paths from transformational leadership to employee engagement The leadership behavior of inspirational motivation, intellectual stimulation, and individualized consideration sửa chữa” Biểu hành động vấn đề trở nên mãn tính Cấp tơi trốn tránh việc định Trốn tránh tham dự vấn đề quan trọng nêu Vắng mặt cần thiết Trì hỗn đáp ứng câu hỏi khẩn cấp Bảng câu hỏi mức độ gắn bó với cơng ty nhân viên Anh/chị vui lịng đánh dấu vào ô thể mức độ đồng ý với câu trả lời theo thang điểm sau: - hồn tồn khơng đồng ý, - khơng đồng ý, - không ý kiến, - đồng ý, - hoàn toàn đồng ý Ở nơi làm việc, bạn có biết điều mong đợi bạn? Cơng ty mong đợi mức thành tích cao từ nhân viên Trong cơng việc tơi hiểu điều mong đợi tơi Bạn có đủ thơng tin nguồn lực bạn cần để hồn thành tốt cơng việc? Tơi có đủ thơng tin cần thiết để hồn thành tốt cơng việc Tơi có đủ nguồn lực cần thiết để hồn thành tốt cơng việc Ở nơi làm việc, bạn có hội để làm tốt cơng việc ngày? Công việc tạo cho hội để làm việc thú vị đầy thách thức Công việc tạo cho sử dụng tốt khả kỹ Điều kiện cơng việc cho phép làm việc với suất cao Khơng có rào cản đáng kể để tơi hồn thành tốt cơng việc Trong vịng ngày vừa qua, bạn có nhận cơng nhận hay khen ngợi hồn thành tốt cơng việc? Tơi nhận công nhận (recognition) làm tốt cơng việc Thành tích tơi tốt, lương cao Cấp bạn, có nơi làm việc, quan tâm đến bạn cá nhân? Tôi đối xử tơn trọng cá nhân Tơi tự thể ý kiến mà không sợ bị trừng phạt Công ty ủng hộ đạt cân hợp lý công việc sống cá nhân Có người nơi làm việc khuyến khích phát triển bạn khơng? Cấp khuyến khích tơi tìm cách thức tốt để thực công việc Cấp liên tục đưa dẫn khích lệ Cấp hướng dẫn tơi cải thiện kỹ thành tích Ở nơi làm việc, ý kiến bạn có xem xét? Tơi có hội để ý kiến thơng qua thực Tơi có đủ quyền hạn định để hồn thành tốt cơng việc Nhiệm vụ/mục đích cơng ty có làm bạn cảm thấy công việc bạn quan trọng? Tôi hiểu rõ mục tiêu chiến lược công ty Tôi tin tưởng chiến lược mục tiêu đắn công ty vào thời điểm Tôi hiểu mối quan hệ công việc mục tiêu công ty Đồng nghiệp (cấp dưới) bạn có cam kết làm tốt cơng việc ? Mọi người nhóm tơi đặt nhu cầu nhóm trước nhu cầu cá nhân Nhóm tơi có hợp tác làm việc nhóm tốt Bạn có người bạn thân thiết cơng ty? Trong vịng sáu tháng qua, có người nơi làm việc nói với bạn tiến bạn? Tôi nhận phản hồi thường xuyên rõ ràng thành tích tơi Trong năm vừa qua, bạn có hội để học hỏi phát triển nơi làm việc? Tơi có đủ thời gian để tận dụng hội đào tạo/ phát triển liên quan đến công việc Công việc tạo hội để học hỏi kỹ phát triển lực Thông tin cá nhân Giới tính anh/chị? Nam Cơng ty anh/chị làm việc thuộc loại hình nào? Cơng ty nhà nước Cơng ty nước ngồi Loại hình khác, vui lịng nêu rõ Anh/Chị vui lòng nêu rõ tên địa Anh/chị làm việc cho cơng ty bao lâu? Ít năm 5-10 năm Độ tuổi anh/chị? Ít 20 30-39 50-59 Anh/chị làm việc phận nào? Nghiên cứu phát triển (R&D) Sản xuất Kế hoạch Tài kế tốn Bộ phận khác , vui lịng nêu rõ ……………………… Vị trí anh/chị cơng ty? Nhân viên văn phòng Giám sát Khác, vui lòng nêu rõ ……………………… Vị trí cấp trực tiếp anh/chị? Giám đốc Giám sát Khác, vui lòng nêu rõ ……………………… Anh/chị dự định làm việc cho công ty nữa? Cho đến lúc nghỉ hưu Hơn năm, không đến lúc nghỉ hưu 1-2 năm 3-5 năm Tên anh/chị: Ngày: Cảm ơn hợp tác anh/chị! Chúc anh/chị thành công! APPENDIX KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Approx Chi-Square Df Sig Total Variance Explained Com pone nt Total 8.780 1.786 1.544 1.426 1.238 1.153 1.022 911 775 10 740 11 738 12 683 13 661 14 615 15 604 16 515 17 496 18 480 19 454 20 429 21 355 22 337 23 314 24 287 25 241 26 212 27 202 Extraction Method: Principal Component Analysis APPENDIX N Mean Std Deviation Variance Cronbach's Alpha 883 APPENDIX Correlations II (A) Pearson Correlation Sig (2-tailed) N II (B) Pearson Correlation Sig (2-tailed) N IM Pearson Correlation Sig (2-tailed) N IS Pearson Correlation Sig (2-tailed) N IC Pearson Correlation Sig (2-tailed) N EE ** Correlation is significant at the 0.01 level (2-tailed) Pearson Correlation Sig (2-tailed) N CR Pearson Correlation Sig (2-tailed) N ME: A Pearson Correlation Sig (2-tailed) N ME: P Pearson Correlation Sig (2-tailed) N LF Pearson Correlation Sig (2-tailed) N EE ** Correlation is significant at the 0.01 level (2-tailed) * Correlation is significant at the 0.05 level (2-tailed) Pearson Correlation Sig (2-tailed) N APPENDIX Model Summary Model R 546a a Predictors: Leadership ANOVAb Model Regression 19.638 Residual Total a Predictors: (Constant), Transformational Leadership b Dependent Variable: Employee engagement APPENDIX Model Summary Model a Predictors: Consideration, influence Idealized influence (Attributes) ANOVAb Model Regression 20.654 Residual Total a Predictors: (Constant), Individualized Consideration, Inspirational Motivation, Idealized influence (Behaviors), Intellectual Stimulation, Idealized influence (Attributes) b Dependent Variable: Employee engagement APPENDIX Model Summary Mode l a Predictors: (Constant), Transactional Leadership RR Square 207 a ANOVAb Model Regression Residual Total a Predictors: (Constant), Transactional Leadership b Dependent Variable: Employee Engagement Square APPENDIX Model Summary Mode l a Predictors: (Constant), Laissez - Faire, Management by Exception: active, Contingent Reward, Management by Exception: passive ANOVAb Model Regression Residual Total a Predictors: (Constant), Laissez - Faire, Management by Exception: active, Contingent Reward, Management by Exception: passive b Dependent Variable: EE1 ... general conclusion Therefore, this paper will focus on contemporary leadership theory, and research the impact of both transformational and transactional leadership behavior 23 on employee engagement. .. appeal, they not conduct much study on the relationship between transactional leadership and engagement Moreover, much of the researches on engagement so far have concentrated on organizations in the. .. following questions Question 1: How transformational leadership and transactional leadership affect the level of employee engagement? Question 2: Which components of transformational leadership have