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 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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 2. I am greatly appreciated for their contribution to my present result. Tang Le Huy February 2014 I LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENT LIST OF TABLES.
VI LIST OF FIGURES. VI CHAPTER 1: INTRODUCTION. 4 CHAPTER 2: LITERATURE REVIEW .1 Predictors of employee retention .2 Motivators of Employee retention .3 Model and Hypothesis. 13 CHAPTER 3: RESEARCH METHODOLOGY.
Method of analysis. Minesota satisfaction Questionnaire (MSQ). 17 III LUAN VAN CHAT LUONG download : add luanvanchat@agmail. 19 CHAPTER 4 : DATA ANALYSIS AND FINDINGS.
Assessment of measurement scales. Testing reliability of scales. Exploratory Factor Analysis (EFA) .3 Testing model and hypotheses .3 Description of statistics of overall employee retention .1 Levels of importance of motivators .2 Differentiation among three groups of working duration .3 Comparing the level of retention between managers and staff. 37 CHAPTER 5 : CONCLUSIONS AND RECOMMENDATIONS .2 Managerial implication and Recommendation .3 Limitation and further research direction.
42 IV LUAN VAN CHAT LUONG download : add luanvanchat@agmail. 43 APPENDIX 1 : SURVEY QUESTIONNAIRE. 47 APPENDIX 2 : CRONBACH'S ALPHA TEST RESULTS. 51 APPENDID 3: EXPLORATORY FACTOR ANALYSIS TEST RESULTS.
55 APPENDID 4: RESULTS OF REGRESSION ANALYSIS. 58 V LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Table 1: The turnover rate of Vietinbank in 2012-2013. 3 Table 2: Maslow vs Hertzberg - Comparative Analysis:. 6 Table 3 : The result of job enrichment program by Herzberg 1976.
8 Table 6 : 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. 27 Table 16: Model Summary (b). 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 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 1: Research model. 12 Figure 2: Research procedure.
14 Figure 3: Regression coefficients of model. 30 VII LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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 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 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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.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. 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Table 1: The turnover rate of Vietinbank in 2012-2013( Source: Human resources managers of Vietinbank) Vietinbank’s Branch Turnover rate of 2012 Turnover rate of first six month in 2013 Bình Phước 2% 1% Bắc Sài Gòn 16.7% Average retention rate 7.65% However, in this difficult situation, the banks also want to keep their employees who have a good skills and experiences in order to reach their business‘s target. There are very necessary to investigate these factors that influence employee retention rate and find out the valuable human resources strategies for keeping good employees in banking industry.
Employee‘s retention is considered by the leaders of the banks. They implemented various ways to increase level of retention such as: increasing salary, training more skills, offering opportunities for promotion … However, the turnover rate is still high. What are the motivated factors and the level relationship that influence the employee‘s retention? Previous researchers suggested some motivator factors that effect to retention such as: hunger, thirst, shelter, safety, social, and esteem needs (Maslow, 1954). Achievements, recognition, work itself, responsibility, advancement, and growth (Herzberg, 1959).
What are the factors that have a relationship with retention in banking industry? This study is expected to find the key motivator factors that effect to retention in banking industry and to provide new solutions and evidences for human resource management in order to reduce the turnover rate in this sector. 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.3 Research Objectives This research aimed at clarifying the impact of motivator factors to the employee retention in the banking industry in Vietnam with the specific objectives: To identify the impact of motivation factors (in Herzberg‘s two factor theory) on employee retention in banking industry in Vietnam. To measure the impact level of these factors on employee retention in banking industry in Vietnam. To examine the differences the impact of motivation factors on employee retention among groups of working duration, and the level of intention between manager and staff.4 Research scope Given the limited resources and time, the empirical data for the research were collected from commercial banks in Binh Duong province.
They are Vietinbank, EximBank and Vietcombank. The respondents are 300 employees from those banks.5 Thesis structure Chapter 1: Introduction presents the research background, problem statements, research objectives, and research scope and thesis structure. Chapter 2: Literature review presents literature review, research model and hypotheses. Chapter 3: Research methodology illustrates the methodology of this paper.
Chapter 4: Data analysis and findings presents research results based on collected data. Chapter 5: Discussion, conclusion and recommendations summarizes the research results, provide the findings and recommendations. 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 2: LITERATURE REVIEW This chapter presents the theories which relate to employee retention. In this literature review, factors effect employee retention will be represented.
Then, the model research will be proposed for this specific study.1 Predictors of employee retention Employee retention is about developing strategies that reduce the number of people who leave the organization for avoidable reasons. Organizations need to retain employees with the required balance of skills and experience to ensure that business can be maintained (Stucberry, 2003). When employees leave their job, the organization will lost the employees who have knowledge about production, current project, competitor and the loyal customer and client of organization. There are many factors that affect the employee's reasons for staying with the organizations, as well as how important those factors are to employees.
In order to retain employees, the organization must understand these factors, which motivate people to perform their jobs and monitor the job satisfaction of employees. Cappelli (2000) suggested factors which play important role in employee retention: career opportunities, work environment, work life balance, Organizational justice, and existing leave policy and organization image. Cole (2000) founded that employees stay with organization where they are highly appreciated and work with their full potential and the reasons, which make the employee remain in their job are: organization reward system, growth and development, pay package and work life balance. 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com There are some of the more famous theories within this motivation category: Maslows‘ Hierarchy of Needs Theory (1954) , and Herzberg‘s Two-Factor Theory (1959).
Maslow‘s Hierarchy of Needs Theory is one of the most well-known motivational theories. Abraham Maslow‘s theory identifies five levels of hierarchical needs that every people attempt to accomplish in their life.