UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Nguyen Thi Ngoc Suong IMPACT OF REWARDS MANAGEMENT SYSTEM ON EMPLOYEE'S JOB PERFORMANCE THROUGH WORK MOTIVATION: A STUDY IN COMPANIES IN HO CHI MINH CITY MASTER OF BUSINESS (Honours) Ho Chi Minh City - Year 2014 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Nguyen Thi Ngoc Suong IMPACT OF REWARDS MANAGEMENT SYSTEM ON EMPLOYEE'S JOB PERFORMANCE THROUGH WORK MOTIVATION: A STUDY IN COMPANIES IN HO CHI MINH CITY ID: 22120069 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. TRAN HA MINH QUAN Ho Chi Minh City - Year 2014 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Page |1 ACKNOWLEDGEMENT I would like to express my sincere appreciation and gratitude to the people who supported and provided me necessary encouragement to complete the thesis. To my supervisor, Dr. Tran Ha Minh Quan for his kindly continuous support, guidance, advise and correction of my thesis.
To colleagues and staffs who willingly participated in the study and provided necessary data for the study to be completed. Lastly to my partner, family and friends who encouraged and believed in me. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Page |2 ABSTRACT Nowaday’s all firms or business entities are facing so many issues related to employee’s job performance and employee’s work motivation. Getting people feel motivated to do their best work, is always one of the most challenges of managers in any organization.
And without motivation employees will not put up their best and the companys performance would be less efficient especially in developing countries where working conditions are unattractive. As rewards have much impact on employees, which increase the level of job performance, this study was conducted to is to find out "Impact of rewards management system on employee’s job performance through work motivation" in companies in Ho Chi Minh City. With the analysis of data collected through Questionnaires distributed by respondents, this study indicates that there is a positive relationship of four mainly focused factors: pay factor, benefits, promotion and recognition of rewards management system, motivation and job performance of employees. Keywords: impact, rewards, rewards management system, work motivation, job performance.
LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Page |3 TABLE OF CONTENTS Contents ACKNOWLEDGEMENT. 2 TABLE OF CONTENTS .2 Theories of motivation .3 Total rewards management system .4 Employee job performance.5 Relationship among rewards management system, motivation and employee’s job performance. 23 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.2 Data source and collection method .1 Descriptive statistics of sample .3 Exploratory Factor Analysis (EFA) .1 Regression assumption checking .6 Analysis of Variance (ANOVA). CONCLUSION AND RECOMMENDATION.
55 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Page |5 Chapter I. INTRODUCTION This chapter represents about introduction of the research which includes research background, management problem, gap, objectives, questions significance, scope and structure of the research.1 Research background Nowadays, it is considered that human resource is the most important factor leading to the success or failure of a business all over the world, especially in Vietnam. Development of human resource is one of the most important works in the development strategy in any organization. A company can have a modern technology, good quality of service, and even good infrastructure, etc but it may hardly survive and build competitive advantages in the long term period if lacking of labor force doing work effectively.
As Lawler (2003) said, the way that people are treated increasingly determines whether an organization will prosper or even survive. An effective organization has to make sure that there is a strong cooperation and satisfaction among employees. And in order to make employee perform their best in the organization, there is a need of effective motivation at various employee’s levels (Bedeian, 1993). Motivation is a process that energizes, directs, arouses and sustains the behavior and performance of the employees (Luthans, 1998).
Thus, motivation is the process that stimulates the employees to put their full efforts in order to achieve a desired task (Ishfaq Ahmed, 2011). And one considerable way to make employees motivated and perform the best in their job is using rewards management system (Deeprose, 1994). Because, the rewards have major impact on organizations capability to catch, retain and motivate high potential employees (Fay and Thompson, 2001).2 Management problem As the largest commercial and economic center of Vietnam, the economic activities of Ho Chi Minh City are always vibrant, and strongly attractive for foreign investments. The economy in this city has grown at a rate of approximately 10% per year LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Page |6 of GDP each year.
However, there is a fact that, in the current context of global economic crisis, many companies in Ho Chi Minh City have to think about how to survive themselves and where to make necessary cuts so that the business will survive. To do the cuts, they have to reduce staffs, but also keep core employees stay during the recession. In a meanwhile, there is always a fierce competition among companies to attract employees, especially those who are skillful and have good experiences through motivational programs. That leads to difficulties of unstable human resource of a company when employees try to jump to other places where they think have better benefit and working mode like Vansteenkiste (2005) used to say: "Today employees are involved in their working activities which are for their benefits and feel intrinsic motivation in their behaviors as their activities are enjoyable and satisfactory".
Facing such situation, the big question for management of most companies in Ho Chi Minh City is how to make employees motivated to work most productively? It is really a big problem that any managers and leaders in Ho Chi Minh City concern about.3 Research gap As a motivational method, rewards management system is being applied in many companies located in Ho Chi Minh City, especially those which have a big capital invested from abroad. However, should the manager use financial aspects like bonuses, higher payrolls, pensions, sick allowances, and risk payments, etc as motivators in order to enhance employee's job performance? If financial motivation has been failed, which aspect will come? While most managers tend to believe that they can adequately motivate their workers by offering rewards such as higher pay or bonuses, money may not work as a motivation for all people because different people will act in different ways (Armstrong & Stephens, 2005). In fact, there are only few employees who truly contribute their best to the company but they have been just treated equivalently to those who work less effectively. And some of employees feel demotivated when benefits of the company have been suddenly decreased due to the tough economic situation.
Hence, it leads to the less motivation on employees. It means the important point is how to LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Page |7 recognize which kind of rewards should be applied for which kind of employee. Undoubtedly, employees with different attitudes, behaviors, experiences, they need different way to promote their creativity and capacity as well. Therefore, in order to motivate an employee so that he can perform his best in the job, it requires a flexible rewards system.
Although there are many studies about employee’s motivation and job performance in Viet Nam context, there is no official study mentioning about how to apply rewards management system effectively for various kinds of employees so that they all can be motivated. This study is try to fulfill this gap by re-measuring the relationship as well as impact of rewards management system on employee’s performance with the mediating role of motivation, focusing on four main factors of rewards named pay factor, benefits, promotion and recognition.4 Research objective As a consequence of above issue, objective of the study is to investigate the impact of rewards management system on employee’s performance with the mediating role of motivation then provides the support to management level on how to apply rewards management system effectively.5 Research question The research will address the following specific questions: 1. Is there any relationship between rewards management system, employee's work motivation and job performance? 2. How does rewards management system impact on work motivation? 3.
How does work motivation impact on employee’s job performance? 4. How to apply rewards management system effectively? 1.6 Research significance In this changing world, employee’s motivation and job performance play important roles in the development of a company. Therefore, this study tries to find out the answers of research questions and basing on that helps companies located in Ho Chi LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Page |8 Minh City could approach the effective rewards management system which would enable their employees motivated to show the best job performance.7 Research scope This study is limited to research on impact of rewards management system on employee’s performance with the mediating role of motivation in companies in Ho Chi Minh City. To be convenient, and directly accessible to the objective, this study aims to employees who are currently working in companies in Ho Chi Minh City as the respondents for the questionnaire survey.
The questionnaire is distributed by respondents within July, 2014. The study will be ended by September 2014.8 Research structure The structure is organized with five parts. The first part is about the introduction of the study. The second one is an integration of literature and hypotheses.
The third is the discussion on research method. Following that, the data analysis process and its findings are presented in the next parts. And, conclusion of the research is consisting in the last part. Chapter 1 provides overview of research background, management problem that companies in Ho Chi Minh City are facing.
As a result, research gap, research objectives, significances as well as research scope and research structure are identified. It provides a brief insight into the study. Chapter 2 provides understanding of rewards management system, motivation and employee’s job performance. This chapter provides an insight into these concepts by focusing on previous research in this area and presents reviewed literature relevant to this study.
After that, hypotheses of the research are mentioned. Chapter 3 describes the research design which is utilized. Specifically, the chapter describes the sample of the study, measurement approached, how to follow to collect the data, and the technique used for data analysis. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Page |9 Chapter 4 focuses on transferring, analyzing the primary data then reports on the results of the empirical analysis.
And based on the results, this chapter is to provide respective discussion as well as findings associated with above literature review. Chapter 5 comes to conclusion based on findings of the research with recommendation. This chapter reflected on the objectives, significances as well as benefits of the research. The following chapter will provide some insights into the concepts that have an impact on employee's work motivation and job performance.
LUAN VAN CHAT LUONG download : add luanvanchat@agmail. LITERATURE REVIEW The focus of this chapter is to provide understanding of rewards management system, work motivation and employee’s job performance as well as important relationship among rewards management system, motivation and employee’s job performance by focusing on the relating theories contents, arguments.1 Motivation The term of motivation is usually explained as desires, emotions, needs that make someone do something. In general, motivation is what causes us to act such as drinking a glass of water to reduce thirst or reading book to gain knowledge, etc. Motivation is "a set of processes concerned with the force that energizes behavior and directs it towards attaining some goal" (Baron, 1983).
It inspires people to work individually or in groups in the ways such as to produce to best results to move toward a goal. Motivation can be divided into intrinsic and extrinsic motivation.