MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF ECONOMICS -------------------- TRỊNH MINH CHIÊU LEADERSHIP STYLE, ROLE CLARITY AND EMPLOYEE JOB SATISFACTION LINK: EVIDENCE IN HOCHIMINH CITY BANKING EMPLOYEES ECONOMICS MASTER THESIS Ho Chi Minh City – 2011 TIEU LUAN MOI download : skknchat@gmail.com MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF ECONOMICS -------------------- TRỊNH MINH CHIÊU LEADERSHIP STYLE, ROLE CLARITY AND EMPLOYEE JOB SATISFACTION LINK: EVIDENCE IN HOCHIMINH CITY BANKING EMPLOYEES MAJOR : BUSINESS ADMINISTRATION CODE : 60.05 ECONOMICS MASTER THESIS INSTRUCTOR: Dr. NGUYỄN ĐÌNH THỌ Ho Chi Minh City – 2011 TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENT TIEU LUAN MOI download : skknchat@gmail.com ABSTRACT Due to the rapid growth in banking industry in Vietnam and the dynamic business environment, many banks and credit institutions are facing more and more continuous challenges. To overcome the issues, banks employees play vital role. Although some foreign researchers have done exploration on dimensions of employee’s satisfaction, Vietnam climate can vary.
This study investigates the relationship between leadership style, role clarity and employee job satisfaction. The author explores the effect of leadership style on role clarity and employee job satisfaction as well as clarifies the impact of role clarity to employee job satisfaction using data collected from 177 responses in Ho Chi Minh City area. A surprising finding is that directive leadership style does not support for employee role clarity. The fundamental implication in this study is that democratic leadership styles are suitable management methods.
Keywords: Leadership style; role clarity; job satisfaction; bank. TIEU LUAN MOI download : skknchat@gmail.com 1 CONTENTS CONTENTS. 1 LIST OF TABLES. 4 LIST OF FIGURES.3 Scope and limitations .5 Structure of the study.
12 CHAPTER II: LITERATURE REVIEW .1 Concept of leadership. 40 CHAPTER III: METHODOLOGY. 42 TIEU LUAN MOI download : skknchat@gmail.4 Data analysis techniques .3 Measurement scales development. 56 CHAPTER IV: DATA ANALYSIS AND FINDINGS .2 Descriptive statistics of sample .3 Assessment of measurement scale .1 Reliability with Cronbach’s alpha .2 Validity with Exploratory Factor Analysis.
76 CHAPTER V: FINDINGS, LIMITATIONS AND RECOMMENDATIONS.2 Findings and research contributions. 77 TIEU LUAN MOI download : skknchat@gmail.1 Leadership style and employee role clarity.2 Leadership style and employee job satisfaction .3 Employee role clarity and employee job satisfaction .4 Limitations and future research. Interview Form – Vietnamese version. Interview Form – English version.
Results of reliability with Cronbach’s alpha. Results of validity with Exploratory Factor Analysis. 100 TIEU LUAN MOI download : skknchat@gmail.com 4 LIST OF TABLES Table 3.1 Type and technique of research .2 Measures used in the study .2 Descriptive statistic of measurement items.3 Summary of Cronbach’s alpha.4 Rotated Component Matrix.5 Final construct measurement scales .6 Linear Regression test of role clarity - organization with directive leadership style .7 Linear Regression test of employee job satisfaction - organization with directive leadership style .8 Linear Regression test of role clarity - organization with participative leadership style .9 Linear Regression test of employee job satisfaction - organization with participative leadership style .10 Linear Regression test of role clarity - organization with empowering leadership style. 73 TIEU LUAN MOI download : skknchat@gmail.11 Linear Regression test of employee job satisfaction - organization with empowering leadership style .12 Model test results.
76 TIEU LUAN MOI download : skknchat@gmail.com 6 LIST OF FIGURES Figure 1.1 Job satisfactions rating of Vietnamese employee .2 Vietnam job changing reason pyramid .1: Schematic diagram of the conceptual framework .1 Research process diagram. 43 TIEU LUAN MOI download : skknchat@gmail.com 7 CHAPTER I: INTRODUCTION 1.1 Research problems Vietnam’s banking sector is expected to have one of the highest growth rates in Asia during the next few years due to the country’s continued economic expansion, rising household incomes, and relatively low penetration of existing banking services. Over the past two decades, the Vietnamese government has undertaken a series of reforms to strengthen and modernize the sector as part of the country’s move towards a more open and market oriented economy. In recent years, rapid economic growth has improved the household income and demand for banking services.
Credit, debit card, consumer lending and corporate banking use has become more common, with the number of cards issued doubling between 2008 and 2010 to 28. The number of automated teller machines (ATMs) has also increased dramatically, rising from 1,800 in 2005 to 11,000 as of December 2010 (SBV, 2011, as cited in Van, 2011). However, the banking industry is still in its infancy (BMI, 2011; SBV, 2011, as cited in Van, 2011). As of December 2010, an estimated 23% of Vietnam’s population of approximately 90 million people had bank accounts and around half of those with accounts actively used consumer banking services (Ho & Baxter, 2011, as cited in Van, 2011).
Seeing these opportunities, many players have penetrated or intent to join this competitive market, both domestic and foreign banks. In the past, foreign banks in Vietnam have been limited due to a geographical restriction of the government, which allowed a single branch per city. Since 2007 upon Vietnam’s accession to the World Trade Organization (WTO), this number has increased with the presence of many foreign banks. Some foreign banks namely Australia and New Zealand Bank, Hongkong and Shanghai Banking Corporation, Standard Chartered, Deutsche Bank, United Oversea Bank, and Sumitomo Mitsui Banking Corporation have strategies entering the market by becoming strategic partners with domestic banks.
Consequently, TIEU LUAN MOI download : skknchat@gmail.com 8 these penetrations of foreign banks, expansions of existing banks and entering of local organizations led to the big resource requirement in banking industry and made this labor market become more dynamic and competitive. A question on how to effectively manage and control human resources was raise natively. In this climate, banks managers have been being forced to find solutions in order to own best employees and keep the stability of human resources in their organizations. Improving employee satisfaction is key answer of the concerns.
Recent articles on some magazines, online newspapers discussed the shortage of human resources in the financial sector amid rapid growth of Vietnamese banks and stock brokerage firms. For years, the lack of human resources in Vietnam has been no new problem to anyone. Recent survey conducted by IBG, a consulting services company specializing Human Resource and Management found that 64% interviewees would like to change their job, including finance industry.1 Job satisfactions rating of Vietnamese employee Source: http://www.vn TIEU LUAN MOI download : skknchat@gmail.com 9 The survey results also showed that chances to receive training, manager leadership style, co-worker relationship, income and working environment are out of main driven factors of employee job satisfaction. In which the manager leadership style is the second important element that explains the reason for changing job.2 Vietnam job changing reason pyramid Source: http://www.vn Other research conducted by Careerbuilder also indicated that in average, out of four Vietnamese employees, more than 2.5 ones have negative feeling with their current job.
These results again emphasized the importance of employee job satisfaction and push the manager in changing to adapt with challenges. Moreover, most industry observers and practitioners agree that employees who are satisfied with and committed to their jobs tend to share the firm’s values to customers TIEU LUAN MOI download : skknchat@gmail.com 10 and deliver the highest level of service quality (cf. Bowen and Schneider 1985; Hartline and Ferrell 1996; Hartline, Maxham, and McKee 2000; Singh 2000) which are essential elements to help a firm to survive in market. Also, researches have demonstrated that manager’s leadership style has a tremendous influence on employees’ perception, including their satisfaction ob job.
This requires the managers to adopt a leadership style that can influence his or her employees. Different leadership styles (whether autocratic or democratic) have the ability to influence employees’ satisfaction in differing ways. Thus, it is necessary to empirically examine the linkages between various leadership styles and employee job satisfaction. In addition, role clarity as outcome of leadership style and antecedent of job satisfaction has been verified by many foreign researchers (Posner and Butterfield 1978; Louis et al.
1983; Hartline and Ferrell 1996; Singh, Verbeke, and Rhoads 1996; Singh 2000; Korczynski, 2002; Mukherjee and Malhotra, 2006). In which, role clarity is being proven as the catalyst for enhancing job satisfaction level of employees. However, there was seldom seen a work that has been performed on leadership style, role clarity and employee job satisfaction in the banking industry in Vietnam .Thus, a question for bank managers in Vietnam is whether these mutual relationships are applicable in their organization. A certified data with confirmation by results of model testing in some credit institutions in Vietnam can help them to systemize the picture and practice.
In summary, the problem to be addressed in this study is to examine the effect of leadership style and role clarity on employee job satisfaction and the effect of leadership style on role clarity. TIEU LUAN MOI download : skknchat@gmail.2 Research objectives A research objective is the researcher’s version of a business problem. Objectives explain the purpose of the research in measurable terms and define standards of what the research should accomplish (Zikmund 1997, p. 89, as cited in Trung, 2009).
In solving the research problem mentioned previously, this study has the following objectives: Examine the relationship between various manager leadership styles and employee role clarity in banking industry in Vietnam. Examine the relationship between various manager leadership styles and employee job satisfaction in banking industry in Vietnam. Examine the relationship between employee role clarity and employee job satisfaction in banking industry in Vietnam. The study results served as guidelines for the policy makers and leaders of banks in Vietnam to enhance employee’s satisfaction by adjusting their leadership style and making clearance on employee’s roles and responsibility.3 Scope and limitations Due to the resource and time limitation, the research is conducted with employees in some banks (Vietcombank, BIDV, Prudential, ANZ, ACB, Saigonbank…) in HCM City only.
A further research with more banks and larger scope of whole main provinces in country is necessary to assess the measurement scales precisely. Besides that, other spreading of research by splitting foreign and local bank can allow manager to have deeper understanding on a specific organization. TIEU LUAN MOI download : skknchat@gmail.4 Research methodology Employees in joint stock commercial bank, state-owned commercial banks and foreign banks are eligible interviewees in this research. The research method used in this project was conducted in two steps: qualitative research and quantitative research.
o In qualitative research, measurement scales was developed by review from previous literatures. Group discussion then was used to eliminate unsuitable elements in circumstances of Vietnam banking environments. o In quantitative research, data collection in the study was conducted by survey method. The reason for choosing the survey method is that surveys provide a quick, efficient and accurate means of assessing information on a population (Zikmund 1997).
In this step, three main tools were used to collect the data: ‐ Face to face interview ‐ Email distribution ‐ Online survey (refer to address: http://edu.com/s3/565448/roleclarity-jobsatisfaction- leadershipstyle). This is main method to collect data. The data analysis with SPSS version 16.0 was used to implement the research such as: descriptive statistic, reliability and validity of scales, multi regression analysis.5 Structure of the study The study consists of five chapters: Chapter 1: Introduction This chapter presents research background of the study as well as research problems, research objectives, research methodology and scope. Chapter 2: Literature Review TIEU LUAN MOI download : skknchat@gmail.com 13 In this chapter, the summary of previous literature, fundamental ideas on various styles of leadership, employee role clarity and employee job satisfaction are reviewed.
This chapter also proposes hypotheses and empirical model in the study. Chapter 3: Research Methodology Based on the research objectives and scopes, research methodology concerned in chapter 1, and literature review and empirical model presented in chapter 2, this chapter particularly presents the research design and development of measurement scales.