UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Nguyen Thi Anh Ngoc THE EFFECT OF WORK-LIFE CONFLICTS, WORKING ENVIRONMENT AND COMPENSATION ON EMPLOYEE PERFORMANCE IN VIETNAMESE DOMESTIC BANKS MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2014 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Nguyen Thi Anh Ngoc THE EFFECT OF WORK-LIFE CONFLICTS, WORKING ENVIRONMENT AND COMPENSATION ON EMPLOYEE PERFORMANCE IN VIETNAMESE DOMESTIC BANKS ID: 21110038 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. TRAN HA MINH QUAN Ho Chi Minh City – Year 2014 TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENT This thesis could not have been accomplished without the help, advice, support, guidance and encouragement of many people. I wish to explain my sincere gratitude to my advisor, Dr. Tran Ha Minh Quan, for his kind guidance, intensive support, valuable suggestions, instructions and encouragement during the time of doing my research.
I also would like to thank my dear colleagues, friends and classmates for their invaluable advice, help, support during the time I was doing this thesis. Last but not least, I would like to express my special thanks to my man and my family for their great support, assistance and encouragement for my study and thesis fulfillment. Nguyen Thi Anh Ngoc November 2014 TIEU LUAN MOI download : skknchat@gmail.com EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS ii ABSTRACT Vietnam, like the rest of Asia, has entered a period of slower growth. Besides the manufacturing and agricultural sectors, other industry sectors are being adversely affected by the slower growth and the Banking sector is no exception.
Series of banks restructure itself with human resource as an important part: layoffs the ineffectives and higher employees’ performance for the remains. It is clear that employees take a key figure for banks’ performance. Go along with the issue, managers should control what contribute for higher employees’ performance to enhance the competitive advantages of banks. As a result, all three determinants which are work-life conflicts, working environment and compensation impact on employee performance in Vietnamese domestics banks whereas compensation has the highest impact on performance of banking staff in significantly high level.
Imbalance in work-life negatively impact on performance bank in turn. Working environment also has positively impact on bank staff productivity but with the lowest significance. The result of the study can contribute for human resource management for enhancing productivity and performance of banking staff in the future. Key words: Employee performance (EP), work-life conflicts, working environment (WE), compensation (COM), Vietnamese domestic banks (VDBs).
TIEU LUAN MOI download : skknchat@gmail.com EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS iii LIST OF FIGURES Figure 1: Conceptual research model. 18 Figure 2: Research process. 20 LIST OF TABLES Table 1: Income of bank staffs by year. 03 Table 2: Income and average profit of bankers in 2013.
04 Table 3: Distribution system of banks in 2013. 19 Table 4: Demographic information. 21 Table 5: Measurement scale. 22 Table 6: Reliability statistics of compensation variable.
29 Table 7: Reliability statistics of COM variable with 5 factors. 30 Table 8: Reliability of Work-life conflicts variable. 31 Table 9: Reliability statistics of WLC variable with 5 factors. 32 Table 10: Reliability of working environment variable.
32 Table 11: Reliability of WE variable with 4 factors. 33 Table 12: Reliability statistics of Employee performance variable. 33 Table 13: KMO and Barlette’s test. 36 Table 14: Total Variance Explained.
37 Table 15: Rotated Component Matrix. 38 Table 16: KMO and Barlette’s test & Total Variance Explained of second EFA. 38 Table 17: KMO and Barlette’s test & Total Variance Explained. 41 Table 20: Model Summary.
42 TIEU LUAN MOI download : skknchat@gmail.com EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS iv LIST OF ABBREVIATIONS EP Employee Performance COM Compensation WE Working Environment WLC Work-Life Conflicts VSBs Vietnamese Domestics Banks HRM Human Resource Management SOCBs State-Owned Commercial Banks JSCBs Joint-Stock Commercial Banks S&D Sales and Distributors TIEU LUAN MOI download : skknchat@gmail.com EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS v CONTENTS ACKNOWLEDGEMENT. ii LIST OF FIGURES .iii LIST OF TABLES .iii LIST OF ABBREVIATIONS .2 Research objectives and questions .3 Scope of the research. 7 LITERATURE REVIEW, HYPOTHESIS AND RESEARCH MODEL .2 Work-life Conflicts (WLC) or Work-life Imbalance .1 Work-life conflicts and employees’ performance .2 Working Environment and employee performance.3 Compensation and employees’ performance. 16 TIEU LUAN MOI download : skknchat@gmail.com EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS vi Chapter 3 .3 Research sample size and techniques, sample discription .5 Data analysis methods .1 Testing reliability of scales by using Cronbach’s Alpha and Coefficient .2 Exploratory Factor Analysis .3 Multiple regression analyses .1 Brief description of subjects .3 Patterns of data for each research question .1 Preliminary evaluation scale with Cronbach’s Alpha .2 Exploratory Factor Analysis (EFA).
44 CONCLUSIONS AND IMPLICATIONS. 43 TIEU LUAN MOI download : skknchat@gmail.com EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS vii 5.3 Limitations and recommend for further research. 49 APPENDIX A: SURVEY QUESTIONAIRE. 61 APPENDIX B – DATA ANALYSIS RESULTS.
74 TIEU LUAN MOI download : skknchat@gmail.com EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS 1 CHAPTER 1 INTRODUCTION This chapter presents the introduction to the study. It contains the research background, research problems, research objective, the significant of research and research structure 1.1 Research background The objective of business owners is profitability. Organization’s success depends on employees’ performance. Poor performance is detrimental to company’s success.
Even employee performance can make or break an organization’s success. Banking industry has sufficiently undergone rapid changes and with the entry of foreign players and strong private players the face of industry was redefined completely. Indeed, according statistics from Vietnamwork, demand for labor force of banking used to be always at the top job hunter and top most desirable jobs in the period of 2006-2007 due to its rapidly development both vertically and horizontally, however, in time of economics deficit, this became against in the later period, begun from 2011. In wake of these changes, the changes in fundamentals and structure of banking industry majorly also affected the role of internal customers - the employees of the industry.
Besides several other changes took place in the industry which led to huge churning of employees in the industry thus the need for caring for the satisfaction of employees also became important. There are several antecedents of employee satisfaction found in various studies conducted in different areas of different industries and sectors. The cost of employee turnover to firms to firms has been estimated to be up to 150% of the employees remuneration package (Schlesinger &Heskett, 1991)…This number, once again, raises up a warning of improving job satisfaction for effective use of resource. There has had number of studies about determinants affect on employee performance worldwide such as Impact of Compensation, Performance Evaluation and Promotion TIEU LUAN MOI download : skknchat@gmail.com EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS 2 Practices on Government Employees Performance VS Private Employees Performance (Bilal Jamil, 2011); Contributory Factors in Employee Satisfaction: An Empirical Investigation of Banking Industry (Pareek&Vandana, 2013); Determinants of Employees Performance in Corporate Sector: Case of an Emerging Market (Mubbsher M.
Khan & Maryam Jabbar, 2013); Work-Life Balance Practices in the Banking Sector: Insights from Nigeria (ChimaMordi& Stella IbiyinkaOjo, 2011); The Effect of Earning, Working Environment, and Promotion Opportunities on Employees’ Performance: A Comparison between the State Sector and Other Sectors in Vietnam (Dang Xuan Chuong, 2012), etc. In Vietnam, in time of slower of growth, highly-affected-by-rumor banking system, high turnover in banking labor force, low performance, the significance to consider the most influencing factors from some previous research about earning, working environment, and promotion opportunities affect employee performance becomes crucial action to enhance banks’ success. Issues for bank employees The banking industry also suffers from high employee turnover rate. One of the seven remarkable Vietnam banking issues in 2013 is the changes in both senior personnel (CEO) and higher requirements for branch directors and cut in labor force along with salary to cut operating cost from 10 to 20 percent in banks.
The cut in labor force issued in the form of giving high target or directly considering and cutting. When the performance is not good enough to meet the target, the employees themselves, or the results from their performances lead them to be fire. In the financial report from banks, every indicators related to bankers’ income decrease in 2013 in comparison with those of the year 2012. See in table 1 below.
TIEU LUAN MOI download : skknchat@gmail.com EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS 3 Table 1: Income of bank staff by year 2013 2012 Stock code Total Average Total Average No. of income (bil. income income employees employees VND) VND) (bil. This is the matter of healthy workplace environment.
The profit in banks is lower and much of rumors of banks’ operation created doubt in customers and staff themselves. The current economic condition seems to have exacerbated these problems. Considering the issues of low wages (compensation), high turnover and job insecurity among bank employees (workplace environment), it is not surprising to find that create work- life conflicts and low performance. From the financial report in 2012, 2013, there are only banking officers of Vietinbank and Military bank create much more than they receive, the rest still show low performance or not stable performance.
TIEU LUAN MOI download : skknchat@gmail.com EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS 4 Table 2: Income and Average profit of bankers in 2013 Bank name Monthly Average Income Average Profit Created Per Person MB 17.7 (Source: Complied from Financial statement of banks third-quarter-end of 2013) Not only decreasing in banker income, it is not really accurate to calculate average profit an employee brings about count on bank profit and number of employees of that bank only. In fact, profit from many banks comes from many others source rather than the profit from Sales and Distributors channel (S&D) such as Eximbank, Tien Phong banks are good at arbitrage of international currency exchange, VP bank gets much profit in recent years by investing in financial subsidiary companies, etc. This means that, in some banks, there may find that there are increasing in income, but in fact, they are managing out more and pay with the same Salary fund, not because of the remaining are working more effectively. It appears that something more fundamental is contributing to the overall problem.
Reviewing the root causes of low job performance from the three key factors can provide some understanding of the problems with bank employees along with possible solutions.2 Research objectives and questions The objective of the present study is to measure how identified factors influence employees’ performance in domestic banks. Consequently, the research questions of the thesis are raised as following questions: TIEU LUAN MOI download : skknchat@gmail.com EMPLOYEE PERFROMANCE IN VIETNAMESE DOMESTIC BANKS 5 - How do work-life conflicts, working environment, compensation affect on employees’ performance in Vietnamese domestic banks? - Is there any relationship between 3 determinants affecting in employee performance? 1.3 Scope of the research The research is conducted in Ho Chi Minh City with 260 respondents who work in both state-owned banks and private owned with various positions, banks. Questionnaire is about to 3-6 items for each determinant about Work-Life Conflicts, Working Environment, Compensation and Promotion Opportunities affect employees’ performance. The timeframe of research intentionally lasts in three-month period from May to the end of July in 2014.
There might be changes in survey depending on how much the bank will allow them and their willingness. The confidentiality of information about their answer can be one of the biggest limitations of the study as the respondents themselves are often scared of showing their workplace.4 Conclusion This paper is organized into five sections. It begins with the introduction section.