UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ************************** Vo Thi Ngoc Linh KEY ORGANIZATIONAL FACTORS CONTRIBUTING TO EMPLOYEE SATISFACTION: An examination of small-medium sized enterprises 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 ************************** VoThi Ngoc Linh KEY ORGANIZATIONAL FACTORS CONTRIBUTING TO EMPLOYEE SATISFACTION: An examination of small-medium sized enterprises in Ho Chi Minh City ID: 22110084 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. NGUYEN DANG LAM Ho Chi Minh City – Year 2014 ii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENT Firstly, I would like to express my sincerest gratitude to my supervisor, Dr. Nguyen Dang Lam. who has supported my thesis with enthusiasm in guidance as well as instruction knowledge in detail.
I would like to express appreciations to my ISB’s classmates, colleagues, friends, and relatives. They helped me so much for finishing data survey, communicating usefully information for my study. Last but not least, I would like to thank my small family who gave me the best conditions to carry out the thesis. Sincerely Vo Thi Ngoc Linh April 2014.
i LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT One of the factors to bring advance competitiveness for enterprises in Vietnam is productive labor. There are some forces helping to increase productivity from different activities as training, physical support or morale. The best choice for increasing productivity and enthusiasm in job is to create high satisfaction of employee with organization. Small Medium Enterprises (SMEs) in Vietnam need to have more attention this aspect for competition with rivals in Vietnam’s market as well as expending to international markets.
The purpose of this study, therefore, tries to examine key organizational characteristics contributing to employee satisfaction in Vietnam’s SMEs. In detail, it surveys seven organizational factors that influence employee satisfaction in enterprises. It includes factors as purpose, structure, relationships, rewards, helpful mechanism, leadership, and attitude toward change. The results form data survey of SMEs in Ho Chi Minh City and using data analysis methods may support finding out key organizational factors impacting on employee satisfaction.
This thing can support enterprises to identify and apply the best strategies to improve and develop labor productivity. ii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS ACKNOWLEDGEMENT .ii TABLE OF CONTENTS. iii LIST OF TABLES .vii LIST OF ABBREVIATIONS .2 Research objectives and questions .5 Overview of research .1 Definition of small-medium sized enterprise in Vietnam .2 Employee Job satisfaction .3 Key organizational factors contributing to employee satisfaction .7 Attitude toward change. 16 iii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.4 Data collection method .5 Data analysis technical .1 Reliability analysis of measurement scales with Cronbach’s alpha .2 Exploratory factor analysis .3 Multiple regression analysis to test the impact of independent variables to dependent variable.
DATA ANALYSIS and RESULTS .3 The mean and standard deviation of independent and dependent variables.1 Reliability of Purpose .2 Reliability of Structure .3 Reliability of Leadership .4 Reliability of Relationship .5 Reliability of Reward .6 Reliability of Helpful Mechanisms .7 Reliability of Attitude toward Change .8 Reliability of Overall Satisfaction.4 Exploratory Factor Analysis (EFA) .1 Assessing the scale measurement of independent variables .2 Assessing the scale measurement of dependent variable .6 Multi-Linear Regression Analysis for testing hypotheses. 37 iv LUAN VAN CHAT LUONG download : add luanvanchat@agmail. RECOMMENDATION AND CONCLUSION .2 Summary of the study results.4 Conclusion and future research recommendation. 49 v LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 1- Weisbord’s (1976) Organizational Diagnosis Model.
12 Figure 2- Research Model: Adapted from Weisbord’s (1976) and Preziosi’s (1980) Organizational Diagnosis Model. 13 Figure 3- The proposal research method. 15 vi LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Table 1- SMEs Definition according to Decree 56/2009/ND-CP. 6 Table 2- Measurement scale of factors contributing to employee satisfaction.
27 Table 5- Descriptive Statistics of Variables. 27 Table 6- Cronbach’s alpha of Purpose. 28 Table 7- Cronbach’s alpha of Structure. 28 Table 8- Cronbach’s alpha of Leadership.
29 Table 9- Cronbach’s alpha of Relationship. 29 Table 10- Cronbach’s alpha of Reward. 30 Table 11- Cronbach’s alpha of Helpful Mechanisms. 30 Table 12- Cronbach’s alpha of Attitude toward Change.
31 Table 13- Cronbach’s alpha of Employee Overall Satisfaction. 31 Table 15- Rotated Component Matrix. 34 Table 16- KMO and Bartlett's Test of dependent variable. 35 Table 17- Total Variance Explained of dependent variable.
35 Table 18- Component Matrix of dependent variable. 36 Table 20- Model Summary. 38 Table 21- Anova Result. 38 Table 22- Coefficients Result.
39 Table 23- Research results. 41 vii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF ABBREVIATIONS SMEs: Small-medium Enterprises EFA: Exploratory Factor Analysis KMO: Kaiser-Meyer-Olkin PUR: Purpose STR: Structure LEA: Leadership REL: Relationships REW: Rewards HEL: Helpful Mechanisms CHA: Attitude toward Change viii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.1 Research background Along with the fast development of science and technology, human resource is becoming a leading competitive factor in business organizations. Businesses focus on increasing their employee satisfaction because satisfied employees will become more enthusiastic, fervent in job and loyal to company’s goals. Thus, identifying factors that can impact on employee satisfaction is of the utmost importance to today’s managers.
When employees satisfy with their job and organization, they are easy to accept change conditions and are quite willing to contribute to organizational initiatives to bring profits for enterprise. In addition, labor cost can be decreased. The costs of recruiting and training are significantly reduced because employees are willing to stay with job. For example, in HP Corporation, managers have allowed employees to arrange their working hours.
With flexible time work plan, workers have had reasonable period of time for job and enjoyed the holidays with relatives. This helped HP reduce 36% overtime cost and costs of recruiting and training were also noticeably decreased (Weekly Saigon Entrepreneur, 2013). According to VTV News, SMEs in Vietnam face many challenges in international competition since Vietnam opened its economy to the world. SMEs are lack of strategic competitiveness because of poor management and labor capacity, small scale, limited capital, and backward technology that forces price to increase while making product quality decreasing (Da Thao, 2013; PhanThanh Hai, 2013).
Facing tough competition from both domestic and international competitors, SMEs in Vietnam need to redefine their resources, capabilities, and core competences and have strategic plans to be able to win the market. Furthermore, as SMEs contribute greatly to the economy, it is strategically crucial to develop this sector to achieve the country’s sustainable growth. 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Among the top strategic directions to help SMEs gain competitive advantage and achieve strategic competitiveness, building a high performance work system that produces superior employee performance is perhaps the most important initiative. One of the ways to accomplish this mission is to increase employee satisfaction and their commitment to the organization.
In previous research, many authors studied the impact of organizational characteristics on employee satisfaction. Because most people spend almost a lifetime for work, understanding of the factors that help increase satisfaction is important to improve the well-being of individuals (Grunneberg, 1997). Recent research results have shown that the level of satisfaction of employees in local companies in Vietnam was low (Duong &Swierczek, 2008; Yu & Lyons, 2012). This research, therefore, focuses on understanding key organizational factors contributing to employee satisfaction in SMEs.
It helps confirm necessary factors that enterprises need to focus on in order to improve their employee satisfaction. Generally, understanding employee satisfaction help SMEs gain some important advantages such as maintaining employee commitment, increasing employee performance, and increasing competitive advantage. It also attempts to examine some key organizational factors that have studied in western cultures and see if they can apply on SMEs in Vietnam.2 Research objectives and questions To become an industrialized country, Vietnam has faced the challenge of deficiency in qualified work force (Truong et al. According to a Gallup survey conducted in 2011, Vietnamese employees were least happy among Asian workers (Yu & Lyon, 2012).
Research on job satisfaction has paid quite a lot of attention to organizational factors (Lorianne, 2011; Yiicel, 2012). Job satisfaction relates to various organizational 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com characteristics and behaviors in the workplace (Boles et al., 2007; Ejere, 2010; Kantabura & Avery, 2007; Nguyen, 2011; Valentine et al. The objective of this study is to determine key organizational factors impact on employee satisfaction. It includes three main contents as follow: - To examine level of employee satisfactionin SMEs in Ho Chi Minh City.
- To identify the key organizational factors contributing to employee satisfactionin SMEs in Ho Chi Minh City. - To find out the strength of each factor on level of employee satisfaction in SMEs in Ho Chi Minh City. In this study, seven organizational characteristics of SMEs in Ho Chi Minh City including purposes, structure, relationships, rewards, helpful mechanism, leadership, and attitude toward change is tested. The study reports influence of these seven factors on employee satisfaction.
For the purpose of the research, research questions to survey key organizational factors contributing employee satisfaction are as follows: - Is there a relationship between each of the seven factors of organizational characteristics and employee satisfaction? - How strong is the relationship between each of the seven factors of organizational characteristics and employee satisfaction? 1.3 Research contribution As stated earlier in this study, the level of employee satisfaction in local companies in Vietnam was low (Duong & Swierczek, 2008; Yu & Lyons, 2012). This may be because of the lack of skilled workers at these companies (Henderson & Tullock, 2008). In reality, there are many different reasons and factors contributing to employee satisfaction. At the theoretical level, this research contributes to previous studies in the literature of organizational study by shedding more light in understanding how organizational 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com characteristics can impact on employee satisfaction.
At the practical level, this research can help managers of SMEs in Ho Chi Minh City have an overview on key organizational factors that impact on employee overall satisfaction. It also helps them recognize how each key factor can strengthen the level of employee satisfaction. The research has implications for not only Vietnamese managers but also for organization development practitioners, as to how to increase the employee satisfaction in SMEs in Ho Chi Minh City.4 Research scope This study is limited to the investigation of SMEs in Ho Chi Minh City only. It focuses on a few referential enterprises in Ho Chi Minh City.
Thus, it is not necessarily representative other enterprises from different areas in Vietnam. The population of this study is staff and supervisor level.5 Overview of research This research includes five chapters that indicate the context as follows: Chapter 1: Introduce the background of the research, research objective and questions, as well as research contribution and scope. Chapter 2: Indicate literature review context that concerned factors belong to organizational characteristics, and employee satisfaction. Chapter 3: Indicate contents concerning research methodology, such as research design, sampling design and data collection.
Chapter 4: Indicate data analysis, hypotheses testing and report result of the research. Chapter 5: Conclusion of the research as well as recommendation. 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. LITERATURE REVIEW Purpose of this chapter is to review concepts of employee satisfaction and organizational characteristics (purposes, structure, relationships, rewards, helpful mechanism, leadership, and attitude toward change).
It focuses on previous research concerning the seven factors of organizational characteristics, employee satisfaction and the impact of organizational characteristics to employee satisfaction.