INTRODUCTION
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
The development of human resources is crucial for any organization's growth strategy Even with advanced technology, high-quality services, and strong infrastructure, a company cannot thrive or maintain a competitive edge in the long term without an effective workforce.
According to Lawler (2003), the treatment of individuals significantly influences an organization's success and survival To thrive, organizations must foster strong cooperation and satisfaction among their employees Additionally, effective motivation at different levels is essential to ensure that employees perform at their best (Bedeian, 1993).
Motivation is a crucial process that energizes and directs employee behavior and performance, encouraging them to exert their full efforts to accomplish desired tasks.
A rewards management system is a significant strategy for enhancing employee motivation and performance (Deeprose, 1994) Implementing effective rewards can greatly influence an organization's ability to attract, retain, and motivate high-potential employees (Fay and Thompson, 2001).
Management problem
Ho Chi Minh City, as Vietnam's largest commercial and economic hub, attracts significant foreign investment and experiences a robust annual economic growth rate of around 10% However, amid the global economic crisis, many companies in the city are forced to strategize for survival, leading to necessary staff reductions while striving to retain essential employees during these challenging times.
In today's competitive job market, companies face challenges in retaining skilled employees due to the allure of better benefits and work environments elsewhere Motivational programs play a crucial role in attracting talent, but they also highlight the instability of human resources as employees seek opportunities that offer greater satisfaction and intrinsic motivation, as noted by Vansteenkiste (2005).
Facing such situation, the big question for management of most companies in Ho
In Ho Chi Minh City, motivating employees to achieve peak productivity is a significant challenge for managers and leaders.
Research gap
In Ho Chi Minh City, many companies, particularly those with significant foreign investment, are implementing rewards management systems as a motivational strategy However, the effectiveness of financial incentives—such as bonuses, higher salaries, pensions, sick leave, and risk payments—in enhancing employee performance is questionable If financial motivation proves ineffective, managers must consider alternative motivational strategies, as not all employees respond to monetary rewards in the same way.
Many employees who genuinely contribute to their company often feel undervalued, as they are treated the same as those who are less effective This lack of recognition can lead to demotivation, especially when company benefits are reduced due to challenging economic conditions Therefore, it is crucial for organizations to identify the appropriate rewards for different types of employees to enhance motivation and performance.
To effectively promote creativity and performance among employees with diverse attitudes and experiences, a flexible rewards system is essential While numerous studies have explored employee motivation and job performance in Vietnam, there is a lack of official research on the effective application of rewards management systems tailored to various employee types This study aims to address this gap by re-evaluating the relationship and impact of rewards management systems on employee performance, emphasizing the mediating role of motivation and focusing on four key reward factors: pay, benefits, promotion, and recognition.
Research objective
This study aims to explore the influence of a rewards management system on employee performance, emphasizing the mediating role of motivation The findings will offer valuable insights for management on the effective implementation of rewards management systems.
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?
Research significance
In today's dynamic environment, employee motivation and job performance are crucial for a company's growth This study aims to address key research questions to assist companies in Ho Chi Minh City in enhancing their workforce effectiveness.
Minh City could approach the effective rewards management system which would enable their employees motivated to show the best job performance.
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
This study focuses on employees currently working in companies in Ho Chi Minh City, who will serve as respondents for a questionnaire survey The questionnaire will be distributed to these respondents in July 2014, with the study concluding in September 2014.
Research structure
The article is structured into five key sections: an introduction to the study, a review of relevant literature and hypotheses, a discussion of the research methodology, an analysis of the data and its findings, and finally, a conclusion summarizing the research outcomes.
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 tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg
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 discusses the objectives, significance, and benefits of the research The next chapter will explore concepts that influence employee motivation and job performance.
LITERATURE REVIEW
This chapter aims to elucidate the rewards management system, work motivation, and employee job performance, highlighting the critical relationships among these elements It emphasizes relevant theories and arguments that connect rewards management to motivation and overall employee performance.
Motivation refers to the desires, emotions, and needs that drive individuals to take action It is the underlying force that prompts behaviors, such as drinking water to quench thirst or reading a book to acquire knowledge.
Motivation is defined as a collection of processes that energize behavior and guide it towards achieving specific goals (Baron, 1983) It drives individuals and groups to strive for optimal results as they work towards their objectives.
Motivation can be categorized into intrinsic and extrinsic types Intrinsic motivation stems from internal factors like job satisfaction and skill development, driven by personal interest in the task, leading to high-quality work and lasting effects In contrast, extrinsic motivation is influenced by external factors such as promotions, salary increases, and benefits, which can provide immediate encouragement but lack long-term impact While some employees are primarily intrinsically motivated and others extrinsically, most individuals experience a blend of both types of motivation, influenced by the specific task, timing, and situational factors.
Motivation theories have evolved since the early 20th century and can be categorized into content and process theories Content theories, such as Maslow’s Hierarchy of Needs, Alderfer’s ERG theory, and Herzberg’s motivation-hygiene theory, focus on the specific factors that drive human motivation.
The Two Factor Theory addresses the question of what motivates individuals It explores the factors that drive motivation and satisfaction in various contexts.
And the process theories of motivation which include Vroom’s Expectancy theory,
Adam’s Equity theory and Reinforcement theory are to answer the question: "How are people motivated?"
As one of the earliest theories of motivation, Hierarchy of needs theory was proposed by Abraham Maslow in his paper "A Theory of Human Motivation" in 1943
Maslow introduced a hierarchical model of human motivation, identifying five distinct levels of needs: physical, security, social, self-esteem, and self-actualization, arranged from the most basic to the highest.
Physiological needs encompass essential requirements such as food, water, oxygen, salt, sugar, rest, sleep, and sexual fulfillment In the context of organizations, Maslow emphasizes the importance of providing employees with adequate salaries to ensure they can meet their basic living conditions.
Safety needs represent the second level of Maslow's hierarchy, emerging once physiological needs are satisfied These needs focus on the pursuit of safety, stability, and protection To foster a secure work environment, organizations must ensure employees have access to safe equipment, health insurance, and fire protection, allowing them to perform their duties without fear of harm.
Belonging needs represent the third level of Maslow's hierarchy, emerging once the second level is fulfilled As inherently social beings, individuals seek acceptance and meaningful relationships within various groups In organizational contexts, it is essential for leaders and managers to foster a sense of belonging by encouraging employee participation in company events, picnics, and team-building activities.
Esteem needs represent the fourth level of Maslow's hierarchy, encompassing the desire for self-respect and the respect and approval of others Individuals often seek high evaluation through recognition and respect, which fosters confidence and a sense of empowerment When these needs are met, people feel valuable and influential in their surroundings Consequently, organizations should promote various awards to acknowledge and celebrate employees' outstanding achievements.
Self-actualization needs represent the highest level in Maslow's hierarchy of needs Once esteem needs are fulfilled, individuals are motivated to pursue self-actualization to reach their full potential As Maslow stated, “What a man can be, he must be,” highlighting the intrinsic desire to become one's true self People fulfill this need through various personal avenues and experiences.
Maslow's theory offers valuable insights for researchers and managers, highlighting that individuals are motivated by different factors and that a person's motivations can change over time Consequently, businesses should implement diverse incentive and motivational programs tailored to the varying needs of their employees.
Developed in 1969 by Clayton P Alderfer, ERG theory was a synchronization of Maslow’s need hierarchy theory with the simpler classes of needs
E stands for Existence needs, the basic material necessities In short, it includes an individual’s physiological and physical safety needs
R stands for Relatedness needs These include the aspiration that individual’s have for maintaining significant interpersonal relationships
Growth needs, represented by G, encompass the desire for self-development, personal growth, and advancement.
The ERG theory suggests that focusing solely on one type of employee need will not effectively motivate them Therefore, managers must recognize that employees have diverse needs that should be addressed simultaneously for optimal motivation.
Two-factor theory was developed by Frederick Herzberg in 1959 It describes about motivators and hygiene factors
RESEARCH METHODOLOGY
In this chapter, the practical methods which were used in order to answer the research questions and fulfill the purpose of this study are presented
This research used both of qualitative and quantitative research method to achieve wide and clear understanding of the chosen object
Qualitative research method was done by a pilot interview with a focus group
Interviewees were individually questioned about their understanding of the statements in the measurement scales to ensure clarity and accuracy in the wording This process will lead to the development of official measurement scales for quantitative research, with modifications made to enhance comprehension.
The quantitative method employed a structured questionnaire derived from a literature review to assess the influence of four key components of the rewards management system—pay, benefits, promotion, and recognition—on employee job performance through motivation This approach allows for large-scale data collection, providing valuable insights and statistical analysis.
3.2 Data source and collection method
Data was gathered through a structured questionnaire distributed in two ways: via email with a link to an online survey, which offered low cost and the ability to reach a large audience, and through direct hand distribution, allowing for immediate completion requests.
3.2.2 Secondary data tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg
Secondary data was sourced from various materials, including books, articles, newspapers, online websites, and academic journals This data enabled the researcher to gain a comprehensive understanding of the topic while saving both time and budget.
A five point likert scale from strongly disagree to strongly agree was used as the scale for the statements defined in the questionnaire
Part I with 9 questions was to ask about biographical information, including gender, marital status, age, job classification, educational qualifications, and tenure
Part II with 22 questions was divided into four main sections in order to measure four variables: pay factor, benefits, promotion and recognition
Overall, there are 31 questions asked in the questionnaire to approach the quantitative research method
3.3.1 Scale items of four main factor of rewards management system
Scale items of pay factor, and promotion and recognition were adopted from Robert Rosan Levina (2005):
PAY1 My salary is satisfactory in relation to what I do
PAY2 I earn the same as or more that other people in a similar job
PAY3 The basis of payment, for example overtime payment, is reasonable
PAY4 Salary increases are decided on a fair manner
PRO1 I will be promoted within the next two years
PRO2 Everyone has an equal chance to be promoted
PRO3 Staff members are promoted through a transparent and equitable process.
REG1 I am praised regularly for my work
REG2 I receive constructive criticism about my work
REG3 I get credit for what I do
REG4 I am told that I am making progress
Scale items of benefits were adopted from Paul E Spector (1994):
BEN1 I am satisfied with the benefits I receive
BEN2 The benefits we receive are as good as most other organizations offer
BEN3 The benefit package we have is equitable
BEN4 There are benefits we have which we should have
3.3.2 Scale items to measure employee's work motivation
With above four factors of rewards, motivation was measured by below items which are adopted from Mikander (2010):
MOT1 My employer encourages me to work
MOT2 I am satisfied with my salary
MOT3 I am satisfied with the amount of free time activity that my employer arranges
MOT4 I get enough feedback from my employer
3.3.6 Scale items to measure employees' job performance
The measurement scales of job performance, as adopted from Rego and Cunha (2008), provide a comprehensive framework for evaluating employee effectiveness.
PER1 I believe I am an effective employee
PER2 I am happy with the quality of my work output
PER3 Accomplishes tasks efficiently Able to complete tasks quicker as the employee gains experience
According to Hair et al (1998), a minimum sample size of 50 is recommended for Exploratory Factor Analysis (EFA), with an ideal size of 100 or more The sample size should also be at least five times the number of observed variables In this research, with 28 items from the measurement scale, the minimum required sample size is calculated as \( n = 28 \times 5 = 140 \).
To ensure a reliable confidence level for the study, a sample size of 200 was determined A questionnaire was randomly distributed to 200 employees aged between 22 and 50 from various companies in Ho Chi.
Raw data gathered through questionnaires was input into SPSS version 20 for analysis The data distribution was verified to ensure measurement accuracy before conducting further analysis based on the results from SPSS.
There were some statistical tools to be applied in this study: Descriptive statistic,
Reliability analysis, and Exploratory Factor Analysis (EFA) and ANOVA analysis
Descriptive statistics were used to describe the basic features of the data in this study such as mean, frequency, standard deviations, percentage and range (Sekara, 2006)
This study utilized descriptive statistics to summarize consolidated data, facilitating a comparison of demographic information among different groups of respondents.
This study employed Cronbach’s alpha to assess the reliability of questionnaire items and evaluate their internal consistency Following the guidelines of Nunnally & Bernstein (1994), any item with a corrected item-total correlation index below 0.3 was deemed unacceptable and subsequently excluded.
Cronbach’s alpha index greater or equal to 0.6 will be accepted
After computing Cronbach’s Alpha, the Exploration Factor Analysis method would be applied in order to explore the interrelationship among the variables In the implementation of EFA:
- The Kaiser - Meyer - Olkin (KMO) index which is used to evaluate the appropriateness of EFA method with the data should be from 0.5 to 1
- And, the signification level of Barlett’s test, which is used to test the null hypothesis that the variables in the population correlation matrix are uncorrelated, would be smaller than 0.05 (p