Key factors affecting employee satisfaction in the banking industry evidences from ho chi minh city

ABSTRACT This study aims to determine the different impacts of five independent variables Salary & Benefits, Work environment, Management system, Career progression and Supervisor suppor

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

HA NGUYEN MINH TAM

KEY FACTORS AFFECTING EMPLOYEE

SATISFACTION IN THE BANKING INDUSTRY – EVIDENCES FROM HO CHI MINH CITY

MASTER OF BUSINESS (Honours) SUPERVISOR: DR DINH THAI HOANG

Ho Chi Minh City - 2014

TABLE OF CONTENTS

ACKNOWLEDGEMENT 4

ABSTRACT 5

LIST OF TABLES 6

LIST OF FIGURES 7

CHAPTER 1: INTRODUCTION 8

1.1 Research background 8

1.2 Research problem 9

1.3 Research objectives 10

1.4 Scope of study 10

1.5 Thesis structure 11

CHAPTER 2: LITERATURE REVIEW AND HYPOTHESES 12

2.1 Employee satisfaction 12

2.1.1 Definition of employee satisfaction 12

2.1.2 Employee satisfaction and its dimensions 13

2.2 Previous research about employee satisfaction and identifying hypotheses in this study 14

2.2.1 Salary and Benefits 14

2.2.2 Work environment 15

2.2.3 Management system 16

2.2.4 Career progression 17

2.2.5 Supervisor support 18

2.2.6 Moderated variable: Bank type 19

2.3 The research model 20

CHAPTER 3: RESEARCH METHODOLOGY 21

3.1 Research process 21

3.2 Measurement scale 22

3.3 Qualitative pilot research 24

3.4 Quantitive research 25

3.4.1 Sample size 25

3.4.2 Data collection 26

3.4.3 Data analysis method 26

3.5 Conclusion 29

CHAPTER 4: DATA ANALYSIS 30

4.1 Sample descriptive statistics 30

4.2 The reliability test: The Cronbach’s Alpha Test 31

4.3 Exploratory Factor Analysis 33

4.4 Hypothesis testing 35

4.4.1 Pearson Correlation Coefficient 35

4.4.2 Testing assumptions of multiple regression 35

4.4.3 Regression analysis 36

4.4.4 Chow Test for moderating variable 40

4.5 Discussion of research findings 45

4.6 Conclusion 46

CHAPTER 5: CONCLUSIONS, IMPLICATIONS AND LIMITATIONS 48

5.1 Conclusions 48

5.2 Managerial Implications 49

5.3 Limitations and recommendations for future research 51

REFERENCES 52

APPENDIX 58

ACKNOWLEDGEMENT

First of all, I would like to express my sincere gratitude to my supervisor Dr Dinh Thai Hoang, who offered his continuous support and useful advices throughout the course of this thesis His guidance helps me over the time of research and writing this master thesis Secondly, I would like to thank the ISB Research Committee for their encouragement and valuable comments

Last but not least, I am thankful to all my colleagues, friends for the consultation and support during my research process

ABSTRACT

This study aims to determine the different impacts of five independent variables (Salary

& Benefits, Work environment, Management system, Career progression and Supervisor support) on dependent variable, employee satisfaction in the Vietnamese banking industry, and explores the moderating role of the bank type variable on these relationships A survey was conducted by utilizing a sample of 171 employees working in both local and foreign banks in Ho Chi Minh City Multiple regression and Chow Test were used to analyze these impacts on employee satisfaction as well as compare those effects between two groups

The result indicates that all determinants which are Salary & Benefits, Work environment, Management system, Career progression and Supervisor support positively influence employee satisfaction Career progression and work environment are found to

be the most important factors Furthermore, the analysis results also support that the bank type moderates the relationship between these factors and employee satisfaction Accordingly, in the local bank type, career progression still has the strongest effect on employee satisfaction, whereas, work environment has the highest impact on employee satisfaction in the foreign bank type

Based on the statistical results, managerial implications have been discussed and recommendations are provided to enhance the employee satisfaction in the banking industry in Ho Chi Minh City

Keywords: Employee satisfaction, salary & benefits, work environment, management system, career progression, supervisor support

LIST OF TABLES

Table 3.1: Measurement scale 22

Table 4.1: Descriptive Statistics 30

Table 4.2 Reliability Statistics of Salary & Benefits variable 68

Table 4.3 Reliability Statistics of Work environment variable 68

Table 4.4 Reliability Statistics of Management system variable 69

Table 4.5 Reliability Statistics of Career progression variable 70

Table 4.6 Reliability Statistics of Supervisor support variable 70

Table 4.7 Reliability Statistics of Employee Satisfaction variable 71

Table 4.8: KMO and Bartlett’s Test 33

Table 4.9: Total Variance Explained 72

Table 4.10: Rotated Component Matrix 73

Table 4.11: KMO and Bartlett’s Test for employee satisfaction 34

Table 4.12: Total Variance Explained for employee satisfaction 34

Table 4.13: Pearson Correlation Coefficient 74

Table 4.14: Coefficients 75

Table 4.15: Variables Entered/Removed 36

Table 4.16: Regression analysis 37

Table 4.17: Hypothesis testing results 38

Table 4.18: The summary of hypotheses testing results 39

Table 4.19: Regression analysis for local bank 41

Table 4.20: Coefficients (local bank) 42

Table 4.21: Regression analysis for foreign bank 43

Table 4.22: Coefficients (foreign bank) 43

Table 4.23: Differences of impact of determinants on employee satisfaction by bank type 44

LIST OF FIGURES

Figure 2.1: Research model 20

Figure 3.1: Research process 21

Chapter 1 INTRODUCTION This chapter provides background information on the nature of the present study and its objectives It consists of four sections The first section introduces the background of the research, the second and third part present the research problem, and the final section present the scope of study

1.1 Research background

In present, along with the globalization, increasingly competitive markets, organizations are forced to offer their best products and services to customers Therefore, delivering the premium service quality plays a critical role on the service providers’ success and survival In addition, some papers point that high service quality results in customer satisfaction and loyalty, greater willingness to recommend to someone else, decrease in complaints (Bitner, 1990; Danaher, 1997; Headley and Miller, 1993)

With regard to such a service business line as banking employees are the service providers in the banks The performance of a bank depends not on the various services/products it launches, but on the employees who provide those services to the customers In order to enhance the productivity and profitability of the bank, the performance of employee should be considered Therefore, huge interest has been gained

by organizations as well as researcher to examine factors that foster employee satisfaction and it and became a critical issue within the last two decades (Matzler and Renzl, 2007)

In service industry, specifically the banking sector, service employees are often representatives of the whole bank and are vital to sharping customer’s perception of service quality (Hartline and Ferrell, 1996)

Business dictionary defined bank as an establishment authorized by a government, act as

a financial intermediary to channel those who have capital surpluses to those who have capital deficits Bank also provides a variety of services such as payments and

collections, funds transferring and foreign exchange dealing Take a closer look at the Vietnam economy, banking industry is the heart of the economy and is at growth stage of its cycle life According to the report of VietinbankSc, the industry’s contribution to the economy grew from 2008 to 2012 In just a few years recently, the whole banking industry has been developed remarkably and plays a significant role in Vietnamese economic structure As of 2013, the whole banking system includes: 6 state-owned commercial banks, 35 commercial banks, 5 fully foreign-owned banks, 11 foreign banks have investment in Vietnamese banks, 54 foreign bank branches, 04 joint venture banks,

17 financial firms, 12 financial leasing companies and nearly 1,100 credit funds The appearance of a lot banks makes the banking industry in Vietnam intensively competitive, each bank tries its best to set up the wide network branches that leads to the increase in the number of bankers

1.2 Research problem

A global economic crisis in 2008 has affected negatively the entire Vietnamese economy

as well as the banking industry As the report of VietinbankSc in November 2013, over 60% enterprises reported negative net income and the profit after tax of commercial banking industry in Vietnam declining from VND47 trillion to VND36 trillion (as of 2012) In 2012-2013, the State bank of Viet Nam restructured the banking industry by making a series of large-scale M&A deals of nine commercial banks because of their weak operation and management (SCB, Ficombank, TinNghiaBank, Habubank, Tienphongbank, GP Bank, Navibank, TrustBank and Western Bank) Besides, the other banks have suffered from the downtrend of economy and forced to cut expenses by dismissing employees, salary’s reduction…

Based on the report of Vietnam News in May 2014, Exim bank has slashed nearly 500 workers and cut the salary for employees by 31.65% in the first quarter of this year DongA bank laid off 168 employees as well as SHB also dismissed off 100 jobs in this period

As the consequence of above situation, many banking employees have been unemployed and working under anxiety, depression and stress These things may affect the employee satisfaction that leads to a lower productivity, high turnover… because the employee plays a vital role to any bank’s performance Therefore, the bank managers need to be aware of the critical role of employees to the bank’s success As mention above, satisfied employees will work with strong commitment and deliver better service quality to the customer This circumstance places a challenge to bank managers that they have to maintain and improve the level of satisfaction of banking employees

Many studies have been conducted to investigate key factors affecting employee satisfaction in both developed and developing countries This thesis is focused on the investigating factors influence employee satisfaction in the banking industry in the context of the Vietnam downtrend of economy as well as exploring the moderating effects of the bank type on these relationships

1.3 Research objectives

The objectives of this study are to identify key factors that impact employee satisfaction

in the banking industry and determine the impact of each factor on employee satisfaction Furthermore, the study examines the moderating effects of Bank type: the impact degrees

of each determinant on employee satisfaction are distinct depending on local or foreign bank

1.4 Scope of study

Due to the limitations of data availability, research funds and time, this research undertakes in Ho Chi Minh city - the biggest and the most prosperous city in Vietnam –

so the result may not totally relevant to the whole country

Respondents of this research are employees working in both foreign and local banks in Ho Chi Minh City so that the result of this research may not appreciate with other industry

 Chapter 2: Literature review

In this chapter, the author presents research model and its hypotheses as well as its literature

 Chapter 3: Research methodology

This chapter particularly presents the research design, research methodology, development of the measurement scales, the questionnaire and the data analysis approach

 Chapter 4: Data analysis

This chapter presents the results of research based on data collected, statistical analysis and discussion

 Chapter 5: Conclusions, implication and limitation

This chapter summarizes the research results, provides the findings and recommendations

as well as the limitations of this study

Chapter 2 LITERATURE REVIEW AND HYPOTHESES There are number of determinants affecting employee satisfaction that has researched in many previous studies Each determinant could have different effects on employee satisfaction depend on business’s situation, type of organization, staff quality…

This chapter presents the theoretical concept of employee satisfaction and its components The conceptual framework and hypothesis development for this research are proposed and discussed

2.1 Employee satisfaction

2.1.1 Definition of employee satisfaction

The concept of employee satisfaction has been defined in many different ways by many researchers and practioners

According to Meena and Dangayach (2012), employee satisfaction is the terminology used to describe whether employees are happy and contented and fulfilling their desires and needs at work The employee satisfaction can be described as how pleased an employee is with his or her position of employment (Moyes, Shao and Newsome, 2008) Based on the study of Santoshi (2011), employee satisfaction is different from job satisfaction, wherein job satisfaction is a subset of employee satisfaction As Spector (1997) defined job satisfaction as the degree to which people like their jobs Employee satisfaction gives a bigger picture which comprises job satisfaction of employees and their satisfaction overall with companies’ policies, environment, relationships and culture…

Many past studies identified various elements of employee satisfaction as well as the importance of employee satisfaction to organizations Employee satisfaction is considered to be one of the most important drivers of quality, customer satisfaction and

productivity Keeping morale high among employees can bring tremendous benefit to any organization

Recent studies (Meena and Dangayach, 2012) have identified that employee satisfaction plays an important role not only employees but also organizations From the point of view of employee, satisfied employees will care about the quality of their work, create and deliver superior value to the customer and be more committed the organization A successful and highly productive work can be achieved by raising their satisfaction

On the other side, from the point of view of the company, giving importance to the organizational objectives, missions, employee satisfaction enhances employee retention, increase productivity as well as customer satisfaction In addition, employee satisfaction reduces turnover, recruiting and training costs, improves team work and creates as well as develops energetic employees for the company

2.1.2 Employee satisfaction and its dimensions

According to Herzberg (1959), satisfaction and dissatisfaction are different constructs and act independently of each other The theory distinguishes between:

Motivators (satisfiers): results in satisfaction when adequately fulfilled, including: achievement, recognition, work itself, responsibility and advancement

Hygiene factors (dissatisfiers): results in dissatisfaction when deficient, including: working conditions, interpersonal relations, salary, supervision, administrative policies, company policies

As of Herzberg’s theory, because of the construct are unrelated, one’s level of satisfaction is independent of the level of dissatisfaction The opposite of satisfaction is not dissatisfaction, but no satisfaction The opposite of dissatisfaction is not satisfaction, but no dissatisfaction

According to Fosam (1998), there are six dimensions of employee satisfaction: job satisfaction; employee morale; colleague’s morale; communication, training, resources, career development; perceived service quality and perceived public view

Santoshi (2011) found that employee satisfaction is affected by ten factors: challenges in the job, supervision, working conditions, salary, accountability, authority, recognition, career progression, company policies and interpersonal relationships

The study by Roland Rust, Greg Steward, Heather Miller and Debbie Pielack (1996) identified four main contributing factors that were linked to employee satisfaction These were: supervisor support, benefits, work design and work conditions

On the other hand, Shun, Ching, Jiun and Hui (2006) in their study designed the employee satisfaction model with six dimensions as follow: organization vision, respect, result feedback and motivation, management system, pay and benefits and work environment

2.2 Previous research about employee satisfaction and identifying hypotheses in this study

The employee satisfaction concept was studied worldwide and applied in many frameworks, research, in order to investigate which factor affecting employee satisfaction

in specific industry as well as circumstances

2.2.1 Salary & Benefits:

Salary related to employee’s perception on fairness of pay Employee should be satisfied with competitive salary packages when comparing their pay packets with those of the outsiders who are working in the same industry A feeling of satisfaction is felt by attaining fair and equitable rewards (Alam, Sameena and Puja, 2012)

Employee benefits on the other hand refers to fringe compensation which including social security, worker compensation, health benefits, pension plans, paid time off,

responsibility allowance, child care…Benefits, in the other way are the indirect financial and non-financial payments employees receive for their commitment with an organization

Based on a study of Santoshi (2011), salary affects employees’ liking towards a job, their satisfaction level and even their commitment to the organization Salary is related to company policies which affects employees’ attitude towards work as well as their satisfaction level

According to Blau and Boal (1989), the importance of fairness is a basic need for the well-being and satisfaction of employees So, employees who perceive that they are treated equitably in pay are more likely to have a feeling of satisfaction and continue to work at the organization

Salary is an essential component, but benefits are equally important and can often be the deciding factor in whether an employee accepts an offer or even stays at an organization Employee’s benefits packages can increase employees’ commitment and reduce their intent to leave (Mitchell et al., 2001)

Various studies have established that salaries and benefits are closely related to employee satisfaction Therefore, an expected relationship between employee satisfaction and salary & benefits is positive Thus, the hypothesis is:

H1: Salary & Benefits have a positive influence on employee satisfaction

2.2.2 Work environment

Work environment, according to Opperman (2002), including three sub-environments: the technical environment, the human environment and the organizational environment Technical environment refers to work equipment, tools, and physical elements: furniture, noise, lighting, temperature, security guards, parking facility, the quality of air, work areas, washrooms…The human environment refers to colleagues, team and work groups,

interactional issues…Organizational environments includes systems, procedures, practices, values and cultures

Work environment is an important dimension affecting employee satisfaction, willingness to work and work efficiency (Santoshi, 2011)

Work place environment may have both positive and negative impact on performance as well as satisfaction level of employees According to Chandrasekar (2011), there are numerous factors of workplace such as: adequate information, sufficient help and equipment, friendly and helpful colleagues… are considered to be factors that motivate employees towards higher productivity

Therefore, improving the work environment can enhance the employee satisfaction and performance as well as reduce turnover Employees are highly motivated with good working conditions as they provide a feeling of safety, comfort and motivation People working under inconvenient and poor conditions may end up with low satisfaction, bad health and absenteeism The more comfortable the work environment is more productive will be the employees (Demet, 2012)

Numerous studies have investigated effects of work environment on employee satisfaction Thus, the following hypothesis is proposed:

H2: Work environment has a positive influence on employee satisfaction

2.2.3 Management system

ISO 9000:2000 defines a management system as a “set of interrelated or interacting elements to establish policy and objectives and to achieve those objectives” A management system comprises the elements of policy, planning, implementation and operation, performance assessment, improvement and management review

According to Greve (2003), creating a set of objective, sustainable and credible measures,

as well as procedures and practices, leads to an effective management system in the organization that will enhance the expected results and the fulfillment of organization

goals This is true for organization in different industries, different firm sizes as well as different types

An effective management system will create a clear and fair performance evaluation system as well as establish a transparent link between employee achievement and overall business results It contributes to better understanding of the work objectives and the common goals of organization, resulting employee satisfaction Employees can have an honest and transparent communication with their leaders, good work environment, fair compensation and recognition as well as feedback for their contribution Ensuring a good management system will help bring successful results in employee productivity and lead

to higher levels of employee satisfaction (Shun, Ching, Jiun and Hui, 2006)

From above literatures, management system was supposed to affect employee satisfaction Therefore, the following hypothesis is proposed:

H3: Management system has a positive influence on employee satisfaction

2.2.4 Career progression

Career progression is about advancement within a job, within an organization or within

an industry It can take a variety of forms and can involve: increasing the breadth or depth of responsibilities, using more advanced knowledge or skills, taking on bigger and more challenging projects and supporting or interacting with higher level administrators

or faculty (Adeboye and Adegoroye, 2012)

Today's employees are demanding more in terms of personal growth and development Opportunities to develop, improve skills and career is one of the most important reasons employees choose to stay or leave an organization (Buckingham and Coffman, 1999)

It is essential that organizations place a high value on career development which includes two major components: counseling and training Counseling provides employees with the opportunity to define career goals and create plans within the context of organizational realities On the other hand, training allows employees to develop and acquire

knowledge, skills and abilities required to enhance the current job and share them with other employees (Noe, 1999) This will allow employees to fulfill their career needs and feel motivated to contribute more for the company Furthermore, organizations will benefit by retaining qualified employees

Besides, according to Santoshi (2011), career progression is one of the critical factors affecting employees’ satisfaction and their willingness to stay with an organization By creating a clear and effective career progression in the workplace, this will enhance organizational loyalty among employees, results in higher level of employee satisfaction, lower employee turnover, and fewer employee complaints (Werther and Davis, 1992) Hence, based on previous studies about affecting of career regression on employee satisfaction, we hypothesize that:

H4: Career progression has a positive influence on employee satisfaction

2.2.5 Supervisor support

Supervisor support is defined as the extent to which leaders value their employees’ contributions and care about their well-being A strong supervisor support improves the quality of employment and is associated with increased job satisfaction and reduced turnover (Newman & Thanacoody, 2010)

The relationship between leadership behavior and employee satisfaction has also received

a great deal of attention in past research Howard and Frink (1996) states that supervisors’ behavior, relationship with co-worker are positively related to job satisfaction Based on the study of Chandrasekar (2011), supervisors’ interpersonal role is important to encourage positive relations and increase self-confidence of the employee Employees will perform better in their current role and be potential to develop further into a future role if they get help from skilled supervisors Supervisor support has a significant impact on creating employee motivation and autonomy As supervisor take care to help and support employees as well as concerned about their needs, these

employees will feel more satisfied (Griffin, Patterson and West, 2001) In the study done

by Mishra (2007), it was found that style of supervision affects the attitude of an employee in the form of their satisfaction and performance

Therefore, based on the literature review, a following hypothesis is proposed:

H5: Supervisor support has a positive influence on employee satisfaction

2.2.6 Moderated variable: Bank type

Based on the practical situation of the banking industry in Vietnam, the sixth hypothesis

is proposed to examine the moderating effects of the bank type: local and foreign bank on the employee satisfaction of the bankers

The appearance of the foreign banks brings competition to the domestic banking industry

by providing advanced banking services and products In the context of this situation, the foreign banks have many advantages compared to local banks such as investment capital, professional management system, experienced and high-skilled staff, etc Therefore, indirectly, it makes the local banks have to improve their service quality, banking products as well as human resources management in order to compete with foreign banks Some previous studies show that employees working in different foreign and local banks have different levels of satisfaction According to Admed (2014), employees working in foreign banks are more satisfied regarding their pay structure and performance evaluation whereas employees in local banks are more satisfied regarding their job security

Given above discussion, the author proposed that the Bank type may have different effects on the relationship between each factor and employees satisfaction Thus the hypothesis will be:

H6: The impact degrees of each factor (Salary and Benefits, Work environment, Management system, Career progression, Supervisor support) on employee satisfaction are distinct depending on local or foreign bank

2.3 The research model

According to above hypotheses, a research model was proposed as below:

Figure 2.1: Research model

Salary & Benefits

Work environment

Management system

Career progression

Employee Satisfaction

Chapter 3 RESEARCH METHODOLOGY This chapter introduces research methodology which is used to do the research It will present research process, the qualitative pilot test, the measurement scales were adopted from previous studies, sample, data collection methods and the technique of analyzing data

3.1 Research process

The research follows the procedure illustrated in the below chart

Questionnaire design

Pilot survey

Main survey and data analysis

Figure 3.1: Research process

Research Objectives Literature Review Draft Questionnaire

Conclusions &

Recommendations

After identifying research problem, research objectives and reviewing the literature, the draft questionnaire was developed based on measurement used in relevant previous studies In research design step, there are 2 sub-steps:

 Pilot survey: was conducted by interviewing 8 banking employees in both local and foreign bank about the contents, the structure of the questionnaire, demographic information and moderating variable to test the meaning of the measurement scales After that, the draft questionnaire was revised and the sample size was determined

 Main survey: Final questionnaire were delivered directly and indirectly to banking employees working in both local and foreign banks in Ho Chi Minh City Data was collected in two weeks

In data analysis step, the collected data was used to test reliability and validity of the measurement scales by Cronbach’s alpha coefficient and EFA method Then, the author used multiple regression method to test the hypotheses proposed in this study The final step, the author discussed the findings and conclusions based on the results of the above step

3.2 Measurement scale

The scale of the study has been developed on the basic of previously established studies,

in conjunction with the refinement for contextual situation, in specific, a banking industry

in Viet Nam In summary, 29 variables are selected and grouped according to their characteristic: salary & benefits factors, work environment factors, management system factors, career progression factors, supervisor support factors and employee satisfaction

Items were measured on a seven-point Likert-type scale ranging from 1 = strongly

disagree to 7 = strongly agree in order to explore the opinion of the respondents

Table 3.1: Measurement scale

of items

Sources

Salary & Benefits

 Good salaries systems

 Good retirement systems

 My job is secure

 Satisfied with amount of health care paid

for

 Satisfied with amount of vacation

05 Shun, Ching, Jiun and Hui

(2006) Rahman, Noraida, Mohd, Harnizam, Gopala and Kamaruzaman (2009)

Work environment

 Materials & equipment to do job well

 Physical work conditions are good

 Provision of educative and training

Management system

 Fair promotion systems

 Good management systems

 Clear system of rewards and penalties

 Smooth communication channels

 Provision of high quality service

processes

05 Shun, Ching, Jiun and Hui

(2006)

Career progression

 Established career path

 Opportunities to learn & grow

 Achieves the level or position I had

hoped to achieve

03 Santoshi (2011)

Rahman, Noraida, Mohd, Harnizam, Gopala and Kamaruzaman (2009)

 Helps his/her team members identify and

develop their skills and potential

 Celebrates his/her team’s successes

 Deals effectively with multiple demands

and conflicting priorities

 Makes timely decisions, without

unnecessary delay

 Demonstrates high ethical standards

 Treats me fairly and with respect

 Employee overall satisfaction

06 Yasir, Kashif-ud-din, Zark,

Khalil, Abdul, Waseem and Ahmad (2011)

3.3 Qualitative pilot research

The pilot test was conducted through qualitative pilot study with group discussion technique The qualitative research was conducted in December 2013 by making a deep interview with eight employees who working in both local and foreign banks in Ho Chi Minh city (Shinhan Bank, Viet A Bank, Asia Commercial Bank) The participants need

to work for at least one year under the current manager in the bank so that they could have enough capabilities to understand and answer the survey

In preparation for this this pilot research, the draft questionnaire was used to interview the respondents The interviewees were asked to indicate whether the questionnaire suitable for measuring critical factors of employee satisfaction in the Vietnamese banking industry On the other hand, respondents’ opinions about the structure of the questionnaire, demographic information, moderating variable (bank type), the contents and meaning of words using in the measurement scale were also recorded

Finally, the qualitative research gave a result that the interviewees who joined in the group discussion had understood the meaning and the Vietnamese translation of the measurement scales The respondents agreed that five factors in the research affecting their satisfaction in the banking career Besides, the interviewees suggested the demographic questions should move into the end of the questionnaire

3.4 Quantitative research

The purpose of this study is to investigate key factors affecting overall employee satisfaction in the Vietnamese banking industry by surveying the employees The target population of the study is employees who are currently working at different departments

in both local and foreign banks in Ho Chi Minh City

3.4.1 Sample size

According to Bollen (1989), for exploratory factor analysis, the sample size should be as large as possible with the minimum should be at least five times as the number of items

to be analyzed and preferably not less than 100

As there are 29 variables used for the factor analysis, the necessary sample size should be: 29*5= 145 observations

In addition, for standard multiple regression analysis, the required sample is recommended by Tabachnick and Fidell (1991) should be: n>50+8m (which m: number

of independent variables)

There are 05 independent variables in this research Hence the minimum sample required

to run multiple regression is: n>50+8*5=90 observations

The sample size used for this research is 230 observations which are appropriate for EFA and multiple regression analysis

3.4.2 Data collection

The secondary data sources from text books, articles, the internet and other materials (journals, newspapers…) as found useful for the study This kind of data collection was also important to the study especially in the literature review

The primary data was collected through questionnaires which were sent directly or indirectly to the respondents 230 questionnaires were distributed to the employees who were working for different banks in Ho Chi Minh City at the time the research was conducted For paper survey, 100 questionnaires were hand delivered to author’s colleagues and friends working at many banks in HCMC Besides, 50 questionnaires were delivered directly to the banking employees who were joining MBUS at night time

in the ISB Besides, author also used Google Doc to create a questionnaire with the same content of hardcopy version, and then the link was sent via email and Facebook message

to 80 respondents who were employees of both local and foreign banks in HCMC

The response rate was 86% or 197 questionnaires were received back After checking, there were 26 questionnaires having errors or missing information was removed from the list of respondents As a result, the data of the study was a sample with 171 observations 3.4.3 Data Analysis Method

Data was analyzed by the SPSS Statistics 20 Data analysis was conducted on respondents’ data in two perspectives: descriptive data analysis and inferential data analysis The analysis process was implemented as follow:

 Testing reliability of scales by using Cronbach’s Alpha and Coefficient:

This was tested the Cronbach’s Alpha of each scale of each factors as well as the beta of the factor loading in the model Variables have correlation coefficients of variables (Corrected Item-Total Correlation) less than 0.3 is disqualified and the scale Cronbach’s Alpha coefficient is 0.7 or more is selected (Nancy L et al., 2005)

 Exploratory Factor Analysis (EFA):

The EFA method would be applied to explore the inter relationship between the variables In this step, each variable will create a factor loading that indicates the factor the variable belongs to The factor loading should be greater than 0.4 (Hair et al., 1998).According to Nancy L et al (2005), the KMO index should be greater than 0.6 In addition, the Barlett’s test should be smaller than 0.05 Eigenvalues need to be greater than 1.0 and the total extracted variance larger than 50%

 Multiple regressions:

Multiple regressions were used to display the degree of impact of each independent variable to dependent variable

According to Pallant (2005), the summaries of multiple regressions analysis are:

The appropriate sample size is: n>50+8m (where m is number of independent variables)

No multicollinearity

No outliers as well as no significant impact of outlier

Normality and linearity should be existed

 Chow Test:

The Chow Test is a test that determines if the coefficients from two regression analyses are the same The Chow test was invented by economist Gregory Chow in 1960 In econometrics, the Chow test is most commonly used in time series analysis to test for the presence of a structural break In program evaluation, the Chow test is often used to determine whether the independent variables have different impacts on different subgroups of the population

Suppose that we have 2 different groups in our data as:

Fk,n+m-2k= ( – – )/

Where SSER is the restricted error sums of squares when all the observations are used within the model, SSE1 is the error sums of squares for the first group and SSE2 is the error sums of squares for the second group n is the number of observations in the first group and m is the number of observations in the second group K is the number of regressors, including the intercept term We will have the same number of regressors in each model – the restricted and both the unrestricted models

The test statistic follows the F distribution with K (numerator degrees of freedom) and

n+m-2k (denominator degrees of freedom) It is concluded that the null hypothesis is

rejected if F (Chow test) is higher than F referred in F distribution table

Therefore, Chow Test was applied in this study to test the effects of five independent variables (Salary & Benefits, Work environment, Management system, Career progression and Supervisor support) in the context of foreign and local bank on the Employee satisfaction

3.5 Conclusion

This chapter presented the research methodology for conducting the study The research model and hypotheses were tested with three steps: Factor analyzing and scale reliability, correlation analysis and multiple regressions analysis Result of data analysis would be displayed in the next chapter

Chapter 4 DATA ANALYSIS This chapter presents the assessment of measurement and results of hypotheses testing about key factors on employee satisfaction in the banking industry in Ho Chi Minh city The content of this chapter is as follows:

 Sample descriptive statistics

 Assessment and refinement of measurement scale

 Hypotheses testing

 Chapter summary

4.1 Sample descriptive statistics

As mentioned in the previous chapter, 230 questionnaires were sent to interviewees who are currently working in the bank The response rate was 86% or 197 questionnaires were received back After filtering, 26 questionnaires were eliminated due to many missing As

a result, the data of the study was based on 171 questionnaires – the sample

Table 4.1: Descriptive Statistics

From 25 to 30 years old 45 26.3

Out of 171 respondents in term of age, there are 45 respondents (26.3%) are from 25 to

30 years old, while 46 respondents (26.9%) from 31 to 40 years old, 43 respondents (25.1%) are less than 25 years old and 37 respondents (21.6%) are over 40 years old The sample consists of 95 (55.6%) respondents working for foreign banks and 76 respondents working for local banks in Ho Chi Minh city

In the percentage of working experience of the respondents, the number of respondents who have working experience less than 1 year is 24%, over 5 years is 20.5%, from 1 to 3 years is 30.4% and from 3 to 5 years is 25.1%

4.2 The reliability test: The Cronbach’s Alpha Test

 Testing the reliability of Salary & Benefits variable

As the results of Cronbach’s Alpha is shown in the Table 4.2, Cronbach’s Alpha of Salary & Benefits is 0.898 (which is larger than 0.7 and less than 0.9), and the Corrected Item-Total Correlation of LUONG1 = 0.770, LUONG2 = 0.743, LUONG3 = 0.701, LUONG4 = 0.726, LUONG5 = 0.802, all of those are larger than 0.3 Therefore, this variable is accepted for Exploratory Factor Analysis later

 Testing the reliability of Work environment variable

As the results of Cronbach’s Alpha is shown in the Table 4.3, the Cronbach’s Alpha of Work environment is 0.877 (which is larger than 0.7 and less than 0.9), and the Corrected Item-Total Correlation of MOITRUONG1 = 0.672, MOITRUONG 2 = 0.790, MOITRUONG 3 = 0.780, MOITRUONG 4 = 0.711, all of those are larger than 0.3 Therefore, this variable is accepted for Exploratory Factor Analysis later

 Testing the reliability of Management system variable

As the results of Cronbach’s Alpha is shown in the Table 4.4, the Cronbach’s Alpha of Management System is 0.875 (which is larger than 0.7 and less than 0.9), and the Corrected Item-Total Correlation of HTQUANLY1 = 0.784, HTQUANLY 2 = 0.619, HTQUANLY 3 = 0.676, HTQUANLY 4 = 0.706, HTQUANLY 5 = 0.757, all of those are larger than 0.3 Therefore, this variable is accepted for Exploratory Factor Analysis later

 Testing the reliability of Career progression variable

As the results of Cronbach’s Alpha is shown in the Table 4.5, the Cronbach’s Alpha of Career progression is 0.824 (which is larger than 0.7 and less than 0.9), and the Corrected Item-Total Correlation of PTNGHE1 = 0.629, PTNGHE 2 = 0.689, PTNGHE 3 = 0.727, all of those are larger than 0.3 Therefore, this variable is accepted for Exploratory Factor Analysis later

 Testing the reliability of Supervisor support variable

As the results of Cronbach’s Alpha is shown in the Table 4.6, the Cronbach’s Alpha of Supervisor support is 0.898 (which is larger than 0.7 and less than 0.9), and the Corrected Item-Total Correlation of DHCONGVIEC1 = 0.694, DHCONGVIEC2 = 0.704, DHCONGVIEC3 = 0.701, DHCONGVIEC 4 = 0.679, DHCONGVIEC5 = 0.755,

DHCONGVIEC6 = 0.811, all of those are larger than 0.3 Therefore, this variable is accepted for Exploratory Factor Analysis later

 Testing the reliability of Employee Satisfaction variable

As the results of Cronbach’s Alpha is shown in the Table 4.7, the Cronbach’s Alpha of Employee Satisfaction is 0.888 (which is larger than 0.7 and less than 0.9), and the Corrected Item-Total Correlation of HAILONGNV1 = 0.652, HAILONGNV2 = 0.722, HAILONGNV3 = 0.611, HAILONGNV4 = 0.742, HAILONGNV5 = 0.742, HAILONGNV6 = 0.754, all of those are larger than 0.3 Therefore, this variable is accepted for Exploratory Factor Analysis later

4.3 Exploratory Factor Analysis (EFA)

After testing Cronbach’s alpha coefficient, the measures were continued to be analyzed

by Exploratory Factor Analysis method (using “principal component analysis” with rotation “Varimax”)

 EFA for independent variables

Table 4.8: KMO and Bartlett’s Test

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy

After rotation, as the result is shown in the Table 4.9, the 1st factor accounted for 17.516% of the variance, the 2nd factor accounted for 15.783%, the 3rd factor accounted for 14.902%, the 4th factor accounted for 13.072%, the 5th factor accounted for 9.548% The total variance extracted is 70.821% greater than the requirement of 50%

According to the result of analysis shows in Table 4.10, five factors consist of 23 items

have the loading factor bigger than 0.5 that meets the requirement The EFA indicates

that there is no more than one set of items loaded highly on one factor and no item load

highly on more than two factors Thus, the convergent validity and discriminant are

ensured (Naceur and Hussein, 2003)

 EFA for dependent variable

Table 4.11: KMO and Bartlett’s Test for employee satisfaction

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy .887

Bartlett's Test of Sphericity Approx Chi-Square 513.269

The KMO value for the employee satisfaction was 0.887 (>0.6) and the Bartlett’s value

was significant at the sig=0.000 (<0.05) mean that the variables are correlated highly

enough to provide a reasonable basis for factor analysis

Table 4.12: Total Variance Explained for employee satisfaction

Total Variance Explained

The eigenvalues in the Total Variance explained is 3.854 (above 1) and the percentage of cumulative for the variance is explained as 64.234% In this dependent factor for EFA testing, there is only one component extracted and there is no rotated Component matrix 4.4 Hypothesis testing

The multiple regression analysis is used to test hypothesis 1-5 and the hypothesis 6 is tested by Chow Test for moderating effect

H1: Salary & Benefits have a positive influence on employee satisfaction

H2: Work environment has a positive influence on employee satisfaction

H3: Management system has a positive influence on employee satisfaction

H4: Career progression has a positive influence on employee satisfaction

H5: Supervisor support has a positive influence on employee satisfaction

H6: Bank type moderates the relationship between each factor (Salary and Benefits, Work environment, Management system, Career progression, and Supervisor support) and employee satisfaction

4.4.1 Pearson Correlation Coefficient

Before running the multiple regression, we need to test the correlation between each independent variable and dependent variable to assure that they have the correlation According to the result is shown in the Table 4.13, The Pearson correlation coefficients between dependent variable (employee satisfaction) and independent variables has significance (2-tailed) were all 0.000 (p< 0.005) The Correlation table showed that the correlation coefficient between employee satisfaction and other factors was not too high (the highest one is 0.629)

4.4.2 Testing assumptions of Multiple Regression

 Sample size

The sample size of this study (171 samples) was larger than the minimum sample required running multiple regression (90 samples) Hence, the sample size is appropriate for multiple regression analysis

 Multicollinearity of independent variables

The Table 4.14 shows that there is no existence of multicollinearity because the tolerance values are higher than 0.1 and the Variance Inflation factor (VIF) are smaller than 10 (Nancy L et al., 2005)

 Normality, Linearity and Homoscedasticity of residuals

The Histogram in Appendix A show the reasonable normal distribution of all variables with mean is approximately 0 and the Standard Deviation (Dev)= 0.985 which mean the assumption about normality was not violated

The normal P-P Plot (see Appendix A) is rather straight line from the bottom left to top the right shows the linear relationship between independent variables and dependent variable

About the Homoscedasticity, as can be seen in the Scatterplot in Appendix A, the dots are scattered which indicates the data meet the assumption of the errors being normally distributed and the variances of the residuals being constant

As all the assumptions for regression analysis were tested and met the requirement, the regression results were conducted further to test the research hypotheses

EC,

F_MOITRUO

NG,

F_HTQUANL

Y, F_LUONG,

F_PTNGHEa

a.All requested variables entered

b.Dependent Variable: F_HAILONGNV

The table above shows that all variables entered Evaluate multiple linear regression model, the coefficient of determination R Square is used to access the relevance of the research model R Square coefficient when accessing the relevance of the model is 0.588

> 0.3, therefore the research model is appropriate The result also shows that Adjusted R Square smaller than R Square (0.588 < 0.575) Adjusted R Square is 0.575 indicates that 57.5% of the variance can be predicted from the independent variables The model for this study is suitable

Table 4.16: Regression analysis

Model Summaryb

Model R R Square

Adjusted R Square

Std Error of the Estimate

a.Predictors: (Constant), F_DHCONGVIEC, F_MOITRUONG,

F_HTQUANLY, F_LUONG, F_PTNGHE

b.Dependent Variable: F_HAILONGNV