Improving employee motivation in Katolec Vietnam Corporation”

Human resources is in any era always regarded as company’s valuable property creating value of company. Employee performance affects the survival, competition ability and productivity of each organization. Therefore, motivating employee is necessary for any organization. When being motivated, employee can improve their performance and as the results, the organization can reach its goals. Katolec Vietnam Corporation company (hereafter referred as “KAV”)-100% invested Japanese capitalized company, was established in 2005 with the mission to provide best quality electronic parts for electronic applications. In spite of highly respecting role of employees to success or failure of company, human resources management (HRM), especially motivating employees has been received a little attention from managers. Recently, KAV faces some difficulties in human resources: high turn-over rate; low commitment. This affects much its production activity. Since 2008, the turn-over rate in KAV has increased rapidly. The rate is approximate 35% while other company is just 10%. By the in-depth interview with some former employees, the main reasons for leaving KAV are: Their contributions are not recognized by managers, the treatment is unfair. Employees with good performance, high responsibility are under-evaluated by managers, even their salary is lower than others who have good relationship with managers. On the other hand, KAV do not have good benefits to employees. Employees feel uncomfortable when working. Unclear performance appraisal makes them more dissatisfied. Thus, they only care about their own responsibilities, not concern much about the company’s objectives or company’s problems. The author wish to research and analyse the main reasons leading to de-motivation of KAV employees and suggest some solutions to improve the employee motivation. From this view, the topic “Improving employee motivation in Katolec Vietnam Corporation” was chosen.

My special thanks are sent to Katolec Vietnam Corporation Board ofManagers, all managers and staffs for the willingness to works with me duringthe progress of the research which is the most important factor in determining mysuccess.

Last but not least, I want to express my deeply thanks to my classmates and

my family who have given me enthusiastic to complete this final project

EXECUTIVE SUMMARY

Katolec Vietnam Corporation (KAV)-100% Japanese capitalized productioncompany was established in 2005, specializing in producing the printed circuit boardfor Canon Vietnam KAV is always assessed to be the good company with the highquality products, well-trained employees by its customers However, in recent twoyears, KAV has faced with some difficulties in human resources management: highturn-over rate and low commitments The KAV’s turn-over rate is approximate 35%while other peer company, this rate is only on and about 10% This results in lowproductivity, unstable workforces Thus, finding out the main causes and solutions is

a priority task for BOM in KAV

The objectives of this thesis are:

- Analyze the current motivating employees performance in KAV

- Find out the main reasons of de-motivation and motivation in KAV

- Make suggestions to improve employee motivation in order to attract,maintain and motivate employees

In order to answer three above questions, the author use three theories asbackground foundations: (1) Herzberg’s two-factor theory of motivation; (2)Maslow’s Theory on hierarchy of need; (3) J’Stacey’s Equity Theory and in-depth interview with current and former employees to design survey on currentemployee motivation: The survey is conducted to 87 people in KAV (takes78.38% of population) In general, employee motivation in KAV is not good.Some reasons are:

* Working environment and company factors (Hygience Factors):

- The salary is not competitive and effective in the current amount of salary,salary increasing policy, in comparison in employee’s contribution

- Welfare and other benefit in KAV is not much good Although the average

of employee satisfied level about welfare and other benefit is normal, in theinterview, many employees complain that there is no difference with other peercompanies

- The working condition is not very good Due to far location, company bus

is one inconvenience to employees The average satisfied score for workingcondition is under than normal level (average satisfied score for company bus is2.67, for office equipments is 2.69, for stationary is 2.80)

- Ineffective company policies like performance appraisal, wrongrecruitment, inadequate training policy…leads to wrong assignment, bias inperformance assessment They demotive employees much.

* Motivation factors:

- One of de-motivative factor is recognition and reward Reward isconsidered as one way of motivating employees Employees feel happier,enthusiastic, interested in their jobs when they are recognized by superiors andother colleagues However, there is hardly reward policy KAV managers havenot realized the importance role of reward to encourage employees

- The work is not really interesting and challenging because of doing similardaily job Almost employees feel bored with their job and they desire to havemore challenging job with higher responsibility

Besides of some de-motivation factors, there are some good motivationfactors in KAV:

- Management policy is primarily quite good Mission of transferringmanagement authority from Japanese managers to Vietnamese manager is apriority policy in KAV This is an incentive for employees to try continuously forfurther development in their career

- Good internal relationships among employees create a good environment

to make employees feel convenient in working; give them more energy toovercome difficulties

This final project suggests some solutions for KAV to improve employee motivation:

- Firstly, improving performance appraisal process is an important solution Good performance appraisal not only makes employee feel satisfied

with their contribution to company but also supports the organization to reviewits capacity, helps it to direct human resource management such as hiring,promoting, training, helps employee improve their working performance

- Secondly, improving the salary and other benefit system is the priority solution Any unclearness in salary policy and payment policy leads to de-

motivating employees Currently, KAV employees do not take care their works

or take responsible because they realize that even they try their best, they are notrecognized well Therefore, KAV employee performance will become worse andworse Consequently, the organization can not reach its previously-agreed goals.For the above reasons, building an effective salary system contributes onencouraging employees and makes them engagement with company

- Thirdly, establishing effective recruitment policy ensures quality of human resources, increases the effectiveness in task assignment, raises employee responsibility.

- Fourthly, improving working condition, especially about daily

transportation means and office equipments helps employee feel more convenient

- Finally, recognition and reward policy is necessary to all of company.

Appropriate recognition and reward policy have invisible value to employees Itcan be financial or non-financial reward Both of them make employee find thatthey are important to company and in any time, they also try their best fororganization

TABLE OF CONTENTS

ACKNOWLEDGEMENT 1

EXECUTIVE SUMMARY 1

TABLE OF CONTENTS 4

ABBREVIATION 7

LIST OF TABLE 8

LIST OF FIGURE 8

INTRODUCTION 9

1 Rationale of the thesis 10

2 Research objectives 10

3 Research questions 11

4 Scope of research 11

5 Research methodology 11

5.1 Research process 11

5.2 Data collection 13

5.2.1 Secondary data 13

5.2.2 Primary data 13

6 Struture of the thesis 14

CHAPTER I: THEORITICAL FRAMEWORK ON MOTIVATION 15

I.1 Definition of motivation and employee’s motivation 15

I.1.1 Motivation 15

I.1.2 Motivation and Satisfaction 15

I.1.3 Employee Motivation 15

I.1.4 The role and the importance of employee motivation 15

I.1.4.1 Motivation is the key of employee retention 15

I.1.4.2 Motivation is the key of performance improvement 16

I.2 Employee Motivation Theory 16

I.2.1 Herzberg’s two-factor theory of motivation 17

I.2.1.1 Hygience Factors 17

I.2.1.2 Motivation Factors 19

I.2.1.3 The combination of Hygience factors and motivation factors 20

I.2.2 Maslow’s Theory on hierarchy of need 20

I.2.3 J’Stacey’s Equity Theory 22

I.3 Relationship between HRM and employee motivation 23

CHAPTER II: OVERVIEW ABOUT KATOLEC VIETNAM CORPORATION (KAV) 24

II.1 General information about KAV 24

II.1.1 Company information 24

II.1.2 Scope of Business 24

II.1.3 Company vision, misssion and development strategy 24

II.1.3.1 Vision 24

II.1.3.2 Mission 24

II.1.3.3 Development strategy 24

II.2 KAV’s organization and Human resources structure 25

II.2.1 KAV’s organization structure 25

II.2.2 KAV’s human resources structure 27

II.2.2.1 KAV’s human resources structure by Sex 27

II.2.2.2 KAV’s human resources structure by qualification 28

II.2.2.3 KAV’s human resources structure by Age 29

CHAPTER III: CURRENT EMPLOYEE MOTIVATION SITUATION AND DEMOTIVATION FACTOR AT KAV 31

III.1 Current employee satisfaction in KAV 31

III.2.Current Two-Factor Theory in KAV 32

III.2.1 Current Hygiene factors 34

III.2.1.1 Compensation and other benefit 34

III.2.1.2 Supervision Technical 41

III.2.1.3 Working condition 42

III.2.1.4 Interpersonal relation 44

III.2.1.5 Company policy and administration 46

III.2.2 Current Motivation factors 51

III.2.2.1 Recognition and Achievement 51

III.2.2.2 Promotion policy 53

III.2.2.3 Growth opportunity 54

III.2.2.4 Workitself 55

III.2.2.5 Responsibility 57

III.2.3 Conclusion on research result 59

III.2.3.1 The de-motivative factors in KAV 59

III.2.3.2 The motivative factors in KAV 60

CHAPTER IV: RECOMMENDATION FOR KAV TO IMPROVE EMPLOYEE MOTIVATION 61

IV.1 KAV’s orientation for human resources management 61

IV.2 Recommendations for KAV 61

IV.2.1 Improve performance appraisal system 61

IV.2.2 Improve salary and other benefit system 64

IV.2.3 Establish an effective recruitment 65

IV.2.4 Improve working condition 66

IV.2.5 Create more interesting and challenging job 67

IV.2.6 Make a more effective reward and recognition policy 69

CONCLUSION 70

REFERENCE 71

LIST OF TABLE

Table 1.1: The research methodology 13

Table 2.1: KAV’s human resources structure by Sex 27

Table 2.2: KAV’s human resources structure by qualification 28

Table 2.3: KAV’s human resources structure by Age 29

Table 3.1: The current employee satisfaction in job 31

Table 3.2: The importance level of hygience and motivation factors 32

Table 3.3: The average importance level of hygience and motivation factors 33

Table 3.4: The employee satisfied level of current salary 34

Table 3.5: The current average salary compared with other peer company 35

Table 3.6: Long service award 36

Table 3.7: The employee satisfied level of welfare and other benefit 37

Table 3.8: The employee satisfied level of current salary increasing policy 38

Table 3.9: The survey result of supervision techinical 41

Table 3.10: The employee satisfied level of working condition 42

Table 3.11: The employee satisfied level of company policy and administration 46

Table 3.12: The employee satisfied level of recruitment policy 48

Table 3.13: The employee satisfied level of performance appraisal 50

Table 3.14: The employee satisfied level of recorgnition and achievement 52

Table 3.15: The employee satisfied level of promotion policy 53

Table 3.16: The employee satisfied level of growth opportunity 54

Table 3.17: The employee satisfied level of work itself 55

Table 3.18: The current level of job tention/ pressure 56

Table 3.19: The employee satisfied level of responsibility 57

LIST OF FIGURE

Figure 1.1: Research process 12

Figure 1.2: The combination of hygience and motivation factors 20

Figure 2.1: KAV’s human resources structure by Sex 27

Figure 2.2: KAV’s human resources structure by qualification 28

Figure 2.3: KAV’s human resources structure by Age 29

Figure 3.1: The current average employee satisfied level of welfare and other benefit 37

Figure 3.2: The current average employee satisfied level of salary increasing policy 39

Figure 3.3: The current average employee satisfied level of reward policy 40

Figure 3.4: The assignment taks 42

Figure 3.5: The current average employee satisfied level of working condition 44

Figure 3.6: The current internal relation 45

Figure 3.7: The average score of employee satisfied level of company policy and administration 47

Figure 3.8: The average score of employee satisfied level of recruitment policy 49

Figure 3.9: The percent of assessment of effectiveness of training programme .50

Figure 3.10: The average score of employee satisfied level of performance appraisal 50

Figure 3.11: The average score of employee satisfied level of promotion and growth opportunity 55

Figure 3.12: The average score of employee satisfied level for work itself and Job pressure 57

Figure 3.13: The percent for suitability of section responsibility 58

1 Rationale of the thesis

Human resources is in any era always regarded as company’s valuableproperty creating value of company Employee performance affects the survival,competition ability and productivity of each organization Therefore, motivatingemployee is necessary for any organization When being motivated, employee canimprove their performance and as the results, the organization can reach its goals.Katolec Vietnam Corporation company (hereafter referred as “KAV”)-100% invested Japanese capitalized company, was established in 2005 with themission to provide best quality electronic parts for electronic applications Inspite of highly respecting role of employees to success or failure of company,human resources management (HRM), especially motivating employees has beenreceived a little attention from managers Recently, KAV faces some difficulties

in human resources: high turn-over rate; low commitment This affects much itsproduction activity

Since 2008, the turn-over rate in KAV has increased rapidly The rate isapproximate 35% while other company is just 10%

By the in-depth interview with some former employees, the main reasonsfor leaving KAV are: Their contributions are not recognized by managers, thetreatment is unfair Employees with good performance, high responsibility areunder-evaluated by managers, even their salary is lower than others who havegood relationship with managers

On the other hand, KAV do not have good benefits to employees.Employees feel uncomfortable when working Unclear performance appraisalmakes them more dissatisfied Thus, they only care about their ownresponsibilities, not concern much about the company’s objectives or company’sproblems

The author wish to research and analyse the main reasons leading to motivation of KAV employees and suggest some solutions to improve theemployee motivation From this view, the topic “Improving employee motivation

de-in Katolec Vietnam Corporation” was chosen

2 Research objectives

The objectives of research are:

- Analyzing the current employees motivation situation and practice in

- Finding out the main reasons of de-motivations and motivations in KAV

- Making suggestions to improve employee motivation in order to attract,maintain, and motivate employees

3 Research questions

- How is the current motivation policy in KAV?

- What are the main roots of de-motivative and what are the importantlevels of motivative factors in KAV?

- What are effective solutions for KAV to improve employee motivation?

- Thirdly, the research information about KAV is collected in 2008 to 2010period

5 Research methodology

5.1 Research process

- Step 1: Collect secondary data to analyze the theory of two factors

- Step 2: Collect the secondary data about KAV

- Step 3: Make in-depth interview with the current employees and manager,and interview some of former employees

- Step 4: Find out the de-motivation factors

- Step 5: Design questionnaires based on collected interview information

- Step 6: Implement the survey with chosen employees

- Step 7: Analyze and assess the results

- Finally, suggest some solutions to improve employee motivation

Step 1: Collect secondary data to

analyze the theory of two factors

General background onemployee motivation

Step 2: Collect secondary data

requirements onemployee motivationStep 3: Perform the in-depth

Step 7: Analyze and assess the

result

Step 8: Suggest the solutions Recommendation

(Chapter IV)

Figure 1.1: Research process

Source: Author’s analysis

5.2 Data collection

The final project is used both of secondary data and primary data.

5.2.1 Secondary data

The secondary data is taken from both of internal data and external data

- Internal data: human resource organization, human resource structure,turn-over rate …

- External data: benefit structure, salary increasing policy from othercompany…

5.2.2 Primary data

- The primary data was collected from September to December, 2010

Quantitative and qualitative methods were used with primary data collection to

analyze the current employee motivation and determine the de-motivation

- Primary data was collected by two ways: in-depth interview and survey

+ In-depth interview: to have a general look about the current employeemotivation, and point out the main reasons of high turn-over in KAV This is

done by interview to 7 people including current and former employees

+ Survey (Quantitative methods): to have more detailed data to analysemain causes by questionnaire survey The survey was conducted to 111 people,

but the valid survey result was 87 people The survey questionnaire was designed

based on the theories/ models that the author selected for this final project They

include multi-choice, yes/ no and open question

Table 1.1: The research methodology Respondent/

Interviewee

Data collecting methods

Number of respondents Instrument Type of information

Former and

current

employees

In-depthInterview

7(includes: 2 managers;

2 supervisors and 3

staffs)

Interviewguideline

The policy of VDC for employee motivation; The main root of leaving KAV

Employees in

every

department

Quantitativemethods(survey)

87(includes: managers;

supervisors and staffs)

Questionnaire

Employee's assessment about KAV employee motivation in practice

Source: Author’s analysis

6 Structure of the thesis

This final project includes four chapters:

- Chapter I: Theoretical framework on motivation: This chapter

provides the basic definition of motivation, the difference between motivationand satisfaction, the definition of employee motivation and its role in employeeretention, three theories on employee motivation: (1) Herzberg’s two-factortheory of motivation, (2) Maslow’s theory on hierarchy of need, (3) J’Stacey’sequity theory

- Chapter II: Overview about Katolec Vietnam Corporation: general

introduction about KAV, KAV’s organization and human resources structure

- Chapter III: Current employee motivation and de-motivation factors.

This chapter forces on analyzing the current employee motivations based on thesurvey results and the factors of Herzberg two factor theory According toanalysis results, the de-motivative factors will be drawn to find suitable solutions

in the next chapter

- Chapter IV: Recommendations for KAV to improve employee motivations: Based on the de-motivative factors in chapter III, some solutions

are suggested to BOM in KAV

CHAPTER I: THEORITICAL FRAMEWORK ON MOTIVATION I.1.Definition of motivation and employee’s motivation

I.1.1 Motivation

Motivation can be defined as that which energizes, directs and sustains human behaviour In HRM, the term refers to a person’s desire to do the best possible job or to exert the maximum effort to perform assigned tasks.

An important factor of motivation is that it is behaviour directed toward a goal (Luis R.Gómer-Mejía et al; 2007; Managing Human Resources (5th);Pearson International Edition)

Therefore, it is essential for managers to have a basic understanding of workmotivation because highly motivated employees are more likely to produce asuperior-quality products or services than employees who lack motivation

I.1.2 Motivation and Satisfaction

Someone thinks that employee motivation is employee satisfaction In fact,

there is difference between two terminologies Motivation is considered as intrinsic power for someone to work with high effort to achieve the target while employee satisfaction is used to describe how employee is happy, contented and fulfilling their desires and needs at work Therefore, it might

be stated that motivation is a root of employee satisfaction.

I.1.3 Employee Motivation

There are some different definitions of employee motivation However, theauthor chooses the definition in "Contemporary Management" by Gareth R.Jones and Jennifer M George Employee motivation is defined as thepsychological forces that determine the direction of a person's behavior in anorganization, a person's level of effort, and a person's level of persistence Effort

is how hard people work Persistence refers to whether, when faced withroadblocks and obstacles, people keep trying or give up When employees follow

an efficient and effective direction, contribute high levels of effort and arepersistent, then high motivation occurs (Ehow)

I.1.4 The role and the importance of employee motivation

I.1.4.1 Motivation is the key of employee retention

Motivation is regarded as the readiness, determination of employee to workwith high effort to achieve the organization’s target and it depends on goalachievement possibility to satisfy individual needs An employee is willing to

stay to work for one company only when he feels happy with his job and satisfiedwith his achievements If not, the dissatisfaction will be easily happened and the

leaving company is unavoidable Actually, creating motivation is preventing the dissatisfaction, preventing employee to leave the company

I.1.4.2 Motivation is the key of performance improvement

There is an old saying that you can give a horse to water but you cannot force

it to drink only it’s thirsty-so with people They will do what they want to do orotherwise motivated to do Whether it is to excel on the workshop floor or in the

‘ivory tower’ they must be motivated or driven to it, either by themselves orthrough external stimulus

Are they born with the self-motivation or drive? Yes or no If no, they can

be motivated, for motivation is a skill which can and must be learnt This isnecessary for any business to survive and succeed

Performance is considered to be a function of ability and motivation, thus:

Job performance = f (ability) (motivation)

(Accel team; Frederick Herzberg-Two factors Hygience and Motivation theory (online) Available from: http://www.accel-team.com/human_relations/hrels_05_herzberg.html )

This statement shows the relation between motivation and jobperformance If employees have motivation, they will work more effectively,improve the quality of work or might contribute more of their creativity andinitiative to the job

Ability in turn depends on education, experience and training and itsimprovement is slow and long process On the other hand, motivation can beimproved quickly (Employee motivation, accel-team.com/motivation)

Realizing the importance of employee motivation, many researches havebeen conducted and given out valuable motivation theories

I.2 Employee Motivation Theory

There are several theories about employee motivation In this thesis, theauthor chosen three the theories to analyse employee motivation factors:Herzberg’s two-factor theory of motivation; Maslow’s hierachy of need andJ.Stacy’s equity theory Herzberg’s two-factor theory covers board factors oforganization such as working environment, company policy … and motivationfactors which company can improve while Maslow’s hierachy of need focus onindividual needs which company should understand employee’s needs toencourage them for greater effort The author also choose J.Stacy’s equity theory

indicate the equity between input and output because the author as insider findthat inequity between input and output exists in KAV As the title of this thesis,the objective of this thesis is to suggest some solutions to improve the employeemotivation in KAV so the author consider Herzberg’s two-factor theory ofmotivation as the core theory to analyse employee motivation in KAV

I.2.1 Herzberg’s two-factor theory of motivation

Frederick Iving Herzberg (1923-2000), an American psychogish, is famousfor introducing “job enrichment” and “two factor theory” Two factor theory wasbased on around interview with about 200 American accountants and engineers

in Pittsburgh, Pennesylvania who were asked about what made them feel badtheir job (dissatisfier) and what made them feel good their job (satisfier) Based

on the interview’s result, he divided into two main factors which affect toemployee feelings: Hygience factor and Motivation factor

The first factor is hygience factor Hygience factors are a set of factorsmake people unsatisfied at work It is something that preserves and promotes thephysical, mental and emotional health of an individual The lack of it creates adissatisfing situation Hygience factors includes: salary, supervision-technical,working conditions, inter-personal relations, company policy and administration The second factor is motivation factor Motivation factor is a set of factorsmake people satisfied Motivation instrincally promotes satisfaction andaccording to Herzberg without motivation, employees perform their job asrequired but with them they will probably perform to the best of their ability,have creativity and commitment in employees

Two factors always exist in any individual and their effect to eachindividual is also different level Some people are hygience seeker, some peopleare motivation seeker In the managing position, managers should understand andfind out what motivate their employees

I.2.1.1 Hygience Factors

Hygience factors include salary, supervision-technical, working conditions,Inter-personal relations, company policy and administration

- Salary:

This category is attributed as current wage, received unexpected wage ornot received expected increased, received wage increase less or later thanexpected, wage compared favourable or unfavourable with other doing the same

or similar job (Frederick Herzberg, 2008, p.114)

- Supervision-technical

This category mentioned competence or incompetence; fairness orunfairness of supervisors; supervisor’s willingness or unwillingness to teachsubordinates; supervisor’s ability to keep things humming smoothly andeffectively

- Working conditions

Working condition is one of important factors to create employeemotivation This includes the physical conditions of work, the amount of work,the facilities available for doing the work Adequacy or inadequacy ofventilation, lighting, tools, space, and other environmental characteristics would

be mentioned here

- Inter-personal relations

Inter-personal relations consist of three main categories: interpersonalrelation with superiors; interpersonal relation with subordinates and interpersonalrelation with peers Interpersonal relation with superiors is friendly or unfriendlyrelations with superiors; sympathetic or unsympathetic thinking of superior;superior’s support or not support in job; attitude to listen suggestion fromsubordinate Interpersonal relation with subordinates is good or poor relationwith subordinates; respects from subordinates to you Interpersonal relation withpeers includes relations with your colleagues in your department with others inother departments Good co-operation with superiors, subordinates and peers isthe key to reach your expected target and fulfill your task

When Herzberg studied about the inter-personal relations, he just mentionedthree main above categories But, nowadays, the relations with client and partnersare also discussed in hygience factor

- Company policy and administration

This mentioned two kinds of over-all company policy and administrationcharacteristics One involved the acdequacy or inacdequacy of companyorganization and management, the communication methods of employees in theirjob, sucessfully unimplementation of company policy because of inadequacyorganization of work

The second kind of over-all characteristic of the company involved notinadequacy but harmfulness or beneficial effects of the company’s policies

I.2.1.2 Motivation Factors

Motivation factors include recognition; promotion; opportunity to growth

in knowledge and capacity; responsibility; achievement; work itself

- Recognition

Recognition includes positive and negative recognition This could be fromsupervisor, some other individuals in management, management as a impersonalforces, a client, a peer, a professional colleagues or the general public Theexpression of recognition is notice, praise, blame or even criticism

Besides, the recognition is also defined interaction between respondentsand supervisors, peers, subordinates This interaction is involved inter-personal relation factor

- Promotion

This is chance to have higher position with better working conditions This

is recognition for which achievements you gained This also shows professionalcharacteristics in your work and supervisor’s belief in your ability

- Opportunity to growth in knowledge and capacity

This is to answer the question that with your current job, whether you canimprove your knowledge, working experience, ability of solving the problems

- Responsibility

Employees feel more satisfied when they are given responsibility for theirown work or for the work of others or for new responsibility The lack ofresponsibility of it might lead to the loss of satisfaction or negative attitudetowards the job

- Achievement

The definition of achievement also included its opposite, failure, and theabsence of achievement Success was put into this category and these includedthe following: successful completion of a job, solutions to problem, vindication,and seeing the results of one’s work

- Work itself (Job-itself interesting and fulfilling work)

Work itself mentions the characteristics of work, whether the work isinteresting or uninteresting; challenging or unchallenging Therefore, work itself isalso a source of good or bad feelings which affects more or less employee’s attitude

I.2.1.3 The combination of Hygience factors and motivation factors

Figure 1.2: The combination of hygience and motivation factors

is a pay check" situation

The ideal situation whereemployees are highlymotivated and have fewcomplaints

Source: Frederick Herzberg, 2008, The motivation of Work

There are four kinds of combination of two factors: low hygience/lowmotivation; low hygience/high motivation; high hygience/low motivation; highhygience/high motivation The above chart shows result of each combination.Easily realized that a firm try to get the forth combination which both hygienceand motivation is high, where employees are highly motivated and have a fewcomplaints to company Clearly, in the fast-changing environment, being highlymotivated, employees will become more and more enthusiastic; committed; andfinally can contribute high level of effort to company

In summary, depending on each firm’s situations, managers can apply an appropriate combination of two factors positively by changing the motivation factors such as having more effective recognition system, giving employees more opportunity for advancement… or changing the hygience factors such as improving working conditions; payment system better…

I.2.2 Maslow’s Theory on hierarchy of need

Humans being have tended to get the upper level of needs when the lowerlevel of needs was satisfied Realizing that Abraham Maslow developed the

Hierachy of Needs He believed that there are at least five levels of needs:

biological and physiological needs; Safety needs; Belongingness and love needs;esteem needs and self-actualisation

Source: www.businessballs.com

- Biological and physiological needs: These needs are basic life needs such

as air for breath, food, drink, shelter, sleep Without these needs, people cannotsurvive

- Safety needs: They are needs for stability and consistency: security of

body, of employees, of family, of property, of morality

- Belongingness and love needs: When safety needs and biological and

physiological needs are satisfied, people will seek the Belongingness and love needswhich including both giving and receiving loveness, affection and the sense ofbelongingness

- Esteem needs: When three above-said needs are satisfied, human beings

have tended to esteem needs Esteem needs are needs to be respected by othersand self-esteem When both of needs are gained, people feel self-confident andvaluable as a person in the world This is a background for them to getachievement Without esteem needs, the person feels inferior, weak, helpless andworthless

- Self-actualisation: Maslow describes self-actualization as a person's need

to be and do that which the person was "born to do" This is the determination of

“Be where you want to be” when the first four needs are satisfied If a persondoesn’t have all five needs, he will become restless about it

In theory, people have at least five need levels, however, not all people arederived by the same needs Different people are affected by different factors Theessential thing for managers in organization is to identify the need levels of eachemployee and use those needs as levers of motivation

I.2.3 J’Stacey’s Equity Theory

Like many of more prevalent theories of motivation, equity theory wasdeveloped by John Stacey Adams, behavioral psychologist who acknowledgedthe balance between an employee’s inputs and outcomes Inputs are logicallywhat employee puts into the work while in return outcomes are everythingemployee takes out Therefore, two conceptions may be understood as follows:Inputs to a job includes: education, experience, effort, ability, loyalty,determination and enthusiasm

Outcomes from a job includes: salary, benefit, promotion, job security andrecognition

According to the equity theory, the equity will be reached when one personcan receive compensation as same as other person if they have similarcontribution to a company The comparison is based on the ratio between outputsand inputs

person with high education, good working experience, ceaseless efforts receivessalary as same as the newly-participated employee without any contribution, hewill think that he is underpaid

In-equity in organization is a bad indication It might lead to unwillingness

to take responsibility, discontentment, less effort, absenteeism and leaving work.Therefore, reducing in-equity status is one of methods to motivate employees

I.3 Relationship between HRM and employee motivation

Basically, employee motivation is a core function of HRM Human resourcemanagement (HRM) is the strategic and coherent approach to the management of

an organization's most valued assets - the people working there who individuallyand collectively contribute to the achievement of the objectives of the business

A firm without employee motivation will find it unable to respond toincreasingly continuous changing needs of employees Unavoidably, the firm has

a tendency to face difficulties in human resources management, instability inorganizational structure, ineffectiveness in its operation

There are some relations between employee motivation and HRM (such asrecruitment, performance appraisal, training…):

* Recruitment, compensation and benefit and motivation: Effective

recruitments help organization to have suitable employees Employees withknowledge, skills and experience will work in their educated field They findtheir job interested and willing to make effort to get more experience.Compensation and benefits will be paid properly by employee’s ability, avoid in-equity between input and output

* Performance Appraisal, training/ career path development and motivation:Effective performance appraisal supports much promotion When employees arepromoted, it is indicated that his contribution is recognized by supervisors andcolleagues, he find enthusiastic in their job and have energy to try the best As forthe organization, effective performance appraisal gives out general view onemployee’s ability The organization will have detailed plan for training or careerdevelopment which encourage employees to stay with company, reduce the de-motivation of employees…

For that reason, HRM and employee motivation has a close correlation.

If an organization has good policies on employee motivation, it will gain success in HRM, especially in maintaining the labor forces, in making certain

of smooth operation and in obtaining important goals of organization Conversely, when HRM which deems to be a bridge connecting employers with employees is implemented well, the methods to enhance employee motivation are also undoubtedly interested by all managers.

CHAPTER II: OVERVIEW ABOUT KATOLEC VIETNAM

CORPORATION (KAV)

II.1 General information about KAV

II.1.1 Company information

Having been established in 26th Octorber, 2005 under business licenseNo.92/GP issued by Vinh Phuc People Committee, Katolec Vietnam Corporation

is 100% Japanese capitalized production company

II.1.2 Scope of Business

The name of Katolec is combined “Kato” and “lec”, “Kato” comes from thesurname of Japanese president and “lec”is abbreviation of three words: L-Logistics; E-Electronics; C: Culture

In Vietnam, Katolec focus on the following fields:

- Assemble printed circuit board for printer

- Manufacture and produce electronic applications

The products of KAV are supplied to domestic EPE and exported tooverseas companies

II.1.3 Company vision, mission and development strategy

II.1.3.3 Development strategy

- To invest continuously in infrastructure, machinery, equipments toimprove productivity

- To co-operate with Katolec Japan Head Office to transfer newly updatedproduction system.

- To implement persistently modern technical training program toemployees

- To establish working environment for all employees to develop their joband capacity

- To make good chance for potential Vietnamese staffs to manage andcontrol factory operation in Vietnam

- To build enterprises culture combined Japanese culture and Vietnameseculture, promote the traditional values of the nation, thereby form the strongorganization for further development

II.2 KAV’s organization and Human resources structure

II.2.1 KAV’s organization structure

The detailed function of each section will be mentioned in Appendix Job Responsibility by Department

Accounting Section

Quality Assurance Section (QA)

Purchasing and Production control Section (PPC)

Direct Production Section

II.2.2 KAV’s human resources structure

II.2.2.1 KAV’s human resources structure by Sex

Table 2.1: KAV’s human resources structure by Sex

Unit: person

Source: Human resource department

Figure 2.1: KAV’s human resources structure by Sex

79.28%

20.72%

Female Male

KAV’s labour forces include the managing/administration employees andworkers In this thesis, the author only deals with the motivation for managementand admin employees Therefore, the data is just related to employees, notworkers

Although KAV is a production company, the manpower is almost femalewith ratio of female and male 79.28%-20.72% According to Mr.Ishikawa-

Factory manager, the company have tend to recruit mainly female employees

because in their opinion, KAV’s specializing field is assembling the componentsfor electronic appliances which attracts a large number of female workers, so ifthe managing employees are also female one, they will take advantage of controlactivities better than male

Therefore, in order to encourage the employees to work in KAV, the motivation policy should forces on this characteristic of workforce like benefit, working condition, job design (work itself)…

II.2.2.2 KAV’s human resources structure by Qualification

Table 2.2: KAV’s human resources structure by qualification

Source: Human resource department

Figure 2.2: KAV’s human resources structure by qualification

There are four levels of qualifications in KAV Bachelor degree takes38.74% is the biggest numbers The second is intermediate takes 30.63% Thethird class is primary takes 20.72% and the last is junior takes 9.91% Inrecruitment requirement, the qualification for staff level up is at least fromintermediate upward However, in the actual situation, there is quite large number

of people who joined KAV as worker position After 2 to 3 years, they getworking experience and are promoted to staff or leader who manages theactivities of production lines This is explained that the junior and primary takeshigh rate in the human resources structure by qualification

II.2.2.3 KAV’s human resources structure by Age

Table 2.3: KAV’s human resources structure by Age

Unit: person

Source: Human resource department

Figure 2.3: KAV’s human resources structure by Age

Source: Human resource department

KAV staff age is categorized into four size The first size is age under 30years old This size is considered is young generation, includes 103 of total 111employees, takes 92.79% (in which office unit 14 persons takes 87.50%,production unit 89 persons takes 93.68%) The second size, is from 31 to 40years old, has 6 persons takes 5.41% in total company The next size is 41 to 50years old, includes 1 person takes 0.90% The last class is over 50 years old,there is also 1 person takes 0.90%

From the table and figure, it is proved that KAV labour force is young.

Young labour force is characterised by creativeness, enthusiasm, fast-learningand dynamism On the other hand, it can lead to high turn over rate, easilymovability to other companies and lack of commitment to company.

In summary, young and dynamic workforce is good for young company like KAV However, KAV should have effective motivation policies to encourage them to have working retention with company like growth opportunity, training opportunity, interesting and challenging jobs… which make them interested in their job more

CHAPTER III: CURRENT EMPLOYEE MOTIVATION SITUATION

AND DEMOTIVATION FACTOR AT KAV

III.1 Current employee satisfaction in KAV

With the aim of understanding the motivation situation in KAV, the surveywas conducted to 111 employees (from staff upward) and the valid answer is 87that takes 78.38% The survey employees are divided by working experiencewhich is meant years of working in KAV There are three sizes of workingexperience: under 1 year; from 1 to 3 years and over 3 years

KAV’s employees were interviewed about the satisfaction on their job Theresult shows as below:

Table 3.1: The current employee satisfaction in job

Unit: %

Employee Satisfaction

Level

Very little or not

Source: The survey by author (2010)

The above table shows that all most KAV’s employees chosen “Little” and

“Normal” in all three levels of working experience Nobody is very dissatisfied.The number of employees chooses “Many” and “More” is just from 3% to 4%.35.63% of survey sample choose “Little” satisfaction in their job and in which18.39% is employees with over 3 years of working time This result shows thatthe longer employees work in KAV, the more dissatisfied they are The mainroots will be analyzed concretely in the next part

III.2.Current Two-Factor Theory in KAV

Table 3.2: The importance level of hygience and motivation factors

Source: The survey by author (2010)

As the previous mention, the employee motivation is depended on two

factors: hygience and motivation In order to assess the importance of each factor

clearly, employees are requested to choose from 1 to 5, in which 1 is very

unimportant and 5 is very important

Based on above result, the author calculated the mean to mark point to each

factor The factor with mark is equal or more than 4 is important

Table 3.3: The average importance level of hygience and motivation factors

1) Hygience factor Over 3 years 1~3 years under 1 year

- Employees with over 3 years, consider “Salary” and “Supervision” as

the most important factors

- Employees with working time less than 1 year, the most important factor

are “Relation”

- All three groups rate “Company policy” over 4.32, means important factor.

It can be explained that the employees with working experience under 1year are almost young people, newly-graduated from university, have not somuch experience so it is difficult to get higher salary The relationship withemployees and customers will make them interested in their job, have morechance to learn and improve their ability Meanwhile, the employees stayed incompany over 3 years, they have already got good working experience, highersalary and supervision is proper requirements

* In Motivation factor:

Employees with over 3 years-“old employees” consider “Recognition; Responsibility, Achievement” when they already get working experience while

employees with working experience from 1 to 3 years or under 1 year assess

highly “Growth chance” and “Work itself”

In summary, in this part, the author analyzes to find the importance of

each factor to employees in KAV In the next part, the author shall forces on

analyzing deeply the current motivation situation in KAV

III.2.1 Current Hygiene factors

III.2.1.1 Compensation and other benefit

Compensation includes herein basic salary and allowance Benefits aresocial and health insurance; annual leave; pension; company presents…

According to survey result in III.2, salary is the most important factor to keep

employees, especially over 3 experience year employees to stay with the

company According to Mr Keishu Seiichi-General Director, the company apply

a fair salary policy to everyone in which employees are paid worth with their

contribution to company However, the survey result shows that KAV faces some

problems in compensation and other benefits

III.2.1.1.1 Current salary

Table 3.4: The employee satisfied level of current salary

Very satisfied

- Compared with other company 6 6.90 48 55.17 26 29.89 5 5.75 2 2.30

- Compared with performance 8 9.20 46 52.87 22 25.29 7 8.05 4 4.60

Source: The survey by author (2010)

According to the Equity theory of J.Stacey, the balance of income andoutcomes is very important in motivating employees The fairness includes

internal fairness (compared in same position in company and compared with

employee’s performance) and external fairness (compared with other

companies) The above figures show that the satisfied level for current salary in

KAV is low 40 of 87 people are dissatisfied with their current salary, especially

employees in production unit In the same position, the salary in production unit

normally is lower than one in office unit Ms Le Thi Hang, QA supervisor said

in interview that: “Our Company is a production company, the employees in

production unit control nearly all processes of company, especially control

workforces However, if comparing salary with office unit in the same position,

the salary of production unit is always lower than 20%~30%” In other peer

companies like Asti, Panasonic …, thank to job characteristics and responsibility,the engineers usually are paid more than office staffs Therefore, the turn-overrate of these companies is low

The rate of dissatisfied level (55.17%) is rather higher in comparison withother company The survey is conducted with Asti-one of Japanese company

with the medium salary payment in the same industrial zone with KAV and in

the same production field-electronic applications

Table 3.5: The current average salary compared with other peer company

Unit: VND

Salary Amount Average salary in

Assistant Manager 10,400,000 13,250,000

Supervisor 5,630,000 7,856,000

Assistant Supervisor 4,675,000 6,800,000

Staff 2,780,000 3,300,000

Source: The informal survey by author (2010)

The average score of the employee satisfaction about their current amount

of salary in compared with their performance is 2.46 Ms Ngo Thi Kim Hoa,

nearly 5 years working in KAV said that: “My current salary is not suitable for

my contribution”.

In conclusion, all most employees in KAV feel dissatisfied with the current amount of salary, especially in comparison with other peer companies Therefore, KAV should consider improving salary system in order to avoid unequal payment for employees who really have excellent ability, skills and good performance.

III.2.1.1.2 Welfare and other benefit

Welfare and benefit is one factor which make employee become morecommitment with the company Some of companies are successful inimplementing a suitable welfare and benefit policy to keep employees

When working for KAV, each employee will receive uniform shirt, shoes are worth 250.000VND The company also provides each employee with daily meal serve.