EMPLOYEE SATISFACTION IN KOREAN CONSTRUCTION FIRM MAKE A DREAM OF ACTUALITY (M.D.A)

FACULTY OF BUSINESS ADMINISTRATION ---***---INTERNSHIP REPORT MAJOR: INTERNATIONAL BUSINESS ADMINISTRATION EMPLOYEE SATISFACTION IN KOREAN CONSTRUCTION FIRM MAKE A DREAM OF ACTUALITY M.

FACULTY OF BUSINESS ADMINISTRATION

-*** -INTERNSHIP REPORT MAJOR: INTERNATIONAL BUSINESS ADMINISTRATION

EMPLOYEE SATISFACTION IN KOREAN CONSTRUCTION FIRM

MAKE A DREAM OF ACTUALITY (M.D.A)

Class: A15 – Advanced Program Cohort: K50

Instructor: Pham Thi My Dung

Hanoi, 4th August 2014

INTRODUCTION 1

CHAPTER 1: LITERATURE REVIEW 2

-1.1 Definition of Employee Satisfaction 2

-1.2 Importance of Employee Satisfaction 3

-1.3 Factors determining Employee Satisfaction 4

-1.4 Measurement of Employee Satisfaction 8

-CHAPTER 2: CURRENT SITUATION IN CONSTRUCTION FIRM M.D.A 11

-2.1. Introduction of the company: 11

-2.2. Analysis of M.D.A case 13

-2.2.1 Application of determining factors in M.D.A 13

-2.2.2 Herzberg’s Theory application in the case of M.D.A 17

-2.2.3 An SWOT evaluation of Employee Satisfaction in M.D.A: 20

CHAPTER 3: RECOMMENDATION 23

-3.1 HR Policy 23

-3.2 Corporate Culture 24

-3.3 Herzberg MotivatorHygiene Factors 24

SUMMARY 26

REFERENCES 27

This report purpose is to fulfill the internship requirement for the AdvanceBusiness Administration Program in Foreign Trade University Moreover, it is also aresearch paper to show how the student understands of the practical business world Inparticular, the main focus of this report will be about employee satisfaction study inone actual Korean enterprise; therefore, to create a firm background for laterdissertation purpose The content of the report covers the student’s five-weekobservation of M.D.A Employee Satisfaction in relation with the firm Human Resource(HR) practices and corporate culture The internship happened from July 16th to July

22nd 2014 During the time, the student has observed and decided to choose EmployeeSatisfaction as the main topic that she wishes to discuss in her report Since the number

of Korean enterprises doing business in Vietnam is increasing, the need to understandboth culture and how to implement HR practice effectively in order to achieve theoptimal is essential for each company to realize Being aware of the situation, thestudent has taken advantage of the internship opportunity to gain more insightknowledge and later, to build her foundation in human resource learning Due to thelarge number of branches that M.D.A Group owns, only M.D.A E&C branch will beconsidered in this report In order to gain a closer look on what is the situation ofemployee satisfaction in the construction firm M.D.A, the student decided to research

on the two main factors which are the company HR policy and the cultural mixture ofKorean and Vietnamese in the firm Among popular methods which are commonlyused to evaluate job satisfaction such as Theory X & Theory Y, McChelland’s Theory

of Needs, Two Theory Factors, etc… Only Herzberg Motivator- Hygiene Theory will

be take priority in this report

CHAPTER 1: LITERATURE REVIEW

As the economy gains momentum and businesses begin expanding once again,employers are recognizing the increasing importance of retaining their talents who arehighly performers in the corporation as well as the opportunities that each employeehold in create prospective outcome in productivity and profitability The key to keepingand raising these valued and potential employees is to maintain a high level of jobsatisfaction Therefore, HR professionals play an integral role in ensuring the appeal ofthe firm working environment The practices, policies and the programs that thecompany establishes are the foundation for efforts throughout the organization tomaintain high morale and retain, develop staffs Most people do not leave theiremployers for one single reason alone A combination of what happens in the officenormally shapes an individual’s perceptions about their status in particular and aboutthe company in general Therefore, the need to identify what is employee satisfactionand gradually advance their HR practice is the most unpleasant challenge that each HRprofessional has to face in today international business

1.1 Definition of Employee Satisfaction

In 1976, Locke defines Employee Satisfaction or Job Satisfaction or EmployeeAttitude as a pleasurable or positive emotional state resulting from the appraisal ofone’s job or job experiences However, Schneider and Snyder back in 1975 definedEmployee Satisfaction as a personal evaluation of conditions present in the job, oroutcomes that arise as a result of having a job On the other hand, Dressler in 2007referred that Employee Satisfaction is a positive feeling each employee have towardstheir jobs resulting from a valuation of its characteristics A person with high level of

job satisfaction holds positive feelings about their jobs, while a person with low levelholds negative feelings.

Employee Satisfaction thus, has to do with an individual’s perception andevaluation of one’s job, and this perception is influenced by the person’s uniquecircumstances like needs, values and expectations Those common facets commonlyare the nature of work, supervisions, present pay, promotion opportunities and therelationship within the organization People will evaluate their jobs on the basic offactors, which they regard as being important to them

1.2 Importance of Employee Satisfaction

In today business world, employees contribute to the uniqueness and originality

of each company, which helps them to distinguish themselves to other competitors.Obviously, Employee Satisfaction implies higher quality of service; furthermore, inother industrial fields or construction, Employee Satisfaction assures higherperformance which leads to more effectiveness and efficiency in production andoperation Employee Satisfaction can have impacts on various aspects of HRM such asJob Performance, Customer Satisfaction, Absenteeism and Turnover Despite the factthat there are some researchers who are in doubt of the relationship between EmployeeSatisfaction and Job Performance, most of them are convinced that happier workers aremore productive workers In the case of service industry, the relationship betweenEmployee Satisfaction and Customer Satisfaction is almost impossible to ignore sincethe service provided by the staffs themselves reflects the outcome in consumers’emotion In other non-service industry, the relationship is harder to notice; however,none of the managers can deny its existence since positive attitude at the office doesincrease the productivity and competencies of the employees

Moreover, Employee Satisfaction plays vital part in drawing and preservingconsumer satisfaction and loyalty Employees are encouraged to “create fun and a littleweirdness” and are given unusual discretion in making customer satisfied; they are

encouraged to use their imagination, including sending flowers to disgruntledcustomers (Robins & Judge, 2013) There is a negative relationship between employeesatisfaction and absenteeism It is more than obvious that dissatisfied employees areexpected to have high absence rate, which is not ideal for company operation They aremore likely to miss work or poorly perform tasks or assignments; not to mention,dissatisfied employees absence can also bring out negative impact on other dedicatedworkers

Lastly, the relationship that job satisfaction having with the company turnoverrate is much stronger than that of absenteeism Exclusively, when employees have high

“human capital” (high education, high ability), job dissatisfaction is more likely totranslate into turnover because they have, or perceive, many available alternatives(Robins & Judge, 2013)

1.3 Factors determining Employee Satisfaction

Organizations represent the most complex social structures known todaybecause of their dynamic nature Employees are one of the role players in theorganization, and it is through their involvement and commitment that organizationbecomes competitive The relationship between the organization and people is howeverinterdependent in nature (Boeyens, 1985; Kerego & Mthupa, 1997), and both partiesmay impact on one another’ ability to achieve positive outcomes

Organizational climate, which is the HR policy and Organizational culture can bepromoted as the main factors to facilitate the achievement of Job Satisfaction inaccordance with the organization optimal goals Each elements contributing theorganizational climate as well as culture can serve the starting point in diagnosing andinfluencing such change within the firm

(1) HR Policy

Each company who wishes to gain promising and sustainable growth must atfirst serves its internal customers – the employee- as they play a crucial role in incomeguarantee In another words, Human Resource Policy can be considered as internalmarketing tools for managers as well as the overall scale for them in order to increaseEmployee Satisfaction

Human resource management (HRM) refers to the policies and practicesinvolved in carrying out the ‘human resource’ aspects of a management positionincluding human resource planning, job analysis, recruitment, selection, orientation,compensation, performance appraisal, training and development, and labor relations(Dressler, 2007) Due to Employee Difference in personalities, gender, abilities,knowledge and needs, they tend to judge the same corporate HRM practice indistinctive attitudes

Depending on the workers’ perception of the actual HR policy, their reactionwill differ, which may lead to satisfaction or dissatisfaction This result is also referred

as “the black box problem” The total four part of HR policy which includesRecruitment, Placement & Talent Management, Training & Development,Compensation and Employee Relation can affect employee emotion and perceptiontowards the corporate in different way during specific period of time

- Employee recruitment, Placement & Talent Management: Any process for

which an organization seeks applicants and attracts potential employee iscalled recruitment; selection refer to the process by which an organizationidentifies those applicants with the knowledge, skills, abilities, and othercharacteristics that will help it achieve its goals (De Cieri & Kramar, 2008,p.30)

- Employee Training & Development: Training is a means of arming employees

with the skills they need to perform their jobs: it is also often deemed to berepresentative of an employer’s commitment to their workforce (Storey &

Sisson, 1993) Furthermore, Training & Development is also considered as avalue added creation to employee at the present time, which promise a hugeboost in employee motivation and engagement towards their jobs

- Compensation: Pay Structure, Incentives and Benefits: Pay or Salary plays a

crucial part in determining employee attitudes The way people are paidaffects the quality of their work, their attitude towards customers, and theirwillingness to be flexible and learn new skills (Milkovich, Gerhart, &Hannon, 1991)

- Employee Relations: The general approach to relations with employees can

strongly affect a company’s potential to gain a competitive advantage (DeCieri & Kramar, 2008, p.63) Clarke also found that employees are moreinclined to stay when they have strong relationships with their workcolleagues (2001) In another words, strengthen relationships in workplacecan enhance employees’ feelings of belongings, which ensure theircommitments and wants to remain longer than they planned In addition, solidnetwork within the corporation can help nurture the organizational culture andhelp build the company unique brand recognition as well as its service orcustomer experience

(2) Corporate Culture

Corporate Culture is described as a pattern of shared basic assumptions,invented, discovered or developed by a given group, as it learns to cope with itsproblems of external adaptation and internal integration, that has worked well enough

to be considered valid, and therefore, is to be taught to new members of the group asthe correct way to perceive, think and feel in relation to those problems (Schien, 1985,p86) In addition, the attitudes each employees have towards the culture of theirorganization has a direct influence on both their level of motivation and the degree ofjob satisfaction that they would experience Even though globalization has nearlystandardized working conditions in each corporation, in Asian business world, original

country culture is still the dominant factors shaping Corporate Culture, especially inConfucius countries such as South Korea or Japan

There are some characteristics which can be identified in most of Koreanenterprises, as the following:

- Kibun, Emotion or Mood In Korea, “Kibun”-the mood is very important since

they emphasize constant stability in “Kibun” and also keeping good “Kibun”

of others

- Inhwa, Harmony Following collectivism, Korean people focus on

maintaining harmony They perceive that a person has duty to show totalloyalty to parents and authority figures, leaders, elders etc… Koreanemployees are expected to show respect and obedience towards theiremployers, managers and supervisors

- Power Distance & Hierarchy Koreans are collectivists, which mostly refer to

high power distance & hierarchy In addition, the high level in power distancealso hindrance the reporting system especially when Koreans followcentralized structure, which makes decision-making process less active andeffective

- Importance of Family Ties and Blood-Based Succession Family control in

Korean corporates is one of the essential characteristics in Koreanorganizational culture High-raking positions in the company are mainly hold

by the family members If the company is doing business outside of thecountry and there is no family member currently working in that branch, thosehigh-ranking positions will be taken by Korean mostly

- Gender Inequality Heavily influenced by Confucianism, women are likely to

be underestimated in the society As Koreans perceive the women’s mainobligations is to take care of the family, Korean women in particular or femaleforeigners working in Korean firms can hardly to climb up in the powerhierarchy

1.4 Measurement of Employee Satisfaction

First introduced publicly in 1959, Herzberg new works on “The motivation towork” offered new perspectives of measuring Employee Satisfaction In his researchpaper released at that moment, Herzberg has created the two factor theory includingprinciples of job attitudes, which are commonly known as Hygiene and Motivatorfactors He believed that job satisfaction and job dissatisfaction is not the obverse ofeach other, rather they are best viewed as two separate and parallel continua As aresult, the opposite of job satisfaction is not job satisfaction is NO job satisfaction; theopposite of job dissatisfaction is NO job dissatisfaction.

(1) Hygiene Factors

The dissatisfiers serve to provide for the animal side of man’s nature which needs toavoid unpleasant environments This is an intrinsic property of all organisms, which isdictated by the laws of biological evolution Being more capable, however, will notmake man less hungry or thirsty or less concerned on status, money, interpersonal

relationships, and hygienic working conditions The dissatisfiers are called “hygiene”

factors, because primarily they serve to prevent dissatisfaction and they relate to theenvironment These factors include:

Company Policy and Administration: Policies and Administrative practices suggest

that the kind of organization policies and practices of administering the people should

be the one that can encourage them to perform well This practice must consist of allelements as mentioned above in the HR policy section

Supervision: The provision of adequate supervision to workers that will encourage

them to be more committed and well aware of their job in the organization

Working Conditions: Working conditions requires an organization to provide a work

environment that is conductive for workers to perform well In that environment,workers can maintain their most basic needs such as safety, survival, clean or evenhealthy conditions and comfort to work

Salary: Provide salaries and other financial benefits to the workers that will

encourage them to be committed to the work in the company Since money plays an

essential part in one’s living conditions and survival, salary must be at least sufficientfor each worker to maintain their personal life outside work

Work-Life Balance: People need to be given ample space to have their own personal

life Disorder in individual’s life could cause huge problems in worker’s mental orphysical condition such as stress High frequency of stress or mental instability couldcause huge decrease in job productivity

Status: The kind of work that people do should be meaningful or be able to able to

make them feel of being in a good position This will help to encourage them tocommit their time and efforts to work

Interpersonal relationship with others: Provision of team work dynamics among

workers is important to encourage them to place their effort together towards the samepurpose Union or the harmony of the team could bring high efficiency in the work aspeople cooperate and support each other works

Job security: People should be made to feel secure about their jobs This helps them

to work harder and focus on the work because they do not have to be worried about theloss or the possibility in losing their jobs

(2) Motivator Factors

The satisfiers serve to provide for the human need to exercise one’s capabilities orthe surplus potentiality of the brain as an instrumentality for psychological growth Theexperience of growth can only arise when there is opportunity to achieve success in theperformance of some task To be creative requires a creative task The satisfying

aspects of the job are named the “motivator” factors in order to emphasize the

individual’s active responsibility for psychological growth in contrast to the passivitywhich characterizes the avoidance nature of the responses to the hygiene factors Theseinclude:

Task achievement: Workers need to feel their job helps them to achieve, their

aspirations This in the end makes them feel a new energy to work and meet otherorganizational objectives

Recognition for achievement: Workers need to feel that they are recognized by their

superiors and the organization for which they work Recognition makes them feel thatthey are respected for having done meaningful things, which can encourage workers towork and try harder the next time they are assigned for a new task

Intrinsic interest in the task: Employees need to feel attached or interested in their

assignments in order to make their best effort in achieving it In another words, theyasks for challenge in their routine jobs

Increased task responsibility: People want to have a sense of responsibility in what

they do; therefore, they can force themselves to search for the best without managers’intense supervision

Advancement or occupational growth: People need to grow in their jobs as they

perceive it as an opportunity for further promotion

The possibility of occupational growth: Workers need to see prospects of

advancement in their jobs Therefore, they can nurture themselves as a better andcompleted human beings rather than a mere skillful business tools

CHAPTER 2: CURRENT SITUATION IN CONSTRUCTION FIRM

M.D.A

2.1. Introduction of the company:

Company Contact Information:

Head Office Address: 4th and 5th floor, L.O.D Building, 138 Tran Nhan Tong Street,

Cau Giay District, Hanoi, Vietnam Official website: http: //mdaenc.com

In charge person: Chairman Song In Soo

Number of employee in M.D.A E&C: 100 people

Company History

Make a Dream of Actuality or M.D.A is Korean invested construction firmwhich was established in Vietnam in 2006 Since then the company has gradually buildits offices and business throughout Vietnam However, the company size by then wassmall and limited Not until 2008, M.D.A expanded its business and opened the secondbranch, which is M.D.A E&C Company Limited In 2009, the M.D.A Groupestablished its third branch, M.D.A Electronics Following, in 2010, M.D.A started theSAVIHA Company Limited, which made M.D.A Construction firm change into M.D.AGroup Since then, the organization has gained various constructing deals and trust inthe industry Until now, M.D.A has taken part in 32 projects including 7 ongoingprojects and 2 investment plans in 2014

Figure2.1 M.D.A Group Branch Functions

M.D.A Group Functions

M.D.A Construction Infrastructure

Architecture Design

Design Developing SANVIHA General Construction

Exploiting rocks and natural resources

Projects on constructing plants MBICO Korean bricks

Production of eco-friendly construction materials

Source: M.D.A Official Brochure

2.2. Analysis of M.D.A case

Different countries have different culture, depending on which corporate culturewill differ However, under the globalization trend of the modern days, corporateculture has gradually become a mixture of several or even various countries’ traditions

as the firm expand its business beyond its border and trade at a global scale Therefore,the case of each firm in the totally different culture will define unique color for itscorporate structure Without exception, M.D.A is one of the stall examples for thematter, which HR practitioners need to face today