Factors affecting labor productivity of employees in ho chi minh city power corporation

The research project of “Factors affecting labor productivity of employees in EVNHCMC” is the result of the process to learn, study, and apply knowledge gained during learning the MBA pr

RESEARCH PROJECT

(BMBR5103)

FACTORS AFFECTING LABOR PRODUCTIVITY

OF

Intake : SEPTEMBER, 2015

Advisor‟s assessment

Advisor‟s signature

The research project of “Factors affecting labor productivity of employees

in EVNHCMC” is the result of the process to learn, study, and apply knowledge gained during learning the MBA program, organized by Open University Malaysia (OUM) links with Hochiminh City University of Technology (HUTECH) The author expect that the research project will contribute to enhance human resource management of Hochiminh City Power Corporation This result is not only my efforts, but also with the help of my lecturers from HUTECH, my classmates, and

my co-workers in the company

First I would like to thank Dr Hung Bui who guided me during this project and the course of Business Research Method I appreciated his advice, supports and knowledge during my MBA study Also, I would like to thank all my colleagues who joined in the survey throughout past several months

I am grateful to my friends and students in the class of MBAOUMK19A for their discussion, supports in lessons and projects Finally, thank my parents, my younger brother and my sweet-heart for thier tender loving care as well as encourging me during this long journey

Once a gain, thank all for your help

Hochiminh City, February, 2017

1.1 Reason for conducting the study 9

1.2 Objectives of the research 10

1.3 Subject of the research 11

2.1 Theory of Labor Productivity 18

2.2 Theory of Oganizational Culture 19

2.3 Theory of Oganizational Structure 21

2.4 Theory of Staff Empowerment 22

2.5 Theory of Motivation 23

2.7 Review of previous studies 24

3.4 Data collect procedure 33

3.5 Method to analyze collected data 33

4.1 General statistics of the researched sample 34

1 OCU : Organizational Culture

2 OST : Organizational Structure

3 SEM : Staff Empowerment

4 SMO : Staff Motivation

5 LPR : Labor Productivity

6 EVN : Vietnam of Electricity

7 EVNHCMC : Hochiminh City Power Corporation

8 SPSS : Statistical Package for Social Sciences

9 Sig : Observed significance level

10 KSA : Knowledge Skill Ability

11 KPI : Key Performance Indicator

12 VND : Vietnam Dong

LIST OF TABLES, FIGURES AND CHARTS

Chart 1.1.Organization Chart of Hochiminh City Power Corporation 13 Table 1.1 Financial Results‟ Hochiminh City Power Corporation in

2012-2014

14

Table 3.1 Measures of Organizational Culture 25 Table 3.2 Measures of Labor Productivity 26 Table 3.3 Measures of Organizational Structure 28 Table 3.4 Measures of Staff Empowerment 29 Table 3.5 Measures of Staff Motivation 30 Table 4.1 General information of researched sample 35 Chart 4.1 Statistics of Sex ratio of researched sample 36 Chart 4.2 Statistics of working time of researched sample 36 Chart 4.3 Statistics of average income of researched sample 37 Chart 4.4 Statistics of position of researched sample 37 Table 4.2 Reliability of measures 38 Table 4.3 Descriptive Statistics 39

ABSTRACT

The aim of this study was to investigate factors which affect on labor productivity

of employees in Hochiminh City Power Corporation The study analyzes whether or not there is a significant relationship between factors such as: (i) organizational culture,(ii) organizational structure, (iii) human resource empowerment, and (iv)employee motivation and labor productivity in the company Two hundred and seventy five (275) responses to questionnaire survey forms were collected from employees who are working in Hochiminh City Power Corporation The study uses SPSS software to analyze collected data The findings of the study show that there

is a positively significant relationship between organizational culture, organizational structure, human resource empowerment, and employee motivation and key construct – labor productivity The study offers the company proposals to improve productivity of employees to the company Finally, the study also provides basic directions for further studies in this field

Keywords: Labor Productivity; Organizational Culture; Organizational Structure;

Staff Empowerment; Motivation

CHAPTER 1 INTRODUCTION

This chapter will introduce the reason for conducting the study, the objectives of the research, the subject of the research, the research model, the statement of the research questions, the research method, the contribution of the study, and the research structure

1.1 Reasons for conducting the study:

Human resources is one of the important valuable assets of an business organization Human capital is regarding to employees‟ set of skills and knowledge that are developed during investments in education, training, and various experiences (Becker Management responsibilities and the main purpose of managers in any organization is effective and efficient use of different resources and assets such as workforce, capital, materials,energy, and information To this end, efficient use of human resources (labor productivity) is ofgreat importance because humans, unlike other organizational resources, are capable of reasoningand free will, and the manager cannot simply use these capabilities More importantly, humanresources are not only an organizational resource, but also the only driving force for other factors.This becomes even more important in the service organizations, since humans are the only asset anddriving force for the related service in those organizations However, if the person is motivated,capable, and productive, he.she can efficiently and optimally utilize other resources and fulfill a variety of productivity roles, and finally, this process might lead to organization's productivity Otherwise, passive and unmotivated manpower lead to recession and underdevelopment (Hariri,2009) The most important factor in improving the efficiency of any organization and any country is human resource This factor has turned into an important and fundamental component in explaining the differences

in productivity and growth in different countries Organizations that have had great success and countries that are among the most advanced and developed nations,

have paid great attention to this issue (Mouhamad Karim Bahadori, 2013) An increase in labor productivity leads to competitiveness in world markets When the competitiveness increases, it leads to an increase in production and more revenue and finally national prosperity (Ghorbani Kia, 2012)., 1993)

One of the major problems in all sectors and levels of society, especially human resources, is lack of efficiency and productivity In other words, the culture and attitude toward productivity is still not pervasive in society and fundamental and effective efforts are needed in this area Regarding the importance of labor productivity, especially the productivity of managers, experiences of successful firms indicate that productivity belongs to firms that have accepted human capitals

as their most important capital, and consequently have invested on training and education and also have considered incentives for their employees (Mahdavinejad, 2012)

The major aim of this dissertation is to identify antecedents that affect labor productivity significantly But this study will focus, primarily, on four factors those are between organizational culture, organizational structure, human resource empowerment, and employee motivation A lot of work has been done over the world on the antecedents of labor productivity, but, in Vietnam, there is very few researches were conducted That the reason why the author choose this topic to do the research in the electrical industry in Vietnam

1.2 Objectives of the study:

The objective of this research is to get an insight into the relationship between the four antecedents of labor productivity, including organizational culture, organizational structure, human resource empowerment, and employee motivation, and their impact on the productivity of the employees in Hochiminh City Power Corporation

1.3 Research subject:

The subject is selected to conduct the research is Hochiminh City Power Corporation

(i) General information:

Hochiminh City Power Corporation (EVNHCMC) is a state enterprise in which the State of Vietnam is owning 100% of the charter capital of the company, and is organized in the form of One Member Limited Company The company is belonging to Vietnam of Electricity (EVN)

The head office of the company is located 35 Ton Duc Thang, District 1, Hochiminh City, Vietnam

Main business field: supply and management of electricity for the whole area

in Hochiminh City with the voltage up to 220kV

Other fields: repairing electrical equipment, electrical network maintenance, testing of electrical equipment, import-export of electrical equipment, consultant services such as design and construction of electrical network, etc

Total employees: 7,745 labors (up to December, 2016)

(ii) Organization chart:

Please see the organizational structure of the company in chart below:

Chart 1.1 – Organization chart of EVNHCMC

Brand‟s logo:

(iii) History:

1976 Department of Power Management and Distribution of Ho Chi Minh

City (of Southern Power Project Company)

1981 Re-named as Power Department of Ho Chi Minh City

(of Power Company No 2)

1995 Ho Chi Minh City Power Company, managed power grids up to

66kV

2003 Completely upgrading the power grids from 66kV to 110kV

2008 Re-name as Hochiminh City Power Corporation, managed power

grids up to 220kV Achieved ISO 9001:2008 certificate

2014 Achieved ISO 9001:2008 Certificate integrated with all subsidiaries

(c p nh t 2015-2016)

(iv) Financial results:

In recent years, the company has gained some financial results as follows:

Table 1.1 – Financial Results’ EVNHCMC in 2013-2015

1.6 Research method:

The study is conductedas a quantitative method Measures and question form are established to do the research The research will be conducted by directly interview technique, and email-interviewing through the questionnairesurvey form The study will use the quantitative method to test the hypotheses of impact of four above mentioned antecedents on the labor productivity

1.7 Contribution:

This research provides several theoretical and practical contributions It will help managers not only in EVNHCMC, but also in electrical industry in Vietnam greater understanding of the mechanism to build the labor productivity in the organization The confirmation of the hypotheses through the results of analyzing collected data in this study would consolidate the given theory.Based on that, managerial leaders may create matching tendency and policies to improve workplace conditions, and seek good solutions to enhance the productivity of employees in organizations As a consequence, the competitive advantage of human resources of the companies may be gained in the tough competitive environment as present

1.8 Research structure:

The present chapter introduces the key construct of labor productivity and four antecedents of it It further develops a hypothesis model consisting of one dependent variable, and four independent variables The study‟s purpose along with its theoretical and practical contribution was also discussed in this chapter Chapter

2 will supply a comprehensive review of the literature relevant to labor productivity, and its relevant antecedents.The development of the hypotheses will be followed Chapter 3 will show the methodology and provides a detailed description of the

research setting, data collection process, measures used in the study and the analysis

of collected data The next Chapter will supply the results of the research, and finally Chapter 5 discusses the theoretical and practical implications of this study Limitations of this study and suggestions for future research are providedin the final chapter as well

CHAPTER 2 LITERATURE REVIEW AND HYPOTHESES

This Chapter will represent concepts and theories which are relating to the construct of organizational commitment and factors affecting it The following content is to develop the research hypotheses

2.1 Theory of labor productivity:

Concepts and Approaches of Productivity

The simplest definition of productivity is the ratio between output and input,

or in other words, the mathematical ratio of production to the amount of resources consumed in the production.Resources can be land, materials, factories, machinery, tools, and workforce (William & Stevenson, 2007) Productivity is essentially an economic concept which later on has entered into management In economy, productivity is defined as the ratio of a certain amount of product and a certain amount of one or more production factors, the amount that each worker produces in

a given period of time (Abdalhousain Nikgohar, 1990) Jan Kenrek (1977) defines productivity as the relationship between goods and services or human and non-human resources that have been used in the production process

Productivity can be a ratio to measures how well an individual, organization, industry and country converts input resources such as labor, materials, machines into goods and services (Amina Hameed, 2009) Gundecha (2013) defined the productivity as an average direct labor hours that required installing per unit material Referring to Eng Zeyad Ahmed Abo Mustafa (2003) defines productivity

as human and financial resources key measurements of utilization because it indicate

an efficient use of available resources as well as converts it into noticeable results International Labor office (1996) (cited by Eng Zeyad Ahmed Abo Mustafa,2003) explained the productivity as a comparison between the result you get out of the project on how much you have put into the projects in terms of material, machinery,

manpower or tools According to Bui Trung Kien (2012), stated that “productivity defined as the ratio of outputs to inputs Productivity = Outputs / Inputs

Where, the examples of outputs are revenue generated or value added, units

or dollar value of product or service The examples of input are units or dollar value relating to equipment, labor, materials and capital Thus, it is important to specify the inputs and outputs to be measured when calculating productivity.” According to Merriam-Webster (cited by Casey Jo Kuykendall) productivity defines as the quality

or state of being productive Main causes that affects cost and time overruns in construction projects is poor labor productivity (Ibrahim Mahamid, A Al-Ghonamy

& M Aichouni, 2013) Serafeim polyzos and Garyfallos Arabatzis (2005), determined the term labor productivity by comparing labor cost with the total efficiency of labor, which represent amount of produced products According to Liu and Ballard (2008), by Ibrahim Mahamid (2013), stated that labor productivity is important in determining financial success of a project According to Freeman (2008) cited by Bui Trung Kien (2012) “Labor productivity is equal to the ratio between a measure of input use (total number of hours worked or total employment) and a volume measure of output (gross domestic product or gross value added).” Labor productivity = volume measure of output / measure of input use

The study will try to find the relationship of labor productivity with Labor Productivity; Organizational Culture; Organizational Structure; Staff Empowerment; Motivation as described in the Figure 1.1 – Research Model

2.2 Theory of Organizational Culture;

Organizational culture has been variously defined (Hofstede 1980a, Schein 1990) [12],[13] It denotes a wide range of social phenomena, including an organization‟s customary dress, language, behavior, beliefs, values, assumptions, symbols of status and authority, myths, ceremonies and rituals, and modes of deference and subversion; all of which help to define an organization‟s character and

norms (Scott Mannion Davies and Marsh all 2003, p 925)[14] Culture, in the sense that it is used here, can be understood as an idealized system (Schein 1999)[15] because a system focuses on types of meanings represented by values, formal rules, knowledge, beliefs and expressive forms (Pet tigrew 1990; Parker 1992; Patrick 2010).[16],[17],[18] The conceptual aspect of culture contains several schools of thought, which are useful for understanding the role of culture in a context The first

is the cognitive school This perceives culture as a system of knowledge or as templates learned through perceptions, beliefs, and evaluations that allow individuals to act in a manner acceptable to other members of the group or with other members of other groups (Bitsani 2006,p.35-37)[19] This perspective encloses the positions presented first by Schneider and Reichers(1983;Hodgetts and Luthans 2003)[6],[20] in the interactive approach to climate They both emphasize the implications for cognitive processes between groups‟ interactions and the relationships between these processes with the construction of individual meaning There is also a parallelism between these positions, evident even in social psychology and anthropology, with tradition phenomenological sociology (Hofstede 1980b; Hofstede 1994) [21],[22] The cultural perspective abandons what structural approach proposed about climate, which was seen as linked to formal property, and also those beliefs that were inherent in the perceptive and interactive approach, i.e the individual examination of the psychological processes (Chan, Shaffer , Snape 2004)[23] It emphasizes the social provisions, where the cultural features become very important What is relevant is not inherent in the cultural significance, but in the way in which they guide the social conduct in its manifestations visible in organizational climate In other words, the cultural approach by its analysis explores the dynamics through which (it delete) is produced a shared consciousness concerning the conditions in which these dynamics occur and how to successfully become significant In brief, organizational climate is created by a collection of individual interactions modeling a common abstract part of attributes, as the culture

of the Organization, by situational factors as contingencies that is the requirements

imposed by organizational conditions (Schein1990)[13] This approach moves the focus from individual perceptions as the main sources of climate, emphasizing instead the interaction between the members of the Organization

2.3 Theory of Organizational Structure

Structures are the manifestation of strategic orientations and regulate information flows, decision-making and patterns of behavior, i.e the „internal allocation of tasks, decisions, rules, and procedures for appraisal and reward, selected for the best pursuit of […] [a] strategy‟ (Caves,1980: 64) Level of hierarchy and control in an organization can, among other issues, beidentified in this domain Structures develop due to the need to organize behavior in a meaningful way and provide orientation for organizational members to set actions that comply with organizational strategy, organizational culture and, as a result, accepted patterns of behavior.In line with Schein (1985) organizational structures and behavior represent the observable manifestation of organizational strategies (espoused values) Thus, operations and are structures are directly linked to each other as they both refer to artifacts, in the nomenclature of Schein(1985) Thus, structures build the frame of reference for running organizational operations and guide or cushion behavior of members of an organization, which translate into certain „patterns ofbehavior‟ supported by organizational structures At the same time, behavior is also reversely linked to structures Here we account for adjustment processes on the level of artifacts Considering that organizations might need to change over time, e.g due to extensive internationalization through M&As, it may become necessary to restructure certain or even all parts of an organization to align organizational behavior in a way to accomplish organizational tasks and comply with a pre-defined strategy Thus, structures need to change if organizational behavior does not lead to the expected performance (e.g on the market) (Harris & Ruefli, 2000) identified through „performance assessment‟ This might be coupled to certain changes in strategy as well (see below) Missing to change structures or operations would threaten economic survivability of an organization

2.4 Theory of Staff Empowerment

Employee empowerment is one of the effective techniques for increasing productivity in employee and optimal use of capacity their individual and group abilities in order to achieve organizational objectives Empowerment is a process in which through the development and influence expand and the capabilities of individuals and teams will be help to improve and performance continuous improvement

Empowerment has been defined in numerous ways, but most authors agree that the core element of empowerment involves giving employees a discretion (or latitude) over certain task related activities (Bowen and Lawler, 1992; Conger and Kanungo, 1988; Schessinger and Heskett, 1991) Randolph (1995) defines employee empowerment as “a transfer of power” from the employer to the employees Blanchard et al (1996) for instance argued that that empowerment is not only having the freedom to act, but also having higher degree of res-ponsibility and accountability This indicates that manage-ment must empower their employees so that they can be motivated, committed, satisfied and assist the organisation in achieving its objectives However, transferring power to the employees should be done with due diligence, at the same time the employees to whom the power is transferred to, must be held accountable for their actions Accountability would instil discipline in utilizing scarce resources to benefit the organisation and other stakeholders Employee empowerment takes place through sharing information, autonomy in making decisions and improving intellectual capacity.Wellins et al (1991) proposed that an organisation that empowers its employees will be able survive in the free economy Mohammed et al (1998) states that empowerment is a state of mind An employee with an empowered state of mind experiences feelings

of 1) control over the job to be performed, 2) awareness of the context in which the work is performed, 3) accountability for personal work output, 4) shared responsibility for unit and organisational performance, and 5) equity in the rewards based on individual and collective performance

Beach (2005) defined motivation as the willingness to expend energy in order

to achieve a goal

Appleby (2002:24)says that motivation is keeness for a particular pattern or behaviour He explain howdrive, urges and needs of individiuals direct and control their behaviour

Davies (2005) define the concept as what goes on inside a person, which bringsabout her behaviour Davies emphasizes that lack of motivation could make

an individiual not to achieve satisfaction from the work

Implicit in all the definitions of motivation above, is the fact that motivation deals with the factors that induce people to performancethe organization

Motivation in the employees: 1) purposively management, 2) behavior modification, 3) staff involvement, 4) planes based on changing rights, 5) skill-based pay plans (competency), and 6) flexible benefit plans

A research on Vietnam‟s labour productivity in asean economic community conducted by Msc Nguyen Dac Thanh (2015)

2.7.Review of previous studies:

Many researches which were conducted in past years demonstrated that there are many factors leading to the labor productivity, and developed research models in order to provide recommendations to managers As a result, the labor productivity are influenced by many factors such as: management support, supervision and technological, the extend of hierarchy, job tension, turnover intentions, employee turnover, protestant work ethic, wok values, and so on In Vietnam, there are not many researches about the labor productivity, especially in the electrical industry

2.8 Development of hypotheses:

Based on the above mentioned literature review of constructs such as labor productivity; organizational culture; organizational structure; human resource empowerment; motivation, hypotheses are developed as below:

H1: There is significantly positive contribution from organizational culture towards labor productivity

H2: There is significantly positive contribution from organizational structure towards labor productivity

H3: There is significantly negative contribution from human resource empowerment towards labor productivity

H4: There is significantly positive contribution from motivation towards labor productivity

CHAPTER 3 METHODOLOGY

This chapter represents in detail aboutobserved measures, sampling process, and research method used to evaluate measures

3.1 Measures:

3.1.1 Organizational Culture: (variable code: OCU)

This questionnaire, which was designed based on the Organizational Culture Questionnaire by Deneson It is including 7 items to assess organizational culture The item uses a 5-point Likert-type response format anchored at 1=Strongly disagree and 5=Strongly agree, in which 1 = completely unsatisfied, 2 = unsatisfied,

3 = uncertain, 4 = satisfied, 5 = completely satisfied (Larger the number is, the more agree)

Table 3.1 – Measures of Organizational Culture

Variable

Code

OCU1 In EVNHCMC, there is a clear mission that gives meaning

and direction to our work

OCU2 In EVNHCMC, people from different parts of the

organization share a common perspective

OCU3 In EVNHCMC, work is organized so that each person can

see the relationship between his or her job and the goals of the organization

OCU4 In EVNHCMC, when disagreements occur, we work hard

to achieve "win-win" solutions

OCU5 In EVNHCMC, new and improved ways to do work are

continually adopted

OCU6 In EVNHCMC, all members have a deep understanding of

customer wants and needs

OCU7 In EVNHCMC, learning is an important objective in our

day-to-day work

3.1.2 Labor Productivity (variable code: LPR):

The Organizational Commitment Questionnaire was designed by Zahra Hagegat Juo The measure indicates the degree of productivity The item uses a 5-point Likert-type response format anchored at 1=Strongly disagree and 5=Strongly agree, in which 1 = completely unsatisfied, 2 = unsatisfied, 3 = uncertain, 4 = satisfied, 5 = completely satisfied (Larger the number is, the more agree) There are

level of work responsibility is given to me is appropriate

LPR5 My job is more challenging and exciting

LPR6 I know what is expected of me during my jon/work done

LPR7 I understand day-to-day objectives of my department

LPR8 My jod/ responsibility is clearly described

LPR9 I would accept almost any types of job assignment in order

to keep working for the company

LPR10 I find that my values and the organization‟s values are very

similar

LPR11 I could just as well be working for a different organization

as long as the type of work was similar

LPR12 I have felt fidgety or nervous as a result of my job

LPR13 I am aware of the specific steps I must take to have a

personnel action taken against me reconsidered

LPR14 I will be demoted or removed from my position if I

perform my job poorly

LPR15 I will be promoted or given a better job if I perform

especially well

3.1.3 Organizational Structure (variable code: OST)

The questionnaire of three dimensions of organizational structure consisted

of 17 items and was aimed to assess the state of formality, complexity, and focus in organizations and institutions The item uses a 5-point Likert-type response format anchored at 1=Strongly disagree and 5=Strongly agree, in which 1 = completely unsatisfied, 2 = unsatisfied, 3 = uncertain, 4 = satisfied, 5 = completely satisfied (Larger the number is, the more agree)

Table 3.3 – Measures of Organizational Structure

Variable

code

OST1 The goals of this organization are ckearly stated

OST2 The division of labor of this organization is flexible

OST3 The division of labor in this organization is intended to

have it reach goal its

OST4 This organization introduces enough new polices and

procedures

OST5 I understand the purpose of this organization

OST6 This organization‟s leadership efforts result in the

organization‟s fullfillment of its purpose

OST7 This organization has adewate mechanisms for binding

itself together

OST8 This organization favos change the reorities of this

organization were understood by its employees

OST9 The structre of my work unit is well designed

OST10 Other work units are helpful to my work unit when never

assitance is requested

OST11 The division of labor in this organization actually helps

its to reach its goal

OST12 This organization‟s planning and control efforts are

helpful to its growth and development

OST13 This organization has the ability to change

OST14 I‟m personally in agreement with the stated goals of my

work unit

OST15 The leadership norms of this organization has its

progress

OST16 The pay scale and benefits of this organization treat each

other employee equitably

OST17 The opportunity for promotion exists in this organization

3.1.4 Staff Empowerment (Variable Code: SEM)

This scale was developed by Spriters The measure indicates the level of empowerment of an employee in an organization The item uses a 5-point Likert-type response format anchored at 1=Strongly disagree and 5=Strongly agree, in which 1 = completely unsatisfied, 2 = unsatisfied, 3 = uncertain, 4 = satisfied, 5 = completely satisfied (Larger the number is, the more agree)

There are 13 items will be used

Table 3.4 – Measures of Staff Empowerment

Variable

SEM1 I am allowed to do almost anything to do a high-quality job

Spriters

SEM2 I am given the opportunity to suggest improvements

SEM3 I participate in setting the goals and objectives for my job

SEM4 I have access to the information I need to make

gooddecisions

SEM5 I have the authority to correct problems when they occur

SEM6 I have a lot of control over how I do my job

SEM7 I am encouraged to handle job-related problems by myself

SEM8 I can make changes on my job whenever I want

SEM9 My supervisor values my suggestions and requests

SEM10 Decisions are usually made at the level where the best

information is available

SEM11 Most employees are highly involved in their work

SEM12 Information is widely shared so that everyone can get the

information he or she needs when it's needed

SEM13 Everyone believes that he or she can have a positive impact

3.1.5 Staff Motivation (Variable Code: SMO)

This measure was developed by Hakman & Oldham (1976) This questionnaire is essentially designed based on five key elements that can be used to describe the potential motivation for a job These elements are diversity of skills, task identity, and importance of the task, independence, and feedback

The item uses a 5-point Likert-type response format anchored at 1=Strongly disagree and 5=Strongly agree, in which 1 = completely unsatisfied, 2 = unsatisfied,

3 = uncertain, 4 = satisfied, 5 = completely satisfied (Larger the number is, the more agree)

There are 24 items will be used to assess the motivation

Table 3.5 – Measures of Staff Motivation

Variable

SMO1 The work itself provides feedback on how well I am doing in my

job