Master thesis Business Administration: Factors effect job satisfaction and organizational commitment- A case study of Tran Duc group

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The aim of research: to quantitatively determine antecedent factors effecting to job satisfaction and organizational commitment of production workers in Tran Duc group; to determine relationship between level of job satisfaction and that of organizational commitment, this study investigated relationship between the level of satisfaction of each of facets of job satisfaction and that of organizational commitment;...

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Nội dung Text: Master thesis Business Administration: Factors effect job satisfaction and organizational commitment- A case study of Tran Duc group

Maastricht MBA C/o HCMC University of Technology, 268 Ly Thuong Kiet, D.10, HCM City Vietnam, Tel: (84-8) 8660 898 - Fax: (84-8) 8660 899 - E-mail: msmsim@hcm.vnn.vn FACTORS EFFECT JOB SATISFACTION AND ORGANIZATIONAL COMMITMENT A CASE STUDY OF TRAN DUC GROUP BY TRUONG QUOC VIET (VIETNAM) COACH Dr. VO VAN HUY “This proposal was submitted in partial fulfillment of the requirements for the Masters of Business Administration (MBA) degree at the Maastricht School of Management (MSM), Maastricht, the Netherlands, April 2009.” Maastricht School of Management P.O. Box 1203 6201 BE Maastricht The Netherlands Page 1 of 72
ACKNOWLEDGEMENTS First of all, I would like to express my deepest gratitude and great appreciation to Dr. Vo Van Huy, my coach, for his guidance, valuable advices and great support in developing my thesis. I would like to express my sincere thankfulness to Mr. Hoang Trong for giving me his inspiration, thoughtful guidance and sharing his valuable knowledge about SPSS program for the completion of my thesis. Also thanks go to my colleagues and staff at Tran Duc Group who assisted me in collecting data during the fieldwork stage, to people at MSM office for their continuous support during last years. Last, but not least I would like to thanks all professors, lectures, tutors, and my classmate for their support during my learning time at the MBA program of the MSM Page 2 of 72
ABSTRACT This study examines what factors motivates the worker involved in the wood industry in Tran Duc group, their level of job satisfaction and relationship between job satisfaction and organizational commitment. Wood industry is a critical industry which accommodates an increasing export up to 300% in three years. Data collected by a survey of stratified random sampling of 350 manufacturing workers at three factories of Tran Duc group. A Likert-scale type questionnaire was used to detect employment attitudes, job satisfaction and organizational commitment. Hierarchical regression analysis was used to analyze the data of the study. Company’s vision, job security, leadership support, pay & benefits, and co-worker relation are found significant determinants of job satisfaction and organizational commitment. The finding of this study provide valuable insights for the management of Tran Duc group understanding the factors effecting job satisfaction and organizational commitment as well as relationship between job satisfaction and organizational commitment. Key words: Job satisfaction, organizational commitment, turnover. Page 3 of 72
TABLE OF CONTENTS I. Introduction ................................................................................................... 9 1.1 Vietnam wood industry introduction ....................................................... 9 1.2 Tran Duc group introduction................................................................. 10 1.3 Statement of the problem ...................................................................... 11 1.4 Purpose of research & objectives .......................................................... 12 1.5 Scope & Limitations ............................................................................. 13 1.6 Thesis structure..................................................................................... 13 II. Review of literature ................................................................................... 15 2.1 Job satisfaction ..................................................................................... 15 2.2 Factors affecting to job satisfaction ........................................................ 16 2.3 Job satisfaction theories ........................................................................ 17 2.3.1 Two-Factor Theory (Motivation-Hygiene Theory) ........................ 17 2.3.2 Affect Theory................................................................................ 18 2.3.3 Dispositional Theory ..................................................................... 18 2.3.4 Equity Theory ............................................................................... 18 2.4 Theory application ................................................................................ 19 2.5. Organizational commitment ................................................................. 20 2.6. Factors affecting to organizational commitment ................................... 22 2.6.1 Personal characteristics ................................................................. 22 2.6.2 Organization structure ................................................................... 22 2.6.3 Work experience ........................................................................... 22 2.7. Models of Retention-Turnover .............................................................. 23 2.8 Importance of job satisfaction and organizational commitment .............. 24 2.9 HR practice in Tran Duc group ............................................................. 26 2.9.1 Regulations and Policy .................................................................. 26 2.9.2 Job description ............................................................................. 26 2.9.3 Recruitment process ...................................................................... 27 2.9.4 Training ....................................................................................... 27 Page 4 of 72
2.9.5 Skill evaluation ............................................................................ 28 2.9.6 Pay, allowance, benefits and bonus................................................ 28 III. Research Methodology: ................................................................................. 29 3.1 Proposal research model ....................................................................... 29 3.2 Instruments ........................................................................................... 29 3.3 Participation .......................................................................................... 29 3.4 Translation and pre-test reliability of questionnaire ................................ 29 3.5 Research hypotheses ............................................................................. 30 3.6 Research methodology .......................................................................... 32 3.7 Data collection ...................................................................................... 32 3.7.1 Primary data.................................................................................. 33 3.7.2 Secondary data .............................................................................. 33 3.8 Method of analysis................................................................................. 33 3.8.1 Assessment of measurement of scale ............................................. 33 3.9 Measurement scales of the questionnaire................................................ 34 3.10 Source of measurement scales.............................................................. 34 IV. Research findings:............................................................................................. 38 4.1 Sample characteristics ........................................................................... 38 4.1.1 Sample ......................................................................................... 38 4.1.2 Gender .......................................................................................... 38 4.1.3 Age ............................................................................................... 38 4.1.4 Marital status................................................................................. 38 4.1.5 Education level.............................................................................. 39 4.1.6 Year of experience ....................................................................... 39 4.1.7 Salary............................................................................................ 39 4.2 Assessment of measurement scale ......................................................... 40 4.2.1 EFA for scale of factors................................................................. 40 4.2.2 EFA for all scale of factors together .............................................. 42 4.3 Testing model and hypotheses .............................................................. 45 4.3.1 Revising the research model.......................................................... 45 Page 5 of 72
4.4 Finding and discussion .......................................................................... 51 4.5 Finding ................................................................................................. 52 4.6 Managerial implications......................................................................... 56 V. Conclusion, discussion and recommendations .................................................... 58 5.1 Conclusion ............................................................................................ 58 5.2 Recommendations.................................................................................. 60 5.2.1 Building a skillful team ................................................................. 60 5.2.2 Building a training system............................................................. 60 5.2.3 Building a skill matrix system and skill-base salary increase ......... 60 5.2.4 Building a reward & recognition System ...................................... 60 5.2.5 Designing job levels. ..................................................................... 60 5.2.6 Building organization culture. ....................................................... 61 5.2.7 Upgrade or invest high-tech processing machine ........................... 61 5.2.8 Monthly performance feedback ..................................................... 61 5.3 Limitations............................................................................................. 61 Page 6 of 72
LIST OF TABLES Table 1.1 : Vietnam wood industry revenue ................................................................... 9 Table 1.2: Tran Duc JS resignation rate in 2008............................................................ 11 Table 3.1: Measurement scales of Job dissatisfaction and organizational commitment.. 36 Table 4.1: Sample distribution by gender .................................................................... 38 Table 4.2: Sample distribution by age........................................................................... 38 Table 4.3: Sample distribution by marital status ........................................................... 39 Table 4.4: Sample distribution by education level......................................................... 39 Table 4.5: Sample distribution by year of experience.................................................... 39 Table 4.6: Sample distribution by salary ....................................................................... 40 Table 4-7: Unidimentionality and reliability test results................................................ 41 Table 4.8: KMO and Bartlett's Test .............................................................................. 43 Table 4.9: Total Variance Explained ............................................................................ 43 Table 4.10: Result of joint factor analysis for 7 scales .................................................. 44 Table 4.11 Revised undimentionality and reliability for 2 new factors ……………..45 Table 4.12: Model Summary (b)................................................................................... 46 Table 4.13: Anova (b) .................................................................................................. 46 Table 4.14: Coefficients (a) .......................................................................................... 46 Table 4.15: Levels of importance factors on Job Satisfaction........................................ 48 Table 4.16: Model Summary (b)................................................................................... 48 Table 4.17: Anova (b) .................................................................................................. 49 Table 4.18: Coefficients (a) .......................................................................................... 49 Table 4.19: Levels of importance factors on Organizational commitment ..................... 51 Table 4.20: R square value ........................................................................................... 52 Table 4.21: Regression result between job satisfaction and organizational commitment 52 Table 4.22: F and Sig. value ......................................................................................... 52 Page 7 of 72
LIST OF FIGURES Figure 2.1: Job Satisfaction Model (Justin Field 2008) .................................................. 16 Figure 2.2: Adams’ Equity Theory diagram - job motivation......................................... 20 Figure 2.3: Factors Affecting Job Satisfaction and Organizational Commitment ........... 23 Figure 2.4: Research model proposals .......................................................................... 25 Figure 4.1: Revised model ........................................................................................... 55 Page 8 of 72
CHAPTER I INTRODUCTION 1.1 Vietnam wood industry introduction Vietnam’s wood and furniture industry has grown tremendously in the past few years. In merely 4 years, the industry’s total export volume rose by 300% from USD 460.2 million in 2002 to USD 1932.8 million in 2006 and 2800 million in 2008. This made Vietnam the second largest exporter of wooden goods in Southeast Asia. Furthermore, the wood processing industry has become an important industry in Vietnam, as it is today the fifth largest source of export earnings in Vietnam after oil, garment & textiles, footwear, seafood & rice, etc Table 1.1 Vietnam wood industry revenue Vietnam 2003 2004 2005 2006 2007 2008 2009 (est) Volume (US mil) 600 1100 1600 2000 2500 2800 3200 Source: www.vietnamnews.vnagency.com.vn Vietnam has developed into the fourth biggest wood product exporter in ASEAN, following Malaysia, Indonesia and Thailand. It can be said that Vietnam’s wood industry has great potentiality as despite its position among Vietnam’s leading export industries, Vietnam’s wood products now account for only 0.78 % of the global market share. So far, China is considered as the most redoubtable competitor of Vietnam in term of wood processing, having the leading position in wood product exporter. Despite a lot of advantages for development, Vietnam’s wood processing and fine art industry is, like other industries, facing with series of difficulties and severe challenges, especially the impacts put by the international economic crisis. Recent new regulations provided by the two export markets, US and EU, such as the FSC (Forest Stewardship Council) requirement, have posed barriers to Vietnam’s wood product exporters. In addition, the 80 % dependence on imported materials has brought about a lot of difficulties in entering these two big markets. Another problem that most of Vietnamese wood furniture companies facing is productivity of labor and capital. Productivity of Vietnam’s worker reached USD 10,000 per year in 2008 meanwhile Chinese’s reached USD 15,000. The productivity rising in 2008 could not cover high interest rate, price hikes and investment cost. In spite of efforts to overcome the difficulties, Page 9 of 72
several Vietnamese wood companies have to stop production, even suffering from loss and bankruptcy. Productivity of capital has a problem due to poor financial management which can result from poor cash flow and a lack of experience. If calculating capital effect (fixed and working capital), Vietnam need VND 0.91 to create a VND 1 in 2008 The big problem accompanying with growth up of industry is demand for wood processing worker in wood furniture industry has continuously been increasing during the recent years, especially in 2008 needed 170,000 workers. However, Vietnam lacking of resources through training and education wood processing, so almost skilled workers learned by working. The given situation has resulted in the movement of the wood skilled workers between organizations. In front of such situation, many of companies become awkward because of the leaking and lacking skilled workers serving their jobs. They understand that losing the skilled workers is a big problem since may it cause a threat to the success of their businesses. High rate of labor turnover rate in wood processing business is affecting to whole of industry. Researching on causes of labor turnover of the industry is necessary to work out measures to reduce this rate and stabilize the workforce of the industry and opportunity for employees. Managers in many companies wondered how to retain skilled workers and whether satisfying their work related needs would help. 1.2 Tran Duc group introduction The Tran Duc Group is one of the leading manufacturers of garden and indoor furniture and flooring in Vietnam. Operating since 2000 the Tran Duc Group has successfully developed a reputation for quality furniture and service excellence. The group currently consists of five companies owned and operated wholly by the Tran Duc Group. Tran Duc Joint Stock and Furniture Global Corporation are responsible for manufacturing the entire garden furniture program while Tran Duc One is the indoor furniture facility. Sao Nam currently manufactures our indoor flooring and packaging and also hosts the log yard and drying facilities. In addition to manufacturing the Tran Duc Group in 2007 created the Tran Duc Forest Management Services Company which is responsible for the acquisition and management of plantation forests in Vietnam. Currently the Tran Duc Group owns two plantation areas in central Vietnam holding 1500 ha of Acacia trees which are under Tropical Forest Trust certification. Page 10 of 72
1.3. Statement of the problem During the past decade, employee turnover has become a very serious problem for organizations. Managing retention and keeping the turnover rate below target and industry norms is one of the most challenging issues facing business. All indication points toward the issue are compounding in the future and, even as economic times changed, turnover will continue to be an important issue for most job groups. Yet despite these facts employee turnover continues to be the most unappreciated and undervalued issue facing business leaders. There are a variety of reasons for this, for example, the true cost of employee turnover is often underestimated. The causes of turnover are not adequately identified, and solutions are often not matched with the causes, so they failed. Preventive measures are either not in place or do not target the issues properly, and therefore have little or no effect, and a method for measuring progress and identify monetary value on retention does not exist in most organizations. Being aware of the critical role of skilled workers in the wood furniture company, Tran Duc Group, which specialized in processing indoor and outdoor wood furniture with over 2,500 workers facing the same issue are striving to attract and retain skilled workers by various measures such as increasing salary much higher than Government law about the limit salary, house & fuel allowance, skill allowance. However, turnover rate among workers has still increased during last year even though that is high season, low season or year end. Table 1.2 Tran Duc JS resignation rate in 2008 Month Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Resignation (#) 105 76 97 150 134 149 121 69 42 66 79 89 Rate (%) 10 8 10 17 17 23 23 14 8 12 13 12 Source: Tran Duc HR department Turnover intension impacts negatively on product quality, productivity and performance of the company. Moreover, it is costly and not easy to figure out for this hidden cost. Cost of labor turnover includes expenses on procedures for separations and on training replacements, losses of productivity when skilled workers spend time training new apprentices, waste caused by production of more bad products by new laborers. To obtain enough skill for a stage of production line, the worker needs at least trained 15 days before their skills are fully estimated. Therefore, stable front-line workforces with artistic skills and honesty at whole production process are valued to the company. The shortage of labor resource adds more difficulty to the company which its key resource is man power. The labor shortage may slowdown the operation Page 11 of 72
expansion of the company and leads to miss business opportunities, delaying delivery, resulting in customer canceling contracts. Why turnover is high after company spent more effort? What does the worker want? What are their needs? Are they satisfied with their current jobs, current salaryies and allowances? Is there relationship between satisfaction and worker retention? In order to has right solution to this problem in wood furniture industry under current social-economic context, The Board of Management needs to understand in more details about those issues namely are the worker preferring better salary, promotion opportunity or motivation, working environment, good relationship with boss/peers, or company’ culture? Research all factors effect to retain worker is necessary not only in adds an insight into the issue of humane resource management in Tran Duc Group but also responding to this situation in the long run 1.4. Purpose of research & objectives Frederick Herzberg’s two factor theory attempts to explain satisfaction and motivation in the workplace. This theory states that satisfaction and dissatisfaction are driven by different factors – motivation and hygiene factors, respectively. An employee’s motivation to work is continually related to job satisfaction of a subordinate. Motivation can be seen as an inner force that drives individuals to attain personal and organization goals (Hoskinson, Porter, & Wrench, p.133). Motivating factors are those aspects of the job that make people want to perform, and provide people with satisfaction, for example achievement in work, recognition, promotion opportunities. These motivating factors are considered to be intrinsic to the job, or the work carried out. Hygiene factors include aspects of the working environment such as pay, company policies, supervisory practices, and other working conditions. Besides job dissatisfaction, the low level of organizational commitment is also correlated to turnover (Angle & Perry 1981, Arnold & Feldman 1982, O’Reilly & Chatmen 1986, Porter at al 1976.). Studies of job satisfaction and organizational commitment to predict factors effected to personnel retention and productivity. Charles Glisson and Mark Durick 1988 reported that a combination of both satisfaction and commitment may form employee morale. Defining factors that impact on employee satisfaction and commitment are potential paths to find a solution to reduce turnover The purpose of this study was to determine factors effected to job satisfaction and relationship between job satisfaction and organization commitment. Vietnam’s economic comes down due to world’s economic crisis, unemployment rate increase, so almost employees try to keep their Page 12 of 72
jobs, therefore level of turnover is low. However, what happens when world economy was recovered? The waves of workforce’s moving will re-occur, turnover may be increased in next few years. A research result is necessary to the Tran Duc Group’s Board of Management find out long-term solutions for retaining skilled workers In response to the above stated problems, this is the aim of research : 1. To quantitatively determine antecedent factors effecting to job satisfaction and organizational commitment of production workers in Tran Duc group 2. To determine relationship between level of job satisfaction and that of organizational commitment, this study investigated relationship between the level of satisfaction of each of facets of job satisfaction and that of organizational commitment 3. To draw recommendations to improve retention of worker in Tran Duc Group 1.5. Scope & Limitations Given the limited of sources and time, the research only focuses on the production workers and a survey will be taken place at Tran Duc Joint Stock, and Furniture Global and Tran Duc One Factory. 1.6 Thesis structure This study report is presented in five chapters as follow: Chapter 1 - Introduction provides a brief introduction to wood industry, overview of Tran Duc group, the research problem, core objectives, scope of the study and structure of the research report. Chapter 2 - Literature Review provides some conceptual definitions of human resource construction, theories of Job Satisfaction and Organizational Commitment. Also it reports several literature reviews of Job Satisfaction and Organizational Commitment and a discussion of previous researches on Job Satisfaction, Organizational Commitment and Employee Turnover. Chapter 3 - Research Methodology introduces the research model and hypotheses. Then it justifies the methods used to evaluate measurement scales and test the research model and hypotheses. This chapter is covers the general approach and construct measurement of the study, Page 13 of 72
the source of primary and secondary information to be used, data collection method including the design of questionnaire and sampling method. Chapter 4 - Data Analysis and Findings presents the description of the sample and response rate of the survey, the practical assessment and refinement of measurement construction, results of testing theoretical model and hypotheses. Chapter 5 - Conclusion, Discussion and Recommendations summarizes and discusses the key findings of the research, then suggests recommendations for improving job satisfaction and organizational commitment. Page 14 of 72
CHAPTER II: REVIEW OF LITERATURE Over the years, many studies relating to personal in term of human needs, job satisfaction and organizational commitment have been conducted, however, almost focus on staff but worker. In this literature review, factors effect job satisfaction and organizational commitment will be represented. Then, the model of job satisfaction and organizational commitment will be proposed for this specific study, which provides a basis for development for hypotheses. 2.1 Job satisfaction Job satisfaction and motivation have widely been investigated in many job situations and against many different theoretical formulations. Frederick Herzberg's motivation-hygiene factor theory, although considered nontraditional when it was introduced in 1959, has become one of the most used, known, and widely respected theories for explaining motivation and job satisfaction. For instance, Maidani (1991) made a comparative study of Herzberg's theory in private and public sector jobs. His analysis showed that, for employees in both sectors, the motivation to work tended to emphasize intrinsic, or motivating, factors. One interesting result of his work was that public-sector workers tended to value extrinsic, or hygiene, factors significantly more than did workers in the private sectors. Herzberg's theory divides motivation and job satisfaction into two continua. The theory differentiates between factors that are considered to be intrinsic to a job, such as responsibility, and factors that are extrinsic but important to a job, such as working conditions. The factors that are inherent to the job are those that affect motivation. To put it in Herzberg's (1968) own words, "The only way to motivate the employee is to give him challenging work in which he can assume responsibility." Conversely, the extrinsic factors affect job satisfaction. Moreover, problems in the job satisfaction factors can serve as barriers to motivation, even if the motivating factors themselves are addressed satisfactorily. Job satisfaction means the degree in which an individual feels towards different sides of their job (pay, promotion, supervision, fringe benefits, contingent rewards, operating procedures, coworkers, nature of work and communication) which determine their work performance”. ( Paul E. Spector 1997) Page 15 of 72
Figure 2.1: Job Satisfaction Model (Justin Field 2008) 2.2 Factors affecting to job satisfaction Growth Aspect: This is one of the key factors, without which there can not be job satisfaction. For some individuals personal growth in terms of skills and knowledge gained is only important whereas for some others in addition to knowledge, growth in hierarchy is important. In either case advancement is a key factor to fulfillment. Money talks: Adequate compensation drives ones interest in the job execution and their performance, so let us not fool our self that money does not matter. There are a few among us who work not only earn a living but also keep themselves occupied, even if this is the case it becomes necessary that such individuals be paid as per the industry standard. Responsibility & Accountability: Responsibility or May I say freedom of action is another important factor that needs to be considered while you measure your job satisfaction. Responsibility and accountability boosts most people’s level of interest in the job. Job Security: Stability and Security is vital to everyone and at all times. Security in terms of job is no exception. Insecurity in job is very likely to affect performance, morale and confidence. Recognition: Let be true to ourselves and agree that we all love to be recognized and Page 16 of 72
appreciated for the work that we do. Recognition is essential as it helps increase confidence and self esteem. It is highly important to know the outcome of a task assigned in terms of good or bad appraisal so as to help them to improve their potentiality. Enjoyment: It would be wise if everyone asks himself / herself if he/she enjoys his/her work. Enjoyment at work comes with satisfaction. Do you look forward to going to work? Do you await results of some important tasks that you complete the previous day? Even if your job is some kind of routine work if you feel a sense of pride and achievement then you definitely enjoy your job. People you work with: Being comfortable with the people we work with high necessity. Unpleasant relationships at the work place are indication to start looking for a new job as it is very difficult to work with those who you hate or can not relate to. One should not try to find best friends in their co-workers but it’s important that you get along well with all. Working hours & conditions: Long hours induces fatigue and tiredness among individuals, which might induce oversight in them and in such condition people make mistakes which take more time to be solved. One does and should have a life outside work. Long hours without breaks should be a strict no! If one is required to put in long hours make sure you are getting compensation or getting knowledge and experience that you can not afford to loose. Working conditions should be comfortable. Perks: Perks last but not the least is another important factor in terms of job satisfaction. Your designation derived from your talent and knowledge should be eligible for some privileges. 2.3 Job satisfaction theories 2.3.1 Two-Factor Theory (Motivation-Hygiene Theory) Frederick Herzberg’s two factor theory attempts to explain satisfaction and motivation in the workplace. This theory states that satisfaction and dissatisfaction are driven by different factors – motivation and hygiene factors, respectively. An employee’s motivation to work is continually related to job satisfaction of a subordinate. Motivation can be seen as an inner force that drives individuals to attain personal and organization goals (Hoskinson, Porter, & Wrench, p.133). Motivating factors are those aspects of the job that make people want to perform, and provide people with satisfaction, for example achievement in work, recognition, promotion opportunities. These motivating factors are considered to be intrinsic to the job, or the work Page 17 of 72
carried out. Hygiene factors include aspects of the working environment such as pay, company policies, supervisory practices, and other working conditions. While Hertzberg's model has stimulated much research, researchers have been unable to reliably empirically prove the model, with Hackman & Oldham suggesting that Hertzberg's original formulation of the model may have been a methodological artifact. Furthermore, the theory is not considered as individual differences, conversely predicting all employees will react in an identical manner to changes in motivating/hygiene factors. Finally, the model has been criticized in that it does not specify which motivating/hygiene factors are to be measured. 2.3.2 Affect Theory Edwin A. Locke’s Range of Affect Theory (1976) is arguably the most famous job satisfaction model. The main premise of this theory is that satisfaction is determined by a discrepancy between what one wants in a job and what one has in a job. Further, the theory states that how much one values a given side of work (e.g. the degree of autonomy in a position) moderates how satisfied/dissatisfied one becomes when expectations are/aren’t met. When a person values a particular side of a job, his satisfaction is more greatly impacted both positively (when expectations are met) and negatively (when expectations are not met), compared to one who doesn’t value that side. This theory also states that too many of particular ones will produce stronger feelings of dissatisfaction the more a worker values that facet. 2.3.3 Dispositional Theory Another well-known job satisfaction theory is the Dispositional Theory. It is a very general theory that suggests that people have innate dispositions that cause them to have tendencies toward a certain level of satisfaction, regardless of one’s job. This approach became a notable explanation of job satisfaction in light of evidence that job satisfaction tends to be stable over time and across careers and jobs. Research also indicates that identical twins have similar levels of job satisfaction. A significant model that narrowed the scope of the Dispositional Theory was the Core Self- evaluations Model, proposed by Timothy A. Judge in 1998. Judge argued that there are four Core Self-evaluations that determine one’s disposition towards job satisfaction: self-esteem, general self-efficacy, focus of control, and neuroticism. This model states that higher levels of self-esteem and general self-efficacy lead to higher work satisfaction. 2.3.4 Equity Theory Page 18 of 72
John Stacey Adams, a workplace and behavioral psychologist, puts forward his Equity Theory on job motivation in 1963. There are similarities with Charles Handy's extension and interpretation of previous simpler theories of Maslow, Herzberg and other pioneers of workplace psychology, in that the theory acknowledges that subtle and variable factors affect each individual's assessment and perception of their relationship with their work, and thereby their employer. However, awareness and cognizance of the wider situation - and crucially comparisons - feature more strongly in Equity Theory than in many other earlier motivational models. When people feel fairly or advantageously treated they are more likely to be motivated; when they feel unfairly treated they are highly prone to feelings of disaffection and de-motivation. The way that people measure this sense of fairness is at the heart of Equity Theory. The basic idea following the Equity Theory is that workers, in an attempt to balance what they put in to their jobs and what they get from them, will unconsciously assign values to each of his various contributions. Workers contribute their experience, their qualifications, and their capability in addition to their personal strength such as acumen and ambition, the most highly motivated employee is the one who perceives his rewards are equal to his contributions. If he feels that he is working and being rewarded at about the same rate as his peers, then he will judge that he is being treated fairly. Equity, and thereby the motivational situation we might seek to assess using the model, is not dependent on the extension to which a person believes reward exceeds effort, nor does even necessarily on the belief that reward exceed effort at all. Rather, Equity, and the sense of fairness which commonly underpins motivation, is dependent on the comparison a person makes between his or here reward/investment ratio with the ratio enjoyed (or suffered) by others considered to be in a similar situation. 2.4 Theory application Equity theory states that, worker fells satisfaction and motivation if they treaded fairly in the organization. Dispositional theory mentions that higher levels of self-esteem and general self- efficacy lead to higher work satisfaction. Meanwhile affecting theory states that the main premise of this theory is that satisfaction is determined by a discrepancy between what one wants in a job and what one has in a job. Motivation-Hygiene theory states that satisfaction and dissatisfaction are driven by different factors – motivation and hygiene factors, respectively. This theory covers all the factors from Page 19 of 72
other theory that lead to low or high turnover. Thus, in this research we use Motivation-Hygiene theory for hypothesis testing Figure 2.2 Adams’ Equity Theory diagram - job motivation 2.5. Organizational commitment Traditionally, within the employment relationship, employees exchanged their loyalty and hard work for the promise of job security. In the contemporary environment, changes in organizational structure towards more flexible work practices and the decline in job security have altered the psychological contract between employer and employee (Allan, 2002; Wiens- Tuers, 2001). The new form of psychological contract is visible in placement practices, which see organizations focus on non-core and part-time workers to gain flexibility at lower cost (Cappelli, 1999; Kalleberg, 2000). Because of these organization-wide changes, the essence of attachment between employer and employee has changed. The old contract of employee loyalty in exchange for job security and fair work has dissolved (Overman, 1998). Current employer emphasizes "employability" rather than long-term loyalty in a specific job (Cappelli, 1999; Ko, 2003). The trend these days seems to be geared towards having a 'career portfolio (Handy, 1995; Hays & Kearney, 2001). Replacing the old employment deal, the new psychological contract suggests that the employer and the employee meet each other's needs for the moment but are not making long-term commitments. It is suggested that commitment to one's professional growth has replaced organizational commitment (Bozeman & Perrewe, 2001; Powers, 2000). Instead of job security, employees Page 20 of 72