THEORETICAL BASIS ON RETAINING EMPLOYEES IN
Concept and role of retaining employees in enterprises
Employee retention is a crucial strategy for fostering long-term engagement among staff members As noted by Chaminade (2007), building a strong connection between employees and the organization is essential, as it should be rooted in shared values and the organization's ability to fulfill employee needs.
Retaining employees is crucial for maintaining a skilled workforce, which directly impacts productivity and service quality By focusing on employee retention, organizations can effectively attract and keep talented individuals who contribute to high performance Providing managers with insights into effective retention strategies ensures that business goals and objectives are met, ultimately fostering a more stable and efficient work environment.
Developing a retention strategy is essential for aligning organizational needs with employee satisfaction, fostering a dependable relationship where individuals choose to stay based on freedom and thoughtful decision-making Retaining skilled employees is crucial for the organization's overall success; therefore, it is vital to implement policies that encourage talent to remain by offering opportunities for skill demonstration and ensuring a good job fit.
Nyoka (2006) emphasizes the importance of retention policies that support a work-life balance by implementing family-friendly initiatives and flexible work arrangements, enabling employees to address personal needs while fulfilling their professional responsibilities.
An effective on-site maintenance policy enables managers to maintain a manageable workforce, which is essential for attracting quality staff To maximize their investment in talent, organizations must implement strategies to retain skilled employees Retention is critical for managers due to the current shortage of skilled labor, economic growth, and the increasing rate of employee retirements.
Employee retention is crucial for organizations, as highlighted by Phillips and Connell (2002), who emphasize the importance of addressing worker sensitivity through various strategies Czakan (2005) identifies key strategies such as career promotion, compensation entitlements, training opportunities, and management support Additionally, labor managers should adopt a flexible approach that incorporates value-added components to enhance retention efforts Brown (2006) further supports this by advocating for training, skill development opportunities, and adaptable reward systems Retaining employees, particularly those with essential skills and experience, is vital to minimize costs associated with turnover, which poses significant challenges for human resource and direct managers due to the need for continuous recruitment and training.
Retaining employees plays an important role and the benefits of retaining experienced, reliable employees are invaluable, helping businesses operate stably, reducing the cost of changing employees
Loyal employees consistently exceed customer expectations and maintain a high level of motivation, which are crucial traits for fostering customer loyalty and driving significant revenue growth for the business.
Loyal employees contribute to long-term stability within a company, often turning down competitive job offers and refraining from job hunting Their positive advocacy for the business as a great workplace not only enhances the company’s reputation but also helps avoid substantial costs associated with employee turnover (Nguyen Thi Huong, 2015, page 8).
Basic factors effecting employee retention
1.2.1 Factors belong to the enterprise
The organization's primary objective is to direct its activities and streamline employee workflows while ensuring a balance between organizational benefits and employee interests This goal encompasses the development of a comprehensive human resource strategy focused on attracting, utilizing, and supporting employees effectively.
Leadership methods encompass the intentional ways in which leaders influence employees and utilize resources to meet management goals These methods play a crucial role in motivating and energizing employees, fostering creativity, and unlocking both internal potential and external opportunities within the organization.
- Organizational motivational tools (Nguyen Van Diem and Nguyen Ngoc Quan,
To foster motivation, managers employ a variety of tools that influence their teams, including material incentives such as salary, bonuses, allowances, and welfare benefits, as well as spiritual motivators related to job satisfaction, work environment, and opportunities for advancement.
+ Income policies of the organization
Organizations implement income policies to manage employee benefits, including salary, bonuses, social insurance, and allowances These policies play a crucial role in attracting and retaining talent, as salary and social insurance are essential factors for employee satisfaction Meanwhile, a well-structured bonus policy serves as a significant motivator for enhancing employee performance For many individuals, a competitive salary and comprehensive social insurance are also key drivers that encourage them to fulfill their job responsibilities effectively.
The income policy tool should take into account the payment by position, capacity and working results that contribute to competition and employee incentives, especially for highly educated employees
+ Working environment and organization's culture
The working environment encompasses not only labor conditions but also the organizational atmosphere and relationships among colleagues, superiors, and subordinates To foster productivity, a proper working environment must prioritize comfort and facilitate focused thinking, while also ensuring that material conditions are convenient for employees.
Organizational culture encompasses the shared values and norms acknowledged by all employees, shaping their behavior both internally and externally A robust culture significantly influences employee actions and fosters an environment that attracts talent and stimulates creativity To effectively motivate employees, it is essential to develop and sustain a strong organizational culture.
+ Ability to promote at work
Career advancement is a key aspect of professional growth, reflecting an individual's desire for recognition within their organization Employees with a proactive mindset actively seek opportunities for career development Consequently, fostering an environment that supports training and advancement is essential for motivating and encouraging employees to reach their full potential.
Work encompasses all tasks carried out by an employee or collectively by a group of employees (Nguyen Van Diem and Nguyen Ngoc Quan, 2007, p 44) Essential requirements for performing work include knowledge, skills, education, and experience The establishment of work arises from the systematic allocation of labor within an organization.
In any organization, a variety of tasks with differing levels of complexity exist, necessitating a workforce with varying skills and expertise As the complexity of work increases, so does the demand for skilled employees, which influences their roles, positions, salaries, job satisfaction, and overall attitudes towards their work Additionally, job stability plays a crucial role in enhancing the experience and productivity of the workforce Consequently, implementing the principle of "right people, right works" is essential for employee retention and organizational success.
- Other human resource management activities of the organization
Effective human resource management encompasses various activities, including human resource planning, job analysis and design, recruitment, and employee training and development These processes are essential for evaluating employee performance and making informed personnel decisions based on individual capabilities and achievements Proper execution of these activities significantly influences employee morale and is vital for the organization's establishment, sustainability, and growth As human resources are a critical asset, effective management in this area is crucial for organizational success By implementing appropriate human resource management strategies, organizations can enhance employee motivation, fostering a more productive work environment.
- Personal’s goal (Nguyen Van Diem and Nguyen Ngoc Quan, 2007, page 128)
Employee motivation is driven by their desire to achieve goals As the goals become more ambitious, the personal effort required to reach them increases, leading to heightened motivation among individuals.
To ensure organizational growth, it's essential that each employee's individual goals align with the company's overarching objectives Administrators must effectively identify and integrate these personal aspirations into the broader organizational aims, fostering a cohesive and motivated workforce.
- Needs and motives of employees (Nguyen Van Diem and Nguyen Ngoc Quan,
Employee behavior is influenced by their needs, leading to two distinct outcomes: satisfaction and dissatisfaction within the organization Dissatisfaction often stems from factors such as unsatisfactory organizational policies, inadequate supervision, poor working conditions, unfair salaries, and conflicts with colleagues Conversely, satisfaction arises from achieving desired results, receiving recognition from the organization and peers, embracing responsibility, and opportunities for promotion To foster a positive work environment, it is essential to address both maintenance and promotion factors that fulfill employees' needs.
The actual capacity of employees reflects their ability to effectively tackle tasks, showcasing their knowledge and professional qualifications This capacity plays a crucial role in motivating employees; when individuals possess the necessary skills to handle their responsibilities, it enhances their engagement and performance Conversely, a lack of qualifications can lead to discouragement and hinder their problem-solving capabilities.
Seniority and work experience significantly influence labor remuneration and job arrangements, reflecting the duration employees have dedicated to their roles Generally, as seniority and experience increase, employees tend to demand higher salaries, while less experienced workers may expect lower compensation.
Theories of working motivation to retain employees
1.3.1.1 Abraham Maslow’s hierarchical doctrine of demand (1943)
According to Abraham Maslow, human behavior is driven by a hierarchy of needs, which are prioritized from low to high Once lower-level needs are fulfilled, individuals are motivated by higher-level demands This cycle continues, as the satisfaction of one need leads to the emergence of another, ensuring that people are perpetually motivated to engage in activities aimed at meeting their unmet needs.
Basic needs, also known as physiological needs, are essential for sustaining human life and include food, clothing, drinking water, and housing According to A Maslow, if these fundamental needs are not adequately met, individuals will lack motivation to pursue higher-level needs In the workplace, it is crucial for organizations to provide employees with fair compensation to ensure they can support themselves and their families, thereby maintaining their minimum living standards and overall survival.
Employees prioritize safety in the workplace to protect themselves from physical dangers and the risk of job loss or asset depletion Leaders in organizations are equally concerned about their employees' health and safety, fostering a stable work environment that promotes long-term employment Assurance of safety needs is reflected in various aspects such as working conditions, labor contracts, social insurance policies, unemployment benefits, health policies, and retirement plans.
Social needs encompass the desire for friendship, love, familial affection, and integration within social life Individuals with strong social needs tend to thrive in collaborative environments, valuing positive relationships with colleagues and superiors In organizational settings, these needs manifest as employees seeking teamwork and opportunities for collective engagement To foster a supportive workplace culture, administrators should promote friendly cooperation and encourage participation in group activities such as sports, arts, and picnics, helping employees fulfill their social needs effectively.
According to A Maslow, the need for self-esteem arises when individuals seek acceptance within society, fostering a desire for self-respect and respect from others Those with elevated self-esteem needs are often motivated to enhance their skills and work diligently to achieve success This drive manifests in employees' expectations for rewards, recognition, promotions, admiration from peers, and trust from superiors Fulfilling these needs cultivates pride among employees, motivating them to deliver high-quality work and providing opportunities to showcase their abilities and courage.
Figure 1.1 A Maslow's hierarchy of Needs
(Souce: Bùi Anh Tuấn và Phạm Thúy Hương, 2013, trang 94 - 95)
Self-actualization, as defined by A Maslow, represents the pinnacle of human needs, where individuals strive to enhance themselves and fully realize their potential in their areas of talent This highest level encompasses the desire for self-mastery, creativity, self-awareness, and problem-solving abilities, making it the most challenging need to fulfill Employees who have achieved respect often seek to express their creativity in their work and embrace more significant challenges, driven by an innate desire for continuous improvement and personal growth.
Self – actualization need Esteem need
To foster employee growth and competence, it is essential to acknowledge their safety and physiological needs By creating opportunities for talent development and skill enhancement, organizations can empower their workforce to confidently tackle work demands and embrace new challenges.
According to this theory, administrators should prioritize addressing employees' basic material needs before progressing to higher-level needs Since the hierarchy of needs among employees varies, a one-size-fits-all approach is ineffective Consequently, it is essential for administrators to identify and understand the specific hierarchy of needs for each individual in order to effectively meet their requirements.
In various countries, whether developed, developing, or underdeveloped, the hierarchy of managerial needs for motivation varies significantly As classified by the World Bank in 2010, there are 58 countries and territories categorized as having low average income, defined as earning between $876 and $3,465 per person per year.
Southeast Asia comprises five countries: Thailand, Indonesia, the Philippines, East Timor, and Vietnam Despite experiencing growth in income from 1,130 USD per person per year in 2010 to 2,385 USD in 2017, Vietnam remains among the nations with low average income, indicating a generally low standard of living Consequently, addressing physical and safety needs is crucial for employee satisfaction By prioritizing these foundational needs and ensuring a stable material life for employees, managers can then focus on fulfilling higher-level needs for overall well-being and productivity.
1.3.1.2 McClelland’s theory of three needs (1960)
David McClelland and others have laid out three major motivations or needs at work:
- Need for achievement (nAch): Motivation to excel, to achieve achievement in a range of standards, to strive for success
- Need for power (nPow): The need to make others behave in a way that if left free they will not behave like that
- Need for inclusion (nAff): The need to have friendly and close relationships between people
Research by McClelland on the need for achievement reveals that high achievers consistently strive for improvement and seek opportunities where they can take personal responsibility for problem-solving They value quick and clear feedback on their performance and set moderate goals These individuals prefer tackling challenging problems independently rather than allowing others to take charge, emphasizing their commitment to personal success.
The desire for power, often measured by high nPow scores, reflects an individual's ambition to influence and control others Those with this trait typically seek leadership roles, thrive in competitive environments, and prioritize status and prestige over effective outcomes Their focus on gaining influence often overshadows the importance of achieving operational success.
McClelland's third need, known as integration, emphasizes the importance of being loved and accepted by others Individuals with high need for affiliation (nAff) scores actively seek friendships, favor cooperative environments over competitive ones, and aim to cultivate relationships characterized by deep mutual understanding.
Extensive research indicates that a strong correlation exists between the need for achievement and work performance, enabling accurate predictions in this area While the need for power and the need for inclusion have been less extensively examined, consistent findings also emerge in these domains.
Individuals with high achievement needs are typically drawn to job environments that offer personal responsibility, constructive feedback, and moderate risk When these elements are prevalent, individuals with high achievement motivation experience a significant boost in their drive and performance.
Content of retaining employees
1.4.1 Determine the need of employees
Identifying employee needs involves assessing which needs are met, currently being satisfied, and unmet, based on their job roles and departments This understanding enables administrators to implement strategies that effectively retain employees by addressing their specific needs.
Regularly assessing employee needs is essential, as these needs are continually evolving Managers must stay attuned to these changes to effectively adjust retention policies, ensuring they are both appropriate and impactful.
The content of determining the needs of employees (Ngo Thi Tam, 2015, page 21):
- Bases for determining the needs of employees
Employees with professional qualifications often seek opportunities for advancement and are eager to enhance their skills through training This desire for self-improvement reflects their commitment to professional growth and development.
+ The attitude of the employee: It is reflected in whether or not the employee is satisfied with the job and the enterprise where they work
Employee personality plays a crucial role in workplace dynamics, with extroverted individuals typically seeking autonomy and opportunities for social interaction, while introverted employees often prefer stable and secure job environments Understanding these personality traits can help organizations tailor their work environments to meet the diverse needs of their workforce.
+ Other bases: Age, gender, family circumstances of employees etc
- Methods to determine the needs of employees
To effectively identify employee needs, organizations can utilize various methods including questionnaires, interviews, group discussions, and the analysis of existing data sources such as performance evaluation reports, personal achievement records, personnel profiles, departmental summary reports, and work diaries.
1.4.2 Retain employees with material tools
Salaries are predetermined amounts of money paid to employees, typically on a weekly, monthly, or yearly basis This form of compensation is commonly awarded to managers and professional or technical staff, serving as their primary source of income Salaries play a crucial role in helping employees support their daily lives and provide for their families.
Maslow's hierarchy of needs emphasizes that physiological needs are the most fundamental, highlighting that an employee's primary concern is earning a sufficient income to support themselves and their family Additionally, Herzberg's theory underscores the importance of salary in influencing employee motivation, as it not only reflects the value of their work but also signifies their worth and status within their family, organization, and society.
According to J Stacey Adams' equity theory, a fair salary system should align with employee contributions, ensuring that compensation reflects their efforts within the organization Salaries must adhere to established principles and be consistent with the organization's production and business conditions Overpaying employees can negatively impact productivity and overall business performance, while underpaying them can lead to decreased motivation and increased turnover.
In order to effectively pay the salary as a lever for labor motivation, it is necessary to ensure the basic requirements and principles in salaries as the following:
- Salary must ensure the reproduction of labor force;
- Salary must be satisfactory, fair and reasonable with labor effort Therefore, every enterprise needs to build a salary system and apply reasonable pay methods
A well-structured salary system is essential for motivating employees to enhance productivity, embrace innovation, and foster creativity in the workplace Businesses should focus on four key objectives when determining salaries: attracting new talent, retaining valuable employees, stimulating performance, and ensuring legal compliance To effectively motivate their workforce, companies must prioritize fairness in their wage structure, which positively impacts labor division in society and encourages a strong commitment to work.
As the modern market economy evolves, payment methods have become increasingly diverse and flexible; however, they fundamentally still fall into two primary categories.
Depending on each subject, the scope of application, the salary system and payment methods will be used appropriately
Equal wages contribute to higher job satisfaction and enhance organizational effectiveness Implementing varied salary levels serves as a crucial economic tool to align employee motivation with personal interests Conversely, if an organization neglects fair compensation and prioritizes profit, it risks exhausting its workforce, diminishing quality, and limiting production capabilities This often leads to the departure of skilled employees in search of better-paying opportunities.
In any organization, salary is a critical concern that significantly motivates employees to enhance their knowledge and skills Establishing an effective salary policy is essential for maintaining a productive workforce, as it not only supports the replenishment of labor resources but also encourages employees to boost their productivity, quality of work, and creativity.
Bonuses serve as a one-time financial incentive, typically awarded at the end of a quarter or year, to reward employees for their job performance They can also be granted unexpectedly to acknowledge exceptional accomplishments, such as completing projects ahead of schedule, adhering to budget constraints, or introducing valuable innovations.
Bonuses serve as a motivational tool that encourages employees to enhance their job performance Organizations can implement various types of bonuses, including productivity and quality bonuses, savings bonuses, initiative rewards, and incentives based on overall organizational performance Additionally, rewards can be given for activities that boost the organization's benefits or reputation, fostering a culture of excellence and engagement among employees.
Bonus calculation methods differ, typically including productivity and quality bonuses, savings bonuses, initiative rewards, and incentives for employees who attract new customers These bonuses are often based on the percentage of benefits employees contribute to the organization Senior management usually establishes the reward structures and communicates them to employees to encourage improved performance.
Experience on retaining employees in SMEs
1.5.1 Experience of L&A (Le&Associates – specializes in providing manpower solutions for businesses)
L & A, a prominent member of L & A Holdings, has established itself as a leading provider of human resources services and outsourcing in Vietnam since its inception in 2001 With 18 years of consistent growth driven by customer trust, L & A has earned a strong reputation by delivering effective solutions tailored to meet the diverse human resource management needs of businesses, thereby supporting their development strategies and enhancing L & A's own growth.
L&A management emphasizes the importance of having employees work in their areas of expertise to foster a sense of contribution to the company Additionally, retaining personnel with leadership qualities is crucial, as they serve as a cohesive force that unites and motivates other talented employees.
Secondly, the Director attracted employees with sincere personality because of the Company, had a clear vision and allowed employees to see promotion opportunities at L&A
Thirdly, use a portion of bonuses for employees instead of salary increases Because that motivates employees to be more productive, helping create greater profits for the Company
To enhance employee retention, it is essential to transform the company's culture by allowing more flexible work arrangements Traditionally, the company mandated strict office hours; however, recognizing the unique needs of media professionals, the Board of Directors has implemented a more adaptable work environment, enabling employees to balance their responsibilities while maintaining productivity.
1.5.2 Experience of United education Joint Stock Company
United Education Joint Stock Company (UE) stands out as a premier provider of study abroad consulting services in Vietnam, renowned for its team of experienced professionals With a strong track record of effective operations and a commitment to excellence, UE has earned the trust of parents, students, and clients alike over the years.
UE management emphasizes that leaders should refrain from engaging in detailed tasks and instead delegate responsibilities to key personnel Additionally, it is crucial to always have prepared successors to prevent the emergence of "star disease."
High-wage employees often leave their jobs not solely for work-related reasons but also due to personal or spiritual matters Despite retaining a significant number of high-paid talents, companies may face turnover as these employees feel envious of the attention given to new hires by the Board of Directors.
Effective communication between company leaders and employees is essential to understand mutual needs and obligations during the employee training process After employees complete their studies, they are expected to transfer the acquired technology back to the company Once this transfer is finalized and the employees leave, the company can recoup its investment.
The Company has streamlined its measurement system and assessed employee performance based on specific assignments and clear criteria This approach minimizes workplace pressure and stress, fostering an environment that enables employees to excel in their roles.
1.5.3 Lessons learned for Impac Corporation
Le&Associates and United Education Joint Stock Company are small businesses similar to Impac, emphasizing the necessity for resilience in small and medium enterprises Employees in these organizations must possess exceptional problem-solving skills, systematic thinking, the ability to multitask, and a commitment to continuous improvement.
Small and medium enterprises often struggle to retain valuable employees due to limited financial resources, making it challenging to offer cash bonuses or stock options However, lessons from successful strategies can be applied to retain employees at Impac Corporation, focusing on non-monetary incentives and fostering a positive work environment.
- HRM should be separated, the director should not concurrently hold that job to maintain fairness in evaluating employees
To retain talented employees during financial challenges, companies must focus on continuous growth and clearly communicate the potential for individual development within the organization.
The effectiveness of a company's director in attracting talent is evident, yet employee retention remains a separate challenge Interestingly, the turnover rate of employees departing from a company is often lower than the number of directors who leave their positions.
Employee motivation can stem from both material and spiritual factors While competitive salaries and training are important, many employees still choose to leave their positions, highlighting that job satisfaction is not solely dependent on financial rewards Understanding the deeper motivations behind employee retention is crucial for fostering a committed workforce.
Research design
The article analyzes employee retention at Impac Corporation through the lens of motivational theories, particularly focusing on F Herzberg's two-factor theory from 1959 It identifies eight key factors influencing employee retention, which are illustrated in Figure 1.4 and detailed in Table 1.1.
(Source: proposed by the author)
Table 1.1 Detailed description of the factors affecting staff retention at Impac
Corporation Research variables Description variables
Salary ensure the life of you and your family The salary payment method applied by the Company is reasonable and fair
The company considers to increase the salary properly according to regulations
Conditions for considering salary increase are appropriate
Reasonable bonus, which encourages you to work Company gives fair evaluation and reward Rewarded employees are appropriate
Company rewarded in a timely manner
Welfare policy for employees is diverse and abundant Welfare policy expresses the Company's concern to employees Employees are satisfied with the welfare regimes of the Company
Job performance assessment Training and promotion opportunity
(Source: synthetized by the author) 1.6.2 Designing questionaire
The survey method is a simultaneous written interview technique that involves multiple participants responding to a printed questionnaire Participants express their opinions by checking the appropriate boxes in accordance with established conventions.
The working environment in the Company is very friendly and united The company has good cultural values and philosophy
Communication between departments is very good Employees are provided with adequate and satisfactory equipment The company always has a clever and delicate discipline policy
Current work is suitable for the capacity and expertise of the staff The current assigned work required a clear and reasonable responsibility
Employees are proactive in their work The assigned work is challenging and interesting
Jobs assigned are stable and long-term The company operates stably and effectively
Assessment criteria are full and reasonable Assessment method is appropriate
The assessment results are fair and reflect the results of the work
Employees are fully trained with the necessary skills to perform their jobs
The company prioritizes employee development by offering training programs tailored to enhance professional knowledge and skills, ensuring that these initiatives align with the abilities of its workforce.
The company creates promotion opportunities for capable people and employees know the conditions needed to develop at work
Traning and promotion opportunities are fair to everyone
Based on the theoretical basis presented above and consulted with the instructor, complete questionnaires are designed with 2 main parts:
Part 1: In order to collect general information about participants of the survey, including name, age, gender, education specification, working time and department Part 2: Content of the survey, aimed at reviewing and evaluating staff retention at Impac Corporation The survey questions all use the Likert five point scale (1 is completely disagree and 5 is fully agree) and the design of the survey question consists of 8 elements (Salary; Bonus; Benefit; Working environment and conditions; Job assignment; Job stability; Assessment of work performance, Training and promotion opportunities) are described in 30 questions (details are in Annex 1.1 - Survey questionnaire for employees of Impac Corporation)
1.6.4.1 Methods of collecting secondary data
This thesis analyzes data gathered from internal documents, reports, and information from Impac Corporation between 2015 and 2017, as well as external sources including central ministries, published materials such as textbooks, articles, magazines, and dissertations.
The research employs an indirect method for information collection, avoiding direct contact with survey subjects The author reviews numerous references to identify overlooked issues, which shapes the overall research direction This approach is applied to the development of employee retention strategies at Impac Corporation, drawing on established theories from other authors Consequently, the employee retention content discussed for Impac Corporation is grounded in a robust theoretical framework, tailored to the unique aspects of the investment sector and the provision of medical equipment technology transfer.
1.6.4.2 Methods of collecting primary data
Overall sample of the research process: All employees have been working at Impac Corporation for the period of 2015 - 2017
Sampling method: The author uses the random probability sampling method
Sample size: Due to the current number of employees of the Company is 22 people and according to the number of storage statistics of the Company, in the period
Between 2015 and 2017, a total of 16 individuals departed from the Company for various reasons, resulting in a limited research sample of only 38 participants Consequently, the author will focus on this sample size of 38 individuals for the investigation.
Sample standard: is employees who have been working at Impac Corporation for the period of 2015 - 2017
Based on the 38 samples of the survey and the official questionnaire has been completed, the author collects specific data as follows:
The survey questionnaire was printed and distributed directly to respondents, who promptly returned their completed forms Additionally, two former employees of Impac Corporation, now working for different companies in Ho Chi Minh City, participated in the survey through email and phone exchanges.
Duration is from 8/2018 to October 15, 2018
The total number of votes issued is 38 votes
The author gathered a total of 38 valid votes through direct interactions with employees who worked at Impac Corporation from 2015 to 2017, aiming to investigate, guide, and collect their insights.
1.6.5 Methods of processing and analyzing data
Analytical method is to study different documents, reasoning materials about retaining employees and then analyzing them into each part, each face by time to understand them fully and comprehensively
The synthesis method involves connecting various pieces of information from existing theories to develop a comprehensive framework for employee retention This approach not only aids in creating a cohesive theory but also provides the author with a broader understanding of the available literature on retaining employees within organizations.
The statistical method encompasses various techniques for collecting, synthesizing, and presenting data related to employee retention at Impac Corporation This system aids in the analysis, planning, and decision-making processes by transforming collected data into generalized insights for evaluation and conclusions.
The comparison method is an analytical approach that evaluates criteria by contrasting data with a baseline indicator This technique aims to derive specific metrics related to value, volume, and growth rate of research topics over a defined analysis period Additionally, it facilitates the synthesis of survey findings to present comprehensive research outcomes.
Chapter 1 presents the most basic theoretical issues about retaining employees At the same time, chapter 1 also points out that factors affecting employee retention can be divided into two groups of factors, namely: Factors belonging to enterprises and factors belonging to employees
Employee retention content has also been mentioned, including:
(1) Determining the needs of employees;
(2) Retaining employees with material tools such as salaries, bonuses and benefits;
(3) Retaining employees with mental tools such as: working environment and conditions, Job assignment, Job stability, Assessment of work performance, Training and promotion opportunities
The author delves into the presentation of data collection and processing methods for retention of employees at Impac Corporation
The author presents a research model proposal and identifies key factors influencing employee retention at Impac Corporation This is achieved through a survey conducted with 38 employees, utilizing a structured questionnaire The collected data is analyzed and processed using Excel software to derive meaningful insights.
CURRENT SITUATION OF EMPLOYEE RETENTION AT
General overview of Impac Corporation
2.1.1 Process of formation and development of the Company
Head office: Room 1905, 19th Floor, Charmvit Tower, No 117 Tran Duy Hung Street, Trung Hoa ward, Cau Giay District – Hanoi, Vietnam
IMPAC CORPORATION, founded on September 20, 2007, commenced operations on March 1, 2008, as a result of an initiative by students from the Master of Business Administration Program at IMPAC University in the USA.
IMPAC aims to be a leading company in investment and technology transfer across various sectors, including medical, environmental equipment, science and technology, and information technology By fostering a work environment that encourages creativity, IMPAC seeks to generate new value and make significant contributions to both shareholders and the community.
2.1.2 Organizational structure of the Company
The Company employs an online functional structure model for its organizational framework, ensuring direct management relationships with no overlap between stages Each department has distinct functions and responsibilities while maintaining close interdepartmental collaboration, all aimed at achieving the Company's overarching goals.
The General Director of the Company holds the highest decision-making authority and serves as the legal representative of the organization This role encompasses the management of all business activities in compliance with company regulations and labor laws Additionally, the General Director is responsible for providing regular updates on the company's business status to all employees.
- Deputy General Director: is the person who assists the General Director in the business process of the Company
- Office block includes functional departments:
The Human Resources Department serves as a consulting and support office for the General Director, overseeing the company's organization, personnel management, administrative functions, legal compliance, and public relations activities It holds accountability to the General Director for executing these responsibilities within its designated tasks and authority.
The Department of Finance - Accounting serves as the advisory division that supports the General Director in organizing accounting operations and ensuring compliance with legal accounting standards It is responsible for compiling internal management reports and submitting them to relevant state agencies as per assigned functions and tasks The department holds accountability before the law and the General Director for its activities, adhering to established legal provisions and its designated authority.
Deputy General Director Deputy General Director
Admin Division Project Division Sales Division
- Project Division includes functional departments:
The Project Department plays a crucial role in marketing and securing job opportunities for the Company by preparing bidding documents for various projects Its focus on investment in project development, along with effective management and exploitation of these projects, ensures high efficiency and aligns with the Company's development objectives.
The Technical Department plays a crucial role in advising the General Director on technical standards, technological advancements, and product quality It is responsible for designing and implementing technical supervision of products, which serves as a foundation for accounting, bidding, and signing economic contracts Additionally, the department collaborates with the Maintenance Department to oversee and verify the quality and quantity of goods and materials during purchasing and exporting processes, ensuring thorough checks and supervision of product quality.
The Maintenance Department is responsible for ensuring the upkeep of machinery and equipment in line with company regulations This includes repairing according to the specific technical processes for each product code and advising the General Director on maintenance strategies Additionally, the department develops and executes equipment maintenance plans, calibrates and controls measuring devices, and prepares and manages maintenance budgets effectively.
- Business Division includes functional departments:
The Market Development Department serves as a key advisory and support entity for the General Director, focusing on market functions to enhance marketing and development initiatives across the Company Its responsibilities include organizing communication and brand promotion, managing and evaluating service quality, addressing customer feedback, and overseeing the preparation and monitoring of economic contracts Additionally, the department guides the inspection and supervision of decentralized economic contract implementations for various units.
The Customer Service Department diligently records and summarizes customer complaints, conducts cause analysis, implements preventive actions, and monitors the execution of these processes It establishes accessible information channels for customers to easily obtain details about the company, product features, pricing, and payment methods, while conducting annual reviews to evaluate the effectiveness of these channels Additionally, the department collaborates with the Market Development Department to execute promotional programs, organizes customer visits and gift distributions, and oversees the product warranty plan, ensuring satisfaction through regular checks on warranty operations, repairs, and maintenance activities.
Table 2.1 Business records of the Company in the period of 2015-2017
(%) Revenue 18.429.053 19.614.864 20.853.652 1.185.811 6,43 1.238.788 6,32 Cost of goods 17.562.356 18.601.827 19.739.617 1.039.471 5,92 1.137.790 6,12 Gross profit 866.697 1.013.037 1.114.035 146.340 16,88 100.998 9,97 Selling expenses and general and adminstrative expenses
Profit before taxes 401.808 436.742 490.287 34.934 8,69 53.545 12,26 Taxes to the state budget 100.452 109.186 122.572 8.734 8,69 13.386 12,26 Profit after taxes 301.356 327.557 367.715 26.201 8,69 40.159 12,26
(Source: Impac Corporation) 2.1.3 Characteristics of business activities and manpower of the company
2.1.3.1 Characteristics of business activities of the Company
Impac aims to establish itself as a leading multidisciplinary company in Vietnam, specializing in the investment and technology transfer of medical equipment, environmental solutions, and information technology The company's business performance has shown remarkable growth over the years, particularly between 2016 and 2017, which outpaced the previous period of 2015 to 2016 This significant upward trend highlights Impac's rapid development and positions the company for a strong presence in the national market.
2.1.3.2 Characteristics of manpower of the Company
The total number of Impac's average employees increased over the years, the average number of employees in 2017 of the Company was 22 people, increased by
3 people compared to 2015, equivalent to 15.79% Specifically:
Table 2.2 Labor situation of the Company in the period of 2015-2017
Growth compare to the previous year 1 5,26 2 10,00
3 Structure according to professional qualifications
Structure according to professional qualifications
Impac's workforce composition has remained relatively stable over the years, with a predominant male presence due to the nature of the business, which requires extensive communication and mobility to engage with clients Female employees consistently represent approximately 42-45% of the total workforce, primarily occupying roles that demand attributes such as grace, attention to detail, and skill, including positions in reception and customer service.
Impac's workforce primarily consists of employees under 30 years old, with a significant portion aged 30 to 45 This demographic trend is typical of newly established private enterprises The youthful labor force at Impac is a key advantage in the service sector, where a dynamic, enthusiastic, and passionate team is essential to meet customer needs effectively.
2017, Impac's employees aged under 30 to 45 are always at a high level, from 85% or more of the total number of employees in the Company
The staff at Impac predominantly hold university degrees, a trend typical of non-manufacturing enterprises, with a consistently stable qualification rate over the years While most employees possess similar educational backgrounds, a small number remain at the intermediate level Currently, employees are actively pursuing further education and professional development to better meet customer needs, resulting in an annual increase in the number of graduates with higher education qualifications.
Analysis of employee retention status at Impac Corporation
2.2.1 Current situation of determining the needs of employees at the Company
In recent years, the Company has lacked a systematic approach to identifying employee needs, relying instead on leaders' experiences and informal interactions, which has resulted in inaccurate and ineffective evaluations Additionally, the absence of dedicated communication channels, such as a company message board or comment boxes, further hampers the ability to gather employee feedback effectively.
To effectively understand and address the needs and aspirations of employees, the Company must prioritize the identification of laborer requirements, as indirect dialogue channels for communication are currently underutilized.
2.2.2 Status of retaining employees with material tools
Impac Company has established regulations for managing and distributing wages based on the principle of compensating employees for their completed work Salaries are determined according to the achievement level of the business plan, which dictates the monthly, quarterly, and yearly salary funds allocated for distribution.
V tql = V đg + V tldvkh +V bs + V dpnt
The salary fund is determined based on a unit price, which will be adjusted in accordance with the profit plan This adjustment can lead to increases or decreases in the salary fund when revenue exceeds the plan by 20% or more.
- Vtldvkh: Salary funds from other services which are not included in the unit price
- Vbs: Additional salary fund (salary paid for vacations, allowances, holidays, Tet holiday, meetings, study, break of female labor regime, )
- Vdpnt: Reserve fund of the previous year transferred to the following year
Salary funds are determined on the basis of other business revenues and include 2 parts:
- Basic salary fund: Calculated based on the minimum salary set by the State, salary coefficient including allowances (if any) and actual working days
The additional salary fund is determined by the increased minimum salary, reflecting enhanced productivity and the achievement of planned targets This calculation considers the salary coefficient, including any allowances, as well as the actual number of working days.
+ Additional minimum salary is adjusted according to the level of completion of the plan + Salary allowances include: Position and responsibility allowances
+ Overtime allowance: Overtime on weekdays, on weekends, overtime on holidays, overtime pay by 150%, 200% and 300% of the hourly regular payment
+ Responsibility allowance equal to 0.05 minimum salary set by the State
+ Dangerous toxic allowance: According to the Circular No 04/2005 / TT- BLĐTBXH dated January 5, 2005 of the Ministry of Labor, War Invalids and Social Welfare
Employee salaries are influenced by business performance, pricing strategies, and the salary budgets established by the company Ultimately, employee compensation is derived from these factors.
The salary of each employee is calculated as follows
TLi: Monthly salary of the employee i
Lcb: Basic salary and is determined as follows: Lcb = (M + Pat) x Ntt
M: Minimum salary of the employee i
Pat: Lunch allowance of the employee i
Ntt: Number of actual working days for the employee i
P: pensions and other allowances (if any) of the employee i (such as responsibility allowances, telephone allowances, )
Ti: Bonus of the employee i (if any)
LTg: Overtime payment (if any) If arranging for the employee to leave in return for compensations, the Company shall not make this payment
Principle for calculating the number of working days:
- Departments arrange for employees to take enough leave during the year, for laborers working in shifts, they shall have to make full compensations for holidays as prescribed
- Public holidays of any month will be paid in that month
- For overtime work, departments arrange for employees to leave for compensations
In special cases, no compensatory leave can be arranged, make payment of overtime pay to employees
Salaries are calculated based on the actual number of working days in a month and should not exceed the established working day limit, except in special circumstances involving unpaid overtime.
The company prioritizes transparent and satisfactory salary payments to motivate employees, fostering job loyalty and enhancing task fulfillment.
Table 2.3 Payroll of employees at the Company in December 2017 (quoted)
No Name Position Basic salary
Social Insurance 8%, Health Insurance 1,5%, unemploymen t insurance 1%
The survey results indicate that the average value (AV) of salary factors is relatively low, as shown in Table 2.4 While 78.95% of employees express satisfaction with the company's adherence to salary increase regulations, reflected in an AV of 3.55, a significant 44.74% remain dissatisfied with the criteria for salary increases, resulting in a low AV of 2.89 Additionally, the state's salary scale is inadequate, with 42.11% of employees feeling unable to support themselves and their families, leading to an AV of only 3.08 for this criterion Furthermore, half of the employees perceive the salary payment system at the company as unfair.
The company's average value (AV) is notably low at 2.74, primarily due to the uniform salary calculation method applied to all employees, resulting in an average salary distribution To enhance efficiency and boost employee motivation, the Board of Directors should evaluate and revise this approach.
Table 2.4 Results of employee survey on salary of the Company
No Survey questions about salary
1 Salary ensure the life of you and your family 7,89 34,21 10,5
The salary payment method applied by the Company is reasonable and fair
The company considers to increase the salary properly according to regulations
4 Conditions for considering salary increases are appropriate 18,42 26,32 18,4
(Source: synthetized by the author) 2.2.2.2 Bonuses tool to create enthusiasm for employees Currently, Impac Corporation is applying the following bonus forms:
- Rewards for departments and individuals with outstanding achievements such as completing outstanding jobs, having achievements in their work etc
Employees who demonstrate initiative in enhancing work efficiency, achieving cost savings, and contributing to the company's development are eligible for rewards The Board of Directors will determine the specific reward amount, ranging from VND 500,000 to VND 2,000,000 per instance, based on the effectiveness of the initiative and its contribution to the company.
- Rewards on the occasion of holidays May 1st , September 2nd and New Year holidays (VND 500,000 / person); Lunar New Year (VND 2,500,000 / person - VND 3,500,000 / person)
Table 2.5 Total paid bonuses of the Company in the period of 2015 - 2017
No Year Total paid bonuses (Million
Over the years, the Company's total bonuses have seen an increase (refer to Table 2.5) While rewards are based on the performance of individual staff members, the evaluation process currently emphasizes a "peace and harmony" approach, lacking a thorough assessment of each employee's actual work results.
Table 2.6 Results of staff survey on bonuses of the Company N
O Survey questions about bonus Result (%)
1 Reasonable bonus, which encourages you to work 10,53 31,58 2,63 47,37 7,89 3,11
2 Company gives fair evaluation and reward 5,26 36,84 5,26 44,74 7,89 3,13
4 Company rewarded in a timely manner 26,32 52,63 13,16 5,26 2,63 2,05
(Source: synthetized by the author)
A survey revealed that 68.42% of employees believe the rewarded individuals are appropriately chosen, with an average score of 3.26 Additionally, 52.63% find their annual bonuses fair, while 57.89% consider them acceptable, resulting in an average score of 3.13 However, 42.11% of employees disagree with the evaluation and reward levels, reflected in an average score of 3.11 This discontent stems from the absence of a dedicated bonus fund, as annual bonuses are based on yearly performance, leading to delayed recognition of achievements Consequently, the average score for timely rewards is notably low at 2.05, aligning with B F Skinner's theory, which suggests that such delays can diminish employee motivation.
The Company has implemented specific policies and targets to reward individual employees and departments that achieve or exceed their goals However, the current bonus distribution remains average and lacks a timely and specialized reward system, which limits the diversification of employee motivation Consequently, the attractiveness of the reward structure is low, resulting in a restricted ability to motivate and retain employees effectively.
Impac Corporation adheres to a comprehensive welfare regime that complies with regulations on social insurance, health insurance, unemployment insurance, and various holidays and allowances Employees receive full pay during significant holidays, including Hung King's Commemoration Day, Liberation Day of the South, International Labor Day, National Day, New Year, and Lunar New Year.
Analysis of factors effecting employee retention
2.3.1 Factors belong to the business
At our Company, maintaining constant communication with customers is essential, making the attitude of our employees a top priority A positive and welcoming demeanor not only enhances customer comfort but also fosters excellent service, ultimately attracting more clients to our business.
The company's subpar working conditions, environment, and corporate culture negatively affect organizational management To effectively implement human resource management policies, it is essential to foster a positive cultural atmosphere and create suitable working conditions that engage employees.
The Company's Board of Directors actively monitors employee performance; however, their reliance on outdated management practices has led to a lack of structured labor management This inconsistency has adversely impacted the overall working style and management effectiveness within the organization.
- Organization's human resource management activities:
The Company assigns reasonable and engaging work that most employees find satisfying and challenging Responsibilities are clearly defined and aligned with each employee's skills and expertise While the Company values employee training, it primarily provides time for learning without reducing workloads or offering substantial support for educational expenses.
The Company faces significant labor fluctuations, with a high percentage of employees having less than one year of experience This situation contributes to psychological instability and concerns among staff, which undermines their confidence in the Company To address this issue, it is crucial for the Company to focus on fostering trust among employees, ensuring they feel secure and motivated to contribute fully to the organization.
Employees universally seek high salaries, job stability, and opportunities for advancement However, at Impac Company, the lack of focus on promotions, coupled with the demands of a large-scale business environment, results in employees remaining in the same positions for extended periods This stagnation, combined with the burden of managing multiple responsibilities simultaneously, creates significant pressure and contributes to a decline in employee morale.
At our company, we prioritize the motivation of our highly qualified employees, as their complex needs require careful attention Failing to address these demands appropriately can result in decreased morale and a negative psychological impact on our workforce.
Impac Corporation employs a workforce primarily composed of college and university graduates who are committed to ongoing improvement to meet customer demands However, the majority of employees have less than one year of experience, attributed to a high annual turnover rate that results in a persistent staffing shortage This situation negatively impacts the overall capability and experience of the workforce, while also driving up human resource costs due to the need for frequent recruitment.
Overal assessment of the status of retaining employees at Impac Corporation69 1 Achieved results
Impac Corporation has effectively implemented motivational tools to enhance employee retention and performance The Board of Directors is committed to fully executing policies that create a supportive work environment, enabling employees to excel in their roles and secure stable incomes The positive outcomes of these efforts are detailed below.
The company enhances employee income through various financial incentives, including competitive salaries, year-end bonuses, holiday bonuses, and rewards for individual and team achievements Additionally, the company prioritizes comprehensive benefits such as lunch and tuition allowances, as well as social, health, unemployment, and maternity insurance These benefits not only boost employees' overall earnings but also demonstrate the company's commitment to their well-being and job satisfaction, fostering a motivated and dedicated workforce.
The company is committed to providing comfortable and safe working conditions that fully address employee needs By equipping the workplace with advanced machinery and management tools, employees are empowered to perform at their best This approach not only fosters the development of their skills and capabilities but also enhances overall quality and productivity.
The Company prioritizes the assessment and evaluation of employee performance to enhance their skills and expertise This process serves as a foundation for salary determination, rewards, and recognition, while also aligning with the Company's overall objectives.
The Company conducts regular training sessions that engage numerous employees, providing them with opportunities to enhance their qualifications through seminars, conferences, and capacity-building programs This initiative not only equips employees with new knowledge and practical applications for their work but also fosters an environment where they can showcase their talents, ultimately leading to improved work efficiency.
Employees at the Company have ample opportunities for promotion, which not only enhances their work capacity but also fosters motivation and encourages them to contribute innovative ideas.
In addition to the outstanding results achieved in retaining employees, the Company also has limitations that need to be overcome to further improve this work, namely:
Employee wages are often viewed as equal, leading to dissatisfaction among those who contribute more significantly to the company While some employees merely meet basic task requirements and achieve a standard labor productivity coefficient, others take on more complex responsibilities and deliver greater value, yet their compensation remains largely unchanged This disparity has led many employees to feel that the company's salary payment method is inadequate and does not accurately reflect their work performance or the true value of their labor.
The company implements various bonus systems to enhance employee income and foster enthusiasm, ultimately driving strong motivation However, many employees perceive a disconnect between their performance results and the corresponding rewards and recognition Additionally, delays in acknowledging achievements diminish the motivational impact of these rewards.
The social welfare policy at the company in Hanoi is ineffective due to the high cost of living in the city Employees are preoccupied with their financial concerns, which hinders their ability to concentrate on their work and ultimately affects productivity and efficiency.
Many employees feel that their current roles do not align with their professional qualifications and career aspirations, leading to unreasonable work assignments Additionally, the necessity to juggle multiple responsibilities hampers their ability to express enthusiasm and creativity, resulting in increased psychological pressure during their work.
Many employees lack confidence in the Company's stability, leading to concerns about their long-term prospects within the organization This skepticism hampers their belief in the Company's future, affecting overall morale and productivity.
Limited workplace facilities result in cramped working conditions for employees, restricting their ability to perform tasks efficiently Additionally, outdated machinery and management tools contribute to decreased operational effectiveness, highlighting the need for modernized resources to enhance productivity.
The evaluation of employee performance at the Company faces significant limitations, including inadequate criteria and assessment methods that fail to accurately reflect work outcomes Additionally, the process does not incorporate staff feedback, relying solely on the judgments of managers or direct supervisors This approach undermines the accuracy and fairness of the assessment results.
The company has provided employees with additional time for training but has not decreased their workload during this period Furthermore, the allocated training budget only partially addresses the learning requirements necessary for their roles.
Promotion opportunities for employees often lack fairness, as many well-qualified individuals who have received thorough training still find themselves unable to advance in their careers Despite achieving excellent results, these employees may not receive the recognition or rewards they deserve, prompting them to leave the company in search of better opportunities.