THEORETICAL BASIS ON RETAINING EMPLOYEES IN
Concept and role of retaining employees in enterprises
Employee retention is a vital organizational strategy that fosters a long-term commitment from staff As noted by Chaminade (2007), building a strong connection between employees and the organization is essential, achieved through shared values and by addressing employees' needs effectively.
Retaining employees is crucial for businesses to maintain productivity and service quality, as losing qualified staff can negatively impact operations Effective retention strategies enable senior management to attract and keep skilled, high-performing employees By equipping managers with essential information on employee retention, organizations can align their workforce with their goals and objectives, fostering a more productive work environment.
Developing a retention strategy is essential for aligning organizational needs with employee satisfaction, fostering a dependable relationship where staff remain due to personal choice and respect for their decisions Retaining skilled employees is crucial for the organization's success, necessitating the implementation of policies that encourage talent retention by offering opportunities for skill demonstration and ensuring job fit.
Nyoka (2006) emphasizes the importance of retention policies that support a work-life balance for employees By implementing family-friendly policies and offering flexible work arrangements, organizations can better address the personal needs of their workforce.
An effective on-site maintenance policy enables managers to maintain a manageable workforce, which is essential for attracting quality staff To safeguard their investments in talent, organizations must implement strategies to retain skilled employees Retaining talent has become increasingly crucial for managers due to a shortage of skilled labor, economic growth, and rising retirement rates among employees.
Retaining employees 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 employee retention Brown (2006) further supports this by advocating for training, career development opportunities, and adaptable reward systems The goal of these retention strategies is to keep skilled employees within the organization, as their departure can be costly and burdensome for employers High turnover rates, particularly among retirees, pose significant challenges for human resource managers and require ongoing recruitment and training efforts.
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 substantial revenue growth for businesses.
Loyal employees contribute to long-term stability within a company, often turning down competitive job offers and refraining from job hunting Their positive endorsements of the workplace enhance the company’s reputation, ultimately helping businesses save on the 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 aim is to direct its activities and employee workflows while ensuring a balance between organizational benefits and employee interests It focuses on establishing a comprehensive human resource development strategy that encompasses policies for attracting, utilizing, and treating employees effectively.
Leadership methods refer to the strategic approach leaders use to intentionally influence employees and resources to meet management objectives These methods play a crucial role in motivating staff, enhancing creativity, and unlocking the potential within the organization, as well as leveraging external opportunities.
- 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 like salary, bonuses, allowances, and welfare benefits, as well as spiritual motivators such as job satisfaction, a positive 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 are crucial for attracting and retaining talent, as salary and social insurance are necessary conditions for employee satisfaction Meanwhile, a well-structured bonus policy serves as a significant motivator for enhancing employee performance For many individuals, a fair salary and comprehensive social insurance also play a vital role in driving their commitment to completing assigned tasks.
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 and superiors To foster productivity, it is essential that proper working conditions prioritize employee comfort and focus, while also ensuring that material resources are convenient and accessible for effective job performance.
Organizational culture encompasses the shared values and norms acknowledged by all employees, shaping their behavior both internally and externally A strong organizational culture not only influences employee actions but also attracts talent and fosters creativity To enhance motivation and drive success, it is essential to establish and sustain a robust culture within the organization.
+ Ability to promote at work
Career advancement is a crucial aspect of professional growth, highlighting the desire for recognition within an organization A proactive employee consistently seeks opportunities for career development, demonstrating a commitment to progress Thus, providing supportive training and work environments is essential to motivate and encourage employees in their pursuit of promotion.
Work encompasses all tasks undertaken by an employee or a group of employees, as defined by Nguyen Van Diem and Nguyen Ngoc Quan (2007) Essential requirements for work include knowledge, skills, education, and experience The establishment of work arises from the allocation of labor within an organization.
In any organization, tasks vary in complexity, necessitating a workforce with diverse skills As work complexity increases, the demand for skilled employees rises, influencing their roles, salaries, job satisfaction, and attitudes Additionally, job stability plays a crucial role in enhancing the experience and productivity of employees 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, training, and performance evaluation These processes are essential for assessing employee capabilities and achievements, leading to informed personnel decisions Proper execution of these activities significantly influences employee morale and is vital for organizational stability and growth As human resources are a critical asset, effective management in this area is key to organizational success, enhancing employee motivation and overall productivity.
- Personal’s goal (Nguyen Van Diem and Nguyen Ngoc Quan, 2007, page 128)
Employee motivation is driven by the desire to achieve goals, with higher goals requiring greater personal effort Consequently, as the ambition of the goal increases, so does individual motivation to succeed.
To foster organizational development, it's crucial that individual employee goals align with the overarching objectives of the organization Administrators should identify and integrate the personal aspirations of employees with the company's goals to ensure cohesive progress and mutual success.
- Needs and motives of employees (Nguyen Van Diem and Nguyen Ngoc Quan,
In 2007, it was noted that employee behavior is influenced by their needs, leading to two pathways of satisfaction and dissatisfaction within an organization Dissatisfaction can arise from factors such as organizational policies, inadequate supervision, unsatisfactory working conditions, unfair salaries, and interpersonal conflicts Conversely, satisfaction stems from achieving desired results, receiving recognition from the organization and peers, taking on responsibilities, and opportunities for promotion To foster a positive work environment, it is essential to address both maintenance and promotion factors that satisfy 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 boosts their confidence and engagement Conversely, a lack of qualifications can lead to discouragement and hinder their performance in the workplace.
Seniority and work experience are crucial factors influencing labor remuneration and job arrangements, reflecting the duration of employees' tenure in their roles Generally, as seniority and experience increase, employees tend to demand higher salaries, while lower levels of these factors may lead to reduced salary expectations.
Theories of working motivation to retain employees
1.3.1 Theories about needs 1.3.1.1 Abraham Maslow’s hierarchical doctrine of demand (1943)
Abraham Maslow proposed that human behavior is driven by a hierarchy of needs, which are prioritized from low to high When individuals fulfill their lower-level needs, they become motivated to address higher-level needs This cycle continues as satisfying one need leads to the emergence of another, ensuring that people are perpetually driven by unmet needs that motivate their actions.
Basic needs, also known as physiological needs, are essential for sustaining human life, including food, clothing, drinking water, and housing According to A Maslow, when these fundamental needs are unmet, individuals are not motivated to pursue higher-level needs In an organizational context, it is crucial for employees to receive adequate compensation to support themselves and their dependents, thereby ensuring their minimum living standards and overall survival.
Employees prioritize safety in the workplace to avoid potential hazards and job insecurity, as they seek stable employment and protection of their assets Organizational leaders also emphasize the importance of health and safety, fostering a secure work environment Assurance of safety needs is reflected through favorable working conditions, comprehensive labor contracts, and robust policies on social and unemployment insurance, health care, and retirement plans.
Social needs encompass the desire for friendship, love, family affection, and social integration Individuals with strong social needs thrive in collaborative environments and seek positive relationships with colleagues and superiors In organizations, these needs manifest through employees' expectations for teamwork and participation in group activities To fulfill these social needs, administrators should foster a culture of cooperation and encourage involvement in collective activities such as sports, arts, and picnics.
According to A Maslow, self-esteem needs arise when individuals seek acceptance within society, leading them to desire both self-respect and respect from others Those with heightened respect needs often strive to enhance their skills for success, which manifests in their expectations for rewards, bonuses, promotions, and admiration from colleagues This need fosters a sense of 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 described by A Maslow, represents the highest level of human need, emphasizing the importance of personal growth and the development of one's full potential This need is characterized by individuals who master themselves, possess creativity, exhibit high self-awareness, and effectively solve problems Meeting this need is challenging, yet employees who feel respected are motivated to express their creativity and take on more complex challenges Ultimately, individuals strive for continuous improvement and self-betterment in their professional lives.
Self – actualization need Esteem need
To foster employee growth and competence, it is essential to acknowledge their 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 material needs before progressing to higher-level needs, as the hierarchy of employee needs within an organization varies Consequently, it is essential for administrators to identify the specific hierarchy of needs for each individual in order to effectively meet their requirements.
In various countries, the hierarchy of managerial needs for motivation varies significantly based on their economic development status—whether developed, developing, or underdeveloped According to the World Bank's classification in 2010, there are 58 countries and territories categorized as having low average income, ranging from $876 to $3,465 per person per year.
Southeast Asia comprises five countries: Thailand, Indonesia, the Philippines, East Timor, and Vietnam Despite an increase in Vietnam's income from 1,130 USD per person per year in 2010 to 2,385 USD in 2017, it remains classified as a low-income country, leading to generally low living standards Consequently, addressing employees' basic physical and safety needs is crucial, as these are the primary priorities Once these foundational needs are met, management can then focus on fulfilling higher-level needs to improve overall employee satisfaction and quality of life.
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 in the field of achievement motivation reveals that high achievers consistently strive for improvement and seek opportunities that allow them to take personal responsibility for problem-solving They value prompt and clear feedback on their performance and tend to set moderate, attainable goals Additionally, they prefer tackling challenging problems independently rather than relying on others to take initiative and action.
The desire for power stems from the wish to influence and control others Those with high need for power (nPow) tend to seek out leadership roles, thrive in competitive environments, and prioritize status They often focus more on gaining prestige and influencing people rather than achieving effective operational outcomes.
McClelland's third need, integration, emphasizes the importance of being loved and accepted by others Individuals with high affiliation (nAff) scores seek friendship and prefer cooperative environments over competitive ones, aiming to build relationships characterized by deep mutual understanding.
Numerous large-scale studies indicate a significant correlation between the need for achievement and work performance, suggesting that predictions about performance can be made based on this relationship Additionally, while the need for power and the need for inclusion have been less extensively researched, consistent findings also emerge in these domains.
Individuals with a strong need for achievement tend to thrive in job environments that offer personal responsibility, constructive feedback, and moderate risk levels When these elements are present, 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 employees' needs is essential for understanding which needs are met, currently being met, or unmet across various labor types and departments This insight enables administrators to implement effective strategies for employee retention by addressing these needs directly.
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 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 career advancement and express a desire for training to enhance their skills and showcase their abilities.
+ 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
Understanding employee personalities is crucial for workplace dynamics Extroverted employees typically seek autonomy and opportunities for social interaction, while introverted employees often prefer stable and secure job environments Recognizing these differences can enhance employee satisfaction and productivity.
+ Other bases: Age, gender, family circumstances of employees etc
- Methods to determine the needs of employees
To effectively identify employees' needs, organizations can utilize various methods, including questionnaires, interviews, group discussions, and the analysis of existing data such as performance evaluation reports, personal achievement sheets, personnel profiles, departmental summary reports, and employees' work diaries.
1.4.2 Retain employees with material tools 1.4.2.1 Salary
Salaries are predetermined monetary compensation provided to employees, typically calculated on a weekly, monthly, or annual basis They are primarily awarded to managerial and professional technical staff, serving as the primary source of income for employees This financial remuneration is essential for individuals to sustain their daily lives and support their families.
Maslow's hierarchy of needs emphasizes that physiological needs are the foundation of human motivation, highlighting that workers prioritize income to support themselves and their families Similarly, Herzberg's theory underscores that salary plays a crucial role in influencing employee motivation, as it not only reflects the value of their work but also signifies their status and worth within their family, organization, and society.
According to J Stacey Adams' equity theory, a fair salary system in the workplace should align with employees' contributions Compensation must reflect the effort employees put into the organization, adhering to principles that consider the company’s production and business context Overpaying employees can negatively impact organizational performance, while underpaying them can lead to disengagement and increased turnover Thus, achieving a balanced salary structure is crucial for maintaining employee motivation and overall business success.
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 their productivity and creativity while applying scientific and technical advancements in their work Businesses should focus on four key objectives: attracting new talent, retaining valuable employees, stimulating performance, and adhering to legal requirements To foster motivation and a sense of fairness, companies must ensure that their wage structure is equitable, positively impacting the overall division of labor in society.
As the market economy evolves, payment methods have become increasingly diverse and flexible; however, they fundamentally consist of two primary forms of payment.
- Payment by product Depending on each subject, the scope of application, the salary system and payment methods will be used appropriately
Equal wages lead to higher job satisfaction and improved organizational effectiveness Implementing varied salary levels serves as a crucial economic tool to align employee motivation with personal interests Conversely, if an organization prioritizes profit over fair compensation and employee welfare, it risks depleting its workforce's physical and qualitative capabilities This misalignment can result in a talent drain, as skilled employees seek positions with more competitive salaries.
In any organization, salary remains a primary concern and a crucial motivator for employees to enhance their knowledge and skills Implementing an effective salary policy is essential for sustaining the workforce and encouraging employees to boost productivity, quality, and creativity.
Bonuses serve as one-time financial incentives, typically awarded at the end of a quarter or year, to reward employees for their job performance Additionally, unexpected bonuses may be granted 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 excel in their roles Organizations can implement various types of bonuses, including productivity and quality bonuses, savings bonuses, initiative rewards, and performance-based rewards that reflect the overall success of the organization Additionally, bonuses can be awarded for activities that enhance the organization's reputation or benefits, fostering a culture of excellence and commitment among employees.
Calculating bonuses can differ significantly, typically encompassing productivity and quality bonuses, savings bonuses, initiative rewards, and incentives for acquiring new customers These bonuses are often based on the percentage of benefits that employees contribute to the organization Senior management usually establishes the criteria for these rewards and communicates them to employees to motivate 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 in the industry The company focuses on delivering practical solutions tailored to meet the diverse human resource management needs of its clients, aligning with the development strategies of both the enterprises it serves and its own organizational goals.
L&A management emphasizes the importance of having employees work in their areas of expertise, as this fosters a sense of contribution to the company Additionally, retaining personnel with strong leadership qualities is crucial, as they serve to unite and inspire 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 crucial to transform the company's culture by adopting a more flexible work approach Recognizing that media employees often cannot adhere to strict office hours, the Board of Directors has implemented policies that allow for greater flexibility in work schedules, enabling employees to balance their professional and personal commitments effectively.
1.5.2 Experience of United education Joint Stock Company
United Education Joint Stock Company (UE) stands out as a premier institution in Vietnam, renowned for its team of experienced consultants specializing in study abroad services and related support Over the years, UE has garnered significant trust from parents, students, and clients, establishing a strong reputation for effectiveness and reliability in the education sector.
UE management emphasizes that leaders should refrain from getting involved in detailed tasks and instead delegate responsibilities to key personnel Additionally, it is crucial to always have prepared replacements for these individuals to prevent the occurrence of "star disease."
High-wage employees often leave their jobs not solely due to work-related issues but also for personal and spiritual reasons Despite the company's retention of these talented individuals, some may feel envious of the attention given to new hires by the Board of Directors, prompting their decision to resign.
Effective communication between Company Leaders and employees is essential to address mutual needs and obligations during the employment process, particularly when sending employees for training courses Following their studies, employees are expected to transfer the acquired technology back to the Company Once this knowledge transfer is complete and employees depart, the Company can reclaim 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 optimal environment for employees to excel in their roles.
1.5.3 Lessons learned for Impac Corporation
Le&Associates and United Education Joint Stock Company, like Impac, exemplify small and medium enterprises that require exceptional resilience Employees in these organizations must possess strong problem-solving skills, systematic thinking, and the ability to multitask effectively, all while maintaining a proactive attitude towards continuous improvement.
Small and medium enterprises often struggle to retain talented employees due to limited financial resources, making it challenging to offer cash or stock incentives However, Impac Corporation can learn valuable lessons from this experience to enhance employee retention strategies.
- HRM should be separated, the director should not concurrently hold that job to maintain fairness in evaluating employees
To retain top talent during financial challenges, companies must focus on continuous growth and clearly communicate opportunities for employee development within the organization.
The effectiveness of a company's director in attracting employees is undeniable; however, employee retention is influenced by various factors beyond initial attraction Interestingly, the rate of employees leaving the company often surpasses the number of directors who depart, highlighting the critical importance of leadership in fostering a supportive work environment.
Employee motivation can stem from both material and spiritual factors While competitive salaries and training are important, they may not be enough to retain talent, as many well-compensated and trained employees still choose to leave their jobs Understanding this dual nature of motivation is crucial for organizations aiming to enhance employee satisfaction and loyalty.
The article analyzes employee retention at Impac Corporation through the lens of motivational theories, particularly F Herzberg's two-factor theory from 1959 It identifies eight key factors influencing employee retention, as 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 involves conducting written interviews simultaneously with multiple participants using a printed questionnaire Respondents share their opinions by selecting the appropriate boxes based on a predefined format.
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
CURRENT SITUATION OF EMPLOYEE RETENTION AT
General overview of Impac Corporation
2.1.1 Process of formation and development of the Company
Company name: IMPAC CORPORATION 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, officially commenced operations on March 1, 2008 The company was established by the pioneering students of the inaugural Master of Business Administration Program at IMPAC University in the USA For more information, visit our website at www.impac.vn or contact us via email at info@impac.vn.
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 effectively contribute to both shareholders and the community.
2.1.2 Organizational structure of the Company
The Company's organizational structure is designed based on an online functional model, featuring direct management relationships without overlap between stages or departments Each department has distinct functions and responsibilities while maintaining close interconnections, all working together towards the Company's unified goals.
The General Director of the Company holds the highest decision-making authority and serves as the legal representative of the Company This role encompasses the management of all business activities and the power to hire, promote, or dismiss employees in line with company regulations and Labor Law Additionally, the General Director is responsible for regularly reporting 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, focusing on organizational structure, personnel management, administrative functions, legal matters, communication, and public relations activities within the company It is accountable 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 aids the General Director in organizing accounting operations and ensuring compliance with accounting laws It is responsible for compiling internal management reports and submitting reports to relevant State agencies based on assigned functions and tasks Furthermore, the department is accountable to both the law and the General Director for its activities, adhering to legal provisions and designated duties and authority.
Deputy General Director Deputy General Director
Admin Division Project Division Sales Division
- Project Division includes functional departments:
The Project Department is responsible for marketing and securing job opportunities, as well as preparing bidding documents to generate work for the Company Additionally, it focuses on project development, management, and exploitation to ensure high efficiency and align with the Company's growth 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 protocols for products, which serve 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 export processes, ensuring rigorous checks and supervision of product quality.
The Maintenance Department is responsible for ensuring the proper upkeep of machinery and equipment in line with company regulations This includes repairing machinery according to 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 instruments, and prepares and manages maintenance budgets effectively.
- Business Division includes functional departments:
The Market Development Department plays a crucial role in advising the General Director on market functions, facilitating the planning and execution of marketing and development initiatives across the Company This department is responsible for organizing communication and brand promotion, ensuring quality assurance of services, and managing customer feedback Additionally, it prepares, evaluates, and oversees the implementation of economic contracts while providing guidance on the inspection and supervision of decentralized contract signing for various units.
The Customer Service Department plays a crucial role in managing and summarizing customer complaints, conducting cause analysis, implementing preventive actions, and monitoring their effectiveness It establishes accessible information channels for customers to learn about the company, product features, pricing, and payment options Annual reviews are conducted to evaluate the effectiveness of these information channels Additionally, the department collaborates with the Market Development Department to execute promotional programs and organizes customer visits and gift distributions It also oversees the product warranty plan, ensuring proper warranty operations, repairs, and maintenance activities to enhance customer satisfaction.
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, focusing on investment and technology transfer in medical equipment, environmental solutions, science and technology, and information technology Through a strategy centered on sustainable development and continuous innovation, the company has achieved significant growth, particularly between 2016 and 2017, outpacing the previous period of 2015-2016 This impressive progress underscores Impac's rapid development and solidifies its position 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 gender distribution has remained relatively stable over the years, with a predominance of male employees due to the communication-intensive nature of the business Female employees consistently represent about 42-45% of the total workforce, primarily occupying roles in departments that require grace, attention to detail, and skill, such as reception and customer service.
Impac's workforce primarily consists of employees under the age of 30, with a significant portion aged between 30 and 45, reflecting a typical trend in recently established private enterprises This youthful labor force is a key advantage for Impac in the service sector, where dynamic, enthusiastic, and passionate staff are essential to fully meet customer needs.
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 characteristic typical of non-manufacturing enterprises, and this trend has remained stable over the years While most employees possess similar qualifications, a small number are still at the intermediate level Currently, employees are actively pursuing further education and professional development to better serve customer needs, resulting in a consistent increase in higher education graduates each year.
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 led to inaccurate and ineffective evaluations Additionally, the absence of common dialogue channels, such as a company message board or comment boxes, has further hindered communication and feedback among employees.
To effectively understand and address the needs and aspirations of employees, the Company must prioritize the identification of laborers' requirements, as indirect dialogue channels for communication are currently underutilized.
2.2.2 Status of retaining employees with material tools 2.2.2.1 Salary
Impac Company has established regulations for wage management and distribution, emphasizing payment based on employee performance Salaries are determined by the completion level of the business plan, which guides the allocation of the salary fund on a monthly, quarterly, and yearly basis.
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 implementation of the profit plan This adjustment can lead to increases or decreases in the salary fund, particularly when revenue exceeds the planned target 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 productivity gains and surpassing planned targets It considers the salary coefficient, including any allowances, and is based on actual 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, unit pricing, and the salary budget set by the company Payments to employees are drawn from these approved salary funds.
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
The lunch allowance for employee i is determined by the number of actual working days (Ntt) and may also include additional pensions and allowances, such as responsibility and telephone allowances (P).
Employees may receive bonuses (if applicable) and overtime payments (if applicable) However, if the company arranges for the employee to leave in exchange for compensation, overtime payments will not be provided.
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 actual working days and should not exceed the monthly working day limit, unless in special circumstances involving overtime that is not arranged for compensation.
The company prioritizes transparent and satisfactory salary payments to motivate employees, fostering job satisfaction and commitment to their responsibilities.
No Name Position Basic salary
Social Insurance 8%, Health Insurance 1,5%, unemploymen t insurance 1%
TIEU LUAN MOI download : skknchat@gmail.com
The survey results indicate a low average value (AV) for salary factors among employees at the Company, 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 substantial 44.74% remain dissatisfied with the conditions for salary increases, resulting in a low AV of 2.89 Furthermore, the state salary scale is perceived as inadequate, with 42.11% of employees unable to secure their livelihoods, leading to an AV of only 3.08 Additionally, half of the employees (50%) feel that salary payments at the Company lack fairness.
The company's average value (AV) stands at a low 2.74, attributed to a uniform salary calculation system applied to all employees, resulting in an average salary distribution To enhance operational efficiency and boost employee motivation, the Board of Directors should consider revising 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
Besides salary, the bonus system of the Company is also an effective motivational 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 growth will be rewarded The Board of Directors will determine specific reward amounts, ranging from VND 500,000 to VND 2,000,000 per instance, based on the effectiveness of the initiatives and their impact on 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 has seen a steady increase in the total bonuses paid (refer to Table 2.5) While the company evaluates rewards based on individual staff performance, the current assessment process emphasizes a "peace and harmony" approach, lacking a thorough evaluation 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 recent survey revealed that 68.42% of employees believe the rewarded individuals are appropriate, with an average score of 3.26 Additionally, 52.63% feel the annual bonuses they receive are fair, and 57.89% find them acceptable, resulting in an average score of 3.13 However, a significant portion, 42.11%, disagrees with the evaluation of the reward system, reflected in an average score of 3.11 This dissatisfaction stems from the absence of a dedicated bonus fund, as bonuses are based solely on annual performance results, leading to delayed recognition of achievements Consequently, the average score for the timeliness of rewards is notably low at 2.05, which, according to B.F Skinner's theory, can diminish employee motivation.
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 crucial A positive and welcoming demeanor not only fosters a comfortable experience for customers but also enhances service quality, ultimately attracting a larger clientele to our business.
The company's inadequate working conditions, environment, and corporate culture negatively affect organizational management For effective human resource management, it is essential to foster a positive cultural environment and provide 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 consistent regulations and methods in labor management This inconsistency has adversely impacted the overall working style and management effectiveness in recent times.
- Organization's human resource management activities:
The Company's work assignments are well-structured, leading to high employee satisfaction due to the challenging and engaging nature of the tasks Responsibilities are clearly defined, aligning with employees' skills and expertise While the Company values training and development, it primarily provides time for employees to pursue education without reducing their workload or offering substantial financial support for study expenses.
The Company faces significant fluctuations in its labor situation, with a high number of employees having less than one year of experience This leads to psychological stress and concerns among staff, which negatively impacts their confidence in the organization To address this issue, it is crucial for the Company to focus on building trust with its employees, ensuring they feel secure and motivated to contribute effectively to the organization.
Employees seek high salaries, job stability, and opportunities for advancement However, at Impac Company, limited attention is given to promotions due to the company's scale and industry focus, resulting in employees remaining in the same positions for extended periods This stagnation, coupled with the expectation to handle multiple tasks simultaneously, creates significant pressure and contributes to a decline in employee morale.
The Company employs a predominantly qualified workforce, making it crucial to prioritize employee motivation The needs of this labor class are complex, and failing to address them effectively can result in decreased morale and psychological distress among employees.
Impac Corporation employs a workforce primarily composed of college and university graduates who are committed to ongoing improvement to meet customer demands However, many employees have less than one year of experience, largely due to a high annual turnover rate, which results in a persistent staff shortage This situation not only diminishes the overall experience and capability of the workforce but also escalates human resource costs due to frequent recruitment efforts.
Overal assessment of the status of retaining employees at Impac Corporation69 1 Achieved results
Impac Corporation has successfully implemented motivational tools aimed at enhancing employee retention and performance The Board of Directors is committed to fully executing policies that create a supportive work environment, enabling employees to effectively carry out their responsibilities and achieve stable incomes The positive outcomes of these efforts are detailed below.
The company enhances employee income through various financial incentives beyond regular salaries, including year-end bonuses, holiday bonuses, and performance-based rewards for both individuals and teams Additionally, the company prioritizes comprehensive benefits such as lunch allowances, tuition support, and various insurance plans (social, health, unemployment, sickness, and maternity), along with vacation allowances These benefits not only supplement employee income but also demonstrate the company's commitment to the well-being and morale of its workforce, fostering a motivated and engaged work environment.
The company is committed to providing comfortable and safe working conditions that fully meet employee needs With comprehensive machinery, equipment, and management tools in place, employees are empowered to excel in their roles This focus on a supportive work environment enhances their capabilities, ensures high-quality performance, and boosts overall productivity.
The Company prioritizes the assessment of employee performance to enhance their skills and expertise, serving as a foundation for salary determination, recognition, and rewards, while also aligning with the Company's 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 helps employees acquire new knowledge and innovative work methods but also fosters an environment where they can showcase their talents, ultimately leading to improved work efficiency.
Employees at the Company have the opportunity for career advancement, which not only maximizes their potential 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 standardized, leading to a disparity in compensation despite varying levels of contribution and responsibility While some employees meet basic task requirements, others undertake more complex roles with greater accountability yet receive similar pay This has resulted in dissatisfaction among employees who feel that the company's salary payment system does not accurately reflect their work performance and the true value of their labor.
The company implements various bonus systems to enhance employee income and foster enthusiasm at work, thereby boosting motivation However, many employees feel a disconnect between their performance results and the rewards received, as the timing of recognition and rewards often lags, diminishing the overall impact on employee motivation.
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 financial concerns, which hinders their ability to concentrate fully on their work, ultimately impacting productivity and efficiency.
Many employees feel that their current roles do not align with their professional qualifications and aspirations, leading to unreasonable work assignments Additionally, the necessity to juggle multiple jobs hampers their ability to express enthusiasm and creativity, resulting in increased psychological pressure during their work process.
Many employees lack confidence in the Company's stability, leading to concerns about their long-term prospects within the organization This perception of instability has fostered a sense of uncertainty among the workforce, impacting their overall trust in the Company.
Limited workplace facilities result in cramped environments for employees, restricting their ability to work effectively Additionally, outdated machinery and management tools hinder operational efficiency, further impacting productivity.
The performance evaluation of employees at the Company faces several limitations, including insufficient evaluation criteria and methods that fail to accurately reflect work results Additionally, the process does not incorporate staff feedback and relies solely on assessments from managers or direct supervisors, leading to concerns about the accuracy and fairness of the evaluation outcomes.
The company has provided employees with flexible time for study but has not decreased their workload Additionally, the training budget only partially addresses the learning requirements essential for their roles.
Promotion opportunities for employees often lack fairness, as many well-qualified individuals who have received thorough training find themselves unable to advance Despite achieving excellent results, these employees may go unrewarded, leading them to leave the company in search of better opportunities.
PROPOSAL OF SOLUTIONS TO COMPLETE EMPLOYEE
Business development orientation of the Company until 2025
- Developing business operations in a more professional direction, better serving the needs of customers, ensuring a stable and steady growth rate
- Building a contingent of officials and employees of the Company according to the criteria of solidarity, creativity, flexibility, willingness to work, constantly setting new goals and promoting the Company's culture
Fostering employee training and promoting self-directed learning are essential for enhancing and streamlining business processes within the company By implementing timely policies that support creativity, the organization ensures that innovation becomes an integral part of the workplace culture.
To enhance the active and creative spirit of employees, it is essential to optimize organizational structures by eliminating obstacles that hinder their contributions This approach not only fosters a more dynamic work environment but also aims to increase employee income and overall satisfaction within the company.
Perpectives of HRM of the Company
At Impac, one of our core values is humanity, guiding all our activities towards serving people Each employee is driven by unique motives and purposes in their work, reflecting individual aspirations and contributions.
Employees seek fair compensation, including salary and bonuses that reflect their contributions and worth They also desire recognition, empowerment, and encouragement from the company, which fosters a positive work environment Opportunities for advancement, a supportive atmosphere, and strong relationships with colleagues are essential for enhancing their self-worth and overall job satisfaction.
Impac Corporation aims to foster a professional and modern workplace that prioritizes employee rights, dedication, and development, while ensuring a harmonious balance between the interests of the company and the well-being of its employees.
To ensure competition and fairness in employee compensation, it is essential to align wages with individual qualifications, capabilities, and contributions Implementing a performance-based payroll system not only promotes equity but also serves as a vital motivator for business success.
To foster a motivated workforce that excels against competitors and attracts top talent, companies must implement personnel policies that align the interests of both the organization and its employees These policies should focus on providing both material and spiritual incentives, ensuring a supportive environment that promotes employee retention and satisfaction.
Proposal of solutions to employee retention at Impac Corporation
3.3.1 Solutions to determine the needs of employees
Understanding and assessing employees' needs is crucial for managers to develop effective retention strategies Retaining employees involves identifying and addressing these needs However, it is essential for managers to focus on fulfilling only the basic needs of employees, encouraging them to continuously strive for their goals.
Table 3.1 Survey form of employees’ needs at Impac Corporation
To express your motivation for working at Impac Corporation, please rate the following factors on a scale from 1 to 5, where 1 indicates "Not important" and 5 signifies "Very important." After rating each factor, return your results in a coherent paragraph format.
No Criteria Level of evaluation
6 Have opportunity to study and improve qualifications 1 2 3 4 5
8 Work is suitable to ability 1 2 3 4 5
10 Be self-reliant at work 1 2 3 4 5
(Source: synthetized by the author)
To effectively understand and assess employee needs, it is crucial for responsible individuals to possess expertise and extensive experience in this area Consequently, companies should conduct annual surveys with well-defined criteria, analyzing the significance of each criterion on a scale This approach enables organizations to identify and prioritize the most urgent needs of the majority of employees.
According to Maslow's Hierarchy of Needs, employees have ten essential requirements for job satisfaction: a high and satisfactory income, stable employment, favorable working conditions, positive relationships with colleagues, a good work record, opportunities for education and skill enhancement, chances for promotion, job roles that align with their abilities, a reasonable work schedule, and the ability to work independently A survey was conducted to assess the importance of these needs, with employees rating each on a scale from 1 (Not Important) to 5 (Very Important).
Accurate classification of various criteria is essential for identifying the specific needs of different target groups By analyzing the frequency of these demands, organizations can pinpoint the most pressing needs of employees Conducting an annual assessment of employee needs is crucial, as these needs evolve over time This proactive approach enables managers to understand employees' desires and aspirations, allowing for timely and effective solutions that enhance motivation and overall job satisfaction.
The survey results will inform the Board of Directors in developing effective retention policies that address employee needs, ultimately enhancing work performance and efficiency within the Company.
3.3.2 Solutions of employee retention with material tools 3.3.2.1 Develop a diverse, specific and transparent payment method
Wages play a crucial role in motivating employees to perform positively, as a stable life allows them to commit fully to their work When salaries are fair and reflect the true value of their labor, employees are encouraged to work diligently and produce high-quality results Therefore, establishing competitive salaries based on the labor market is essential for attracting and retaining talent while ensuring a decent standard of living for employees.
Chapter 2 analysis reveals widespread employee dissatisfaction with the Company's salary policy, indicating that it fails to provide genuine motivation This has led to feelings of unfairness among employees, as their compensation does not align with their contributions.
To enhance employee satisfaction, the company should clearly communicate future salary details contingent upon meeting specific requirements Department managers must effectively explain the payroll system, policies, and wage-related decisions to ensure transparency and prevent dissatisfaction among employees.
At the same time, managers should regularly receive and promptly handle feedback from staff on issues related to wages
To ensure fair wages, it is crucial to evaluate work performance, allowing companies to align salaries with employee efficiency This approach fosters motivation, encouraging employees to enhance revenue and optimize time management In the sales department, individual salaries are based on personal sales performance, supplemented by a basic salary, bonuses, and overall employee benefits Sales staff can earn commission rates ranging from 20% to 40%, depending on their sales achievements This structure not only incentivizes employees to excel in sales but also boosts the company's revenue and operational efficiency Therefore, it is essential for the company to maintain fairness in wage distribution and consistently monitor employee contributions, holding everyone, including the Board of Directors, accountable for their performance.
3.3.2.2 Diversity and publicity of bonus forms
To enhance employee responsibility and performance within the Company, it is essential to recognize that working hours alone do not accurately reflect individual contributions The qualifications and awareness of employees significantly impact departmental effectiveness To foster enthusiasm and attract long-term, qualified talent, the Company should implement a reward system that acknowledges both mental and material contributions based on work completion rates This system should evaluate employees on their punctuality, adherence to rules, and error-free service to customers Rewards should be calculated monthly and quarterly, with a formula based on the job completion coefficient, which considers the level of work completed and sales achieved.
Labor bonus rate i = TR x % bonus
Total revenue (TR) is influenced by the bonus percentage, which is determined by the job completion coefficient This coefficient is assessed through employees' performance scores, taking into account various important criteria, including their ability to work independently, coordinate effectively, handle complex tasks, understand their work, and apply their knowledge and skills.
Table 3.2 Sample of work performance assessment form
The graphic evaluation method is the most suitable assessment approach for the Company, allowing employees to self-evaluate their performance Following this self-assessment, direct managers provide feedback using a scale that ranges from low to high, ensuring a comprehensive evaluation process.
+ Step 1 : From the evaluation criteria that have been developed, conduct the total points distribution for each criterion according to certain weights
Step 2 involves assessing the work completion levels of staff and assigning scores based on specific criteria To minimize subjective bias in evaluations, it is advisable to create an assessment table that includes self-assessment sections for employees, peer evaluations, and assessments from supervisors, as illustrated in Table 3.2.
Step 3 involves processing information post-evaluation, where scores from direct managers are converted into rankings and job completion coefficients Employees also provide self-assessment scores for comparison with employer evaluations This facilitates discussions between employees and managers to address any discrepancies in assessment results, ensuring a more accurate evaluation Criteria with varying weights are established by the Administration Department based on job descriptions, requirements, and employee input This assessment serves as a basis for making salary and bonus decisions, with bonus percentages outlined in Table 3.3.
Realizing that the bonuses as well as their salaries are affected by the coefficient of work completion, employees will have a sense of striving and higher responsibility