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I would like to express the deepest appreciation to my Faculty of English for Economics where embraces my dream and facilitates me make it come true.

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Last but not least, I offer my regards and blessings to all of those who supported me in any respect during the completion of the project.

TABLE OF CONTENT

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Executive summary 4

Chapter I: Introduction of Vega Corporation with their issues 6

3.2 Scope of research

1010

1.1 Nature of information technology work 16 1.2 Instructions from the company’s leaders 17

2.1.1 Fostering group cohesiveness 18 2.1.2 Aiding performance measurement 18

2.1.4 Improving knowledge among team members 19

2.2.3 Difficulties in defining the meaningful group 25

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1 Dealing with individualism conflict 27

2.1 Building a tough performance appraisal 29

3.2 Maintaining relationship between managers and teams 34

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the number of good software developers quitted job reached the peak of 22% of the company’s labor force

This report consists of four chapters Chapter I proposes an overview of company with its services and solutions, offers some general information about their achievements, vision, missions, culture and structures Chapter II of the report provides theoretical framework which can be considered as a base to analyze the TBP

in Vega Corporation Chapter III investigates the pros and cons of TBP to the company In this context, it is argued that this policy has both positive and negative impacts The method of assessing these impacts is to develop its advantages and tackle with those weak points Next, some recommendations will be proposed in Chapter IV Finally, my findings will be summarized and a number of conclusions will be drawn in the last part- Conclusion

INTRODUCTION

Background

TBP appeared in foreign countries long time ago but to Vietnamese companies, it

is still quite new Vega Corporation is one leading company which has been determined to apply this kind of performance rewarding for their long-term strategy During the first years, they have been trying continuously to develop strong points and minimize the weak points to make the best of this model

Rationale of the study

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As following the requirement from the National Economics University as well as the Faculty of English for Economics, this internship report was carried out at the end

of Semester 8 in order to complete the course and to be the base for general evaluation of all knowledge which was accumulated after four years studying in NEU This report details the result of my internship at Vega Corporation which has just ended in 30/4/2010

Research question

The content of the report is to answer the question “How to bring into play advantages of TBP as well as handle with its disadvantages to keep good software developers staying with the company?”

Research methods

The study draws upon qualitative and quantitative data and information from both primary and secondary sources concerning the issues which have been raised Primary data were collected through an interview with workers and managers in Vega Corporation Fifty employees took part in my survey Ten managers and twelfth team leaders got involved in my interviews All questions were listed in Appendix’s

section This information was collected in order to have a better understanding about

how the team-based pay policy has been influencing on those working in team Secondary data were taken from documents in the Human Resource Department

MAJOR FINDINGS

CHAPTER I INTRODUCTION OF VEGA CORPORATION WITH THEIR ISSUES

1 Vega corporation introduction

1.1 Overview

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Vega Corporation was founded in

2003 by a group of talented software

engineers and passionate project managers,

who are experienced in technical skills and

strongly united in working Their motto is

to incessantly deliver optimum solutions

and excellent services to customers and

internet users as well

1.a Company’s logo which is the symbol for leading advanced technology internationally

With strong technical experience, sound resolution and the capability of quickly grasping international market trend, they have been developing and providing advanced solutions, online services and digital content in high quality and cost efficiency to domestic and global customers Vega has strongly established their name in the technology market in general and online service in particular They earned credit from the most demanding customers With more and more customers’ trust, they are on track to be one of the most Vietnamese successful businesses in online service and mobile content in Vietnam

1.2 Services and solutions

a Web Content Management System:

• Online news: serves online news house with high traffic Some prestigious websites:

http://mnews.vn http://anninhthudo.vn http://ictnews.vn

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• E-commerce: serves clients who want to launch and sell products/services on website Vega’s WCMS support clients in conducting the transaction easily and closely.

1 b E-Commerce Transaction in Vega Corporation

Source: Company Profile, 2009

b Client Server Application:

• Customer Relationship Management

• VClick: An ads management system supports website owner with controlling banner ads and keyword ads which offer clients with whole solution and partial service

c Outsource: An application supports a company in tracking its contract with its current and prospective customers and developing company-client relationship This section includes DesignWeb design, logo design and brand identity set design

Mobile services

• Mobile content distribution Vega supplies mobile entertainment content of music, video, news, ringtone, ringback tone

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Vega’s strategic missions are as follow:

• Taking advantages of cutting-edge online technology and making it their core value

• Nurturing, developing and respecting their talented staff

• Bringing online-related benefits to internet users

• Encouraging strategic partnership

1.6 Culture

Person is the chief resource, so Vega Corporation always attaches the special importance to working environment which encourages staff bring into play their competence and creativeness Working in Vega, everyone feels friendly, happy and always considers it as their second home Apart from business, Vega usually holds recreational activities such as picnic, football, karaoke and party to enrich staff’s spiritual life These activities connect every individual into a close and enthusiastic community Everyone in this community has opportunity to demonstrate their ideas

to build up a Vegiks cohort

2 Company’s structure

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1.c Vega’s structure( Source: Human Resource Department, 2009)

Board of shareholders

CEO

Advisory BoardGeneral Directors

Technolo-gical

Dep

Human Resource Dep

Finance Dep Marke-ting Dep Customer Service

Dep

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said that the performance rewarding was the reason for their quitting According to the recent survey, 67% of the employees said that they strongly disagreed with the team-based pay The disadvantages of this waging such as individualism conflicts, free riding effect, difficulties in working in a group really annoyed them The number

of good employees leaving jobs increases also Actually, at the end of 2009, this

number reached the peak of 22% of the company’s labor force (Source: Annual report, composed by Mr Tran Dac Trung, Head of the Financial Department, 2009)

This situation became terribly alarming This information following will show you the real company’s situation when applying TBP and recommend some solutions to tackle with this kind of issue

3.1 Purpose of the study

The purpose of this study is to identify the advantages and disadvantages of the team-based pay policy, to analyze the way Vega Corporation has applied this policy in their own company and to find out the core problem of job quitting and finally attempt to give some recommendations for the problem

3.2 Scope of research

Due to the course’s requirement, this paper is developed in just roundly 30 pages Therefore, I mainly focus on the influential factors which occur inside the Vega main office but setting aside those happening nationally or internationally such

as the 2009 financial crisis or the new or updated regulations or decrees from government because of its complexity

3.3 Definitions

Team-based pay: special performance rewarding based on the general

contribution of team work instead of individual as usual

Free-rider: a person who contributes little to team- either because of low

effort or limited ability

Individualism conflict: According to Managing Human Resources (5th

Edition, 2006), this phenomenon means that:

Workers expect to be recognized for their personal contributions, they may not react well to an incentive system in which individual efforts take a back seat to the group effort, with all team member rewarded equally Besides, collective orientation also makes it more difficult to harmonize individuals.”

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Free-rider effect: disagreement among team members because of equal

compensation for unequal contribution

3.4 Report organization

To be easier for readers to follow, the research will be arranged like this:

Chapter I: Introduction of Vega Corporation with their issues

1 Vega corporation introduction

Chapter III Analysis and Findings

1 Reasons for applying TBP in Vega

1.1 Nature of information technology work

1.2 Instructions from the company’s leaders

2 The advantages and the disadvantages of TBP in Vega

2.1 Advantages

2.1.1 Fostering group cohesiveness

2.1.2 Aiding performance measurement

2.1.3 Better end result

2.1.4 Improving knowledge among team members

2.1.5 Maintaining customers

2.2 Disadvantages

2.2.1 Individualism conflict

2.2.2 Free-riding effect

2.2.3 Difficulties in defining the meaningful group

Chapter IV Recommendations

1 Dealing with individualism conflicts

1.1 Rebuilding the company culture

1.2 Providing a soft skill course

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2 Dealing with free-riding effect

2.1 Building a tough performance appraisal

2.2 Building peers’ evaluation

3 Group identification methods

3.1 Completing the grouping procedure

3.2 Maintaining relationship between managers and teams

CHAPTER 2 THEORETICAL FRAMEWORK

I Introduction

As mentioned in Chapter 1, to have a comprehensive view of the problem, I would like to concentrate on two sides of TBP including its advantages and disadvantages This chapter provides a review of theories relating to TBP

II Theoretical bases

Many researchers state that TBO is the most effective way of rewarding employees if a company has team members who try to achieve team-related goals In this case, TBP is often used as an appropriate method to motivate all the employees to

strive toward the common goals According to Luis Gomez-Mejia, David Balkin,

Rober, they indicated two major advantages of TBP including fostering group cohesiveness and aiding performance measurement in their book Managing Human

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Resources (5th Edition, 2006), Chapter 11: Performance Rewarding In which,

fostering group cohesiveness means that team members have the same goals and objectives, they work closely and depend on one another for the group’s overall performance, team-based incentives can motivate group members to behave and think

as a unit rather as competing individuals In this situation, each worker is more likely

to act in a way that benefits the entire group Besides, a number of studies have shown that performance can be measured more accurately and reliably for an entire team than for individuals This is true because less precise measurement is required when an individual’s performance does not need to be identified and evaluated in relation to others in group

Also, on the website http://www.teambuilding-solutions.com, the office website of one of the leading team building companies based in Bangkok, Thailand, they mentioned some ideas as outstanding strong points of TBP:

• “Higher quality output.

Involvement of everyone in the process.

Increased ownership and buy-in by members.

Higher likelihood of implementation of new ideas.

Widens the circle of communication.

Shared information means increased learning.

Increased understanding of other peoples perspectives.

Increased opportunity to draw on individual strengths.

Ability to compensate for individual weaknesses.

Provides a sense of security.

Develops personal relationships.”

Another source providing me a great deal of knowledge which helps me much

with analyzing advantages of TBP in Vega Corporation is the Chartered Institute of Personnel and Development (CIPD) It is Europe's largest

professional institute for people management and development It is located

in Wimbledon, London, England They indicated some bright sides of TBP like this:

Team pay can:

encourage co-operative work and behavior

clarify goals and priorities at team and organizational level

emphasize a flatter and process-based organization

act as a lever for organizational change

encourage flexible working and multi-skilling

offer a fairer perceived payment system

collectively improve performance and team process

encourage the less effective to meet team standards

develop self-managed and directed teams.”

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Concerning disadvantages, also in the book Managing Human Resources (5th Edition), Chapter 11: Performance Rewarding written by Luis Gomez-Mejia, David

Balkin, Rober, writers referred five main disadvantages of TBP which include:

• Possible conflict with individualism: individual conflict is referred as a phenomenon that occurs when employees want to be recognized for their personal contributions, but not stay behind group effort Besides, collective orientation also makes it more difficult to harmonize individuals in a team

• The free riding effect: free-riding effect is a big barrier for team members to overcome Free-riders are those who contribute little to a team- either because

of low effort or limited ability But all team members including free-riders are rewarded equally for a group outcome

• Social pressure to limit performance: It is one of the most influential factors It can affect the performance of the team by dampening team productivity Group dynamics may encourage team members to try to beat the game- cheating to get the reward, for instance, as a way to get back at management

• Difficulties in identifying meaningful groups: It is very difficult to make a team because of different team members’ characteristics It is also confused to identify which ones did what Besides, a person maybe a member of more than one team, and teams change member frequently

• Intergroup competition leading to a decline in overall performance: A team becomes so focused on maximizing its own performance that it ends up competing with other teams The results can be quite undesirable

Based on the Vega’s condition and characteristics, I apply five most compatible points of TBP’s advantages which include:

• Fostering group cohesiveness

• Aiding performance measurement

• Better end result

• Improving knowledge among team members

• Maintaining customers

Besides, I also studied carefully the theory mentioned in the book “Managing Human Resources” (5th Edition, 2006) to find out three weak points of this pay for performance They are:

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• Individualism conflict

• Free-rider effect

• Difficulties in defining meaningful group

CHAPTER III ANALYSIS AND FINDINGS

This chapter analyzes the impacts of TBP in Vega Corporation It is argued that this phenomenon has both positive and negative impacts The determination is to explain the reasons for applying this kind of pay and to analyze its pros and cons

1 Reasons for applying the TBP in Vega

There are many reasons for applying TBP in Vega Corporation But we should look at the two major ones covering the nature of work and the instructions from the company leaders

1.1 Nature of information technology work

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Information Technology including software developing sector is a complicated industry which demands patience, creativeness and carefulness Especially, because it comprises of many different parts, it requires contribution from all members in a group Therefore, it is necessary to use TBP as a kind of pay-for-performance to stick

up all members in a team together To be more specific, the diagram below describes the software development process in Vega Corporation Among them, each step designed following an unchangeable order is carried out with the strict censorship to maintain fluency and accuracy

From the diagram, we can see that TBP is the smartest pay-for-performance to maintain the staff, and develop the work effectively and stably

3 a Software development process in Vega Corporation

(Source: Human Resource Department)

1.2 Instructions from company’s leaders

Another main reason for applying TBP in Vega Corporation is that it is instructed from the company leaders in the third year of establishment

In the first two years of establishment 2003-2004, Vega decided to apply individual–based pay However, this model expressed many drawbacks which could not be compatible with the company’s objective Some major weak points can be listed below:

• It created competition but destroyed cooperation among peers

• It promoted single-mindedness

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• Individual-based programs promote inflexibility in the company where demanded the concord among members in groups and groups.

(Source: Managing Human Resources (5th Edition) written by Luis Mejia, David Balkin, Rober, 2006)

Gomez-Due to those listed factors, together with less experience and lack of financial budget, the image of Vega was so fuzzy and faint during the period of 2003-2004 The company did not give any mark on the information technology market map

Nevertheless, the situation became brighter when the company decided to turn their performance reward from individual-based pay into team-based pay From the time of applying this kind of reward, teams seemed to be more energetic and inspired Also, team members were more involved in their common project As a result, many projects were fulfilled better than ever In general, this situation helped the company a lot in building Vega’s image Moreover, it brought company the increasing revenue during the last five years (2005-2009)

This chart below describes the revenue of Vega during years (2003 – 2009) :

3 b Vega’s annual revenue, 2009

(Source: Vega’s Financial Department)

2 The advantages and the disadvantages of TBP in Vega.

2.1 Advantages

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TBP has brought a lot of benefits to Vega It has turned the unknown company into one of the IT leading companies in Vietnam This section of the report will look into how TBP has been influencing on activities of Vega

2.1.1 Fostering group cohesiveness

Importance of cohesiveness: Cohesiveness takes an important role in the

formation and development of a team Cohesiveness is the degree to which the team sticks together as they pursue the team’s purpose This characteristic is considered as the binding material of the teams

TBP impacts on team work cohesiveness: Thanks to cohesiveness fostered by

TBP, the team members could accomplish larger tasks within shorter time because they are connected by a glue of financial budget and common project goal If Vega succeeds in setting a goal that all the employees in the group feel that they want to contribute to, they will have a clear motivation to carry out the task

2.1.2 Aiding performance measurement

Surely, when applying TBP, company could reduce a great deal of time and money in evaluating and measuring employees’ performance Now instead of analyzing single employee, the company just gives them a base wage and efficiency wage which is called common project fund (after fulfillment) This fund is divided equally among the team members

In addition, to good or outstanding employees, they will be marked in a performance appraisal which will help them have a sum of bonus at the end of the financial year

2.1.3 Better end result

The key advantage of teamwork is a better end result Initially, in a team, there is always a team member who is assigned to concentrate on market changing This person will help the team be closer to customer's needs, more informed about advanced technology, and faster to respond than traditional hierarchies All this factors take an importance part in developing better end result at the end of the project

Besides, the more members in a team, the more ideas are brainstormed Therefore,

it would be easier to choose the most suitable end effective idea to complete the task

2.1.4 Improving knowledge among team members

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When working in a team, the employees are unable to keep their skills’ secrets

because they always have to work in team environment for an agreed goal To foster working speed as well as to enhance work quality, the employees are forced to share knowledge and experience In general, this is useful for both employees and the company as well

2.1.5 Maintaining customers

Applying TBP ensures that the company will not lose sight of their customers if any problem happens in the labor force To be more specific, if an outstanding employees who always keep in tough or even have a strong relationship with customers, decides to leave He or she can not take away the potential partners of the company Working in team and having involvement in financial budget are motivators for the employees to keep customers for their team but not for any individual

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3 c Check list 1: TBP’s advantages In Vega Corporation

2.2 Disadvantages

There are two sides to everything It is all right in the case of TBP in Vega Corporation This section of the report lists three most serious disadvantages of the TBP covering individualism conflict, free-riding effect and difficulties in defining a meaningful group Two first ones are related to the involvement of the team members

in the team work The last one has a connection with the company management The three issues will be discussed clearly in order to find the best solutions for Vega Corporation

2.2.1 Individualism conflict

Fostering group cohesiveness

Aiding

performance

measurement

Better end result

Improving knowledge among team members

Maintaining

customers

TBP’s advantages

in Vega Corpora- tions

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