Low employee engagement at RSM DTL auditing company

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Do Kieu Bich Ngoc 22130046 LOW EMPLOYEE ENGAGEMENT AT RSM DTL AUDITING COMPANY MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DR NGUYEN PHONG NGUYEN Ho Chi Minh City – March 2016 CONTENTS EXECUTIVE SUMMARY CHAPTER - PROBLEM IDENTIFICATION 1.1 Introduction about the Company and the central problem 1.2 Justify the existence of the problem .8 1.3 Justify the importance of the problem 14 CHAPTER - CAUSE VALIDATION 18 2.1 Potential causes of the problem 18 2.2 Cause justification 25 CHAPTER – ALTERNATIVE ANALYSIS and ALTERNATIVE CHOICE 31 3.1 Training program 31 3.2 Improving physical work environment 37 3.3 Rewards 41 3.4 Leadership 44 3.5 Strategy evaluation .49 3.6 Recommendation 51 CHAPTER – ACTION PLAN 52 CHAPTER – SUPPORTING INFORMATION .54 5.1 Interview transcript to explore the potential problems and central problem 54 5.2 Scale items to justify the existence of the problem .57 5.3 Questions for Interview at RSM DTL Company to test the existence of the problem 59 5.4 Interview transcript for testing the existence of the problem 60 5.5 Survey Questionnaire to justify the existence of the problem sent to RSM DTL, Grant Thornton and BOD Vietnam 63 5.6 Survey to justify the existence of the problem at Grant Thornton and BOD 65 5.7 Scale items to justify the importance of the problem 65 5.8 Interview transcript to justify the importance of the problem .67 5.9 Cause justification 69 REFERENCES 80 LOW EMPLOYEE ENGAGEMENT AT RSM DTL AUDITING COMPANY EXECUTIVE SUMMARY This topic is to research the effective solutions to increase the level of employee engagement at RSM DTL Auditing Company The first step is to find the central problem, to justify the existence of the issue and to justify the importance of the problem by analyzing the organization through interview and survey for employees The low level of employee engagement led to the higher turnover rate, the low performance, the absenteeism and the low organization commitment Secondly, the researcher investigates the potential causes of the problem and validates the root causes of the problem to find the appropriate strategies via literature reviews and in-depth interviews with the managers and the employees As the result, it was found that the physical working environment, the ineffective training program, the reward and the leadership are the most significant causes leading to the low level of employee engagement at RSM DTL The paper suggested the combination of solution relating to improving the training program, physical work environment, reward system as possible solutions to enhance the level of employee engagement at RSM DTL Auditing Finally, the action plan with detailed steps was presented to implement these strategies CHAPTER PROBLEM IDENTIFICATION 1.1 Introduction about the Company and the central problem RSM DTL Auditing Company established in 2001 is one of the top ten accounting and advisory firms in Vietnam with more than 140 employees serving mid to large publiclisted, multi-national and private companies in various industries The operation of DTL is divided into two fields including Auditing and Tax consulting With the mission “RSM DTL Auditing wants to be your great business partner by way of bringing creative added value solutions to your success in local and global environment” (RSM DTL profile, 2014), DTL endeavor to provide the clients with professional services following international quality standards adapted to Vietnam business environment In addition, the Company also pays more attention to build up a professional team to get effectiveness in working, to satisfy the increasing demand of customers and to develop the organizational culture instead of focusing on finding more clients However, the approach and application process have not been implemented and the employees continue waiting the positive changes In this paper, we focus on the Tax Consulting Department, currently comprising of forty three (43) employees In fact, we can get the kindly supports from the Management of Tax Department and the annual revenue often accounts for 70% of total Company‟s revenue Due to the variety of services provided to customer, this department is structured in eight groups and each group handles one main business line such as tax advisory, tax compliance, accounting, etc According to the Human Resource Department data, the number of employee leaving job has increased significantly (i.e 14.8% in 2013, 16% in 2014 and 19 % in the first six months of 2015) In comparison with the average turnover rate of industry (i.e around 15% for 2014 and the first six months of 2015), the turnover rate of RSM DTL was higher than that The figures show that the turnover rate rose by 3% in the first six months of 2015 and till not stop here From 2013 until now, the staff turnover rate has been on up trend and has the sign of continuous increase next time Additionally, based on the Data from the Human Resource Department, the number of leaving employees at senior position with over three year working experience account for 70% Together with the high staff turnover rate, the performance of employee has the sign of decrease as discussed with the Managing Partner in charge of Tax Department The working result from the staff sending to the managers was not good as expected and there were more mistakes in calculating and reporting Moreover, employees did not put in much effort to ensure maximum productivity for the Company; there were increased cases of tardiness and absenteeism, rework and poor quality of output, inappropriate and unnecessary socializing during working hours and a general lack of interest in the job There are many reasons leading to these consequences However, based on the intake meeting and interview with DTL members including Mr Le Khanh Lam – Managing Partner of Tax and Consulting Department and employees, the potential problems relating to decreasing work quality and productivity, employee appraisal and employee engagement need to be considered and analyzed at present Therefore, the problem mess was developed below to reflect the current situation of Company Lacking of attention to work Increasing work volume Unequal work sharing between groups Decreasing enthusiasm Increasing customers Increasing work pressure Increasing absenteeism Decreasing work quality and productivity Low employee engagement Salary/ bonus based on level of position instead of performance Appraisal form provided general information Ineffective employee appraisal Low employee performance High employee turnover rate Figure 1.1: The initial cause – effect map Firstly, from the last three months of the year 2014 until now, due to considerably increasing number of customers, the work volume as well as the pressure has also risen However, the workload assigned for each group was unequal and the complexity for each job was different In addition, the number of employee was constant at that time and the Company could not recruit more staff quickly to be in charged of new jobs Although the new clients often had the complex issues, the revenue received was not high as expected To attract the potential customers, the fee charge for services provided was competitive with other entities on the market For new clients, employee had to spend more time on working with them These conditions led to the decrease of work quality and productivity and the Tax Partner was aware of that as a critical issue need to be solved Nevertheless, this problem need a lot of time and can be related to many aspects such as human resource management, business strategies, cost and revenue estimation, etc to be solved thoroughly From discussion with the Tax Partner, the second problem was the employee appraisal process In fact, the applied assessment was based on the level of position instead of the performance of employee Additionally, the assignment for each staff at the same position was different according to the employee capability and the job complexity Moreover, the appraisal form was designed to collect the general information of staff and could not reflect sufficiently the working process of employee At present, DTL is preparing the new appraisal system including the detailed assessment for each job at the mid-year and the comprehensive appraisal at the ending of the year The last issue was related to the level of employee engagement As mentioned above, based on the data from the Human Resource Department, the number of employee leaving job has increased significantly (i.e 14.8% in 2013, 16% in 2014 and 19% in the first six months of 2015) Furthermore, the number of laborers coming in late has also risen considerably connected with the weekly employee attendance report of the Administrative manager The enthusiasm of staff has the sign of depression In addition, the Tax Partner observed that the employees had the signs of lacking the attention in work There were a number of staff including the new members under one year position frequently used the working time for individual needs such as surfing the internet, connecting the social network for chatting, reading online newspapers, making online transactions, etc When had the free time, they were not in the habit of improving the knowledge by themselves through reading the updated regulations, studying the customers‟ documents to broaden the experience on treating the real situations The specific characteristic of the tax advisory industry was that the rules, the laws could change and supplement day by day Therefore, the self-awareness of collecting the new was very important Currently, there are approximately 30% members spends more than one hour per day within working times for personal issues via internet network as mentioned above as the statistic figure from IT Department These activities cause the low intention in main tasks and leading to the inefficiency in work Moreover, the number of products sent to him for final review in recent times with lower quality than his expectations as well as missed the deadline was higher than the previous time These aspects can prove that the Company has the trouble with employee engagement Therefore, in line with the data collection from the Company and the results from other interviews with employees, under the limited time, resources and the acceptance of the BOD, the low level of employee engagement is considered as the most significant issue needed to be analyzed at the present 1.2 Justify the existence of the problem Firstly, it is very important to understand sufficiently the meaning of “employee engagement” In terms of engagement, people express themselves cognitively, physically, and emotionally while performing their work roles (Kahn, 1990) Engagement, on the other hand, is indicated by job resources such as job control, the availability of learning opportunities, access to necessary materials, participation in the decision-making process, positive reinforcement, and support from colleagues (Freeney, 2006) The Gallup Organization, defines engaged employees as those who, "work with a passion and feel a profound connection to their company" and "drive innovation and move the organization forward" (Harter et al., 2009) Employee engagement –refers to a psychological state where employees feel a vested interest in the company‟s success and perform to a high standard that may exceed the stated requirements of the job according to Schaufeli (2013) According to Schaufeli and Salanova (2012), the synthesis identified the most prevalent definition used by the research community was that of engagement as “a positive, fulfilling, work related state of mind This statement indicated that the engagement as a positive psychological experience when carrying out work activities and work tasks, and refers to feelings of “vigor” (e.g energy), “dedication” (e.g enthusiasm), and “absorption” (e.g feeling immersed) Vigor refers to high levels of energy while working, the willingness to invest effort in one‟s work, and persistence even in the face of difficulties; dedication refers to being strongly involved in one‟s work, and experiencing a sense of significance, enthusiasm, inspiration, pride, and challenge; and absorption refers to being fully concentrated and happily engrossed in one‟s work, whereby time passes quickly and one has difficulties with detaching oneself from work Based on this perception, the Utrecht Work Engagement Scale (UWES)-9 item indexes including valid and reliable questionnaire was developed to measure the employee engagement as a combination of vigor, dedication, and absorption The most comprehensive study to date of employee engagement has come from The Gallup Organization‟s research using the Q12 instrument Gallup developed the Q12 instrument for measuring employee engagement According to the Gallup Organization, (Harter et al., 2009) define Employee engagement as "the individual's involvement and satisfaction with as well as enthusiasm for work” The Q12 questionnaire is a means of measuring “actionable issues” or “engagement conditions” where employee attitudes can be predicted and ultimately engagement is measured (Harter et al., 2009) Depending on Gallup (2002), there are three types of people comprising of engaged employees, not engaged employees, and actively disengaged employees Engaged employees are builders who consistently strive to give excellence within their roles Not engaged employees focus on the tasks spelled out to them rather than the goals of the organization They what they are told to Actively disengaged employees are dangerous individuals who not only not perform well but also demotivate the performer in the organization The newly developed ISA Engagement Scale (Soane et al., 2012) based on the conceptualization Kahn put forward in his 1990 seminal article on personal engagement at work measures three different aspects of work engagement: intellectual engagement, 5.8.3 Senior with more than three years of experience (Ms Hoa) As discussed with Ms Hoa – tax-consulting senior with more than three years of experience, she mentioned that she felt unhappy and she had never thought that she would continue working there for long time in future In fact, she could not received kindly support form the direct manager as well as other member in her team Therefore, she was always in being seperated emotion and could not be attached to the enperprise 5.9 Cause justification (support for Point 1, Chapter at Page 18) Table 5.9.1 – List of Potential causes with scale items based on theories Antecedence Definition Working environment Work displays environmen typically concern for employees‟ t needs and feelings, provides positive feedback and encourages them to voice their concerns, to develop new skills and to solve work-related problems Author Relationship Miles (2001) (+) Scales Job aid (Van Dam, 2005) a written tool which provides guidance to the employees in an organization Supervisor supports (Nijman, 2004) leading the subordinates in their group task and the groups in the organizations Physical work environment (Carlopio, 1996) Environmental design (lighting, air quality, surface, atmosphere, facility cleanliness) Facilities (restroom; reaction; eating size, cleanliness, pleasantness) Work organization (schedule, work amount, activity, pace flexibility, work system design, time to complete work, information quality, information move and store) 69 Equipment and tools (numbers of tools, efficiency of tools, effectiveness of tools) Healthy and safety (accident avoidance, accident reporting, safety training received, safety training available, fine prevention systems) Leadership Effective leadership is a higher-order, multidimensional construct comprising selfawareness, balanced processing of information, relational transparency, and internalized moral standards Wallac e (2009) (+) Support team (Jessica, 2010) behaviors that maintain a high level of team performance and ongoing development, including helping team members develop their potential, promoting team pride, and encouraging a superior customer service role Performs effectively (Jessica, 2010) leaders‟ effective problem solving, and good management of time and priorities Displays integrity respectively (Jessica, 2010) behaviors that demonstrate high stands of ethics and honesty, as well as good interpersonal skills Please see the detailed items below (*) (*) Leadership scale items  Takes a genuine interest in the personal development of his/her team members  Helps his/her team members identify and develop their skills and potential  Celebrates his/her team‟s successes  Encourages commitment to organization objectives  Ensures his/her team members are sufficiently trained to their jobs  Promotes a sense of loyalty and pride within his/her team  Encourages other to deliver superior levels of customer service  Approaches tasks with enthusiasm and energy  Personally strives to excel in all activities 70  Supports team decisions, even if they differ from his/ her own view  Seeks opportunities to improve the quality of service to customers  Builds positive, long-term internal working relationships  Willingly shares own knowledge and ideas with others  Demonstrates good presentation skills  Makes timely decisions, without unnecessary delay or haste  Provides timely responses to requests, phone calls, or problem situations  Deals effectively with multiple demands and conflicting priorities  Takes action without prompting  Anticipates workload and plans accordingly  Handles multiple demands effectively  Proactively deals with problems  Keeps promises made  Keeps others well informed  Is readily accessible to discuss progress or assist with delegated tasks  Communicates clear performance expectations  Demonstrates high ethical standards  Can be trusted with confidential information It is the relationship (Sias, Team and between employees at 2008) co-worker relationship the same hierarchical level who have no formal authority over one another It can refer to any individual with whom one works (including supervisors and subordinate employees) The training program (Adair, Training that is being conducted 1988), are such as establishing (Elango the objectives, selecting van, the trainer, developing 1999) a lesson plans, selecting the program method and techniques that is being used, 71 (+) Trust Intimacy Emotional support Self-disclosure (+) Establishing the objectives Selecting the trainer Developing a lesson plans Selecting the program method and techniques Preparing the materials Scheduling the program Conduct a training needs analysis preparing the materials, scheduling the program and also conduct a training needs analysis The opportunities Career by the development provided organization to advance an individual‟s career prospects, such as challenging assignments, career counseling and being kept informed Reward and Attractive compensation recognition comprises a combination of pay, bonuses, other financial rewards as well as nonfinancial rewards like extra holiday and voucher schemes (Saks, 2006) (+) Challenging work assignments (Kinnie, 2005) New learning opportunities (Kinnie, 2005) Career counseling (Leung, 2002) Access to information about the organization (Gubbins, 2005) Extrinsic rewards Tangible rewards pay raises, bonuses, and benefits, given to employees Intrinsic rewards (Thomas, 2009) including: Sense of meaningfulness: You feel that you are on a path that is worth your time and energy, giving you a strong sense of purpose or direction Sense of choice: You feel ownership of your work, believe in the approach you are taking, and feel responsible for making it work Sense of competence: You feel that you are handling your work activities well-that your performance of these activities meets or exceeds your personal standards, and that you are doing good, highquality work You feel a sense of satisfaction, pride, or even artistry in how well you handle these activities Sense of progress: You are encouraged that your efforts are really accomplishing something You feel that your work is on track and moving in the right direction You see 72 Organization The policies should provide guidance to al policies employees and partners as to how they should act and behave to be in line with management's wishes (Von Solms, 2004) (+) convincing signs that things are working out, giving you confidence in the choices you have made and confidence in the future Consistence with the values of the organization Compliance with employment and other associated legislation Ensure uniformity and consistency in decisionmaking and operational procedures Save time when a new problem can be handled quickly and effectively through an existing policy Maintain the direction of the organization even during periods of change Provide the framework for business planning Table 5.9.2 Interview transcript for Cause justification (support for Point 3.2, Chapter 3, Page 25) Respondent Question Respondent Respondent Respondent from Tax from from Group Partner Director Leader Respondent Respondent from – from – Team leader Team leader Totally agreed Yes, learning Yes, learning Yes, training Agreed there any Good training and will then can provide Employees relationship program development provide the the would like to between the focuses on provides a means to knowledge feel valued training teaching the way to motivate and for staff to and that they program skills which are address all of engage handle the are and the level needed to these human employees task better recognized of employee this effectively needs and People will Employee for a job well engagement The right greatly feel valued for can be more Is 73 done In ? Why/ Why training and improves their confident in addition, they not? development employee contribution working also need to can greatly engagement and they will process and get the enhance When we understand produce opportunity employee invest in that the effective for learning engagement by their people organization results and growing nurturing talent through supports them through and helping training and to be the best education people to learn development that they can and new things and are also be experiences improve their viewed more Engaged performance favorably by employees Most people employees are more want to feel than those in productive, that they are organizations which boosts doing a good who not your bottom job and that line And one they are valued of the best by their ways of organization keeping for the part employees they play engaged is to offer good training and development opportunities Yes, a good Of course, Yes, when I there any work the come to office a clear healthy and relationship environment can comfortable everyday, the relationship safety work between the lead to higher convinient between enviroment work engagement and profesional work them can lead to Is and 74 Yes, there is Yes, a environment vice versa At work environment Imaging that the good and the level our Company, environment bring me the you are spirit for of employee maybe the can lead to interest for a working in a employees the new day to convinient They can enthusiasm work work increase the effectively environment, concentration engagement? physical work Why/ Why environment not? need to improve for the work to bring the Employee you would in work and convinience can find that like to be feel more enviroment for it is happy to engaged comfortable staff I used to go to work recieve the everyday feedback from the employees related to the quality of drinking water, air-conditioner system as well as the materials (i.e laptop, scanner, etc.) Yes, reward is Agreed Pay Yes, Obviously, Yes, there any an important people well employers pay is vital recognition relationship component of and you get need to for from between the effective good develop and motivation supervisors reward, employee performance, operate such a and and managers recognition engagement high strategy, incentive, but can increase and the level strategies If engagement giving due a total employee of employee the Company Pay and weight to the rewards engagement benefits pay and approach is for better contributed incentive essential for productivity Is engagement? want Why/ Why employees to 75 and deliver to staff elements, but employee and more, it‟s engagement also engagement performance essential that Engagement delivering a employees feel is not just broader work valued as about the experience people, that motivation to that is their extra achieve conducive to efforts are performance the recognized and goals but engagement appreciated, also a of their staff and that over genuine and time there is a sense of differentiates balance mutuality them from between what with the their they give to long-term competitors and get back interests of from an the organization employer Yes, there is a It is clear As I know, Yes, leaders May be yes, I there any strong about that employee can support am not sure relationship relationship There is a engagement is and about that between the between the natural a positive encourage However, in leadership leadership and tendency to emotional employees to order to and the level employee lift people up connection to grow in their maintain our of employee engagement to a place of the work they career paths competitive leadership, and a When leaders position and move toward continue to not? Is engagement? The leaders are Why/ Why playing the within a "thinking not? important roles highly connection" to improving be successful in development engaged the belief in their as an of both organization the goals, observable organization, purpose and behaviors, employee organization and One of the 76 employees key drivers mission of they have the engagement Engaged people of employee that work extraordinary is critical make for the engagement Employees ability to Leaders can best leaders is providing want to feel positively encourage Their behavior opportunity proud, feel influence new ideas will reflect their to grow and enjoyment, employees to and new level of feel support, willingly ways of engagement and challenging but more than become doing things will not only that, they engaged challenge others the leaders want to That's a to stay engaged, are in charge believe that powerful but also give an of providing their work investment example of how them matters, that that pays things can and they dividends not should be done contribute, only in – true and that it developing leadership resonates their good people, providing work And values but by Leaders can directly tell and show affecting the the work organization's matters, can bottom line encourage staff to be innovate by lis istening the employees‟ point of view, asking the feedback, giving choices 77 in how to jobs well, and recognizing staff for good work Maybe yes but A little bit No I not there any not too much Supporting think like that Good is a relationship You can see the relationship The kind relationship relationship between the turnover rate between relationship with other between the team and co- now is so high, employees at between the employees team and co- worker although most RSM DTL colleagues does not worker relationship employees share can affect the can help you mean that I relationship and the level that there is a level of feel more will working and the of employee kind and engagement happy at here for long employee but not work time as well engagement much Nevertheless, as increasing but it is not Is engagement? supporting Maybe no Perhaps there Why/ Why relationship not? between the co- it not affect my level of clearly You workers, it is not level of engagement can have a ensure that they employee good can work here engagement at colleagues for long time our Company but it is not and engage to the factor the Company which increase your engagement to your Company Maybe yes No I did not May be yes No There is No Good there any However, the see the but not too not clear career relationship career strong much The relationship development Is 78 between the development at relationship career between does not career our company is between development employee mean your development quite good but employee at auditing engagement staff and the level the engagement engagement like our and career working here of employee is not high It and the company is development longer There career often clearly at RSM DTL is not engagement? means that this Why/ Why factor does not development and you can importance not? influence know it first link between significantly to when starting employee the level of working engagement employee and career engagement development Maybe yes But Not clear No In Not clear No There is there any the policies is May be no general, The link no significant relationship usually fixed in Adapting to policies are between relationship between the long term You new fixed and it is employee between company have to adapt to environment hard difficult engagement employee policies and the current with new to change I and company engagement the level of policies of your policies is not see the policies is not and company employee Company the necessary clear Is engagement? instead of clear policies We action you relationship need to Why/ Why thinking about need to between change not? changing them overcome policies and ourselves to Therefore, it is You can engagement adapt to the not the factor engage to the in case of our affecting the Company but company employee it is not engagement depend much more on policies 79 policies REFERENCES Adair, J (1988) The effective supervisor London: The Industrial Society, 8(2), 156-162 Alderfer, C P (1972) Human Needs in Organisational Settings Free Press of Glencoe, New York, NY., 3(16), 215-219 Alfes, K., Shantz, A D., Truss, C., & Soane, E C (2013) The link between perceived human resource management practices, engagement and employee behavior A moderated mediation model The International Journal of Human Resource Management, 24(2), 330-351 Amir, F (2010) Measuring the impact of office environment on performance level of employees: A case of private sector of Pakistan Proceedings of the 2nd International Conference of AGBA South Asia Chapter on Nurturing Innovation, Entrepreneurship, Investments and Public Private Partnership - 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Thornton and BOD, the level of employee engagement at RSM DTL (i.e 2.3) was lower that those Therefore, it was found that the low employee engagement was a real issue at RSM DTL and needs to be analyzed... each question In short, the mean rate was approximately 2.3 and it demonstrated that the level of employee engagement at RSM DTL is lower than the average rate (2.5) 12 In addition, the above... to level of employee engagement 2.2.2 Training The interview found that training program is the most important cause contributing to the low level of engagement at RSM DTL Auditing Company Referring