Solution to improve organizational commitment in saigon co op

1 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Le Uyen Phuong SOLUTIONS TO IMPROVE ORGANIZATIONAL COMMITMENT IN SAIGON CO.OP ID: 22130058 MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Dr Nguyen Thi Nguyet Que Dr Tran Ha Minh Quan Ho Chi Minh City - 2016 TABLE OF CONTENTS ACKNOWLEDGEMENTS EXECUTIVE SUMMARY LIST OF FIGURES LIST OF TABLES CHAPTER 1: PROBLEM IDENTIFICATION 1.1 Company introduction 1.2 Background of the business problem 1.3 Business problem identification 11 1.3.1 Problem definition 11 1.3.2 Problem existence 12 1.3.3 Problem consequences 13 1.3.4 Potential causes 15 1.3.5 Cause and effect map 19 CHAPTER 2: ALTERNATIVE SOLUTIONS 20 2.1 Cause justification 20 2.2 Solution proposal 25 CHAPTER 3: SELECTED SOLUTION 31 3.1 Solution justification 31 3.2 Designing the change strategy 33 CHAPTER 4: SUPPORTING INFORMATION 36 4.1 Supporting information of business problem background justification 36 4.2 Supporting information of problem existence justification 40 4.3 Supporting information of problem consequences 42 4.4 Supporting information of potential causes justification 44 CONLUSION 54 REFERENCES 55 LIST OF FIGURES Figure 1.1: Cause-and-effect map 19 LIST OF TABLES Table 1.1: The recruitment and training cost in 2013 -2015 Table 1.2: The turnover rate of Saigon Co.op in 2013 – 2015 Table 2.1: Cost – benefits analysis for solution one 27 Table 2.2: Cost – benefits analysis for solution two 28 Table 2.3: Cost – benefits analysis for solution three 30 ACKNOWLEDGEMENTS First at all, I would like to express my sincere gratitude to my supervisors, Dr Nguyen Thi Nguyet Que and Dr Tran Ha Minh Quan for their continuous support of my thesis My sincere thanks also goes to my dear colleagues, friends and classmates for their invaluable advice, help, encouragement and support during the time I was doing this thesis Last at all, I would like to express my great thanks to my family for their support, assistance and encouragement for my study and thesis fulfillment EXECUTIVE SUMMARY Organizational commitment is an issue of prime importance, especially to the management and owners of the organizations Organizational commitment and job satisfaction are directly related to an organization’s profitability and competitive position in the market Organizational commitment directly affects employees’ performance and is therefore treated as an issue of great importance (Vijayashree and Jagdischchandra, 2011) Commitment is a sort of bond between an employee and the organization he is working for (Jaramillo et al., 2005) The strength of this bond is dependent on various factors This study will try to find the relation of some of these factors with organizational commitment Organizational commitment has a strong relation with the employee behavior If an employee is committed to an organization, it would reduce the chances or occurrences of absenteeism and turnover (Igbaria & Greenhaus, 1992) Commitment refers to an employee’s willingness to work positively in an organization and his continuance to work for it (Mowday et al., 1982) The dissertation concludes by endeavoring to unravel the causes behind the decreasing organizational commitment in employees of Saigon Co.op and gives suggestions as to what organizations might to lower the problem The researcher recommends to managers to consider training and development as influencers of organizational commitment CHAPTER 1: PROBLEM IDENTIFICATION This chapter includes three sections The first section introduces the background of the company The second introduces the background of the business problem while the third section introduces more details about the business problem of the company 1.1 Company introduction Saigon Co.op established in 1989 after the dissolution of Ho Chi Minh City Trade Cooperation Its two main functions were directly operating the business and organizing the business for cooperatives in the city In the trend of market opening and economic development, the living standard of the people in Ho Chi Minh City at that time was rising and need for modern shopping centers emerged Some of the supermarkets were opened at small scale and high prices In this situation, Saigon Co.op decided to change the strategy from importation/exportation to wholesaling and retailing The first supermarket store of Saigon Co.op opened in 1996 under the brand Co.opmart with the supports from Japanese, Singaporean and Swiss cooperatives (Co.opmart) After 18 years, Co.opmart is one of the biggest retailers in Vietnam There are 320 employees under seven department, including: Human Resources, Purchasing, Financial, Accounting, IT, Marketing, Development and Planning This thesis mainly focus on headquarter of Saigon Co.op 1.2 Background of the business problem In two quarter company meeting with all of employee and board of director, one of issues rising to be by the Chairman of the board is rising many cost in the company, especially recruitment and training cost The table below explain more detail Table 1.1: The recruitment and training cost in 2013 -2015 Year 2013 2014 2015 Recruitment and training cost 269 332 371 (million VND) (Human Resource Report 2013, 2014, 2015) To define the problem, personal interview with the Vice-Director of Human Resources and the Director of Human Resources to get more details about the issues Questions are used in discussion “What is your opinion about the rising cost? What cause of this problem?” There is an increasing turnover rate from 18.4% to 25.7% in 2013 2015 Comparing with the rate in retail industry, it was around 15 – 20% (Sources from General Statistics Office of Viet Nam 2015) The table below show more information Table 1.2: The turnover rate of Saigon Co.op in 2013 – 2015 Year 2013 2014 2015 Turnover rate (%) 18.4 20.5 25.7 (Human Resource Report 2013, 2014, 2015) At 25.7% this rate is considered high, it reflects a lot of employees leave job and significantly affect the financial performance of an organization Direct costs include recruitment, selection and training of new people, with a phenomenal cost of time and expense Indirect costs include increased workloads and overtime expenses for coworkers and reduced productivity associated with low employee morale The organization need to hire new employees to replace and train them to be suitable of the vacancy And this is the main reason in increasing the cost of recruitment and training To justify the reason why many employees quit their job The author conduct an interview with the Director and Vice-Director of Human Resources, current and former employees who are under different departments The interview result listed as below First, Saigon Co.op faces tough competitors Mergers and acquisitions are churning the Vietnamese retail market, with large domestic players buying out rivals and massive investment by foreign retailers For example, giant conglomerate Vingroup acquired supermarket chain Maximark, a popular retailer in the southern and southcentral regions Aeon - Japanese retail giant and Citimart completed a deal for business collaboration with the name of the local supermarket chain will be changed to AeonCitimart Korean largest retailer E-mart just open its first hypermarket While facing fierce competition from several new foreign players, the employees are easily to be approached by rival companies More than 50 percent of employees left jobs because of better job offers from competitors (AEON and Vin Mart) for higher position or higher salary This means the employees are less committed to the organization 10 Secondly, few opportunities for career development within the company About 40 percent of employees feel that it is difficult to get promoted to the next level Because they have to work hard, spend most of time at office to meet targets without failing to meet deadlines, so they not have time to learn new skills to match with the requirement of the next level Besides, the organization does not provide a clear picture of career advancement for employees There are not any programs to help employees get a promotion Compare with AEON, they pay close attention to employees’ career development, and provide a targeted cultivation and development platform to realize the growth of both the Company and our employees Employees getting more development opportunities have less intention to leave organization So, lack of career development, is prompting a fair share of employees to feel disengaged, less productive and in many instances, leaving their jobs Lastly, lack of skills training and development as the main reasons 30 percent of employees chose to voluntarily leave their positions The organization does not offer any training programs to improve the skill levels of employees such as advanced job-specific training and skill competitions This made employee not have enough abilities knowledge and skills to helps them perform better on their jobs They feel that they are not involved in activities that promote their professional development They are not allowed to involve in decision making process for some important projects or operation process, so they can not help managers execute difficult projects or implement the 48 activities to help an employee -Anything that you would like to identify/improve abilities, goals, strengths recommend so that you can be more & weaknesses motivated than what you presently are? 49 Nga Nguyen – Accounting department Working condition “I quite satisfied with the availability of equipment and supplies which made her perform job better such as personal computer with many useful application, stable internet connection which can transfer information rapidly to clients, etc.” Training “I felt that the training wasn't designed to meet my needs, but was rather intended to just "put something out there" The training program just for basic level, mainly focus on improving soft skill like: presentation, problem solving, negotiation and team building The organization did not have any training courses for advance level like management training In my opinion, training is the most important factor affect the commitment” Yen Do – Purchase department Working condition “in fostered positive relationships when I am overwhelmed with my workload or I am having a problem with client, as I am a part of the team, other team members are willing to help me out.” Supervisor support ”I felt lack of support from my boss, because he is very busy with a lot of work and project so he did not have time to her feedback on the performance or develop and objective with boss” 50 Training “Training and development programmer should be tailored to the individuals being trained, but the company think ‘top-down’ rather than ‘bottom-up.’ The company does not ask employees what they feel weak on and what needs to be developed and try to find a unifying training course that works for everyone Example: “In my sales team, and half of the team is tasked with drumming up new accounts while, the other is supposed to maintain existing accounts, it doesn’t make a ton of sense to teach the entire team about cold calling techniques This wastes time and money for both employee and employer.” Lam Nguyen – Marketing department Compensation “I am not satisfied with the basic salary, compare with my friend who work in Big C (the competitor) is lower But the organization offers a good benefits package such as vacation time, medical insurance, individual retirement account, profit sharing compared to other organizations A good benefits package is also a sign of a company that actually cares about its employees With retirement accounts she felt more committed to meeting the company's goals” Supervisor support “I not have my supervisors’ support in work or have good interactions with my supervisors My boss does not provide feedback, encouragement and support my performance” However, this factor does not play an important role in affecting organizational commitment Because of my boss is very busy with meeting and a tide schedule so he does not have time to give advice and feedback, I can 51 receive the support from the direct team leader and colleagues on my work and progress” Training “In many training courses, training is delivery using theoretical, dry content that is far removed from the day-to-day issues being face by the employee I not feel engaged to the training program using the old-fashion way- mention all thing in theory and not using story-telling and real life case studies to deliver training, and I gain nothing that will help me in real-life scenarios” Hanh Dang - HR department Compensation “Pay and benefits are not commensurate with my skills and experience, I have worked for years, my salary increased only five percentage every year However my pay is less than others who are doing similar work I felt unhappy and not fulfill my needs and financial desires, which made me less committed and not want to stay with the organization so I looking for a new job” Career development “Management is terrible and no opportunities for career development They perform career review but just to tick a box in the system No training unless it helps boss to achieve utilization Worked there for years but no career development And this is the main reason that I left job and work for the competitor which offer me higher position in new job.” Tam Nguyen – IT department 52 Training “I have not received sufficient training to my job effectively Training – in the company is gather a lot of people (around 30-40 persons) in a room listening to the lecture talking, mostly just listen and write Because of the large group discussion in the room so I not has a chance to participate and ask questions Training sessions often like cram sessions, full of information and facts and I cannot retain and memorize all this information Training is mainly develop these skill: communication, problem solving and negotiation The information isn't relevant to my jobs, I not learn anything new, and the information is same which I have learnt from the university.” Career development “A lack of career path, is the reason that I left job The company did not offer opportunities for advancement tailored to my skills and goals I felt the organization does not value my contribution And this is the main factor affect my commitment to the company” Nam Le - Development and planning department Working condition: “I felt lack of support from her boss, because her boss is very busy with a lot of work and project so he did not have time to her feedback on the performance or develop and objective with boss And made me realized that the firm does not consider me important, I did not feel engage with the organization” 53 Training “The topic has no relevance or importance to me or my job and the content is completely academic, impractical, unsupported, or just an exercise in memorization I felt it just waste of time to attend these training course Career development “There is few opportunity for advancement I’ve been at my job as a marketing executive for almost years, and in that time I’ve gone above and beyond the expectations for the position When I asked for a promotion, I did my research and found that with years’ experience and have Master Degree in Management, the position in the same industry is higher such as team leader of vice director, in addition the average salary for my position is nearly double what I was making I explained this to my boss, along with how much I’ve accomplished, and she agreed She got me a five percent pay raises and told that I am not good at leadership skill and there is no position available I attended many leadership seminars & courses to develop my leadership skill, after one year I still in the same position even I remain this issue with my manager many times So I not feel engaged at work and stay with the company longer ” 54 CONLUSION Based on the results of discussion, it can be concluded that the main factors affecting the organizational commitment of staff at Saigon Co.op is a factor of training and career development Training and development is important as it encourages employees to their work better and increases productivity within the organization Training need assessment helps respondents to ascertain their weaknesses and strengths which will lead to respondents being selected for trainings, seminars and workshops in the areas they require training When employees are trained they become satisfied with their work and it reduces absenteeism as it helps increase job knowledge and skills of employees at each level Therefore, in an effort to boost the organizational commitment of employees at Saigon Co.op, it is recommended to the manager at Saigon Co.op regularly provided employees with the opportunity to attend training and development workshops, they will recognize the company’s commitment to improve their skills and will be more likely to remain in the environment where they have a continual opportunity to learn Therefore, training and development practices persuaded by the organization help to increase the organizational commitment among employees 55 REFERENCES Adams, J S (1965) Inequity in social exchange In L Berkowitz (ed.), Advances in experimental social psychology New York: Academic Press Ahmad, K Z., & Bakar, R A (2003) The association between training and organizational 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OP 1.3.5 Cause and effect map Based on the literature review and the interview result, the following... factors “training and career development” have a great influence on the level of organizational commitment The author propose three solutions Solution one: Provide development training courses to. .. author find out the main cause effect to the organizational commitment is “lack of training and development” The author propose three solutions to improve the low level of organizational commitment