Solution to reduce ambiguity at interlog company

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Huynh Thuy Tien SOLUTIONS TO REDUCE AMBIGUITY AT INTERLOG COMPANY MASTER OF BUSINESS Ho Chi Minh City - 2016 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Huynh Thuy Tien SOLUTIONS TO REDUCE AMBIGUITY AT INTERLOG COMPANY ID: 21130004 MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: NGUYEN THI MAI TRANG Ho Chi Minh City –2016 ABSTRACT Today, Logistics is one of the sectors are high-speed development in Vietnam Therefore, the need for personnel especially employees who have expertise, capabilities and experience is a critical requirement of Logistics industry The recruitment has been difficult, the retention of personnel is one of the issue of concern of Logistics Companies And for InterLog it is no exception, in recent years, high employee turnover rate is problem which BOD of InterLog always think about Thorough this study, I find out four key causes lead to that problem, they are: conflict, ambiguity, salary and reward system, and high pressure In which I focused analysis and propose some alternative solutions to the ambiguity issue TABLE OF CONTENTS I – EXECUTIVE SUMMARY II- PROBLEM DEFINITION 2.1 Background of InterLog Company 2.2 Current situation of InterLog Company 2.3 First cause: Conflict 11 2.4 The second cause: Ambiguity 14 2.5 The third cause: Salary, Reward System and High Pressure 19 III – ALTERNATIVE – ANALYSE ALTERNATIVE CHOICE 31 3.1 First alternative solution 32 3.2 Second alternative solution 35 IV- ACTION PLAN 39 V- CONCLUSION 40 VI- SUPPORTING INFORMATION 41 REFERENCES LIST OF TABLES Table 1: Employee turnover rate in 2013 – 2014 Table 2: Position of employee leave in 2013-2014 .9 Table 3: Turnover rate of each department in 2013-2014 .10 Table 4: The comparison between average salary increase and inflation rate 20 Table 5: List of antecedents of job satisfaction and commitment of previous researches 24 Table 6: Benefits and Cost of building a new working process .34 Table 7: Benefits and Cost of setting up a clear goals 38 Table 8: Action plan for two solutions .39 Table 8: Position and Work Experience of Respondents (in years) 44 Table 9: Position and Work Experience of Respondents (in years) 54 LIST OF FIGURES Figure 1: Salary Increase In Vietnam from 2004 – 2015 .21 Figure 2: Diagram for main causes lead to high turnover rate in InterLog .23 Figure 3: Results of incident analysis at InterLog 31 Figure 4: Supply Chain Process of InterLog Company 33 ACKNOWLEDGEMENTS The completion of my Master thesis represents the end of my academic training in International School of Business (ISB) I want to take this opportunity to give my gratitude to a select few for their time, talent, assistance and encouragement in the past two years First, I am greatly indebted to Professor Nguyen Thi Mai Trang, my advisor, who was always very patient and kind to give me suggestions and ideas in my work She was really helpful in the whole process of this thesis I really appreciate it I also want to extend my gratitude to the BOD, and all employees of InterLog Company, which I this study in Without their co-operation and help, the data collection process of this thesis could not have been completed Finally, I want to give my deepest appreciation to my parents Mom and dad always believe in my abilities and give me encouragement all the time They have shared my ups and downs during my ISB program This work is dedicated to them I- EXECUTIVE SUMMARY InterLog Company is a Logistics Company, which current situation is high employee turnover rate In 2013, turnover rate is 19.5% and in 2014 that is 26.88% In 2014, the average staff turnover rate of general industry is 12.7%, however, that of InterLog is 26.88%, higher compare with result survey of Towers Watson Vietnam And following statistics, turnover rate of Sales Department in 2013 and 2014 in turn are 8/16 (50%) and 14/25 (56%) is highest, so I focus on analyzing turnover intention of employee of Sales Department Based on secondary data such as annual HR report of the company in two years 2013 and 2014, and reports of exit interviews and primary data – I used qualitative method – in-depth interview employees of Sales Department randomly, I find out some main causes lead to this situation is conflict, ambiguity, salary and reward system, and high pressure In the four reasons mention above, conflict and ambiguity are key causes Ø Conflict due to inefficient internal communication Ø Ambiguity due to inconsistent working process, unclear role of employee and empowerment of middle manager Between conflict and ambiguity, BOD of InterLog should solve the ambiguity first; a consistent working procedure and role clear of employees are a “solid foundation” for longterm development of the company Basing on results of interview of some middle managers (Sales, Production and Human Resources and Finance Department) of InterLog Company, I propose two solutions for company First alternative solution: Set up a clear process Ø First, making quotation of popular items Ø Second, set up process Ø Last, define rights and responsibilities of each department Second alternative solution: Set up clear goals Ø First, communicate corporate goals, mission and vision for employees Ø Second, performance feedback Ø Third, developing autonomy Ø Next, setting up a clear path promotion Ø And the last, contest a game show such as: “I want to be section director” II- PROBLEM IDENTIFICATION 2.1 Background of InterLog Company International Logistics Joint Stock Company (InterLog) was separated from Interlink Group – business specializing in freight forwarding multinationals In the context of international trade development, freight demand for exports and domestic rises up in Vietnam, to more proactive in business, International Logistic JSC was born on August 2005 with its head office based on Ho Chi Minh City Being a business with 100% domestic capital, InterLog has powers such as: • As an independent accounting unit • Have full legal status • Used seal • Proactively perform business activities, finance, and independent personnel organization Established since 2005, InterLog has become a strong brand and won the trust of many domestic customers It has built a powerful workforce with more than 100 official staffs, developed an official network in five big cities including two branches in Ha Noi and Dong Nai, and two agents in Da Nang and Hai Phong Ms Thanh Hoa: I know it costs so much when having an employee quit job because of training cost is so high In InterLog, our training program for newcomers lasts from months to year, some cases, it can last years So, high turnover rate is something we not wish To avoid it, we support our best for the salesperson in working to get good results and well as high wages However, when he/she has intention quit job, personally I would not try to hold him/her back Mr Thanh Ton: Now, sales is a hot career, almost company need salespeople to grow market also increase revenues, so the salespeople have a lot of choices, leading to the high job-jump Ms Hoang Linh: Sales Department has high turnover rate, the cause of this is due to the recruitment, managers department not to involve interviewing and choosing personnel, but directly CEO participate in recruitment, resulted in some conflicts how to select suitable personnel for department Ms Cat Duyen: In my opinion, I think, the movement of human resources of the company in recent times, especially in the Sales division it has many causes, but primarily comes from internal causes such as: the ambiguity in the division of responsibilities and rights of the departments led to the conflict and had two experienced employees of Sales Department were off work because of this problem, conflicts between them are irreconcilable contradictions And promotion opportunity in InterLog is not really clear, this also makes employees lack motivation to strive and easily give companies they can find another company with more opportunities for advancement That is the internal cause of the 49 company, and the external cause is very clear that in recent years, Vietnam's logistics industry is booming, and personnel for this sector is really deficient, especially in the Sales department, so the work in other companies with higher income levels always attracts Salespeople to decide job-hopping Ms Bich Loan: According to my opinion, currently, most companies focus on developing sales department to expand and seek new customers, so the demand for sales lot, which is the reason for the sales jump and look for the opportunities that they feel suitable with them Question 4: As a manager or a group leader, what did you think when one of your subordinates left the company and did you anything to keep him or her? Ms Mong Hien: I think, if one of my subordinates wants to leave the firm, I will accept, but I will have a meeting with him or her to frank discussion about reasons make him/her want quit job Follow me, when a person had intention to quit job that means he has thoughts and own estimates, so we couldn’t keep them stay Mr Van Tri: Be a deputy of SCM, I know clearly the cost when an employee quit Logistics Industry until now is still a relatively new industry in Vietnam, and is growing strongly, so that human resources for this sector is remains scarce, especially the experienced personnel Therefore, I don’t want any one of my subordinates leave the company, especially key players So, when it happens, I will try to keep them 50 Ms Thanh Hoa: As I mentioned, in working, I will support my best for subordinates But, if they want to leave the firm, I wil not keep them because I have tried my best to help and support them, they want to leave that means they have had own their plan Mr Thanh Ton: As a manager, when one of my subordinates leave the company, I will keep him or not depend on his working ability, ethic, … If he is a key player, I will discuss with him to find out common solutions for both of us Ms Hoang Linh: I would ask why to resign, depending on the reasons that make the various workarounds Such as: resigned because of incapacity to fulfill the job, I will not keep them stay Ms Cat Duyen: If my subordinates have turnover intention, I will find out reason why they decided that, if the reason stems from the wages, pressure, conflict, I will try to solve, analyze and release the pressure on them What if after all that they still want to go, I will not hold them anymore And decision to retain them also depend my judgment on the employee, if that's key players will try my best to keep them Ms Bich Loan: When a person wants to leave the company, sure he will have their own reasons, and I think, if you keep him, this will just maintain for a short time because sooner or later he will also leave well, so I will not keep him, instead of that I will have a talking with him to understand reason why he decides to leave, and from that lessons to avoid for the following cases 51 Question 5: In your opinion, what are the vital factors that intensively affect to the turnover intention of an employee? Ms Mong Hien: As I mentioned, I think internal conflict is one of reasons Beside that, workload is also a cause, for service sector, competition is so high, so pressure is also so high Mr Van Tri: ‘In my opinions, some causes can lead to intention-quit job of employees: - Pressure - Conflicts which cannot resolve - Require higher salary and reward - Ambiguity about role in work Ms Thanh Hoa: I love this job and cooperate culture of InterLog, so I never had the intention to quit job or job-hopping But, working here many years, I could conclude some causes: - Working pressure - Conflict with other department - Salary and rewards don’t compete with other company - Different ways of working with direct manager leads to conflict - Lack of clarity about path promotion Mr Thanh Ton: I think, some reason lead to the intention to quit job: 52 - Ambiguity in working, goals, and process - Conflict with other departments, and internal conflict in department - High pressure Ms Hoang Linh: Having a lot cause lead to quit job, such as: - Working results not good (for new graduate) - Relationships at workplace not good, having many conflict - Work is not clear, overlap between department and have a transfer between departments so much - Internal work unmatched - Salespeople not independent in work Ms Cat Duyen: After eight years working for InterLog, I can accentuate some reasons why employees quit job, such as: - Conflict with other people - Unclear promotion opportunities - Compensation is not good - High pressure - Different style in working with direct manager - They find out another job with high salary - They want to try in another area Ms Bich Loan: Following to me, some reasons like as: 53 - Salary, compensation - Work environment - Leader style - Working pressure - Lack of motivation The report of the second qualitative research: The common themes of suggestions for ambiguity problem of InterLog managers mentioned set up a standards working process for two departments Sales and Provision, define the clear roles and responsibilities of each employee, as well as the powers of each department to avoid overlapping on work, and also mentioned that should make empowerment for middle managers to reduce the pressure to the CEO In addition to the general idea that, then there are some suggestions on building promotion opportunities, performing comments and feedback timely for employees’ performance And below are the transcripts of the interview: Question 1: Please tell us your full name and the position that you are holding in your company at the moment? Tabel 4.2: Position and Work Experience of Respondents (in years) No Name Position Experience Tran Thanh Hoa Sales Manager 7,5 years 54 Nguyen Thi Hoang Linh Ho Phu Loc Dang Nguyen Thao Linh Sales Deputy of Interconsol Trucking Solutions Manager Deputy of HR& Marketing (Recruitment Executive) years 13 years years Question 2: With the survey results about the cause of current situation of InterLog is high turnover-rate that I have communicated to you; in your opinions, you will propose what solutions to resolve this situation? Ms Thanh Hoa: First, the need to accelerate finishing of workflow process between the Sales and Provision Departments, in which has to particular and detail on work of each stage as well as the estimated time for each stage Besides, BOD needs for clear delineation of roles and responsibilities of each department, in order to avoid overlapping rights cause conflicts at work And the CEO should also consider decentralization to middle managers, it has reduced the work pressure for the CEO, and I think it would also be motivated to each manager to work with more responsibility In terms of the roles and responsibilities of each employee is unclear, managers will be combined with HR managers to solve this problem Ms Hoang Linh: Based on the survey results of the siblings, it is clear we need to solve the immediate future is to build common and unified working process for both Sales and Provision Departments Next, BOD should pay attention to solve the separation of powers for middle managers as in the previous interview I have mentioned The ambiguity in the role of employee perhaps greater fault lies in the managers, which I think would be 55 redressed Plus, I think the company should build a clear path promotion or promotion opportunities to motivate employees to strive for themselves as well as for the managers Mr Phu Loc: About the solution, we first need to address three issues raised in the survey Besides, I also propose a number of solutions to help limit current situation of company is the high employee turnover rate It is necessary to focus on the recruitment process, in recruitment segment I think the CEO should change, should give managers the right to check/test for personnel, instead CEO will test first and then is the head department, I think this process should be reversed Ms Thao Linh: In terms of personnel, I have some suggestions as follows, continue to perform the monthly report on the situation of each department personnel, in addition, the manager needs 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be section director” II- PROBLEM IDENTIFICATION 2.1 Background of InterLog Company International Logistics Joint Stock Company