Solutions to enhance the level of employee recognition in coca cola southeast asia

Ho Chi Minh City – Year 2015 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyen Thi Thanh Tuyen Solutions to Enhance the Level of Employee Recognition in Coca-Cola Southeast Asia ID: 22130093 MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Dr Nguyen Thi Nguyet Que Dr Tran Ha Minh Quan Table of contents ACKNOWLEDGMENT Executive Summary Chapter 1: Problem Identification 1.1 Introduction of the company 1.2 Background of the business problem 1.3 Justification of the problem existence 11 1.4 Justification of the problem importance 15 1.5 Potential causes of the problem 18 Chapter 2: The alternative solutions 22 2.1 Justification of the potential causes 22 2.2 Proposed alternative solutions 26 Chapter 3: The Selected Solution 33 3.1 Explanation for selected solutions 33 3.2 Change Plan 40 Chapter 4: Conclusion 47 Chapter 5: Supporting Information 48 5.1 Supporting information of business problem background justification 48 5.2 Supporting information of problem existence justification 50 5.3 Supporting information of problem importance justification 56 5.4 Supporting information of potential causes 57 5.5 Supporting information of potential causes justification 59 5.6 Supporting information of proposed solutions 67 References 69 List of Tables Table 1: Turnover Rate Comparison from 2013-2015 Table 2: Turnover Rate Comparison from 2013-2015 in Coca and Pepsi 177 Table 3: Employee performance in Q1 and Q2 at Coca-Cola and Pepsi 188 Table 4: A comparison of alternative solutions 333 Table 5: Action timeline and objectives 422 Table 6: Questionnaire items and references for problem existence justification 511 Table 7: Interviewee’s Answers for problem justification 533 Table 8: Potential causes and definition 588 Table 9: Questionnaire items and references for potential cause justification (employees) 600 Table 10: Employee’s answers for potential cause justification 611 Table 11: List of questions and answers in justifying the potential causes (manager) 655 List of Figures Figure 1: Reasons for employees’ resignation in 2015 10 Figure 2: A cause-and-effect map of low employee recognition 21 Figure 3: Final Cause –Effect Map 26 ACKNOWLEDGMENT I am heartily thankful to my supervisors, Dr Nguyen Thi Nguyet Que and Dr Tran Ha Minh Quan, whose encouragement, guidance and support from the initial to the final level enabled me to develop an understanding of problems, solutions and structure At the beginning of the thesis, I had met misunderstanding about the real problems, their outcome and factors, Ms Que and Mr Quan instructed me to come over the difficulties, helped me understand the thesis structures, and edited flaws Therefore, I deeply appreciate their contribution Lastly, I offer my regards and blessings to all my colleagues, friends and classmates who supported me in any respect during the completion of the thesis Executive Summary On October 2015, the author got the chance to talk to Coca-Cola’s General Manager in their quarterly meeting, in which he raised some problems whom company had to face The employee’s turnover rate drastically increased, impacting to the business and raising a large amount of recruitment cost in the company To find out the real problem of recognition and its causes, and draw the effective solutions for this issue, the author closely works with human resource department and management team, besides, make interviews with employees and heads of departments to deeply understand the company situation and acquire their view points, combining interview data, literature reviews, and company sources to buttress the argument This thesis includes five chapters, in each chapter; the author analyses collected data, strengthens the argument by literature, and emphasizes the problem’s consequences and real causes, and seeks for the effective solutions that are applicable to company problems Chapter 1: Problem Identification This chapter includes six sections In the first section, the author makes introduction that inform company’s general information The following chapter convincingly shows an interview data that the author makes with employer and human resource manager to understand the basic background of the business problem The third and fourth sections are the justification of problem existence, and the justification of problem importance, which clearly indicate the problem’s existence and its’ outcome Then, the author lists down the potential causes of the problem that closely bases the literature in the fifth section Finally, the cause and effect map exhibits the whole picture of the correlation among potential causes, real problems and their outcome 1.1 Introduction of the company The representative office of Coca-Cola has been established in 1994 with responsibilities: to act as a liaison office, conduct market surveys, carry out activities to stimulate, and establish co-operation projects of Coca-Cola Southeast Asia, Inc in Vietnam, act as a communicative office, execute market research, and promotion activities, and run the marketing campaign and stimulate the implementation of contracts and agreements in the areas of commerce and investment signed between Coca-Cola Southeast Asia, Inc and Vietnamese Co-operations in compliance with Vietnam Law leader in the beverage industry As a global the Coca-Cola Company offers hundreds of brands, including soft drinks, fruit juices, sports drink and other beverage in Vietnam particularly and in more than two hundreds countries in general Coca-Cola is meeting the tastes of people around the globe In January 2015, the company runs the organizational restructuring to cut cost, downsize the workforce and open new positions matching to each employee’s capabilities Besides, many unnecessary positions had been cut to ensure the long term development, reaching to company vision A haft of employees was abruptly terminated in this period; some people were rotated to the new roles or to the new working locations After restructuring, there are thirty five employees (ten temporary employees and twenty five permanent employees) under seven departments, including: Human resource, Knowledge and Insights, Finance, Commercial and Operations, Technical, PAC, and Marketing 1.2 Background of the business problem In this step, the author applied qualitative method through interviews, and collected data from human resource reports Data resembled, analyzed and relied on the answers whose interviewees are general manager and human resource manager (section 5.1 in supporting information chapter) and reports were provided from Human resource department (table 1: turnover Rate comparison from 2013-2015, figure 1: reasons for employees’ resignation in 2015) in this section In the quarterly meeting, the general manager announced the business performance at Coca- Cola Vietnam in nine months in 2015 particularly and in three years in general He also raised the difficulties that company has met since January 2015 So, the author made an interview with him and human resource manager, who deeply understand about company situation The answers have been briefly described in the section 5.1 of supporting information chapter Firstly, the general manager was asked about turnover rate, which had been stated as a main concern in his speaking General Manager confirmed that since 2014, crisis global economy in general and in Vietnam in particular has attacked to business performance in Coca- Cola Vietnam, many compensation packages have been cut to ensure the profit in each division through the interview For two years, the award and promotion have been limited Besides, after organizational restructuring, many positions have been cut, and many employees’ job tasks have doubled, workload has been over Many employees have worked over time and under the pressure to ensure the project run smoothly and match with project timeline Many of them required to add more assistant positions, causing the cost would be over budget for 2015 Therefore, General Manager had to reject the request, making employees unhappy with his decision According to the Table of Turnover Rate Comparison that is provided from Human Resource Department, the turnover rate increases 8%, comparing to in 2014, increases 13.7%, comparing to 2013 So, the cost for recruitment process and training courses for new employees strongly increased to 53,690 USD in 2015 (table 1) In the office, the major of staffs in office who decided to quit their jobs are managers, causing to the recruitment process always takes time to select the suitable candidates and consequently this process impacts to the current employees who have to cover the tasks whose staffs were already left Table 1: Turnover Rate Comparison from 2013-2015 Years Turnover Rate (%) Manager Recruitment and Training turnover (%) Cost (USD) 2013 6.8% 45% (%)Rate 27,860 2014 12.5% 38,725 2015 20.5% 65% % 82% 53,690 Source: Human Resource Report in 2015 (Coca-Cola Southeast Asia) According to the pie chart of potential reasons (figure 1), all former employees who had been interviewed with human resource department before leaving, Human Resource Manager stated that 45% of them feel devalued and unrecognized from their managers Because when the job got done, they did not get any compliments from their manager, even they did not understand the difficulties that employees had been meeting at Some of employees assert that after so many years, they were not promoted because of the lack of recognition and understanding from their managers Moreover, the conflicts partly rose from the way that their mangers gave feedback to their concern in hard tasks As the figure shows in the pie chart of employees’ resignation reasons in 2015, there are more than 30% employees who left Coca-Cola because they got the better job offers from other companies in the same industries, such as: Nestle, Dutch lady, and Unilever 17% interviewees implied that over workload is main reason for resignation Besides, headcount freeze is established to limit cost, so company cannot offer the permanent positions to temporary employees who work for Coca-Cola more than five years So, temporary employees feel stress about their career paths when they are not extended their contracts as permanent employees They not know whether their contracts can be renewed when it expires, they can sign a new contract or not There are four reasons, such as: low employee recognition, over workload, other job offers, and job security which are considered as problems in Coca-Cola However, there are limitation about timing and budget to plan for the solutions In the interview with Human resource department, more than 45% of employees confirmed that recognition is the main reason pushing them to quit the job The author, general manager, and human resource manager discussed and decided low recognition is key problem needs to be immediately solved to improve working spirit in the long term (1993) Pergamit & Veum included as part of the employment package Promotions Promotions involved no change in position or (1999) duties, but were simply an upgrade of the current position 5.5 Supporting information of potential causes justification After justifying the potential causes impact to the recognition level with literature’s support, the author continue to make an interview with employees to find out the real potential causes effect to the recognition level in the company Before the interview, the author explains to each interviewee about the definition of each potential causes and recognition basing measurement scale The question are developed on the measurement scale of recognition and five potential cause in the research of Kopelman, Richard, Gardberg & Brandwein in 2011 Rewards: cash payment, working condition, compensation, incentive awards and performance awards Feedback: Formal feedback (company evaluation form, email) and informal feedback (conversation) Intrinsic motivation: when you something because you enjoy it or find it interesting Benefits: company outing trip, transportation, gifts, vouchers 59 Promotions: an upgrade of the current position The questions were asked and answers in table (section 5.5) were collected from the employees about those term The questions ca exploits employees’ view about potential causes The author directly asked employees about causes that they think are the most important and raise the reasons for each answers Basing on the answers, the author realizes which one is a real problem in the company Besides, the author made an interview with management team to understand their opinions about the whole picture The questions in table (section 5.5) are developed from the research of Kopelman, Richard, Gardberg & Brandwein in 2011 Table 9: Questionnaire items and references for potential cause justification (employees) Construct Rewards Measurement items References How satisfied are you with your current salary? Kopelman, Richard, How you feel about the fairness of the wages Gardberg & system at your place compare to: Brandwein (2011) The tasks you Your co-worker wage Other people working in the same field? Feedback When you finish your job, you often get the Kopelman, Richard, comments from you manager or co-worker? Gardberg & 60 Brandwein (2011) Intrinsic Motivation How much you enjoy working every day and Kopelman, Richard, performing at your best? Gardberg & Do you think your work fulfills your basic needs? Brandwein (2011) Would you say that it is usually nice to come to work? Benefits Promotion Are you happy with your health benefits? Kopelman, Richard, How you find the company’s benefits compared Gardberg & to other companies’ benefit in the industry? Brandwein (2011) How you feel about the possibilities to be Kopelman, Richard, promoted in your work? Gardberg & Brandwein (2011) The author analyzes the problem basing on the table below: Table 10: Employee’s answers for potential cause justification Feedback Brand Manager – In my point of view, manager feedback and support impact to permanent employee my performance and commitment It enhances my working spirit The straightforward feedback from my manager can help 61 me improve the weakness and develop the strength Besides, all the effort that releases the good result always expect to the rewards from the organization to help employees to know what they really strive for Brand Assistant – The timely feedback from my supervisor helps me solve the permanent employee issue accordingly, improve the performance Especially in Marketing department, I and my manager have to daily communicate to run the media project smoothly Her feedback helps me recognize the project drawbacks and then I can urgently contact to the agencies to fix the problem However, sometimes, the feedback comes late, or even my manager did not give any feedbacks I feel very disappointed, the feeling makes me confused about what I should when I got stuck in the mess So I think that timely and motivated feedbacks play important role in making us feel appreciated ” Commercial and My former manager always assigns the urgent hard tasks for Operations Manager – me He even did not support me to complete it So I think that permanent employee support and feedback make employee aware whether we are recognized 62 Office Manager – The company should improve their reward system Because, for permanent employee the long time, we even try our best, but have not gotten any reward as recognition from the company The rewards help us feel that our contribution has been appreciated In company, every employee who has work for company for years will receive a gift like: a watch, suitcases or necklaces But it will be better if we can get the reward every three years To me, the promotion is not quite important, because job title not play a key role in many cases Quality, Safety and I strongly believe that straightforward feedback play an Environment Manager – important role in inspiring us to work hard and contribute for permanent employee the long term development of Company It directly reflects the manager recognition to us In recent years, the salary just increases 10-15% annually as a support from company for the inflation So, position increase or promotion are important factors that can show the recognition Knowledge & Insights Rewards are is key factor effects to employee recognition” Specialist – former 63 employee Finance and procurement Recognition from line manager is very significant, because assistant- temporary manager directly evaluates my performance If I not receive employee the recognition from managers, all my efforts become to be meaningless So, if the good feedback make me feel recognized, I can acknowledge that my contribution behind has been appreciated Reward is the gift that I get in hand after the effort Management trainee Benefits, feedback are the causes of the low recognition in the company PAC specialist- former Manager directly evaluates our performance and our salary employee increase rate depends on the performance result from manager If we not get the useful feedback, how we can to improve ourselves? So, my former manager did not give any feedback to my concerns He emotionally evaluated team member It is not fair to everyone The majority of rewards are depend on the perform valuation results IT manager – temporary I have worked for years, my salary increased 15 % every 64 employee year However, there no reward or certificates has been received to recognize employee contributions My jobs become routine, which not come from rewards After justifying the existing potential causes, the author made an interview with management team to make sure the causes that employees stated, are existing in CocaCola Table 11: List of questions and answers in justifying the potential causes (manager) Questions: References: Kopelman, Richard, Gardberg & Brandwein Do you think that you have (2011) provided timely feedbacks to your employees? Do you think that our reward system is fair to all employees? Indochina Marketing I always give appropriate feedbacks to employees But the manager international company always requires employees to be proactive, they should be active to solve the issues rather than wait for my advices or guides? In my point of view, the 65 promotion system is quite good Because I have worked for Coca-Cola since years ago as a brand assistant, and now I have promoted to Indochina Marketing Manager The company always gives likelihood to potential employees to be promoted and supported Recently, we not have budget for rewarding So, it is true to say that reward system is quite poor here Indochina Commercial I think that feedback and motivation are key factors to improve Finance Manager employees’ performance So, I always contribute the good and bad comments on employees’ performance every quarter I am quite happy with the promotion system here Because they always give a chance to employees a self-decision The reward system has changed in recent year The financial budget cannot effort so many policies Technical Manager In my team, all members are experienced employees So they have enough experiences and power to come over the difficult situation without my helps But I think company should improve expatriates’ benefits packages The apartment, which company has rented for me is quite small and faraway from 66 city centers We not have the policy to reward for outstanding employees this year 5.6 Supporting information of proposed solutions Finally, the author learns from literature reviews for the solutions that can limit the consequences of the causes The proposed solutions depend on the total cost, timing, participant and company policy to make sure the solutions are applicable to company situation, and effectively practice in the long term (Table in section 3.1) Feedback-Friendly Culture According to Baker, Perreault, Reid & Blanchard (2013), take feedback to the new level: The Benefits of Feedback-Friendly Culture The culture provides an organization with a shared set of values, rules and regulations for how to behave and it creates an identity for its members that is dynamic and can be customized 360 Degree feedback Robertson (2008) indicated that a 360 degree feedback report is a way for employees to learn how they are perceived by direct reports, colleagues, managers, In organizations where coaching is viewed as a way to help employees develop to their fullest potential The organization is asking for their perspective on the behavior of their manager 67 (Garavan, Morley & Flynn, 1997) presented a 360 degree feedback can help to create better working relationships within the organization and improves the ability of people to work in teams Cash bonus Organizations should use cash bonus to reward employees for exemplary performance that is if they have performed higher or exceed their set targets, this hence makes them eligible (Njanja, Maina, Kibet & Njagi, 2013) A market reward alternative Hsieh & Chen (2011) stated that a market reward alternative that pays these individuals at or above the market rate can prove to be a wise investment London & Higgot (1997): Annual Quality Award 68 References Klubnik, J (1994) The power of peer-to-peer recognition The Journal for Quality and Participation, 17(3), 36 Retrieved from http://search.proquest.com/docview/219125354?accountid=63189 Hopkins, H (1995) A challenge to managers: Five ways to improve employee morale Executive Development, 8(7), 26 Feys, M., Anseel, F., & Wille, B (2013) Responses to co-workers receiving recognition at work Journal of Managerial Psychology,28(5), 492-510 doi:http://dx.doi.org/10.1108/JMP-08-2011-0025 Saunderson, R (2004) Survey findings of the effectiveness of employee recognition in the public sector Public Personnel Management, 33(3), 255-275 Achim, I M., Dragolea, L., & Balan, G (2013) The importance of employee motivation to increase organizational performance Annales Universitatis Apulensis : Series Oeconomica, 15(2), 685-691 Skudiene, V., Everhart, D D., Slepikaite, K., & Reardon, J (2013) Front-line employees' recognition and empowerment effect on retail bank customers' perceived value Journal of Service Science (Online), 6(1), 105 Muthuveloo, R., Basbous, O K., Ping, T A., & Long, C S (2013) Antecedent of employee engagement in the manufacturing sector American Journal of Applied Sciences, 10 (12), 1546- 1552 69 Mone, E., Eisinger, C., Guggenheim, K., Price, B., & Stine, C (2011) Performance management at the wheel: Driving employee engagement in organizations Journal of Business and Psychology, 26(2), 205-212 Rustand, D L (2001) Rewards and recognition: Keys to retaining experienced nursing personnel SSM, 7(4), 56 Özutku, H (2012) The influence of intrinsic and extrinsic rewards on employee results: An empirical analysis in turkish manufacturing industry Business and Economics Research Journal, 3(3), 29- 48 Retrieved from http://search.proquest.com/docview/1032666131?accountid=63189 Baker, A., Perreault, D., Reid, A., & Blanchard, C (2013) Feedback and organizations: Feedback is good, feedback-friendly culture is better Canadian Psychology, 54(4), 260-268 Lorenzet, S J., Cook, R G., & Cynthia Ozeki, UCE Birmingham,Business School (2006) Improving performance in very small firms through effective assessment and feedback Education & Training, 48(8), 568-583 doi:http://dx.doi.org/10.1108/00400910610710010 Masvaure, P., Ruggunan, S., & Maharaj, A (2014) Work engagement, intrinsic motivation and job satisfaction among employees of a diamond mining company in zimbabwe Journal of Economics and Behavioral Studies, 6(6), 488-499 70 Dar, A T., Bashir, M., Ghazanfar, F., & Abrar, M (2014) Mediating role of employee motivation in relationship to post-selection HRM practices and organizational performance International Review of Management and Marketing, 4(3), 224238 Koning,John W.,,Jr (1993) Three other R's: Recognition, reward and resentment Research Technology Management, 36(4), 19 Pergamit, M R., & Veum, J R (1999) What is a promotion? Industrial & Labor Relations Review, 52(4), 581-601 Robertson, C (2008) Employee development: Getting the information you need through a 360° feedback report Chemical Engineering, 115(4), 63-66 Garavan, T N., Morley, M., & Flynn, M (1997) 360 degree feedback: Its role in employee development The Journal of Management Development, 16(2), 134147 Robertson, C (2008) EMPLOYEE DEVELOPMENT: Getting the information you need through a 360° feedback report Chemical Engineering, 115(4), 63-66 Njanja, W L., Maina, R N., Kibet, L K., & Njagi, K (2013) Effect of reward on employee performance: A case of kenya power and lighting company ltd., nakuru, kenya International Journal of Business and Management, 8(21), 41-49 71 Hsieh, Y H., & Chen, H M (2011) Strategic fit among Business Competitive Strategy, Human Resource Strategy, and reward system Academy of Strategic Management Journal, 10(2), 11-32 London, C., & Higgot, K (1997) An employee reward and recognition process The TQM Magazine, 9(5), 328 Gberevbie, D E (2008) Employee retention strategies and organizational performance Ife Psychologia, 16(2), 148-173 Cash incentive; bonus payments are growing in popularity, but what considerations should a company keep in mind when it comes to putting this through payroll? louise mitchell, director of precise payroll in aberdeen, advises (2006, Nov 24) The Press and Journal Clark, S., Whittall, A (2003) Performance management develops productivity Winnipeg Sun Henryhand, C J (2009) The effect of employee recognition and employee engagement on job satisfaction and intent to leave in the public sector (Order No 3369470) Available from ProQuest Central Allen, R S., & Helms, M M (2002) Employee perceptions of the relationship between strategy, rewards and organizational performance Journal of Business Strategies, 19(2), 115-139 72 Kopelman, Richard E,D.B.A., S.H.P.R., Gardberg, N A., PhD., & Brandwein, A C., PhD (2011) Using a recognition and reward initiative to improve service quality: A quasi-experimental field study in a public higher education institution Public Personnel 73 ... supported me in any respect during the completion of the thesis Executive Summary On October 2015, the author got the chance to talk to Coca- Cola s General Manager in their quarterly meeting, in which... the following section to further elucidate their importance in the development of a feedback-friendly culture According to the employee answers in the second interview, the majority of employees... leader in the beverage industry As a global the Coca- Cola Company offers hundreds of brands, including soft drinks, fruit juices, sports drink and other beverage in Vietnam particularly and in more