Organizational restructuring at Mai Linh Group from 2010-2014

ACKNOWLEDGEMENT The process of writing this graduation thesis has provided me interesting experience It would not have been completed without guidance, support and motivation from many people whom I would like to express my gratitude and appreciation First of all, I would like to thank my supervisor, Mr Nguyễn Hồng Quân Without his in-depth knowledge and careful guidance, I might not produce this work Secondly, I would like to say thanks all the managers and staffs of Mai Linh North Joint Stock Company, for their cooperation that helped and inspired me in this writing Last but not least, I would also like to give my warm thank to the authors, researchers, scientists who provided me such valuable materials for my research Hanoi, May 14th, 2015 CONTENT LIST OF FIGURES LIST OF TABLES CHAPTER 1: INTRODUCTION 1.1 Background for the research .1 1.2 Research objectives .2 1.3 Research scope 1.4 Research questions 1.5 Research method 1.5.1 Literature review .3 1.5.2 Empirical study 1.6 Thesis structure CHAPTER 2: LITERATURE REVIEW 2.1 Organizational restructuring 2.1.1 Definitions 2.1.2 Reasons .5 2.1.3 Types of organizational restructuring .7 2.1.4 Models 10 2.1.5 Communication in restructuring process 20 2.2 Employees under restructuring conditions 26 2.2.1 Employee attitude 26 2.2.2 Employee engagement 27 2.2.3 Employee morale 33 CHAPTER 3: RESEARCH PURPOSE 36 3.1 Overview of Mai Linh Group .36 3.2 Vision, mission and core values 37 3.3 Restructuring process of Mai Linh Group from 2010 to 2014 .37 CHAPTER 4: RESEARCH METHODOLOGY .42 4.1 Research design 42 4.2 Treatment of data 43 4.2.1 Data collection 43 4.2.2 Data analysis 44 4.3 Questionnaire design 45 4.4 Pilot study .46 4.5 Sample population 47 4.6 Response rate 48 CHAPTER 5: RESULTS AND INTERPRETATION .49 5.1 Analysis of biographical information 49 5.2 Employee involvement in the process 51 5.3 Employee attitudes after the restructuring process .53 5.5 Communication process and strategy during restructuring 57 5.5.1 Forms of communication used during restructuring 59 5.5.3 Other findings 60 CHAPTER 6: CONCLUSIONS AND RECOMMENDATIONS 62 6.1 Main findings 62 6.1.1 Employee involvement in the restructuring process .62 6.1.2 Impact of restructuring on employee attitudes 62 6.1.3 Impact of restructuring on employees’ morale 63 6.1.4 Communication process and strategy during restructuring .63 6.2 Problems and limitations .64 6.3 Recommendations 64 6.4 Opportunities for further research 66 REFERENCES 67 APPENDIX 70 Appendix 1: Questionnaire covering letter 70 Appendix 2: Questionnaire covering letter in Vietnamese language 71 Appendix 3: Research questionnaire 72 Appendix 4: Research questionnaire in Vietnam language 79 Appendix 5: Results of questionnaires 84 LIST OF FIGURES Figure 2.1: Nadier & Tushman’s congruence model………………………………….14 Figure 2.2: John Kotter’s eight-step model………………………………………… 18 Figure 2.3: The International Survey Research’s Model…………………………… 31 Figure 3.1: The organizational chart of Mai Linh group in 2010…………………… 39 Figure 3.2: The organizational chart of Mai Linh group in 2014…………………… 40 Figure 5.1: Gender distribution of sample…………………………………………….49 Figure 5.2: Age distribution of sample……………………………………………… 50 Figure 5.3: Responses by number of years employed…………………………………50 Figure 5.4: Forms of communication predominantly used during restructuring…… 59 LIST OF TABLES Table 3.1: Financial statement of Mai Linh Group from 2006 to 2014……………….37 Table 3.2: The number of employees working for Mai Linh Group from 2010 to 2014…38 Table 5.1: Employee Involvement in the Process…………………………………… 52 Table 5.2: Employee Attitude after the Restructuring……………………………… 54 Table 5.3: Employee morale after restructuring………………………………………56 Table 5.4: Communication process and strategy during restructuring……………… 58 CHAPTER 1: INTRODUCTION 1.1 Background for the research Change has become inevitable in today’s fast paced and increasingly complex world Besides to external factors such as high speed technological developments, economic factors and globalization, a conceited change inside also fuels the change in the business environment As a result, organizations need to keep up with rapid developments in the business environment to survive This requires organizations to be open and willing to change and once the organizations make up their mind to undergo a radical change, significant effort is required to effectively manage this change Regarding Mai Linh, from 2007, it started to fall down into the hot growth trap by rushing to inject cash in the business fields such as education and real estate which unrelated to their main business, namely transportation service Meanwhile, the modest income was insufficient to cover expenses and then led Mai Linh into the statuses of the insolvency and the liquidity exhaustion In 2010, the annual shareholders' meeting of Mai Linh group announced to embark on a process of restructuring the organization after suffering negative net profit after tax three years in a row from 2007 to 2009 The group would return to the core business This process, like many other restructuring processes, has had some casualties in terms of people in which some had to leave the organization while others were asked to pursue something else within the group This created a lot of uncertainty amongst many employees, particularly those that were from the redundant unit This has been the case despite the repeated assurances from the management that this was not a cost-cutting exercise, and therefore, staff should not be afraid that they may lose their jobs 1.2 Research objectives  Reviewing contemporary literature to identify the restructuring strategies for organizations  Clarifying the organizational restructuring process employed by the selected organization  Evaluating the effects of the organizational restructuring process has had on the employees  Comparing the literary theory with the restructuring process followed by the chosen organization  Recommending the most appropriate strategies for the organizational restructuring process 1.3 Research scope There are many interesting issues and topics around restructuring process and thus it is important to focus on only chosen issues The main issue in this thesis is to learn more about effects of restructuring on employees' attitude, engagement and morale as well as gain deep understanding of communication process during restructuring to help change project managers more effectively plan and implement change projects The study is carried out at a child company of Mai Linh group named Mai Linh North Joint Stock Company In addition, due to the topic of this thesis, the author concentrates on the period of restructuring of Mai Linh group from 2010 to 2014 1.4 Research questions Main Problem Although Mai Linh’s restructuring process affects all aspects of the group, the author pays more attention to the question related to what strategies this organization can employ to effectively restructure its business without compromising the employees’ morale Sub-problems An analysis of the main problem allows identification of the following sub-problems: Sub-problem one: What are the restructuring strategies that the related literature has been discussed which can help an organization in effectively implementing their restructuring process? Sub-problem two: What restructuring strategies did the chosen business employ? Sub-problem three: What were the influences of the restructuring process on employees’ morale at the selected organization? 1.5 Research method The subsequent methodologies were applied for this study 1.5.1 Literature review Some restructuring strategies such as Burke-Litwin model of organizational performance and change and John Kotter’s eight-step change model, based on a related literature study of the newly-updated possible sources, were revised to help the organization effectively implement its restructuring process A theoretical foundation for this study also came from some research reports and journals like “The effect of downsizing on morale and attrition” and “Work and Occupations” 1.5.2 Empirical study A survey was conducted among certain employees of Mai Linh North Joint Stock Company Moreover, the researcher constructed a questionnaire to identify influences the recent restructuring process on its morale Regarding a sample for this study, 30 employees of Mai Linh North Joint Stock Company including 11 taxi drivers and 19 office-based employees were selected as a sample for the study 1.6 Thesis structure The study includes the following chapters: Chapter 1: Problem statement and outline of the study Chapter 2: Theory of organizational restructuring Chapter 3: Description of organizational restructuring at Mai Linh Group Chapter 4: Research methodology and analysis of biographical details Chapter 5: Analysis and interpretation of results Chapter 6: Summary, conclusions and recommendations CHAPTER 2: LITERATURE REVIEW 2.1 Organizational restructuring 2.1.1 Definitions The concept of "organizational restructuring" has various definitions To be more specific, organizational restructuring is “planned changes in a firm’s organizational structure that affect its use of people” (Cascio, 2002, p.4) On the other hand, Greenberg and Baron (1995) define this concept as the altering of size and basic configuration of the organizational chart Organizational restructuring can also be considered by Hammer and Champy (1993) as the fundamental rethinking and radical redesign or change of business processes (such as the process of receiving a sales order to billing the customer and receiving and payment), in the way in which an organization performs its business activities, to bring about dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed 2.1.2 Reasons Regarding reasons of organizational restructuring, many organizations these days often take part in activities which are designed to improve their organizational effectiveness, which then would create a need for the organizations to restructure to enhance the process Also, organizational restructuring may refer to different forms such as the addition of new product lines or markets, mergers, acquisitions and cost reduction exercises These various forms of restructuring often confront a common challenge that they require human resources to be changed so that an appropriate staff level can be maintained in a corporate structure to foster both the proactive and reactive capacity of the organization to meet new demands in the marketplace Therefore, the restructuring process would cause either upsizing or downsizing the staffing levels In either case, the result will involve the rightsizing and the reorganization as well as realignment of workflows Especially, to bolster the productive and effective use of resources, lines of 70 APPENDIX Appendix 1: Questionnaire covering letter Hanoi, 6/4/2015 Dear Respondent, My name is Tran Tuan Anh I am a senior of Foreign Trade University Now I am conducting a research with regard to restructuring process of Mai Linh group for my graduation thesis It would be appreciated if you could complete the questionnaire and return it to me If you wish to receive a copy of the summary of the findings, please inform me Yours sincerely Tran Tuan Anh, Researcher 71 Appendix 2: Questionnaire covering letter in Vietnamese language Hanoi, ngày tháng năm 2015 Thân gửi anh/chị, Tên em Trần Tuấn Anh, sinh viên năm trường đại học Ngoại Thương Hà Nội Hiện em tiến hành nghiên cứu trình tái cấu trúc tập đoàn Mai Linh để phục vụ cho khóa luận tốt nghiệp Rất mong anh/chị giúp em hoàn thiện câu hỏi khảo sát để em có thêm thơng tin cho khóa luận Nếu anh/chị muốn nhận copy kết quả, anh chị báo cho em biết để em gửi lại cho anh/chị Chân thành cảm ơn anh/chị, Trần Tuấn Anh 72 Appendix 3: Research questionnaire Section A: Biographical Information Please choose with an X in the appropriate box A1 Which division you work for? Office of Mai Linh in North Vietnam Transportation (taxi driver) A2 Please choose your gender Male Female A3 Please indicate your age Below 21 years 21-30 years 31-40 years 41-50 years 51-60 years Above 60 years A4 The period of time of working at Mai Linh group at the restructuring time Years Months Section B: Organizational Restructuring Process at Mai Linh group B1 Employee Engagement in the restructuring process Please select the degree to which you agree 73 Employee Involvement in the Restructuring Process Strongly Agree Agree Uncertai n Disagree Strongly Disagree Disagree Strongly Disagree My manager recognized and managed the impact of change on me All affected employees were consulted before change was implemented I was encouraged to become involved and committed to be restructuring process by my manager Benefits of restructuring were discussed with me personally I clearly understood the reasons for the recent restructuring I was given an opportunity to give input into the restructuring process B2 Employee Attitude after Restructuring Please select the degree to which you agree Employee Attitudes after the Restructuring Process Strongly Agree Agree Uncertain 74 Top Management effectively implemented the restructuring process The organization has changed for the better I feel positive and certain about my future in this organization I trust top management of his organization Top management was honest well caring Recent restructuring process was well planned Recent restructuring resulted in positive outcomes for the group I intend working for this organization for a long time to come I still have confidence in top management and this organization B3 Employee Morale after Restructuring Please select the degree to which you agree Employee Morale after Strongly Agree Agree Uncertain Disagree Strongly Disagree 75 Restructuring Recent restructuring was good for employees I look forward to going to work every day Recent restructuring has created more opportunities for employees Recent restructuring has improved my working conditions I want to continue working for this organization in the future I still enjoy doing my work I still feel very committed to the goals and objectives of this organization I still feel a sense of belonging to this organization I still put in extra effort to ensure that goals and objectives of this organization are achieved B4 Communication Process and Strategy during Restructuring 76 Please select the degree to which you agree Communication during Restructuring process The vision and objectives of restructuring were clearly communicated to me There was enough communication with staff during restructuring Top management communicated all the relevant information accurately and timeously with staff All affected employees were informed about restructuring right at the outset There was consistent communication throughout the process The medium of communicating changes to me was appropriate Managers and supervisors were kept informed about restructuring at all times Strongly Agree Agree Uncertain Disagree Strongly Disagree 77 Open and honest communication was used at all times B4.1 Please select the communication methods used in the process Types of communication Face-to-face Email Telephone Video-conferencing Other (please specify) Never B5 If you had been in charge of the restructuring process, what would you differently? …………………………………………………………………………………………… …………………………………………………………………………………………… …………………………………………………………………………………………… …………………………………………………………………………………………… …………………………………………………………………………………………… …………… Many thanks for participating in this project Your time and input are greatly appreciated 78 Appendix 4: Research questionnaire in Vietnam language Mục A: Thông tin tiểu sử Hãy điền dấu X vào ô thích hợp A1 Anh/Chị làm cho phận công ty cổ phần Mai Linh Miền Bắc? Văn phòng Vận tải (tài xế taxi) A2 Giới tính anh/chị là? Nam Nữ A3 Độ tuổi anh/chị khoảng: Dưới 21 tuổi 79 21-30 tuổi 31-40 tuổi 41-50 tuổi 51-60 tuổi Trên 60 tuổi A4 Tính tới thời điểm anh/chị làm cho Mai Linh năm? Số năm Số tháng Mục B: Quá trình tái cấu trúc tập đồn Mai Linh B1 Sự tham gia nhân viên trình tái cấu trúc Hãy điền dấu X vào thích hợp Sự tham gia nhân viên trình tái cấu trúc Quản lý anh/chị nhận thấy kiểm sốt ảnh hưởng q trình lên thân anh/chị Tất nhân viên bị ảnh hưởng tư vấn trước trình tái cấu trúc tiến hành Anh/chị khuyến khích quản lý tham gia tuân theo trình tái cấu trúc Những lợi ích việc tái cấu trúc thảo luận trực tiếp với anh/chị Anh/chị hiểu rõ lí cho việc tái cấu trúc gần Mai Linh Rất đồng ý Đồng ý Không Không đồng ý Rất không đồng ý 80 Anh/chị cho hội để đưa nguồn lực vào trình tái cấu trúc B2 Thái độ nhân viên sau trình tái cấu trúc Hãy điền dấu X vào ô thích hợp Thái độ nhân viên sau trình tái cấu trúc Ban quản trị cấp cao thực hiệu trình tái cấu trúc Mai Linh thay đổi tốt so với khứ Anh/chị cảm thấy tích cực chắn tương lai Mai Linh Anh/chị tin vào ban quản trị cấp cao Mai Linh Ban quản trị cấp cao quan tâm thành thật với nhân viên Quá trình tái cấu trúc gần lên kế hoạch cụ thể Quá trình tái cấu trúc gần mang để kết tích cực cho doanh nghiệp Anh/chị có ý định làm việc cho Mai Linh khoảng thời gian dài Rất đồng ý Đồng ý Không Không đồng ý Rất không đồng ý 81 Anh/chị có tự tin vào ban quản trị cấp cao doanh nghiệp B3 Tinh thần nhân viên sau trình tái cấu trúc Hãy đánh dấu x vào tích hợp Tinh thần nhân viên sau trình tái cấu trúc Quá trình tái cấu trúc gần tốt cho nhân viên Anh/chị mong chờ làm ngày Quá trình tái cấu trúc gần tạo nhiều hội cho nhân viên Quá trình tái cấu trúc gần nâng cao điều kiện làm việc anh/chị Anh/chị muốn tiếp tục làm việc cho Mai Linh tương lai Anh/chị u cơng việc Anh/chị cảm thấy thân cam kết với mục tiêu tổ chức đề Anh/chị cảm thấy thuộc doanh nghiệp Rất đồng ý Đồng ý Không Không đồng ý Rất không đồng ý 82 Anh/chị cố gắng để đảm bảo mục tiêu doanh nghiệp đạt B4 Quá trình chiến lược giao tiếp trình tái cấu trúc Hãy đánh dấu x vào thích hợp Giao tiếp trình tái cấu trúc Tầm nhìn mục tiêu trình tái cấu trúc truyền tải rõ ràng tới anh/chị Thông tin đầy đủ tới đội ngũ nhân viên trình tái cấu trúc Ban quản trị cấp cao cung cấp thông tin liên quan cách xác kịp tới cho đội ngũ nhân viên Tất nhân viên bị ảnh hưởng thơng báo q trình tái cấu trúc từ ban đầu Việc thơng tin thống tồn q trình tái cấu trúc Phương tiện thơng báo trình tái cấu trúc phù hợp với anh/chị Các quản lí người hướng dẫn ln cập nhật trình tái cấu trúc Rất đồng ý Đồng ý Không Không đồng ý Rất không đồng ý 83 Việc giao tiếp cởi mở thẳng thắn sử dụng lúc B4.1 Hãy chọn phương thức giao tiếp sử dụng trình tái cấu trúc Loại giao tiếp Mặt đối mặt Thư điện tử (Email) Điện thoại Hội thảo video Khác (làm ơn ghi rõ) Không giao tiếp B5 Nếu anh/chị đảm nhận trình tái cấu trúc Mai Linh, anh/chị làm khác so với ban quản trị làm? …………………………………………………………………………………………… …………………………………………………………………………………………… …………………………………………………………………………………………… Cảm ơn anh chị nhiều tham gia hoàn thành điều tra Appendix 5: Results of questionnaires Respondents by gender Gender Male Female Total Number of Respondents 21 30 Proportion of respondents 70% 30% 100% Respondents by age Age Below 21 years 21-30 years 31-40 years 41-50 years 51-60 years Above 60 years Total Number of Respondents 13 30 Percentage of Respondents 16.67% 26.67% 43.33% 13.33% 0% 100% 84 Responses by number of years employed Number of Years Number of Respondents 20 years Total 30 Percentage of Respondents 20% 23.33% 43.33% 13.34% 100% Forms of communication predominantly used during restructuring Types of communication Face-to-face Email Telephone Video-conferencing Other (please specify) Never Total Response frequency 19 0 30 Percentage of Responses 23.33% 63.33% 0% 0% 0% 13.34% 100% ... CHAPTER 1: INTRODUCTION 1. 1 Background for the research .1 1.2 Research objectives .2 1. 3 Research scope 1. 4 Research questions 1. 5 Research... restructuring 2 .1. 1 Definitions 2 .1. 2 Reasons .5 2 .1. 3 Types of organizational restructuring .7 2 .1. 4 Models 10 2 .1. 5 Communication in restructuring... Research method 1. 5 .1 Literature review .3 1. 5.2 Empirical study 1. 6 Thesis structure CHAPTER 2: LITERATURE REVIEW 2 .1 Organizational restructuring