LV Thạc sỹ_Improving the reward system at VID public bank

1 TABLE OF CONTENT ACKNOWLEDGEMENT ABBRIVIATIONS 1.1 Rationale 1.2 Research Objectives 1.3 Research Questions 1.4 Research Scope 1.5 Research methodology 10 1.6 Structure of thesis 12 2.1.The concept of rewards and reward system .13 2.2.The supporting components for reward system .16 2.2.1.Business Strategy .16 2.2.2.Reward strategy 16 2.3.The aims of reward system 18 2.4.The elements of reward system .18 2.4.1 Financial Reward .18 2.4.2 Non financial reward .25 2.5.Principles of the reward system .32 2.6.Relationship between reward system and other Human Resource functions 32 3.1 Overview of VID Public Bank 35 3.1.1 History of VID Public Bank 35 3.1.2 Corporate Philosophy .36 3.1.3 VPB business results 38 3.2 The current reward system at VID Public Bank 39 3.2.1 VPB current financial reward 39 3.2.2 VPB current non financial reward 46 3.3.1 Findings on VPB financial reward 48 3.3.2 Findings on VPB non financial reward 54 3.3.3 Summary of reward system at VID Public Bank .58 ACKNOWLEDGEMENT First of all, I would like to express my sincere thanks to my supervisor - Dr … who enthusiastically guided me during the last thesis’s implementation As one of the youngest students at EMBA program, I am still lack of certain knowledge and experiences in both theory and practices Ms … provided me with such a logical thinking that I can make a clear part in conducting my thesis and view it from different scales Secondly, I would like to thank my family members who support me a lot during the last time Especially, my mother always encourages me to study further for better chance in life She was the one to sponsor for my whole EMBA course even when I got a job with stable salary Moreover, my colleagues at VID Public Bank were so willing to contribute to this research by sharing with me their perspectives I am also grateful of my Manager who allowed me to approach VPB information and gave me useful advice Last but not the least; I would like to mention my closed classmates who motivated me much time by time I will miss some out goings for chatting/beer with them because such occasions enabled me to work harder on my thesis to catch up with them ABBRIVIATIONS BIDV : Bank of Investment and Development COLA : Cost of living allowance HA : Housing Allowance HR : Human Resource PAI : Personal Accident Insurance PBB : Public Bank Berhad PRP : Performance Related Pay VN : Viet Nam VPB : VID Public Bank LIST OF FIGURES ACKNOWLEDGEMENT ABBRIVIATIONS 1.1 Rationale 1.2 Research Objectives 1.3 Research Questions 1.4 Research Scope 1.5 Research methodology 10 1.6 Structure of thesis 12 2.1.The concept of rewards and reward system 13 2.2.The supporting components for reward system 16 2.2.1.Business Strategy 16 2.2.2.Reward strategy 16 2.3.The aims of reward system 18 2.4.The elements of reward system 18 2.4.1 Financial Reward 18 2.4.2 Non financial reward 25 2.5.Principles of the reward system 32 2.6.Relationship between reward system and other Human Resource functions 32 3.1 Overview of VID Public Bank 35 3.1.1 History of VID Public Bank 35 3.1.2 Corporate Philosophy 36 3.1.3 VPB business results 38 3.2 The current reward system at VID Public Bank 39 3.2.1 VPB current financial reward 39 3.2.2 VPB current non financial reward 46 3.3.1 Findings on VPB financial reward 48 3.3.2 Findings on VPB non financial reward 54 3.3.3 Summary of reward system at VID Public Bank 58 LIST OF TABLES ACKNOWLEDGEMENT ABBRIVIATIONS 1.1 Rationale 1.2 Research Objectives 1.3 Research Questions 1.4 Research Scope 1.5 Research methodology 10 1.6 Structure of thesis 12 2.1.The concept of rewards and reward system 13 2.2.The supporting components for reward system 16 2.2.1.Business Strategy 16 2.2.2.Reward strategy 16 2.3.The aims of reward system 18 2.4.The elements of reward system 18 2.4.1 Financial Reward 18 2.4.2 Non financial reward 25 2.5.Principles of the reward system 32 2.6.Relationship between reward system and other Human Resource functions 32 3.1 Overview of VID Public Bank 35 3.1.1 History of VID Public Bank 35 3.1.2 Corporate Philosophy 36 3.1.3 VPB business results 38 3.2 The current reward system at VID Public Bank 39 3.2.1 VPB current financial reward 39 3.2.2 VPB current non financial reward 46 3.3.1 Findings on VPB financial reward 48 3.3.2 Findings on VPB non financial reward 54 3.3.3 Summary of reward system at VID Public Bank 58 EXECUTIVE SUMMARY Most of organizations realize such important role of human resource that they always try their utmost to attract, motivate and retain talented, skilled and committed employees to achieve high turnover and outstanding productivity Among various aspects of human resource management, reward system is supposed to make considerable contribution to help an organization to reach these targets With reference to the above, the author wished to make a research on the reward system of a bank where there is a tough competition in owning strong labor force and high turnover situation occurring VID Public bank is chosen to help the author with chance to have diversified perspectives on different elements of reward system including base pay, variable pay, benefits (financial rewards) and recognition, growth and development, work itself, supervision, interpersonal relations (non financial rewards) The research was to: • Analyze the current reward system at VID Public Bank in order to find out the strengths and weaknesses of the system • Analyze the key causes of the weaknesses of the reward system • Make recommendations to improve the current reward system so that it can retain and motivate VID Public Bank employees Identifying those research objectives, the researcher based on the theoretical background and collected data from both primary and secondary sources to realize the findings on reward system at VID Public Bank More than 20 interviews with both VPB employees and ex-employees and up to 50 questionnaires were carried out at Hanoi offices Most secondary data for the research were ranged from 2007 to 2009 The findings of the research reveal both strengths and weaknesses of the VPB reward system The strong points were found in competitive base pay level, wide range of benefits, supportive supervisors and comfortable relations among staffs The limits of VPB reward system were realized in both financial and non financial factors For financial rewards: • VPB staffs are not clear about the base pay level for each position • The annual increment is low in compared to the VN inflation rate • Bonus is equated between staffs • Annual performance appraisal does not reflect the employees’ performance precisely • No overtime payment and no bonus on Vietnamese holidays are applied For non financial rewards: • Improper recognition • Dissatisfactory training • Additional works Via the direct interviews with both Human resource Manager and the Bank manager, the root causes of such weak points were also found out The reasons generate from VPB rarely updated policy and insufficient concern for recognition, training and reviewing labor force Based on theoretical background, the results of the research as well as the bank requirement to upgrade its reward system, the author has come up with certain recommendations as follows: • To popularize the pay level and limit for each position • To update inflation rate in Vietnam as reference for incremental level determination • To define more clearly about bonus • To modify the annual performance review in aspects of the conducting time, the conductors and the clarity in the criteria • To practice overtime payment and bonus on Vietnamese holidays • To utilize the non monetary recognition • To build up training policy The improvement requires the involvement of changes in policy and procedures in implementation of each element Moreover, the cooperation of the Management and Staff level employees are also crucial to ensure the success of the reward system enhancement Reward system if being concerned and implemented well will work as positive tool to retain and motivate the labor force CHAPTER 1: INTRODUCTION 1.1 Rationale Human resource in banking sector in Vietnam has been more and more urgent due to the imbalance between labor supply and demand As a report on online human resource parameters in 1st Quarter 2010 by Vietnamworks.com, one of Vietnam’s biggest online recruitment providers, banking field is among sectors being considered to have highest human power demand In comparison with th Quarter 2009, the demand on human resource for banking sector increased 18 percent Meanwhile, the gap between labor supply and demand of this sector still remains the biggest, which leads to a fierce competition in attracting employees among banks Thus, how to retain and motivate employees to maintain strong labor force for the bank has been a big question for human resource manager VID Public Bank was set up in 1992 in a form of joint venture between Public Bank Berhad in Malaysia and Bank for Investment and Development of Vietnam Since its establishment, VID Public Bank has always considered labor force as determinant factor to the bank’s success However, in recent years, VID Public Bank has had to cope with such problems coming from human resource when its staff turnover rate has kept staying at high level rate The turnover rate has respectively maintained at 18.5%, 18.7% and 11.44% in 2007, 2008 and 2009 In exit interview forms that staffs have to fill in before resigning, the listed reasons are the dissatisfaction about salary, bonus, benefits and etc… Based on more than 03 years of working experience at Human Resource Department of VID Public Bank, It is revealed that the high staff turnover rate is the result of some shortcomings of VID Public Bank reward system It is the right time that reward system at VID Public Bank should be reviewed so that weaknesses would be found out and necessary actions should be taken By this way, VID Public Bank would strengthen its labor force to ensure its further development and expansion in the coming time From the above, the thesis of “Improving the Reward system at VID Public bank” is chosen with desire to help enhance VID Public Bank reward system as a method of motivation and retaining staffs 1.2 Research Objectives In this research, the author would like to achieve the following objectives: - To analyze the current reward system at VID Public Bank in order to find out the strengths and weaknesses of the system - To analyze the key causes of the weaknesses of the reward system - To make recommendations to improve the current reward system so that it can retain and motivate VID Public Bank employees 1.3 Research Questions Within the framework of this thesis, there will be some relevant questions raised such as: - What is current reward system at VID Public Bank? - What are the weaknesses and strengths of reward system at VID Public Bank? - What are the roots of the weaknesses? - How to improve the current reward system so that it will help motivate and retain employees at VID Public Bank? 1.4 Research Scope Due to the time limitation and the accessibility to the whole VID Public Bank staffs, the thesis is focused on mainly staffs and management group working at Hanoi office The data provided by the Bank from 2007 to 2009 and information collected from employees are applied to find out the real situation of current reward system at VPB The thesis also focuses on the elements of the reward system instead of digging into the strategy scope of the subject 10 1.5 Research methodology a Research Process Identifying research objectives Theoretical Background Collecting data Secondary data Recommendations Primary data Research findings on reward system at VID Public Bank Figure 1.1 - Research Process b Collecting data Secondary data: is collected from internal sources: (1) VPB HR manual policy, (2) VPB Guidelines, (3) VPB HR reports and external sources: (1) Human Resource management books; (2) websites Primary data: - In depth interview: The in depth interview is carried out with purpose to get the different viewpoints of staffs and find out strengths and weaknesses on VID Public Bank’s current reward system The author conducted 20 interviews with 10 VID Public Bank current staff, 05 VID Public bank current officers and 05 ex-staff The details of interviewees are as follows: 84 APR recognizes achievement Frequency Valid Percent Valid Percent Cumulative Percent Disagree 17 34.0 34.0 34.0 Neutral 18 36.0 36.0 70.0 Agree 15 30.0 30.0 100.0 Total 50 100.0 100.0 APR clear criteria Frequency Valid Percent Valid Percent Cumulative Percent Disagree 20 40.0 40.0 40.0 Neutral 14 28.0 28.0 68.0 Agree 16 32.0 32.0 100.0 Total 50 100.0 100.0 APR executed by direct supervisor Frequency Valid Percent Valid Percent Cumulative Percent Disagree 6.0 6.0 6.0 Neutral 16 32.0 32.0 38.0 Agree 30 60.0 60.0 98.0 2.0 2.0 100.0 50 100.0 100.0 Strongly Agree Total 85 APR reviewed by Manager Frequency Valid Percent Valid Percent Cumulative Percent Disagree 6.0 6.0 6.0 Neutral 14 28.0 28.0 34.0 Agree 28 56.0 56.0 90.0 10.0 10.0 100.0 50 100.0 100.0 Strongly Agree Total APR from feeling Frequency Valid Percent Valid Percent Cumulative Percent Disagree 14.0 14.0 14.0 Neutral 12 24.0 24.0 38.0 Agree 27 54.0 54.0 92.0 8.0 8.0 100.0 50 100.0 100.0 Strongly Agree Total APR in Sep reflect performance Frequency Valid Strongly disagee Disagree Percent Valid Percent Cumulative Percent 2.0 2.0 2.0 28 56.0 56.0 58.0 APR reflect performance Frequency Valid Percent Valid Percent Cumulative Percent No 36 72.0 72.0 72.0 Yes 14 28.0 28.0 100.0 Total 50 100.0 100.0 Benefits 86 VPB Housing Allowance Frequency Valid Dissatisfied Percent Valid Percent Cumulative Percent 10 20.0 20.0 20.0 Neutral 26 52.0 52.0 72.0 Satisfied 14 28.0 28.0 100.0 Total 50 100.0 100.0 87 VPB COLA Frequency Valid Dissatisfied Percent Valid Percent Cumulative Percent 10 20.0 20.0 20.0 Neutral 26 52.0 52.0 72.0 Satisfied 14 28.0 28.0 100.0 Total 50 100.0 100.0 Social Insurance Frequency Valid Percent Valid Percent Cumulative Percent No 4.0 4.0 4.0 Yes 48 96.0 96.0 100.0 Total 50 100.0 100.0 Medical Insurance Frequency Valid Percent Valid Percent Cumulative Percent No 15 30.0 30.0 30.0 Yes 35 70.0 70.0 100.0 Total 50 100.0 100.0 Leave day number Frequency Valid Percent Valid Percent Cumulative Percent No 4.0 4.0 4.0 T 2.0 2.0 6.0 Yes 47 94.0 94.0 100.0 Total 50 100.0 100.0 Overtime payment Frequency Valid Percent Valid Percent Cumulative Percent No 47 94.0 94.0 94.0 Yes 6.0 6.0 100.0 Total 50 100.0 100.0 88 work overtime willingness Frequency Valid Percent Valid Percent Cumulative Percent No 40 80.0 80.0 80.0 Yes 10 20.0 20.0 100.0 Total 50 100.0 100.0 Reason for not working overtime Frequency Valid Percent Valid Percent Cumulative Percent I have got my family matters 11 22.0 27.5 27.5 I get nothing from my extra working hour VPB does not pay overtime pay 22 44.0 55.0 82.5 14.0 17.5 100.0 40 10 50 80.0 20.0 100.0 100.0 Other Total Missing System Total 89 overtime pay recommendation Frequency Valid Valid Percent Cumulative Percent Partly recommend 4.0 4.0 4.0 Recommend 4.0 4.0 8.0 Fully recommend 46 92.0 92.0 100.0 Total 50 100.0 100.0 Frequency Valid Percent N/A Percent Valid Percent Cumulative Percent 2.0 2.0 2.0 Partly recommend 11 22.0 22.0 24.0 Recommend 15 30.0 30.0 54.0 Fully recommend 23 46.0 46.0 100.0 Total 50 100.0 100.0 Clothing allowance recommendation Frequency Valid Percent Valid Percent Cumulative Percent N/A 4.0 4.0 4.0 Partly recommend 18.0 18.0 22.0 Recommend 11 22.0 22.0 44.0 Fully recommend 28 56.0 56.0 100.0 Total 50 100.0 100.0 makeup allowance recommendation Frequency Valid Percent Valid Percent Cumulative Percent N/A 18.0 18.0 18.0 Partly recommend 10.0 10.0 28.0 Recommend 10 20.0 20.0 48.0 Fully recommend 26 52.0 52.0 100.0 Total 50 100.0 100.0 90 Higher bonus on VNese holidays Frequency Valid Recommend Percent Valid Percent Cumulative Percent 4.0 4.0 4.0 Fully recommend 48 96.0 96.0 100.0 Total 50 100.0 100.0 91 Sex * Reason for not working overtime Reason for not working overtime I get nothing from my extra I have got my working hour family matters VPB does not pay overtime pay Sex Female Count 12 22 31.8% 54.5% 13.6% 100.0% 10 18 % within Sex Count 22.2% 11 55.6% 22 22.2% 100.0% 40 % within Sex 27.5% 55.0% 17.5% 100.0% % within Sex Male Total Total Other Count Recognition Are you awarded? Frequency Valid Percent Cumulative Percent Valid Percent No 44 88.0 88.0 88.0 Yes 12.0 12.0 100.0 Total 50 100.0 100.0 Feeing about recognition Frequency Percent Valid Percent Valid Cumulative Percent I am praised immediately and appropriately when I fulfill my task 10.0 83.3 83.3 The praise is just in formalism The Officer/ manager does not really care about my achievement 2.0 16.7 100.0 44 50 12.0 88.0 100.0 100.0 Total Missing System Total 92 Growth and development types of training Cumulative Frequency Percent Valid Percent Percent Valid On the job training with official/proper materials 8.0 8.0 8.0 43 86.0 86.0 94.0 Other 6.0 6.0 100.0 Total 50 100.0 100.0 On the job training without official/proper materials enough training Frequency Valid Strongly disagee Percent Valid Percent Cumulative Percent 8.0 8.0 8.0 Disagree 32 64.0 64.0 72.0 Neutral 10 20.0 20.0 92.0 Agree 8.0 8.0 100.0 Total 50 100.0 100.0 Further training is supported Frequency Valid Strongly disagee Percent Valid Percent Cumulative Percent 4.0 4.0 4.0 Disagree 17 34.0 34.0 38.0 Neutral 21 42.0 42.0 80.0 Agree 10 20.0 20.0 100.0 Total 50 100.0 100.0 93 helpful and necessary training Frequency Valid Strongly disagee Percent Valid Percent Cumulative Percent 16.0 16.0 16.0 Disagree 28 56.0 56.0 72.0 Neutral 11 22.0 22.0 94.0 Agree 6.0 6.0 100.0 Total 50 100.0 100.0 VPB should enhance further training Frequency Valid Percent Valid Percent Cumulative Percent Strongly disagee 2.0 2.0 2.0 Neutral 2.0 2.0 4.0 Agree 29 58.0 58.0 62.0 Strongly Agree 19 38.0 38.0 100.0 Total 50 100.0 100.0 Work itself interesting job Frequency Valid Percent Valid Percent Cumulative Percent Disagree 2.0 2.0 2.0 Neutral 34 68.0 68.0 70.0 Agree 15 30.0 30.0 100.0 Total 50 100.0 100.0 suitable skills and knowledges Frequency Valid Percent Valid Percent Cumulative Percent Disagree 18.0 18.0 18.0 Neutral 24 48.0 48.0 66.0 Agree 17 34.0 34.0 100.0 Total 50 100.0 100.0 94 assigned additional work Frequency Valid Percent Cumulative Percent Valid Percent Disagree 16.0 16.0 16.0 Neutral 22 44.0 44.0 60.0 Agree 20 40.0 40.0 100.0 Total 50 100.0 100.0 independence in work Frequency Valid Percent Cumulative Percent Valid Percent Disagree 24 48.0 48.0 48.0 Neutral 20 40.0 40.0 88.0 Agree 12.0 12.0 100.0 Total 50 100.0 100.0 feedback Frequency Valid Strongly disagee Percent Cumulative Percent Valid Percent 8.0 8.0 8.0 Disagree 26 52.0 52.0 60.0 Neutral 11 22.0 22.0 82.0 Agree 18.0 18.0 100.0 Total 50 100.0 100.0 need of being rotated Frequency Valid Percent Valid Percent Cumulative Percent No 21 42.0 42.0 42.0 Yes 29 58.0 58.0 100.0 Total 50 100.0 100.0 95 Reason Frequency Percent Valid Percent Valid I just want to obtain more banking knowledge from other banking field I am fed up with my current job Cumulative Percent 24 48.0 75.0 75.0 16.0 25.0 100.0 Supervision competent manager Frequency Valid Strongly disagee Percent Valid Percent Cumulative Percent 6.0 6.0 6.0 Disagree 14 28.0 28.0 34.0 Neutral 22 44.0 44.0 78.0 Agree 18.0 18.0 96.0 Strongly Agree 4.0 4.0 100.0 50 100.0 100.0 Total delegate responsibility Frequency Valid Percent Valid Percent Cumulative Percent Disagree 16 32.0 32.0 32.0 Neutral 18 36.0 36.0 68.0 Agree 16 32.0 32.0 100.0 Total 50 100.0 100.0 attentive towards employee needs Frequency Valid Percent Valid Percent Cumulative Percent Disagree 10.0 10.0 10.0 Neutral 34 68.0 68.0 78.0 Agree 11 22.0 22.0 100.0 Total 50 100.0 100.0 96 concern about work quality Frequency Valid Percent Cumulative Percent Valid Percent Disagree 8.0 8.0 8.0 Neutral 25 50.0 50.0 58.0 Agree 21 42.0 42.0 100.0 Total 50 100.0 100.0 support subordinates Frequency Valid Strongly disagee Percent Valid Percent Cumulative Percent 6.0 6.0 6.0 Disagree 11 22.0 22.0 28.0 Neutral 15 30.0 30.0 58.0 Agree 21 42.0 42.0 100.0 Total 50 100.0 100.0 Interpersonal relations cooperative departmental colleagues Frequency Valid Percent Valid Percent Cumulative Percent Disagree 6.0 6.0 6.0 Neutral 16.0 16.0 22.0 Agree 36 72.0 72.0 94.0 6.0 6.0 100.0 50 100.0 100.0 Strongly Agree Total cooperative colleagues from different dept Frequency Valid Percent Valid Percent Cumulative Percent Disagree 14.0 14.0 14.0 Neutral 20 40.0 40.0 54.0 Agree 18 36.0 36.0 90.0 10.0 10.0 100.0 50 100.0 100.0 Strongly Agree Total 97 Chance to meet more people Frequency Valid Percent Valid Percent Cumulative Percent Strongly disagee 10.0 10.0 10.0 Disagree 14.0 14.0 24.0 Neutral 15 30.0 30.0 54.0 Agree 18 36.0 36.0 90.0 responsible colleagues Frequency Valid Percent Valid Percent Cumulative Percent Disagree 6.0 6.0 6.0 Neutral 15 30.0 30.0 36.0 Agree 32 64.0 64.0 100.0 Total 50 100.0 100.0 support from Manager Frequency Valid Percent Valid Percent Cumulative Percent Disagree 18 36.0 36.0 36.0 Neutral 16 32.0 32.0 68.0 Agree 16 32.0 32.0 100.0 Total 50 100.0 100.0 98 factor to encourage working spirits Frequency Percent Valid Percent Cumulative Percent Valid Recognition 6.0 6.0 6.0 Growth and development 26 52.0 52.0 58.0 Work itself 6.0 6.0 64.0 Leadership 4.0 4.0 68.0 Interpersonal relations 16 32.0 32.0 100.0 Total 50 100.0 100.0 factor to keep staying at VPB Frequency Valid Financial reward Percent Valid Percent Cumulative Percent 22 44.0 44.0 44.0 18.0 18.0 62.0 Other 19 38.0 38.0 100.0 Total 50 100.0 100.0 Non financial reward ... - What is current reward system at VID Public Bank? - What are the weaknesses and strengths of reward system at VID Public Bank? - What are the roots of the weaknesses? - How to improve the current... revealed that the high staff turnover rate is the result of some shortcomings of VID Public Bank reward system It is the right time that reward system at VID Public Bank should be reviewed so that weaknesses... way, VID Public Bank would strengthen its labor force to ensure its further development and expansion in the coming time From the above, the thesis of “Improving the Reward system at VID Public bank? ??