Low organizational commitment at unitrade joint stock company

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyen Huynh Hoai Binh LOW ORGANIZATIONAL COMMITMENT AT UNITRADE JOINT STOCK COMPANY MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – 2016 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyen Huynh Hoai Binh LOW ORGANIZATIONAL COMMITMENT AT UNITRADE JOINT STOCK COMPANY ID: 22 12 00 04 MASTER OF BUSINESS ADMINISTRATION Supervisor: Le Nhat Hanh Ho Chi Minh City – 2016 Table of Contents Executive Summary Chapter 1: Problem Identification 1.1 Company background 1.2 Background of problem 1.2.1 Symptoms 1.2.2 Possible problems 1.3 Problem Justification 12 1.3.1 Problem definition 12 1.3.2 Justify the existence of the problem 13 1.3.3 Justify the importance of the problem 14 High Turnover Rate 14 Ineffective Performance of Employees 15 Employee Absenteeism 16 1.4 Potential causes of the problem 18 1.4.1 Organizational Policies 18 1.4.2 Compensation & Benefits 19 1.4.3 Job satisfaction 19 1.4.4 Supervisory Support 20 1.4.5 Working environment 21 1.4.6 Training and career development 21 Initial Causes And Effect Map 23 1.5 Causes validation 24 1.5.1 Training and career development 24 1.5.2 Organizational policies & Compensation 25 1.5.3 Working environment & Supervisory Support 26 1.5.4 Job Satisfaction 26 2.1 Alternative Solutions 28 2.1.1 Dismissal and Recruitment 28 2.1.2 Team Building 29 2.1.3 Workplace Training 30 2.2 Solution Comparison 31 2.3 Recommendations 33 Chapter 3: Action Plan 35 Conclusion 42 Supporting Information 43 Appendix 1: Survey questionnaire of problem existence: 43 Appendix 2: Results of survey questionnaire of problem existence: 45 Appendix 3: Open questions for problem existence 46 Appendix 4: Interview transcript for problem existence 47 Appendix 5: Survey questionnaire of problem potential causes: 51 Appendix 6: Open questions for the causes of the problem: 54 Appendix 7: Focus group data on causes justification and recommendations 55 Appendix 9: Detailed Implementation Plan 58 REFERENCES 59 LIST OF TABLE Table 1: The overall Turnover rate in year 2013 and 2014……………………………….14 Table 2: Initial causes and effect map…………………………………………………… 23 Table 3: The comparison between solutions: training, teamwork and recruitment……….32 Table 4: The action timeline and objects for the project………………………………….35 Table 5: The cost and budget for the solution…………………………………………….40 ACKNOWLEDMENT I would like to extend the warmest thanks and debt of gratitude to the following people who have truly made vital contribution to the completion of this dissertation Indeed, without them I definitely would not have written this paper Firstly, I would like to express my truthful thanks to my advisor, Ms Le Nhat Hanh for her kindly guidance and deeply encouragement from the beginning to the ending Secondly, special thanks to Ms My Anh, Ms Tran Lan, Ms Anh Van, Ms Thanh Huynh, Mr Thu Nguyen for their valuable and precisely information during the information collection period and in-depth interviews at the Unitrade Company Last but not least, big thank you to all of my family’s members and my close friends who made precious contributions I hope to receive more support from all of them in the future Executive Summary Unitrade is one of leading companies supplying environment processing equipments in the entire Vietnam However, in a high competitive market and due to economic crisis, nowadays Unitrade had to face to some serious problems According to the recent report of the company, a large number of sales staff of the Company is laid off and if this lasts for long, it will affect development strategies and cause big losses for the company in the long term Hence this thesis studies the issue of low commitment of employees with the company at Unitrade; this issue has recently become more serious because of its large role in competitive advantage among companies So, this project will seek for an appropriate solution based on the literature and the actual situation in the Company to resolve the ongoing problems After collecting data, studying theoretical sources, the author have identified the main cause of problems is lacking of training and career development program Data from these interviews has helped the author propose 03 appropriate solutions to solve the above problem: Training program, dismissal and recruitment and building team work Through the analysis and evaluation phase, a most effective solution is training program would be selected to assist the enterprise to overcome the problem of human loss Chapter 1: Problem Identification 1.1 Company background Unitrade Joint Stock Company was established in 2000, operates mainly in the area of supplying medical and environment processing equipment Since 2005, the company has become the exclusive partner of Chi Sun, Shinmaya and Graatech to supply its products in Vietnam Their customers are various ranging from universities, research institutes, physiochemical laboratories to hospitals, manufacturing firms, restaurants, hotels, and civil works We also consult and offer European brand-new products to customers Performance of after-sales services includes: instructions for use, package installation, equipment guarantee and maintenance These services are implemented with assistances of the firms from accessories supply, technical advice, specialistic training to complex installation together with foreign experts The company is operated according to ability and qualification of experienced staff, who are approached to modern technologies from many developed countries Their mission is to bring high quality units and professional services of technical supports Over the past 15 years of operation and development, Unitrade has become one of leading companies supplying environment processing equipments in the entire Vietnam Unitrade with its head office located in Ho Chi Minh City has developed strongly workforce with more than 40 staffs and members of Board of Directors (BOD) Their products are widely distributed to almost all provinces of VietNam 1.2 Background of problem 1.2.1 Symptoms Nowadays, high competitive market and high inflation which led to a significant VND depreciation Prices have been soaring and inflation is getting worse, at the same time, the stock exchange is going down, causing a negative effect on consumer purchasing power So it had caused quite a great deal of difficulty in searching for new customers which then made the sales goal targeted by the company at the end of 2014 unaccomplished In addition, the real estate market totally frozen in 2004 which has significantly increased bad debt ratio of banks Since borrowing from banks got more difficult, Unitrade had to cut down operation cost and readjust the personnel which have decreased greatly the revenues of the company since the end of 2004 Hence, the company had to seek for appropriate approach to continue its operation and carry out some cut-down policies such as Top sales of the year, reducing rates of salary increase, holiday leaving policy, etc which affected directly a large party of the company staff, especially Sales department Under that bad circumstance, the number of staff quitting job increased dramatically These staffs were prone to leave and seek for better opportunities in other companies rather than staying and resolving remained problems together with the company during the tough time 1.2.2 Possible problems The brief interview with Mr Minh Do, Sales supervisor, revealed that there might be some possible causes that leads to the aforementioned symptoms The first tentative problem is the prolonged economic crisis has made companies affected Unitrade also faced many important issues such as reducing profits and difficulty in finding new customers Economic crisis has taken the bad effect on domestic market As the result, the buying power decreased Besides, due to the freezing of real estate and the stock market as the business lasted very careful in spending According to Ms Thanh Nguyen – Business manager: Because of the increase in bad debt ratio, banks tightened lending policies In addition, companies met many difficulties in raising capital because of the high borrowing interest rate With the current economic situation, not only the finding new customers but also the maintaining of the loyal customers are the big challenge for Unitrate The second tentative problem is the competitive rate among companies in the same industry is very high According to Ms Huong Le – Sales Department, in the market, many companies have large capital, they can storage a large number of product, and as a result, their price is always cheaper than general price In addition, many foreign companies began investing in Vietnam with the strength of the good quality and diversity of products, after sales service and maintenance are also much more professional than domestic companies, thus providing customers have more choice Unitrade, has been struggling in finding potential customers These competitors have made Unitrade improve service quality and product diversification, and investing more on the after-sales service and customer care The third tentative problem is difficulties in human resources Sales team is a very important force in the company, which is one of the main factors contributing to the 10 Accounting staff 01: Up to now, the number of staff in Unitrade has been cut down greatly which makes this accounting staff busier Although she wanted to support other departments and divisions, she did not have time She even could not accomplish her tasks punctually She proposed to the head of division for sending more people and good reply has not showed up On the other hand, she even did not have time for her family due to the incessant working schedule from a.m to p.m every day excluding Saturday afternoon and Sunday A high workload need to be handle, she often tired after a long working day and not want to go to work every morning She really want to quit job if she has another job lined up Personnel staff 01: Currently, her job concerns with recruiting new employees for the company In her personal opinion, it was hard to recruit high quality employee One of the reasons was that the name of the company was not attractive enough for the applicants There were some bad words about the company mainly concerning with its remuneration and infrastructure Training for sales staff and technical staff was not a long term strategy Most of them attending the training course were required to get all of the process and procedures of the company in 3-5 days They hardly completed the training course and acquired necessary knowledge Besides, she saw many staffs quit their job recently and heard some previous old staff say that they had not been really satisfied with this company Technical staff 01: He has worked for the company for years Last year, there was a structural shift of the company, a head of technical department left and built up his own company, persuading a group of sales and technical staff to follow him and work for his new company with a higher wage than that of the company The new head of the technical department has tried to keep the current rapport with the customers Nevertheless, customers were not really comfortable with this change, they considered whether to continue signing contract with the company or not Technical staff 02: He loves his job because it is not plainly repetitive Everybody in the company is friendly; he has drawn a lot of experiences from his colleagues and managers However, recently the company business has not appeared positive; it takes time for new technical staff to get to know the job and ways of dealing with different situations 49 However, they lack necessary skills such as communication or problem solving If the installation and operation are not right, it takes more time to fix those wrongdoings He thought the recruitment division should pay more attention to that issue Besides, he finds that the remuneration of technical staff is rather low comparing to the common level He is going to get married and have baby in the time to come, and he is quite concerned about the financial aspect of his life 50 Appendix 5: Survey questionnaire of problem potential causes: Indicate your choice by placing an (x) under your answer choice Totally No disagre Item e A Organizaitional policies (Maxwell,2009) Changes in the company’s policies and procedures towards the employees are fully and clearly informed Employees of all departments are equipped with sufficient working knowledge Functions and duties of departments are not overlapped Evaluation policies give me a specific plan for the private career development orientation The company policies make me improve greatly the quality of work performance B Compensation & Benefits ( Thomas & Wise,1999) I can fully live on my income from the company The salary I got is satisfied with the working achievements The employees of the company are paid fairly and reasonably It is equal for all employees to deserve the promotion and commendation regimes 51 Disagree Neutra l Agree Totally agree 10 The welfare regimes of the company expresses its concern to all officials and employees C Supervisory support ( Turban, 2001) 11 I have been asked about my job by my superiors 12 I have been encouraged to participate in the important decision making by my superiors 13 I have been supported right after the problem occurrence by my superiors 14 The superiors always listen and pay attention to the staff benefits 15 I have got the support from the superiors in all fields D Job Satisfaction ( Luddy, 2005) 16 The job is consistent with my professional capacity 17 I deeply understand the work I am working on 18 The job comes up with challenges and promotes my personal capacity 19 The job facilitates to make my professional skills improved E Working Environment ( Potting & Jensen, 1998) 20 I have been equipped with highly qualified support equipment and devices 52 21 The working place is very comfortable 22 The temperature, light and noise in the company is enough for me to work 23 I feel safe in my working place F Training & Career Development (Moses, 1999) 24 I am trained with necessary skills to perform the tasks well 25 I am involved in full training programs as required by the job 26 I have many opportunities to be promoted in the company 27 I am aware of the conditions for promotion 53 Appendix 6: Open questions for the causes of the problem: What are causes of the low commitment of employees at Unitrade? Please kindly explain more about your opinion Why and how these factors contribute to the low commitment at Unitrade? Besides the cause you mentioned, these are other factors including : organizational policies, compensation and benefits, job satisfaction, supervisory support, working environment, training and career development 3.1 Do you think that organizational policies affect the commitment of employees? Do it happen at Unitrade? How does it affect? 3.2 Do you think that compensation and benefits affect the commitment of employees? Do it happen at Unitrade? How does it affect? 3.3 Do you think that job satisfaction affect the commitment of employees? Do it happen at Unitrade? How does it affect? 3.4 Do you think that supervisory support affect the commitment of employees? Do it happen at Unitrade? How does it affect? 3.5 Do you think that working environment affect the commitment of employees? Do it happen at Unitrade? How does it affect? 3.6 Do you think that training and career development affect the commitment of employees? Do it happen at Unitrade? How does it affect? Among the causes that are discussed, what is the most important cause? Why you think so? Among the causes that are discussed, what is the second important cause? Why you think so? The in-depth interview found that the most of employees strongly agree that the most important cause is training and career development issue What does Unitrade can to enhance the commitment of employees? Why you think so? 54 Appendix 7: Focus group data on causes justification and recommendations Respondent Questions HR department Sales Department Technical Department The lack of the necessary Yes, limited written rules - Yes, the lack of official support policies can easily and regulations lead to regulations and policies will lead to misunderstanding individual doing job in cause troubles in the overall with the same arisen problem their Do you think that without any commitment own way and process due to duplicates of firm understanding It is hard to tasks Employees easily get from the know the responsibilities confused as they not organizational Company policies affect will lose their confidence in difficult to know who is official, the commitment of employees? the So, employees of each staff, making it know which information is organization policies are not If leading the the key contact for each miscommunication to and tight, work task and to know waste of time So they employees will be confused whose fault when it comes decided between the assignedtasks, to errors to left the company and they tend to evade responsibilities Yes, When beginning the Yes, salary and benefít Yes, clear financial support Do you think that compensation and benefits affect the commitment of employees? work, one question always plays an important part in help employees thrive to arises how much you will get the employee’s grow, make them have paid and in addition to expectation of the job, so motivation and the right salary, what about other if salary is enough for track for them With low benefits? many layers in the them, they will focus on salary, making it hard for organization cause a serious the long term goal or employees to keep track problem to the loyalty of organization mission, with employees financial understand deeply about the Therefore, change and to support will focus on long goal to prepare themselves term rather than short term 55 for the change Yes, job satifaction makes Yes, if someone not Yes, job satisfaction is one staffs their work better satisfy with his or her job, of the essential factor affect than others Thus in the long it can make them confused employee’s Do you think that job satisfaction motivation run may make the staffs and not know the right They will focus on the long motivated which lead to get track for them Due to this term achievement in organization get evaluation commitment of the incorrect but try to accomplish their on performance employees? or issue, management will organization mission, vision also affect the goal as staff’s daily tasks only well Employees can not focus on the overall goal, so may interpret differently from what it really is It varies on the cases For Yes, usually the Not really, because we are example, if the task is not so management inform issues not judged or punished by hard, I can deal with the in a general way and I find giving questions in the issue myself In case that the it quite hard to ask for organisation, so we can Do you think that supervisory support affect the commitment of employees? issue is ambiguity, I will ask further explanation due to either ask for clarification the relevant person for their busy working and from management team or further details in order to meeting schedule, so I ask for support from our complete my task in the best sometimes figure out the colleagues The thing is it way problem myself I will not may take a long time to get understand the issue a decision made from the clearly and will complete management, but not the my tasks with an amount misunderstanding and of ambiguity to make sure tolerating ambiguity from I can make adjustments it later, causing a waste of time 56 Yes, I always feel unclear We should make a clear Regular training program Do you think that training and career development affect the commitment of employees? about everything in my job, and specific training need to be held to and I find quite hard to ask program for everyone and emphasize the commitment for further explanation due to need to be informed to to their busy meeting working schedule, the organization and other staff so they can Moreover, goals need to be I know all the key person announced sometimes figure out the responsibility for each management by the and proper problem myself I really need staffs training should be taken to a training program in order make sure the employees to know how to achieve the understand the issue clearly goals First, we need to specify our A clear job description is We should clarify each current processes Although required we procedures What does have every employee's responsibilities, specified employee and needs to be duties and goals for each and job informed to other staff so job The employees need to descriptions, they are not up- they all know they key follow the processes given Unitrade can to-date and usually we get person to enhance tasks that are not in our job each the for description Secondly, responsible task Also, for by the school and should be the given the right to contribute we information about who has to the processes to make commitment of need to reduce the layers of quit the organisation or them more efficient and employees? decision making, thus it will who has recently joined less time-consuming The Why you take less time for a decision the school needs to be employees should also be think so? to be made and will serve as announced to everyone.E- encouraged to join the quick response to internal system should be taken decision making process, and external problems into account as well due to thus causing less delay and their inefficiency miscommunication in the organisation 57 Appendix 9: Detailed Implementation Plan Strategy Training Teamwork Recruitment Timeline Jan 2016 Preparing documents and inviting appropriated the people for training program Feb - Apr 2016 Training sales team at Unitrade Jul 2016 Gathering all sales Setting target for each staffs make groups of sale staff two or three people, providing targets for each group Aug 2016 Sep 2016 Oct 2016 Testing the groups Firing the sales staff with the targets that that cannot get the were gave then giving before, target in three month new before, then making targets for each group an announcement to recruit Nov 2016 new sales staffs & training them Testing the groups with the new targets 58 REFERENCES Ahmad, K Z., & Bakar, R A (2003) The association between training and organizational commitment among White Collar Workers in Malaysia International Journal of Training and Development, Vol 7, No 3, pp 166-185 Alderfer, C P (1972) Human Needs in Organizational Settings Free Press of Glencoe, New York, NY Al-Hussami, M (2008) A study of nurses’ job satisfaction: The relationship to organizational commitment, perceived organizational support, transactional leadership, transformational leadership, and level of education Journal of Occupational Psychology, Vol 27, No 2, pp 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235-249 63 ... issue of the company recently : low level of commitment at Unitrade Joint Stock Company 1.3.3 Justify the importance of the problem The low level of organizational commitment has an negative effect... Continuance Commitment 3 12 Continuance Commitment 12 Continuance Commitment Continuance Commitment 6 8 Normative Commitment 14 Normative Commitment Normative Commitment Normative Commitment 4 Normative... directly examining its correlation with organizational commitment Training must design in a way that achieves organizational commitment (Lang, 1992) Organizational commitment appears more significant