Ineffective managerial support in electrolux vietnam AC

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Truong Hieu Lam INEFFECTIVE MANAGERIAL SUPPORT IN ELECTROLUX VIETNAM AC MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DR NGUYEN PHONG NGUYEN Ho Chi Minh City – Year 2019 Table of Contents Executive summary Company background Problem mess 2.1 2.1.1 First symptom: Low sales 2.1.2 Second symptom: Low customer satisfaction 2.2 Initial cause-effect map 12 2.3 Updated cause-effect map 18 2.3.1 Ineffective managerial support 18 2.3.2 Work-life imbalance 19 2.3.3 Insufficient training 20 2.3.4 Ineffective segmentation 21 2.4 Potential problems 23 2.4.1 Ineffective segmentation 23 2.4.2 Ineffective managerial support 24 2.4.3 Main problem validation 25 Problem justification 26 3.1 Problem definition 26 3.2 Problem existence 27 3.2.1 Quantitative research findings 27 3.2.2 Qualitative research findings 29 3.3 Symptoms Problem importance 32 Cause validation 35 4.1 Literature review 35 4.2 Qualitative research findings 36 The set of solutions 41 5.1 Training sales manager and supervisor 41 5.2 Developing the performance management system 42 5.3 Solution selection 43 5.4 Change plan design 45 5.4.1 Objectives 45 5.4.2 Action plan 45 5.4.2.1 Development of an appraisal form 45 5.4.2.2 Guideline for effective performance feedback 49 5.4.2.3 Disciplinary procedure for poor performance management 49 Conclusion 55 Supporting information 56 References 111 Appendix 115 List of Figures Figure 1: Initial cause-effect map 17 Figure 2: Updated cause-effect map 22 Figure 3: Managerial support at sales department 28 Figure 4: Managerial support at sales department 28 Figure 5: Employee satisfaction of salespeople at Electrolux Vietnam AC 2014-2018 33 Figure 6: Final cause-effect map 40 List of Tables Table 1: Sales growth of Electrolux Vietnam AC, Daikin, Toshiba and Vietnam AC market from 2016 to 2018 Table 2: Results of the survey collected from Electrolux Vietnam AC, Daikin and Toshiba 11 Table 3: Measurements of managerial support 27 Table 4: Cost estimation for solution to training sales manager and supervisor 42 Table 5: Cost estimation for solution to updating the performance management system 43 Table 6: Organization of actions in implementation of effective performance management system 51 Executive summary Customer dissatisfaction undoubtedly imposes a challenge for the organization to maintain consumers’ loyalty and retention 62 Dissatisfied consumers discontinue purchasing the product or service as well as have a high potential to engage in negative word-of-mouth communication about the organization’s product or service 62 The fact that keeping customers satisfied with their product or service does have a positive influence on an organization’s profitability is non-negotiable 63 Hence, customer defection or discontinuance of purchase from consumers causes Electrolux Vietnam AC to suffer remarkable loss of sales To investigate the worrisome situation, potential problems which are identified through interviews and subsequently confirmed with theories involve ineffective managerial support and ineffective segmentation By evaluating and verifying each potential problem, a discussion to focus on ineffective managerial support is determined as the central one Electrolux Vietnam AC is confronting the ineffective managerial support that makes their employees feel dissatisfied with the job and consequently, has low commitment and intention to leave the company in the future Their low productivity causes the organization to experience low performance as well After further rounds of interviews and the support of literature, the validated and most important cause of ineffective performance evaluation is chosen to build the set of solutions The possible solutions for improvement of performance evaluation are training sales manager and supervisor on evaluating and giving performance feedbacks to their subordinates effectively or developing the performance management system Basing on the cost-benefit analysis, the development of the performance management system is feasible to efficiently solve the ineffective managerial support The solution is beneficial from available resources that are gained from the cooperation between HR department and sales department, which costs around VND 11,500,000 and takes approximate two months without a break in order for salespeople to keep up with the schedule to promote their work efficiency By taking an action, this cost-efficient solution can terminate the current problem of Electrolux Vietnam AC Not only customer satisfaction but also employee satisfaction is expected to enhanced in order to improve the organizational performance Company background Electrolux Group which headquarters in Stockholm, Sweden is a world-leading provider of diverse consumer appliances and electronics with more than 100 years of history The organization has 54,400 employees in Europe, North America, Latin America, Asia, Africa and Oceania It is in the company’s DNA to continuously strive to further improve efficiency and quality across the organization, from production to administration The mission of Electrolux is to provide outstanding products in order to enrich people’s enjoyable and sustainable life As a member of Electrolux Group, Electrolux Vietnam which was established in 1999 specializes in distributing thoughtfully designed and innovative products for households and businesses Electrolux Vietnam has a head office in Ho Chi Minh City and representative offices in Hanoi and Danang According to the company’s HR report in February 2019, there are departments with a total of 130 employees There are departments of human resources and general administration (11 headcounts), finance and accounting (23 headcounts), corporate marketing (8 headcounts), customer service (5 headcounts) and consumer electronics (83 headcounts) that conjointly support the company’s operation The consumer electronics department has three sub functions which are air conditioning (31 headcounts), kitchen appliances (23 headcounts) and home appliances (29 headcounts) Air conditioning, abbreviated as AC, comprises air conditioners whilst kitchen appliances include cookers, ovens, kettles and food processors, and home appliances consist of refrigerators, washing machines, and vacuum cleaners In the AC division, each department has their own departments to go along with to support their activities for related products Specifically, there are departments which belong to AC division The head of AC administers not only sales management but also product management, customer service and administration Product management is in charge of monitoring pricing, inventory, orders and marketing activities Customer service is accountable for handling consumers’ inquiry in terms of installation, maintenance and reparation Administration supports administrative tasks In total, there are managers and 28 employees Every department in AC collaborates with each other towards a shared vision with the goal of achieving excellent business outcomes and outstanding customer experience In today’s ever changing business environment, Electrolux is proud of being one of the leaders in the air conditioning industry that foresees the future and continuously innovates to develop future-proof air-conditioning solutions The product line of air conditioning contains residential air conditioner and system air conditioner The compatible models can be single-split, multi-split, single-split packaged, multi-split packaged air conditioners and VRF system For the residential air conditioners, air conditioners are used when an outdoor unit connects to an indoor unit, which are best suited to houses with a number of floors and rooms with little space for an outdoor unit For the system air conditioner, they are ideal for installation in larger areas such as larger-scale residential houses, commercial buildings, condominiums, etc A single or multiple outdoor units serving various indoor units and allows for a mixture of system types Driven by a never-ending quest for product innovation, their goal is to deliver products with superior quality and reliability and provide experience of true comfort for businesses and homes The proportion of sales for product type is shown that residential air conditioner constitutes 65 percent of total sales which is higher than that of system air conditioner accounting for 35 percent Electrolux Vietnam AC division’s competitors are Daikin, Panasonic, LG and others They target B2B customers that a distribution network is applied through modern trade and traditional trade to attract customers and sell their products Regarding modern trade, ecommerce such as Tiki, Lazada, etc and supermarkets such as Dien may Xanh, Nguyen Kim, Cho Lon, Tu Do, etc Concerning traditional trade, retailers are Truc Mai, Thien Nam Hoa, etc The proportion of sales for consumer type is shown that modern trade constitutes 40 percent in which 15 percent for ecommerce and 25 percent for supermarkets which is lower than that of traditional trade accounting for 60 percent Sales department has a total of 15 members including a sales manager, a sales supervisor, 11 sales representatives and a sales administrator The role of a sales admin is to assist sales force with daily sales administration activities Sales reps are in charge of developing customer intimacy and establishing new sales opportunities Sales supervisor is responsible for ensuring customer satisfaction, increasing sales for the company, consistently monitors the sales activity of the team and tracks the results Sales manager participates in strategic and tactic planning and managing for the department Because of increasing competition between air conditioning manufacturers, it is crucial for Electrolux to foster a motivated and committed sales force which plays an important role in generating revenue for the company Problem mess 2.1 Symptoms To indicate something abnormal in the current business operation of Electrolux Vietnam AC, the source of internal data was examined such as reports of HR department, customer report which was published by management team so that employees are aware of their performance level These internal data was found to be advantageous due to its ease to approach and availability, together with cost efficiency and useful time series data Moreover, depth interviews with sales manager and sales supervisor were carried out in order to have a better understanding about what the division is struggling with and any necessary improvements 2.1.1 First symptom: Low sales According to the company’s internal data, Electrolux Vietnam AC experienced an increase in sales over the last three years Nevertheless, sales growth rates declined markedly, falling from the high 17 percent to the low 11 percent in 2017 and percent in 2018, even as the company added approximately USD 3.5 million of additional revenues in each of the past three years As declared by head of AC in the company’s annual meeting, Daikin has continued sales growth exceeding 25 percent from 2015 to 2018 Another Japanese-based air conditioning provider, Toshiba has achieved over 18 percent of sales growth in the same period What is more, it is reported by Nikkei Asian Review that sales of Vietnam AC market is forecasted to grow over 14.5 percent from 2015 to 2021 In general, Electrolux Vietnam AC suffered progressive slowdown in sales growth From 2015 to 2018, its sales also experienced a slower growth rate than that of their biggest rivals, Daikin and Toshiba and local AC market Table 1: Sales growth of Electrolux Vietnam AC, Daikin, Toshiba and Vietnam AC market from 2016 to 2018 Year Sales revenue – Electrolux Vietnam AC Sales growth – Electrolux Vietnam AC Sales growth – Daikin Sales growth – Toshiba Sales growth – Vietnam AC market 2014 2015 2016 Unit: million USD 2017 2018 24.5 27 31.6 35.3 10.2% 17.0% 11.7% 25.0% 18.0% 14.5% 38.5 9.1% Source: Nikkei Asian Review43, internal meeting 2.1.2 Second symptom: Low customer satisfaction Customer satisfaction is defined as a consumer’s response to the assessment of their consciousness of inconsistency between preceding expectations and actual exhibition of the product or service as discerned in the time following its consumption The measure of satisfaction can be economic satisfaction in terms of financial returns derived from the sales of the supplier’s products or non-economic satisfaction in terms of satisfaction that could be derived from interpersonal relationships with the supplier’s sales representatives In today’s highly competitive market, customer satisfaction is regarded as a major contribution for organizations to not only retain customers but also assist in recognizing economic goals like sales turnover and profitability 3; 4; It is shown that there is a positive relationship between customer satisfaction and customer loyalty The higher level of customer satisfaction leads to the greater customer loyalty 6; 7; Otherwise, as a result of customer dissatisfaction, they will not hold commitment to re-buy or re-patronize product or service 9; 10 in the future and have a potential to cause switching behavior and negative word of mouth 11; 12 It was reported that sales representatives at Electrolux Vietnam AC did not take good care of their customers As a consequence, the number of customers who either ceased repurchasing products or left the company is noticeable In accordance with Mr Phu, customer complaints were regarded as serious problems of which must be taken notice Customers expressed their dissatisfaction towards poor service rather than products They complained about late responses from salespeople which made them wait for more than day and have to make a call for prompt In some cases of emergency, salespeople are the ones that customers directly contact to ask for immediate help but they were asked to leave messages or voice mails and would be re-contacted after few hours later rather than receiving an instant support from salespeople They also complained that they were not informed about necessary information from salespeople on time such as delay in product delivery, or changes in promotion As a consequent, customers were discontented with salespeople, which brought about not only loss of existing customers but also low sales There was no denying the fact that this issue had an influence on the long-term sustainable growth of the company To be more specific, Mr Phu elaborated the issue that many dealers had not ordered Electrolux products for more than months although he definitely guaranteed that they had been sold out Most of them were air conditioner specialists, known as ACS, were qualified customers that were believed to have a potential in buying and selling to gain revenue on a monthly basis because they had sufficient resources in terms of human resources, financial resources and inventory capacity Some of them intentionally sent formal complaints to related parties whilst others complained by oral and decided to slow down the period of time from buying to selling Electrolux products as a way of not hurting the relationship with the company, which made the company challenging to figure out the problem owing to their inaccurate reasons Therefore, after receiving a large number of complaints from customers, manager and supervisor were able to aware of the main cause of this problem, which was because of salespeople As shared by Mr Quan, there were actually cases that have had a close relationship with the company more than years finally being out of business with the company Alongside, other cases did not want to enthusiastically sell their products which mean that when individual customers come to ask their recommendation about proper products that matched their needs; however, they did not mention about Electrolux brand In the context of business-to-business relationship, it is proven that salespeople’s job performance as customer contact employee plays a crucial role in securing business customers’ satisfaction 13 Specifically, attitudes, expertise and traits of salespeople can impact on customer satisfaction 13; 14 To measure the level of customer satisfaction, a quantitative survey which includes quality of service in case of salespeople was distributed to 56 business customers that carry out product lines of not only Electrolux Vietnam AC but also their competitors, among which Daikin and Toshiba were particularly chosen to investigate the level of customer satisfaction of these companies and to compare with the existing situation of Electrolux All items are measured using 10-point scale ranging from which indicates strong dissatisfaction or fully disagreement to 10 which indicates strong satisfaction or fully agreement By providing them with a hard copy at shop as well as an email invitation to online survey, complete questionnaires could be acquired from a total of 53 customers out of 56 in total, for a response rate of 94.6 percent 10 36 Carmeli A, Gilat G, Waldman DA The role of perceived organizational performance in organizational identification, adjustment and job performance Journal of Management Studies 2007 September 1;44(6):972-92 37 Rhoades L, Eisenberger R Perceived organizational support: A review of the literature’, Journal of Applied Psychology 2002;87(4):698-714 38 Edwards MR HR, perceived organizational support and organizational identification: an analysis after organisational formation Journal of Human Resource Management 2009;19(1):91-115 39 Allen DG, Shore LM, Griffeth RW The role of perceived organizational support and supportive human resource practices in the turnover process Journal of Management 2003;29(1):99-118 40 Chiang H, Han T, Chuang J The relationship between high-commitment HRM and knowledge-sharing behavior and its mediators International Journal of 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An exploratory analysis of the differential effects of career stage European Management Journal 2012 Apr 1;30(2):111-120 58 Tannenbaum SI, Mathieu JE, Salas E, Cannon-Bowers JA Meeting trainees' expectations: The influence of training fulfillment on the development of commitment, self-efficacy, and motivation Journal of Applied Psychology 1991 Dec; 76(6):759 59 Dessler Fundamentals of Human Resources Management (4th ed.) 2016, Upper Saddle River, NY: Prentice Hall 60 Borman Job behavior, performance, and effectiveness In M D Dunnette & L M Hough (Eds.), Handbook of industrial and organizational psychology 1991;2:271-326 Pal Alto, CA: Consulting Psychologists Press 61 Wexley Appraisal interview In R A Berk (ed.), Performance assessment 1986:167-185 Baltimore: Johns Hopkins University Press 62 Hoyer WD, MacInnis DJ Consumer Behaviour 2nd ed., Boston, Houghton Mifflin Company, 2001 63 Singh H The Importance of Customer Satisfaction in Relation to Customer Loyalty and Retention UTCI Working Paper, 2006 114 Appendix I Current performance appraisal form of AC sales department Name: Position: Unit/ Department: Last review date: Performance evaluation Sales SAC RAC New clients Business opportunities creation Win rate Visit report % of KPI 25% 40% 20% 5% Requirements $300,000 $600,000 clients 1,000,000 5% 5% 25% 60 reports Competency evaluation Core competency (Grading of – 5) Employee self-evaluation Response Time Productivity Teamwork Product Knowledge Average Rating Manager evaluation Employee remark Manager remark 115 Employee signature Date Manager Signature Date II Proposed new performance appraisal form of AC sales department Performance evaluation 2019 Target Objectives (KPI) Unit Weight (1H) Threshold Cap Weight (2H) Threshold 2019 Actual Year 2019 Cap Year 2019 Achievement After Threshold and Cap Score I Objective K USD 50% 70% 150% 40% 60% 150% 9200 9900 11300 12100 42500 Channel: Individual Sell In RAC + SAC/RAC K USD 30% 70% 150% 25% 60% 150% 900 900 900 1000 3300 Supermarket: Individual Sell In RAC + SAC K USD 30% 70% 150% 30% 60% 150% 900 900 1000 1100 3900 15% 60% 150% 200 300 500 AC Group Sell In II Objective 2.1 II Objective 2.2 Channel: Individual Sell In SAC K USD Supermarket: Individual Sell In RAC III Objective 3.1 AC Profit % 5% 70% 120% 8% 8% 8% 116 III Objective 3.2 Channel: Number of Customer Visits Times 5% 70% 120% 99 99 198 Supermarket: Number of Customer Visits Times 10% 70% 120% 66 66 132 IV Objective Partner Recruitment Customer 5% 70% 120% 5% 70% 120% 2 2 Channel: BO Creation K USD 5% 70% 120% 5% 70% 120% 3600 3600 4000 4400 15600 Supermarket: BO Creation K USD 5% 70% 120% 5% 70% 120% 3600 3600 3600 4000 14800 % 5% 70% 120% 10% 70% 120% 25% 25% 25% 25% 25% V Objective VI Objective BO Win Rate Total Competency evaluation Response time (Demonstrate the ability to respond and follow up with work requests) Always acknowledge request within day, provide final reply within days and update weekly until matter is resolved Usually acknowledge request within day, provide final reply within days and update weekly until matter is resolved Occasionally acknowledge request within day, provide final reply within days and update weekly until matter is resolved Rarely acknowledge request within day, provide final reply within days and update monthly until matter is resolved; occasionally have to be reminded Always have to be reminded to acknowledge request, provide final reply or updates at all 117 Productivity (Demonstrate the ability to produce the amount of work under different circumstances) Always meet deadlines, and efficient; exceed all KPIs Usually meet deadlines, and efficient; meet all and exceed some KPIs Occasionally meet deadlines, and efficient; meet all KPIs Occasionally deliver last minutes work; and meet some KPIs Occasionally deliver last minutes work, and missed deadlines; meet some KPIs Teamwork (Demonstrate the ability to actively participate and work with others as a team to achieve results) Always participate actively in activities and work well with others as a team to achieve more than projects for the company Usually participate actively in activities and work well with others as a team to achieve – projects for the company Occasionally participate actively in activities and work well with others as a team to achieve – projects for the company Seldom participate in activities; and cooperate with others as a team to achieve – projects for the company Rarely participate in projects and cooperate with others as a team, so projects is achieved Product knowledge Exceptionally product comprehension by achieving the highest 10 points for the test (PASS) Good product comprehension by achieving – points for the test (PASS) Average product comprehension by achieving – points for the test (PASS) Bad product comprehension by achieving lower than points for the test (FAIL) No product comprehension by achieving point for the test (FAIL) Salesperson’s overall competency rating 118 Consistently far exceeding expectations Frequently exceeding expectations Consistently meeting expectations Frequently not meeting expectations Not meeting expectations III Proposed product test of Electrolux AC Test Results – Salesperson’s name Questions on Test: 10 Questions Correct: Questions Incorrect: Percent Correct: Passing Score: 60 Pass/Fail: SEG1 (Page) SEG2 (Option type) SEG3 (Common) Evaporator drying SEG7 (Page) SEG8 (Common) Drain pump SEG9 (Only Duct) AUX heater SEG13 (Page) SEG14 (Common) External control SEG15 (Common) External control output/ External AUX heater On or SEG4 (Common) External room temperature sensor/ Minimizing fan operation when thermo off SEG10 SEG16 (Common) 5-Plasma ion SEG5 (Common) Central control SEG6 (Common) Fan RPM compensation SEG11 (Common) EEV Step when heating stops SEG17 (Common) Buzzer SEG12 SEG18 (Common) Number of hours using filter 119 SEG19 (Page) SEG20 (Common) Individual control of a remote controller Off signal SEG21 (Common) Heating setting compensation/ Removing condensate water in heating mode SEG22 (Common) EEV Step of stopped unit during oil return/ defrost mode SEG23 (Only4Way(600x600)) Motion detection sensor SEG24 (Only 360CST) Cycle time of Swing A user wants to prevent odors from occurring in an indoor unit heat exchanger What kind of function (option) can you suggest? O SEG16: Number of hours using filter O SEG14: External control O SEG3: Evaporator drying O SEG6: FAN RPM compensation What is not related to cooling performance of E-DMS? O Well bulb temperature of the room O Outdoor wet bulb temperature O Piping length from outdoor unit to indoor unit O Level difference between outdoor and indoor unit Which is the statement below is correct regarding Cassette units? O Cassette units can be installed only with closed type panels O Cassette air direction could be set by steps (wide or narrow) O Horizontal airflow is possible by using booster fans 120 O There is no fresh air intake duct opening a) ER-HD00 (Wireless remote controller) b) EWR-HD00N (Simplified wired remote controller) c) EWR-HD10N (Touch wired remote controller) d) EWR-AF13N (Standard wired remote controller) Which controller can be used to set discharge air temperature control for E-DMS duct indoor unit? O d) & c) O a) & b) O c) & d) O d) & a) User requirement: Control indoor units divided by window Turn on all indoor unit in cooling mode at 8:00 on Wed & Thu Turn off all indoor units at 18:00 every day When outdoor temperature is below 5oC (41oF), all indoor units should be set only heating mode on everyday 121 The picture is one of E-DMS site Which is not needed setting in E-DMS in order to satisfy the user’s requirements? O Schedule setting O User editable control logic O Emergency operation location O Zone setting What is the proper solution for E-DMS systems to save energy and customize the operation load in accordance with indoor and outdoor temperature? 122 O Max cooling capacity restriction of outdoor unit option setting O Energy control operation of outdoor unit option setting O Speed operation of outdoor unit option setting O Cooling capacity correction of outdoor unit option setting All product is applied new protocol NASA If there are not any external factors (ideal conditions), which part of this diagram is incorrect? O1 O2 O3 123 O4 As a big AHU coil design is required Which is the right one? O1 O2 O3 O4 When a deducted type indoor unit is installed, what should be considered for normal operation? O Room temperature O Fresh air intake O Ambient temperature O External static pressure 10 Choose the correct order of refrigerant cycle O Evaporator → Expansion device → Condenser → Compressor O Compressor → Evaporator → Condenser → Expansion device O Compressor → Condenser → Expansion device → Evaporator O Condenser → Evaporator → Compressor → Expansion device IV Employee counseling statement 124 Employee’s Name: Job title: Department/ Division: Date of Notice: Date of Violation: Nature of Violation Poor Performance Absence/ Tardiness Violation of Company Policy Falsification of Documents/ Records Harassment Other Action Taken Verbal Warning Written Warning Suspension Termination Other Supervisor’s Statement 125 Summary of Violation (incident(s) and reason for having a performance coaching/counseling meeting with the employee) Summary of Corrective Plan of Action (timetable for improvement and how it should be achieved) Employee’s Statement (Response to supervisor’s remarks and what action you will take to meet performance standards) I have read this performance coaching/counseling document and understand that future issues could bring out further disciplinary action, up to and comprising probation and/or immediate dismissal from employment 126 Employee Signature Date Supervisor/ Manager Signature Date Human Resources Received Date 127 ... theories involve ineffective managerial support and ineffective segmentation By evaluating and verifying each potential problem, a discussion to focus on ineffective managerial support is determined... and marketing activities Customer service is accountable for handling consumers’ inquiry in terms of installation, maintenance and reparation Administration supports administrative tasks In total,... local AC market Table 1: Sales growth of Electrolux Vietnam AC, Daikin, Toshiba and Vietnam AC market from 2016 to 2018 Year Sales revenue – Electrolux Vietnam AC Sales growth – Electrolux Vietnam