Solutions for poor employee performance at annam gourmet market

HO CHI MINH CITY UNIVERSITÉ LIBRE DE BRUXELLES OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL OF ECONOMICS & MANAGEMENT MBQPM NGUYEN THI NGUYEN THAO SOLUTIONS FOR POOR EMPLOYEE PERFORMANCE AT ANNAM GOURMET MARKET MASTER FINAL PROJECT MASTER IN BUSINESS QUALITY AND PERFORMANCE MANAGEMENT Ho Chi Minh City (2018) HO CHI MINH CITY UNIVERSITÉ LIBRE DE BRUXELLES OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL OF ECONOMICS & MANAGEMENT MBQPM NGUYEN THI NGUYEN THAO SOLUTIONS FOR POOR EMPLOYEE PERFORMANCE AT ANNAM GOURMET MARKET MASTER FINAL PROJECT MASTER IN BUSINESS QUALITY AND PERFORMANCE MANAGEMENT Tutor: Prof Jacques Martin Ho Chi Minh City (2018) DECLARATION OF AUTHENTICITY I, the undersigned, _, declare that this dissertation is my original work, gathered and utilized specially to fulfil the purposes and objectives of this thesis, and has not been previously submitted to any other university for master degree Any work or information adopted from other sources is duly cited and referenced as such _ Signature ACKNOWLEDGEMENTS I would like first to express my appreciation to the Solvay Brussels School of Economics & Management and Ho Chi Minh Open University that provided me with this special and useful program Then I would like to offer my deep gratitude to Prof Jacques Martin, who is the Director of the program, the lecturer of two courses, and most importantly, my advisor for this thesis for his profound knowledge transfer, his dedication, his willingness, for his valuable and constructive suggestions during the planning and development of this report I am particularly thankful for the support of Prof Michel Brotto (Process Management), Prof Philippe Debroux (Human Resources Management), Prof Paolo Braguzzi (Innovation), Prof Antigoni Papadimitriou (Performance Evaluation) and all other professors of the program, who have conveyed their sound, systematic and practical knowledge and experience to us Besides, assistance provided by my colleagues in my company for the data collection are greatly appreciated TUTOR’ S COMMENTS AND APPROVAL _ Signature TABLE OF CONTENTS PREFACE PART I – INTRODUCTION AND PROBLEM IDENTIFICATION CHAPTER – CORPORATE CONTEXT AND EMPLOYEE PERFORMANCE ISSUE COMPANY CONTEXT .1 I II EMPLOYEE PERFORMANCE ISSUE CHAPTER – INVESTIGATION OF THE CAUSES OF POOR EMPLOYEE PERFORMANCE AND THE CONSEQUENCES .9 EMPLOYEE FEEDBACKS WITH SURVEYS & INTERVIEWS .10 I II DETAIL ANALYSIS OF EMPLOYEE POOR PERFORMANCE ROOT CAUSES 14 Assessment of current EPM system 14 Processes and procedures 20 Delegation and job design 21 PART II - SOLUTIONS FOR EMPLOYEE PERFORMANCE MANAGEMENT 24 CHAPTER 1: SOLID FOUNDATION FOR SUCCESSFUL EMPLOYEE PERFORMANCE MANAGEMENT 24 CRITICAL PREREQUISITES 24 I Vision Framework 24 Leadership and Commitment .26 II PROCESS SYSTEM 27 Why processes are needed? 27 How to build the process system properly? 28 How to implement and control process 31 CHAPTER 2: PERFORMANCE MANAGEMENT SYSTEM 33 PURPOSES OF PERFORMANCE MANAGEMENT SYSTEM 33 I II DESIGN OF PERFORMANCE MANAGEMENT SYSTEM .34 AGM Objectives Development with Balanced Scorecard 34 Targets 43 Measurements .44 III PERFORMANCE MANAGEMENT CYCLE 44 CHAPTER 3: DRIVERS TO ENHANCE EMPLOYEE PERFORMANCE SYSTEM 49 EFFECTIVE COMMUNICATION 49 I Communication plan for changes 49 Change promotion in the company 49 Two-way communication .50 II MOTIVATION 51 III TRAINING 52 IV CULTURE 52 V INCENTIVES & REWWARDS/ RECOGNITION SYSTEM .53 CONCLUSION 54 REFERENCE LIST 56 APPENDIX 57 LIST OF ABBREVIATIONS - AGM : Annam Gourmet Market - AFF : Annam Fine Foods - TQM : Total Quality Management - PM : Performance Management - PMS : Performance Management System - EPM : Employee Performance Management - HR : Human Resources - IT : Information Technology - HCMC : Ho Chi Minh City - Dist : District - FDI : Foreign Direct Investment - FTA : Free Trade Agreement - KPI : Key Performance Indicator - JD : Job Description - CSF : Critical Success Factor - IP : Input - OP : Output LIST OF FIGURES IN THE REPORT Figure Company organization chart Figure SWOT Analysis Figure Factors Affecting Employee Performance 11 Figure Root Cause Analysis of Poor employee performance 13 Figure Aligning Strategic Planning and Job Requirements 22 Figure 8: Strategy Map & Objective linkage 40 Figure 9: Scorecard Strategic Alignment Process 41 Figure 10: Linking Organizational Performance to Employee Performance 42 Figure 11: Business Performance Management Maturity Model 55 PREFACE In today’s globalized world, it is much more opened and there are available opportunities for anyone to create a business compared to previous ages Establishing a company therefore is just as easy as pie However, is it just that easy to maintain, grow, sustain and succeed? - The answer definitely is “No” The more developed we are; the more competition becomes tougher A rough company survival rate (USA Today) states that 1/3 of companies disappear after years, 2/3 of companies disappear after years, and less than 30% last 10 years Causes for failure of these businesses certainly varies from underestimating how much money will be needed to fund operations and/or overestimating how quickly their products and services will catch on in the marketplace However, there is a common basic reason in general that they either lack their own competitive advantages or lose them over time “Michael Porter pioneered the concept of competitive advantage and broke it down into two forms: differentiation advantage and cost advantage Differentiation advantage is when a company provides a superior service or product for the same price charged by the market Cost advantage is when a company provides the same service or product as the market, but at a lower price Porter collectively refers to these as "positional advantages" because they define the firm's position as having the leading service or product in its specific industry” – Investopedia Where does these advantages derive from? He also states that these advantages cannot be sustained for any length of time because the promise of economic rents invites competition How can we sustain our competitive advantages? Let us be inspired and learnt from the success story of Toyota, a company that succeed with that two strategies of Quality and cost Their “secret” is always the principle of elimination of waste and absolute concentration on consistent high quality by a process of continuous improvement (Kaizen) as a core” The gain of superior products or services offered to customer is more and more critical, and the costs should be more and more utilized How? It is not something new, the world has recognized it as a most crucial approach to business success and sustainability - “Total Quality Management” (TQM) TQM ensures long-term success by enforcing all-encompassing internal guidelines and process standards to reduce errors By way of serious, in-depth auditing – as well as some well-orchestrated soul-searching – TQM ensures firms meet stakeholder needs and expectations efficiently and effectively, without forsaking ethical values TQM, in other simple words, is quality in everything we do, and make a loop of continuous improvement “If we not improve, we deteriorate” We are the top today, but it is not guaranteed that we remain to be top tomorrow even if we remain the same effort that we devote today Therefore, knowing where we are, how to improve, and where to improve is especially critical to the success of the implementation of TQM in particular and in doing any business in general as Deming’s cycle Plan – Do – Check – Act The “check” part in this case is Performance Management (PM) System We need PM to translate our strategies into actions, to ensure our performance in the aspects we want like quality of products, services, processes, etc to meet customer standards or requirements, internal and external benefits PM is also the base for decision-making Many big companies which implemented successfully their TQM and PM system cannot deny that human capital is their key resources It is totally true that as long as we get everything else but not a right team of people, we hardly produce a sustainable competitive advantage PM, of course, not only about employee performance, is more encompassing Yet, supposing that we have all of process written, but employees are not buy in, the system will barely work properly and not high-performing Hence, employee performance management play an integral and main part of the system where we can transform our people’s talent and motivation into a strategic business advantage, just like we sail or drive a ship with the strength of all crew members together pointing towards the desired destination That powers the most 54 CONCLUSION Managing people in general or managing employee performance has been never an easy job It is normally complicated to solve and requires constant and vast effort put in many aspects Once AGM recognize the criticality of poor employee performance to their business survival and growth, such big effort to change shall be paid off Starting from the root with its vision, missions, and strategies, which should be well-established and communicated to all employees in a language that they can comprehend, and in a committed way from the top management Showing them first where the company wants to be, then calling for collective intelligence and joint effort is vital to enlighten the ways to be there with the right tool – process system And in order to know whether the company operates effectively, efficiently, and forwards to its goals or not, the current system of PMS must definitely be replaced With the proposed PMS system, which is congruent to its strategic objectives, thorough, fair and reliable, AGM will be able to manage the employee performance more effectively Properly designed and implemented performance management system will enhance employee motivation, engagement, satisfaction, reduce employee turnover, and provide valid information for appropriate decision-making which will result in increases in turnover, profits, customer satisfaction and of course, more sustainable growth According to a model developed from the big survey findings of the Advanced Performance Institute (a research, consulting and training organization in business performance), AGM is at level now, which means we have some facts and performance data but the collection and usage are just ad hoc and uncoordinated Companies at this level often create more confusion rather than useful and structured insights because the data are not generated regularly and in a systematic manner Therefore, with proposed solutions, AGM is expected and supposed to upgrade to Level of maturity where there are more structured approaches to collecting and EMPLOYEE PERFORMANCE MANAGEMENT ANNAM GOURMET MARKET 55 reporting data The data are also more relevant and allow the company to produce regular performance reports and dashboards to support management decisionmaking, and gradually step up to highest benefits level Figure 11: Business Performance Management Maturity Model Noted that there is no one or no company that can change overnight It is, in fact, a continuous journey Everything including mission, strategies, process, system should not be a fixed document, and built once upon the time They all should be updated, revised, improved, changed according to implementation and adaptability, to the business environment, the industry changes, and the company itself Finally, there is no need to set such a far-reaching target right away, too hustle for too ambitious goals, which may cause resistance and fear for nonachievability Yet, we can just be better than we were yesterday 1% better every day, meaning that we are 365% better in year I think this is already a good growth rate EMPLOYEE PERFORMANCE MANAGEMENT ANNAM GOURMET MARKET 56 REFERENCE LIST Herman Aguinis (2013), Performance Management, Pearson Education, US John S Oakland (2003), Total Quality Management: Text with Cases, Oxford James R Evens, William M Lindsay, (2011), The Management and Control of Quality, Canada Paul Falcone, Winston Tan (2013), The Performance Appraisal Tool Kit, Amacom, US Robert S Kaplan, David P Norton (1996), The Balanced Scorecard: Translating Strategy into Action, Harvard Business School Press, Boston, Massachusetts EMPLOYEE PERFORMANCE MANAGEMENT ANNAM GOURMET MARKET 57 APPENDIX Exit Interview Questionnaire Form EMPLOYEE PERFORMANCE MANAGEMENT ANNAM GOURMET MARKET 58 EMPLOYEE PERFORMANCE MANAGEMENT ANNAM GOURMET MARKET 59 EMPLOYEE PERFORMANCE MANAGEMENT ANNAM GOURMET MARKET 60 KPI Form Annam Gourmet Market KPI Sales & Operations Team Name Position Dpt in charge NGUYEN VAN A Level/ Grade D DRY SELLER Basic Salary 3,400,000 50.00% GROCERY + NF + DHP DEPT Review Quarterly or Monthly Weight Key Performance Measure Potential Bonus Sub.W eight I/ QUANTITATIVE Hit TOTAL SALES TARGET 20% 70% Hit TOTAL SALES of DRY 25% Hit TOTAL SALES of NON FOODS 5% Hit TOTAL SALES of DHP 5% Hit CAMPAIGN SALES TARGET (AMERICAN) 5% Reach the Target of Damage/Expired – DRY FOODS 4% Reach the Target of Damage/Expired – DHP 1% Reach the Target of Damage/Expired – NON FOODS 1% Reach the Target of Sampling/Tasting – DRY FOODS 1% TURN OVER MARGIN STOCK CUSTOMERS EXPENSES 60% 15% 13% 10% 2% Reach the Target of Shrinkable Inventory/Stock-take w/ full involvement – DRY FOODS Reach the Target of Shrinkable Inventory/Stock-take w/ full involvement – DHP Reach the Target of Shrinkable Inventory/Stock-take w/ full involvement – NON FOODS Decrease the number of Out of Stock – DRY FOODS < 11% : 100%