UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Pham Minh Tuan IMPROVING INEFFECTIVE LEADERSHIP IN TUAN LOC CIC’S HEAD OFFICE MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2018 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Pham Minh Tuan IMPROVING INEFFECTIVE LEADERSHIP IN TUAN LOC CIC’S HEAD OFFICE MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DR. PHAN THI MINH THU Ho Chi Minh City – Year 2018 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com SUPERVISOR’S REPORT ON THE THESIS PROPOSAL SUBMITTED FOR DEGREE OF MASTER of BUSINESS ADMINISTRATION The thesis proposal title: IMPROVING THE INEFFECTIVE LEADERSHIP IN TUAN LOC CIC’S HEAD OFFICE Student Name: Pham Minh Tuan Supervisor: Dr. Phan Thi Minh Thu 1. General comments: Remarks on the student’s attitude: ……………………………………………………………………………………… ………………………………………………………………… Remarks on the assignment’s academic quality: ……………………………………………………………………………………… ………………………………………………………………… 2.
Overall assessment: Meet requirement for submitting Not meet requirement for submitting 3. Other remarks: Did the student follow the report schedule? Yes No Other…………………………. The Turnitin plagiarism percentage: Supervisor’s signature LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Contents Executive Summary. Importance of the selected symptom.
Central Problem and Cause Identification. Proposed solution and action plan. Evaluation of solutions. 28 Appendix 1 – The report of Viet Nam salary online survey in 2016.
31 Appendix 2 – Transcript with Mr. Viet – Deputy Planning Manager. 32 Appendix 3 – Transcript with Mr. Phuc - Deputy Human Resource Manager.
34 Appendix 4 – Transcript with Mr. Nghia - Chief Accountant. 36 Appendix 5 – Transcript with staffs who left the company. 38 Appendix 6 – Questionnaire 1 to validate literature for leadership and actual situation in Tuan Loc CIC’ Head Office.
Result of Leadership Survey 3 Departments (Technical, Planning and Business). 42 Appendix 8 – Questionnaire 2: Company Communications Evaluation. 44 Appendix 9 – Transcript with Ms. Tam - Human Resource Manager.
46 Appendix 10 – Transcript with Mr. Thang - Deputy General Director. 48 Appendix 11 – Transcript with Ms. Tam – Human Resource Manager for Evaluation of solutions 50 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Executive Summary High employee turnover rate becomes more and more complicated from 2014 up to now, impacts on many aspects of the company such as performance, reputation, finance and image.
Specially, in the last haft of 2016 and 2017, the turnover rate increases too quickly that seriously effect on the department’s activities as well as company’s performance. There are a lot of potential problems causing the high employee turnover rate was found out as ineffective leadership, low compensation and poor work environment relied on interviews and literature. After analysis, evaluation and validation process, department manager’s ineffective leadership is demonstrated as the central problem. In this research, ineffective leadership is the term which describes poor leadership qualities as well as causes negative influences on job satisfaction and organizational commitment, results of this issue is high turnover rate.
The root causes and proposed solutions for solving problem are significant to reduce the employee turnover rate and improve department’s performance. Finally, Results of research are four potential solutions: team building, developing an internal training, finding third party to train or finding the training courses (external training) and changing Department Managers. Through solution evaluation process related to realistic and feasibility, cost saving, requirement of time and obtained benefits, external training and team building are the most appropriate solutions with available resources in order to improve ineffective leadership in Tuan Loc CIC’s Head Office. 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.1 Company History Tuan Loc Construction Investment Corporation (Tuan Loc CIC) is established and come into operation in 2005.
The main business forms are road and bridge construction, industrial park investment, water supply system construction and investment. The average employees are 250 in total and to ensure the stable and effective operation, the average number of staffs in Head Office is maintained from 55 to 65 people (excluding Manager). Tuan Loc CIC is promoting investment and construction activities in the whole country and foreign cooperation. The company operates relied on the function structure with 8 Departments in Head Office including: Human Resource, Accounting, Technical, Planning, Business, Investment, Machine and Equipment; Water Department.
Symptoms Through the initial interview with the Deputy Manager of Human Resource Department, he told that: “In 2015 and 2016, although there are a lot of employees who left company, it is not seemed to impact on the Company’s operation, number of staffs left the company continuous increase too many and impact on the operation of the company this year. However, we have not found the effective solutions for controlling yet”. He also shown the evidence for his talking regarding to numbers of staff left Tuan Loc CIC from 2014 to 2017 presented in the Table 1 - Number of Staffs working and Left Tuan Loc CIC’s Head Office from 2014 to 2017. Number of Staff Total Number Year M (Average) of left HR Accounting Technical Planning Business Investment & Water E 2014 5 12 18 3 6 3 6 3 56 1 2015 5 12 20 6 7 5 8 3 66 7 2016 5 10 15 3 5 5 8 3 54 13 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Number of Staff Total Number Year M (Average) of left HR Accounting Technical Planning Business Investment & Water E 2017 5 11 4 0 5 5 8 3 41 15 Turnover Rate 40.59% Chart 1 – Tuan Loc CIC’s Head Office Turnover Rate As the result of calculation shown in the Chart 1 - Tuan Loc CIC’s Head Office Turnover Rate, the turnover rate in 2016 and 2017 are 24.
Meanwhile, the average turnover rate is 15.7% for Real Estate – Construction Major referred to the report of Viet Nam salary online survey in 2016 (Appendix 1 - The report of Viet Nam salary online survey in 2016) with participation of 300 companies and 106.925 employees performed by Macconsult Consultant Company. As analysis, Tuan Loc CIC’s Turnover rate is higher compared with the average turnover rate and continue increasing year by year. Phuc – Deputy Human Resource also said that: “In the first haft of 2017, three departments: Technical Department, Planning Department and Business Department always complain with us about lack of direct staffs and required to recruit new staffs because they didn’t have enough staffs to work”. Refer to the data about left staffs are provided more by Mr.
Phuc, most of employees left the company from Technical 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Department, Planning Department and Business Department, the details are given in the Table 2 – Number of Staff Working and left of 3 Departments: Head Office Staffs Technical Planning Business Total of Year Total leaving staff Staffs Leaving TOR Staffs Leaving TOR Staffs Leaving TOR 2014 18 0 0% 3 0 0% 6 1 17% 27 1 2015 20 3 15% 5 1 20% 7 3 43% 32 7 2016 20 7 35% 5 2 40% 5 2 40% 30 11 2017 15 11 73% 3 2 67% 6 2 33% 24 15 Remain 4 0 5 9 Table 2 – Number of Staff Working and Left of 3 Departments According to functions and duties of departments, three Departments play important role with the key contents such as: - Technical Department: Completion of the shop drawing and calculation of quantity for bidding; managing the technical of all projects and controlling and improving the construction schedule, quality of projects. - Business Department: Bidding for new projects and managing all of Subcontractors. - Planning Department: Managing Contract related to collecting Payment, ensuring Schedule, Output and resolving the problems that need to be explained and prove with State Management Agencies; forecast the output, revenue and cash flow (including establish disbursement schedule). With the role and functions as given, high turnover rate will certainly impact on the company’s operation.
To identify these effects, the researcher conducts interviews with Mr. Viet – Deputy Planning Manager, Mr. Phuc - Deputy Human Resource and Mr. Nghia – Chief Accountant.
5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Importance of the selected symptom In year 2015 and 2016, although the turnover rate was high, it did not seem to impact distinctly on the management progress of the company yet. However, in the first haft of 2017, there are a lot of problems the company shall face. Viet – Deputy Planning Manager said that: “The completion of documents is often late, impact on the reputation, finance and image of the company, For example: - In Package I, we submitted payment two months late, the value of payment is about fifty eight billion VND, and value of payment is about fifty eight billion VND.
It impacts on the finance for construction on site. Up to now, because of delayed cash flow, the schedule of Package I is late for 2 months compared with required Schedule. If this situation keeps going up to completion of Project, as the condition and provision of Contract, we will be punished 0.1% of Contract Value, about 566.5 million VND per 1 late day. - In Sai Gon – Metro Project: Because late construction, we must bear the cost of waterway warrant (560 million VND per month), for 3 months.
- In general, in this stage, payment document is late compared with the payment plan from haft of month to 2 months because we don’t have enough staffs for performance. Employers regularly complain these situations” Mr. Phuc – Deputy Human Resource Manager added: “The document works in projects are regularly slow, cannot meet the requirement lead to delay on construction on site. We received a lot of writings in this year from Employer for complaining and punishing due to late schedule on site, late document for payment and so on.
All of these situations seriously impact on the reputation of our company”. In the interview with Mr. Nghia – Chief Accountant, he explained consequences of delaying document and schedule: “We built the finance planning based on the disbursement schedule and construction schedule on site of all projects. In 2017, the actual disbursement and construction schedule are slower than planning, although the planning is changed many times.
Therefore, we have to change the source of financing to meet operation needs by bank loans and bear more financial cost”. 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com From all information, high turnover rate impact directly on performance, finance, image as well as reputation of company, problem identification and solving is very significant as well as important in order to improve performance, maintain sustainable growth and development. Problem Identification Researcher conducts the interviews to identify problem that Tuan Loc Construction Investment Corporation shall face. The first, the face to face interview with Mr.
Phuc – Deputy Human Resource Manager, He said that: “The number of staffs left increase so quick in recent year, I used to ask several people about the reasons which they decided to leave the company. Most of them complain the salary and direct manager”. Two interviewees who left the company participate in the next interview, the first one shared that: “Managers only care about the results of the work, not care about the process so rarely support staff to complete the work, seldom empower, all of things are decided by manager and my tasks are performing the process, reporting regularly”. In addition, two interviewees confirmed that: their manager frequently losses his temper and blames on employees.
Participants are not satisfied with their direct manager and feel uncomfortable when work with their Manager. Deputy Human Resource Manager also recognized that: “Most of them are good in the technical skill because they graduated and worked with this field many years before become the manager. However, everyone has certain limitations”.