UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Huynh Thuy Tien SOLUTIONS TO REDUCE AMBIGUITY AT INTERLOG COMPANY MASTER OF BUSINESS Ho Chi Minh City - 2016 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Huynh Thuy Tien SOLUTIONS TO REDUCE AMBIGUITY AT INTERLOG COMPANY ID: 21130004 MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: NGUYEN THI MAI TRANG Ho Chi Minh City –2016 TIEU LUAN MOI download : skknchat@gmail.com ABSTRACT Today, Logistics is one of the sectors are high-speed development in Vietnam. Therefore, the need for personnel especially employees who have expertise, capabilities and experience is a critical requirement of Logistics industry. The recruitment has been difficult, the retention of personnel is one of the issue of concern of Logistics Companies. And for InterLog it is no exception, in recent years, high employee turnover rate is problem which BOD of InterLog always think about.
Thorough this study, I find out four key causes lead to that problem, they are: conflict, ambiguity, salary and reward system, and high pressure. In which I focused analysis and propose some alternative solutions to the ambiguity issue TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS I – EXECUTIVE SUMMARY. 1 II- PROBLEM DEFINITION .1 Background of InterLog Company .2 Current situation of InterLog Company .3 First cause: Conflict .4 The second cause: Ambiguity .5 The third cause: Salary, Reward System and High Pressure. 19 III – ALTERNATIVE – ANALYSE ALTERNATIVE CHOICE .1 First alternative solution.2 Second alternative solution.
35 IV- ACTION PLAN. 40 VI- SUPPORTING INFORMATION. 41 REFERENCES TIEU LUAN MOI download : skknchat@gmail.com LIST OF TABLES Table 1: Employee turnover rate in 2013 – 2014 .9 Table 2: Position of employee leave in 2013-2014 .9 Table 3: Turnover rate of each department in 2013-2014 .10 Table 4: The comparison between average salary increase and inflation rate .20 Table 5: List of antecedents of job satisfaction and commitment of previous researches .24 Table 6: Benefits and Cost of building a new working process .34 Table 7: Benefits and Cost of setting up a clear goals .38 Table 8: Action plan for two solutions .39 Table 8: Position and Work Experience of Respondents (in years) .44 Table 9: Position and Work Experience of Respondents (in years) .54 TIEU LUAN MOI download : skknchat@gmail.com LIST OF FIGURES Figure 1: Salary Increase In Vietnam from 2004 – 2015 .21 Figure 2: Diagram for main causes lead to high turnover rate in InterLog.23 Figure 3: Results of incident analysis at InterLog. 31 Figure 4: Supply Chain Process of InterLog Company.
33 TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENTS The completion of my Master thesis represents the end of my academic training in International School of Business (ISB). I want to take this opportunity to give my gratitude to a select few for their time, talent, assistance and encouragement in the past two years. First, I am greatly indebted to Professor Nguyen Thi Mai Trang, my advisor, who was always very patient and kind to give me suggestions and ideas in my work. She was really helpful in the whole process of this thesis.
I really appreciate it. I also want to extend my gratitude to the BOD, and all employees of InterLog Company, which I do this study in. Without their co-operation and help, the data collection process of this thesis could not have been completed. Finally, I want to give my deepest appreciation to my parents.
Mom and dad always believe in my abilities and give me encouragement all the time. They have shared my ups and downs during my ISB program. This work is dedicated to them. TIEU LUAN MOI download : skknchat@gmail.com I- EXECUTIVE SUMMARY InterLog Company is a Logistics Company, which current situation is high employee turnover rate.
In 2013, turnover rate is 19.5% and in 2014 that is 26. In 2014, the average staff turnover rate of general industry is 12.7%, however, that of InterLog is 26.88%, higher compare with result survey of Towers Watson Vietnam. And following statistics, turnover rate of Sales Department in 2013 and 2014 in turn are 8/16 (50%) and 14/25 (56%) is highest, so I focus on analyzing turnover intention of employee of Sales Department. Based on secondary data such as annual HR report of the company in two years 2013 and 2014, and reports of exit interviews and primary data – I used qualitative method – in-depth interview 7 employees of Sales Department randomly, I find out some main causes lead to this situation is conflict, ambiguity, salary and reward system, and high pressure.
In the four reasons mention above, conflict and ambiguity are key causes. Ø Conflict due to inefficient internal communication Ø Ambiguity due to inconsistent working process, unclear role of employee and empowerment of middle manager. Between conflict and ambiguity, BOD of InterLog should solve the ambiguity first; a consistent working procedure and role clear of employees are a “solid foundation” for long- term development of the company. 1 TIEU LUAN MOI download : skknchat@gmail.com Basing on results of interview of some middle managers (Sales, Production and Human Resources and Finance Department) of InterLog Company, I propose two solutions for company.
First alternative solution: Set up a clear process Ø First, making quotation of popular items. Ø Second, set up process. Ø Last, define rights and responsibilities of each department. Second alternative solution: Set up clear goals Ø First, communicate corporate goals, mission and vision for employees.
Ø Second, do performance feedback. Ø Third, developing autonomy. Ø Next, setting up a clear path promotion. Ø And the last, contest a game show such as: “I want to be section director”.
2 TIEU LUAN MOI download : skknchat@gmail.com II- PROBLEM IDENTIFICATION 2.1 Background of InterLog Company International Logistics Joint Stock Company (InterLog) was separated from Interlink Group – business specializing in freight forwarding multinationals. In the context of international trade development, freight demand for exports and domestic rises up in Vietnam, to more proactive in business, International Logistic JSC was born on August 2005 with its head office based on Ho Chi Minh City. Being a business with 100% domestic capital, InterLog has powers such as: • As an independent accounting unit. • Have full legal status.
• Proactively perform business activities, finance, and independent personnel organization. Established since 2005, InterLog has become a strong brand and won the trust of many domestic customers. It has built a powerful workforce with more than 100 official staffs, developed an official network in five big cities including two branches in Ha Noi and Dong Nai, and two agents in Da Nang and Hai Phong. 3 TIEU LUAN MOI download : skknchat@gmail.com Name of Company and Head Office Name of Company: International Logistics Joint Stock Company Short name: Interlogistics Head office: 5th Floor, Saigon Port Building, 03 Nguyen Tat Thanh St.39435898 Tax code: 0303957341 Email: Info@interlogistics.vn Website: www.vn The Scope of Business • Shipping and freight forwarding by truck, train, ship and aircraft (including: less than container loaded - LCL and full container loaded - FCL).
• Sales of multi-modal transport. • Handling, preserving, storing and packaging of goods. Do not just focus on transportation and freight forwarding import and export goods from the port to the port, but also InterLog exploits air transport, organizes the consolidation and 4 TIEU LUAN MOI download : skknchat@gmail.com storage of goods. With extensive relationships, agency network of the company has been selected to enhance the quality of service, to meet increasing demand of domestic and foreign clients.
Vision and Mission Vision: In next 5 years, InterLog has oriented to become leading supply chain innovator not only in Vietnam but also in Indochina region specializing in service "one-stop" for clients and packages. Mission: Operating in logistics business, InterLog has developed with mission to create the effective supply chain that brings benefits to customers, themselves and community. Achievements Over 10-year development, it has had the own milestones include: • 2005: Established InterLog Head Office; Achieved ISO 9001:2000 • 2006: Established InterLog-Danang Agent • 2007: Achieved Vietnam Excellent Brand Certificate, which is organized by Ministry of Trade and Vietnam Economic Times. • 2008: To be approved as an Official Licensed Customs Broker by Vietnam Customs General Agency.
5 TIEU LUAN MOI download : skknchat@gmail.com • 2011: Established InterLog-Haiphong Agent • 2012: Established InterLog-Hanoi Branch • 2014: Opening Nhon Trach Depot Beside that, InterLog also gets other achievement such as: • As an official member of International Federation of Freight Forwarders Association (FIATA) and Vietnam Freight Forwarders Association (VIFFAS). • As an official member of Vietnam Chamber of Commerce and Industry (VCCI). • Get Excellent Brand Award by the Vietnam Economic Times certified in 2005. The Organizational System With the nature of logistics business, InterLog sets up its organizational structure into particular departments that run each part of every shipment from customers.
The organizational system of InterLog comprises of Sales Department and Expert Bureau Department. In details, Sales Division contains three specific segments of Export, Import and Domestics shipments meanwhile Expert Bureau Department gets involve in paperwork, documents, customs, trucking and warehousing departments etc. The diagram below (Source: InterLog Company) is structure of InterLog with three main divisions: Production, Sales and HR & Finance. In the bottom of diagram has the number that is the number of employees in each department.
6 TIEU LUAN MOI download : skknchat@gmail.com Board of Director Board of Supervisor Director Deputy Director Warehous Customs Trucking Document Multi Interconso Agents Sales Supply Hanoi Marketing Accountin e Solutions ation Transport l Developmen Chain Branch & HR g Operator t Managemen t In charge In charge In charge In charge In charge In charge In charge In charge In charge In charge with with with with with Export with Import with with with LCL with Oversea storage, customs providin Import and shipment shipment customer Domestic Consolidatio Agents/Client loading, clearance g Export from from in s (Inland n (NVOCC) s distribution trucking documents Customers Customers Northern Trucking services (B/L, D/O) ) Vietnam 13 14 9 8 5 4 4 8 3 9 9 7 Number of staff Report directly to Deputy Production Divisions Sales Divisions HR & Finance Director Divisions Report directly to Managing Director 7 TIEU LUAN MOI download : skknchat@gmail.2 Current situation of InterLog Company Currently, the most valuable assets of all businesses are their employees. Becker (1964) stated that the investments that a firm makes for the employees about benefits, career development, and training and development are human capital investments and can be compared to the capital investments made in property, equipment, and plant that provide a sustainable advantage in the marketplace. For service sector in general and Logistics sector in particular, employees, especially salespeople, keep more important roles, and they are considered as internal customers of firm because they are major revenue-producing and cost-generating factor in most business enterprises. Consequently, the successful management of sales-force resources is of central important in determining the success of the firm.
However, retention of personnel, especially key players are still a major problem that companies must face when labor market has massive staffing shift between service sectors in recent years. Although developing stably throughout 10 years with the staffs and diversified services, InterLog still meets problems of personnel affects. Specially, from the beginning of year 2014 to 2015, they faced the biggest personnel changes ever. Employee turnover rate maintained at a high level is the problem that BOD of company always thinks about because turnover is extremely costly, whether it’s involuntary, such as termination due to poor performance, or voluntary, such as resignations.
Following to O’Connell et al. (2007), employee turnover remains one of the most persistent and frustrating problems that organizations face. And there are three main components associated with the cost of 8 TIEU LUAN MOI download : skknchat@gmail.com turnover: staffing, vacancy and training which business enterprise must spend.