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 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Table of Contents Executive Summary. 7 Chapter 1: Problem Identification .2 Background of problem .2 Justify the existence of the problem .3 Justify the importance of the problem. 14 High Turnover Rate. 14 Ineffective Performance of Employees .4 Potential causes of the problem .6 Training and career development.
21 Initial Causes And Effect Map .1 Training and career development .2 Organizational policies & Compensation .3 Working environment & Supervisory Support .1 Dismissal and Recruitment. 30 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. 33 Chapter 3: Action Plan. 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. 59 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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. 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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. 7 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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 3 members of Board of Directors (BOD). Their products are widely distributed to almost all provinces of VietNam. 8 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.2 Background of problem 1.1 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.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. 9 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com success or failure of the enterprise.
According to data reported by the HR department, the proportion of staff quit in 2013, 2014, 2015, respectively 8%, 21% and 27%. The company's leaders were really worried because if this situation extended, it will led to incalculable dangers for companies. In addition, through the interview, Board of Directors of Unitrade said they received a lot of complaints about the attitude of the staffs, the staffs seem to not really care about their jobs. That made the work delayed and resultant revenue was not as expected.
On the side of the staffs, it has been disclosed that the remuneration policy of the company is not really fair; the management board needs to listen to the opinions of employees. Employees in the company feel unmotivated and have no excitement in working. That is the cause of the high drop-out rates as recently. Thus it is very difficult for the company to keep the loyalty of employees and as a consequence the profit from the business of the company was very low.
Since the above symptom is not good for the company in the long term. It is necessary to looking for the underneath problem that causes those bad condition of the company. According to the literature review, that phenomenon might reflect the low level commitment of employees at Unitrade. Overall, in the past 2 years, Unitrade is facing 3 major problems: Affect from the economic crisis, the rate of competing with higher rival companies, and problems related to the employee's loyalty when experienced employees leave company increased.
In which, the first two issues are outside the ability to solve of the company. So based on the orientation of the company, in 2016 the company should focus on improving the human resources. 11 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Due to the limitations of time, cost and accountability, low commitment of employees with the company was chosen as the main issue of this essay. Solving this problem will not only reduce the incidence of staff quit, but also promote work motivation of employees, management support to overcome current difficulties and continue to grow the company.1 Problem definition Organizational commitment has been defined by Mowday, Porter, and Steers (2013) : “an identification with the goal’s and values of the organization, a desire to belong to the organization and a willingness to display effort on behalf of the organization”.
According to Meyer, Stanley, Herscovitch, and Topolnytsky (2002) commitment has three components including affective commitment (i., individuals want to be attached to the organization, because they fell their goals and values are similar with the organization); continuance commitment (i.,individuals feel they need to be attached to the organization, because they aware the cost associated with leaving the organization); and normative commitment (i., individuals feel they ought to remain with the organization, which is guided by sense of duty, obligation and loyalty toward the organization). Differentiating from engagement, organizational commitment refers to a person’s attitude and attachment towards their organization (Saks, 2006).