UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ HUYNH MINH TRANG SOLUTION FOR LOW EMPLOYEE ENGAGEMENT IN MILITARY JOINT- STOCK BANK – SURVEY AT HO CHI MINH CITY BRANCH MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2016 1 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ HUYNH MINH TRANG SOLUTION FOR LOW EMPLOYEE ENGAGEMENT IN MILITARY JOINT- STOCK BANK – SURVEY AT HO CHI MINH CITY BRANCH ID: 22130080 MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DR. NGUYEN PHONG NGUYEN Ho Chi Minh City – Year 2016 2 TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS EXECUTIVE SUMMARY. 6 CHAPTER 1: PROBLEM DEFINITION .1 Background of problem .2 Problem and situation analysis. Justify the existence:.
Justify the importance of the chosen problem:. 16 High intention turnover:. 17 CHAPTER 2: CAUSE VALIDATION. 19 Supervisory relations/support.
19 Co-worker relations. 20 Perceived organizational support:. 20 Training and career development:. 20 Reward and recognition:.
21 Distributive and procedural justice:. 26 Training and career development. 27 Rewarding and recognition:. 27 Distributive and procedure justice:.
Potential alternative solution and solution analysis:. 30 Reward and recognition. 30 Supervisor relation and support:. 32 Training and career development:.
33 3 TIEU LUAN MOI download : skknchat@gmail.com Distributive and procedure justice: .2 Comparison and analysis possible solution: .4 Testing design requirement. 39 CHAPTER 5: SUPPORTING INFORMATION. Scale items and questionnaires:. Survey of level of employee engagement results.
List of participation interview and representative transcription. List of participants. 47 LIST OF REFERENCES. 65 4 TIEU LUAN MOI download : skknchat@gmail.com LIST OF FIGURE Figure 1.1: Problem mess at MB .1: Initial cause-effect-map.
24 LIST OF TABLES Table 2.1: Potential cause and scale items .2: Summarize causes and solution .2: Level of employee engagement result .3: List of participants. 46 5 TIEU LUAN MOI download : skknchat@gmail.com SOLUTION FOR LOW EMPLOYEE ENGAGEMENT IN MILITARY JOINT- STOCK BANK – SURVEY AT HO CHI MINH CITY BRANCH EXECUTIVE SUMMARY The recent year was a difficulties and challenges year for the whole banking industry. With the slow credit growth, high competition and other problems in banking system, banks have to face with many huge concerned issues. In this situation, the target of every bank is achieving the significant operating results, which can be seen clearly as the bank profitability, and maintaining good traditional customers.
This research is taken place at Military Joint Stock Bank – Ho Chi Minh City branch with three purposes. Finding the main problem the bank are facing in recent years, the important antecedents of the problem and the way to solve that problem. After a whole investigated process, low employee engagement is considered as the main problem at MB. Supervisor relation, training, and career development, reward and recognition, distributive and procedure justice are the main causes of the low employee engagement at MB.
For the action plan, restructuring payment system, updating training program, establishing clear assessment and outdoor activities are held to enhance the level of engagement at MB. 6 TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 1: PROBLEM DEFINITION 1.1 Background of problem Military Joint Stock Bank is one of the top five largest Commercial Joint Stock Bank in Viet Nam. It was established in 1994 with the charter capital of twenty billion Vietnam Dong and twenty-five employees. The purpose of MB is providing financial support to Military enterprises.
From 1994 to 2014, MB has created a typical icon in Banking and financial market of Vietnam with the business target was achieved at a high level. Ho Chi Minh City Branch is the first branch of Military Bank (MB), which was established in 1996. MB is going to celebrate 20 years establishing the first branch in the southern Area. Southern area branches have contributed on the development and successful of MB.
Forty per cent profit of MB comes from this area. This study bases on the survey doing at Ho Chi Minh City branch. According to the report of MB Board Director, be attention of the high intention turnover, the decreasing of productivity, decreasing the loyalty of traditional customer and difficult for getting new customers are considered as the target of sustainable development. Among these issues, the most important target of MB is maintaining and finding good financial customers.
The research of Ho Chi Minh City branch corporation office reveals that the number of corporate customer in 2014 is 218 customers and in the first three month of 2015 are 176 customers. It indicates that the number of corporate customer decrease 19.2% and tend to decrease in the next period. The report also indicates that the level of traditional 7 TIEU LUAN MOI download : skknchat@gmail.com customers that terminate their cooperation with MB is increasing. Based on the result of interviews there are three-importance problems for this issue.
The first issue is high competition. Thao, a subsidiary’s manager has shared that although weak banks have already merged, however, the financial market still has other banks with the strong financial support along with diversified products and high quality of service. In addition, more and more foreigner banks are investing in Vietnam with high-tech product and good service. These competitors have put MB in an emergency that need to increase the quality of service, diversifying product or investing more in information technology.
Therefore, want to keep traditional customers and attract more customers, it is necessary to beware of competitors. Besides that, following the financial crisis, there were fluctuations in domestic and international economies, the real estate and securities’ markets are quiet which impact on banking. According to the message of Mr. Le Huu Duc, the chairperson of the board of directors, the credit growth is low while the bad debt ratio increased sharply as a the result of the weakening of corporate customers.
Bank profit decline significantly and weak banks have to be merged. In addition, the increasing of loan interest rate and the difficulty of capital mobilization are cause the decreasing in bank profitability With the economic situation, it is not only hard for getting good customers, but helping them to maintain their business in a good mood is also a difficult responsibility. The final problem relates to human resource: low employee engagement. Employee is the principal resource of an organization; it helps organization achieves high outcomes and gets 8 TIEU LUAN MOI download : skknchat@gmail.com company goals.
Employee engagement refers to the interaction between employee and organization. Through the interviews with employees and managers, some managers shared that they were complained about working attitude of their employees, employees seem not interested much in their job. Employees are easily distracted when working and have low engagement with the organization. This issue leads to the low performance of employee.
Moreover, many employees said that the reward and recognition were not as they expected they felt no enthusiasm for working and have low absorbed in work performance. As Ms Thuy states that, these emotions relate to the low engagement, which is the reason of low productivity of employee and low performance. Because of the low performance, it is difficult for bank to keep customer’s loyalty. Through the intake and orientation with MB, a problem mess can be drawn to describe the present situation.
9 TIEU LUAN MOI download : skknchat@gmail.com Difficulty for Loan capital interest rate mobilization increase Financial crisis Bad debt Credit ratio growth is increase Hard for low getting and High keeping competition good customer Foreigner Diversify High quality of bank products service Good High tech service product Low employee engagement …. Unfair of decision Do not have clearly Low of making procedure career development recognition and reward Figure 1.1: Problem mess at MB To summarize, in the recent years, MB is facing with three main problems: the low engagement of employee, the high competition and the difficulty of the economy. While high competition and difficulty of economy are the external problem that the entire banking industry has to deal with, the low engagement is internal issue. The level of engagement is difference for every bank base on the bank resource and characteristic.
According to Mr. Le Cong, the general director of MB has stated that, in future, MB will concentrate on human 10 TIEU LUAN MOI download : skknchat@gmail. Focusing on Human Resource enhancement that is attached to “training, planning, assessment, rewarding and cultural environment of MB has resulted in high productivity and quality of the employee”. It is MB strategy for the next future.
It is easy to attract employee to participate in the organization but it is difficult to maintain employee working attitude and engagement. Making a strong engagement of employee for retaining the sustainable organization for customer is one of the targets of MB. Employee’s productivity and quality are considered as an important key for the success of the organization. In the annual report 2014 of the chairman of the board of director, it was emphasized that: “MB continued to it restructure comprehensively and make many breakthroughs with investments in information technology, and develop many services and products with high- tech content, concentrate on developing MB brand that is community-oriented”, by that, creating high competition ability for MB.
With the difficulty of economy problem, MB will combine the collective strength; create momentum for the new period of development. Continuing to maintain restructuring and sustainable development is also a necessary step in this current difficulty situation. With the limit of time, organization budget and due to the main strategy of MB, which focuses on enhancing the quality and employee productivity in the present period, this study chooses employee, engagement is the central problem to be solved for improving the productivity and quality of employee at MB. 11 TIEU LUAN MOI download : skknchat@gmail.2 Problem and situation analysis 1.
Problem definition: According to Markos and Sridevi (2010) employee engagement is the predictor of positive organizational performance. It shows the two-way relationship between employer and employee. “Engaged employees are emotionally attached to their organization and highly involved in their job with great enthusiasm for the success of their employer, going extra mile beyond the employment contractual agreement” (Markos & Sridevi, 2010). Another conceptualization of Kahn (1990) defined employee engagement as the expression of organization member’s physically, cognitively, and emotionally during role performance.
Employee engagement can also be defined by W. Schaufeli et al.74) as “a positive, fulfilling, work-related state of mind that is characterized by vigor, dedication, and absorption”. It is the degree to which individual is attentive and absorbed in the performance of their work (Saks, 2006). Maslach, Schaufelli, and Leiter (2001) argued that job engagement is associated with a sustainable workload, feeling of choice and control, appropriate recognition and reward, meaningful and valuable work.
Employees who have high engagement come to work every day with a connection to their organization, and enthusiasm for their work (Buckingham & Coffman, 1999) and the outcome of it is a high level of performance. Engaged employee also has the positive effect on customer-satisfaction rating scale (Vance, 2006) which will increase the loyalty of customers. In addition, employees who have high engagement with their work are more focus on organizational outcomes. 12 TIEU LUAN MOI download : skknchat@gmail.
Justify the existence: For measuring the level of engagement, interview and questionnaire method are used. Employees and managers shared their opinions and emotions about their work through the interview questions. Furthermore, there are also many interviews with customers, who have been cooperated with MB for many years. In the survey, questionnaires are sent out for employees at four banks in the top five for comparing the level of engagement.
Vietcombank, BIDV, Sacombank and MB are the chosen bank for this survey. The reasons for comparing MB with Vietcombank, BIDV and Sacombank are that all of these banks have the similar target which is becoming the biggest and the most profitable in Vietnamese banking industry.