UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ HOANG THI HOA INEFFECTIVE APPRAISAL SYSTEM AT NIKE CUSTOMER SERVICE DEPARTMENT IN DAMCO MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2018 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ HOANG THI HOA INEFFECTIVE APPRAISAL SYSTEM AT NIKE CUSTOMER SERVICE DEPARTMENT IN DAMCO MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DR. QUOC PHAM Ho Chi Minh City – Year 2018 TIEU LUAN MOI download : skknchat@gmail.com 1 INEFFECTIVE APPRAISAL SYSTEM AT NIKE CUSTOMER SERVICE DEPARTMENT IN DAMCO Table of Contents Executive summary .2 Symptoms of probem in Nike customer service department .1 Low employee satisfaction .3 Initial causes – effects map .1 Initial causes – effect map identification process .2 Initial causes – effects map analysis .4 Updated causes – effects map .3 Ineffective appraisal system .1 Quantitative research result .2 Second qualitative research result (15-Aug-2018). Causes validation and solutions .1 List of real causes .2 Third qualitative research result (22-Aug-2018) .2 The set of solutions .3 Change plan design .39 TIEU LUAN MOI download : skknchat@gmail.com 2 INEFFECTIVE APPRAISAL SYSTEM AT NIKE CUSTOMER SERVICE DEPARTMENT IN DAMCO 3.3 Steps to build new appraisal system. First qualitative research (8-Aug-2018) .77 Quantitative research methodology .77 Questionnaire – Quantitative research: .78 Quantitative research result.
Second qualitative research (15-Aug-2018). Third qualitative research (22-Aug-2018). Current KPI of Nike customer service department. Proposed KPI for customer service executive of Nike customer service department.
Employee counseling form.113 TIEU LUAN MOI download : skknchat@gmail.com 3 INEFFECTIVE APPRAISAL SYSTEM AT NIKE CUSTOMER SERVICE DEPARTMENT IN DAMCO Table of figures Figure 1: Work experience in Nike customer service department .6 Figure 2: Employee satisfaction result of Nike customer service department 2013-2017 .9 Figure 3: Turnover rate 2013-2017 of Nike customer service department in Damco and APLL .11 Figure 4: Recruitment cost of Nike customer service department in 2013 – 2017 .12 Figure 5: Nike customer operation index from 2013 to 2017 .14 Figure 6: Customer satisfaction ratio of Nike Customer Service Department .16 Figure 7: Initial Causes - Effects map .18 Figure 8: Updated causes - effects map .22 Figure 9: Average score of question 3-10 in quantitative survey.29 Figure 10: Age and work experience of employees in Nike customer service department .31 Figure 11: Plan schedule .39 Figure 12: Proposed appraisal process .46 List of tables Table 1: List of people left Nike customer service department in 2017 .24 Table 2: List question from 3 to 10 in quantitative survey .29 TIEU LUAN MOI download : skknchat@gmail.com 4 INEFFECTIVE APPRAISAL SYSTEM AT NIKE CUSTOMER SERVICE DEPARTMENT IN DAMCO EXECUTIVE SUMMARY It can be said that appraisal system plays an important role in company operation. To be specific, it was stated that appraisal system is one of the key element to increase employee motivation and productivity (1). Therefore, ineffective appraisal system can make employees feel dissatisfied with the job and as the result, there would be low productivity (2). Moreover, it was also mentioned that about low organizational commitment and intention to leave of employee when the company appraisal was not effective (2).
Furthermore, high employee turnover rate has many hidden costs such as productivity loss, workplace safety issues, and morale damage (3). That is the current situation at Nike customer service department in Damco, ineffective appraisal system is the central problem causing low customer satisfaction and low employee satisfaction which resulted in high turnover rate as well as high recruitment cost. After conducting researches by both qualitative and quantitative method, the main causes found are unclear key performance indicators (KPI) and lack of ongoing performance feedback, one way of communication appraisal process. In order to solve the central problem of ineffective appraisal system, the possible solutions are developing detail, specific KPI for Nike customer service department employees and building up effective appraisal process including self-appraisal as well as ongoing performance feedback.
This solution can take advantage of available resource with the coordination between human resource department and manager of Nike customer service department in estimated six months with no extra cost. The aim of this low cost and feasible solution is to lower the high turnover rate at Nike customer service department. Furthermore, it is also the solution to increase employee satisfaction which also linked to customer satisfaction. In addition, lower turnover rate can save money for new recruitment and training program for new employees as well as keep Nike customer service department stable.
In short, this cost saving solution can eliminate almost the current problems of Nike customer service department in Damco. TIEU LUAN MOI download : skknchat@gmail.com 5 INEFFECTIVE APPRAISAL SYSTEM AT NIKE CUSTOMER SERVICE DEPARTMENT IN DAMCO CHAPTER 1.1 Company background Damco is one of the world’s leading providers of freight forwarding and supply chain management services with more than 100 years of history. The company has 11,400 employees in more than 300 offices around the world and a global presence in about 100 countries. Damco is part of A.P Moller - Maersk Group – the biggest shipping line in the world (4).
To be more specific, Damco is at the forefront of developing innovative supply chain solutions. Damco fuse their global network and depth of expertise with pioneering digital innovations to enable their customers to stay ahead. Damco’s vision is to connect and simplify supply chains across the globe. Damco Vietnam was established since 28/11/2007 with three offices in Hanoi, Hai Phong and Ho Chi Minh city.
The main office is in Ho Chi Minh. According to Damco HR report in June 2018, there are five departments in Damco Vietnam with total 816 employees: • Finance: 37 employees • Human resource: 8 employees • Warehouse and distribution: 438 employees • Procurement: 21 employees • Supply chain management (SCM): 312 employees Supply chain management (SCM) department in Damco Vietnam is separated into many sub teams based on the Customer that team handle. Nike customer service department is one of the key team of SCM because of the highest volume of Nike cargoes shipped via Damco which accounts for 30% of total volume Damco is handling. TIEU LUAN MOI download : skknchat@gmail.com 6 INEFFECTIVE APPRAISAL SYSTEM AT NIKE CUSTOMER SERVICE DEPARTMENT IN DAMCO Nike Customer Service team are taking responsibility of Nike customer care, warehouse management, managing all projects related to Nike cargoes, as well as doing planning to make sure cargoes shipped as Nike requirements and communicating with all relevant parties to solve troubles and ensure shipments delivered on time.
It can be said that customer service team is the representative of all departments in Damco to directly contact with Nike customer. If there is any issue, other parties have to report to customer service team, therefore the KPI of customer satisfaction is extremely important in this Nike customer service department. Nike Customer Service department currently has 18 members. The current manager has taken over Nike Customer Service department since December 2016.
She already had six year experience in freight forwarding part, and just started moving to customer service part since joining Nike customer service department. Nike customer service department is a dynamic and active team with mainly young people. Below is the current work experience status of Nike customer service department: Work experience Number of employee < 1 year 7 1-2 years 4 3-5 years 3 > 5 years 4 Figure 1: Work experience in Nike customer service department (Source: Damco HR report in June - 2018) It can be seen from figure 1 that over 60% of work experience in customer service department is under 2 years. All seven employees with under one year experience are fresh graduations.
The advantage of young people are their pro-activeness, dedication to contribute to the team, willingness to work over time. Besides, the cost of hiring fresh graduation is lower compared with hiring experienced one. However, the disadvantages of short experience time is low productivity because it takes time to hand over between the old team members to the new comers and high training cost. In TIEU LUAN MOI download : skknchat@gmail.com 7 INEFFECTIVE APPRAISAL SYSTEM AT NIKE CUSTOMER SERVICE DEPARTMENT IN DAMCO addition, lacking of experienced one in the team raises concerns to Damco’s customer about the quality of service, especially key and professional customer like Nike.2 Symptoms of probem in Nike customer service department In order to identify if there is any abnormal signs in the current operation of Nike customer service department, available internal data was analyzed such as HR report collected from HR department, customer KPI report which was published by management team in order for employees to know the current level of performance… The advantages of these internal data are its availability and its ease to approach, besides the cost saving and cost efficiency; moreover, it can reflect the real time series data.
According to the internal data, there are four abnormal trends in the performance of Nike customer service department: 1. Low employee satisfaction: detail will be shown in following part 2. Low performance of the employees: detail will be shown in following part 3. High turnover rate: the abnormal trend of turnover rate will be discussed in more detail in figure 3.
However, high turnover rate may not be the main symptoms because it can be impacted by many elements such as: the market trend, personal plan, external better opportunities, lacking of engagement… It can be seen that some elements such as the market trend, personal plan are external factors and they cannot be controlled by the organization. So, it can be said that low employee satisfaction can impact to turnover rate but it will be bias to say that turnover rate is a symptoms of problem. Low customer satisfaction: it can be said that the performance of Damco will impact to the customer satisfaction. However, customer satisfaction can also be impacted by the performance of the rivals, the change in the standards of customers, market trends.
Therefore, it cannot be seen as the main symptom of the problem. TIEU LUAN MOI download : skknchat@gmail.com 8 INEFFECTIVE APPRAISAL SYSTEM AT NIKE CUSTOMER SERVICE DEPARTMENT IN DAMCO It can be stated from above explanation that there are only two main symptoms based on the available internal data: low employee satisfaction and low performance that will be analyzed in following parts.1 Low employee satisfaction It can be said that employee satisfaction is one of key elements a firm need to focus on. Low employee satisfaction can lead to the serious consequences of high turnover rate and high recruitment cost which definitely impact to overall performance of whole Nike customer service department.1 Low employee satisfaction data analysis Employee satisfaction is of utmost importance for employees to remain happy and also deliver their level best. Satisfied employees are the ones who are extremely loyal towards their organization and stick to it even in the worst scenario.
Moreover, employee satisfaction is essential to ensure higher revenues for the organization. Last but not least, satisfied employees tend to adjust more and handle pressure with ease as compared to frustrated ones (5). With all respect to the importance of employee satisfaction, Damco is also conducting employee satisfaction survey annually in December. To be more specific, and the score is from 1 (Totally dissatisfied) to 5 (Totally satisfied) and the target on employee satisfaction is set for manager level.
The employee satisfaction survey was including questions related to four main items: Damco working environment, colleague collaboration, manager assessment and any comment to make Damco a better work place. TIEU LUAN MOI download : skknchat@gmail.com 9 INEFFECTIVE APPRAISAL SYSTEM AT NIKE CUSTOMER SERVICE DEPARTMENT IN DAMCO Employee satisfaction 5.0 2013 2014 2015 2016 2017 Nike employee satisfaction Damco target Figure 2: Employee satisfaction result of Nike customer service department 2013-2017 (Source: Yearly employee satisfaction survey of Damco) According to figure 2, it can be seen a sudden decrease in employee satisfaction in 2017 compared with the four previous years.