UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Tran Thi Minh Thuy ENHANCING THE LEVEL OF EMPLOYEE ENGAGEMENT OF CREDIT OFFICER STAFFS IN ASIA COMMERCIAL BANK (ACB) – PHU LAM BRANCH ID: 22130078 MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DR. NGUYEN THI NGUYET QUE Ho Chi Minh City – April 20th, 2016 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ENHANCE THE LEVEL OF EMPLOYEE ENGAGEMENT OF CREDIT OFFICER TABLE OF CONTENTS ABSTRACT .1 CHAPTER 1: PROBLEM IDENTIFICATION. Justifying the existence of the central problem. Justifying the importance of the central problem.
List the potential causes of the problem. 14 CHAPTER 2: ALTERNATED SOLUTIONS .21 Solution 1: Developing a supportive work environment that typically displays concern for employees’ needs and feelings within credit department of Phu Lam branch 21 Solution 2: Improving reward and recognition programs for employee. 23 Solution 3: Develop employee’s knowledge base and skills through training programs. 26 CHAPTER 3: SELECTED SOLUTION AND CHANGE PLAN DESIGN.
Selected the suitable solution. 37 CHAPTER 4: SUPPORTING INFORMATION. Interview Transcript to get information about the symptom of problem: 38 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ENHANCE THE LEVEL OF EMPLOYEE ENGAGEMENT OF CREDIT OFFICER 4. The Employee Engagement Questionnaires (Ibrahim, M.
Interview Transcript to identify the existence of the problem. Literatures review - The potential causes influencing the central problem47 4. The result of question in the focus group to justify the main causes: .65 Balance Score Card of Credit Department in 2014 .65 Balance Score Card of Credit Department in first half of 2015 .68 Table 1: The overall turnover rate in 2014 and the first half year in 2015. 68 Table 2: Evaluation Criteria of Balance Score Card.
68 Table 3: Percentage of credit officers in accordance with the evaluation criteria BSC 68 Table 4: The Comparison among these solutions based on four criteria. 68 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ENHANCE THE LEVEL OF EMPLOYEE ENGAGEMENT OF CREDIT OFFICER 1 ABSTRACT Phu Lam branch has emerged as key contributor to the profit and the development in ACB. However, the low employee engagement in credit department is creating the significant effects on all employees’ spirit and company. Far, this problem also gives the potential consequences to the future developing status of the bank when the low employee engagement problem cannot find the good way to solve.
The low employee engagement are step by step making the employees feel weary, stress and the certainly results of this problem are low commitment and high turnover rate. The main purpose of this thesis is identifying the solutions to enhance the level of employee engagement of credit department in ACB - Phu Lam Branch. It includes collecting the symptoms, analyzing the important of the problem; identify the root causes of low employee engagement at Phu Lam Branch which are Reward and Recognition, Training and career development, Work Environment. In addition, based on the root causes of the problem, the potential strategies to enhance the level of employee engagement at the workplace also are found out.
From the potential solutions, the efficient solutions will be built and proposed to ACB - Phu Lam Branch so that the corrective action can be followed. The thesis use the qualitative method that is face to face interviewing the Credit Department Manager and staffs, and reference the literature from the theories and previous academic papers to determine the symptoms, problem as well as proper solutions. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ENHANCE THE LEVEL OF EMPLOYEE ENGAGEMENT OF CREDIT OFFICER 2 CHAPTER 1: PROBLEM IDENTIFICATION 1. Company background Asia Commercial Bank (ACB) was established in May 1993.
Today, ACB is one of the leading joint stock commercial banks in Vietnam. It is developing with the branch network system nationally with nearly staff of 10,000 employees and many different products and services. The major activities of Asia Commercial Bank and subsidiaries is to mobilize short, medium and long-term funds in the form of term deposits, demand deposits; to receive entrusted investment and development funds from domestic credit institutions; to borrow from other financial institutions; to grant short, medium and long-term loans; to discount commercial papers, bonds and other valuable papers; to contribute capital and to invest in joint-ventures in accordance with the law; to provide settlement services to customers; to trade foreign currencies, gold; to provide trade finance services; and to provide other banking services. In the next 5 years, the position of ACB is the position of a leading bank established in 5 fields; and in 2015, ACB is the bank operating with main targets: stable growth, professional management, suitable income, and reasonable profit.
As of December 31, 2014, ACB develops network system nationally with nearly of 346 branches and sub-branches in 47 provinces and cities nationwide Phu Lam branch has emerged as key contributor to the profit and the development in ACB, which may not be possible without extraordinary performance of the satisfied employees. Phu Lam Branch was established in June 1995 with approximately 12 employees, and now it has growth with about 120 employees. For this reason, it is in top of contributor to the profit in ACB. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ENHANCE THE LEVEL OF EMPLOYEE ENGAGEMENT OF CREDIT OFFICER 3 Company Structure Credit officers examine, evaluate and process applications for credit or loans and, in commercial enterprises, control and process accounts.
Credit officers is known as Sale Staff in ACB – Phu Lam branch which divide into two major, include credit officer for corporation and credit officer for individual customer. Credit officer is one of the most important staff in ACB business process because this staff makes a main profit for bank in general. Problem symptom To have the initial subjective and general information about currently company personnel status of Phu Lam Branch, the writer collect secondary data from HR Division report and conduct to preliminary short interviews with credit department manager. Based on the interview results (Refer to Chapter 4 - part 4.1), initially, the writer can get some basic information on currently status of the company.
Although, Phu Lam branch is one of the largest branches in ACB system and has emerged as key contributor to the profit and the development in ACB, however, Phu Lam Branch also encountered many personnel problem with the sale staff such as low commitment, low employee productivity and high turnover rate. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ENHANCE THE LEVEL OF EMPLOYEE ENGAGEMENT OF CREDIT OFFICER 4 Firstly, these employees worked at different position in the sale department such as relationship assistant (RA), relationship officer (RO), relationship manager (RM), Personal Financial Consultant 1(PFC-1), Personal Financial Consultant 2 (PFC 2). According to the Human resource report, the turnover rate has been increased significantly, 28% only for 6 first months 2015, compare with the rate of 16% for the whole 2014. There were 4 out of 24 people in 2014 and 10 out of 32 people in the first half year in 2015 left the company that account about 16 to 28 percent out of total employees.
In fact, this number is considered as a high turnover ratio for a one of big branch which contribute large profit for ACB. Since the average turnover ratio in the first half year in 2015 is approximately 10% in ACB. Phu Lam branch is one of the top in ACB, this figure will be a source for instability alarm of the branch, must resolve this matter quickly. The result of statistical in Table 1 showed that the comparison of employee leaving ratio in nearly two year.
According to Huselid (1995), he researched that a high turnover rate extremely have negative effects in organization such as low productivity, higher cost in recruiting and training new employee (Rousseau, 1984) and low future performance as well (Baron, Hannan and Burton, 2001). Therefore; this is a bad symptom for any organization if the high turnover ratio become more enlarges and develops consistently Table 1: The overall turnover rate in 2014 and the first half year in 2015 (Data is provided from Phu Lam Branch - HR Division) YEAR The first half 2014 year in 2015 Compulsory turnover 0 1 Voluntary turnover 10 3 Total of Employees who Left 10 4 Total of Employee 32 24 Employee Turnover rate 28% 16% LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ENHANCE THE LEVEL OF EMPLOYEE ENGAGEMENT OF CREDIT OFFICER 5 Secondly, from secondary data, up to now Phu Lam Branch hasn’t achieved many targets of three quarters of year 2015. Balanced Scorecard is software to evaluate the complete working results for each employee. BSC system used to assess the productivity of employee based on four main criteria.
Each evaluation criteria of this software are shown in the following table 2: Table 2: Evaluation Criteria of Balance Score Card (Data is provided from Phu Lam Branch - HR Division) Score Measure Total Score Weight Target Actual BSC F FINANCE 60% F7 Credit Scale 30% F6 Deposit Scale 15% The debt ratio from group 2 F13 20% to group 5 F15 Net income 35% C CUSTOMER 25% The number of customers C12 30% increased The average number of C4 20% products used per customer P Internal processes 10% L Labor 5% In general, 50% staffs in Phu Lam Branch have low level of Balance Score Card (BSC) below 80% level in the first half year in 2015. In 2014, 53% staffs in Phu Lam Branch have low level of Balance Score Card (BSC) below 80%. According to the bank's standard regulations, the credit employees must get more than 80 points of BSC score will be standard. The statistics are presented in Table 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ENHANCE THE LEVEL OF EMPLOYEE ENGAGEMENT OF CREDIT OFFICER 6 for the sale staff are working at ACB - Phu Lam branch, the writer has its own method to find out over the current situation of the working employees.
Table 3: Percentage of credit officers in accordance with the evaluation criteria BSC (Data is provided from Phu Lam Branch - HR Division) The first half year in 2015 2014 Number Rate Number Rate Employee have 11 50% 9 47% standard BSC Score Employee have BSC 11 50% 10 53% Score under 80% Total number 22 19 Finally, according to Ms. Mai Xuan - Credit Department Director, she is worried about the present employee's problem such as lack of enthusiasm, customer dissatisfaction and loyalty, lack of personal initiative on the job, lack of building passion, commitment and alignment with the organization's strategies and goals. In 2012, ACB has gone through a crisis; banks caused the crisis led to reduced business scope of the company. ACB has implemented plans to cut costs as the effect of the crisis.
Moreover, since the revenue reduction, it is necessary to find a way to keep business operations continue, ACB decided to freeze some benefits to optimizing operating costs such as Growth bonus program, reduce the rate of wage, etc. What makes companies less competitive than other banks such as Vietcombank, Arigbank, VP Bank, etc.? Recently, the salesperson receives many invitations to recruit from the HR department of VP Bank. They offer a very competitive salary and appointment as a high place, some employees have resigned and applied to other banks. This issue will affect the psychology of the other employees.
Especially recently, branch received a lot of customer criticism about bad morale of salespeople, salespeople do not take good care of customers. Managers have to LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ENHANCE THE LEVEL OF EMPLOYEE ENGAGEMENT OF CREDIT OFFICER 7 apologize to customers by reducing loan interest rates and fee, which reduces the profitability of the branch. Besides, about 50% of sale staff does not have the spirit to work and learn more knowledge about new product and sales skills.