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 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 Table of Contents Executive Summary Chapter 1: Problem Identification 1.1 Company background 1.2 Background of problem 1.2.1 Symptoms 1.2.2 Possible problems 1.3 Problem Justification 1.3.1 Problem definition 1.3.2 Justify the existence of the problem 1.3.3 Justify the importance of the problem High Turnover Rate Ineffective Performance of Employees Employee Absenteeism 1.4 Potential causes of the problem 1.4.1 Organizational Policies 1.4.2 Compensation & Benefits 1.4.3 Job satisfaction 1.4.4 Supervisory Support 1.4.5 Working environment 1.4.6 Training and career development Initial Causes And Effect Map 1.5 Causes validation 1.5.1 Training and career development 1.5.2 Organizational policies & Compensation 1.5.3 Working environment & Supervisory Support 1.5.4 Job Satisfaction 2.1 Alternative Solutions 2.1.1 Dismissal and Recruitment 2.1.2 Team Building 2.1.3 Workplace Training 2.2 Solution Comparison 31 2.3 Recommendations 33 Chapter 3: Action Plan .35 Conclusion 42 Supporting Information .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 58 REFERENCES 59 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 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 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 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 members of Board of Directors (BOD) Their products are widely distributed to almost all provinces of VietNam 1.2 Background of problem 1.2.1 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 1.2.2 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 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 52 21 The working place is very comfortable 22 The temperature, light and noise in the company is enough for me to work 23 I feel safe in my working place F Training & Career Development (Moses, 1999) 24 I am trained with necessary skills to perform the tasks well 25 I am involved in full training programs as required by the job 26 I have many opportunities to be promoted in the company 27 I am aware of the conditions for promotion 53 Appendix 6: Open questions for the causes of the problem: What are causes of the low commitment of employees at Unitrade? Please kindly explain more about your opinion Why and how these factors contribute to the low commitment at Unitrade? Besides the cause you mentioned, these are other factors including : organizational policies, compensation and benefits, job satisfaction, supervisory support, working environment, training and career development 3.1 Do you think that organizational policies affect the commitment of employees? Do it happen at Unitrade? How does it affect? 3.2 Do you think that compensation and benefits affect the commitment of employees? Do it happen at Unitrade? How does it affect? 3.3 Do you think that job satisfaction affect the commitment of employees? Do it happen at Unitrade? How does it affect? 3.4 Do you think that supervisory support affect the commitment of employees? Do it happen at Unitrade? How does it affect? 3.5 Do you think that working environment affect the commitment of employees? Do it happen at Unitrade? How does it affect? 3.6 Do you think that training and career development affect the commitment of employees? Do it happen at Unitrade? How does it affect? Among the causes that are discussed, what is the most important cause? Why you think so? Among the causes that are discussed, what is the second important cause? Why you think so? The in-depth interview found that the most of employees strongly agree that the most important cause is training and career development issue What does Unitrade can to enhance the commitment of employees? Why you think so? 54 Appendix 7: Focus group data on causes justification and recommendations Respondent HR Questions The supp lead with Do you think with that com organizational Com policies affect will the the commitment of polic employees? emp betw and resp Yes, Do you think that compensation and benefits affect the commitment of employees? work arise paid salar bene orga prob emp 55 Yes, staff than Do you think run that job moti satisfaction achi affect the commitment of employees? It va exam hard issue Do you think that supervisory support affect the commitment of employees? issue the furth com way 56 Yes, Do you think that training and career development affect the commitment of employees? abou and for f their mee som prob a tra to clear First curre we proc What does desc Unitrade can to-da to enhance tasks the desc commitment of need employees? deci Why you take think so? to be quic and 57 Appendix 9: Detailed Implementation Plan Strategy Timeline Jan 2016 Feb - Apr 2016 Jul 2016 Aug 2016 Sep 2016 Oct 2016 Nov 2016 58 REFERENCES Ahmad, K Z., & Bakar, R A (2003) The association between training and organizational commitment among White Collar Workers in Malaysia International Journal of Training and Development, Vol 7, No 3, pp 166-185 Alderfer, C P (1972) Human Needs in Organizational Settings Free Press of Glencoe, New York, NY Al-Hussami, M (2008) A study of nurses’ job satisfaction: The relationship to organizational commitment, perceived organizational 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Continuance Commitment Continuance Commitment Continuance Commitment Continuance Commitment Normative Commitment Normative Commitment Normative Commitment Normative Commitment Normative Commitment Normative... issue of the company recently : low level of commitment at Unitrade Joint Stock Company 1.3.3 Justify the importance of the problem The low level of organizational commitment has an negative effect... directly examining its correlation with organizational commitment Training must design in a way that achieves organizational commitment (Lang, 1992) Organizational commitment appears more significant