Tài liệu Solution for low employee engagement in military joint stock bank survey at ho chi minh city branch

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 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 TABLE OF CONTENTS EXECUTIVE SUMMARY ............................................................................................................................... 6 CHAPTER 1: PROBLEM DEFINITION ......................................................................................................... 7 1.1 Background of problem ......................................................................................................................... 7 1.2 Problem and situation analysis .................................................................................................................. 12 1. 2.1. Problem definition: ....................................................................................................................... 12 1.2.2. Justify the existence: ...................................................................................................................... 13 1.2.3. Justify the importance of the chosen problem: .............................................................................. 15 Job performance: ............................................................................................................................................. 15 Job satisfaction: ............................................................................................................................................... 16 High intention turnover: .................................................................................................................................. 17 CHAPTER 2: CAUSE VALIDATION ........................................................................................................... 18 2.1 . Potential causes: ................................................................................................................................ 18 Job characteristic ..................................................................................................................................... 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: ......................................................................................................... 21 2.2 . Causes justification ............................................................................................................................ 24 Supervisor support: .................................................................................................................................. 26 Training and career development ............................................................................................................ 27 Rewarding and recognition:..................................................................................................................... 27 Distributive and procedure justice: .......................................................................................................... 28 CHAPTER 3: SOLUTION .............................................................................................................................. 30 3.1. Potential alternative solution and solution analysis: ................................................................................. 30 Reward and recognition ........................................................................................................................... 30 Supervisor relation and support: .............................................................................................................. 32 Training and career development: ........................................................................................................... 33 3 Distributive and procedure justice: .......................................................................................................... 34 3.2 Comparison and analysis possible solution: .............................................................................................. 35 3.3. Action plan ............................................................................................................................................... 36 3.4 Testing design requirement ....................................................................................................................... 38 CHAPTER 4: CONCLUSION ........................................................................................................................ 39 CHAPTER 5: SUPPORTING INFORMATION ............................................................................................ 40 5.1. Scale items and questionnaires: ........................................................................................................... 40 5.2. Survey of level of employee engagement results ................................................................................ 46 5.3. List of participation interview and representative transcription .......................................................... 46 5.3.1. List of participants ................................................................................................................... 46 5.3.2. Representative transcription .................................................................................................... 47 LIST OF REFERENCES ................................................................................................................................ 65 4 LIST OF FIGURE Figure 1.1: Problem mess at MB .................................................................................................................... 10 Figure 2.1: Initial cause-effect-map................................................................................................................ 24 LIST OF TABLES Table 2.1: Potential cause and scale items ...................................................................................................... 22 Table 3.2: Summarize causes and solution ...................................................................................................... 35 Table 3.3: Action plan ..................................................................................................................................... 37 Table 3.4: Design requirement ........................................................................................................................ 38 Table 5.2: Level of employee engagement result ............................................................................................ 46 Table 5.3: List of participants .......................................................................................................................... 46 5 SOLUTION FOR LOW EMPLOYEE ENGAGEMENT IN MILITARY JOINTSTOCK 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 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 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. Ms. 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 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 Difficulty for capital mobilization Loan interest rate increase Financial crisis Bad debt ratio increase Credit growth is low Foreigner bank Good service …. High competition Diversify products High tech product Unfair of decision making procedure Hard for getting and keeping good customer High quality of service Low employee engagement Do not have clearly career development Low of 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 resource. 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 hightech 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 1.2 Problem and situation analysis 1. 2.1. 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. B. Schaufeli et al. (2002, p.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). A study of C. 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 1.2.2. 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. The total asset, profit, or number of employee at these banks is similar with each other. Moreover, all of three above bank are considered as the main competitor of MB. Employees are chosen from different departments and positions of the branch in the scope of District 11, Ho Chi Minh City. All the answers are kept secretly, the survey papers are kept anonymous and only used for research purpose. Questions relate to the scale item base on the questionnaire established by W. B. Schaufeli et al. (2002) for measuring the level of vigor, dedication, and absorption, which are the characteristic of engagement. Questionnaires are made up of 17 items, including six items of vigor scale, 5 items of dedication scale and 6 items of absorption scale. All items were scored on the 7 point rating scale ranging from 1 (not agree) to 7 (totally agree). Detail of the questionnaire can be seen at chapter 5: Supporting information, section 5.1: Scale items and Questionnaires. 120 survey papers are sent out for employee at different departments of 4 branches in the chosen bank. The number of respondent paper is 94. The average age of employee at banks is 30 13 with 88.7% having bachelor degree. With the Mean is 3.5, the level of engagement at each bank is 5.5, 4.2, 3.9, 3.3 respectively. The level of employee engagement at MB is 3.3, which is the lowest rate among four banks. (See table 5.1: Level of employee engagement result for more detail). Employee usually distracted when performing work, and they do not exert all their energy for working and usually avoid working overtime. Besides questionnaire, personal interview is also a good method for employee to share their feeling and emotion about job and the organizational engagement. Mr Son, a relationship manager, shared that his working day starts at 7 am by listening many customer phone calls, transferring from Customer Company to the bank and other departments several times for getting documents, signing, and asking for supervisor’s opinion. In addition, the policy is not stable; it is difficult for both of employee and customer to follow with the change of bank policies. He is not satisfied with his current job and wants to change it when getting a good one. Ms Thuy, a supporting officer said that: “I have to work 12 hours a day! I cannot suffer for this job anymore. I do not want to participate in any activity of the bank and do not have enthusiasm for work. I am tired because of worrying about customer loans or nonperformance loan rate”. High workload is also one of the reasons that make her feel exhausted. “In addition, the reward and recognition are not interesting; I have been working 5 years however, my salary is as same as the new comers” said by Ms Thuy. Another sharing is from Ms Thu, a teller at MB, “It has changed too much since I have been here four years ago. The requirement for my work is higher. We have to work overtime to 14 meet the expectation, but the salary is not good enough. Moreover, I am not interested in my job anymore”. It can be concluded that employees have negative feeling of working. Lacking employee’s dedication for job is one of the big problems of employees. Besides that, employees do not get satisfaction from their job, no enthusiastic for working and have a low level of employee loyalty. The result from the questionnaire and interview shows that there is an existing problem of MB in the recent years: Low employee engagement. 1.2.3. Justify the importance of the chosen problem: Low engagement has an important influence on performance of employee as well as the productivity of organization. Throughout a process of interview employee and literature review, unless the low employee engagement is enhanced, the organization will face with three big consequences as the low job performance, low employee satisfaction and high intention turnover rate which impact directly on the organization profitability and employee productivity. More detail for the deep interviews can be seen at chapter 5: Supporting information, section 5.3.2: Representative transcription. Job performance: From the result of small interviews, it is seen that, the quality of commitment and productivity at MB have declined strongly. Job performance is defined as the aggregated value that employee concentrate both directly and indirectly on organization goals (Borman & Motowidlo, 1993). According to Anitha (2014, p. 313), “Employee performance indicates the financial or non-financial outcome of employee”. These outcomes link directly to the 15 organizational performance and its success. The study also demonstrates the strong significant relationship between engagement and performance. The low level of engagement will lead to the reducing of employee performance. As a commercial bank, focusing on maintaining and enhancing service quality is the leading strategy for MB five-years planning. Thus, to accomplish high organization performance, all employees need to concentrate on the central strategy: increasing and retaining quality of service and productivity as high level. Nonetheless, in the interview, most of customers comment that, it is time for the bank to review its activities and structure. Increasing quality of service is also necessary action. There are many reasons for the downturn of productivity; however, the central problem that the bank has to deal with can be related to the low level of engagement. Many customers explained the reason they did not transfer all their company transactions to MB is the depression of commitment quality. Mr Huy, a chief accountant of Hao Hung Company Limited said that “Time to complete a transaction at MB is getting longer with more paperwork to do than in the past. Moreover, there are many mistakes on bank document”. One of the main criteria for choosing as the best Retail Bank, which is given by the Global Financial Market Review (GFM), is the service quality and productivity. To accomplish the strategy as top retailing Bank, it is necessary to enhance quality of service and productivity by increasing employee engagement. Job satisfaction: As Locke and Dunnette (1976) stated that job satisfaction is the positive emotion when people appraise their job or job experience. Zhu (2012, p. 294) summarized that “job 16 satisfaction is about whether the job stimulates employee’s pleasant emotions and positive feeling”. It measures the feeling and emotion of employee in working. The positive feeling relates to the high job satisfaction. According to a study of Saks (2006), Job engagement predict job satisfaction. Employee who has greater level of engagement in work is more likely to have higher job satisfaction. In contrast, low level of engagement can reduce the satisfaction of employee. Due to the low level of job satisfaction, employee feels distracted easily from work or has negative feeling about his or her future. For this reason, the productivity drop rapidly. With the low productivity of employee, the organization’s profitability will decrease quickly. High intention turnover: The results from B. Shuck and Wollard (2010) reveal that the lower level of engagement is more likely to report the higher level of intention to turnover. Intention turnover is the consider of an individual about the probability that they will quit their job in the near future said by Carmeli and Weisberg (2006). In the interview, Ms Thuy said that if she had opportunity to find another job, she would quit the current job even if she had higher salary. Mr Son also has the similar answer when sharing about his plan. There are six out of nine employees said that they would move to another bank if they have change. The loyalty of employee at MB is at the alarm level. Based on the data of the human-resource department of Ho Chi Minh City branch, the turnover rate of the relationship office in the first three months is 21.05% in the comparison with the level of changing job of banking industry which is around 15% based on a Towers Watson survey of Human resource 2015 and 17 intends to continue rising. With the high rate of turnover, there is unstable of resource at MB. Increasing cost of recruiting new employee and training new staff is reducing organization profit. In summary, it is proposed that low employee engagement is consequence of three major organization outcomes: low organization performance, low job satisfaction, and high intention turnover. Continuing to develop stability, increasing quality of commitment for the purposed of keeping good customers is the general target of the bank’s strategy. To accomplish these goals, employee engagement is an important factor that needs to be considered carefully. The lower employee engagement, the lower performance and job satisfaction organization will be faced. Moreover, intention turnover getting higher is another issue of low engagement; it affects the organization profit. The interview shows that MB employee engagement decreases steadily in the recent year is the main reason that affects bank outcome and employee performance. Therefore, to enhance the bank outcome and productivity as well as completed the organizational strategy, it is necessary to increase the level of engagement. CHAPTER 2: CAUSE VALIDATION 2.1 . Potential causes: If it is important to figure out the consequences of low employee engagement at MB and the reason for solving that problem, clarifying the causes of the problem is also a necessary and urgent step. After examining many relevant literatures on engagement, the potential antecedents that are believed to provide the most understanding are supervisor relation, co18 worker relation, perceived organizational support, training & career development, reward & recognition and distributive & procedure justice. All of these findings are built base on the foundation and engagement models of Saks (2006), W. Schaufeli and Salanova (2007), B. Shuck and Wollard (2010), Anitha (2014), C. Maslach et al. (2001). Job characteristic When employees do work that is challenging, creative and clearly delineated, they are likely to experience psychological meaningfulness (Kahn, 1990). Job characteristic provides employees with the room and incentive to bring themselves into work or to be more engaged (Kahn, 1990). Each job characteristic requires different skills, personal discretion, and the opportunity. Depending on job characteristic, employees find themselves as inspired for working with all their enthusiasm and engagement. Supervisory relations/support A study of Kahn (1990) found that supervisory relation was the relationship between employees with their directly manager. It may have a dramatic impact on the individual’s perceptions of safety in working environment. Supportive actions by manager can enhance employee self-determination and interest in their work. These individuals are likely to feel safer to engage themselves in their work. The higher-quality relationship with manager, the more positive attitude, behaviour, and engaged employee has (Saks, 2006). There will be a flexible environment where employee is encouraged to try and maybe to fail without fearing the outcomes. It would be better to allow employees voice their opinion for enhancing their work (Kahn, 1990). 19 Co-worker relations The study of W. B. Schaufeli et al. (2002) provides that the support from co-worker will heighten the engagement of employee. People do not feel safety when they are disconnected from others (Kahn, 1990) and interaction between employees which is supportive and trusting will also help employees feel safer thus engaged themselves higher in their work. Edmondson (1999) found that the quality of relationship in work impact on employee’s shared beliefs and support each other Perceived organizational support: Perceived organizational support can be defined as an individual’s organization values their contribution and cares about their well-being (Rhoades & Eisenberger, 2002). A study of Saks (2006, p.605) indicates that “Organizational members feel safe in work environment that is characterized by openness and supportiveness” and “perceived organization support predicts both job and organizational engagement”. Other Findings of B. Shuck and Wollard (2010) recommend that managers should create a possible workplace environment, safe, meaningful and empowering for employee. In addition, a finding from B. Shuck and Wollard (2010) suggests that it is necessary to offer a supporting and favourable workplace climate that is positive, empowering, safe and meaningful for employee. Training and career development: Aguinis and Kraiger (2009) believe that training in work organization is suitable for making a contribution to enhance human well-being and performance in organization as well as society. Another finding of Anitha (2014) shows that training and career development are 20