Acknowledgments The author would like to express her gratitude to all those who have helped her to complete this case study. The author is especially indebted to Prof. Pham Thi Bich Ngoc for her professional guidance, constructive comments and great encouragement during her study and preparation for this final research. The author would also be grateful to her colleagues at Mai Dong Mechanical Company for providing valuable information during her study. Sincere thanks are addressed to her MBM7 classmates, especially G3 for their good teamwork spirit, excellent knowledge, sharing valuable experience and especially their precious friendship with many unforgettable memories in study as well as in life. The author would also like to send great thanks and appreciation to the author’s parents and her beloved husband and little daughter who have created aspiration and sacrificed for her to fulfill her study. i Abstract In practice, a large number of companies pay a great attention to human resources, but they do not really know what activities should be carried out. Many companies are likely to recruit relatives of the company’s employees, which are seen as a motivation and an encouragement for them to achieve better performance in the companies. It is clear that the companies need a new approach to human resources, starting from recognizing ways to tailor the human resource strategy to fit the corporate strategy. Mai Dong Mechanical Company is not an exceptional case. Mai Dong Mechanical Company has been facing a crisis of human resources with the turnover rate of key employee increasing significantly in recent years. Consequently, the current human resources have not fully met working requirements both in quality and quantity that has influenced the working efficiency and productivity of the company during the previous years. Recognizing the human resource of key employee as the most important asset and the core competency of the company which greatly contribute to the company’s success and create a competitive advantage for the company development, this case research emphasizes an analysis of the current human resource of key employee of the company; root causes which influences on the effectiveness of the human resource of key employee, especially the recruitment and retention issues. It identifies key factors needed to be considered and improved to develop its recruitment and retention functions at Mai Dong Mechanical Company in the future. ii Table of Contents LIST OF TABLES VI CHAPTER 1 - INTRODUCTION 1 1.1.RATIONALE OF THE RESEARCH 1 1.2.PROBLEM STATEMENT 1 1.3.OBJECTIVES OF RESEARCH 2 1.4.THEORETICAL FOUNDATION 2 1.5.RESEARCH METHODOLOGY 2 1.6.RESEARCH SCOPE 3 1.7.RESEARCH DESIGN 3 1.8.RESEARCH STRUCTURE 4 CHAPTER 2 – LITERATURE REVIEW ON RECRUITING, SELECTING & RETAINING KEY EMPLOYEES 5 2.1.DEFINITION OF KEY CONCEPT 5 2.2.RECRUITMENT AND SELECTION PROCESS 6 2.3.WHICH FACTORS CAN AFFECT RETAINING KEY EMPLOYEE? 7 2.4.MOTIVATION – AN IMPORTANT FACTOR IN RETAINING KEY EMPLOYEE 7 2.5.SUMMARY OF THEORETICAL FOUNDATION 8 CHAPTER 3 – CURRENT SITUATION OF MAI DONG MECHANICAL COMPANY 10 3.1.OVERVIEW OF THE COMPANY 10 3.2.DESCRIPTION OF CURRENT HUMAN RESOURCE MANAGEMENT ACTIVITIES OF THE COMPANY 14 3.3.HR MANAGEMENT SYSTEM 16 3.4.CHAPTER SUMMARY 17 CHAPTER 4 – MAIN FINDINGS ON RECRUITING, SELECTING AND RETAINING KEY EMPLOYEES 18 4.1 DESCRIPTION OF SAMPLE 18 4.2 DATA COLLECTION 18 4.3MAIN FINDINGS ABOUT RECRUITMENT, SELECTION AND RETENTION SITUATION OF MDC 18 4.4CHAPTER SUMMARY 27 CHAPTER 5 – RECOMMENDATION AND CONCLUSION 28 5.1.ROOT CAUSES 28 5.2.ALTERNATIVES FOR RECRUITING AND SELECTING KEY EMPLOYEE 29 5.3.ALTERNATIVES FOR RETAINING KEY EMPLOYEE 33 5.4.ALTERNATIVE EVALUATION AND RECOMMENDATION 36 5.5.ACTION PLAN FOR PROBLEM SOLVING 39 5.6.CONCLUSION 40 REFERENCES 41 APPENDIX 1 42 GANTT CHART - PLAN FOR PROBLEM SOLVING AT MAIDONG MECHANICAL COMPANY 42 APPENDIX 2 – KEY EMPLOYEE SURVEY 44 iii List of Abbreviations MDC Mai Dong Mechanical Company HR Dept. Human resource department HR Human resource HRM Human resource management Dept. Department FDI Foreign Direct Investment WTO World Trade Organization B&C Benefit and Compensation ISO International Organization of Standardization ISR International Survey Research USD United State dollar U.S. United State iv List of Figures Figure 1.1 Key employee turnovers Figure 1.2 Research design Figure 2.1 Selection process Figure 2.2 Recruitment and selection process Figure 2.3 Theoretical model Figure 3.1 Organizational structure of MDC Figure 3.2 Total revenue in 2006-2009 Figure 3.3 Profit ratios in 2006-2009 Figure 3.4 Product portfolio Figure 3.5 Age structure (Y2009) Figure 3.6 Organizational structure of HR Department Figure 4.1 Recruitment achievement Figure 4.2 Recruitment achievements by jobs Figure 5.1 Root causes of recruiting and selecting key employee problem Figure 5.2 Root causes of retaining key employee problem Figure 5.3 Suggested recruitment procedure v List of Tables Table 4.1 Recruitment and selection practices Table 4.2 Recruitment Summary in 2009 Table 4.3 Key employees’ perception of policies and regulations Table 4.4 Key employees’ benefit and compensation package Table 4.5 Benefit and compensation package for key employees Table 4.6 Employees’ perception of working environment Table 4.7 Internal training programs for key employee in 2009 Table 4.8 Key employees’ perception of training program Table 4.9 Plan of HR replacement (Y2010-2012) Table 4.10 Key employees’ perception of performance appraisal Table 5.1 Recruitment and selection alternative evaluation Table 5.2 Cost and benefit analysis vi Chapter 1 - Introduction The first chapter will start with the introduction to the problem that Mai Dong Mechanical Company has been facing and also the research design and methodology of the research. 1.1. Rationale of the research Being the official member of the WTO in January 2007, Vietnam has become an attractive destination for the foreign investors from all industries. The total foreign direct projects invested in Vietnam were 839 projects with the register capital of 21.48 billion USD in 2009. Hence, the competition becomes tougher in all business aspects, especially in human resource for local companies. The employer quantity is increasing quickly while the available capable and quality human resource remains almost unchanged or changed insignificantly. As a consequence, the recruiting and retaining excellent key employees have become more difficult for companies. Recruiting excellent employees is important, however, retaining them is even more essential to ensure the success of the companies. The human resource management (HRM), therefore, becomes more critical and important than ever. 1.2. Problem statement Along with the fast development and integration of Vietnam economy, human resources, the most important resource of any company, has become more competitive and also tougher for local companies. Mai Dong Mechanical Company (MDC) is not exceptional in this issue. Being a state owned manufacturing company established in 1960, specialized in mechanical and metallurgical industry, MDC has suffered the increasing turnover rate in key employees in recent years. This forces the company to make it more attractive and competitive to recruit excellent candidates and also retain them to devote their talents to maintain and develop the company’s business in this industry successfully. The FDI invested into Vietnam is increasing significantly in recent years. There are more and more companies established. This creates a tougher competition on human resources for local companies, especially for state owned company like MDC. Another challenge for MDC is that the inflation rate of Vietnam keeps going up higher and higher, it reached 28.30% at the end of August 2008 as statistic of General Statistic Office of Vietnam. This trend combines with the current HR policies and regulations on salary and benefits making the number of key employee, leaving for other companies with more favorable conditions, become higher and higher in recent years. Year Total number of key staffs Total number of resigned staffs Turnover rate 2006 58 6 11% 2007 62 8 13% 2008 68 13 19% 2009 72 15 21% Figure 1.1: Key employee Turnover 1 (Source: MDC HR department, 2009) The above chart clearly shows key manpower numbers of the company left in recent years dramatically at the alarm rate. The key employee turnover rate in 2008 and in 2009 are 19% and 21% respectively while the average ‘job moving’ in this industry was 12% in 2008 (as Navigos Group’s survey in 2008). This trend shows a very high turnover rate of the company in recent years. Hence, the company lost many key persons whose positions has still been vacant and need to be fulfilled by other excellent candidates. In conclusion, HR problems that the company has facing seriously could be summarized in both recruiting & selecting and retaining its key employee. This forces the top management of the company and also HR department to find out the best way to recruit as well as retain its key employee that are loyalty and mostly devote to the successful development of the company in the coming time. 1.3. Objectives of research The main objectives of the research are to identify current HR situation of MDC and find out the root causes of the recruitment, selection and retention problems; set out some recommendations to improve the current HR policies and procedures to attract and retain its key employees. 1.4. Theoretical foundation The research is studied basing on theory of recruiting, selecting and retaining key employee. It includes definition of key employee, recruitment, selection and retention. It also covers recruitment and selection process and some factors affecting retaining employee like benefit and compensation (B&C) policy and training and development. 1.5. Research methodology In terms of data source, this research is studied basing on primary and secondary source. In terms of data collection, primary data are collected by the internal questionnaire of the key employee’s satisfaction and expectation and the analysis of questionnaire results. The total number of responded key employees is 65 persons. The internal questionnaire is carried out in December of 2009. Secondary data comes from annual reports of the company, internet, websites, newspapers, magazines and external surveys (questionnaires and interviews). 2 In terms of data analysis technique, this research uses statistical technique and qualitative technique. 1.6. Research scope There are both internal and external factors influencing recruiting, selecting and retaining key employees. However, this research only focuses on analyzing internal factors. Data and information of the research is from the company background and performance during the previous years. Besides, the data also is collected by internal and external survey in terms of the human resource issues in combination with the theories study to find out the key factors for successful recruitment and retention and solutions to address the remaining inside HR problems. This will help contribute to the successful development of the company in the next period. 1.7. Research design The research is conceptualized in the figure 1.1. Figure 1.2 – Research Design Rationale of study Problem statement Literature review Overview of company and its current situation Research objectives, methodology, scope, design and structure Conclusion & Recommendations Main findings 3 1.8. Research structure Chapter 1 - Introduction This chapter gives the general introduction to the problem that Mai Dong Mechanical Company has been facing and also the research theoretical foundation, methodology, scope and conceptual design. Chapter 2 - Literature Review on Recruiting and Retaining key employee This chapter mentions about the concepts and theories which are used as the background for this research. The concepts and theories are about key employees, recruitment, recruitment process and factor affecting recruiting and retaining human resource management and motivation. Chapter 3 - Current situation of Mai Dong Mechanical Company This chapter gives general background and key performance results of MDC in the previous years. It specifically identifies the problem HR and HRM in the company along with analysis. Chapter 4 - Problem findings on recruitment and retention at MDC This chapter states the problem findings, problem analysis and also problem definition of recruitment and retention at MDC. Chapter 5 – Recommendations and Conclusion This chapter aims to set out some possible solutions and evaluation of these possibilities to deal with the current HR problems at MDC 4 [...]... force of the company to partially meet the demand on working capital in its manufacturing and business operation The production of the company grew better so the gross sales of the year 2007 increased by 3.9% in comparison with the year 2006 The revenue decreased significantly in 2008 and 2009 This reflects that the company has been facing a lot of difficulties as well as challenges in the production and. .. are also potential products of the company The company needs to concentrate on producing and developing these products and make them be key products of the company to enhance competitive advantages in the industry 3.1.6 Human resource features of the company The total number of staff in 2007, 2008 and 2009 is 652, 549 and 493 respectively In which, 7% are technical managerial and supervisor staffs and. .. led to the expenditures of manufacturing increased and the price of the products also went up so the products of the company could not compete with the lower price products imported from foreign countries As the result, the return of sales slightly went up in 2007 and dramatically decreased in 2008 and 2009 The product portfolio of the company and its revenue percentages in 2009 is indicated in the. .. control of Hanoi Industrial Department Since 1998 the name changed into Mai Dong Company according to the Decision No 2424/QD-UB of Hanoi People's Committee dated 18th June 1998 After mergence with several enterprises in Hanoi and pursuant to the Decision No 175/2003/QD-UB of Hanoi People's Committee on 17 December 2003, Mai Dong Company has been transformed into Mai Dong Mechanical Company under the control... of trainers and coachers, the company also has saved a lot of money in conducting training needs assessment, organizing and delivering the training courses in house And also the training effectiveness is improved This way is not really helpful and effective to train and re-train the managerial staff level They are all key persons of the company They need to be updated and well-equipped a lot of professional... supervising the implementation of the vision, missions, strategies and action plans of MDC They again visualized the 11 vision and missions in any where applicable to help staff, agencies and communities to understand and gradually become the company culture They maintain high standards of ethics; make decisions ethically and in a socially responsible manner Thanks to their qualifications and professional... years and analysis of its current HR situation and HRM activities of the company 3.1 Overview of the company 3.1.1 History of the company Mai Dong Mechanical Company (MDC) was established in 1960 as a state-owned company Its head-quarter is located at #310 Minh Khai Street, Hai Ba Trung District, Hanoi City At first it was established on 30th June 1960, MDC was named Mai Dong Mechanical Factory under the. .. developing their career and growth The organization and its managers are, therefore, required to be able to realize the key employees’ career desire and provide them the right chance for the right job which is appropriate with them Otherwise, the current job scope and organization will quickly become “too small” for them and they may desire for “larger room” in their employment with other organizations... recovering, contributing and pushing the development of the mechanical and metallurgical sector of Hanoi as well as the national mechanical sector, considering employees as the asset of the company which can develop the ability of everything those are relating to the business operation of the company o Continuously develop manufacture-trade-services activities to maximize its profit; upgrade its abilities;... this has made staff not be able to solve arising difficulties by themselves It means that they could not fully meet the requirements and productivities of their jobs The performance results of the department as well as the business and manufacturing operation results of the company has also been negatively affected 15 3.2.3 HR policies and procedures One of functional missions of HR department is to . Cost and benefit analysis vi Chapter 1 - Introduction The first chapter will start with the introduction to the problem that Mai Dong Mechanical Company has been facing and also the research design. findings 3 1.8. Research structure Chapter 1 - Introduction This chapter gives the general introduction to the problem that Mai Dong Mechanical Company has been facing and also the research theoretical. devote to the successful development of the company in the coming time. 1.3. Objectives of research The main objectives of the research are to identify current HR situation of MDC and find out the