0VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS PHAM THU HA RETAINING SKILLED EMPLOYEE, CASE STUDY IN MAI DIEM TEXTILE & GARMENT LIMITED COMPANY Major: Business Administration Code: 603405 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisors: Dr Nguyen Danh Nguyen Hanoi – 2012 TABLE OF CONTENT ACKNOWLEDGEMENTS ABSTRACT TÓM TẮT TABLE OF CONTENT LIST OF FIGURE INTRODUCTION The necessity of the thesis Objectives of the research Research scope Hypothesis of the research (Research questions) Methodology Thesis‟s limitation Significant Thesis structure CHAPTER 1: LITERATURE REVIEW 1.1Employee retention 1.1.1 Definition of employee retention 1.1.2 Reasons of employee retention 1.1.3 Factors make employees leave Company 1.2 Employee retention components 1.2.1 Work environment and Job Design 1.2.2 Leadership 1.2.3 Employee Recognition, Rewards and Compensation 1.3 Employee retention tactics 1.3.1 Employee Compensation 1.3.2 Employee Benefits 1.3.3 Employee Recognition and Reward Program 1.3.4 Job satisfaction 1.3.5 Creating a comfortable work environment 1.3.6 Coaching programmes 1.4 Employee retention in Garment and textile industry 1.4.1 Overview on Vietnam‟s garment and textile industry 1.4.2 Human resource management and development solution CHAPTER 2: ANALYSIS OF MAI DIEM‟S EMPLOYEE RETENTION 2.1 Overview of Mai Diem Garment and Textile Company 2.2 The Research methodology 2.2.1 Overall approach 2.2.2 Questionnaire development 2.2.3 Target Population 2.3 Findings and analysis 2.3.1 Benefit programs 2.3.2 Strategies 2.3.3 Organizational culture 2.3.4 Employee Satisfaction CHAPTER 3: RECOMMENDATION AND CONCLUSION 3.1 Overview of the current human resource system at Mai Diem 3.2 Recommendation for Mai Diem Garment and Textile Company 3.2.1 Clear Objectives about work climate 3.2.2Training and Motivation 3.2.3 Benefits and Compensation 3.2.4 Communication and Assistance 3.2.5 Create belief for the employees in the future development of Mai Diem 3.3 Action plan 3.3.1 The action plan in long term 3.3.2 The proposed action plan in short term to attract newcomers and sustain current employees from the researcher: CONCLUSION REFERENCE APPENDIX RETAINING SKILLED EMPLOYEE, CASE STUDY IN MAI DIEM TEXTILE AND GARMENT LIMITED COMPANY Pham Thu Ha MBA candidates, 2007 - 2009 School of Business Vietnam National University, Hanoi Supervisor: Dr Nguyen Danh Nguyen INTRODUCTION The necessity of the thesis Employee is the most important asset of enterprises but many enterprises have failed to introduce reasonable solutions to retain qualified employees This reduces the main competitiveness of enterprises in the current period Mai Diem textile and garment limited Company specializes in domestic and exported products Building and maintaining a high-skilled workforce has enabled the company to produce high-quality products Attracting and retaining the high-skilled employees is seen as one of the vital factor for maintaining the competitive advantage of the company As one of committed employees in Mai Diem company, I choose the topic "Retaining skilled employees, case study in Mai Diem textile and garment limited Company." as the official one for my Business Administration thesis Objectives of the research The thesis aims to achieve the following objectives: - Identifying and assess actual situations of Mai Diem‟s Human Resource Management and its current employee retention - Develop some suggestions and recommendations to retain skilled employee in Mai Diem Company Research scope Doing research Human resource management is a broad topic The thesis only concentrates on employee retention with case study in Mai Diem garment textile Company Research period from 2006-2010 Hypothesis of the research (Research questions) From my point of view, the research focuses on main factors in order to satisfy needs of employees to retain them, as follows: Hypothesis 1: The higher the income, the more loyal and dedicated employee are Hypothesis 2: Working environment at the Company affects the level of labor‟s loyalty by proportional Hypothesis 3: Career development opportunities of individuals affect to the level of labor dedicated to Company by proportional Data sources - Reports of Mai Diem garment & textile Company from 2006 to 2010 (including HR reports, financial reports and other statistical reports relating HR) - Data from survey, observation, direct interview and discussion with CEO & employees of Mai Diem Company - Data from other sources such as specialist magazines and books, internet Methodology Method: research survey, the quantitative method Moreover, the research aims to apply to descriptive analysis and logical reasoning to analyze the data collected Thesis’s limitation The solutions in this thesis are not completely suitable with all managers or companies, it depends on financial statement, business field of each Company Significant The thesis is expected to make great contribution to Mai Diem Company and other companies in their applying measures to retain skilled employees Thesis structure TOPIC “Retaining skilled employees, case study in Mai Diem garment & textile Company” Chapter 1: Literature review Chapter 2: Analysis of Mai Diem‟s employee retention Chapter 3: Recommendations and conclusions CHAPTER 1: LITERATURE REVIEW 1.1 1.1.1 Employee retention Definition of employee retention Retention defined as “an obligation to continue to business or exchange with a particular Company on an ongoing basis” (Zineldin, 2000, p 28) A more detailed and recent definition for the concept of retention is “customer liking, identification, commitment, trust, readiness to recommend, and repurchase intentions, with the first four being emotionalcognitive retention constructs, and the last two being behavioral intentions” (Stauss et al., 2001) Employee retention is a process in which the employees are encouraged to remain with the organization for the maximum period of time or until the completion of the project Employee retention is beneficial for the organization as well as the employee (Source:http://retention.naukrihub.com/retention.html) 1.1.2 Reasons of employee retention - Today‟s tightening labor market and tomorrow‟s predicted talent crunch It‟s getting increasingly difficult for companies to keep current employees and find qualified replacements - A growing skills shortage Many occupations are facing a severe lack of talent - An aging workforce The workforce is getting older and upcoming age groups don‟t have the numbers to fill the spaces Businesses need to keep people as long as possible - Decreased employee loyalty Gone are the days of the 25th anniversary gold watch Employees don‟t stay with companies as long as they did in the past - The search for new opportunities In today‟s world, it‟s easy for people to look for a job They can open the newspaper or search the Internet for instant job listings 1.1.3 Factors make employees leave Company Poor relationship between the employee and their immediate boss Lack of a career advancement plan - A poor match between the employee and the job or the employee and the Company Compensation not competitive No direct link between strong performance and increased rewards A need for stimulating, meaningful work Lack of appreciation, recognition, and rewards Insufficient coaching and feedback - Quality of the people the employee works with Insufficient alignment of how the employee‟s work achieves organization objectives and how the employee can be greater success (Source: www.RetainsEmployees.com) 1.2 Employee retention components 1.2.1 Work environment and Job Design Work environment is an important factor for an employee to be successful in their carrier According to (Fields, 2001) work environment should mutate regularly to keep up with the times and: - Allow individuals to balance work and personal life activities - Have a well-defined culture People understand how their performance is measured and what gets rewarded and punished - Foster learning opportunities to improve workers' intellectual capital and sustainable marketability in a world where continuously learning in order to keep a job is a given - Have benefits that are in line with where individuals are in their life cycle Employees need to be given certain level of freedom, authority and responsibility to make decision on their work to get things done Company should listen to the feedback or suggestion provided by employee to improve the work environment or the job design that they are doing 1.2.2 Leadership Leadership is defined as the “process of social influence in which one person could enlist the aid and support of others in the accomplishment of a common goal” It involves using one‟s role and ability to influence others in some way, which delivers business results and contributes to the organisation‟s overall success 1.2.3 Employee Recognition, Rewards and Compensation Recognition: Can be defined as a form of sincere praise or appreciation given to an individual by another Compensation: Wages and other financial benefits earned from labor Reward: An earned item of value presented to an individual for successful accomplishment of a particular service, task, or mission 1.3 Employee retention tactics 1.3.1 Employee Compensation Compensation is payment to an employee in return for their contribution to the organization, that is, for doing their job The most common forms of compensation are wages, salaries, bonus-based programs, commission-based program - A performance-based compensation plan - Loyalty based Bonus - Salary policy 1.3.2 Employee Benefits Employee benefits program includes: - Vacation and days-off policies: - Health benefits - Disability Insurance - Life Insurance - Education reimbursement programs: - Education Assistance: - Retirement Plans: - Gifts at some Occasions: 1.3.3 Employee Recognition and Reward Program - Communicate the Program Internally - Meaningful Awards - Share Reasons for Award - Choose Appealing Rewards 1.3.4 Job satisfaction - Clearly define what is expected of employee - Autonomy to make decision - Rotate Jobs - Treat employees fairly and respectfully - Career Development Program - Opportunity to learn new things - Provide alternate work schedules 1.3.5 Creating a comfortable work environment - Working Atmosphere - Communication - Balance work and personal life - Allow employee to share their knowledge with others - Colleagueship factor - Allow team members to share their knowledge with others - The quality of supervision and mentorship 1.3.6 Coaching programmes Building confidence and competence through training, encouragement and education, coaching includes orienting, mentoring, and leading, which are critical to developing long-term loyalty 1.4 Employee retention in Garment and textile industry 1.4.1 Overview on Vietnam’s garment and textile industry Vietnam‟s garment and textile sector has seen fast and sustainable growth over the past years, playing an important role in national socioeconomic development One of the biggest issues facing Vietnam's textile and garment industry is a labor shortage _specifically, of skilled workers The effect of labor shortages was worse for the garment industry because of the labor intensive nature of the industry and especially the fact that wages were generally lower in the garment industry than in other manufacturing industries Thus the industry had a hard time competing with other industries (e.g electronics) for labor In garment industry, the unsettled thinking is always in labor mind Especially, due to specific characteristic of garment industry, most labor are woman and they think that after get married and past their youth, the productivity will decrease Therefore, garment industry is short of skilled labor besides unskilled labor 1.4.2 Human resource management and development solution To solve the difficulties in lack of skilled labor, Vietnam garment and textile industry posed the Human resource management and development solution for whole industry Figure 2.5: The perception of Mai Diem participants about the healthrelated benefits The fifth factor to be analyzed in this package is the Long-term care insurance The sixth factor of the Benefit programs package is the Tuition Reimbursement The eighth factor in the package is the Employee Assistance Program: Employee Assistance Program as help to deal with family difficulty, job performance problem, stress, workplace violence, alcohol and drug abuse The last factor in the Benefit Programs package is the Work-life Balance It can be seen as natural due to the fact that the employees in this textile industry have a very unstable work-life balance 10 2.3.2 Strategies There are 12 items in the second package Strategies, which represents for the strategies adopted by Mai Diem in recent years The first item Alternative Work Schedule: The second item in the Strategies package is the Voluntary Reduction in Work Schedule The third item of the Strategies package is the Telecommuting and Work at home The fourth item in the Strategies package is the Wellness program The fifth item in the Strategies package is the Mentoring and Coaching The sixth item in the Strategies package is the Job rotation and new Assignment 11 The seventh item in the Strategies package is the Help with the career planning The eighth item in the Strategies package is the On-site day care The ninth item in the Strategies package is the Rewards and Recognition The tenth item in the Strategies package is the Education Opportunities 12 The eleventh item in the Strategies package is the Job-related Training opportunities The last item in the Strategies package is the Annual performance appraisal 2.3.3 Organizational culture The Organizational Culture package of the questionnaire consists of 10 items Each item represents a type of culture which could be applied in Mai Diem Company The first item in Organizational culture is ‘supervisors in Mai Diem sit down with employees and discuss the development plan at least every months’ The second item in the package is ‘employees are often given the opportunity to be part of task group and assignments outside their core job responsibilities’ 13 Mai Diem has established a policy allowing the employees to be able to attend the job outside their core responsibilities one day a month, thus allowing them to obtain experience and understand the whole picture of production in the Company The third item in the Organizational Culture is ‘Mai Diem Company has a career development program that helps people become more aware of and responsible for their own career development’ The fourth item in the package is ‘Working on project or assignment is an open process with few barriers’ It can be concluded that this item is part of the organizational culture within Mai Diem Company In recent years, Mai Diem Company has taken necessary steps to simplify the documentation process in order to 14 allow employees to be more flexible in their job, thus enabling employees to attend more jobs without barriers The fifth item in the package is ‘Supervisors communicate effectively with employees’ Although the Company has always been friendly and enthusiastic in communicating with the employees, it can be seen that production team is not well-attended and even the employees are sometimes nervous when meeting with the management team Therefore, the board of management has to make development on updating the employees with information The sixth item in the package is ‘Mai Diem has a culture that recognizes and values diversity’ The seventh item in the package is ‘There is an environment with openness and trust in Mai Diem’ Mai Diem has always been providing a very convenient condition for employees to share and improve various situations at work 15 The eighth item in the package is ‘Employees in Mai Diem are treated with fairness and respect’ The ninth item in the package is ‘Supervisors spend a considerate deal of time listening to employee’s ideas’ The last item in the package is ‘Supervisors empower people to take responsibility and authority’ Although due to the nature of the work in Mai Diem, employees are limited with the authority provided However in recent years, supervisors in Mai Diem has been assigning the employees with flexibility and certain aspect of authority in order to let employees more active in their work 2.3.4 Employee Satisfaction This package „Employee Satisfaction‟ of the Questionnaire consists of 11 items Each item represents the difference aspects of the employee satisfaction The analysis of this package is carried out below The first item in the package is ‘Opportunities for personal growth and development’ 16 The second item of the package is ‘the feeling of worthwhile accomplishment from the job’ It can be seen that Mai Diem has not established a feeling of worthwhile accomplishment in the mind of the employees, consequently leading to the fact that the retention system has not been working effectively In the near future, Mai Diem needs to develop some policies in order to increase the quality and salary for the employees while maintaining the work-life balance The third item in the package is ‘The amount of independent thought and action exercised from the job’ The fourth item in the package is „The amount of challenge in the job’ 17 The fifth item in the package is ‘The amount of job security’ The sixth item in the package is ‘the amount of pay and fringe benefits I receive’ The seventh item in the package is ‘the degree to which I am fairly paid for what I contribute to my organization’ 18 This strong dissatisfaction is mostly placed on the employees with low-skilled and experiences while the Company are focusing mostly on employees who acquire high-skilled on the job This is one of the shortages at Mai Diem and the Company should make more development in the payment system so that it can reflect the fairness in paying employees The eighth item in the package is ‘the people I talk to and work with in my job’ The ninth item in the package is ‘the amount of support and guidance received from the superiors’ The tenth item in the package is ‘the overall quality of supervision received in the job’ The overall quality of supervision has been improving in recent years, mainly due to the investment of Mai Diem in recruiting the high-skilled supervisors 19 The last item in the package is ‘opportunities to learn new 20 CHAPTER 3: RECOMMENDATION AND CONCLUSION Overview of the current human resource system at Mai Diem In order to effectively managing the employees, Mai Diem has built and issued some policies and programs However, there is a limited effectiveness on the attitudes and perception of the employees, especially in the processing of motivating the employees to increase the productivity Employees who have talent or special skills might not be interested with the lack of long-term commitment at Mai Diem Although the Company has improved in certain aspects such as holding a health check event for employee on yearly basis, it does not seem to be enough for the employees at Mai Diem The below information is presented as the recommendation for improvement of Human Resource at Mai Diem in the attempt to retain excellent employees at the Company 3.2 Recommendation for Mai Diem Garment and Textile Company 3.2.1 Clear Objectives about work climate Develop work climate: clearly identified and harmonious Promote a more positive work environment Make the workplace at Mai Diem enjoyable or fun and Mai Diem itself a special place to work 3.2.2 Training and Motivation Provide with on the job and off the job training for employee Conduct meetings in the regular basis, it would enrich the 3.1 employee’s skills and job 3.2.3 The appointment process should follow: - The appointment must be transparent - The appointment must base on skills, quality and experience in order to appoint right people to the right job - Encouraging the appointment of young professionals who possess capabilities into management team - Evaluating performance accurately in order to promote or feedback employees Benefits and Compensation 21 - Paying adequate attention to the timely rewarding for employees who have major contribution to the Company's operation - Applying special rewards for the employees (apply for only one employee per year) such as: a trip with family or the gifts with similar value Specifically, employee retention is more likely to be achieved when the rewards and processes to earn such rewards are well understood Along with pay, benefits are the most important factor in retaining the employees 3.2.4 Communication and Assistance Effective communication and frequent feedback system should be established Mai Diem should be aware of what the employees are thinking of their job, identifying their satisfaction, their issues and their relationship with their colleagues are very important in retaining them Mai Diem should frequently conduct survey researching for the satisfaction level of the employees as well as holding events in timely manner to gather feedback from employees in order to understand the employee's concern and feeling Employees tend to work more effectively and enthusiastically if they know that they are cared and evaluated correctly 3.2.5 Create belief for the employees in the future development of Mai Diem Creating the confidence for the employees is very crucial for the employee retention system in Mai Diem Company Mai Diem will have to show proof of its contracts and documents in business with partners and financial positivity of such contracts and documents in order to let employees believe in the bright future of the Company This could be an effective way of creating confidence for the employees and make them believe that they are working for a potential Company 3.3 Action plan 3.3.1 The action plan in long term Mai Diem should provide feedback for employees Provide challenging experience Train the supervisors to become the coach working directly and closely with the employees 22 Applying the appraisal, in which good employees are rewarded for their progress Career enhancement should be considered Mai Diem should provide the material compensation and consider it as one of the immediate way to Create a comfortable work environment 3.3.2 The proposed action plan in short term to attract newcomers and sustain current employees from the researcher: Giving welcome bonus to newcomer & sustained bonus to current employees Giving gift/money to employee's on their Weddings, Birthday or their parents' Funerals Give Production Manager's responsibility Providing dormitory for employees who live far from Mai Diem Improving lunch quality & quantity Advertising recruitment information on TV, local radio, Internet & Company's loudspeaker system as well as hanging poster, banner at places where have Mai Diem Facilities operating Meeting with authorized person in some remote districts in Nam Dinh, Ha Nam & Ninh Binh province to recruit employees Besides, update information regarding the recruitment in the North West & the middle of Viet Nam Search and get advice from labor department, working with some, school, training center to get their manpower support 23 CONCLUSION Chapter 1: Literature review: This chapter has mentioned the general relevant theories regarding employee retention as well as theories regarding the solutions to encourage and retain employees Chapter 2: Findings and analysis: This chapter focused on analyzing the current human resource situations at Mai Diem through the implementation of questionnaire, along with identifying the issues which remains at Mai Diem Chapter 3: Recommendation and conclusion: This chapter brings up some solutions in order to retain skilled employees at Mai Diem 24 ... employees in Mai Diem company, I choose the topic "Retaining skilled employees, case study in Mai Diem textile and garment limited Company. " as the official one for my Business Administration... reduces the main competitiveness of enterprises in the current period Mai Diem textile and garment limited Company specializes in domestic and exported products Building and maintaining a high -skilled. .. REFERENCE APPENDIX RETAINING SKILLED EMPLOYEE, CASE STUDY IN MAI DIEM TEXTILE AND GARMENT LIMITED COMPANY Pham Thu Ha MBA candidates, 2007 - 2009 School of Business Vietnam National University, Hanoi