TABLE OF CONTENT ACKNOWLEDGEMENTS i ABSTRACT ii TÓM TẮT iv TABLE OF CONTENT vi LIST OF FIGURE ix INTRODUCTION 1 The necessity of the thesis Objectives of the research 3 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 vi 1.2.1 Work environment and Job Design 1.2.2 Leadership 11 1.2.3 Employee Recognition, Rewards and Compensation 13 1.3 Employee retention tactics 14 1.3.1 Employee Compensation 15 1.3.2 Employee Benefits 16 1.3.3 Employee Recognition and Reward Program 18 1.3.4 Job satisfaction 20 1.3.5 Creating a comfortable work environment 22 1.3.6 Coaching programmes 24 1.4 Employee retention in Garment and textile industry 25 1.4.1 Overview on Vietnam‘s garment and textile industry 25 1.4.2 Human resource management and development solution 26 CHAPTER 2: ANALYSIS OF MAI DIEM’S EMPLOYEE RETENTION 29 2.1 Overview of Mai Diem Garment and Textile Company 29 2.2 The Research methodology 30 2.2.1 Overall approach 30 2.2.2 Questionnaire development 31 2.2.3 Target Population 32 2.3 Findings and analysis 33 2.3.1 Benefit programs 33 vii 2.3.2 Strategies 41 2.3.3 Organizational culture 49 2.3.4 Employee Satisfaction 57 CHAPTER 3: RECOMMENDATION AND CONCLUSION 68 3.1 Overview of the current human resource system at Mai Diem 68 3.2 Recommendation for Mai Diem Garment and Textile Company 68 3.2.1 Clear Objectives about work climate 68 3.2.2Training and Motivation 70 3.2.3 Benefits and Compensation 71 3.2.4 Communication and Assistance 72 3.2.5 Create belief for the employees in the future development of Mai Diem 73 3.3 Action plan 74 3.3.1 The action plan in long term 74 3.3.2 The proposed action plan in short term to attract newcomers and sustain current employees from the researcher: 77 CONCLUSION 80 REFERENCE 82 APPENDIX 84 viii LIST OF FIGURE Figure Steps of the research 31 Figure 2: The perception of Mai Diem participants about the salary and compensation 34 Figure 3: The perception of Mai Diem participants about the Leave Benefits 35 Figure 4: The perception of Mai Diem participants about the Retirement Plan 36 Figure 5: The perception of Mai Diem participants about the health-related benefits 37 Figure : The perception of Mai Diem participants about the Long-term Care 38 Figure 7: The perception of Mai Diem participants about the Tuition Reimbursement 39 Figure 8: the perception of the participants about the Employee Assistance Program 40 Figure 9: The perception of Mai Diem participants about the Work-life Balance 40 Figure 10: Perception of Mai Diem Participants about the Alternative Work Schedule 42 Figure 11: The perception of Mai Diem participants about the wellness program 43 Figure 12: The perception of Mai Diem participants about the Mentoring and Coaching 44 ix Figure 13: The perception of Mai Diem participants about the Job rotation and new Assignment 45 Figure 14: The perception of Mai Diem participants about the Rewards and Recognition 46 Figure 15: The perception of Mai Diem participants about the Education Opportunities 47 Figure 16: The perception of Mai Diem participants about the Job-related Training Opportunities 48 Figure 17: The perception of Mai Diem participants about the annual performance appraisal 49 Figure 18: The perception of Mai Diem participants about the Development plan 50 Figure 19: The perception of Mai Diem participants about Task group assignment 51 Figure 20: The perception of Mai Diem participants about Career development program 51 Figure 21: The perception of Mai Diem participants about New assignment52 Figure 22: The perception of Mai Diem participants about Supervisor communicate 53 Figure 23: The perception of Mai Diem participants about Value of diversity 53 Figure 24: The perception of Mai Diem participants about Openess and trust 54 Figure 25: The perception of Mai Diem participants about Fairness and Respect 55 x Figure 26: The perception of Mai Diem participants about Supervisor listening 56 Figure 27: The perception of Mai Diem participants about Supervisor empower 56 Figure 28: The perception of Mai Diem participants about Opportunities for personal growth and development 58 Figure 29: The perception of Mai Diem participants about the feeling of worthwhile accomplishment from the job 59 Figure 30: The perception of Mai Diem participants about The amount of independent thought and action exercised from the job 60 Figure 31: The perception of Mai Diem participants about The amount of challenge in the job 60 Figure 32: The perception of Mai Diem participants about the amount of job security 61 Figure 33: The perception of Mai Diem participants about the amount of pay and fringe benefits 62 Figure 34: The perception of Mai Diem participants about the degree to which I am fairly paid for what I contribute to my organization 63 Figure 35: The perception of Mai Diem participants about the people I talk to and work with in my job 64 Figure 36: The perception of Mai Diem participants about the amount of support and guidance received from the superiors 65 Figure 37: The perception of Mai Diem participants about the overall quality of supervision received in the job 65 Figure 38: The perception of Mai Diem participants about opportunities to learn new knowledge 66 xi LIST OF TABLE Table 1: Mai Diem employee‘s response rate 33 xii INTRODUCTION The necessity of the thesis In today‘s economy, the bottom line in business is profits Where the profits come from? From sales of services and/or products We have developed the following acronym (ECP) that explains how companies will increase their profits E— Employee retention and employee satisfaction When you have satisfied employees (who are not caught up in the quagmire of bureaucracy and leave), they are more able to help the customer C— Customer retention The more effective the customer services the greater the customer retention P— Profit The equation is simple from this point on When we keep customers that are satisfied, and continue to add more, the corporation has increased the likelihood of increased profits Employee Satisfaction + Customer Satisfaction = Increased Profits 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 Skilled employee is defined as a segment of the work force with a high skill level that creates significant economic value through the work performed (human capital) Skilled labor is generally characterized by high education or expertise levels and high wages Skilled labor involves complicated tasks that require specific skill sets, education, training and experience, and may involve abstract thinking So, attracting and retaining skilled employees are the best solution to help enterprises develop rapidly and sustainably However, Vietnam enterprises always have to deal with the risk of losing their top talents to competitors Enterprises need to be aware that retaining employees is not a countermeasure but a strategy A strategy of retaining and developing human resource need to process fully and professionally which follows a consecutive chain including recruitment, training, retaining and human resource development This includes such factors as: Creating human resource + Reduce dissatisfaction + Motivation Solutions that give enterprises introduce to retain good employee must meet the three mentioned-above groups of factors If one enterprise ignores the above issue and just pays attention to income, compensation, promotion, it is not differentiated from others Moreover, other enterprises may offer better compensations so as to attract good people Nevertheless, if one enterprise focuses much on income for employee, however, it fails to create a professional working environment, such excellent labor will fell boring and they soon leave for other companies Retaining excellent labor is a throughout process, beginning at the work of attraction-recruitment-working and cooperation for productivity These items need to be processed professionally together with the sharing and close cooperation of leaders, which can make excellent labor think again before they decide to accept attractive invitations 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 For many years, the Company has focused on investment to building a high-skilled workforce, having realized that its development and success are heavily based on the quality of such workforce, to be able to cope with the change of the new environment The year 2008 has marked a period when the competition of local garment industry has reached another level, challenging Mai Diem to foster its success and maintain the well-living condition for its 200 employees 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 purpose of this research is to identify the relationship between these factors: salary, compensation and benefit, working environment, career promotion chance, employee‘s satisfaction, especially in Mai Diem garment & textile Company Thence, 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 The definition of employee retention using in this study means skilled employee 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: and (c) Supervisors spend a considerate deal of time listening to employee‘s ideas, communication is nevertheless the most important factor to achieve the overall objectives of the firm The more effective the frequent performance feedback is provided, the higher the employee commitment will be Basically, skilled workers in Mai Diem are more interested to receive feedback frequently about their daily performance It can be seen in Mai Diem now that effective communication system is not effectively established and the environment is in turbulence and the objectives are changing Therefore, effective communication and frequent feedback system should be established with high urgency in Mai Diem Company 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 In order to understand thoroughly, 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 One of the most crucial factors in retaining workforce in any organization is to create belief for such workforce Naturally the employees will feel more secured working in a credited Company with strong growth In addition, there is a feeling of pride in working for a potential, popular Company If a Company is unable to create confidence for the employees 73 about its future development or that Company is not operating effectively and the future is vague, it is natural that employees will begin their search for another Company and ultimately leave the current Company when their confidence is not established When the future is not seen with the Company, it would create instability for their salary and their living standard Therefore, creating the confidence for the employees is very crucial for the employee retention system in Mai Diem Company Specifically, 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 There are some solutions that Mai Diem Company can utilize as the long term plan to retain skilled employees First of all, Mai Diem should provide feedback for employees because naturally all employees want feedback, regardless of positive or negative one Employees at Mai Diem and anywhere else consider feedback as necessary to their career growth and their job performance Therefore, in order to retain good employees, Mai Diem should train and prepare supervisors to provide feedback This solution can be implemented at once in order to understand what employees are thinking The second solution is to provide challenging experience Challenging experience is the best way to keep employees motivated and stay at the Company Specifically, Mai Diem should put ambitious employees with potential and excellent skills through a series of challenging, new and unique experience 74 Mai Diem should emphasizes that these challenges will benefit their career path and furthermore will affect the success of Mai Diem in the future In addition, the provision of challenging experience will help employees themselves to develop their talents from within For Mai Diem, the quality of jobs, tasks and quality are the key factors in determining the employee motivation Therefore, Mai Diem should consider offering more opportunities for employees to challenge themselves with different and unique tasks In addition, Mai Diem should train the supervisors to become the coach working directly and closely with the employees Most of the time the supervisors are separated from the employees and they are very poor at coaching and instructing employees to work more effectively The cooperation between the supervisors and the employees will help the employees to work more efficiently and in turn building a healthy environment in which employees will not thinking of leaving Mai Diem Another solution in long-term that Mai Diem can consider applying is the appraisal, in which good employees are rewarded for their progress However, the rewards for employees should not be limited with monetary aspect, but should be reflected in the recognition of the employee contribution for the success of Mai Diem Mai Diem should analyze carefully in order to identify the employees working with enthusiasm and productivity for the Company Appraisal is nonetheless the best practice to retain good employees since employees will be built with the sense of responsibility and achievement while it also creates healthy competition within Mai Diem Although appraisal itself is not an direct solution to retain good employees at Mai Diem, but to be able to appraise good employees with reasonable rewards and recognition will surely make employees think that Mai Diem is adjusted to 75 understand and care more for employees and they will remain at the Company for a long while to see if their expectation comes true In addition, career enhancement should be considered as one of the long-term plan for Mai Diem to retain good employees The enhancement of qualification will lead to the better knowledge and preparation for employees Mai Diem should send good employees to short-term training programs, which both enhance their educational knowledge and their skills training Employees will perceive it as a positive signal from Mai Diem Company and they will remain at the Company Furthermore, this training will help employees to understand the whole process at the Company and employees will perform more effectively in the operational procedures However, Mai Diem should provide the material compensation and consider it as one of the immediate way to implement The material compensation can be provided either by an increment in the salary, or the bonus or a payment given as recognition for the hard work on a particular assignment Since higher payment will affect the profitability of Mai Diem, therefore careful consideration should be performed as employees who are provided with material compensation will be expected the same level The material compensation therefore can be a two-way knife as it will help retaining employees at once but it can also fasten the leaving of the employees when they cannot cope with the increased expectation Mai Diem should also make sure that employees understand that they are not only provided with material compensation only for their hard work but it also a token of gratitude from Mai Diem Although employees are the one that Mai Diem should focus on retaining However, there is one aspect that Mai Diem can as long-term 76 plan, working environment Practically at Mai Diem, where employees are spending more time than at home, the working environment is playing a vital role in keeping employees motivated and remain at long-term Working in a comfortable work environment has an invariable and invaluable positive effect on the efficiency of the employee 3.3.2 The proposed action plan in short term to attract newcomers and sustain current employees from the researcher: (i) Giving welcome bonus (VND 2,000,000/person) to newcomer & sustained bonus (VND 1,000,000/person) to current employees - Welcome bonus: Paying VND 1,000,000 after 01 month working & receiving the remaining VND 1, 000, 000 after 06 months working in Mai Diem - Sustained bonus: Paying together with Salary of January 2013 (ii) Giving gift/money to employee's on their Weddings, Birthday or their parents' Funerals This fee is provided by Trade Union budget - Funeral: VND 500,000/person - Wedding: VND 300, 000/ employees - Birthday: once a month for all employees who have the same birthday in month (iii) Production Manager's responsibility: - Should talk with newcomers everyday (until they sign contract & have experience in job) to know their name, their family situation and their difficulties in job as well, timely giving them your help if necessary - Appoint a good & enthusiastic person to train/guide newcomers 77 - Arrange for newcomer to work in new line or sample room until newcomer have experience in job & catch the work of other employees in current line to ensure no newcomer resign during their probation time (iv) Providing dormitory for employees who live far from Mai Diem (v) Improving lunch quality & quantity (Supervising raw material before cook and the food after cook) (vi) 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 (vii) 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 (viii) Search and get advice from labor department, working with some, school, training center to get their manpower support Chapter summary Based on the analysis and findings which has been clearly described in chapter 2, chapter focuses on recommending specific solutions for certain major issues in Mai Diem regarding the retaining of skilled and capable employees for long-term at the Company Main solutions in chapter are described as follow: - Clear Objectives about work climate - Training and Motivation - Benefits and Compensation - Communication and Assistance 78 - Create belief for the employees in the future development of Mai Diem The chapter also brings up the action plan in long term and action plan in short term in order to retain skilled employees at Mai Diem The solutions should be implemented synchronously in order to bring the highest effectiveness by both retaining the current skilled employees and attracting new sources of employee Successfully implementing these solutions and Mai Diem can obtain the capable, committed and enthusiastic workforce When employees are satisfied with the benefits brought by the Company, they will place higher trust on the development of the Mai Diem, thus believing in their own career development and they will be long-term committed with Mai Diem 79 CONCLUSION In this high technological and modern world, capital, machinery can not make up successfully business without the capable, veteran and loyal workforce Therefore, employee retention is major issue requiring the attention from the management of Mai Diem As the Company operating in the textile industry, employee retention is especially important for Mai Diem because the industry standard has shown that there is a lack of skilled employees in the textile industry recently The topic ―Retaining skilled employees, case study in Mai Diem textile & garment limited Company‖ has shown the reality in the human resource at Mai Diem, along with the analysis and reasoning for the employee retention issue at the Company in order to develop effective solutions to retain employees After a period of serious and attempted research, the thesis has been completed with the achievement as follow: 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 80 By offering some solutions in the thesis, the researcher has hoped to contribute to building an effective employee retention system at Mai Diem, along with supporting the Company to achieve the objectives in the era of development Due to the inexperience and lack of knowledge about developing a thesis, errors are unavoidable However, the researcher is enthusiastic in receiving feedbacks and instructions in order to develop better thesis in the future 81 REFERENCE Dawson.C, 2009, ―How to decide upon a methodology: Introduction to Research Methods (4th Edition), USA: How To Books Ltd Coff, R W (1997) Human Assets and Management Dilemmas: Coping with Hazards on the Road to Resource-Based Theory The Academy of Management Review, 374-402 Davidow, W.H., Uttal, B (1989), Total Customer Service: The Ultimate Weapon, Harper and Row, New York, NY, Reichheld, F.F (1995), "Loyalty and the renaissance of marketing", Marketing Management, Vol No.4, pp.10-21 Stauss, B., Chojnacki, K., Decker, A., Hoffman, F (2001), "Retention effects of a customer club", International Journal of Service Industry Management, Vol 12 No.1, pp.7-19 Zineldin, M (2000), TRM Total Relationship Management, Student litterateur, Lund., McGovern, P (1995) ‗To retain or not to retain? Multinational firms and technical labour,‘ Arthur, J (1994), ‗Effects of human resource systems on manufacturing performance and turnover.‘ In Academy of Management Journal Bame, S.I (1993) ‗Organizational characteristics and administrative strategies associated with staff turnover.‘ In Health Care Management Review, v18, n4, pp 70-86 10 McKeown, , L (2002) Retaining Top Employees Blacklick, OH, USA: McGraw- Hill Companies 11 Mai Diem garment and textile ltd Company, ―Annual report‖, 2006,2007,2008,2009,2010 82 12 Grant.C, 1984, ―Employee Motivation: Principles and practices.‖ USA: Vantage Press 13 Phillips.J.J; Connel.A.O, 2003, ―Managing employee retention: a strategic accountability approach.‖ USA: Butterworth-Heinemann 14 Bowen, R B (2000) Recognizing &Rewarding Employees OH USA: McGraw-Hill Professional Book Group 15 Debra F, C (2002) Expanding Paradigms in Providing Internal Service ManagingService Quality, 87-99 16 Fields (2001) Indispensable Employees :How to Hire Them, How to KeepThem Franklin Lakes, NJ, USA: Career Press, Incorporated 17 Ian M, T., &Jonathan, W (2007) The importance of management style in labourretention International Journal of Sociology,5-1 18 Milman, A a (2004) Predicting job retention of hourly employees in the lodging.Journal of Hospitality and Tourism Management Vol I I No 1,23-41 19 Rarnlall, S (2003) Managing Employee Retention as a Strategy for IncreasingOrganizational Competitiveness Applied H R M Research, VOL 8, NO 2, 63-67 20 Silbert, L (2005) The effect of Tangible Rewards on Perceived Organizational Support Management Sciences Retrieved from Management Sciences 21 Human Resource Institute (2001) Loyalty and commitment: a survey on attracting and retaining workers 22 Chaminade, B (2006) Staying Power HR Monthly, March 2006 Article pp 44-45 23 Jordan, M (2010) Leadership of the future: Strategies for success 83 APPENDIX QUESTIONAIRE As part of the Employee Assistance program, the Human Resource department would like to gather information on the ideas and feedback of the employee about the current employee retention condition of Mai Diem This questionnaire is designed as part of the information gathering process in order to understand the employee‘s perception about various aspects of working condition at Mai Diem Garment & Textile company A Benefits program Please kindly rate the following benefits in Mai Diem Garment & Textile company on the scale from to 5, in which = not at all important and = very important Not at all Not very Neutral Somewhat Very important important important important Salary/Compensation Leave Benefits (including sickness, vacation, personal and public holidays) Retirement plan Health-related benefits (health insurance, vision, dental and prescription) Long-term care insurance Tuition reimbursement Deferred compensation Employee Assistance Program Work-life balance Other benefits (Please kindly specify): …………………………………………………… B Strategies Please kindly indicate if any of the following strategies is available at Mai Diem Garment & Textile company Please rate the level of importance on the scale from to 5, in which = not at all important and = very important Availabl Not at all Not very Somewha Very Neutra e Importan importan t importan l t t Important t Yes No 84 Alternative Work Schedule Voluntary Reduction in work schedule Telecommuting/Wor k at home Wellness program Mentoring/coaching Job rotation and New Assignment Help with career planning On-site day care Rewards and recognition (service award, employee of the year) Education Opportunities Job-related Training Opportunities Annual performance Appraisal                         Any other strategies (please kindly specify): …………………………………………… C Organizational culture Strongly Strongly Disagree Neutral Agree disagree agree Supervisors in Mai Diem sit down with employees and discuss the development plan at least every months Employees are often given the opportunity to be part of task group and assignments outside their core job 85 responsibilities Mai Diem company has a career development program that helps people become more aware of and responsible for their own career development Working on a new project or assignment is an open process with few barriers Supervisors communicate effectively with employees Mai Diem has a culture that recognizes and values diversity There is an environment with openness and trust in Mai Diem Employees in Mai Diem are treated with fairness and respect Supervisors spend a considerate deal of time listening to employee‘s ideas Supervisors empower people to take responsibility and authority 86 D Personal satisfaction Please kindly rate the following statements on the scale from to 5, in which = very dissatisfied and = very satisfied Very Somewhat Somewhat Very Neutral dissatisfied Dissatisfied satisfied satisfied Opportunities for personal growth and development The feeling of worthwhile accomplishment from the job The amount of independent thought and action exercised from the job The amount of challenge in the job The amount of job security The amount of pay and fringe benefits I receive The degree to which I am fairly paid for what I contribute to my organization The people I talk to and work with in my job The amount of support and guidance received from the superiors The overall quality of the supervision received in the job Opportunities to learn new knowledge THANK YOU VERY MUCH FOR TAKING PART IN THIS SURVEY 87 ... 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. .. 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 limited. .. of the knitting industry in Nam Dinh, Mai Diem has decisively invested in two knitting machines It was then the Company focused on producing knitted textile and clothing Mai Diem Company has