Periodical review policy and procedure for the smooth operation

From interviewing managers and employees as well as studying reports, policy and procedure of the division and the company, the author has found out serveral problems during the period o

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business -

HOANG TUYET MAI

PERIODICAL REVIEW POLICY AND PROCEDURE FOR THE SMOOTH

OPERATION

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2019

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business -

HOANG TUYET MAI

PERIODICAL REVIEW POLICY AND PROCEDURE FOR THE SMOOTH

OPERATION

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: DR LE THI THANH XUAN

Ho Chi Minh City – Year 2019

TABLE OF CONTENT

EXECUTIVE SUMMARY 4

ACKNOWLEDGEMENTS 5

A INTRODUCTION 6

B BACKGROUNDINFORMATION 7

C SYMPTOMCONTEXT 11

1 FINANCIAL STATEMENT 11

2 ACCOUNTING DOCUMENTS 12

3 WORK CONFLICTS AND UNSATISFIED EMPLOYEES 14

D PROBLEMIDENTIFICATION 16

1 Manpower cost 16

2 Material cost 18

3 Policy and procedure development 18

4 Problem definition and consequence 21

5 Initial effect map 24

E CAUSEVALIDATION 25

1 Problem during initial policy and procedure development of the division 25

2 Lack of periodical review, update of policy 29

3 Updated cause and effect map 31

4 Final cause and effect map 33

F SOLUTION 34

1 Improve analysis and research and enhance communication 34

2 Improve too general policy and procedure 39

3 Periodical review, update of the policy 46

G CONCLUSION 50

SUPPORTING DOCUMENTS 51

1 Literature review 51

2 Study method 53

3 Interview guide 53

4 Transcripts 55

ATTACHMENT 67

REFERENCE 76

EXECUTIVE SUMMARY Policy and procedure is an important part of each company, it contributes to success of the company Policy and procedure help the company work smoothly, it is the manual for every employees and through all departments It is the guideline and the effective training for newcomers Developing and implementing policy is a process of continuous

improvement, there is never a moment because the company continues developing Policy and procedure periodic review is as important as preparing period The company with out of date policy and procedure is as no policy and procedure The thesis focuses on researching the policy and procedure of the external division of AB Petroleum Company From

interviewing managers and employees as well as studying reports, policy and procedure of the division and the company, the author has found out serveral problems during the period

of policy development of the Division as well as the lack of periodic review of the policy and procedure Based on study literatures, researches as well as interview relating

personnel, author has given solutions (i) the company should establish a preparing and reviewing team of policy and procedure to enhance communication as well as knowledge share during period of policy development and periodic review (ii) policy and procedure should be detailed to guide users from various departments (iii) set the procedure for

periodic review of policy and procedure to always update changes to ensure adequacy and effectiveness

ACKNOWLEDGEMENTS

I would like to acknowledge all who supported me during my study without whom I would not be where I am today

I would especially like to thank my supervisor – Dr Le Thi Thanh Xuan and professors

of ISB for all their advices and guidance Without their help, this could not have been possible

I also would like to show my gratitude to my colleagues at work and classmates at ISB for their continuous supports I also send my sincere thankfulness to my parents and friends for their support and encouragement

A INTRODUCTION

There are many challenges for organization when they want to expand their business The organization needs to identify the appropriate organization structure and operating mechanism as well as prepare their new policy and procedure for the best management control system If not, it will impact on the existing operation of the organization Good new vision and mission allows the organization growth on the right way Good organization structure equips the organization with the best skilled personnel as well as Good procedure and policy helps organization always compliant with law and consistent with existing

policies and procedures of the company Moreover, policies and procedures are an essential component of any organization Policies address important issues, such as what constitutes acceptable behavior by employees Procedures, on the other hand, clearly define a sequence

of steps to be followed in a consistent manner, such as how the organization will respond to any policy violations All these readiness help the companies succeed to gain their goals and objectives

B BACKGROUND INFORMATION

AB Petroleum operating company (ABPOC), who was established in 2009, is a branch

of Petro Vietnam and an operator of AB project invested by two parties of Petro Vietnam (PVN) and Gazprom International (GP) for exploration, development and operation of gas and condensate offshore Vietnam In operation period, AB company has two positions as the operator and PVN’s branch The below chart shows potions of AB company and

agreements in which the company must comply during their operation

Source: Created by Author based on function of AB Company

Figure 1: ABPOC’s operation position chart

Product sharing contract

(PSC)

Joint operation Authorized Operation Sole Risk Operations (if any)

Joint Operation Agreement

(JOA)

ABPOC

Authorization Contract

ABPOC as an operator of PVN and GP for block A&B

ABPOC as the branch of PVN

Service contracts External Service Division

1.1 Operator position

ABPOC is nominated, with consent of GP, as the operator of PVN under Product

sharing contracts (PSC) between PVN and GP to operate the block A&B offshore ABPOC operations based on contracts and agreements including

The main activities of ABPOC as an operator are management and conduct of all joint operations, sole risk operation and authorized operations (if any) in the joint operating agreement (JOA) as permitted and required by the parties based on a principle of no-gain and no losses, within the scope of JOA and PSCs

Subject to respective PSCs provisions, all joint property (except petroleum), all joint petroleum allocated to the contractor and all costs and obligations incurred in conduct of the joint operations shall be owned and borne by the parties in proportion to their respective participating interests which at the date are as follows:

PVN: fifty one percent (51%)

GP: Forty nine percent (49%)

Joint operations are all petroleum operation includes management, maintenance and exploiting petroleum (gas and accompanied condensate) This operation is in line with the provisions of PSC and JOA for and on behalf of all the Parties The cost of this operation shall be chargeable to the joint account

Authorized operations are the operations, other than joint operations which parties

authorize the Operator to carry out and on Parties’ behalf Currently, ABPOC is authorized

by Parties (PVN and GP) to the management of gas and condensate selling operation For

to the joint account, but shall be monitored on another account Profit for authorized

operations after deducting of all obligations with government will be transferred to Parties’ accounts

Sole risk operations are operations and activities carried out by less than all Parties The cost of which are chargeable to the account of Sole Risk Party Sole risk party is a party who participates in the sole risk operations Currently there is no sole risk operations carried out by parties

To enable operator to maintain the joint operation, on or before the 28th day of each month, the operator shall furnish each party with a cash call request the advances for month following the next month (“cash call month”) The amount requested in a cash call shall be the Operator’s estimate of the amount required from each Party to enable the Operator to defray the net cash payment, being cash payment less cash receipts, due in cash call month under obligations properly incurred by operator in connection with the joint operations, authorized operations and sole risk operations (if any) separately

This thesis only focuses on the joint operation

Figure 2: ABPOC development stages

Source: created by Author based on operation periods of ABPOC

2009 2013 2017

Development period

Operation period Drilling period

2033

2012

Exploration period

The development period started in 2009 with the main scopes including feed design, engineering, procurement, construction, installation, commissioning, tie-in and hook-up of

02 drilling platform, 01 processing overhead platform, 03 subsea pipelines and 01 floating storage offloading (FSO)

Drilling period started in 2012 with the main scopes including drilling of 16 oilfields Operation period started in 2013, the products of the project including gas and

accompanied condensate Gas exploiting from oil field after being proceed at overhead platform is transferred to export pipeline for selling Accompanied condensate after

exploiting is directly transferred to FSO for selling

Exploration period works through the project time to (i) provide instruction and

information on seismic or geological to drilling campaign and exploiting operation as well

as (ii) explore new oilfields

1.2 Branch of PVN - External Service Division

In 2011, ABPOC was authorized by PVGAS to conduct a 26 inch gas export pipeline system from BDPOC platform to 2nd Nam Con Son Pipelines with 3% management fee which are paid after completion of the scope of work

In 2016, authorization contract came into closing out and making payment In the same year, ABPOC with an approval from PVN established an External Service Division as the branch of PVN which the main purposes are

(i) To solve remaining issues to close the authorization contract

(ii) To seek for opportunities for external supplying service contracts Company will hire its engineers which have 3 weeks off after completing 3 week working offshore for external call-out jobs

(iii) To optimize internal resources For example, use internal manpower instead of out-sourcing for maintenance works Company will hire its engineers which have 3 weeks off after completing 3 week working offshore for internal call-out jobs

Operating costs for this division will be from 3% management fee of authorization contract The yearly profit after deducting all costs and tax will be transferred to PVN

C SYMPTOM CONTEXT

1 Financial statement

In the role of branch of PVN, AB has established the external division which began

to operate since 2015 and had its own financial reports since 2016 Looking at the income statement of the division for three year 2016, 2017 and 2018, they all show that the division had no direct expenses (especially labor cost and material cost), the reports only presents indirect expenses including travelling expense, workshop expense, etc According to the research of Gunn12 on the goal of tax accounting, the reports of the company may violate the principle of matching of costs and revenues For this reason, it can be said the financial statement of the external division does not correctly reflect the actual expenses of the

division

Revenue (Mil VND)

Expense (mil VND)

Reven

ue (Mil VND)

Expense (mil VND)

Direct expens

e

Indirect expense

Direct expense

Indirect expense

Direct expense

Indirect expense

Source: created by Author based on financial statements year 2016, 2017 and 2018 of ABPOC

Table 1: Data of revenue and expenses

2 Accounting documents

On 29 December 2000, the Minister of Finance issued Decision 218 with detailed regulations on the preservation of accounting documents5 Any expenses and costs recorded

in accountancy needs supporting accounting documents According to Circulars 200,

accounting document are papers, accounting document is the original documents that

illustrate a transaction have occurred Original records which evidence a financial

transaction, such as debit/credit memos, invoices, receipts, orders and vouchers An

accounting document is the original record containing the details to substantiate a

transaction entered in an accounting system

A company's accounting documents for its monthly payroll are the employees'

timesheets To record labor cost of the division, the division is lacking of papers such as approved timesheet from manager It causes no labor expense recorded in financial

statement of the company

A manufacturer's production records will also include source documents such as

materials requisition forms A material cost records will includes source documents such as call out request, material issue ticket, invoice, purchasing contract The Division is difficult

in prepare appropriate papers according to the inventory management

Inventory documentation

According to Mr Hoàng, he is difficult in pro-rating costs between the company and the division Maintenance works of division are conducted by company’s offshore engineers for equipment of contractor located on the platform of AB Company Cost for maintenance

of equipment of contract must be charged to the division However, engineers do not

distinguish which equipment of contractor and the operator They use consumables to

maintain equipment of both the company and contractor at the same time And then, costs for maintaining equipment are charged to the company There is no document record for the cost of the division

All assets including platform, equipment, office and human of operator are contributed

by both PVN and GP therefore any profit after liability should be shared according to

investment percentage rather than only transferred to PVN Or else all costs of the Division should be separated and deducted from the cost of the Operator as stipulated in the policy as Division has to separately monitor and record their own expenses In actually, costs have not allocated for the Division such as cost of manpower, material, administrational

expenses,…

The revenue of the division is small but the division is now operating with the unclear policy/ procedures or does not correctly pursuant to the existing procedures/ policies may lead the company with several problems in the future as following:

- The AB company will have negative image with parties (GP and Petro Vietnam) when AB company have not well performed their responsibilities as an operator

- AB Company is the operator who is hired by Petro Vietnam and Gazprom, the parties can change other operator if AB company does not work under

agreements, policies and procedures as set and initial approved by parties

- AB company may face legal problems when State audit and 3rd party audit can figure out mistakes relating to procedures and policies which the company does not comply with

3 Work conflicts and unsatisfied employees

Pursuant to the procurement and contract management procedure of the company, commercial and contract department has main function of purchasing and rental of goods and services and/or other equipment of AB Company In addition to entering into the

contract, this function involves the invitation of bidder to register, submit bid proposals, negotiation with bidder and contract signature In external service division, members of the Division are currently performing the purchasing of goods and services (preparing bids, negotiating with vendors, signing the contracts) which is out of responsibilities as stipulated

in the Decision of establishment of external service Division

Interviewing members of the Division shows that they are not satisfied in working and

According to Ms Cẩm

“I have never done the tender and bid before I have not been trained on tending and bidding but now I have to do the bid”

According to Mr Hoàng

“I am an engineer but now I have to prepare tender and bidding”

Interview Ms Cẩm shows that the AB Company has commercial and contract

department (“C&C”) which is in charged in tending and bidding, however there no C&C’s employees appointed as the member of Division so they refuse to work jobs relating to the Division Even though, the deputy C&C director, who must be responsible for purchasing according to procurement policy of the company, do not review and sign purchasing of Division

Division members have no experiences in preparing tendering/bidding/contract

document for purchasing Before working as a planning officer of the P&P department and members of the Division, Ms Cẩm had worked as secretary for Operation department It causes that purchasing procedure is not compliance with procurement procedure of the AB Company

The interview shows that members of division have difficulties in working According

to McCullough14, responsibility of manager is to train their employees for well performance Staffs cannot be expected to carry out the work well without training Training must be undertaken for one of the following reasons (i) staffs are doing the works incorrectly (ii) staffs cannot do the works at all (iii) staffs cannot do the work well enough

Moreover, employees’ performance is just good when the right person is assigned for the right job, and the right job is delegated for the right person15

D PROBLEM IDENTIFICATION

1 Manpower cost

According to Ms Cẩm, the new division includes nine members with organization chart as below These persons will manage the division’s general affairs Relating to the maintenance works, they will be conducted by alternate engineers offshore who are not included in the division manpower list

Working Level Managing Level

Division

members

Source: External Division’s data

Figure 3: External division’s organization chart

All members have their own existing affairs as job descriptions in the role of the

Operator, besides they also take part in new affairs from the new established division which

is external division Monthly all members of the division fill in their timesheet online

(Attachment 3_form of timesheet), there is a row named OTHER PROJECT where

members of external to fill in their timeline for external division According to Ms Cẩm, people do not timeline the time for the division because the division has no clear policy for salary payment and the Division has no guidance on filling timesheet Currently, salaries of members of division are paid and recorded in manpower expenses of the Operator

According to Ms Cầu:

“The manpower cost cannot be allocated to the Division because each members of the division signed labor contract with the AB Company in the role as Branch of PVN which the branch can do many jobs other than the job of the Operator.”

No member of division timelines the timesheet of the division because they are

worried whether they are paid if they timeline for the division Mr Hoàng said:

“I have confused how to timeline my timesheet, whether my salary payment is effected if I timeline

my time for other project, while the Division do not have clear policy for salary”

Offshore maintenance work are carried out by offshore engineer also are difficult in timeline their timesheet because their labor contracts are full time for the Operator during the offshore time

2 Material cost

According to Mr Hoàng, “procurement and stock of material of Division is referred to the Operators’ policy” that means the Division should annually set the material procurement plan to clearly have their own material for maintaining external works of the Division However, actually the Division is using material of Operator to perform the maintenance works because the Division doesn’t have their material management system and their clear procurement and material management system They cannot procure or store their own material, as above said the Division has to follow Operator’s policy which is complicated and not suitable for a small division like external service division For this reason, from

2016 the Division has carried out several maintenance activities but they have not procured any material but borrowed from the Operator No clear policy for material management policy between the Operator and Division causes all material cost recorded into Operator’s expense That the offshore works were not clearly breakdown by the Division leads

engineers carried out the maintenance works did not split or record actual materials used for Division’s job and Operator’s job

3 Policy and procedure development

A policy is a guiding principle used to set direction in an organization while

a procedure is a series of steps to be followed as a consistent and repetitive approach to accomplish an end result

According to Mr Tuấn Anh – P&P manager, member of the division, the division was established in Jul 2015 but until beginning of 2016, the finalized policy and procedure for

of the company According to Mr Tuấn Anh, the main person in charge in composing this policy

“I cannot be aware the legal operation of the Division against the Operator as well as the future of the Division.”

For this reason, most terms in the policy are referred to the current policy of the

Operator which is too complicated for the small division to apply The existing policy is set out for the operator (Operator of PVN and GP) while the division operates as the branch of PVN position

a Policy and procedure development process

Based on interview of Mr Tuấn Anh, the process of development the existing policy and procedure of the Division is summarized as follows:

Step 1: Mr Tuấn Anh (P&P general manager – member of the Division) composed a

draft of the policy and procedure

Step 2: He sent the policy and procedure to department to review and modify their

relating parts (commercial and contract department, financial and accounting department, human resource department)

Step 3: After departments had revised and modified their parts, he finalized and sent

the policy and procedure to get directors’ approval

Step 4: After the policy and procedure was approved, he sent out the policy to

department

After listening to the steps of policy and procedure development, the author had taken the more detailed interviews and known that during the policy and procedure development:

i) no meeting was held between departments, ii) no team was established to prepare the policy and procedure iii) no comment and revise after the first finalization

b Difficulties in applying the current policy and procedure of Division

The existing policy cause many conflicts when conducting the divisional business For example, pursuant to the existing commercial procedure, all tender plans/ ITBs must be approved by Deputy Director of commercial and contract, but she is not a member of the division so she are not allowed to sign on any divisional documents including bidding

documents

Other problem on policy is that there is no clear policy relating to allowances

compensating to divisional personnel as well as guidance for timesheet filling For this reason, personnel have to work both exiting job and divisional business without any

allowances while the Division does not have any source document to record their labor cost

On another hand, this unclear policy and procedure causes employees work without

motivation and dissatisfaction

Pursuant to Ms Cẩm, the difficulties of the division is a lack of clear and detailed policy and procedures which cause the cost of the division cannot be recorded, the current costs only relates to workshop/ entertainment Material, equipment and direct manpower

costs of the divisional operation to maintain the contract’s system cannot be separated from the existing company business because there is no official policy for the division to record these costs

4 Problem definition and consequence

Policy and procedure

The policies of an organization are the clear, concise statements of the parameters by which an organization conducts its business In essence, the policies are the rules that staff abide by as they carry out their various responsibilities

The procedures are the instructions or steps that describe how to complete a task or do

a job Procedures are important when a deviation from the process will result in rework or a poorly done product, or for a highly complicated and complex task Procedures become overkill when they are created for simple tasks or tasks that can truly be done effectively in

a variety of ways to achieve the same outcome

Policies and procedures are essential for an organization to keep everyone operating from the same core principles and completing their tasks in the way that assures a sound, dependable product each time The only caution in creating a set of policies and

procedures: be careful to avoid overkill

Policies and procedures can help prevent workplace incidents by making sure the proper safety measures are in place If an incident does take place, good policies and

procedures help right the ship and get operations back to normal as quickly as possible Policies provide framework and structure for the organization Every company has a set of policy which stipulates and covers many areas of the company When consistently

enforced, they contribute to the development of the company culture If the organization has strong policies on ethics, for instance, they can help instill the importance of integrity and ethical behaviors in employees Policies also serve as a way for management to

communicate behavioral expectations to employees Good policies reinforce practices that benefit the workplace and customers; they don't arbitrarily and unnecessarily restrict

employee freedoms and decision-making

Another definition of policies and procedures is that policies and procedures are

designed to influence and determine all major decisions and actions, and all activities take place within the boundaries set by them Procedures are the specific methods employed to express policies in action in day-to-day operations of the organization

Policies and procedures are meant to provide guidance and clarity so that employees have an understanding of processes and guidelines for their work Unclear policies and procedures create confusion during implementation There is also the possibility that the policy and procedures are too simple; that is, they are too broad and general to suit a

specific situation If your procedures are not directly to the point and don not offer

information specific to the process employees are working on, they will not be used

Consequence of unclear policy and procedure to the Division

Currently, the Division is using assets and human resource of the Operator All these assets of the operator were invested by both PVN and GP therefore profits after liability should be shared according to investment percentage rather than only transferred to PVN

The revenue of the division is small but the division is now operating with the unclear policy/ procedures or does not correctly pursuant to the existing procedures/ policies may cause legal problem in the future

Operation of the external supply service division with the unclear profit sharing policy and without approval from GP will lead negative image with GP if they are aware of this operation GP can terminate the agreement for AB Company to be an operator of this

project because AB Company has operated the project not in compliance with the

agreement of the Operator

5 Initial effect map

Unclear policy &

procedure

Not enough accounting and procurement document

Incorrect financial statement

No material cost

No labor cost

No document for inventory

No timesheet

E CAUSE VALIDATION

Taking the depth interview with manager and members of the Division seeks reasons causing the problem of the Division

1 Problem during initial policy and procedure development of the division

1.1 Lack of analysis and research before policy development

Some studies have proved that analysis and research are an important part of policy development The purpose of analysis and research is for issue identification and policy definition Analysis and research help to identify whether legislative or other external regulations will impact on the policy proposal

This step will help the policymaker understand current policies, exiting issues, areas required to put into the policy so as to reducing expenditure and needless time and consistency In the case of the division, the author focuses to analysis the lack of

understanding or current policy and procedure of the company It leads to the

inconsistence between the existing policy of the company and the policy of the division

According to Mr Tuấn Anh, the person was in charge of preparing policy of the division

“The company has a lot of policies and procedures, each department has their own policies and procedures” and “I have difficulties in preparing policy and procedure of the Division since I cannot understanding policy of other department” said Mr Tuan Anh

That the company and each department have many policies and procedures

causing difficulties in preparing the policy and procedure of the Division, only one

person in charge cannot understand all issues, requirements and procedures of other

departments To make a policy, the policy makers must understand the current company policy and procedure This will ensure that the new process will not quickly become obsolete.12 However, in the case of the Division, Mr Tuấn Anh, the person in charge of developing a new policy have a limited understanding current policy and procedure of the company These issues caused the new policy of the division inconsistent with related policy of the company

Procedure for labor cost:

According to Ms Cầu, legal basis for employees working for the Operator can carry out works of the division is not identified Employees sign the labor contracts with

AB Company who is the operator of AB project It is not compliance with the parties’ agreements if AB Company uses these staffs for their own benefit of AB Company The policy makers need to analysis and research to clearly stipulate and guide users the

implementation of filling timesheet as well as recording labor cost

Procedure for material:

According to Mr Hoàng, material utilized for the Division was purchased by the Operator at the beginning operation of the division However, supporting documents for these materials were not supplied because the policy of the division does not clearly stipulate procedure for material using so as material of the division was not recorded

According to the Division’s policy, material and inventory management is

referred to inventory and material of the Operator However, the operator has their own system to management off material and inventory, while the Division has no system It

These problems show that the policy maker was lack of research and understand issues and operation of mechanism of the Operator and the Division before policy

development

Understanding policy processes is relatively complex due to multifaceted

set of interacting elements16.According Rathe17, the other issue in preparing policy and procedure is that the policy leaders, responsible for policy-writing procedure are limited

in the area of understanding of the issues

Lack of understanding of process, procedure and existing situation during policy

development is one of the reasons to cause the policy prepared sketchily

According to Shockley7, the more detailed and prescriptive policies and practices become, the more the organization communicates a distrust of stakeholders The policy of the Division is too general and not specific causing difficulties during the

implementation Divisions’ members are confusing in applying the policy

Ms Cầu said

“The labor cost cannot be recorded and made payment because the policy is not stipulated clearly the allowance or rate to pay.”

Or

“Material expense cannot records because there is no document such as material issue ticket,

purchasing invoice, purchasing contract,…”

That the current policy of the division is generally stipulated and much referred to the current policy of the company which cannot be applied cause difficulties in recoding and booking expense for the Division

Unclear policy and procedure relating to labor and material expenses causes

wrong recording in financial reporting and impact the interest of relating parties

According to Ms Cẩm, difficulties of the division when preparing policy and procedure is that there are no company in both positions of Operator and Branch like AB Company For that, there is no policy and procedure to be referred There are many

agreements which company must be complied therefore it is easy for these agreement and policy to be conflicted each other The policy only stipulates general term and almost referred to the current complicated policy and procedure of the company which are not suitable for the Division

1.2 Lack of communication during policy formulation process

Through the interview Mr Phong, to avoid questions from GP, currently AB has not informed GP the operation of the Division Good communication between relating parties will give an open policy and clear operation mechanism for the Division The clear and transparent information will support the Division when allocating expense and cost The more policies and procedures empower employees to "do what is right," the more trust is supported7

Mr Tuấn Anh quoted “no meeting was held during the policy and procedure

development and there is no team establishment” prove the lack of communication as well as identification of the responsibility of person in charge during formulation process

According to Randolph, Susan2, first step is to determine who will involve and assist in the processby whichthe Division can define the responsibility of each person in

policy and procedures are7 Bywhich people can share their knowledge and experience relating to their fields

At AB Company, the lead person of the Division has drafted the policy and sent to department managers to review and comments before the final policy was issued

According to Mr Hoàng, no meeting or discussion is held to review and comment the policy and procedure People almost agreed with the draft version The formulation process lacked of the cross check between departments causing conflict during the

implementation

2 Lack of periodical review, update of policy

According to Randolph and Susan2 the policy and procedure should be reviewed periodically and the company should set up a specified time (such as annually,

quarterly…) An outdated procedure is the same as no procedure12 defines review of policy/procedure as important as prepare a new policy/procedure

Lord6 stated that:

“The board of a company and its senior management team need to be committed to creating the appropriate culture by regularly monitoring and reviewing the policies and procedures; undertaking regular and thorough risk assessments; updating the policies and procedures to address any findings; and clearly communicating these policies and procedures”

Through the interview, it is known that the policy of the Division is effective since

2016 The depth interview with Ms Cẩm and Mr Hoang showed that the policy and procedure of the Division have not been reviewed although there are some problem occurred during the operation of Division Lack of the specific financial procedure causes

many cost, expense cannot be recorded by the accounting department Lack of the

specific procurement procedure causes much material and equipment cannot be bought for the Division Lack of human and resource procedure causes member of Division cannot timeline their working time and the allowance cannot be paid

Shockley7 stated that:

“Consider reviewing hiring policies and practices, performance feedback, compensation,

disciplinary processes, benefits, vendor policies and practices, customer/ client relationships, financial reporting, media relations, and confidentiality of private information to ensure that these

organizational policies meet the above criteria.”

Develop a system to regularly review, modify, and update policies and procedures

is very important Policies and procedures should be reviewed periodically based on a specified time frame2 to update changes and have appropriate modification None of items or sections in Division’s policy reflects identification when and how to review the policy Outdated policies can leave the company at risk Old policies may fail to comply with new laws and regulations They may not address new systems or technology, which can result in inconsistent practices

In most company, there is often no specific communication method for advising

on policy matters, nor is there a repository where they are stored4 which causes out of date of policy and conflict during using the policy and procedure.

3 Updated cause and effect map

Unclear policy &

procedure

Financial statement does not reflect adequate expenses

No supporting document

No material cost

No labor cost

Problem on initial policy and procedure development

Unsatisfied employees Core problem

Problem of initial policy and procedure development can be resolved during periodical review and update of the policy To avoid these problems continuing to occur during the review process, the company should carefully analysis the issues of the policy and procedure as well as well communication during the review policy to have a completely policy which are suitable and applicable

The causes during initial policy and procedure development are analyzed to seek for reasons causing unclear policy and procedure of the Division Although this period was passed, it is useful for the review period to figure out these issues The review period

is only effective and applicable when it solves existing issues of the initial development period including:

- Lack of analysis and research and research before policy development

- Lack of communication during policy formulation process

- Too general policy and procedure

The periodical review of the policy will help the company to modify required changes of the company as well as review and modify existing issues of the policy and procedure From this, the main cause of the unclear policy and procedure of the Division

is to solve the issue of lack of periodical review of the policy and procedure In the solution, based on information from literature review as well as taking interview staffs of Division, the author will figure out alternative solution for the main cause of the problem

of lack of periodical review and update of policy and procedure

4 Final cause and effect map

Unclear policy &

procedure

Financial statement does not reflect adequate expenses

No supporting document

No material cost

No labor cost Lack of periodical

review, update of

the policy

Work conflict

Unsatisfied employees Core problem

Main cause

F SOLUTION

In consideration of situation of the Division, the thesis gives alternative solutions on the main cause of unclear policy and procedure which is the lack of review of the policy and procedure The author hopes that the alternative solutions are more suitable with the current operation of the Division The policy and procedure should determine and

stipulate the terms relating which time to review, revise and modify the policy and

procedure to update new suitable terms

To solve the main cause (lack of review of the policy and procedure) of the problem (unclear policy and procedure), the author suggest that, the Division should improve analysis and research before conducting the periodical review, so that they know exactly what they need to modify and update for facilitate requirements of users More over the author suggest that the Division should enhance the communication during the review of policy which is one of the causes at initial policy and procedure development

1 Improve analysis and research and enhance communication

According to ATCA, policies and procedures are only as effective as they are able

to be applied, and therefore known and understood by all relevant personnel, and

regularly reviewed and/or updated11 To help other employees from other departments especially newcomers understanding policy and procedure, it is suggested that each department should prepare presentations or a summary to introduce and guide and train their procedures to relevant personnel as well as newcomers The presentation includes information as below

- Function of the department

- List of policy and procedure of the department

- Guidance of using policy and procedure

- The contact point for enquiries According to Randolph and Susan2, the team for preparing policy and procedure should be determined By working together, team members can learn to write effective policies and procedures, engage in broader, creative thinking, and support the team

concept Mr Tuan Anh agreed that the Division should establish a policy writing team with members from different departments who understand policy and procedure of their department The establishment of the policy maker team will help the decision to solve both problems of lack of communication during policy formulation process and lack of understanding current policy of the company

Getting the right members involved in writing policy and procedure is crucial to success Tracy12 suggested the required players including

- Senior management to assure everyone involved will accept the policy/ procedures

- A "champion" to provide overall project direction and support, allocate resources, act as a liaison to senior management and manage the area the policy/procedure most affects

- A project manager to manage the timeline and balance interests and objectives of the team

- A team that consists of a cross-functional group of individuals directly affected by the policy/procedure to provide feedback on

the policy/procedure Team members may have knowledge of current practices and could be the ultimate users They will be accountable and responsible for maintaining compliance for the

new policy and procedure

Writing members will be in charged for terms relating to their department’s areas Pursuant to the current policy of the Division and specify interview Mr Tuấn Anh to clear identify responsibilities of writing members The author suggests to add the

responsibilities of writing members as a part of establishment decision of the policy maker team as below When the works and responsibilities are clear, it effectively

enhances the communication during policy formulation process during working between members of the division

Writing member

from department Responsibilities in policy writing

Coordinating department

 To prepare Section 1 - General Terms

- The basis of the policy

- Vision and mission

 To prepare Section II – Planning the plan

- General plan of the Division

- Annual plan of the Division

 To prepare Section III – Provision of external

All Depts

services

- Procedure for preparing tender and bidding

- How to perform the external services

- Procurement and purchasing

 To prepare Section V – General management

- General reports on operation of the Division

- Evaluation of the Division’s performance

- Award and Punishment

 To prepare Section VII – Policy review &

modification

- Procedure for policy reviewing and modification

C&C Dept C&C Dept, OPS Dept C&C Dept, OPS Dept

All Depts All Depts Admin & HR Dept

- How to perform the external services

- Procurement and purchasing

P&P Dept P&P Dept, OPS Dept P&P Dept, OPS Dept

Operation Dept

(OPS Dept)

 To prepare Section II – Planning the plan

- Annual plan of the Division

 To prepare Section III – Provision of external services

- How to perform the external services

- Procurement and purchasing (Scope of work part)

P&P Dept

P&P Dept P&P Dept, C&C Dept

Admin & HR Dept  To prepare Section VI – HR and P&P Dept

(HR Dept) Administration

- Administration, decisions, legal papers

- Personnel

- Salary and allowance

 To prepare Section V – General management

- Award and Punishment

- Revenue and Cost

- Assets and inventory management

- Financial reporting

P&P Dept OPS Dept, HR Dept OPS Dept

Finally, the solution for lack of communication during policy formulation process and lack of understanding of current policy and procedure of the company will be solved when the division is to establish a policy making team with members from various

departments who are departmental representatives and comprehensively understand the policy and procedure of their department This team is suggested to perform the

periodical review of the policy and procedure of the division for effective implementation