Solutions for lack of empowerment at VEAS

Below are different teams who are Board of Directors Human resources & Administration Department Sales Department Operation – Technical Department Marketing Department Project Team 1 Pr

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Ly Bich Van

SOLUTIONS FOR LACK OF EMPOWERMENT

AT VEAS

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2019

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Ly Bich Van

SOLUTIONS FOR LACK OF EMPOWERMENT

AT VEAS

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: DR LE THI THANH XUAN

Ho Chi Minh City – Year 2019

Table of Contents

EXECUTIVE SUMMARY 1

CHAPTER 1: INTRODUCTION 3

CHAPTER 2: PROBLEM ANALYSIS 8

2.1 Symptom 1 – Employee dissatisfaction 8

2.2 Symptom 2 – High voluntary turnover rate 10

CHAPTER 3: PROBLEM IDENTIFICATION 14

3.1 Potential problems 14

3.1.1 Relationship at workplace 15

3.1.2 Salary 17

3.1.3 Empowerment 19

3.2 Initial Symptom-Potential Problem map 21

3.3 Main problem 22

CHAPTER 4: CONSEQUENCES 24

4.1 Time consuming 24

4.2 Cost consuming 27

4.2.1 Tangible cost 27

4.2.2 Intangible cost 30

4.2.2.1 Loss of experience 30

4.2.2.2 Loss of customers 30

4.2.2.3 Low productivity 30

CHAPTER 5: CAUSE IDENTIFICATION 33

5.1 Potential causes 33

5.1.1 Leadership style 33

5.1.2 Policies 35

5.1.3 Procedures 36

5.2 Initial Cause-Effect map 37

5.3 Main cause 37

5.4 Final Cause-Effect map 40

CHAPTER 6: ALTERNATIVE SOLUTIONS & ACTION PLANS 41

6.1 Change policies and procedures 41

6.2 Increase salary and benefit 41

6.3 Change leadership style 42

6.4 Solution justification 44

6.5 Action plans 46

CHAPTER 7: CONCLUSION 53

CHAPTER 8: SUPPORTING INFORMATION 54

8.1 Interview Transcript 54

8.2 Methodology 90

REFERENCE 91

APPENDIX 96

List of Figures Figure 1.1 Organizational structure of VEAS 5

Figure 2.1 Percentage of employees agree that they feel satisfied when working at company 9

Figure 2.2 Percentage of employees agree that they want to stay at the company for a long time 10 Figure 2.3 VEAS’s turnover rate from 2016 to 2018 11

Figure 2.4 VEAS’s turnover rate among departments in 2018 12

Figure 3.1 Reasons for employee dissatisfaction 15

Figure 3.2 Sales employee’s opinion for relationship at workplace 16

Figure 3.3 Sales employee’s opinion for salary 18

Figure 3.4 Sales employee’s opinion for the empowerment 21

Figure 4.1 Average time to hire new employees at VEAS 25

Figure 4.2 Time to hire new employees for Sales Department 26

Figure 4.3 VEAS's tangible cost in 2018 27

Figure 4.4 Departure cost at VEAS in 2018 28

Figure 4.5 Replacement cost at VEAS in 2018 29

Figure 4.6 Percentage of sales department’s employees agree that they get motivation at work 31

Figure 4.7 Compliance ratio between departments at VEAS in 2018 32

Figure 5.1 Potential causes of lack of empowerment at VEAS 38

Figure 6.1 The percentage of employees agrees to change from transactional to transformational leadership style 44

Figure 6.2 Employees’ opinion regarding to solution justification 45

List of Tables Table 2.1 Number of employees participating in the survey 9

Table 6.1 Transactional vs Transformational leadership style 43

EXECUTIVE SUMMARY

This study was conducted at VEAS, in Ho Chi Minh City VEAS is the company which specializes in holding international trade exhibitions, but it is facing the problem of high voluntary turnover rate and high percentage of dissatisfied employees The purpose of research proposal is to find the causes and suggest possible solutions for company’s current issue It comprises of eight chapters, where the first chapter gives an overview of the company In chapter two, three and four mention about problem analysis, problem identification and its consequences to the company While chapter five figures out cause identification, some alternative solutions and action plans are clearly discussed in the next chapter Conclusion of the research and supporting information are listed in the last two chapters

The paper specifically stays focused on identifying and examining the causes and solutions of lacking of empowerment of VEAS Both probability and non- probability sampling methods of data collection were employed in this study A total number of 40 respondents will be assessed Moreover, structured and unstructured questionnaires were used to get the information from selected departments of the organization

Furthermore, personal observation and interviews will be applied in collecting information and presented in forms of percentage to show the relationship of the interviewees to find out the main cause of lacking of empowerment

The research paper thoroughly shows the current symptoms of VEAS which are strong dissatisfaction of employees and a really high voluntary turnover rate, especially at sales department who helps company to achieve revenue target If it is not solved, bad consequences will considerably affect Some potential problems are found out such as lack of empowerment, relationship at work place and unsatisfactory salary with the main problem is the first issue – lack of empowerment The study about the causes of problem was also conducted with two potential causes – policies and procedures and leadership style Deep research has concluded that cumbersome policies and procedures are the main cause of VEAS Some alternative solutions; therefore, are suggested to solve the problems like changing leadership style, changing

policies and procedures and increasing salary and benefit As a result, changing leadership style is recommended to implement based on company resources, its effective result and time to deploy

CHAPTER 1: INTRODUCTION

Minh Vi Exhibition and Advertisement Services Co., Ltd (VEAS) is one of the key International Exhibitions and Business to Business Conferences Organizers in South East Asia with the company head office in Tan Binh District, Ho Chi Minh City – Vietnam and possesses representative offices in the region, including Myanmar, Thailand and Cambodia

VEAS was founded in 2007 It has successfully accomplished and organized many stunning corporate regional events, which has opened various potential opportunities for different regional and international companies

VEAS plays an important and fundamental role in building the corporate connections and convincing establishments for partnership between Vietnamese and International enterprises through their provided dedication and professional services and solutions VEAS’s services cover a large variety of sectors from agriculture, livestock, aquaculture, beauty and aesthetics, pharmaceutics to coatings, paper, rubber and tyre, plastics, garment and textile and many more

The company has clear vision and values which indicate that its dedication would bring the customers and partners valuable events where they can get memorable experience and long-term benefits Moreover, the organization’s aim is to provide its related parties with opportunities for recognizing market potentials through latest market and technology trends, meeting various business partners and promoting their cooperation

Specializing in enhancing local and global business cooperation through interactive events, VEAS is highly appreciated to bring professionalism, quality and innovative ideas to its clients from conception to execution The company plays a key role as an international exhibition management and organizer, business to business events and professional seminar conference management and organizer VEAS provides platforms for investors, customers and vendors to connect, exchange information as well as expand their market Remarkably, what makes company special

when accompanying with clients is its diversity in professional services At VEAS, people provide events from various sectors to meet diverse clients’ demands including personal and healthcare industry, agricultural industry, paper – rubber – plastics – coating industry, industrial production and so on

Some featured events can be listed down such as Ildex Vietnam – the biannual large scale exhibition where local and international firms experience new technology and update latest market trends of livestock industry; Cosmobeaute Vietnam – the largest beauty show in Vietnam with more than 10-year long standing history and the presence of premium brands from over the world; HortEx Vietnam – the annual large scale exhibition where local and international firms experience new technology and update latest market trends of horticultural and floricultural production and processing technology, the most promising sectors of the Vietnamese economy In addition, the company is also successful abroad with the series of biggest international exhibition for agriculture industry in Myanmar and Cambodia where enterprises can explore business opportunities and achieve better market understanding or the largest international beauty trade fair in Myanmar and Cambodia to bring domestic and international enterprises in cosmetics-related industries together for networking and expanding businesses

In general, VEAS is making efforts to raise the bar through its continuous improvements on professional services The business has successfully organized more than 500 events with over 9,000 exhibitors from around 50 countries and attracting some 350,000 local and international visitors since its establishment The company has currently kept strong relationship with approximately 15 well-known partners in the similar industry from China, Thailand, Malaysia, Korea, India, the Netherlands, Taiwan and Turkey

VEAS has many trade customers including exhibitors and visitors, partners, suppliers for each exhibition in different industries The company always tries to develop the current holding exhibition and find the new partners to co-organizer new

exhibition in new industry to meet the demands of customers and requirements from the market

Figure 1.1 Organizational structure of VEAS (Source: Company’s report)

VEAS is a family-owned business, but it owns young, talented and experienced employees working in meetings, incentives, conferences and exhibitions (MICE) industry Therefore, although there are around 30 employees, they all work well together to support for the ambitions and success of company The organizational structure of VEAS is separated in hierarchical level with the board of directors – highest level including director and vice director Below are different teams who are

Board of Directors

Human resources

& Administration Department

Sales

Department

Operation – Technical Department

Marketing Department

Project

Team 1

Project Team 2

Project Manager

Project Supervisor

Project Executive

Operation Manager

Operation Supervisor

Operation Executive

Marketing Manager

Marketing Executive

Content Marketing

Finance – Accounting Department

Accounting Manager

Accountant

in charge for different tasks to support for the exhibitions The main team who takes the largest responsibilities for the final results of each exhibition is project team or sales team In the past, there were 4 project teams which were called project team 1, project team 2, project team 3 and business development team While the first 3 teams were in charge of the company’s current exhibitions, the business development team tried to support the organization to develop more new exhibitions However, because

of some adjustment of the organization structure, there are only two project teams now and each team has 5 or 6 members managing some specific exhibitions and the director will be the one who will decide to open new exhibition The project manager will be the main contact for each team, and then there are project supervisor and project executives Their duties are to find customers to meet the target revenues and manage for the whole shows The next two teams supporting the most for project teams are marketing team and operation team Marketing team has five members with the marketing manager, marketing executives and content marketing to help for the marketing materials, social networks and so on to take the most advantages of these channels to promote for the company’s events Operation team; however, will be in charge for designing, constructing booths and working mainly with constructors when onsite with the operation manager on top and below are operation supervisor and operation executives Moreover, there is support team or considered as call center to send the invitation email and make phone call to introduce the event to customers and try to persuade them to participate the events or visit the exhibitions Other last teams which are also important are human resource (HR) – administration team and accounting team The former team includes 1 HR and 1 administrator The latter team includes 4 members which are accounting manager and accountants which support in general finance and operation cash The assignment of HR is to recruit and find suitable candidates for vacant positions In addition, administrator does general tasks and supports the remaining teams when they require for stationery or other stuff

In 2018, there are a total of 40 employees in VEAS and the number of employees in sales department is 11 people which accounts for 27.5 percent The company’s advantages are the customer-oriented service, professional service

provided, and especially B2B matchmaking service Direct competitors of VEAS are companies who organize the exhibitions in the same industry as VEAS does such as UBM UBM has two largest beauty exhibitions that directly compete with Cosmobeaute Vietnam of VEAS The company total revenue in 2017 was 32 billion VND; however, the revenue in 2018 decreased and the number was fewer than 25 percent in comparison with 2017

CHAPTER 2: PROBLEM ANALYSIS 2.1 Symptom 1 – Employee dissatisfaction

Although the company still works well, it can be seen that the employees show some not good attitude They tend not to contribute 100% of what they have for the tasks People go to work late and leave the office early and they are not willing to work overtime, especially in the high season The working hours for all employees are from 8AM to 5PM, but people are at the office around 8.30AM Some employees are even unacceptably late because they come to work at 9.30AM or even 10AM Furthermore, although people are at work late, they finish around 4.30PM or 5PM regardless of job being done or not In addition, when the exhibition nearly takes place, all employees have to work overtime to well prepare for the event As per the director’s notice, all have to work all full Saturday before the show starts 3 weeks However, most employees skip the working on Saturday or they only work half day, especially the sales team who takes the main responsibility for the successful of the project does not want to work overtime to ensure work completely well covered Moreover, the cooperation among teams is not strong as before When one team needs help, people in the remaining teams do not want to give a hand to support their colleagues They only focus on their task and ignore the other one For example, nearly to the exhibition, the project team usually asks marketing team to prepare the content which is more attractive and highlights some interesting activities during exhibition to attract more visitors coming to the show, but the marketing team is not willing to support and mentions that they are also really busy with other tasks Only if the director sends the email directly to them, they will do; otherwise, they will find reasons to refuse More importantly, the employee dissatisfaction symptom mainly comes from the department that creates the revenue to support the operation of the company – the sales or project team Therefore, a research has to be investigated to find out the reason and to figure out which departments have many employees who are dissatisfied with their work A survey for all employees working at VEAS was conducted, in order to assess the satisfaction of the position they are in charge of So how employees’ dissatisfaction here is defined? Employee dissatisfaction is an employee who views their job in a negative light This may be dealt with in a positive

way by the employee by seeking to expand their role and contributions Alternatively,

it can lead to disengagement and neglect of duties (1)

Table 2.1 Number of employees participating in the survey

(Source: Research interview)

Department Number of employees

Figure 2.1 Percentage of employees agree that they feel satisfied when working

Figure 2.2 Percentage of employees agree that they want to stay at the

company for a long time

(Source: Research interview)

According to the "Overall, I feel very pleased to work here" content, the

percentage of people who agreed with this idea at VEAS is quite high (the level of consent is 30 percent, the neutral level is 43 percent) However, if only employees in sales department are counted, the rate of disagreement is very high (nearly a half),

while the consent rate is very low (18 percent) Regarding to the content "I want to

stick with the company for a long time", the similar results are achieved Therefore, a

preliminary conclusion was come up that employees who are working in the sales department are not happy with their current job, which leads them to being easily off work In this view, the remaining contents of the survey continued to be analyzed to find out what the real cause of this problem is

2.2 Symptom 2 – High voluntary turnover rate

Another symptom that can be easily observed is the rate of employees to quit their job is high Some employees even have not passed the probation period which takes only 2 months In addition, if people pass the probation period to be a full-time employee, they can only stick with company maximum 1 year Although the number

of employees leaving VEAS after only a short time is large, the department which has

a plenty of people coming in and out is project team Some people even do not get closer with their colleagues because they have to say goodbye very soon That

abnormality is necessary to be thoroughly studied to list down the cause for that issue, especially the rate of volunteer turnover level of sales department at VEAS

Voluntary turnover is a type of turnover that occurs when employees willingly choose to leave their positions Employees might choose to vacate their jobs for a variety of reasons They may feel dissatisfied with their position or their compensation, they may be seeking a career change, or they may have accepted another offer While involuntary turnover usually involves employees being let go for unsatisfactory performance, voluntary turnover often involves competent employees leaving their positions As a result, voluntary turnover can be very expensive for an organization because of the costs associated with recruiting and hiring a new employee (2)

Figure 2.3 VEAS’s turnover rate from 2016 to 2018

(Source: Company’s report) According to the statistics of the above table, to meet the requirements of the company's operation development, the number of employees working at VEAS has steadily increased in the period 2016-2018 However, the project department - one of the departments playing a key role in business operations at VEAS - has no change in

the number of personnel, even decreased in 2016 After the annual voluntary leave rate in VEAS and its own sales department (the number of employees who are off work annually / the total number of employees of the company or department are taken) were measured, it can be found out that the average annual leave rate of sales department is much higher than the average rate of absenteeism of VEAS (the difference is 2.5-3 times, and the gap is getting bigger and bigger over the years)

In the same way, the average voluntary leave rate of 2018 for other departments in VEAS was also calculated, to see if there were any unusual points, the results were given as follows:

Figure 2.4 VEAS’s turnover rate among departments in 2018 (Source: Company’s report)

The number given is not so much different when compared to the 2018 voluntary leave rate in VEAS (even some departments have lower rates) There are 4 departments which have high percentage of leaving rate, consisting of project team, administration – accounting team, marketing team and operation team with the percentage of 40, 22, 18.2 and 13 respectively It was an evident that there is a significant gap between the voluntary leave rate in the sales department and the other departments This considerable difference is considered a serious problem for the company now Therefore, evaluation and analysis are necessary to find the cause and solution

CHAPTER 3: PROBLEM IDENTIFICATION 3.1 Potential problems

Job satisfaction is an employees’ attitude which is a consequence of many satisfactions and dissatisfactions with the job (2) Job satisfaction is a necessary pointer of how an individual feels regarding of the job and indicates how much they are satisfied with their job (3) The level of satisfaction of individuals has a strong correlation with the development of organization (4) and a level of employee turnover (5) Therefore, keeping individuals happy and satisfied with their present job would be

a leading priority for every organization

According to some researches, there are many reasons why employees can become disappointed with their jobs and resign, including lack of recognition, high stress, lack of communication within the company, or limited opportunity for promotion Moreover, Job Descriptive Index (JDI) is seen as one of the most widely used scales, which evaluates the work, salary, promotion opportunities, administration and colleagues (6) In 2003, Smith et al (6) also considered six factors of job satisfaction which are empowerment, job accomplishment, security, pay, team work and work facilitation

From the above symptoms, most problems come from sales team with negative responses Therefore, in order to find the cause and then solutions to solve company’s current problem, the writer strongly focuses on project team or sales department Based on the literature review, some interviews with the members of project team were collected and it can be seen from the graph that there are many reasons resulting

in high turnover rate, in which the 3 main reasons come from lack of empowerment (46 percent), relationship at workplace (24 percent) and salary (22 percent) Other

reasons accounts for a quite small percentage

Figure 3.1 Reasons for employee dissatisfaction

(Source: Research interview)

3.1.1 Relationship at workplace

Deeper interviews were conducted to completely understand each reason which leads to employee dissatisfaction There were more conducted interviews with other departments that work closely to the team such as operation team, marketing team and supporting team

There is somehow a shortage of communication among departments When one department gets update information from the director, they only keep and do the job, but do not transfer to the other related teams though this team’s action will directly affect the completion time of others Dung (male, 25 years, and project executive) indicates the poor communication of employees

“The problem that I think the company exists and needs to overcome is lack of information among employees When there is new information, the team leader or board of director does not promptly notify staff to update On the other hand, when there is an incident, the information will be officially announced.”

Moreover, colleagues or team member supports each other if people need others’ help for their task However, people sometimes keep things for themselves like technique to get customers easier and they are not willing to share their strengths with

each other to improve the team’s performance Relationship at workplace relates to any relationship that one person has with colleagues such as a supervisor-subordinate, peer or mentoring relationship (7) Positive co-worker relations describe helping behavior and support among employees (8) Fiedler et al (9) believed that relationship

of coworkers is the built-up friendship, acceptance, and loyalty between the members

of a team, which also indicates the level of the subordinates' confidence, trust, and respect in their leaders (10) Hackett et al (11) and Bass (12) showed in their researches that relationship of coworkers affects job satisfaction, which is the employees' overall assessment on their jobs Nevertheless, although people in sales department indicate maintaining good interaction with colleagues is now an issue, nearly half of the interviewees recognize the existence of accepted extent of attributes affecting the contact among employees in this team (Mr Hai, 28 years, and former project executive) showed some acceptable level of the working place

“The working environment at VEAS is quite friendly It is difficult to avoid conflicts in the process of working between members in the team and with other departments, but after the problem was solved, we still enjoyed drinking together In general, I am satisfied with the working environment at VEAS.”

Figure 3.2 Sales employee’s opinion for relationship at workplace

(Source: Research interview)

If this problem is not solved immediately, there will be some negative effects Firstly, as workplace environments are naturally competitive, real social relationships are also hard to achieve Evidence proved that loneliness at work is a consequence of competitive and uncooperative company climate (13) Secondly, previous research figures out that people tend to look for the connection and recognition in companies It will reduce the employees’ commitment and increase their intention to quit the job and they are not probable to have the best performance (14)

3.1.2 Salary

Previous researches have also illustrated that pay affects job satisfaction (15, 16,

17, 18 and 19) Workers expect a certain level of monetary rewards for their contribution to the organization, and pay forms a quantitative measure of an employee’s worth Companies need to provide attractive, fair and impartial pay to win the most talented employees The pay’s role in appealing and retaining people at work has been acknowledged for many years and is increasingly vital in today’s competitive environment where strategic compensation planning is necessary (20) Judge et al (21) also conducted extensive research to prove that pay satisfaction positively influence general job satisfaction, motivation and behavior, performance, and result in less absenteeism and high turnover rate of employee

Although some people in project team mentioned salary as one of the factors which make them dissatisfied, deeper interviews have concluded that it may not an important reason that leads to the consequence Phuc (male, 35 years, and former project manager) confirmed salary was not the reason to make him leave

“Income at VEAS is quite average The company also has welfare policies I was not really happy about my income at VEAS, but it did not really affect my decision to leave.”

As per the salary base of VEAS, the salary of project team is not much as high

as other departments, but it still reaches the average base of the industry Moreover, it

is general payment for sales or project team because they can increase their salary by commission The more customers that people in sales team can get, the higher

payment that they will be able to receive (Mr Hai, 28 years, and former project executive) did not consider salary as the problem

“I think it is not high, but the incentive is higher than the companies I used to work for In addition, VEAS also has insurance for employees and gasoline allowance Overall, VEAS also pays employees not badly.”

It can be indicated that the interview results of salary have the same pattern with the results of relationship at workplace above which is also received high approval or no ideas feedback when being asked about some features sticking to the payment Nearly half of them agree that what they contribute deserves with how they are paid and that their payment is reviewed periodically Based on the responses of managers and employees, it seems that they both do not satisfy with their current salary at VEAS However, because company also has other benefit policies, they do not consider salary as an important problem now and accept it to some extent They also believe that the benefit can compensate for the low salary they receive

Figure 3.3 Sales employee’s opinion for salary

(Source: Research interview)

Compensation package is directly connected to retention because everyone is doing their best to reach the top performers Many young employees nowadays have figured out that switching jobs helps them receive the higher pay Therefore, workers may find unhappiness with their current jobs which can lead to low productivity, absenteeism and attrition Moreover, when people think that they are underpaid at work, they might not be motivated to work harder anymore and they believe it should

be better for them to spend time on personal things Consequently, salary or compensation has the strong impacts on employee performance in term of retention, satisfaction, productivity and motivation and the lack of above factors will result in poor performance of workers and company’s operation results (22)

3.1.3 Empowerment

In general terms, the definition of empowerment can be considered as a practice collection of transferring information, delegating authority and increasing employee autonomy (23) (24) believed that motivating and giving permission for each individual to be personally responsible for the improvement of the way they complete the tasks and contribute to the success of organization are employee empowerment Empowering employees is not easy though, because it requires that a company and their management be committed to continuous employee development (25) It means fostering an environment of trust and helping employees learn from successes and analyze failures (26) Empowerment is one of the most effective ways

to allow employees at all levels to use their creative ability to improve the performance of the organization they work and the quality of their own working lives Empowerment is a type of risk management process, which empowers culture to develop information in the form of common vision, clear goals, boundaries for decision making and the results of efforts and cooperation Their movements for the whole form of training and experience are developed; resources, or the ability to get them when needed to be effective in their work, are provided; and support in the form

of mentoring, cultural support and risk-taking encouragement (27)

For interview results, the empowerment factor received a diverse negative feedback of employees when most people think about the bad effects of lack of

empowerment About half of them said that the supervisor does not listen supportive ideas from employees and approximately 37 percent think that the supervisor does not respect employee’s decisions In addition, the same percentage strongly disagrees with the aspect that the leader does not believe in their team members and does not trust their capability According to Mr Dung (project executive), among many issues, the lack of decision-making ability in the range of employee’s right is the most serious problem

“Most of my work must be through team leader and team leader again through the head and superior with higher authority resulting in delays in decision making and even leads to bad customer service, making them unhappy.”

Even the former project executive asserted that limited employee power when working is the main reason why he left the company

“I did not know how the rest of the departments were, but it was true that many sales staff has been off this year I have just left the company since September There are also many reasons for this But I think the main reason is very limited employee power when working, which makes it very difficult especially for the business department like me VEAS’s management process is quite complicated and requires a lot of approval levels, even if it is a large and frequent customer, it also needs a variety of different procedures.” (Mr Hai – Former project executive)

According to Mr Phuc – Former Project Manager of Team 1, there are some difficulties in the process of working with his employees

“Most of these people are new employees; the time spent at the company is not long so the knowledge and experience of themselves is very limited They often complained to me that why I did not give permission to them to actively decide on some issues such as gift policies for customers, incentives for potential customers not necessarily change or flexibly adjust.”

Figure 3.4 Sales employee’s opinion for the empowerment

(Source: Research interview) Based on the data analysis above together with the interview, it can be concluded that most people in sales department do not feel satisfied with the current job and they tend not to stick with VEAS for a long time

Some researches show that workers in different companies perceive inadequate autonomy and authority to decide on something to feedback accurately and promptly

to customers; therefore, businesses fail to retain customers as a result The shortage of information and certain rights not only intervene quick provided services but also make employees dissatisfied Employee empowerment; however, results in much higher job satisfaction and encourage quicker service delivery to consumers (28)

3.2 Initial Symptom – Potential Problem map

of empowerment, which receive the most negative feedbacks from the respondents

Symptoms

Employee dissatisfaction

High voluntary turnover

Potential problems

Salary

Relationship at workplace

Lack of empowerment

When some employees are asked about their idea among the three potential problems, most of them have the same response and point out that lack of empowerment, but not the others is the main problem that VEAS has to deal with now

“In general, VEAS is a good company with many nice co-workers; its compensation package is acceptable They are not really the problems of the organization now However, not having the right to make any decisions within employees’ position is truly the cause for leaving If the company had been more flexible in employee empowerment, I might still be a member of VEAS family now.”

(Ms Giang – Former project executive)

“I am really tired of asking and waiting for approval from different hierarchy levels because it indeed has strong effect on the process of my work I sometimes make customers not satisfied because of late feedback If they are not the good salary and strong support from colleagues, I will be able to quit the job now.” (Ms Anh –

Project Executive of team 1)

“Actually, I think three of them are all the problems of VEAS, but to some extent, the benefit and working environment are acceptable because when comparing

to other companies in the same industry, VEAS still offers somehow a little better On the other hand, the remaining issue which is lack of empowerment is a warning sign for the operation of company now due to bad consequences for not only internal management but also external transaction As a supervisor of a project team, I do not have much power in accepting suggestions from sales staff I have to wait for my manager and he has to wait for director’s permission It takes lots of time to have one thing done” (Ms Dung – Project Supervisor of team 2)

CHAPTER 4: CONSEQUENCES

From many symptoms, interviews as well as many surveys, the main problem

of Sales Department is lack of empowerment (29) defined empowerment concept is the link and co-operation between individuals to achieve goals, efforts and to enhance member participation and improve goal achievement in organization Organizations fail to apply this concept may lead to bad effects on their employees and business result For the project team case, there are problems in leadership style of manager, especially in empowerment structure that leads to many consequences There are three mains consequences are drawn from this problem: cost consuming, time consuming and low productivity

4.1 Time consuming

The first consequence is time consuming One of the symptoms for lack of empowerment is high turnover ratio that can observe clearly year by year Sales Department has high turnover rate it means that many staff had left the company including key staff Time spending for replacing these positions and training new employees are large The more experience employees left the company, the higher the cost is Thus, there are two stages VEAS needs to consider for recruiting new employees: the hiring stage and training stage The hiring stage is the stage when an organization looking for potential candidates to fill out their positions These steps include: planning, selection and evaluation This stage is important because it will shape the initial base for matching job requirement (30) identified the recruitment process involves various selection practices: the examine more information of candidates in the pool through testing and interviewing, screening and deciding who suit for the job, checking references and negotiating agreements with candidates Hiring new employees also takes time for employers Time costs involve the replacement of new employees, including time spent on staff handling exit interviews, managing salaries and benefits and managing time of managers; resources to maintain and interview exits, leave time and sick time left by employees, temporary insurance costs in the replacement process, and production delays and other interruptions due to the staff’s leaving The Recruiting report of (31) showed that the average time to hire

new employees is 38 days; meanwhile the other report of Glassdoor showed the average time is 23.8 days The number can variously depend on the job tittle and position At VEAS the hiring stage may take from 3 weeks to one month, depending

on the position level (staff or managers) For upper level like manager the recruitment process may take 40 days to complete

Figure 4.1 Average time to hire new employees at VEAS

(Source: Company’s report)

Figure 4.2 Time to hire new employees for Sales Department

(Source: Company’s report) According to company report, the average time to recruit new staff at VEAS is around 20 days for the low level positions and about 35 days for the higher positions However, it takes more time to hire new employees for sale department, even longer time than the average Specifically, it will require approximately 22 days, 26 days and

up to 38 days to get new project executive, project supervisor and project manager, respectively

Furthermore, after the hiring stage, the training process is conducted Training time for new employees is a small part of the lost time in the general recruitment and recruitment process According to (32), the maximum length of probation period for technical qualification of technical college diploma and above is 60 days This means that new employees need at least 2 months to have an overview of job duties To get

in touch and clearly understanding about their job, new comers need more time Two probation months just help them have a basic though about their job and the company also has some evaluations about these employees According to (33), the range is falling between 12 months and two years to optimal productivity of an average employee in organization So employees may need to two years to have fully productive and replace the skills former staffs left the company This means that even

after an employee has been hired, they may not be as productive as the previous employee for 2 years As a result, loosing potential value after skilled employees has left a company is unavoidable and it takes time to replace as well as hiring new employees

4.2 Cost consuming

Cost is an important factor of any organizations that need to be considered when replacing former employees and hiring new staff There are two kinds of cost: tangible and intangible cost

4.2.1 Tangible cost

Tangible cost can be directly connected to a material item used to conduct recruiting and training process Replacing old employees and hiring new employees can incur 2 kinds of cost: departure cost and replacement cost At VEAS, the departure cost takes the higher percentage than the replacement cost, 56 percent in comparison with 44 percent

Figure 4.3 VEAS's tangible cost in 2018 (Source: Company’s report)

56%

44%

Departure cost Replacement cost

The monetary cost of a departure employee is somewhat easier to calculate than most other expenses When an employee leaves, direct costs for a company include:

 The amount paid for vacation time, including unused holidays and sick days

 Temporary employee payment or overtime payment for other employees

 Other unemployment benefits like retirement benefit

Figure 4.4 Departure cost at VEAS in 2018 (Source: Company’s report)

In detail, based on the company’s data collection in 2018, the three main departure costs of VEAS are manager’s time, temporary employee payment or overtime payment for other employees and HR staff time which accounted for 35 percent, 28 percent and 20 percent, respectively While manager’s time include high effort to retain employees, interview exits and adjust production losses, regardless of temporary or permanent, staff time includes conducting exit interviews and handling paperwork related to payroll and benefit management However, other employee’s compensation packages take the smallest percentage which is 7 percent for unused vacations and sick days and 10 percent for other unemployment benefits

HR staff time

Other unemploymentbenefits

Replacement cost is the cost which incurs during recruitment and hiring process in order to find new employees These costs include job posting cost, salary for new employees, on boarding and training cost, learning and development cost The Human Research Management Association estimates that the cost of directly replacing

an employee can be up to 50 to 60 percent of their annual salary and the total cost associated with revenue can increase to 90 to 200 percent Furthermore, the salary paid for hiring new employees of the same level of job may increase from 9 to 15 percent of salary A statistic conducted by Mercer in 2018 showed organizations agree

to pay more 9 – 15 percent of salary to outside talents at the same level of job and 14 –

20 percent of salary for higher level of job

Figure 4.5 Replacement cost at VEAS in 2018 (Source: Company’s report)

New hire compensation, benefits and inducements are considered as the main replacement costs at VEAS While new hire compensation constitutes nearly one third

of the company’s budget, new hire benefits such as health insurance, retirement savings contributions, travel reimbursements, etc make up a quarter of the total replacement cost Moreover, new hire encouragement comprises some aspects like signing bonuses, perks and relocation charges occupy 19 percent of total cost, whereas

New hire compensation New hire benefits New hire inducements

Onboarding time Welcoming new hires

the other two elements represent a small minority of the total expenses Onboarding period is the amount of time that employee spends on orientation, benefits enrollment and payroll and welcoming new hires is the period which manager and functional departments spend time on helping new staff adjust and well perform on-the-job training

4.2.2.1 Loss of experience

All employees are unique, have their own strength and a unique set of attributes are taken with when they leave the company Some experienced employees of Sales department have left the company which leads to the lack of labor resource The more experienced employees the more experience they take when they leave Some of work are harder to replace and required high quality of employees Losses will vary depending on whether the employee has high performance or low performance and their attributes

4.2.2.2 Loss of customers

Especially in case the salesperson having a long-term relationship with certain customers, many customers will follow this employee and choose another company for their service Exhibition Service industry is a competitive industry, salesmen have

to work hard to gain customers and they have close relationship with their customers Some customers work with these salesmen and receive consultant from them and they

do not want to change to other people

4.2.2.3 Low productivity

Costs of employee turnover can include factors like loss of productivity; loss of engagement, as existing employees begin to question why turnover is so high and start

to disengage Bersin defined employees are appreciating assets that add more value to organization so this explain why losing them is costly and reduce organization’s performance

A survey was conducted in Project teams and asked if they get motivation at work The result is summarized as below

Figure 4.6 Percentage of sales department’s employees agree that they get

motivation at work

(Source: Research interview) Only 15 percent of staff agrees that they get motivated at work Meanwhile nearly 60 percent said that they do not get motivation According to Maslow, once people are "safe" - ie well-paid, they look for more meaningful value at work The most successful and enduring organizations in business are those that have a common sense of mission, a deep respect for their employees Employees need recognition and goal achievement in job If they do not get involved in job, they will not satisfy and lead to many consequences Lack of empowerment is main problem of Sales department, staff do not have chance to involve in their job and do not have power to make decisions As a result, many employees left the company and current employees

do not work effectively At VEAS, the administration and accounting department have duty to check the compliance of departments The purpose is to evaluate if department jobs comply with company and government regulation, to minimize the risk can occur Here under is the compliance ratio between departments at VEAS in 2018:

Figure 4.7 Compliance ratio between departments at VEAS in 2018

(Source: Company’s report)

Comparing with other departments such as marketing department, HR and Administration department, they all have the compliance ratio over 90 percent Meanwhile the compliance ratio of Sales department is only around 35 percent which

is the lowest ratio comparing with other departments This means that many mistakes occurred during the operation and shows the low productivity of the staff in this department

CHAPTER 5: CAUSE IDENTIFICATION 5.1 Potential causes

5.1.1 Leadership style

Leadership is a social impact process that a leader looks for the subordinates’ voluntary participation so as to reach the company’s target (34) A person who delegates or influences others to work in order to pursue specific goals can be defined

as a leader (35) Leadership style is quite consistent attitudes or behaviors which characterizes a leader (36) While there are many kinds of leadership style and each type has different effects on the effectiveness or performance of an organization (37), transactional leadership is a stronger feature that results in both job satisfaction and overall satisfaction (38) Transactional leadership style emphasizes on the supervision and organization of the workers in the organization Furthermore, it concentrates on the individual and organizational performance in the company Rewards are applied in this leadership style for leaders to achieve desired performance from every employee and the entire team Punishment is also used if employees do not perform according to expectation or if they find any differences in the performance process through the supervision (39) Transactional leadership only helps employees when they need more achievement than the regular achievements Therefore, they use the carrot and stick approach to attain the respective purposes (39, 40) Employees are given rewards only when they execute certain tasks accordingly or are punished if the completion of their functions is not achieved (39, 40, 41 and 42) Transactional leaders do not give the rights to an employee in the company to be an innovative person in terms of performing functions or duties in the organization (39, 41 and 43) In order words, the transactional leaders do not provide autonomy to the employees, which lead to reducing employee empowerment (41, 44 and 45)

“All decisions must be made to the boss of the department.” (Ms Phuong, a

project executive of sales team 2)

“The head of the sales department will decide the bonuses for each person On the one hand, his subordinates will receive incentives and rewards if they strictly follow what he requires On the other hand, bonuses will be taken out if they are

against his requirements Although staff feel that such work and management are somewhat emotional and unfair, they have no right to raise their voice Employees still do not have the initiative in their work It took them a lot of time to sign the papers, do not actively decide their work, so the time to work longer and the work efficiency is not high As a result, it affects the target of themselves and the whole department.” (Mr Hoa, an accounting manager)

Moreover, as shared by Mr Phong, a project executive of sales team 1:

“Manager sets KPI which is used to evaluate the performance of each employee However, some employees tried hard but the results were contrary, sometimes based on luck There is low interaction between management and staff because the manager of sales department sits in separate rooms Therefore, employees are expected to follow the guidance and rule that were created by managers

From the viewpoint of Mr Phuc, a project supervisor of sales team 2:

“Employees are young that has insufficient experience and limited knowledge,

so it is reasonable that I do not give them permission to involve in making a decision

or changes to the current policy for customers I was promoted to the project supervisor of team 2 because I acquire expertise; therefore, what I decide is certainly

a perfect policy that is unarguably applied by subordinates.”

Interviews with employees who left the sales team are conducted to reaffirm the possible cause of transactional leadership style that results in lack of empowerment and high turnover rates

“There is discrimination among employees and lack of interaction between manager and employees, so I could not understand manager’s direction Manager and supervisor seem to be interested in controlling everything although they do not have time to consider every issue promptly.” (Mr Hai, a former project executive)

“The remuneration for an employee is not fair and do not have a true evaluation of their competencies Some employees are nominated to be the employee

of the month of the department and receive higher bonuses than me by manager

because everything is repetitively done as required without involving in proposing any new ideas to improve the competitiveness of the department as well as the company although I still tried my best to serve customer well I actively gave recommendations

to manager to make their working process smoothly and effectively However, manager did not listen Specifically, I was one of employees suggesting flexible price policy for customers in order to attract potential customers, retain them as well as actively compete with other rivals; however, I was criticized and advised to stay focus

on my work rather than cause discomfort in working atmosphere Moreover, it seems

to me that manager often makes it difficult for me to work to warn me about my contribution.” (Mr Dung, a former project executive)

5.1.2 Policies

Policy is a predetermined course of action, which is established to provide a guide toward accepting business strategies and objectives In other words, it is a direct link between an organization’s vision and their day-to-day operations Policies identify the key activities and provide a general strategy to decision-makers on how to handle issues as they arise (46) Principles, rules and guidelines formulated or adopted

by a company to achieve its long-term objectives and generally published in a notebook or other widely accessible forms are regarded as a set of policies (47) Regarding to this definition, the policies of the company has a significant influence to the employees’ making decision in both their daily tasks and other issues as they arise Therefore, if the company has suitable policies, employees can work effectively On the other hand, if its policies are so rigid, they will make employees feel uncomfortable when they are working and also making decision, then they create many difficulties for employees, so they cannot bring effective performance for the company VEAS is one of the obvious proofs for this statement Regarding to the policy of gifts for customers, VEAS regulates fixed price for customers For example,

an employee that has just left VEAS for 4 months stated:

“Loyal customers had to be treated with this fixed discount price, and new customers had to be applied another less or no discount price and so on Although employees are the ones who directly work with customers, they obviously know the

appropriate price to deal with their customers, but they are not allowed to be flexible

in applying any discounts for customers.”

Furthermore, according to Mr Nguyen who is a current employee of VEAS:

“Instead of assigning targets to employees to select which customers are more potential to create and maintain the relationship like other companies, VEAS’s director lists down all customer lists and employees just need to prepare gifts for them

on some special occasions If they would like to change anything in those lists, they have to submit it and wait for very long time to be considered and approved; it may be over the occasions.”

Finding more and more customers is very essential for every company and the competition among companies in the market is so fierce today Therefore, VEAS may lose many potential customers if it continues to do that Furthermore, with those rigid policies, staff will feel uncomfortable because they do not achieve the targets, are not rewarded, and even are judged as ineffective employees Hence, it affects their income and performance significantly because of lack of motivation As a result, they feel discouraged and choose to leave the company after few months or few years Thus, it

is better to close the deal with customers as quickly as possible In order to do that, employees must have the right to negotiate with customers about flexible prices

5.1.3 Procedures

“Procedures are a series of instructions which must be followed in order to comply with prescribed policies and practices” (48) Procedures are the practical ways which are used to transfer policies into action in everyday practices of the organization (47) Every company should have its own procedure for employees to follow when working It creates not only the culture but also the way employees doing their daily tasks and making decisions Thus, procedures are so important to every business Nevertheless, if the company builds cumbersome procedures, they will create many difficulties for employees in working For example, when VEAS’s employees would like to propose a good idea that benefits the company, they have to wait for the approval from a lot of different levels, which results in time-consuming and affects the progress of the work