Tạo động lực cho người lao động tại tổng công ty cổ phần xây lắp dầu khí (PVC)

CHAPTER 1 OVERVIEW OF WORK MOTIVATION FOR EMPLOYEES 1.1 Concept 1.1.1 Human resource management and encouragement There are many different concepts of human resource management: Accord

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-

NGUYỄN THỊ DIỆU LINH

MOTIVATING THE WORKFORCE AT PVC COMPANY

TẠO ĐỘNG LỰC CHO NGƯỜI LAO ĐỘNG

TẠI TỔNG CÔNG TY XÂY LẮP DẦU KHÍ (PVC)

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2020

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-

NGUYỄN THỊ DIỆU LINH

MOTIVATING THE WORKFORCE AT PVC COMPANY

TẠO ĐỘNG LỰC CHO NGƯỜI LAO ĐỘNG

TẠI TỔNG CÔNG TY XÂY LẮP DẦU KHÍ (PVC)

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS TRẦN HUY PHƯƠNG

HÀ NỘI - 2020

DECLARATION

The author confirms that the research outcome in the thesis is the result of author’s independent work during study and research period and it is not yet published in other’s research and article

The other’s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if required) is given

The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration

Date………

TABLE OF CONTENTS

DECLARATION i

TABLE OF CONTENTS ii

LIST OF TABLE v

LIST OF FIGURES vi

INTRODUCTION 1

CHAPTER 1: OVERVIEW OF WORK MOTIVATION FOR EMPLOYEES 3

1.1 Concept 3

1.1.1 Human resource management and encouragement 3

1.1.2 Goals of human resource management 4

1.2 Theories on work encouragement and motivation through needs 4

1.2.1 Maslow’s hierarchy of needs (1908-1970) 4

1.2.2 Frederick Herzberg’s Two-Factor Theory: 5

1.2.3 D.McClelland’s theory of satisfied needs: 5

1.2.4 Douglas McGregor’s X-Y theory: 6

1.3 Encouragement through expectation 7

1.4 Encouragement through equity 9

1.5 Other applications in encouragement and motivation 10

1.5.1 Employee evaluation 10

1.5.2 Employee rewards 11

1.5.3 Rewards based on a model that determines the level of income satisfaction 17

1.6 Experience in motivating employees at the business 18

1.6.1 Enhancement of the role of work motivation 18

1.6.2 Common shortcomings of work motivation at the businesses 19

Summary of Chapter 1 20

CHAPTER 2: EVALUATION OF THE CURRENT STATUS OF WORK MOTIVATION AT PVC 21

2.1 History and important development milestones of PVC 21

2.2 Overview of work motivation at PVC 23

2.2.1 Work performance evaluation 23

2.2.2 Employee reward 24

2.3 Evaluation of current status 26

2.3.1 Survey of Board of Directors: 26

2.3.2 Employee survey 27

2.4 Factors affecting employee rewards at PVC: 37

2.4.1 External environment: 37

2.4.2 Internal environment: 37

2.5 Conclusion on issues to be improved by urgency and feasibility 38

Summary of Chapter 2: 40

CHAPTER 3: SOLUTIONS AND RECOMMENDATIONS TO IMPROVE WORK MOTIVATION AT PVC 41

3.1 Improvement of performance evaluation 41

3.1.1 Improvement of performance evaluation process and method 41

3.1.2 Establishment of a performance evaluation quality monitoring process: 42 3.1.3 Development of evaluation skills of managers 43

3.2 Supplementation of reward policies: 43

3.2.1 Development of achievement-based bonus policies: 43

3.2.2 Supplementation and amendments of reward policies to encourage employees to work at the Corporation for a long time: 43

3.3 Specific actions to positively impact the employee performance and reward evaluation results 44

3.3.1 Collection and analysis of employees’ opinions on human resource management 44

3.3.2 Supplementation of Key Performance Indicators (KPI) 45

3.3.3 Employee encouragement forms 45

3.4 Implementation of human resource management support activities 46

3.4.1 Communication culture development in the Corporation 46

3.4.2 Company tradition and emulation movement development: 47

3.4.3 Using human resource management software: 47

3.5 Action plan 49

CONCLUSION 59

REFERENCES 61

Table 2.4: Spiritual reward evaluation results Error! Bookmark not defined

Table 2.5: Compensation evaluation results Error! Bookmark not defined

Figure 1.3: Classification of compensation forms Error! Bookmark not defined

Figure 1.4: E Lawler’s model of income satisfaction level Error! Bookmark not

defined

Figure 2.1: Organizational chart of PVC as of March 31, 2018 Error! Bookmark

not defined

Figure 2.2: Summary of employee survey results Error! Bookmark not defined

Figure 2.3: Summary of employee survey results by rank Error! Bookmark not

Human resources in general and motivating employees in particular are always a hot issue with many creative solutions in each unit

Human resources in general and work motivation and employee satisfaction

in particular are always a hot issue with many creative solutions in each unit

2 Research objectives

- Present scientific and practical basis to propose some solutions to create work motivation at PetroVietnam Construction Joint Stock Corporation (PVC)

- Analyze and assess the current status of work motivation at PetroVietnam Construction Joint Stock Corporation (PVC) Clarify the shortcomings in this work and the need to change it

- Propose work motivation solutions to contribute to implementing the business development orientation of PetroVietnam Construction Joint Stock Corporation (PVC)

3 Research questions

To meet the above research objectives, the following research questions need

to be answered in the thesis:

1 What models and systems have been mentioned in dealing with the work motivation and dedication of employees?

2 What are the peculiarities of work motivation for employees in the construction industry (or petroleum)?

3 What are the achievements of PVC and what are the limitations of PVC

in work encouragement and motivation?

4 What improvements does the Corporation need?

4 Research Subject and Scope

- The research subject of this thesis is: Work motivation at PetroVietnam Construction Joint Stock Corporation (PVC)

- Research scope: PetroVietnam Construction Joint Stock Company (PVC)

Data source

Data for the study are taken from two main sources Secondary data are

collected from industry reports, company reports, annual reports, publications and

other related websites Primary data are collected directly from surveys and

selected interviews with a number of internal and external employees

5 Research methods

On-site research is conducted as a basis for learning about and selecting appropriate analytical models and tools before the questionnaire is designed to collect information through social survey methods About 100 questionnaires are randomly distributed to different groups of employees in the Corporation

The collected data is processed by excel spreadsheets to obtain meaningful analysis results and exact answers to the above mentioned research questions

6 Thesis design

The Thesis consists of five parts:

 Part 1: Introduction: Rationale, scope, subject, objectives and expected research findings;

 Part 2: Summary of theoretical models that can be used to analyze the current status of work motivation for employees in the Corporation

 Part 3: Actual survey and analysis results to find out solutions to further improve the work encouragement and motivation activities at PVC

 Part 4: Some suggestions to improve work motivation at PVC

 Part 5: Conclusion

CHAPTER 1 OVERVIEW OF WORK MOTIVATION FOR EMPLOYEES

1.1 Concept

1.1.1 Human resource management and encouragement

There are many different concepts of human resource management:

According to American Professor Dimock, “Human resource management includes all measures and procedures applied to employees of an organization and resolves all arising cases related to a certain type of work”

Professor Felix Migro said that “Human resource management is an art of selecting new employees and using existing employees so that each person may reach the maximum labor productivity and quality”

Human resource management philosophy:

Despite the changes in the labor market and the state’s approach to the economy,

an approach that is considered to be the most practical and constructive based on the original ideas of Enid Mumford (1972) and McCarthy and Ellis (1973) were first introduced in 1979, then slightly revised in 2002 The approach states that:

In practice, human resource management is considered a series of activities aimed at enabling employees and employer to reach a common agreement on the nature and purpose of the work relation and finally comply with the signed agreement (Torrington and Chapman 1979, page 4)

The definition in the 5th revision (2002) is as follows:

“Human resource management is a series of activities that firstly enable employees and employer to reach a common agreement on the purpose and nature

of the labor relation, secondly ensure that the agreement is fully implemented.” (Torrington, Hall and Taylor 2002, page 13)

Human resource reward is the process of “taking care of the material and

spiritual life of employees so that they can complete their assigned tasks, thereby fulfilling the goals of the enterprise”.1

Encouragement and motivation

1.1.2 Goals of human resource management

The basic goal of any organization is to effectively use human resources for its overall goals Therefore, human resource management in enterprises is often oriented with the following basic goals:

 Social goals: Enterprises operate not only for profit but also for the benefits of society

 Human resource management is aimed at attracting talented people, at the same time, consolidate and maintain the quantity and quality of personnel needed to achieve the set goals of the company

 Human resource management is aimed at finding out and developing the best methods to effectively use human resources to improve labor productivity, at the same time, facilitate the employees’ continuous development

 Human resource management is aimed at motivating employees, creating favorable conditions for them to express, develop and devote their talents to the company, at the same time, help them to attach, devote and loyal to the company

1.2 Theories on work encouragement and motivation through needs

The study and application of need theories in human resource management will help managers identify the needs of employees as a basis for developing appropriate reward policies as well as appropriate measures to motivate employees

1.2.1 Maslow’s hierarchy of needs (1908-1970)

- People have special talents that enable them to make independent choices, thus giving them control of their destiny

- Human needs including five (05) categories are arranged in different hierarchies and modeled as follows:

Self-actualization

Esteem

Love/belonging

Safety Physiological

Figure 1.1: 5 Levels of Maslow’s Hierarchy of Needs

Maslow believes that effective leadership and management must be paid attention to meeting the needs of people

1.2.2 Frederick Herzberg’s Two-Factor Theory:

In 1966, Frederick Herzberg wrote the famous book titled “Work and nature of man” about human motivation, he proposed two factors:

 Motivator factor: achievement, recognition, work itself, responsibility, advancement, growth All of these things create job satisfaction

 Demotivate factor: leads to dissatisfaction if it is not met, does not motivate people to work For examples, demotivate factor includes organizational policy, work supervision, working conditions, salary, relationships with colleagues, relationships with subordinates

1.2.3 D.McClelland’s theory of satisfied needs:

Specific needs achieved or known and shaped by life experiences include:

 Achievement: A group of people who like challenges and have achievable goals, and some feedback

 Affinity: A group of people with a high degree of harmony who always desire harmonious relationships and need to be accepted by others Therefore, managers should try to create a collaborative work environment for them

 Power: A group of people with a need for power including individual power (not good), collective power (good for the organization), who are seeking collective power management opportunities

1.2.4 Douglas McGregor’s X-Y theory:

Douglas McGregor propagated human relationships close to management in the 1960s

Table 1.1: Theory X, Theory Y and Theory Z

Theory Brief contents

Theory X States that employees don’t like and avoid work, so managers

need to take mandatory measures, threats and control methods to make employees meet their goals

Theory Y States that individuals consider work as playing or resting and

enjoying the satisfaction of being respected and their real needs Theory Z Introduced by William Ouchi in 1981 and based on a Japanese

approach to motivating employees, emphasizing trust, quality, collective determination and cultural values

Theory X – Economic human theory (Taylor, Grant, Ghinbert, Fayol):

This theory states that human nature is lazy, mechanical and disorganized Human only works in moderation to make a living and always avoid work, just like material benefits without group and friend relations Therefore, the most logical solution is

to divide the work into repetitive tasks to make it easier to learn Moreover, managers must regularly supervise, urge and inspect the performance of the

authorized staffs A system with clear hierarchy and a strict reward and punishment regime is also established

This management style will make employees be worried and scared They accept hard work because of both high wages and harsh employer In such conditions, the employee will be tired, lack of creativity in the process of completing the assigned job

Theory Y – Social human theory (Gregor, Maslow, Likest):

This theory assesses the underlying potentialities in humans as the great possibilities that need to be evoked and exploited People in any position have a high sense of responsibility and work hard to complete their assigned work Everyone finds himself useful and respected, shared responsibility and asserted From this point of view and evaluation, the management method is applied through self-awareness, creating favorable conditions for employees to actively work and inspect their work Managers must trust and actively engage employees in the work, having a mutual understanding between superiors and subordinates

Under this management style, employees find themselves important and have a role in the collective, so they are more responsible for the assigned work, voluntarily work and take full advantage of their potentialities to get the job done in the best way

Theory Z – Theory of Japanese enterprises:

This theory states that satisfying employees is the key to high labor productivity The absolute belief in employees, the delicacy in behavior and close coordination among the collective are the decisive factors for the success of human resource management in the business According to this theory, managers care about their employees and create favorable conditions for them to study and share their rights appropriately

This method makes employees feel confident and loyal to the business, considering the business as their home However, this style of management sometimes makes employees dependent and passive at work

1.3 Encouragement through expectation

The theory of expectation by Prof Dr Victor Vroom (Yale School of Business) suggests that an individual will act in a certain way based on expectations of an

outcome or the attractiveness of such outcome This model was introduced by V Vroom in 1964, then revised and supplemented by some other researchers, including scholars Porter and Lawler (1968)

V Vroom’s theory of expectation is based on the following formula:

Attractiveness x Expectation x Means = Motivation

Figure 1.2: V Vroom’s theory of expectation (1964)

Where:

• Attractiveness (Rewards) = Attractiveness for a goal (What is my reward?)

• Expectation (Work performance) = trust of employees that if working hard, the task will be completed (How hard do I have to achieve the goal?)

• Means (Belief) = employees’ belief that they will receive a reward when completing the task (Will people know and appreciate my efforts?)

The achievement of these three factors is the motivation for someone to do something It is the power that leaders can use to lead the collective to accomplish the set goals When an employee wants to promote in his job, promotion is highly attractive to himself/herself If an employee believes that when he/she works well, meet schedule requirements, etc., he/she will be appreciated by people, which means that he/she has a high level of expectation However, if he/she knows that the company will recruit people from outside to fill in vacancies or apply for managerial positions rather than promote staff at lower levels in the company, he/she will has a low level of means and it will be difficult to motivate him/her to work better

The applications of this theory are summarized as follows:

Step 1 Step 2 Step 3

Increase expectations from

effort to work completion

Increase expectations from work completion to

efficiency

Increase satisfaction level

 Choose the right

employee for the job

 Train good employees

 “Role-play” clearly at

work

 Sufficiently supply

necessary resources

 Instruct, monitor and

actively collect feedback

 Measure work processes correctly

 Describe good and bad results

 Explain and apply the remuneration

mechanism based on the work result

 Ensure valuable rewards (material & spiritual rewards)

 Particularize rewards

 Minimize differences

in the degree of satisfaction of results

Figure 1-3: 3 application steps of V Vroom’s theory of expectation

1.4 Encouragement through equity

Equity Theory is a theory of employee encouragement launched by John Stacey Adams, a behavioral and management psychologist, in 1963 Like many other famous encouragement theories (Maslow’s hierarchy of needs or Frederick Herzberg’s Two-Factor Theory), Adams’s Equity Theory presents implicit and transformative factors that impact employees’ perceptions and assessments of their company and their work

Common applications of this theory in the management and leadership practice are:

 Equity in combination with job performance management tools can collect feedback to evaluate and compare employees’ work performance, helping the organization identify which behaviors contribute to increased job performance and set standards for the best

 Motivate employees to work because timely work recognition from managers or supervisors is a top motivating factor for them If an individual

finds himself underpaid, he will reduce his efforts to maintain “balance” If

he thinks that he is being paid well, he will try to work harder

 Manage employees through consideration of the correlation between the contribution rate and the outcome received by employees, thereby making appropriate adjustments

1.5 Other applications in encouragement and motivation

1.5.1 Employee evaluation

Employee evaluation is one of the top issues of human resource management It is the basis for businesses to recruit, train, develop and treat personnel Employee evaluation is aimed at determining the employee’s level of job performance, career development ability and collecting information about employees’ personal aspirations, thereby making the right decisions on personnel dispatch, assignment, promotions and remuneration for each employee

Employee assessment requires accuracy and fairness If this job is done well,

it will create a healthy and positive working environment as well as a healthy competition among employees Each person tries to work better to receive good assessment and adequate remuneration On the contrary, employee evaluation in a subjective, rational and unfair manner will create a stressful and inhibiting working atmosphere Employees who are overestimated will not perform a newly assigned task well or become subjective and non-progressive meanwhile those who are underestimated will be discontented and depressed and lose their work motivation

As a result, businesses suffer from reduced labor productivity and quality and an open and friendly working environment is disrupted, adversely affecting the corporate culture and possibly losing potential employees

Employee evaluation process and contents:

The employee evaluation process will be conducted through the following stages:

 Determine the contents to be assessed: The contents to be assessed depends on the nature and position of the job

 Develop assessment criteria: The assessment criteria should be elaborated in a detailed, easy- to- understand, easy-to- identify and maximized manner

 Set benchmarks as the assessment goal: These benchmarks represent the wishes/requirements of the business for each position

 Conduct employee evaluation: Compare the collected information on the employee’s work performance with the corporate benchmarks

 Talk the evaluation results to employees

Several employee evaluation methods:

Some main methods used to evaluate employees are:

 Alternating ranking: Give some main criteria, list the people to be assessed and rank them from the best to the worst according to the given criteria This method is simple but quite subjective and emotional

 Pair comparison: The employees are compared to each other in pairs based on the ranking criteria This method is time-consuming and still subjective

 Grading method: Employees are assessed according to different criteria Each criterion is divided into assessment levels (weak, average, fairly good, good, excellent) corresponding to the score (1, 2, 3, 4, 5) This method is very popular because it is easier to perform and more objective

Extrinsic rewards are controlled and distributed directly by the organization and are tangible

2 Lloyd L Byars and Leslie W.Rue, “Human Resource Management” (IRWIN 1997), pp 314

8 purposes of employee rewards

 Compensate and recognize employees’ past efforts

 Encourage and improve the labor efficiency of employees

 Maintain the competitiveness of enterprises in the labor market

 Maintain fairness in the business

 Link employees’ achievements with business goals

 Control budget

 Attract new employees

 Minimize rates of job quitting and job transfer

Figure 1-4: 8 Main purposes of employee rewards

Principles, bases and requirements of reward policies:

To ensure the development of an effective reward policy, businesses must rely

on the following principles, bases and requirements:

Table 1-2: Rewards: principles, bases, requirements

 State regulations:

Labor law

 Business strategy of the company

 Corporate culture

of science

and practice

It is necessary to apply scientific and objective knowledge to the policy development process to ensure the policy feasibility

Employee reward forms

a, Compensation:

“Compensation means all external benefits employees receive in exchange for their work including wages, bonuses and other benefits.”3

Compensation is divided into 02 following categories:

Figure 1.5: Classification of compensation forms

3

Lloyd L Byars and Leslie W.Rue, “Human Resource Management” (IRWIN 1997), pp 315

Spiritual rewards:

Spiritual reward plays an important role in satisfying the diverse needs of employees The higher the standard of living is, the higher the spiritual demand is Spiritual satisfaction is an extremely effective method to encourage employees and create employee loyalty to the business

Spiritual reward methods are:

 Exactly evaluate the ability of employees, reward and encourage them timely A very important way is to recognize and reward good employees in front of people such as letters of commendation, commendation in meetings, etc

 Organize and promote emulation movements in businesses that promote the proactiveness and creativity of employees

 Arrange jobs suitable to each person’s abilities and aspirations; Create conditions for them to develop their career and improve their qualifications

 Build corporate culture, create a friendly and open working environment

 Show sincere interest in employees, visit and timely encourage them to make them feel their company like a big family

 Organize healthy recreation and entertainment activities for employees to create

a playground for employees

 Organize commendation and celebration parties for employees with excellent achievements, where the Chairman of the Board of Directors or the General Director presides over and directly awards certificates of merit to those employees

 Organize activities to welcome the Company’s major holidays such as the establishment date of the company, the traditional day of the industry

 Improve working conditions for employees

 Apply human-based management policies which will help employees feel more comfortable, love their work and be more responsible for their work

 Organize humanitarian and charitable activities, etc so that employees can see the interest of their company in humanitarian activities, thereby recognizing their company’s care to the staff life

Employee reward is an important measure to attract and retain talented people Employee reward also helps stimulate employees to improve labor productivity and work efficiency

Every employee working in the enterprise has different needs and desires in different priorities In order to have good employee rewards, managers need to identify what are the needs and desires of each group, each employee so that they have the appropriate form and level of rewards to motivate employees, each group

of individuals and each individual to work and achieve the desired results

Human needs collectively include physical needs and spiritual needs Therefore, employee reward is also carried out through two forms of compensation and spiritual reward

Compensation is provided through salary and bonus policies

Salary payment is a human resource management activity that has a great meaning in positively impacting employees; thereby improving employees’ labor productivity and engagement with the company

Salary is both a labor price formed by an agreement between a business and an employee and demonstrates the business’ appreciation of their contribution as well

as their talent and social position Therefore, a reasonable salary policy and structure is especially important not only to create fairness for employees but also to convince them of their salary

Developing the salary system of the business:

The salary system of a business depends on the characteristics and its viewpoints

of remuneration; however, when developing the salary system, the following basic requirements must be met:

 Basis of salary calculation must be easy to understand and clear so that employees can understand and check their salary

 Comply with relevant laws and regulations on working hours, minimum wages, hazardous allowances, etc

 Commensurate with the capacity and contributions of employees, ensure

transparency and fairness in the business

 Concerned about price competitiveness in the market

 Consider a salary structure (hardware, software) suitable for each job position Two main forms of salary payment in a business:

 Time-based salary payment: Salary of employees are calculated based on the level of wages determined for the job and the actual working time Salary may

be paid by month, day and hour

This form of payment is usually applied to managers, office staffs or employees directly performing high-accuracy jobs

 Product-based salary payment: The salary of employees will depend directly on the number of product units produced and the unit price of salary per unit of product

Salary is paid by products in several ways:

- Salary payment according to direct personal products

- Salary payment according to collective products

- Salary payment according to indirect products

- Salary payment according to prize products

- Job wage payment

Bonuses and other benefits for employees:

 Compulsory benefits: Indirect remuneration paid to employees in accordance with the Labor Law and other relevant provisions such as social insurance, health insurance, trade union fees, etc

 Voluntary benefits: Indirect remuneration paid to employees to support their lives such as life insurance, free medical care, lunch allowance, benefits due to work schedule flexibility and other benefits

 Bonus policy: An additional payment for employees based on work performance

to grasp the principle of labor distribution

 Main bonus forms:

- Bonus for completing the assigned job

- Bonus for individuals with initiatives for technical improvement and labor productivity improvement

- Bonus for loyal individuals with long-term attachment to the business

- Bonus on the occasion of holidays and New year

Spiritual rewards:

Spiritual reward plays an important role in satisfying the diverse needs of employees The higher the standard of living is, the higher the spiritual demand is Mental satisfaction is an extremely effective method to encourage employees and create employee loyalty to the business

Spiritual reward methods are:

 Exactly evaluate the ability of employees, reward and encourage them timely A very important way is to recognize and reward good employees in front of people such as letters of commendation, commendation in meetings, etc

 Organize and promote emulation movements in businesses that promote the proactiveness and creativity of employees

 Arrange jobs suitable to each person’s abilities and aspirations; Create conditions for them to develop their career and improve their qualifications

 Build corporate culture, create a friendly and open working environment

 Show sincere interest in employees, visit and timely encourage them to make them feel their company like a big family

 Organize healthy recreation and entertainment activities for employees to create

a playground for employees

 Improve working conditions for employees

 Apply human-based management policies which will help employees feel more comfortable, love their work and be more responsible for their work

1.5.3 Rewards based on a model that determines the level of income satisfaction

This model introduced by Lawler is based on the idea that employees will be

satisfied with their income when they are aware of their income and the level of adequate income

Figure 1.6: E Lawler’s model of income satisfaction level

Source: Edward E Lawler III, Pay and Organization Effectiveness: A Psychological

(New York: Mc-Graw-Hill), pp.215

1.6 Experience in motivating employees at the business

1.6.1 Enhancement of the role of work motivation

In the context of the current difficult business situation, the work motivation for employees which is needed is now hotter and more necessary, which require

monetary form

Awareness of job characteristics

Perceptions of personal attrition and the results received by others

Perception of personal attrition for the job

Real income

Perceptions of

adequate income (a)

Understanding of received actual income

managers to pay constant attention and take measures to enhance the role of work motivation

1.6.2 Common shortcomings of work motivation at the businesses

The current shortcomings in work motivation mainly focus on the implementation of policies and regimes for employees in businesses such as labor remuneration, social insurance and working conditions This situation proves that the current work motivation has not really been deeply concerned, sometimes only formal at the businesses The officers with long seniority are largely trained under the previous central planning management program, so their working style and methods are still heavily administrative, mechanical, less independent and creative

in work Moreover, they lack the market knowledge and modern production and business management methods Meanwhile, the young workers who are trained every year are dynamic, enthusiastic and creative but they lack practical experience, challenging opportunities and industrial working environment Most importantly, young workers are inexperienced in motivating employees and do not have feasible incentives and motivations Their potentiality is still hidden and is only maximized when being combined with the experience of predecessors

Summary of Chapter 1

It can be understood that Human Resource Management is a series of activities that firstly enable the employee and the employer to reach a common agreement on the purpose and nature of the labor relation, secondly ensure that the agreement will be fully implemented

The guiding principle in human resource management is to create a two-way link between employees and the organization: Satisfying the needs of employees will create their commitments to the organization’s goals which are required to create its success In contrast, contribution to the success of an organization is the only way for employees to meet their personal needs

There are many factors that affect employee satisfaction Understanding the needs

of employees is not enough, the company must also know how to apply other influencing factors (differences in expectations, confidence, desire for each form of reward, fairness, etc.)

CHAPTER 2 EVALUATION OF THE CURRENT STATUS OF

WORK MOTIVATION AT PVC 2.1 History and important development milestones of PVC

In 1983, PVC was established under the name of Petroleum Construction Enterprise under the General Department of Petroleum After 12 years, it changed its name to Oil and Gas Construction and Design Company in 1995 Ten years later, when the equitization plan was approved, it became a petroleum construction joint stock company Its charter capital gradually increased to VND 1,500 billion (2008) and then VND 2,500 billion (2010) and VND 4,000 billion (2012) after being listed

in 2009 at Hanoi Stock Exchange (HNX)

PVC was established and grew with the main business lines: specialized construction and installation of oil and gas, industrial construction, civil engineering, and financial investment As of December 31, 2018, the total number

of employees was 6,028 people with 11 departments, 6 major project management boards and associated companies

Figure 2.1: Organizational chart of PVC as of March 31, 2018

Business

Because of difficulties, the subsidiaries do not have new sources of employment, so the revenue dropped sharply with unfinished volumes and large liabilities 4

In 2018, PVC took the initiative in rearranging its organizational structure, reducing indirect labors at the Corporation’s office and actively reducing salary costs The Corporation completed the construction of the overall PVC restructuring plan and was approved by the Corporation in Decision No 2034a/QD-DKVN dated September 20, 2013

At the same time, PVC also completed the transfer of PVC’s paid-in capital

in Petrosetco Assets Management JSC (PSA) PVC has been negotiating with OceanBank to exchange shares at PVC-ME, PVC-HN, PVC-SG, PVC-TH, PVC-SSG, etc on the principle of focal point reduction, capital recovery or debt reduction, publicity and transparency; Building a roadmap and plan for divestment, dissolution and merging of PVC units to contribute capital for investment in the non-main business fields and ineffective activities under the Corporation’s orientation

In 2016, PVC completed construction and handed over many projects such as: Leveling project (phase 1 & 2) - Nghi Son petrochemical refinery, Agribank headquarters building project (Hanoi), Topside and the base of 5X Northeastern Golden Lion Project, Topside BK 17, Thang Long underframe, Supply of materials, onshore fabrication, offshore installations for Cuu Long JOC-02 (Vung Tau), Ba Ria - Vung Tau Vocational Training Center, etc

PVC’s human resources

With more than 6,000 employees, in terms of qualifications, PVC has 226 unskilled employees, 2,612 technicians, 617 employees with Associate Bachelor’s Degree and Intermediate certificates, 2,451 bachelors/engineers, 117 masters, 5 doctors

4 As of December 31, 2012, total unfinished production and business cost of PVC is more 3,200 billion dong

However, due to the appearance of new water and wastewater treatment companies and the influence of job quality, the percentage of employees who quit their jobs in

2017 was 25%

2.2 Overview of work motivation at PVC

Besides salaries, the main source of income for employees has been affected for 2-3 recent years Many officers and employees have moved to other places, even some subsidiaries have been dissolved The following analysis mainly focuses on material and non-material reward activities, typically the evaluation, employee identification (non-material)

2.2.1 Work performance evaluation

PVC aspires to implement a unified achievement evaluation program for all departments, all levels and all offices This program is not aimed at evaluating the work performance for each employee rank in the Corporation Its work performance evaluation program is shown below:

The Corporation uses a single evaluation form for all ranks and departments However, in this form, there are 20 criteria divided into 04 groups of evaluation criteria:

 Work performance

 Working attitude

 Personal characteristics

 Leadership capacity

Each evaluation criterion consists of 5 levels: Excellent: 5 points, Very good:

4 points, Good: 3 points, Average: 2 points, Weak: 1 point

Comment: The Corporation applies the same evaluation method to all employees, regardless of department or rank This results in evaluation results that do not really reflect the capacity, level of dedication as well as achievements of each individual Evaluation activities are relatively new and not all officers are proficient, so there is

a difference among units

The work performance evaluation results were not disclosed, making some employees skeptical of their veracity

2.2.2 Employee reward

PVC leadership is gradually improving the employee reward regime in order to encourage employees to improve labor efficiency, attract and retain talented people

A Basis for determining income

i , For new employees:

 Based on the nature of the job, the position, the urgency of the recruitment, the capacity of candidate, the level of income is agreed upon between the two parties Currently, the Corporation has not built a payroll scale

ii , For existing employees of the Company:

 Apply the wage survey method of companies in the same area, companies in the same industry to make adjustments accordingly and ensure competitiveness

 Use the employee performance evaluation results as a basis for determining the specific salary increase for each individual to ensure reward fairness

Comment: The above mentioned basis for determining the income level for existing employees at the Corporation is completely reasonable and convincing for employees

The current income level of employees in the Corporation is considered to be good compared to other companies of the same industry and area

B Income and income payment

PVC set up the financial regulations that includes all provisions on same income and income payment for all employees, specifically:

Monthly income: includes

- Basic salary, responsibility allowance (for assistant manager or higher) based

on the actual number of working days and hours;

- Other allowances: travel, telephone, lunch, responsibility allowances are fixed and the same for all employees in the Corporation

13th month salary:

- All employees of the Corporation are entitled to the 13th month salary unless the employees quit their job before or on December 31 of that year or the employees are disciplined in the year

- The 13th month salary will be paid in January next year

Comment: The Corporation has not developed any spot bonus policy for each specific case/achievement Moreover, the Corporation has not developed any bonus policy based on its sales or business results, so it has not encouraged employees to strive for its growth and development

Salary policy: Unless employees are imposed disciplinary measures, a warning letter during the year, all employees are considered for salary increase in December

of the year and new salary levels shall be applied from January 1 of the following year The salary increase is based on the performance evaluation results and is divided into 04 levels: A - Increasing by 15%, B- Increasing by 10%, C - Increasing

by 5%, D- No pay rise (Level D for seniors/ juniors below 29 points and for assistant managers/managers below 39 points or employees who are imposed any disciplinary action or warning letter during the year)

C Benefits

 Employees are entitled to Workman compensation insurance Accordingly, employees are insured in the event of an accident during the period from their home to the Corporation, the working time at the Corporation and from the Corporation to their home

 All employees are paid social insurance, health insurance, unemployment insurance, trade union fees by the Company in accordance with the current regulations in Vietnam

Comment: The Corporation has implemented a variety of benefits including mandatory and voluntary benefits to encourage employees

D Spiritual rewards

 Organize annual tours for all employees and pay vacation allowance to individuals who cannot join tours due to job requirements or force majeure

 Visits, allowances for weddings, funerals, sickness

 Childbirth benefits for all employees

 All employees receive gifts on the occasion of traditional New Year, birthday, mid-autumn, international children’s day (if the employees’ children are under

15 years old)

 Female employees receive gifts on the occasion of the International Women’s Day, the establishment of the Vietnam Women's Union

 All employees of the Corporation are entitled to annual health checks

Comments: The Board of Directors is aware of the importance of spiritual rewards for employees and has implemented practical compensation forms However, the Corporation has not organized excellent employee voting and appropriate commendation to encourage employees

2.3 Evaluation of current status

Board of Directors of the Corporation sets out guidelines and policies on performance evaluation as well as employee reward A performance evaluation and reward system is considered to be effective when it both satisfies the wishes of employees, at the same time, ensures its business efficiency In order to do this task, the Board of Directors needs to recognize the current status of the performance evaluation system and reward regime applied at the Corporation, thereby making appropriate adjustments

The author has tried to conduct surveys and collect opinions from both sides: employees and employers on the performance evaluation and reward regime at the Corporation to find out similarities and disagreements between employees and employers, thereby taking appropriate solutions

2.3.1 Survey of Board of Directors:

Method of collecting evaluation opinions: Direct interview

Objectives: Through a direct discussion with the Board of Directors, grasp their

viewpoints of the current performance evaluation and reward regime of the Corporation and the guidelines and policies of the Board of Directors in the future

Implementation:

The author conducted a direct interview with members of the Board of Directors in charge of the Corporation’s personnel After interviews, the author makes the following comments:

The Board of Directors of the Corporation also recognizes that its performance evaluation system is currently showing some disadvantages, which are

no longer suitable for its development process in particular and the application of more and more advanced knowledge of human resource management in general in economic organizations in Vietnam

On the other hand, the Board of Directors also realizes that although the Corporation has had a relatively competitive reward regime, it has not any appropriate reward policy to encourage employees to develop their capacity and not paid attention to the spiritual reward regime, the employees have not really devoted themselves to its development

Through the above interview results, the author realizes that idea contribution

to developing and completing an appropriate evaluation process and an effective reward regime will be paid attention to and encouraged by the Board of Directors

2.3.2 Employee survey

The object of human resource management is the employees of the Company,

so their comment and satisfaction level is the most accurate measure of the current status and efficiency of human resource management Moreover, managers not only impose their own management policies and methods but also need to listen to their employees to introduce the most appropriate management activities

From the above perspective together with the lesson on successful typical implementation method, the author decides to choose the method of collecting employees’ evaluation opinions as a basis for assessing the actual status of work performance evaluation and employee reward regime at PVC

Opinion collection method: The author sent survey questionnaires to nearly 100

employees and collected 55 ones The content of the survey questionnaire is

presented in Appendix 5

The received results are the evaluation of 55 employees, accounting for about 55%

of total expected samples

Table 2.1: Respondent structure

(Source: Employee survey of PVC)

The grading system given to respondents is a 5-point scale, where 5 is the best (Strongly agree) and 1 is the worst (Strongly disagree)

Criteria with an average score of 3.5 or higher are considered as positive

Criteria with an average score of less than 3.5 are considered as negative and need

to be specifically analyzed to find out the cause and provide a corresponding solution

Evaluation result:

As shown in Figure 2.2 - Summary of employee survey results presented below, it can be seen that employees generally have a relatively positive assessment of the performance evaluation and employee reward regime at PVC The criteria that are rated lower than others are: time spent on personal needs, appropriate commendation and rewards, fair compensation for individual contributions, leaders’ care about employees and exact and timely evaluation results

Figure 2.2: Summary of employee survey results

In order to determine more clearly the satisfaction level of different employee ranks and the different concentration levels of human resource management for employee ranks, the author summarized the survey results based on the employee rank shown

in Figure 2.3

Figure 2.3: Summary of employee survey results by rank

Comment:

The survey results by rank presented in Figure 2.3 show that the manager of the department has the highest satisfaction, followed by the Deputy Manager or the Director of subsidiaries Long-term professionals have the lowest satisfaction level

In general, the compensation criteria are evaluated positively; however, both term and less experienced professionals are not completely satisfied with their income level The lowest-rated criteria is the work performance evaluation, most employees are dissatisfied with non-reception of their feedback

long-In order to determine more clearly the satisfaction level of employees doing different jobs and the different concentration levels of human resource management for positions, the author summarized the survey results by departments in Figure 2.4

Figure 2.4: Summary of employee survey results by Department

The above survey results show that the Office including Administration, human resources, Accounting Departments have the most positive evaluation and the Technical Department has the lowest satisfaction level In the construction industry, technicians are quite important because they directly create the quality of service and directly contact customers, thus improving the satisfaction level of this group must be given the top priority

Analysis of evaluation results and conclusions on the causes of negative evaluations:

In order to find out solutions to the shortcomings in the performance evaluation and employee reward regime at PVC, the author analyzes the evaluation results, particularly focusing on the criteria less than 3.5 points The author also conducted individual interviews, group interviews to better understand employees’ evaluation and comments on the negative evaluation criteria, thereby identifying their causes

as the basis for taking appropriate solutions

Performance evaluation:

The employee evaluation results on the criteria related to the performance

evaluation of PVC are presented in Table 2.2