Solutions for poor employee performance at annam gourmet market

OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL OF ECONOMICS & MANAGEMENT MBQPM 6 NGUYEN THI NGUYEN THAO SOLUTIONS FOR POOR EMPLOYEE PERFORMANCE AT ANNAM GOURMET MARKET MASTER FINAL PROJECT M

OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL OF

ECONOMICS & MANAGEMENT

MBQPM 6 NGUYEN THI NGUYEN THAO

SOLUTIONS FOR POOR EMPLOYEE PERFORMANCE AT

ANNAM GOURMET MARKET

MASTER FINAL PROJECT MASTER IN BUSINESS QUALITY AND PERFORMANCE MANAGEMENT

Ho Chi Minh City (2018)

OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL OF

ECONOMICS & MANAGEMENT

MBQPM 6 NGUYEN THI NGUYEN THAO

SOLUTIONS FOR POOR EMPLOYEE PERFORMANCE AT

ANNAM GOURMET MARKET

MASTER FINAL PROJECT MASTER IN BUSINESS QUALITY AND PERFORMANCE MANAGEMENT

Tutor: Prof Jacques Martin

Ho Chi Minh City

(2018)

I, the undersigned, _, declare that this dissertation is my original work, gathered and utilized specially to fulfil the purposes and objectives of this thesis, and has not been previously submitted

to any other university for master degree Any work or information adopted from other sources is duly cited and referenced as such

_

Signature

ACKNOWLEDGEMENTS

I would like first to express my appreciation to the Solvay Brussels School of Economics & Management and Ho Chi Minh Open University that provided me with this special and useful program

Then I would like to offer my deep gratitude to Prof Jacques Martin, who is the Director of the program, the lecturer of two courses, and most importantly, my advisor for this thesis for his profound knowledge transfer, his dedication, his willingness, for his valuable and constructive suggestions during the planning and development of this report

I am particularly thankful for the support of Prof Michel Brotto (Process Management), Prof Philippe Debroux (Human Resources Management), Prof Paolo Braguzzi (Innovation), Prof Antigoni Papadimitriou (Performance Evaluation) and all other professors of the program, who have conveyed their sound, systematic and practical knowledge and experience to us

Besides, assistance provided by my colleagues in my company for the data collection are greatly appreciated

TUTOR’ S COMMENTS AND APPROVAL

_

Signature

TABLE OF CONTENTS

PREFACE

PART I – INTRODUCTION AND PROBLEM IDENTIFICATION 1

CHAPTER 1 – CORPORATE CONTEXT AND EMPLOYEE PERFORMANCE ISSUE 1

I COMPANY CONTEXT 1

II EMPLOYEE PERFORMANCE ISSUE 5

CHAPTER 2 – INVESTIGATION OF THE CAUSES OF POOR EMPLOYEE PERFORMANCE AND THE CONSEQUENCES 9

I EMPLOYEE FEEDBACKS WITH SURVEYS & INTERVIEWS 10

II DETAIL ANALYSIS OF EMPLOYEE POOR PERFORMANCE ROOT CAUSES 14

1 Assessment of current EPM system 14

2 Processes and procedures 20

3 Delegation and job design 21

PART II - SOLUTIONS FOR EMPLOYEE PERFORMANCE MANAGEMENT 24

CHAPTER 1: SOLID FOUNDATION FOR SUCCESSFUL EMPLOYEE PERFORMANCE MANAGEMENT 24

I CRITICAL PREREQUISITES 24

1 Vision Framework 24

2 Leadership and Commitment 26

II PROCESS SYSTEM 27

1 Why processes are needed? 27

2 How to build the process system properly? 28

3 How to implement and control process 31

CHAPTER 2: PERFORMANCE MANAGEMENT SYSTEM 33

I PURPOSES OF PERFORMANCE MANAGEMENT SYSTEM 33

II DESIGN OF PERFORMANCE MANAGEMENT SYSTEM 34

1 AGM Objectives Development with Balanced Scorecard 34

2 Targets 43

3 Measurements 44

III PERFORMANCE MANAGEMENT CYCLE 44

CHAPTER 3: DRIVERS TO ENHANCE EMPLOYEE PERFORMANCE SYSTEM 49

I EFFECTIVE COMMUNICATION 49

1 Communication plan for changes 49

2 Change promotion in the company 49

3 Two-way communication 50

II MOTIVATION 51

III TRAINING 52

IV CULTURE 52

V INCENTIVES & REWWARDS/ RECOGNITION SYSTEM 53

CONCLUSION 54

REFERENCE LIST 56

APPENDIX 57

LIST OF ABBREVIATIONS

LIST OF FIGURES IN THE REPORT

Figure 1 Company organization chart 2

Figure 2 SWOT Analysis 2

Figure 4 Factors Affecting Employee Performance 11

Figure 5 Root Cause Analysis of Poor employee performance 13

Figure 6 Aligning Strategic Planning and Job Requirements 22

Figure 8: Strategy Map & Objective linkage 40

Figure 9: Scorecard Strategic Alignment Process 41

Figure 10: Linking Organizational Performance to Employee Performance 42

Figure 11: Business Performance Management Maturity Model 55

PREFACE

In today’s globalized world, it is much more opened and there are available opportunities for anyone to create a business compared to previous ages Establishing a company therefore is just as easy as pie However, is it just that easy

to maintain, grow, sustain and succeed? - The answer definitely is “No” The more developed we are; the more competition becomes tougher

A rough company survival rate (USA Today) states that 1/3 of companies disappear after 2 years, 2/3 of companies disappear after 4 years, and less than 30% last 10 years Causes for failure of these businesses certainly varies from underestimating how much money will be needed to fund operations and/or overestimating how quickly their products and services will catch on in the marketplace However, there is a common basic reason in general that they either

lack their own competitive advantages or lose them over time

“Michael Porter pioneered the concept of competitive advantage and broke

it down into two forms: differentiation advantage and cost advantage Differentiation advantage is when a company provides a superior service or product for the same price charged by the market Cost advantage is when a company provides the same service or product as the market, but at a lower price Porter collectively refers to these as "positional advantages" because they define the firm's position as having the leading service or product in its specific industry” –

Investopedia

Where does these advantages derive from? He also states that these advantages cannot be sustained for any length of time because the promise of economic rents invites competition How can we sustain our competitive advantages? Let us be inspired and learnt from the success story of Toyota, a company that succeed with that two strategies of Quality and cost Their “secret” is always the principle of elimination of waste and absolute concentration on

consistent high quality by a process of continuous improvement (Kaizen) as a core”

The gain of superior products or services offered to customer is more and more critical, and the costs should be more and more utilized How? It is not

something new, the world has recognized it as a most crucial approach to business success and sustainability - “Total Quality Management” (TQM)

TQM ensures long-term success by enforcing all-encompassing internal guidelines and process standards to reduce errors By way of serious, in-depth auditing – as well as some well-orchestrated soul-searching – TQM ensures firms meet stakeholder needs and expectations efficiently and effectively, without forsaking ethical values

TQM, in other simple words, is quality in everything we do, and make a loop of continuous improvement “If we do not improve, we deteriorate” We are the top today, but it is not guaranteed that we remain to be top tomorrow even if we remain the same effort that we devote today Therefore, knowing where we are, how

to improve, and where to improve is especially critical to the success of the implementation of TQM in particular and in doing any business in general as Deming’s cycle Plan – Do – Check – Act

The “check” part in this case is Performance Management (PM) System We need PM to translate our strategies into actions, to ensure our performance in the aspects we want like quality of products, services, processes, etc to meet customer standards or requirements, internal and external benefits PM is also the base for decision-making

Many big companies which implemented successfully their TQM and PM system cannot deny that human capital is their key resources It is totally true that

as long as we get everything else but not a right team of people, we hardly produce

a sustainable competitive advantage PM, of course, not only about employee performance, is more encompassing Yet, supposing that we have all of process written, but employees are not buy in, the system will barely work properly and not high-performing Hence, employee performance management play an integral and main part of the system where we can transform our people’s talent and motivation into a strategic business advantage, just like we sail or drive a ship with the strength

of all crew members together pointing towards the desired destination That powers the most

Frankly speaking, managing employee performance is not at all a fast and easy job It is one of the biggest concerns of almost all management teams That is why in this assignment, I will discuss and focus on finding solutions for this matter,

on how to solve poor employee performance, how to assess, design, and implement successfully an employee performance management system where our company’s strategic objectives and goals will be achieved

PART I – INTRODUCTION AND PROBLEM

customer demands and more;

service that exceed customer expectation; we do not simply provide

fine foods, we bring a lifestyle and culture;

 Strong customer relationship that care so much for customers

More customized;

 Trusted brand awareness, associated with products of high quality,

organic, healthy, and eco-friendly;

AGM, retail sector, belongs to Annam Group which includes wholesales

of imported products - AFF AGM shares the common departments (HR, Accounting, Maintenance, IT) with AFF to take advantages of cost-saving

Figure 1 Company organization chart

GENERAL DIRECTOR

RETAIL DIRECTOR

HR DEPARTMENT

MAINTENANCE

ACCOUNTING DEPARTMENT

AX/ IT

PURCHASING MARKETING OPERATIONS

Phu My Hung Store Hanoi Store

STORES

Direct report line:

Indirect Report line:

Supporting/ Shared departments from the Group

Hai ba Trung Store Saigon Center Store An Phu Store

Figure 2 SWOT Analysis

of the city and of expat community

(HCMC: Dist 1, Dist 2, Dist 7,

Hanoi: Tay Ho Dist.);

with high quality that has been

developed for years to satisfy

customers demand;

image with imported products offer,

and unique shopping experience in

boutique style of design and nice

decoration;

in Vietnam; we have certain

number of loyal customers;

enables us to invest and expand

more;

activities are not so effective;

well-linked processes, having no complete supply chain – very inefficient and ineffective, not computerized;

many reasons, partly as high staff turnover and no customer relations management policies;

staff turnover, unfavorable corporate culture for employee development;

selling price but not much margin;

government policies, removed trade

barriers: allow easier and less costly

access to importation; more foreign

investment means more expats,

our core customers, coming to

Vietnam;

from domestic/ foreign investors with better coverage, competitive advantages than us;

when there is more competition will

be even harder to find and retain the staffs so that we can always maintain

+ Vietnam economy continues

to growing well, retailing has more

development space;

middle class: chance to expand

more targeted customers from

upper/ middle class Vietnamese,

aside from expats, tending to be

more foreign-oriented and

quality-driven;

over food safety and health

consciousness will promote us as

safe and origin-clear, organic foods

and products retailer;

the efficiency, the service quality, in plus the labor costs must be increasing;

Widely looking at the industry and its scenarios, Vietnam's food retail sector

is expanding in response to growing consumer demand Overall economic growth, including a sizable young population, rapid urbanization and concerns about hygiene and food safety are driving changes in consumption patterns This will spur the demand for greater choice in products, brands, and product categories

With increasing disposable incomes, rapid urbanization and rising living standards, Vietnam is one of the most dynamic emerging economies in the Southeast Asia region Vietnam’s GDP growth positively help to drive a robust inflow of FDI capital into the country capturing incentives offered by several FTAs These FTAs help boost Vietnam’s economic growth, which in turn offers more opportunities to businesses in the food retail sector Besides, food safety and hygiene have a significant influence over Vietnamese consumers’ food purchasing decisions Overall, consumers are more careful about the quality of the products they purchase

Therefore, easier policies and taxation for importation, more and more customers as more expats, more middle Vietnamese income classes, more foreign-oriented customers, more concern about quality of products will provide AGM with many good conditions and opportunities However, it also means the competition will become stiffer

Many companies are expanding or planning to provide so many alternative choices of imported products Currently there are only those with much smaller scale and much smaller selection compete with AGM directly AGM is, even though, the main player in the segment, it cannot rely on this situation forever, as the game changes, the competition becomes stiffer in the next coming years, so the strategies for remaining our positioning need to be prepared

The company, therefore, should be advanced and improve to be even stronger, much more profitable and competitive if we can eliminate or minimize the internal weaknesses to increase our competitiveness especially human resources problems, which can cause problems in quality, productivity and many more

II EMPLOYEE PERFORMANCE ISSUE

The management has focused on the financial targets only and neglected employee performance management which can strongly affect the company success and sustainable development Poor management of employee performance can result

in poor employee performance, leading to so many defects in operations and service, low efficiency and effectiveness The company is struggling to find the way to achieve the targets but has realized that while the management is trying, the employees cannot perform what they want

For 3 consecutive years, sales data of the company showed that we have missed the set target and grown less than 5 % in sales compared to the same period

of the year before while the industry grows about 10% (Nikkei Asia, 2017) Even AGM has invested a lot in marketing activities, in renewing the stores, and promotions to boost sales, the results showed that they are not effective enough, which really concerns the top management

Furthermore, one of our competitive edges defined, which is vital, is customer service AGM has increasingly got many customers complaints The Operation Department organizes frequent audit, on weekly basis, to control the store operations Despite strict audit and scores affecting the employees’ KPI incentives, they just make a lot of mistakes, breaches, failure to meet operation standards

Despite setting high margin percentage of 20% - 40% depending on product types, our profit remains very low as all kinds of costs incurred due to poor employee performance

Current costs include:

 High operating costs: up to 20 - 25% of the revenue, meaning that the company is operating so inefficiently and ineffectively (including high costs of loss and damage)

salary is competitive but the results are not as expected, and employees always complain that they are overloaded, managers always want to have more staffs to finish the work

training new ones, cost of cover time for the vacancy;

Surely, these issues not only reduce a lot of profits, waste time and resources, but cost future growth and sustainability because besides adverse financial and operational impact derived from poor employee performance, the current way of employee performance management way creates lots of human resources issues adversely affect the company outcomes such as:

 Employees does not undertake work as required, showing signs of apathy and laziness;

opinions to the work environment;

so there is no good data for proper decision-making like promotions, demotions, training, pay increase, discipline, and termination, etc.;

competition

objectives, leading to micromanagement, which is very exhausting and not effective;

reactor of day-to-day tasks and overloaded with no focus They, furthermore, feel they don’t get enough support and instructions to do their work

High employee turnover rate, up to 40 – 50% (full time store and back office employees) while the industry rate is about 30% (Mercer, 2016), cost much money and effort, causing low productivity and work quality as new employees cannot perform well immediately It is very hard to maintain good service because of frequent employee replacement The issue becomes more severe day by day if we do not solve it

Even if the management cares only about having healthy financial statements and better profitability, understanding the strong link between employee performance with the company performance is a must Poorly managed employee performance not only causes problems at present but for long-term and sustainable growth

Figure 3 Summary of Poor Employee Performance Issues

Low motivation

High Staff Cost

High Staff Turnover

Poor service quality

High Operating Costs

Decreased Sales Low

Efficiency/

ess

Effectiven-Impaired

corporate

culture

Poor employee performance

Employee is one of the core assets of the company, so it is critical for the company to know how to manage and strengthen this own asset effectively if they want to grow even more Other aspects for employee performance enhancement rather than sales must be included to manage employee output and productivity We will find out more in details about what and where to improve or replace in the current system so that we can be able to drive the company to the desired targets in the next chapter

CHAPTER 2 – INVESTIGATION OF THE CAUSES OF POOR EMPLOYEE PERFORMANCE AND THE CONSEQUENCES

A simple definition of unsatisfactory job performance, in other words, poor employee performance, is a gap between the employee's actual performance and the level of performance required by the organization The tricky thing at this point

is that with the current way of performance management, it is hard to tell the right gap as the current so-called EPM system does not work well or provide the right measurements because of many reasons that will be discussed below

The top management has thought the job of managing employee performance is not an issue and can be relying mostly on the line managers, and using

“Stick and carrot” method to scare the employees not to make mistakes EPM is, in fact, critical for the company to carry out its visions, strategies and targets

Many actions taken mainly are just corrective rather than preventive or able to solve the operation problems due to employees at the root The store audit, for instance, happens every two weeks to control the store operations are as expected and under control However, AGM recently got a serious case of damaged and expired products with fairly big costs due to employees neglecting to take care the temperature of the freezer They then hid it in a corner of a warehouse to prevent Operations team from figuring out and to avoid the responsibility that will make the company fire or discipline them It was even more serious when some of these products were at the time still on the display for sale The case ended up very complicated because there were no clear responsibilities, no clear delegation from the Store managers, no follow-up and control of the inventory, and many more It was just one of many problems happened related to employee performance The case closed with labor discipline, more frequent store audit, and inventory check without digging deeply into why and how such a situation can happen? The management said that was entirely employee faults, is it really that only their faults and how we can prevent it from happening again?

We will really need to investigate why employees do not do what we expected, is it because they are unable to do it, do not want to do it, or whatever reasons are

I EMPLOYEE FEEDBACKS WITH SURVEYS & INTERVIEWS

I have collected information from informal feedbacks like employee conversations, formal feedback like exit interview, meetings and from my observations of real situation Most typical and obvious feedbacks that I got for the

question “why you/ your subordinates underperformed?” being asked in different

ways have been recorded There are other questions I asked employees who wanted

to resign from the company, and I think these employees were much more willing to express whatever the issues are, what they really felt about anything, if we have done the questions in the proper way (attached Exit Interview Questionnaire Form in the Appendix)

I divided the reasons into 4 big groups of factors and illustrate the main reason with the below chart:

- Managerial and Organizational Factors: pay, working hours, promotion

system, authority and responsibility, managerial behaviors and participation in management, communication, reward and penalty, work design, company support, guidance, processes, corporate culture, etc

- Physical Factors: Lighting, noise, thermal comfort, ventilation and

humidity, hygiene and cleaning services, etc

- Technical Factors: Workplace design, technology, machinery, devices

and materials, etc

- Personal factors: competencies, attitude, education and self-development,

etc

The results of my rough calculation of surveys, interview, and observations can be summarized as the Figure 4 below

Figure 4 Factors Affecting Employee Performance

The main group factors affecting employee performance are Managerial

and Organizational Factors (70%), and personal factors (20%) Here are details of

the factors and reasons in order of highest to lowest importance and impact:

 Managerial and Organizational Factors

performance appraisal, unfair KPI system which I will explain further in more details in the next part, and slow payment of KPI incentives accounting for up to 50% of their pay;

work and joint effort in solving problems;

management to employees, so employees don’t really understand what they are expected of;

the management

they have been told, they are too complicated to understand or implement;

0 10

Personal factors Physical Factors Technical Factors

Group Factors Affecting Employee Performance

- Their roles are not clear and being changed frequently;

are too stressed, and overloaded;

responsibilities, what should be expected, goals and/or standards

or workplace policies and consequences are not clear (or have not been set);

micromanagement way;

because there is no counselling or feedback on their performance regularly;

 Personal factors:

job they are required to undertake, or the employee does not have the knowledge or skills to do the job expected of them;

Figure 5 Root Cause Analysis of Poor employee performance

procedures **

Unfair EPM system

Causing employee dissatisfaction &

low motivation

Lack of support &

no team work

No guidance or little training

Objectives not well defined &

communicated clearly

Performance feedback not provided

Ineffective micromanagement style

Lately/ wrong paid KPI incentives

EPM system not function properly

Improperly designed &

implemented EPM system *

Unfavorable working environment

Lack of good processes &

procedures **

Lack of good processes &

procedures **

Wrong delegation/

job design ***

Improperly designed &

implemented EPM system *

Low personal motivation

Not chose right competent employees

Wrong delegation/

job design ***

Lack of good processes &

procedures **

Poor selection process

Chose the wrong job

Physical problems

Mental problems

Lack of training/

self-learning

Too much work/

unbalance work - life

Work over capabilities

EPM system not function properly

Improperly designed &

implemented EPM system *

Note: a*, b**, c*** are repeated

causes

As showed in the 5 why chart, those causes that are final and repeated are root causes We will only focus on analyzing root causes arising from the

company to find proper solutions Those belonging to employee self-issues will not

be a big concern as they are much lighter factors that will be surpassed if we can solve our organizational issues

I therefore will take these three following factors into detail analysis to figure out what, why, and how they affect adversely employee performance:

 Improperly designed and implemented EPM system

 Lack of good processes and procedures

 Wrong delegation and/or job design

II DETAIL ANALYSIS OF EMPLOYEE POOR PERFORMANCE ROOT CAUSES

1 Assessment of current EPM system

The first, most important and direct factor impacting the employee performance is the “so-called” EPM system Frankly speaking, this is presently just

a Form or Template to calculate KPI incentives for the employees every month or every quarter, not really a system

When thinking about assessing an EPM, it is necessary to define what its purposes are in the organization, how it is designed and how it is implemented

Firstly, AGM’s EPM system purposes are either only for calculating KPI

incentives as a main role to reduce the staff costs (by putting more incentive into salary package and lowering the basic salary, helping to reduce much taxes and insurance cost) or appear to be not much meaningful in controlling, managing and improving employee performance even if that is what current EPM tries to accomplish It is to see that the top management has not thought EPM is crucial or directly link and affect much on whether or not the company can achieve its objectives And so, KPI in this company acts more as an incentive-counting tool and

as a “stick” to scare employees and put them into a frame that the management wants

Or, they understood that it is not a good system, but there is not strong will to change

or improve it as it is supposed to be The current EPM system therefore serves only administrative purpose – producing information to use for HR compensations and benefits system I believe definitely this way of thinking has been never showed a right meaning and value of an EPM It should be much more than that A true and real EPM system should serve as many purposes including:

 Strategic purpose – most important purpose: to link employee activities

with the company’s mission and goals, to achieve strategic business objectives It identifies results and behaviors needed to carry out the strategy and create the type of organization with the culture they want to cultivate;

 Information purpose: valid information for decision-making, including

HR decision making like selection criteria, compensation and reward, retention, promotion, demotion, training needs,

 Communication purpose: serve as important communication device,

informing employees what the company considers to be most important, what they need to achieve, how they are doing, what they need to improve

 Improvement/development purpose: important component of a

well-communicated EPM system, providing employees with feedbacks, to define their strengths and weaknesses, key improvement areas, and causes for performance deficiencies This is not only used for organization development but also for employees’ career development path;

 Assessment purpose: assess performance both individual and

organizational level, the effectiveness of investment, resources allocation,

HR intervention, etc

Secondly, because the intentional purposes of AGM EPM system have

been improperly defined, its design is surely just to meet these improper purpose, not what it is supposed to become

The design of AGM EPM system, actually it just consists a KPI Form (attached in the Appendix) was done by Operations Dept, not even HR Dept It is therefore mainly serving operational purpose rather including people management elements

 Description of AGM EPM system:

Employees are divided into 7 levels and with the percentage of KPI incentives as showed in below table

Description

% Base salary/

month

% KPI/

month

Frequency paid

Cleaner, kitchen helper, security, delivery

Every month

Seller, cashier,

Every 2 months

Every 4 months

Every 4 months

Every 4 months

Every 4 months

Every 4 months

Junior – Senior

Every 4 months

 80% of the employees are store staffs, paid in the structure of: 50 – 70% % is base salary and 30 - 50% is KPI incentives The percentage depends on the positions, the lower position is, the higher the percentage of KPI incentives

finish KPI of 1 employee A Store manager has to do KPI calculation for about

30 – 100 staffs depending on the store size The reports are only enough

but the salary calculation is closed at 25th, so Store manager will have normally

10 days to finish the calculation manually for most of the store employees It makes the calculation become so tiring, time-consuming, and inaccurate There

is almost no performance meeting between managers and employees, only some special case Therefore, employees do not really consider the meaning of the KPI as anything else but incentives of sales

actually never happens Because there is no willingness to do it, more importantly no data to do it The KPI Form for Office employees are filled by Line manager, and in most cases, they do not know what to put in Therefore, employees have no target at the beginning, then no data or comparison enough

to calculate their KPI In plus, because the staff turnover is so high that no line manager remembers about it and no one seems to care Employees who remain working are already tired of keeping asking about the KPI incentive It ended

up that the company always owe this money to the employees, and the KPI there exists for the sake of nothing

performance evaluation

time or even more for HR to check and for the Director to validate the figures

the Annual Appraisal in the Appendix) This is considered to be so important to employees because its results will relate to whether or not they can get pay

increase and/or promotion However, clearly, the appraisal assessment is based

on feeling and judgement of line managers without any proof, data, or evidence

to prove Anh then why it is also not linked at all to the KPI evaluated during the year This appraisal really acts as a formality only, no value behind

Failing to serve most of the purpose an EPM system is supposed to, AGM’s EPM system is lacking many needed features Following are all features that AGM EPM system lack when being benchmarked and compared to a good EPM system:

 Strategic congruence: EPM system should be congruent with the

organizational strategies In other words, individual goals must be aligned with departmental and organizational goals and objectives while KPI criteria were not set based on the strategies, but the sales and some other financial figures only;

 Thoroughness: the system should be thorough regarding four

dimensions

+ All employees should be evaluated including all managers; + All major job responsibilities should be evaluated including both results and behaviors;

+ the evaluation should include performance spanning over the entire review period, not just a few weeks or months before review;

+ Feedbacks should be given on positive performance aspects as well as improvement- needed areas and on on-going basis; AGM employees are not evaluated in such above way, making it really inconsistent, broken and clumsy

 Practicality: the system need to be good, fast and easy to use, not too

expensive, while AGM’s is too much time and effort consuming, complicated to understand and finish;

 Meaningfulness: the system should be meaningful in several ways,

the standards and evaluations conducted for each job function must

be considered important and relevant The performance assessment

must emphasize only those functions that are under control of the employees However, AGM KPI criteria are really irrelevant, especially for some position (for example, why does a cleaner have

to bear the deduction of KPI incentives if there is a high percentage

of damage or shrinkage because of expiry!!!) The evaluation must

be at regular intervals and at appropriate moments AGM does only one formal evaluation at the annual appraisal, it is not at all sufficient The results should be used for improvement and HR decision purpose, not taking results for fun People will not pay attention to a system that has no consequences in terms of outcome they value

 Inclusiveness: good system includes input from multiple sources on

an on-going basis Evaluation process must represent the concerns of all people who will be affected by the outcome Consequently, employees must participate in the process of creating the system by providing input regarding what behaviors or results will be measured and how (very important because people having different views) All participants must be given a voice in the process of designing and implementing the system This will help minimize employee resistance while at AGM, only Operations or sometimes HR and Director will take the job of creating the system

 Specificity: a right system should provide concrete guidance to the

employees about what is expected of them and how they can meet these expectations Yet, AGM provides too many either relevant or not criteria to understand clearly and to remember what to do This KPI has never ever acted as guidelines for employees

 Reliability: measures of performance of AGM system cannot provide

valid, relevant, consistent and free of error data as it is really wrongly designed and implemented

 Fairness: at AGM, and with this KPI Form, many criteria are not

fact-based but feeling-based, and there is no standard behaviors specified to benchmark and evaluate, so it is easy to be biased by

personal interests It should minimize subjective aspects, training of raters of appraisal needed Besides, the appraisal consists of two-way communication during which information is exchanged, not top down flow only like AGM now; And, unlike AGM system, standards should be clear so that performance is evaluated consistently across people and time

 Improvement: performance management should be a continuous

process with improvement loop, not isolated like AGM system It should be able to identify problems Feedback meeting with discussion allow us to diagnose the causes and explore possible remedies, such as job redesign, training or counselling in order to make improvement for the next period

2 Processes and procedures

For any company, processes and procedures will make the company function properly It acts as guidance for employees to follow and meet the required standard results At AGM, basically there is only a few processes being completed even if the management understand that they need processes

AGM is a functional structure This form of structure makes each department only focus on their own tasks, so there may be conflicts among departments rather co-operation, and between what is best for the functional department rather than the company as a whole, and also time-consuming for information flow This structure type, of course, has its own advantages Therefore, there is no need to change the structure, but to minimize the impact of these conflicts and promote more cooperation by having well-built and well-managed cross-functional processes

For 5 years, up to now, AGM is building its processes and procedures The Director of the company is aware of its importance However, the method used was not the proper ones Each department has been asked to list out all of the processes they think they need to have or should have There is surely no link with missions,

strategies, and critical success factors These processes also have no good link with each other

Then each department was in charge of creating these listed processes and procedures and submitted for approval and validation from the management The task

of process creation has never been completed as department managers are not the one who are skilled for this They also felt exhausted already with daily operational tasks, let alone this process project, and not being motivated because they did not find it meaningful to do so Even with some processes have been established, their values

do not reveal much Ready-to-use processes have normally sent out to all relevant departments without no or little training and communication The implementation of the processes thus is really weak

which core, support and management processes are and build upon, not treat them the same, not write many unimportant processes just for no use

After the process creation and implementation, the control and management part do not exist Please refer to a Process of Stock Management as an example in Appendix, there is no existence of process owner, input – output, requirements, and process measurement Many tasks done manually without support

of software make the situation of having no good processes even worse

Because the company is operated habitually Employees carry out their activites as underlying knowledge, so once an employee, especially key one, leave, there will be a mess of operations of the relevant tasks as no one else knows about or

be familiar with it

In addition, because there is no good process management, employee selection process is also not under control, leading to poor performance management

as lack of well-set criteria for selection, no right competencies, no standards and requirements for such process

3 Delegation and job design

The job design and delegation have to be linked with strategic planning too They cannot and should never be a job only coming from HR Dept alone, separately from the company’s strategies

Figure 6 Aligning Strategic Planning and Job Requirements

Human resources policies and plans

Job design

Job analysis

Competency profiling

Job description specification

Person specification

Strategic Model for Job requirements

Employee job descriptions have been not fully specified, and mostly written by HR Dept without taking input from other sources, especially job holders When the JD is not clear, it can affect employee performance and surely affect the quality of recruitment by not giving the right information to look for the right person

Method of collection data for job design and analysis should be done in many ways: interviews, questionaires, job performance, observation, dỉaies, critical incidents, rather than only information of HR

Another reason that causes poor performance is that organization chart of each department changes too often Every time change means the responsibilities of the employees in such department will have to change accordingly There has been not enough time for them to adapt to each role before the organization changes again

This really makes employees confused and exhausted I think the reason behind is the management wants to find a way to optimize the organization, maximize the quality and productivity of departments, but they have not considered about the time of change and how they make the change so that employees can follow In many case, the change of organization chart and wrong delegation have brought negative consequences An obvious example was removing the operation training to HR, instead of Operation teams And the transition happened very fast The trainer is a new member of HR team too HR team can have better communication and training skills, but they know almost nothing about store operations at the time, how can they train employees?

Delegation at the store is 99% under line manager control who are currently weak at people management skills So they keep moving employees from these positions to another as we have high turnover, and we always lack of employees The rotation is therefore not done properly

In conclusion of the analysis, the first two factors: Improperly designed and implemented EPM system, and lack of good processes and procedures are two major and critical causes to employee performance Therefore, we will find the solutions for these two problems as re-designing the PMS, which is more focused for the employees to reach their objectives, which has been aligned with the company objectives, to make sure the company reach its target either in short term or long term, and building process system to make sure employees carry out their tasks properly

PART II - SOLUTIONS FOR EMPLOYEE PERFORMANCE

MANAGEMENT

Employees are one of the key assets of any company, which can be considered as Human capital Enhancing employee performance is boosting the company performance The ability to maximize the value of its human capital will provide the company competitive advantages And, the key tool for this issue is an EPM system, which can be used to transform people’s talent and motivation into strategic business advantages

However, I would like to approach the issue in a holistic way, with considering the current status of the company, the thorough solutions should start first with building a solid foundation for the company, which is a critical condition needed for successful EPM such as its shared mission, vision, strategies, values, then building process system, and finally building the EPM system

The vision, mission, goals define where to go, process system guides how

to go, then the EMP locates where we are compared to the place we want to go, keep

us focused and on track to keep making effort to achieve the goals without falling off track, or spread effort and resources to wrong directions

CHAPTER 1: SOLID FOUNDATION FOR SUCCESSFUL

EMPLOYEE PERFORMANCE MANAGEMENT

The company has been too familiar with the way it has been operated for many years for now, the solutions I am going to provide will force them to change the mindset to break down existing barriers The new approach, total quality management approach, is comprehensive to achieve high competitiveness, effectiveness and flexibility for the company AGM will need to start to set up its solid foundation

I CRITICAL PREREQUISITES

1 Vision Framework

 Mission and vision must be clearly defined and communicated throughout the company

The company has no vision, mission, and values stated clearly These are not communicated to any level of the company Those that I summarized about the vision, mission, strategies in Chapter 1 Part 1 are information that I was trying to ask the top management in many ways, together with my observation

Any organization needs a vision framework, comprising its guiding philosophy, core values, beliefs, purpose and mission, and being communicated so that these are crystal clear to all employees just as a light on their ways

This will provide guidance for employees, the management uses this philosophy

to lead employees, and employees understand clearly what are important to the company and act upon

 Share and align the common goals

AGM has no established common goals And the effectiveness of an organization depends on the extent which people perform their roles and move towards the common goals and objectives Therefore, it is hard for them to be efficient and effective

Strategic planning allows the company to clearly define its purpose or reason for existing, where it wants to be, the goals it wants to achieve, and the strategies it will use to attain the goals Once the goals for entire company have been established, these goals will be cascaded to departmental goals and objectives The cascading downward continues until the individual goals compatible with those of the company As we lack of the strategic planning and cascading, goals of the company and the department have not joined each other to become common goals and objectives Departments and individuals are not in tune with the company

strategic direction

Furthermore, as cited from Performance Management by Herman Aguinis: “an important objective of any EPM is to enhance employee contribution to the goals of the company If there is a lack of clarity regarding where the company

wants to go, or if the relationship between the company’s mission and strategies and the department’s mission and strategies is not clear, there will be a lack of clarity regarding what each employee needs to do and achieve to help the organization to get there” Therefore, AGM crucially needs to have vision, mission and its strategies being communicated, cascaded and aligned

2 Leadership and Commitment

The culture of an organization is formed by beliefs, behaviors, norms, dominant values, rules, and climate in the organization, and of course, it starts from the values, beliefs, actions and behaviors of the top leaders Therefore, serious obsessional commitment of the top management to quality and high performance must be demonstrated Middle management also has a key role in communicating the message The spirit has to be bore in every employee mind They are not forced to do

some things, but they are willing to do it and with motivation

Hence, to be successful in promoting company efficiency & effectiveness, the performance-driven attitude must be organization-wide, starting from the top management with CEO and Operational Director They have to show and demonstrate they are serious about this spirit Forcing and controlling externally with employees are not effective Instead, the management should lead by example, show their strong commitment with what they desire to achieve and gain the consensus from employees The internal self of employee always generates more motivation to complete the jobs than external control of their superiors

The top management needs to see and appreciate how valuable the employees are, how important the employee performance is to the business in order

to promote this idea of performance management They need to integrate this belief into employees’ values, actions, plans, strategies to let them see how their contribution affect to the business and the company development

The management will also need to give resources and support enough to design, implement and maintain the employee performance system, knowing that this will help the business grow in the long run

II PROCESS SYSTEM

1 Why processes are needed?

Lacking good processes and procedures is one of root causes leading to poor employee performance Lacking process system makes employees struggle with their tasks because processes provide a roadmap for day-to-day operations The efficiency and effectiveness have therefore really been affected

When we have good processes, employees in the company will use time and resources more efficiently The consistency in practices that processes provide when employees working under processes is also useful for employees individually They know what they’re responsible for, what’s expected of them, and what they can expect from their supervisors and co-workers This frees them up to do their jobs with confidence and excellence

AGM can also gain better service quality by the standards and consistency that process system will bring When employees follow procedures, they perform tasks correctly and provide consistent customer service This enhances the quality of services, and, in turn, improves the company reputation Employees can know they are fulfilling their roles and take pride in their work

Proactively managing the processes can help the company to:

However, processes and procedures won’t do any good if employees don’t buy in like what has happened at AGM How to make people follow? The process needs to make sense, needs to provide benefits for people involved Process is not a document providing rules and restrictions, tiring and wordy to read It, indeed, must

be short, simple, precise, practical, and memorable, to ensure that employees understand the importance of following processes and procedures and know how to

do so

2 How to build the process system properly?

Learning from the mistakes that AGM has made in building processes for the last 5 years is a must Unlike their way, there is no need to write all processes that many of them surely do not add value, which only exhaust, demotivate and bore all employees

Here are the proposed steps for building process system:

improve processes to start the project without interfering employees’ daily tasks

processes

priority

The core business processes describe what actually is or needs to be done

so that the organization meets its CSFs

Defining processes types

The defining and classification are critical because we build, treat, control different kinds of processes in different ways

According to Viewpoint Training and Consulting:

“Core processes are end-to-end, cross-functional processes that directly

deliver value to external clients or intermediaries Core processes are often referred

to as "primary" processes as they represent the essential activities an organization performs to achieve its goals and objectives, fulfil its mission and attain its vision These processes make up what is called the value chain, which is the set of high level, interconnected core processes each of which adds value to the product or service The value chain creates and delivers the product or service, which ultimately delivers value to customers Core processes are the engines of the value chain and need to work seamlessly together to achieve real customer value”