PROBLEM IDENTIFICATION
Company background
Asia Commercial Bank (ACB), established in May 1993, has become one of Vietnam's leading joint stock commercial banks, boasting a national network of nearly 346 branches and sub-branches across 47 provinces and cities With a workforce of approximately 10,000 employees, ACB offers a diverse range of products and services, focusing on mobilizing short, medium, and long-term funds through various deposit forms, providing loans, and engaging in foreign currency and trade finance services ACB aims to strengthen its position as a top bank in five key areas over the next five years, emphasizing stable growth, professional management, and reasonable profit margins As of December 31, 2014, ACB is committed to delivering high-quality banking services while maintaining a strong market presence.
The Phu Lam branch has become a vital contributor to ACB's profitability and growth, largely due to the exceptional performance of its satisfied employees Established in June, this branch plays a significant role in the bank's overall success.
1995 with approximately 12 employees, and now it has growth with about 120 employees For this reason, it is in top of contributor to the profit in ACB
Credit officers play a crucial role in the ACB – Phu Lam branch by examining, evaluating, and processing credit and loan applications, while also managing accounts in commercial enterprises They are categorized into two main types: credit officers for corporations and those for individual customers As key personnel in the bank's operations, credit officers significantly contribute to the overall profitability of ACB.
Problem symptom
To assess the current personnel status of Phu Lam Branch, the writer gathered secondary data from HR Division reports and conducted preliminary interviews with the credit department manager The findings indicate that while Phu Lam Branch is one of the largest and most profitable branches within the ACB system, it faces significant personnel challenges, including low employee commitment, reduced productivity, and a high turnover rate among sales staff.
In the sales department, employees held various positions, including Relationship Assistant (RA), Relationship Officer (RO), Relationship Manager (RM), Personal Financial Consultant 1 (PFC-1), and Personal Financial Consultant 2 (PFC-2) The Human Resource report indicated a significant increase in turnover, rising to 28% in the first half of 2015 compared to 16% for the entire year of 2014 Specifically, 10 out of 32 employees left the company in early 2015, highlighting a concerning trend for a major branch like Phu Lam, which is crucial for ACB's profitability With the average turnover rate at ACB being approximately 10% during the same period, this elevated figure raises alarms about potential instability within the branch that needs urgent attention Research by Huselid (1995) emphasizes that high turnover rates can lead to negative organizational impacts, including reduced productivity, increased recruitment and training costs (Rousseau, 1984), and diminished future performance (Baron, Hannan, and Burton, 2001) Thus, a persistent high turnover ratio poses serious concerns for any organization.
Table 1: The overall turnover rate in 2014 and the first half year in 2015 (Data is provided from Phu Lam Branch - HR Division)
YEAR The first half year in 2015
Total of Employees who Left 10 4
As of now, Phu Lam Branch has not met many of its targets for the third quarter of 2015, according to secondary data The Balanced Scorecard (BSC) software is utilized to comprehensively evaluate the performance of each employee This system assesses employee productivity based on four key criteria, which are detailed in Table 2.
Table 2: Evaluation Criteria of Balance Score Card (Data is provided from Phu Lam Branch - HR Division)
Measure Total Score Weight Target Actual Score
F13 The debt ratio from group 2 to group 5 20%
C12 The number of customers increased 30%
C4 The average number of products used per customer 20%
In the first half of 2015, 50% of the staff at Phu Lam Branch reported a low Balance Score Card (BSC) score, falling below the 80% threshold This indicates a slight improvement compared to 2014, when 53% of staff members also scored below 80% on the BSC.
To meet the bank's standard regulations, credit employees must achieve a BSC score exceeding 80 points Table 3 illustrates the statistics for the sales staff at the ACB - Phu Lam branch, and the author employs a unique method to assess the current performance of the employees.
Table 3: Percentage of credit officers in accordance with the evaluation criteria BSC (Data is provided from Phu Lam Branch - HR Division)
The first half year in 2015 2014
Employee have standard BSC Score
Ms Mai Xuan, the Credit Department Director, expresses concern over current employee issues, including a lack of enthusiasm, customer dissatisfaction, and low loyalty She highlights the absence of personal initiative, passion, commitment, and alignment with the organization's strategies and goals.
In 2012, ACB faced a significant crisis driven by the banking sector's turmoil, which led to a contraction in the company's business operations In response, ACB implemented cost-cutting measures, including freezing employee benefits and reducing wages to maintain operational continuity amid declining revenues This strategic shift has rendered ACB less competitive compared to other banks like Vietcombank, Arigbank, and VP Bank Recently, VP Bank's HR department has actively recruited ACB's sales personnel by offering attractive salaries and high-ranking positions, prompting some employees to resign and seek opportunities elsewhere, which could negatively impact the morale of remaining staff.
Recently, the branch has faced significant customer criticism due to low morale among salespeople, leading to inadequate customer care In response, managers have had to apologize by reducing loan interest rates and fees, which has negatively impacted the branch's profitability Approximately 50% of the sales staff lack motivation and do not seek to enhance their knowledge of new products and sales techniques Ms Xuan has observed a low work ethic, with employees failing to develop strategies for acquiring new customers or addressing the additional needs of existing clients This negligence has allowed competitors to attract clients with more appealing offers The Phu Lam branch has lost several valuable customers, and monthly meetings reveal a lack of enthusiasm among staff regarding business strategy contributions Employees are reluctant to discuss challenges, particularly concerning customer bad debt, which could demoralize the team and hinder the overall company strategy.
Recognizing the constraints of time, budget, and responsibilities, this project identifies low employee engagement as a key issue Addressing this challenge will not only enhance employee involvement in executing company policies and support managers in driving business development but also significantly contribute to lowering turnover rates.
Justifying the existence of the central problem
Employee engagement is increasingly recognized as a significant challenge for organizations today (Frank, Finnegan, & Taylor, 2004) It encompasses various aspects, such as employee involvement, empowerment, and job satisfaction (McManus, 2007; McBain, 2007) When employees feel a sense of ownership in the organization's strategic direction, they become optimistic and motivated However, mere engagement does not guarantee substantial changes; true involvement means actively participating in business processes and driving initiatives forward.
Employee engagement encompasses various definitions, but key elements consistently emerge: alignment between a company's goals and its brand, incorporating both rational and emotional aspects, and employees willingly exerting extra effort to achieve results According to Towers Perrin, engagement reflects an employee's voluntary decision to invest additional time, energy, and intellect into their work Ultimately, employee engagement is characterized by a deep connection to one's role, engaging an individual's emotional, physical, and cognitive capacities This rational and voluntary commitment enables employees to exceed expectations, significantly contributing to organizational success.
Justify the existence of the central problem
In order to understand deeply the real problem that happens at the company, the writer would like to reveal the symptom and critical evidences as the following
In-depth interviews were conducted with five employees from various positions, including Relationship Assistant (RA), Relationship Officer (RO), Relationship Manager (RM), Personal Financial Consultant 1 (PFC-1), and Personal Financial Consultant 2 (PFC-2) These employees responded to a series of statements reflecting their feelings about the company, based on an employee engagement questionnaire developed by Ibrahim, M., & Al Falasi, S (2014) Assured of their confidentiality and the absence of judgment regarding their responses, the interviewees provided objective and unbiased insights into their experiences within the organization.
Five interviewees expressed dissatisfaction with their work expectations, citing a lack of a clear promotional roadmap within the bank for long-term employees This absence of defined career progression, particularly for the sales force, hampers staff motivation and goal-setting, leading many to seek opportunities elsewhere Additionally, performance reviews often rely on personal relationships with reviewers, creating an uneven playing field where high-performing employees feel their career advancement is stifled Consequently, the overall productivity of bank employees remains ineffective.
Employees at Phu Lam Branch feel a lack of recognition for their hard work, often facing pressure to meet high sales targets without adequate support from experienced managers Despite their efforts to acquire new customers in a competitive market, they struggle to meet credit indicators, leading to feelings of disappointment Many believe their managers overlook their contributions, focusing solely on credit growth, which makes it challenging to communicate their concerns They view award ceremonies and assignments to significant clients as vital forms of acknowledgment for their dedication and achievements.
In a recent discussion about workplace development, several interviewees expressed dissatisfaction with their managers' support Four respondents highlighted that their managers lacked the skills to help employees achieve their targets, leading to a negative work environment One individual mentioned feeling uncomfortable sharing urgent issues with her supervisor, despite her willingness to assist colleagues under pressure She felt unrecognized for her capabilities, especially when facing customer challenges, as her manager failed to provide timely support and often blamed her for poor outcomes without understanding the underlying issues Additionally, five interviewees noted that they were excluded from decision-making processes related to employee benefits and operational procedures, resulting in a lack of understanding and support for management initiatives This disconnect led to the implementation of policies that employees found meaningless, as they felt their contributions were overlooked and their managers were disconnected from their experiences.
A recent survey revealed that 80% of employees feel the bank does not provide sufficient opportunities for professional development, particularly in management training At the Phu Lam branch, the manager's lack of attention to this issue has left sales staff, who require extensive skills and knowledge to effectively engage clients, to rely on self-directed learning Access to updated information and new knowledge is crucial for their success, and participation in advanced classes could significantly enhance their professionalism.
In summary, the Phu Lam Branch is facing a significant issue with low employee engagement, which is adversely affecting business strategy and customer retention Monthly employee meetings reveal a concerning trend of lost customers, yet employees are reluctant to discuss the challenges they face, particularly regarding managing customer debts This lack of communication not only impacts individual morale but also threatens the overall company strategy As employee engagement continues to wane, it leads to increased stress, decreased commitment, and a higher turnover rate To address these challenges, it is crucial for Phu Lam Branch to implement strategies aimed at enhancing employee engagement.
Justifying the importance of the central problem
Previous studies on employee engagement, including those by Abraham (2012), Echols (2005), and Right Management (2009), highlight that high employee engagement leads to improved customer service, increased productivity, reduced staff turnover, a dedicated workforce, strong work commitment, a willingness to invest extra time, and overall job satisfaction Additionally, research by Swaminathan and Rajasekaran (2010) and Right Management (2009) further connects employee engagement to various positive organizational outcomes.
- Increasing customer satisfaction, customer loyalty and sales
- Personal initiative on the job
- Motivation to carry out the highest
- Apply creative energy to their work
- Raised passion, alignment and commitment with the company's strategies and target
- Increases employees' responsibility in the company
- Improves a feeling of loyalty in a competitive environment
- Provides a high-energy working environment
- Improve their benefit in their company's success
Employee engagement has garnered significant attention from researchers, with Vance (2006) highlighting that employees who are committed to their work and aligned with their organization contribute to competitive advantages, including increased productivity and reduced turnover Globally recognized as crucial, employee engagement is fundamental to the overall performance of any organization, as emphasized by Mohsan.
Employee engagement is a crucial factor influencing organizational success in today's competitive and technologically advanced business landscape According to Mohsan et al (2011), companies that foster strong engagement among their staff tend to achieve better performance To enhance competitiveness, it is essential for organizations to attract and retain skilled and loyal employees, as engaged employees contribute significantly to improved productivity.
The ACB – Phu Lam branch has experienced a significant increase in its turnover rate, rising to 28% in the first six months of 2015, compared to just 16% for the entire year of 2014 This sharp rise highlights a concerning trend in employee retention at the branch.
In 2014, 24 employees left the company, and in the first half of 2015, 10 out of 32 employees departed, resulting in a turnover rate of 16 to 28 percent, according to the HR division of ACB – Phu Lam Branch Laddha et al (2012) highlight that "employee turnover is one of the largest though widely unknown costs an organization faces." The rising turnover rate can be attributed to two primary factors: attractive offers from competing companies and individual reasons for leaving As the company loses core employees to competitors, sourcing new talent becomes increasingly challenging This turnover incurs significant costs across all sectors, including recruitment, training, and employee development.
According to Cohen (2003), a lack of employee engagement can lead to diminished effort, increased theft, job dissatisfaction, and reluctance to seek new employment Employees who are highly engaged are more likely to invest their efforts and resources into their organization (Saal & Knight, 1988) In contrast, those with low engagement often either exit the company or fail to contribute effectively to organizational goals (Schein, 2003).
Following the scandalous arrests of several ACB executives in August 2012, employee reactions have been mixed, with some supporting the management while others express concern and dissatisfaction about the bank's future Rumors circulated during this period suggested that ACB might face imminent closure, prompting some employees to consider seeking new job opportunities In response, the bank's CEO held numerous communication meetings with middle management and above to alleviate employee concerns; however, improvements in morale have been minimal.
The company is currently facing challenges that necessitate maximum employee contribution As a result, the low level of engagement among staff has emerged as a critical issue that requires immediate attention.
List the potential causes of the problem
Identifying the central problem's potential causes is crucial for understanding its significance The writer reviews communication literature, which demonstrates that various factors influence employee engagement These factors play a vital role in shaping how engaged employees feel within their organizations.
- Perceived organizational and supervisor support
Details of the potential causes of central problem are shown in the Chapter 4: Supporting Information – Part 4
Cause and Effect Map of the Low Level of Engagement of Credit Officer Staffs in Asia Commercial Bank – Phu Lam Branch
This chapter identifies low engagement among credit staff as a significant issue at ACB - Phu Lam Branch Through a comprehensive literature review and in-depth interviews with credit staff, the author uncovers several potential causes, including inadequate Reward and Recognition Programs, insufficient Training and Career Development opportunities, a lack of perceived organizational and supervisor support, and job-related factors.
Employee empowerment and the work environment significantly impact staff engagement at ACB - Phu Lam Branch Understanding the primary factors influencing this engagement is essential for developing effective solutions The upcoming chapter will explore potential programs and activities designed to foster and enhance employee engagement within the organization.
ALTERNATED SOLUTIONS
Justify causes
To assess the factors influencing the low engagement levels of credit officers at ACB - Phu Lam Branch, a mini focus group comprising six experienced employees was formed These individuals were selected for their significant contributions to current projects and their relevant work experience A comprehensive list of potential causes was presented to ensure clarity among the respondents They were assured that their feedback would solely be used for the project and would not be evaluated The participants were encouraged to openly discuss and respond to nine questions aimed at identifying the root causes affecting employee engagement Additionally, to protect their privacy, they requested anonymity in the report.
Chapter 4: Supporting Information – Part 4.4 summarizes the opinions of interviewees, demonstrating a clear connection between Reward and Recognition Programs, Training and Career Development, and the Work Environment.
Financial rewards significantly enhance employee loyalty by providing a sense of security in their employment These incentives serve as crucial motivators, encouraging employees to achieve their goals and maintain high performance, especially in high-pressure situations Ultimately, effective financial rewards not only drive quality performance but also foster a committed workforce.
Research by Farrell and Rusbult (1981) indicates that an organization's reward structure significantly influences employee satisfaction and commitment (Brown & Peterson, 1993) Motivation can stem from both financial and non-financial factors, which should be tailored to employees' job levels For example, offering bonuses and commissions alongside opportunities for educational development, job training, and specialized courses can enhance motivation and engagement.
Employees value acknowledgment for their contributions, as noted by Bernthal et al (1999) Interestingly, despite the presence of formal rewards and recognition programs, many still seek additional recognition When organizations actively listen to, recognize, and support their employees, it fosters greater commitment among the workforce.
Employee engagement is significantly influenced by compensation and benefits, particularly at ACB - Phu Lam Branch When considering a job, employees prioritize their salary and additional benefits such as social insurance, financial support, bonuses, and company trips One respondent emphasized the importance of financial goals in job acceptance, noting that companies with attractive salary packages tend to attract top talent Good remuneration not only fosters a sense of financial security but also encourages employee retention and commitment to the organization Many employees leave for competitors offering better pay and benefits, highlighting the perception of worth associated with compensation If a company fails to provide a competitive salary, it risks losing employees Furthermore, a robust salary and benefits package serves as timely recognition of employee contributions, motivating them to invest more effort and strengthen their connection to the company.
The reward system significantly impacts employee engagement, as interviewees expressed dissatisfaction when the company reduced bonuses, commissions, and salary increases This led to feelings of unhappiness and concern about their future at ACB - Phu Lam Branch, prompting them to explore opportunities at other companies Many employees believe that rival firms offer better benefits and a more favorable working environment.
The work environment, encompassing both communication and physical aspects, is a critical factor influencing employee engagement levels (Miles, 2001; Harter et al., 2002) Employers who prioritize a supportive work environment demonstrate genuine concern for their employees’ needs and feelings (Deci and Ryan, 1987) To enhance engagement and performance, it is essential for employers to implement positive communication and feedback systems while clearly conveying organizational objectives A positive workplace fosters confidence and ownership among employees, ultimately boosting their engagement (Robinson, 2006) However, some employees may feel disengaged due to a lack of support from management; for instance, one employee expressed feeling overwhelmed by pressure and unsupported in resolving customer issues, leading to frustration when her efforts went unrecognized This highlights the necessity for supervisors to understand employee challenges and provide appropriate support rather than placing blame.
Effective communication skills of supervisors during training programs can significantly enhance employee job performance (Foxon, 1993; Nijman, 2004) Both supervisors and employees must commit to fostering a strong relationship, as this commitment leads to improved performance outcomes (Blau, 1964) Key behaviors that enhance employee performance include sharing information, providing support, offering feedback, and recognizing achievements Additionally, supervisors play a crucial role by supplying necessary resources such as time, tools, and training opportunities to support their employees' development.
Investing in training and career development is crucial for engaging employees and enhancing performance levels Professional training not only improves service effectiveness and accuracy but also boosts employees' confidence and motivation, encouraging them to exert discretionary effort in their roles Adlerfer (1972) posits that providing growth opportunities is akin to rewarding employees for their hard work Therefore, organizations should integrate training and development into their policies to elevate employee competence, adaptability to job demands, and motivation Research by Muthuveloo et al (2013) highlights that employee development significantly contributes to engagement, making it essential for organizations to prioritize this area By investing in skill enhancement programs and tailored workshops, companies can effectively improve their employees' abilities and overall engagement.
On their first day at ACB, new employees participate in an Orientation session that includes an overview of the company's history, structure, vision, and mission, as well as information on career paths for various positions, an introduction to training programs, and wellness activities Additionally, the Business Title system provides a detailed list of skill requirements for sales staff, ranging from junior levels to managerial positions.
The training team provides a range of professional development courses, including customer evaluation and financial statement analysis, along with English language and essential soft skills training such as time management, problem-solving, and decision-making Employees are encouraged to participate in these training sessions to enhance their knowledge of new products and effectively apply their skills in the workplace.
All interviewees expressed appreciation for the internal training program, noting that participation in these courses enhances their hard skills and job performance During regular performance reviews, managers provide guidance on necessary skill improvements and recommend suitable courses This structured approach helps employees understand what they need to develop for career advancement Additionally, employees feel valued as the company invests in their growth, fostering a supportive environment for career progression In turn, this investment leads to a workforce of highly skilled employees capable of meeting and exceeding client expectations.
“win-win” situation, where company has a good staff and the staff wants to stay with the company until they keep the same direction, same development plan
While the training program at ACB – Phu Lam branch is perceived as free and beneficial by some employees, it does not significantly enhance employee engagement for all One respondent noted that he can independently learn or enroll in external courses, as the available classes primarily cover basic levels Consequently, the lack of advanced training options limits its impact on his overall engagement compared to other factors.
An employee at ACB – Phu Lam Branch, who has been with the bank since 2008, highlighted that turnover intentions and low employee engagement stem from a lack of motivation and growth opportunities for the sales staff The absence of a clear promotion roadmap for long-term employees leaves them uncertain about their career advancement, diminishing their perception of a promising future within the organization.
Developing a supportive work environment that typically displays
Work environment in respect of both communication and physical environment is regarded as the most significant factor that influences engagement levels of employees (Miles, 2001; Harter et al.,2002) According to
Employers who prioritize a supportive work environment demonstrate genuine concern for their employees' needs and feelings, as highlighted by Deci and Ryan (1987) To foster this positive atmosphere, it is essential for employers to implement effective communication and feedback systems while keeping employees informed about organizational goals and objectives A nurturing workplace not only boosts employee confidence and ownership of the organization but also enhances engagement and overall performance (Robinson, 2006).
To enhance positive relationships within the credit department at ACB - Phu Lam Branch, it is essential to foster transparency and a humanistic approach built on mutual respect and trust A key recommendation is to implement specific programs that support employees at all levels, promoting collaboration and leadership By prioritizing these initiatives, the credit department can cultivate a more harmonious work environment that benefits both staff and the organization as a whole.
The proposed solution includes four distinct programs: familiarizing employees with their colleagues, appointing a peer mentor, providing questions for managers, and organizing external activities and celebrations Additionally, three of these programs will be facilitated through an internal site developed by the department.
Creating an intranet website will foster an environment for employees to share information and collaboratively address workplace risk cases, ultimately enhancing positive relationships within the organization This centralized platform will enable credit staff to gain insights into their co-workers' roles, making it especially beneficial for departments that struggle with employee connectivity While participation in this program would be voluntary, it has the potential to strengthen bonds among employees in a constructive manner.
The internal website allows credit department members to create and manage a peer recognition program, enabling employees to nominate their coworkers for outstanding performance or helpfulness Participants can provide comments detailing their reasons for the nominations, fostering a culture of appreciation within the team This employee recognition initiative not only highlights individual contributions but also enhances camaraderie and special moments among colleagues.
The internal website at ACB – Phu Lam Branch not only facilitates the sharing of employee information and recognition of colleagues for their achievements but also includes a feature that allows employees to pose questions to higher management This interactive platform significantly enhances the flow of information, fostering a positive relationship among all staff levels As Margaret Wheatley (2006) noted, improved communication is essential for organizational growth.
To enhance organizational effectiveness, it is crucial to promote greater access to information and minimize restrictive control functions Relying on information technology and management systems as gatekeepers limits knowledge sharing and predefines who has access to essential information Embracing a more open approach will empower all individuals within the organization to access the information they need.
Enhancing information flow fosters strong relationships among employees and the organization When managers promote transparency, it builds trust among team members, which is crucial for cultivating positive relationships To further strengthen these connections, it is recommended that the credit department organize external activities and celebrations that encourage teamwork Additionally, organizations should offer opportunities for staff to engage in non-work-related events, such as charity initiatives and sports activities, to strengthen bonds and collaboration.
When employees enjoy a day off, participating in events can foster positive relationships, which is crucial for organizational optimism This human-centric approach highlights key characteristics that significantly enhance employee engagement.
Solution 2: Improving reward and recognition programs for employee
Understanding the significance of employee recognition is crucial for managers and leaders, as it directly impacts employee engagement By creating opportunities to acknowledge their contributions, managers can enhance employee retention, productivity, and recruitment A simple, sincere "thank you" can have a profound effect, requiring minimal resources while offering substantial returns Building a committed workforce relies on a leader's ability to implement effective employee engagement strategies through timely and authentic recognition Therefore, leaders must recognize the power of appreciation and actively seek ways to acknowledge their employees' efforts.
To enhance employee satisfaction at ACB – Phu Lam Branch, it is essential to conduct market research to determine the average salary range and develop more appealing reward packages Currently, the company's offerings are perceived as less attractive compared to competitors, particularly regarding cash-out dates, reward procedures, criteria, and additional incentives such as meal allowances, company trips, and team-building activities Implementing these suggestions will help create a more competitive and motivating reward system for employees.
To enhance employee satisfaction at ACB – Phu Lam Branch, it is essential to conduct market research to determine the average salary range and improve the current reward packages, which are perceived as less attractive compared to competitors Key areas for improvement include cash-out dates, reward procedures and criteria, as well as additional incentives such as meal allowances, company trips, and team-building activities Implementing these suggestions will help create a more appealing and competitive rewards system for employees.
Employers can effectively acknowledge employee contributions by recognizing them during meetings, sending thank-you emails, and sharing success stories with the entire team However, it is crucial that this recognition is timely to ensure employees feel valued for their efforts.
Reward employee’s achievement and contribution timely will encourage employees to contribute more to the bank
Employers are shifting away from material rewards like trophies and plaques, recognizing that genuine appreciation fosters motivation A simple, heartfelt 'thank you' or 'great job' is now seen as a more meaningful form of recognition, highlighting the value of authentic acknowledgment over superficial incentives.
To foster employee loyalty, organizations should focus on developing non-monetary incentives like health benefits, challenging job roles, and holiday trips When employees experience training and career development that align with their expectations, they are more likely to remain loyal to the organization Challenging job roles can involve senior employees mentoring junior staff or training them to become valuable resources for the company.
In fact, at this time, monetary reward may not easy to carried out, so the bank should implemented non-monetary programs instead.
Solution 3: Develop employee’s knowledge base and skills through training programs