Lack of career growth opportunity in operation department at THI group vietnam HCM branch

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

VU THI BICH HOP
FINAL THESIS
LACK OF CAREER GROWTH OPPORTUNITY
IN OPERATION DEPARTMENT
AT THI GROUP VIETNAM HCM BRANCH

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2019
1


UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

VU THI BICH HOP
FINAL THESIS
LACK OF CAREER GROWTH OPPORTUNITY
IN OPERATION DEPARTMENT
AT THI GROUP VIETNAM HCM BRANCH
MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2019

2

CONTENTS
EXECUTIVE SUMMARY ........................................................................................ 4
CHAPTER I: INDUSTRIAL OVERVIEW AND COMPANY BACKGROUND.. 8
1.1 Industrial Overview .......................................................................................... 8
1.2 Company Background...................................................................................... 8
CHAPTER II: PROBLEM JUSTIFICATION ...................................................... 10
2.1 Problem finding process ................................................................................. 10
2.2 Company’s Symptoms .................................................................................... 10
2.2.1 Low Revenue ............................................................................................. 10
2.2.2 High turnover rate in Operation Department ............................................ 13
2.3 Problem Identification .................................................................................... 15
2.3.1 The Initial cause-effect map ..................................................................... 15
2.3.2 The Updated cause-effect map ................................................................. 20
2.3.3 The Final cause-effect map ...................................................................... 24
CHAPTER III: ALTERNATIVE SOLUTIONS .................................................... 31
3.1 List of real causes............................................................................................ 31
3.1.1 Lack of training ......................................................................................... 31
3.1.2 Lack of knowledge sharing ........................................................................ 31
3.1.3 Lack of orientation .................................................................................... 32
3.1.4 Lack of promotion ..................................................................................... 32
3.2 Proposed solutions .......................................................................................... 33
3.2.1 Solution 1: Provide an effective orientation program ............................... 35
3.2.2 Solution 2: Provide an official training process ........................................ 35
3.2.3 Solution 3: Open sharing session between teams ...................................... 36
3.3 Alternative sets of solution ............................................................................. 37
3


3.4 Action plan ...................................................................................................... 40

3.4.1 Objective of action plan ............................................................................. 40
3.4.2 Timeline and Cost ...................................................................................... 40
CHAPTER IV: SUPPORTING INFORMATION ................................................. 43
4.1 Interview Transcripts ..................................................................................... 43
4.2 Questionnaire for the existence of problem ................................................... 65
4.3 Questionnaire for the chosen set of solutions ................................................ 67
REFERENCES ........................................................................................................ 68

4


LIST OF FIGURES
Figure 1: Organization Structure ............................................................................... 9
Figure 2: The initial cause-effect map...................................................................... 19
Figure 3: The update cause-effect map .................................................................... 23
Figure 4: The final cause-effect map ....................................................................... 26
Figure 5: Solution Map ............................................................................................ 34
Figure 6: Sets of solutions ........................................................................................ 37

LIST OF TABLES
Table 1: Summary revenue of THI Group in 3 years ··············································· 11
Table 2: Operation Department customers’ situation ··············································· 12
Table 3: Turnover rate of operation department ······················································ 14
Table 4: The result of survey ···················································································· 38
Table 5: Cost-benefit analysis ··················································································· 39
Table 6: Timeline and estimated cost for Solution 1················································· 41
Table 7: Timeline and estimated cost for Solution 2.1·············································· 42
Table 8: Timeline and estimated cost for Solution 3················································· 42

5

ACKNOWLEDGEMENTS
I would like to express my gratefulness for the period two years studying in ISB
Ho Chi Minh City. I also would like to express my deep sense of gratitude to Dr. Thu
Phan for her valuable guidance, keen interest and especially encourage me at various
stages of doing this thesis.
Besides, I would like to thank my family; friends who always stand by me to
support me finish this thesis well. Especially, many thanks for my colleagues who
gave me valuable information and advices so that my thesis can be done well.

6


EXECUTIVE SUMMARY
This study analyzes the case in Operation Department of THI Group Viet Nam
Ho Chi Minh Branch with the symptoms are high turnover rate and the declining in
revenue of Operation Department. There are three main chapters in this paper. In
chapter I, an overview of the logistics industry as well as the background of the
company THI Group Vietnam will be introduced. Chapter II will be all about the
existing problem in the department. Firstly, based on the primary and secondary data,
there are two symptoms low revenue and high turnover rate found out. After that,
through depth-interview with some related people, a problem mess is figured out on
the initial cause-effect map. Next part is the updated cause-effect map, in this section
three potential central problem are figured out based on the information from interview
and literature review. Finally, the final map with all details about the central problem
is demonstrated. The central problem is lack of career growth opportunity, which lead
to many consequences; thus, it has been chosen as a central problem, which need be
solved in this paper. Chapter III is included a list of real causes of the central problem
and a set of solutions for the problem. In Chapter IV, all supporting information for

this paper is indicated.

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CHAPTER I: INDUSTRIAL OVERVIEW AND COMPANY BACKGROUND
1.1 Industrial Overview
Vietnam grows vigorously in trade over the coming years, which will support for
the development and expansion of logistics industry, one of the fastest growing
industries in Vietnam. There are many main logistics hubs in Viet Nam which are
located in the North including Ha Noi – Hai Phong area and in the South, Ho Chi
Minh City area, Dong Nai province, Binh Duong province as well as Ba Ria - Vung
Tau. The logistics industry is estimated to grow at a pace faster than the GDP growth
rate, and currently, the logistics service accounts for 15-20% of GDP in Vietnam.
There are many parties involved in this industry, such as liner who are owners of
vessels to transport cargo, forwarding company, the manufacture, the seller, the buyer,
custom official, trucking company and so on. All these parties will cooperate to serve
customers by taking cargo from supplier and delivering to the final customer.
1.2 Company Background
THI Group Viet Nam is one forwarding company, which belongs to a Taiwan
Group and was established in 2004 in Ho Chi Minh City. Now, it is one of the leading
international logistics service providers in Vietnam with branches. With almost 150
friendly and professional staffs working in four offices together with a reliable and
robust partner network in the world, it serves every single demand of customers’
shipment at any corner in the globe.
History Timeline
2004 THI Group Viet Nam was founded in Ho Chi Minh City
2005 Set up Ha Noi and Hai Phong Branch
2015 Set up Da Nang Branch
Vision

THI Group will be a global company, providing professional logistics services,
keep creating value for society and its people.
Mission
The mission of THI Group is offering modern, integrated logistics solutions to
customers based on the creativity and the ongoing optimization of our operations
through our team.

8


The main business of THI Group Viet Nam – HCM Branch
Ho Chi Minh Office is head office of THI Group Viet Nam, and it provides all
logistics services to all customers around the world. It provides customs brokerage
service to customers. In addition, with a global agent network, THI Group is able to
provide its clients import and export FCL and LCL services from anywhere to
Vietnam or from Viet Nam to any country around the world at most competitive rates.
Especially, THI Group operates regular import and export airfreight consolidation to
and from cities throughout the world using our network.

Organization Structure

General Director

Accountant

Operation

Sales

Pricing

Admin and HR

Department

Department

Department

Department

Department

Figure 1: Organization Structure

9


CHAPTER II: PROBLEM JUSTIFICATION
2.1 Problem finding process
In order to identify the existing problems of the company, the following steps will be
executed:
- Referring to the reports from the company as well as from Operation Department to
collect and analyze data.
- Conducting the depth interview with the related people, including Operation
Manager, Admin Staff, Current Operators and Old Operators to understand the
division symptoms and possible problems.
- Conducting a small survey to get data from a number of employees in three
departments: Accounting Department, Operation Department and Sales Department to
affirm the existence of central problem in the department.

- Review the literature and theory, which is relevant to the problem.
2.2 Company’s Symptoms
2.2.1 Low Revenue
As per information from the previous part, logistics industry is strongly
developing in Vietnam, many forwarding companies are founded around the country,
they grow very fast from year to year, and below is data about the revenue of five
companies in three years:
Unit: USD
Seq

Company

2016

2017

2018

1

Bee Logistics

8,638,105

9,537,682

9,767,562

2

Everich Vietnam

7,046,294

8,465,738

8,864,321

3

VVMV

6,830,976

7,341,986

8,024,673

4

Eculine

6,793,746

7,145,763

7,737,945

5

ANC VietNam

5,734,144

6,542,986

7,097,023

Table 1.1 Revenue of logistics companies
Source: www.logisticsmgmt.com
It can be seen clearly that, the revenue of above companies is increased year by
year, these companies have same background with THI Group Vietnam. Back to THI
10


Group Viet Nam, according to financial report, the revenue of the company THI
Group (HCM Branch) in three years 2016, 2017 and year 2018 has big gaps.
Especially, the revenue of year 2018 is lowest in the period of 3 years; details are as
the following table:
Unit: USD
Year

Sales Department

Operation Department

Total of Company

2016

1,158,960

1,796,335

2,955,295

2017

1,023,457

1,289,210

2,312,667

2018

1,167,987

911,017

2,079,004

Table 1: Summary revenue of THI Group in 3 years
As mentioned in previous part, the main business of THI Group is about logistic
field. In the company, there are two types of customers, nominated customers and
freehand customers. In the company, Sales Department will be in charge of freehand
customers and Operation Department will handle all nominated customers that is the
reason why there are two kinds of revenues as above, one is from Sales Department
and one is from Operation Department.
Follow the data from above table, it can be seen clearly that compared among

three years 2016, 2017 and 2018, then 2016 has the highest revenue. Indeed, the
revenue of 2016 is 2,955,295 USD, meanwhile in 2017 it dropped to 2,312,667 USD,
nearly 22% is decreased and the worst is in 2018, 2,079,004 USD, nearly 30%
decreased compared to 2016. The percentage 30% revenue drop is a considerable
number for a company to pay attention. Especially, compared with the revenue of
other companies, revenue of THI Group VietNam is very low. With the same
background, they have more than five million USD per year; meanwhile THI has just
no more than 2 million USA per year. Thus, it can be concluded that revenue of THI is
too low.

11


Besides that, according to the monthly and annual report from Operation
Department, a big number of nominated customers has terminated the services contract
with company; in addition, number of new customers signing contract is lower than
previous year. This information is also confirmed by data recording as below table:

Year

Total number of customers

2016

2017

2018

297 100% 279 100% 238 100%

Number of customers stop using THI
Group’s service

55

19%

62

22%

71

30%

Number of new customers signing contract
with THI Group

37

12%

21

8%

18

8%

Table 2: Operation Department customers’ situation
In 2016, the company has total 297 nominated customers, however through the
year, there are many customers left the company and the specific number is 55
customers stop using the service of company, 19% customer stopped using service of
the company. Meanwhile the number of new contracts is lower than the number of
terminating, and there are only 37 new customers in 2016, there is only 12% new
customer compare with the total. This caused to the drop in 2017, there are only 279
customers for total, nearly 7% drop compared to 2016. The most important thing is
that there are many customers chose to leave the company in 2017 than 2016, and
especially there are only 21 new customers for this year. Based on the table, it can be
seen clearly that the percentage of new customer is decreased year by year. In the
meantime, the percentage of terminating is increased, the highest is in 2018, 30%. In
all industries, it is too hard to approach and win a new customer, especially in logistics
field, one of the most competitive services in Ho Chi Minh City. Day by day, there are
many new companies built as well as old companies also keep expanding their market,
so the losing customer as well as drop in number of new customers is a very big
problem for a company in this industry. As above table, through the period of 3 years,
12


a big number of old customers change to use another company’s service and just a
small number of new customers come to use the company’ service. That is the reason
why the revenue is decreased sharply in the period three years from 2016 to 2018.
Back to the revenue report at the beginning, the revenue of Sales Department
kept stable through 3 years, however there is sharply drop in Operation Department.
From 2016 to 2017, nearly 30% revenue of operation department drop. Especially, to
2018 the revenue is only 911,017, so the percentage is increase to nearly 50 %, it
means that revenue of 2018 is decreased nearly 50% compare to 2016. Thus, it can be
seen clearly that the operation of this department has problem inside which cause to
the significant decrease in revenue and it also effect to the revenue of the whole

company.
2.2.2 High turnover rate in Operation Department
Turnover rate is the percentage of employees leaving a company within a
certain period. There are two main kinds of turnover are voluntary and involuntary
turnover. In the context of operation department of THI Group, only voluntary
turnover is mentioned. Below is the formula to calculate the annual turnover rate:

Source: resources.workable.com
According to the above formula and supporting data from HR Department,
below table will show the situation about turnover of operation department in 3 years
2016, 2017 and 2018:
Year

2016

2017

2018

Number of employees at the beginning of the year

20

22

23

Number of employees at the end of the year

14

11

15

Number of employees who left

6

9

8

Annual turnover rate (%)

35%

55%

42%
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Table 3: Turnover rate of operation department
As per data from above table, it can be seen clearly that there is a huge number
of employees of operation department in and out the company in 2 years 2016 and
2017. “The majority of staffs in Operation Department chose to leave their job after a
long time as well as a short time join the company.” one sharing from Ms. Rosy,
Operation Manager. Ms. Jenny, HR Staff also shared that “Except for some old
employees who has worked for THI Group for a long time from 2 years to more, the

average working time of one operator in THI Group is only from 4-6 months. Overall,
the rate of turnover in 2016 is nearly 35%. This percentage is increased in 2017.
Indeed, in 2017, the turnover rate in operation department is nearly 55%, a
considerable number. In 2018, this percentage is slightly decreased, it is 42%.
However, compare to the total number of employees in operation, and then this rate is
too high. It can cause many problems for the department and the whole company.
Indeed, when being interviewed, Ms. Jenny shared that recruiting new employees for
Operation Department was one of her difficulties. One more important thing that, the
other two interviewees who are current staff in operation department also shared that,
they have just worked for THI for a short time and they have trend to leave if there is a
better offer from another company in same industry. With above data and information,
high turnover rate is also one of considerable symptoms, which can lead to a problem
in Operation Department of THI Group Viet Nam.
The link between turnover rate and revenue in Operation Department
At the end of the day, the issue high turnover rate also has effect on the revenue
of Operation Department. Indeed, a huge number of old staffs left the company and
they convince the customers follow to their new company, thus THI Group get lost. In
addition, when old employees leave, the company will recruit new employees, and
most of them have no experience and not enough knowledge to do their job well, so
they cannot serve the customer well, this cause to customers’ dissatisfaction and they
will change to use service of another company. That is also the reason what the
revenue of Operation Department is decrease year by year. In addition, new employees
do not have enough ability to solve the problem and then customers will not be
satisfied with the service of the company, then customers will leave as well. Like
14


sharing from Ms. Rosy that “when there are many in and out, we need more time as
well as more cost to recruit new employees. However, as you already know that
newcomers will be not good as the old one, sometimes they will make mistake &

trouble, so agents & customers will complain about our service, some strict customers
will not use our service any more. Therefore, the revenue will be lower than before
and profit will be lower as well”. Thus, to conclude that there are two symptoms but
only one main symptom, that is high turnover rate in Operation Department, which has
the link with the central problem.
2.3 Problem Identification
2.3.1 Initial cause-effect map
After analyzed as above, high turnover rate and low revenue are two symptoms,
found in operation department at present time. This finding is based on data from some
company’s reports as well as information from the interviews with some related
people. The key reason for choosing these people to interview is that, various
perceptions and perspectives have been marked and collected. They are all currently
working at THI Group in Operation Department. The others are ex-employees in
Operation Department at THI Group, who used to engage with company and left for
different reasons. They partly understood what was going on inside the company.
Some people are working in THI Group but not in Operation Department. In addition,
some old customers as well as current customers of THI Group who have different
aspects and give out different viewpoints on the quality of THI Group’ services, are
also interviewed shortly via skype to understand more about the situation of the
department. Also, from the information from the interview, some variables, which
cause to these two symptoms, are found with details as following:
Uncompetitive salary: Ms. Apple, ex-employees complained that “salary is too
low” and that is one of reasons, which made her to leave the company. She also
revealed that her salary is increased nearly 50% in the new company. Mr. Andy,
current employee also shared that “Salary is too low; the speed in salary increase is too
slow compared to other companies in the same industry”. When being asked about the
reason why the turnover rate in operation department is too high, Ms. Jenny – an HR

15

staff also mentioned that most of employees did not satisfy with salary of the
company.
Poor benefit packages: Through the interview, poor benefit package, one of
causes of the symptoms is found. Indeed, most of interviewees mentioned about this
issue. Ms. Sarah, one of old operation staff answered, “Compared to other companies,
the benefit from THI is just 12 annuals leave a year; there is no sick leave, no health
care, no team building every quarter, just one trip inside Viet Nam per year. Ms. Jenny
also shared that “Compare to the other companies, the benefit for employees here is
not good” and “the budget for company trip is very poor, and thus the annual trip
quality is not good.”
Low speed of Remuneration Growth: Mr. Andy said with bad mood, “the
speed in salary increase is too slow compared to other companies in the same
industry.” Ms. Apple shared that her new company would review salary every six
month and the percentage of increase is not low, she also emphasized, “It’s
acceptable”.
Lack of promotion opportunity: Ms. Apple said, “The most important reason is
about opportunity, after worked for the company for a long time & they look back and
they realize that they still stand on the same position”. Mr. Andy always complained
about the promotion policy, he said he worked for a long time but without change in
position although he worked very hard and did not do any trouble for the company.
Lack of sharing session between teams: Regarding to the reason lead to high
turnover rate in operation department, Ms. Jenny exposed that some operation staffs
shared with her that they left the company because they find nothing new for
themselves “they have no chance to learn new knowledge to improve themselves”. Mr.
Andy also has the same viewpoint when said “company do not open any extra class to
improve employees’ knowledge and skill”. He also emphasized that the company did
not do anything for employees to be motivated. Ms. Triss directly mentioned, “We
need some sharing sessions between teams so that we can learn more knowledge from
other people. In addition, we can share some difficult cases for other teams to study

like cases study which need to know to avoid mistake later”

16


Lack of official employee orientation: Most of answers noticed about this
issue, orientation. It seems an important problem in the department. For instance, Ms.
Rosy said that they just took from 15 to 30 minutes to introduce some basic
information for the newcomers. There is no handbook, no preparation for the
orientation process. Ms. Apple also shared that “Especially, for the newcomers, they
do not receive any official training or job orientation, they will be confused with their
career and their future here, so they will feel not interesting and they choose another
place to work.”
Poor training program: All interviewees mentioned about this issue, training
program. Ms. Sarah complained, “There is no official training process for new
employees, so I do not know exactly about my job role.” She also raised a suggestion
for better that “the key thing is still opportunity to develop in one’s career, if
employees get the good training, for the new employees as well as monthly training
for old employees or open sharing session between team so that they can learn from
each other then they can do their job well”. One sharing from Ms. Apple that “when I
have just joined the company, they did not give any official training so that I can know
about my job, just a short time in a day they introduce about the company and that is
all. I have to ask the old employees what should I do, or I have to find out on my own
how to do this job. Then, if the company does not change their style to run the
Operation Department, maybe someday, all current employees will leave the company.
Because as you know that, young generation they have aspiration and the then they
really need a company where can help for their improvement”. “Training for new
employees, it helps them to understand about their job clearly, and then they can know
where they are and where they need to move.” is also one sharing from Ms. Triss.
Ineffective employee evaluation: Mr. Andy “We work hard and devote for the

company but we do not receive any appreciation or something special to encourage us,
to motivate us in career.” Ms. Triss complained that other companies has semi-annual
employee evaluation or even quarterly employee evaluation, but THI has only annual
evaluation. In addition, Ms. Apple said, “the result of evaluation is not worthy, there is
only evaluation from supervisor, there is no evaluation from peer or self-evaluation”.

17


Lack of supervisors’ feedback: Ms. Sarah said, “Sometimes we need feedback
from our team leader but there is no feedback.” Mr. Andy has same point that he needs
comments from his supervisors about his job, which is good or which is bad, so that he
can limit the bad thing and improve good thing, but his supervisor did not mention
anything about this matter in the meeting.
Basing on the analysis as above, a problem mess is figured out and the initial
cause-effect map can be showed as below:

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Uncompetitive salary

Poor benefit packages
Low speed of
Remuneration Growth

Organization’s Symptoms

Lack of promotion

High Turnover

opportunity

Rate

Low Revenue

Lack of sharing session
between teams
Lack of official
employee orientation

Poor training program

Ineffective employee

Figure 2: The initial cause-effect map

evaluation

Lack of supervisors’

19

feedback

Figure 2: The initial cause-effect map Error! No text of specified style in document..1
document..2

2.3.2 The Updated cause-effect map
2.3.2.1 Poor compensation and benefits
Employee turnover intention usually depends on some factors like salary, job
satisfaction or employee morale. Indeed, salary is considered as the primary
motivation for employees to do their job. With highly paid and good benefit,
employees tend to be more motivated to stay with their job in the organization. When
being asked about the reason why they quit job, employees always mentioned about
pay and benefit as the first or second reason. If they feel unhappy with their pay or
benefit, they might quit the job for the better. Besides that, benefit packages, work
environment or professional development opportunities also have influence on job
retention. Nowadays, one of useful and important Human Resource Management
Practices is employee compensation and benefit including pay and rewards, Snell &
Bohlander(1). As per Bernadin

(2)

mentioned that a part of employment relationship is

compensation and benefit which are all forms of financial returns and tangible benefits
that employee receives. According to Malik,

(3)

there are direct and indirect

compensation, which are including wages and salaries, incentive-payments, bonuses,
commissions, free insurance, subsidized lunch, intrinsic rewarding jobs, a nice work
environment and flexible work hours to accommodate personal needs. Compensation
play an important role in attracting, motivating and retaining talented employees.

According to Ibrahim and Boerhaneoddin

(4),

compensation encourages employees

staying longer with the organization. Greenberg and Baron (5) also indicated that a low
salary leads to the dissatisfaction with job and contributor to employee turnover.
Indeed, it can be seen clearly that good compensation and benefits can make
employees satisfied with job and commitment to the organization, turnover rate can be
reduced. Back to the company’s situation, most of complaints from employees are
about pay and benefit, Mr. Andy “Stress about the workload, not satisfied with salary,
disappointed about salary increase policy.” Alternatively, one sharing from Ms. Jenny
that “the benefit for employees here is not good, such as there is no free yoga or gym
class for employees after working time, the budget for company trip is very poor, and
thus the annual trip quality is not good.” Ms. Sarah had a comparison with other
companies in same industry and she concluded that benefit in THI Group was too poor.
20


When being asked about the unsatisfied thing, Ms. Apple mentioned that salary was
too low and there was a little compensation and benefit for employees. Therefore, poor
compensation and benefits is one of potential problem of the department.
2.3.2.2 Lack of career growth opportunity
Besides the problem of poor compensation and benefits, career growth is one of
the prime reasons why employees leave organizations. Nowadays, with the
competitive market, there are many chances for people to find a good job in their life,
thus, when they observe that their current job has limited opportunity for professional
and personal advancement, they prefer to join another company, where they can find
good career growth for them. According to Weng & McElroy (6), career growth is

about the degree that the organization supports employees in meeting their careerrelated needs as well as about promotions and compensation. Research also indicated
that the more career growth opportunities employees have, the more committed to
their employers they would. In fact, when perceived career opportunity in the
organization is low, turnover intention will be increased, Kraimer, Seibert, Wayne,
Liden, & Bravo

(7)

. In other words, employees will stay with the company if they

receive enough training and development opportunity. Conversely, perceiving little
chance to move ahead within their organization, employees may look elsewhere.
According to a recent employment survey of cebglobal.com, the primary reason which
making employees leave the company is lack of career growth opportunity (8. It is so
clear in the context of the company, most of ex-employees mentioned about the career
growth opportunity. Ms. Apple said, “The most important reason is about opportunity,
after worked for the company for a long time & they look back and they realize that
they still stand on the same position; salary is still low, nothing new for their brain, so
they will quit.” One point of view from Ms. Sarah “the key thing is still opportunity to
develop in one’s career, if employees get the good training, for the new employees as
well as monthly training for old employees or open sharing session between team so
that they can learn from each other then they can do their job well. Ms. Rosy also
mentioned about the opportunity to improve issue, which is one of reasons which exemployees left the company. In addition, some view point from current employees like
Mr. Andy and Ms. Triss that, if the company do not create any chance for them to
21


develop themselves, they will tend to find another company to work for. Mr. Andy
complained, “There is no promotion, so there is no development for us”. Through
above analyses, it can be concluded that lack of career growth opportunity is also one

of potential central problem in the department.
2.3.2.3 Ineffective performance appraisal system
One more importance thing is regarding to performance appraisal system.
Performance appraisal is about performance evaluation based on opinion and
comments of supervisor, co-workers, managers and themselves as well, Jackson and
Schuler

(9)

. Performance appraisal is a process designed with the purpose to evaluate,

manage or even improve employees’ performance. Through this process, employer
and employee have chance to discuss together about the expectations of the
organization or the achievements of employees, which will help for the development
of employees in future. It is one of essential strategy, which need to be put in human
resource actives and business policies. Fletcher stated (10) performance appraisal system
is important for employer to evaluate employees, increase their competencies, enhance
their performance and distribute rewards. Giving feedback to employees is one of the
primary purposes of formal performance appraisals, Carroll and Schneier (11). Hence, in
case employees feel unfair treatment, firstly, they may change their job attitudes, and
later they may quit the job, Vigoda (12). This also happened in operation department of
THI Group, many informants complained about the evaluation system of the company.
Normally, there will have semi-evaluation and annual-evaluation in each organization,
in operation department of THI Group, only one evaluation per year. However, the
quality is not qualified, as per sharing from Ms. Apple. In addition, with a professional
working environment, weekly or monthly meeting will be hold frequently and, in this
event, supervisors will give feedback to all employees about good and bad thing,
which need to be improved or limited. In operation department, there is nothing, “we
did not receive any feedback from supervisors so that we can know what we need to
do to improve ourselves” share from Mr. Andy. Ms. Sarah also said, “The evaluation

is not fair, supervisor usually use feeling to evaluate team member”. From this
information, ineffective performance appraisal system is also one of potential
problems in operation department of THI Group at present time. The updated map is
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Potential Central
Problems
Poor

Uncompetitive salary

compensation
and benefits

Poor benefit packages

Low speed of

Organization’s Symptoms

Remuneration Growth
Low Promotion Speed

Lack of career
growth
opportunity

High Turnover
Rate

Low Revenue

Lack of sharing session
between teams
Lack of official
employee orientation
Poor training program

Ineffective
performance
appraisal system

Ineffective employee
evaluation

Figure 3: The update cause-effect map
Lack of supervisors’
feedback

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2.3.3 The Final cause-effect map
2.3.3.1 A discussion to eliminate some potential central problems and focus on a
central problem of interest
Discussion to eliminate some potential central problems
Investigating the problem of “poor compensation and benefits”, Ms. Jenny
shared that “When we recruit new employees, we always mention about the benefit of
the company for the employees in the interview. It is their decision to accept working

for the company or not, we inform to them before they join the company, so it is not
reasonable if they complain about this issue”. In addition, Ms. Rosy said, “Regarding
to the salary and benefits of the company that is the policy from top management from
the day company was founded till now; this policy has been applied, so it is very hard
to change”. She also mentioned that the company also check around in the industry,
and most of the forwarding companies use the same benefit packages for their
employees. She also emphasized that this problem is out of our control, it is difficult to
improve now. Therefore, poor compensation and benefits problem will be eliminated
from the analysis.
Regarding to the performance appraisal system, Ms. Rosy said that, most of
forwarding companies have only one evaluation per year, annual evaluation. Therefore,
performance appraisal system of the company now is still reasonable. About the
supervisors’ feedback, she said she would hold meeting with team leaders & complain
to them directly about this issue, so that they can improve in the coming time. In
addition, although employees feel upset about the performance appraisal process in
department now, currently it is not the problem, which the top management pay
attention. She revealed that the top management already had plan for this system in
next few years. Therefore, the ineffective performance appraisal system is not the
problem, which can be solved immediately, and this will be eliminated from the
analysis.
A discussion to focus on a central problem
After considering all the potential problems, “lack of career growth opportunity”
problem will be chosen to solve. Indeed, based on information from the interview with
operation manager, the board of directors really considered this an important problem.

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They really want to solve this problem as soon as possible so that to reduce the high
turnover rate in the operation department now. This problem is related to high turnover

rate, it is estimated that one employee leave, it can cost the company nearly salary of
an employees in one year. Then solving this problem will lower the turnover intention
in future. In addition, this problem is directly related to the revenue of the department
as well as the company, if it is solved, company can get more profit. Especially, this
problem is belonging to the operation department, so it is easier to control, it has no
need for too much involvement of other departments, this will save the human
resources involved in problem solving. According to the operation manager, the
financial cost for solving this problem is expected to be low, so it will be feasible to
implement.
Based on above analyses, below is the final cause-effect map:

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