UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
----------------------------------------NGUYEN THI THANH TAM

LOW JOB SATISFACTION
IN VIETNAM STAR AUTOMOBILE

ID: 22130064
MASTER OF BUSINESS ADMINISTATRION

SUPERVISOR:
Dr. LE NHAT HANH

Ho Chi Minh City – Dec, 2016


TABLE OF CONTENT
ACKNOWLEDGEMENT .......................................................................................................................... 1
EXECUTIVE SUMMARY ........................................................................................................................ 2
CHAPTER 1: COMPANY INTRODUCTION ........................................................................................ 3
1.1

General Information about Vietnam Star Automobile ........................................................... 3

1.2

Company background ................................................................................................................ 3

1.3

Organization chart ...................................................................................................................... 5

CHAPTER 2: PROBLEM IDENTIFICATION ...................................................................................... 6
2.1

Problem context .......................................................................................................................... 6

2.2

General symptoms ...................................................................................................................... 7

2.2.1

The first symptom: High employee turnover ................................................................... 7

2.2.2

The second symptom: Increasing customers complaints................................................. 9

2.2.3

The third symptom: Decreasing in sales performance .................................................. 12

2.3

Identifying and Diagnosing Tentative Problems .................................................................... 13

2.3.1

The first tentative problem: low satisfaction in internal communication .................... 14


2.3.2

The second tentative problem: low satisfaction in pay and compensation .................. 16

2.3.3

The third tentative problem: low satisfaction in management skills............................ 19

2.4

The real problem: low job satisfaction .................................................................................... 23

2.5

Verifying the importance of job satisfaction .......................................................................... 30

2.6

Verifying the existence of real problem: Low job satisfaction in Vietnam Star Automobile
32

2.7
Causes and Effects chart of real problem: Low job satisfaction in Vietnam Star
Automobile............................................................................................................................................. 33
CHAPTER 3: ALTERNATIVES ANALYSIS AND POSSIBLE SOLUTIONS ................................. 35
3.1

Verify causes of the real problem ............................................................................................ 35

3.2


Root cause: poor pay and compensation................................................................................. 38

3.3 Possible solutions............................................................................................................................. 42
3.3.1

Solution 1: Providing non-monetary compensation-learning and training programs 42

3.3.2

Solution 2: Developing a proper annual performance and salary review plan ........... 46

3.3.3

Solution 3: Creating an effective incentive compensation plan .................................... 50

CHAPTER 4: SUPPORTING INFORMATION ................................................................................... 54
4.1

Interview transcription ............................................................................................................. 54

4.2

Literature review factors of real problem .............................................................................. 59

4.3

Job satisfaction survey .............................................................................................................. 60



4.4

Survey on factors of job satisfaction ...................................................................................... 60

4.5

Satisfaction survey on facets of job satisfaction ..................................................................... 61

4.6

The understanding of staff about KPIs in Performance Appraisal form. ........................... 64

REFERENCES .......................................................................................................................................... 65


LIST OF TABLES
Table 1: M-Rate from Jan to Dec 2015
Table 2: Number of customer complains about delayed delivery and long waiting time for service done
Table 3: Average score of customer satisfaction about VSAL service
Table 4: Sales achievement from 2013 to 2015
Table 5: Management skills assessment survey
Table 6: Survey on factors of job satisfaction in Vietnam Star Automobile
Table 7: Pay and compensation satisfaction survey result
Table 8: Plan to build a good training program for staffs
Table 9: Plan for employee performance review
Table 10: Step to build up an effective incentive compensation plan
Table 11: Factors of building up an effective incentive compensation plan

1



ACKNOWLEDGEMENT

I am grateful to my supervisor, Dr. Le NhatHanh, whose expertise, understanding, generous guidance and
support made it possible for me to work on a topic that was of great interest to me. It was my pleasure
working with her.
I am hugely indebted to Managers of Vietnam Star Automobile, Mr. Tu, Mr. Do, Ms. Thu, Ms. Trang and
Ms. Tho, for finding out time to response to my questions for being ever so kind to show interest in my
research and for giving their precious and kind advice regarding to my topic.
I would like to express my gratitude to co-workers at Vietnam Star Automobile for being so generous to
reply to my questionnaires. Words can never be enough to thank your all kindness.

1


EXECUTIVE SUMMARY
This project is conducted at Vietnam Star Automobile Limited Company. The purpose of this project is
figuring out the reasons for increasing employee turnover from 12.3% at the end of 2014 to over 25% in
December of 2015, the increasing in customers complains according to the report from Customer
management department and falling business result in 2015 comparison to the one of year 2014.
Low job satisfaction among staffs is the real problem because there is a consistency between literatures
informed reviews and the collected data from Vietnam Star Automobile during deep interviews with
managers, mini-survey on staffs and reports from customer relationship management department, human
resource department and financial department. In a further investigation, the root causes of low
satisfaction are figured out and corresponding solutions are given to improve the situation.
There are three alternative solutions proposed as following:


Providing learning and training opportunities to employees




Develop employee performance review plan and salary increase



Build up an effective incentive compensation plan

2


CHAPTER 1: COMPANY INTRODUCTION
1.1

General Information about Vietnam Star Automobile

Vietnam Star Automobile is a 100% foreign invested authorized retailer of Mercedes-Benz products. It
was established in 2005 by the Hong Kong based Lei Shing Hong Group, a strategic partner of MercedesBenz in Asia with over 200 Mercedes-Benz outlets including two in Vietnam. It is proud to have a
professional workforce with international standards and continuously wins the best service prize during
five years from 2009 to 2014 as well as the highest Customer Service Indicator prize during six years
from 2008 to 2013.
According to the Board of Director meeting at the end of year 2014, its mission for the period from 2015
to 2020 is “being the Number 1 in Quality, Image and Profitability in the Automobile Sector in Vietnam”.
This mission creates some challenges for the company including: continually improve the quality
services, delighting customers and stakeholders in everything which the company is doing, building and
remaining a healthy financial situation.
1.2

Company background


Name of the company: VIETNAM STAR AUTOMOBILE LIMITED., CO
Short name: VSAL or VSA
Head office: No. 811-813 Nguyen Van Linh, Tan Phong Ward, District 7, Ho Chi Minh city, Vietnam
Tax code: 0 3 0 3 3 1 3 0 0 1
Tel: +84 (0) 854 112 280
Fax: +84 (0) 854 112 290
Website:
Sector: retailer of Mercedes-Benz products in Vietnam.

3


Branches: Phu My Hung and Truong ChinhAutohauses in Ho Chi Minh City; Ha NoiAutohaus and Ha
Noi showroom in Ha Noi city; NhaTrangAutohaus in NhaTrang city, Body and Paint center in Ho Chi
Minh City.
Number of employees from 2010 to 2015 of 6 branches is presented as below.
Branch name

Y 2010 Y 2011 Y 2012 Y 2013 Y 2014 Y 2015

Phu My Hung branch

85

97

92

106


111

124

Truong Chinh branch

89

92

91

89

95

97

Ha Noi branch 1

46

39

42

41

50


56

Ha Noi branch 2

26

28

29

31

29

35

NhaTrang branch

0

0

0

15

18

22


Body and Paint branch

0

0

0

0

33

38

(Source: Human resource report in Dec 2015)
Business activity of Vietnam Star Automobile combines trading Mercedes-Benz cars, accessories,
providing after sales service and brokageIt is summarized by the following chart.

Trading MBV Cars

Business activities

Trading MBV Trucks
(FUSO)
Trading MBV’s
accessories
Insurance brokerage

4



1.3

Organization chart

General Director

Secretary to GD

General
Manager, Dealer
operation

Group CRM & DS
Manager

CRM staff

Chief Financial
Officer

Dealer Principle

Sales Manager Old cars

Sales Manger New cars

Sales support
Manager


Salesmen

After-sales
service Manager

Sales supervisor

Salesmen

Technicians,
Body repair, car
washers, WS
admin, parts
controllers

General
Manager, Group
HR

Admin Manager

HR Manager

IT Manager

C&B Manager

Project Manager

Marketing

Manager

Tax Manager

Chief
Accountant

5


CHAPTER 2: PROBLEM IDENTIFICATION
2.1

Problem context

During the December 2015 meeting between CEO, CFO and all heads of department was hold in
headquarter, there were some issues about human resources and management which were raised. Firstly,
the human resources manager reported that there was a risk about the employee engagement. To be
specific, the number of resigned staffs was increasing dramactically for the first six months of 2015 in
comparision to the number at the same period in 2014. This situation put a significant pressure on the new
recruitment demand including cost of replacement and cost of training. The head of human resource
department also presented his opinion about the status of poor coordination among staffs and through
departments. He strongly believed that it was a reason for the high employee turnover score.
Secondly, the manager of client relationship management department expressed her worry about the
staffs’ productivity and performance. She said that they recoginized the working efficiency of people was
falling. Staffs were usally late in reporting and delayed in giving information or feedback to managers in
neccessary cases. In addition, the complaints which received from client increase definitely. They suggest
that company should have a proper internal information system to make sure that customers’ requests are
fully transferred to the engineer and workers.
Thirdly, the sales head recommended that the company must decrease the number of meetings which are

hold during a week and increase the incentive for salesmen. The salesmen complained to him that they
meed more time to go out for visiting and looking for new customers. Due to so many meetings they have
to take part and due to the long time of each meeting, their time for other tasks are decreased
unintentionally. He salesmen also expect for a higher commission from car selling activity. They said that
it was not easy for them to catch a new customer. They had to spend several months or even a year from
seeing customer at the first time till the day cars were delivered. They think that they are served enough to
get a higher commission amount for each car sold. The engineers and workers in workshop also ask for a
higher incentive for their services done and delivered to clients.
6


Finally, the marketing manager expressed her idea about building a common place for employees to
exchange opinions, concerns and recognizations. She showed to the board some evidences about the value
of internal marketing which was focuces on employees to maintain and expand a positive image of
company to the customers.
Obviously, a clear and deeper understanding the issues which were reported during the September
meeting is essential for VSAL to success in its business. Based on the importance of issue, the author
decided to conduct a research within the company to collect more information and clarify the real
problem.
2.2

General symptoms

Key Performance Indicators or KPIs are measurable values that demonstrate how effectively a company
is achieving key business objectives. KPIs represent a set of measures focusing on those aspects of
organizational performance that are the most critical for the current and future success of the organization.
The writer bases on some KIPs of Vietnam Star Automobile to present about its current symptoms. The
detail is following.
2.2.1


The first symptom: High employee turnover

According to the definition in human resources, employee turnover is a measurement of the time the
employees stay with the company and how often they are replaced. It can be low or high; it is low when
there is only few people leave the company and high when there are so many people leave the company.
However, no matter how the employee turnover is: low or high, calculating this ratio is important to any
company because it has impact on the path of growth and success of business (Mullins, 1996).
Reggio (2003) indicates that employee turnover is the movement of employees in and out of an
organization. It has negative influence not only on the short but also on the long run of business. High
employee turnover reflects workplace problems more than opportunities. Specifically, it affects to
teamwork, costs and reduces job performance and leads to losing knowledge as the result.
7


The impact of replacing employees are various depends on many different factors such as the difficulty of
finding a new person, the expenses for training as well as the recruitment and advertisement costs.
For example, in the fast food industry, it may be necessary to fill some positions every few months or
even more frequently. People who are working for this industry are usually unskilled and may change
positions frequently because there are many similar options available. In terms of costs, these positions
generally require limited training to reach full productivity, so replacing personnel will not tend to have
much impact on the business. But in other industries which ask for specific and high skillful employees,
the replacement cost is significant including advertising and interview cost, training and on-boarding cost.
In addition, the replacement of employees does have effect on the productivity of business.
To calculate monthly employee turnover rates, divide the number of employee separations in one month
by the average number active employees at worksite during the same period.
Monthly turnover rate = (number of separations during the month/average number of employees during
the month) x 100
For example, let’s say we lose four employees out of 200
M = (4/200) x 100 = 2%
According to the report from HR department, the M-rate of VSAL has been increasing from 12.3% in

Dec 2014 to 25% at the end of 2015, meeting peak in Sep 2015 at 27.6%. The following table will show
in detail the trend of M-rate during the year 2015.

8


Table 1: M-Rate from Jan to Dec 2015
M-

Dec-

Jan-

Feb-

Mar-

Apr-

May-

Jun-

Jul-

Aug-

Sep- Oct- Nov- Dec-

rate


14

15

15

15

15

15

15

15

15

15

15

15

15

%

12.3


15

13.6

21.2

24.5

23.7

26.1

20.8

22.3

27.6

24.1

23.6

25.2

(Source: VSAL’s HR report on Dec 2015)
To any kind of organization, employees are key elements for the success of its business. A high employee
turnover says that the company is not really a good place for the staffs to have long term commitment.
The company is losing the most important factor contributing to its business target. It creates pressure not
only for human resource department but also for other divisions in the company.

High turnover costs VSAL financially because the firm needs to spend time and resources filling the
position and training the new people. In addition, high turnover can reduce the staffs’ morale and cause a
flood of people leaving because they see their co-workers doing the same thing. High turnover can also
make the remaining employees more stressed out because they have to fill in the gaps until a new
employee is hired and trained. For those reasons, the current turnover is a difficulty to VSAL and its
business goal to be a leader in luxury car market.
2.2.2

The second symptom: Increasing customers complaints

Customer relationship management or CRM is a concept of managing the interactions between the
company and its customers. The objectives of customer relationship management are increasing
profitability, income and customer satisfaction. To organize the CRM department, many organizations
use tools such as technologies and procedures to maintain a good relationship with its customers and
contribute to the increasing sales. Therefore, according to Dowling and Gardberg (2012) CRM is an issue
of strategic business and process rather than a technical one.

9


A customer complaint is an expression of dissatisfaction about the provided services or delivered products
(Landon, 1980). It is a report from a customer providing documentation that the product or service of
company does not fit to the demand of customers.
Vietnam Star Automobile has the Customer Relationship Management department. Its main task is
contacting with customers and recording feedback on quality of services and products. Then, it will
coordinate with Sales and Marketing divisions in order to improve the services and products. The
company determines that, understanding its clients whether a good comment or a complaint is a crucial
way to enhance and develop its business.
In order to collect data from customers, the CRM department has a questionnaire including ten questions.
Its staffs will call to customers who have just experienced the after sales service or have just bought the

car and ask them questions orderly. The questionnaire is designed by eight Yes/No questions or 1 to 10
point scale and two open questions. By listening to responders, the staffs will record all of answers from
them.
According to the record from Customer Relationship Management department, there are usual complaints
from customer as following:
-

Quality of engineering service: low quality of service, high price (expensive), long time of
waiting

-

Price of service and price of parts or accessories: too expensive, need to improve

-

Poor customer service: the staffs do not understand the customers’ requirements; the waiting
time for service done is too long.

Base on the data from Apr to Dec 2015 which is provided from CRM division, there is a going up
complaints from VSAL’s customers. The number of respondents who say “Yes” to the two questions
whether there is a delayed delivery and long time waiting equivalent with job demand are showing as
following:
10


Table 2: Number of customer complains about delayed delivery and long waiting time for service done

15-Apr


15-May

15-Jun

15-Jul

15-Aug

15-Sep

15-Oct

15-Nov

15-Dec

Delayed delivery

25

21

18

27

35

12


26

37

39

Did the waiting time take you so long equivalent
with job demand?

15

12

8

25

16

21

32

26

23

(Source: CRM department’s monthly data from April 2015 to December 2015)
The average score for the three questions about 1) the accurate repair/maintenance; 2) The level of
satisfaction with the explanation and information which are received and 3) The value of service received

are falling down from Apr to Dec 2015. The table 4 shows the average number which is rated from
customers for the three questions above.
Table 3: Average score of customer satisfaction about VSAL service

15-Apr
How many point would you give to us regard to
accuracy repair/maintenance work in 10 point
scale?
How are you satisfied with the explanation,
information in what SA provided to you regarding
these service? How many point would you give to
him in 10 point scale?
How many point would you give to us in regard to
value of service received in 10 point scale?

15-May

15-Jun

15-Jul

15-Aug

15-Sep

15-Oct

15-Nov

15-Dec


7.5

6.8

6.3

5.2

8.1

7.1

5.1

6.5

5.1

7.1

5.8

5.5

6.3

7.6

6.9


6.1

5.9

6.2

6.7

6.2

5.7

6.5

7.5

6.3

7.2

7.1

6.5

(Source: CRM department’s monthly data from April 2015 to December 2015)
Receiving so many customers’ complaint is a risk to business of VSAL because it is evidence that the
company is having problem with its quality of product and service. Poor level of service could lead to
losing the current customers as well as potential customers. Customers have intention to do business with
VSAL because of convenience and quality, it is also a habit and they are looking for particular product or

service that is hard to find elsewhere. If customers consider that VSAL is delivering a bad quality of
service, they are able to change to other suppliers. At the result, business performance of company will go
down.

11


Moreover, the company can even loss its potential and future customers. When new patrons walk into the
showrooms and find themselves ignored, talked down or subjected to long time of waiting, they might
head for the door before they even reach their wallets. Customers who experience poor service often tell
their friends and their family members about VSAL. This will cost the company potential customers.
The number of complaints which are received from customers is increasing definitely. It is an evidence
for issue of serving customers and creating a good relationship the customers. Obviously, it will affect
negatively to sales and profit of VSAL. It rises up a demand of improving service quality and serving
attitudes of employees at Vietnam Star Automobile.
2.2.3

The third symptom: Decreasing in sales performance

In any organization, the sales department plays a vital role to the success of the business. It is the income
that a business makes from daily activities such as selling its products and providing its services to
customers. It is usually measure by the amount of money during a period of time. At the end of each
financial year, VSAL plan a Sales target for the next year. The Sales target is build basing on many
internal and external factors. They include the overall economy forecast, the industry forecast, the market
conditions, the present year sales and the investment of company.
An increase in sales could mean an increase in profit and expenses as well. However, an increase in sales
can make the company to be able to invest more for technology, staff training and extending business
scale. For that reason, to VSAL meeting the sales target is the most important purpose for a year of
running business.
According to the report from finance department in Dec 2015, the Sales of year 2015 does not meet to the

target. The sales for 2015 is expected greater than the sales of year 2014 approximately 10%. However,
the report indicates that revenue of year 2015 is only equivalent to 95.56% revenue of year 2014.

12


Table 4: Sales achievement from 2013 to 2015
Year

Sales Target

Sales achievement

% Achievement

Y.2013

135

138

102.22%

Y.2014

155

161

103.87%


Y.2015

180

172

95.56%

(Source: Financial Report in Dec.2015-Unit: Million USD)
Vietnam Star Automobile is the biggest dealer of Mercedes-Benz in Vietnam. During 10 years running
business, it always meet the sales target and achieve the highest service indicator. Although sales of year
2015 is 11 billion USD greater than sales achievement of year 2014, it does not fit to the expectation. This
incident is raising a concern about risks of losing customers and bad quality of services. The board of
directors says as this is a sudden sock to them and negatively affect to the whole business plan of year
2015. Additionally, it makes the managers have to be more careful, prudent and detail in planning for year
2016.
To summary, the bad symptoms that have been presented have negative influence to the business and the
people in Vietnam Star Automobile. It is losing employees and the loyalty of customers in the same way.
It is also facing with bad result in sales and its business generally. For that reason, the demand for
clarifying root reasons and real problem is necessary for the company.
2.3

Identifying and Diagnosing Tentative Problems

In order to identify the problems basing on those symptoms, the writer review previous researches and
experimental studies which relate to above general symptoms. Then, the writer summarizes potential
factors of those symptoms in the Appendix 1, chapter 5 of this paper. The next step is implementing deep
interview with 5 managers from Sales, After Sales Service, Finance, Administration and HR departments.
As the result of reviewing previous researches and interview responses, the writer withdraw the three

following tentative problems. They are presented in the next parts of this paper.
13


2.3.1

The first tentative problem: low satisfaction in internal communication

In term of interview results, the managers of VSAL confirmed that internal information system or the
internal communication is really a problem of increasing customer complaints and employee turnover.
Mr. Tu, as the Sale manager, said that his salesmen have to face with difficulties when they talk to staffs
in other departments. Because it is not easy for salesmen adapting to a new client and having the sale
contract, salesmen expect that the information as well as the internal documentation flow among
departments should be faster and smoother. They need the sales and supporting documents for sales
agreement to be approved quickly so that they can narrow down the length from meeting customer as the
first time to delivering car or service to them. The internal information system does not only affect to the
sales procedures but also affect to the compensation of salesmen since the policy of the company
indicates salesmen could only receive their commission after a month of delivering car to customers. For
those reasons, the sale managers claimed that the internal communication in VSAL is the problem and
lead to the symptom that salesmen quit the job and sales decreasing in comparison to sales target.
In addition, Mr. Do, as the director of after sales service workshop, agreed that his staffs need more skills
in communication. In term of a service officer, the staffs need to listen to customer and understand about
their demand of service. In turn, service officer will transfer that information to the engineers and the
workers at workshop. In case of misunderstanding or difference between delivered information and
received information, the service done cannot adapt to customers’ requirements. As the result, customers
will not be happy and satisfy with the service done. Mr. Do also concluded that communication skills and
internal communication way roots to the going up of customers’ complaints.
According to literature reviews, there are many studies on the importance of internal communication and
its relationship with employee turnover. Employees have demand of being confirmed. The company with
strong internal communication system makes employees feel comfortable to stay longer because they are

involved in some level of decision making process. In the absence of openness’ in sharing information,
employee empowerment the chances of continuity of employees are minimal.
14


Booth and Hamer (2007) found that labor turnover is caused from variety of external and internal factors
for example organizational culture and values, leadership and management style, wages and
compensations, internal information system or inside communication, co-workers relationship, the
development and career building satisfaction and degree of job satisfaction
Gemünden and Ritter (2003) combined internal communication structure as an important part for the
development of a firm’s team working ability, many others have also found that internal communication
has an effect on customer relationships and the company’s profitability.
Communication is an independent factor to employee turnover. A number of studies have shown (Storey,
2001) that communication has direct or indirect connection with employee turnover or employee
commitment. The direct connection between communication and turnover lead to result that there is no
factor present to mediate the relationship between these two concepts: communication and turnover. The
second one – that is indirect relationship – shows that there are certain factors that connect the
relationship between employee turnover and communication. Accordingly, Pettite, Goris and Vaught
(1997) proved there is a high positive correlation between job satisfaction and communication. While
other studies (Price, 1977; Tett &Meyer, 1993) show that there is a correlation between employee
turnover and job satisfaction. In a study by Jablin (1987), it highlighted that communication issues are
preexisting to employees’ affective responses in relation to communication satisfaction and job
satisfaction as well as organizational commitment, which finally lead to employee turnover growing and
actual turnover.
Literature reviews also show that internal communication has coordination with customer relationship or
customer satisfaction. Smythe (1996) notes that the speed of the business cycle has increased and thus
the decision making process must be quicker. He remarks that the decision makers need extensive
information around the organization more quickly, so that customers’ needs can be satisfied better.
According to Smythe (1996), by developing internal communication, information and knowledge can be
transferred effectively to the decision maker, through which the speed of the decision making and its

15


quality can be increased. The study also indicates the transparency of decision making is also increasing
through the development of internal communication. Furthermore, this transparency improves also the
psychological health of the organization, reflecting positively on the customer relationship.
Customer satisfaction has today a more and more significant impact on the financial success of an
organization (Adebanjo, 2001). He argues that observations of the customers have to be communicated to
all the relevant departments and individuals in the organization, so that the customer needs can be
satisfied effectively. According to him, effective internal communication ensures that all necessary
information is transferred to the stakeholders. Internal communication has also an important role in
developing and maintaining the company brand. It has been found that successful brands depend on good
internal communication programs (Cleaver, 1999) to support greater consistency, at whatever point the
customer’s contact with the organization occurs (Camp, 1996). Chernatony, Drury and Segal-Horn (2003)
state that effective internal and external communication is one way to improve customer perceived
consistency. Peters and Fletcher (2004) also see the communication within and between organizations as
a way to improve marketing effectiveness.
From reviewing previous studies and interview managers of VSAL, the writer concludes that ineffective
internal communication is probably a problem that company is facing to. A poor internal communication
makes the employees feel not happy with the workplace so that they intend to change to another
company. It also creates a negative impact on sales and the customers’ satisfaction.
2.3.2

The second tentative problem: low satisfaction in pay and compensation

Most of interviewed managers consider that salary, incentives and commission policy is very important
not only to them but also to their staffs. They all agree that staffs resign the position in VSAL and find a
new workplace with higher wages and better commission policy. Mr. Tu and Mr. Do say that the applied
commission and incentive system are not suitable to the current business situation. Salesmen as well as
engineers and workers at workshop have a very low fixed salary. For every car have been sold, the

salesmen only can receive a very little percentage in comparison to the car price. It happens as the same
16


way to people at workshop. They must meet to at least 101% of monthly target if they want to have
incentives for that month. In general, employees have a right to find a new workplace with higher fixed
income and more easily adapted commission program. The managers conclude that low compensation is
one of the main reasons for high employee turnover.
In addition, the managers believe that commission motivates the salesmen to work hard. It is a driven for
salesmen to look for more customers, meeting more potential customers and get more sales contracts. To
the engineers and other staffs in other departments, compensation is a force for them to do the job more
effectively and increase the job performance. Ms. Trang, as the chief accountant says her staffs need to
have some added benefit not only monthly salary. She trust that it is a good tool to keep her people
working for the company in long term and enhance the employee turnover.
Obviously, pay and compensation play a key role because it is a connection of employment relationship,
being a critical issue to both organization and its people. To the organization, compensation decisions
influence its costs of running business and thus its ability to sell products and services at a competitive
price in comparison to its competitors. In addition, compensation provides each organization a tool to
compete for staffs in the labor market. To employees, they typically depend on wages to support for their
living expenses and other living activities. The company compensation policy has significant impact on
their behavior and working attitude. It also affect to the commitment between employee and its employer.
According to Steers and Porter (1996), the research on compensation clearly shows a link between the
offered rewards by the firm and individuals that are attracted by the compensation into working for the
firm, and those employees who will continue to work. In recent years the compensation concept has been
expanded both in terms of type and amount. Traditionally, employees are compensated with a basic salary
and a business period bonus based on meeting pre-set goals for revenues and expenses (Muller, 1999).
Nowadays, compensation has been divided into monetary and non-monetary types. They include wages,
commission, training opportunity, health care plan and other non-cash benefits that are provided by the
firm to its people.
17



According to Mercer (2003), employees will continue working in an organization if they are well
rewarded. Moreover, employees are likely to stay in organizations where they believe that their
capabilities, contributions and efforts are appreciated (Davies, 2001). Gomez-Mejia, Balkin and Cardy
(2004) also stated that internal equity and external equity should be observed in terms of remuneration if
the compensation package is to be used as a retention strategy.
Sales incentive programs are likely to drive sales revenue by motivating and rewarding salespeople and
customers. The programs may be used to encourage salespeople to meet or exceed their sales goals. The
incentives may also be designed to attract customers to purchase a specific product or product lines (Janis,
2013; Ulanoff, 1985).
These sales incentives are in addition to the root compensation elements such as basic salary,
commissions and bonus plans. Incentives play a central role in the management of the overall company
rewards plan (Coughlan & Joseph, 2012). The firm’s overall compensation plan is important for
motivating employees (Boyd & Salamin, 2001), and compensation policy that combines incentives are
likely to have more impact (Menguc & Barker, 2003).
Additionally, pay and compensation policy have influence on the employee working attitude and their
behavior to company’s client. If staffs receive a certain benefit from serving customers in a good way,
they will try to satisfy the customers. In contrast, they have to reason for doing the job well. For that
reason, in order to satisfy its clients, the company must satisfy its people first.
Obviously, staffs in Vietnam Star Automobile are not really happy with the current pay and compensation
level. To attract good salespeople and motivate them, company must have an appealing compensation
plan. Ideally, Vietnam Star Automobile should pay for its sales representatives in a way that encourage
them to do for personal interest and as the same time for the company’s interest too. To build a
competitive sales force Vietnam Star Automobile must pay at least an equivalent wage in comparison to
the luxury car industry. To be sure it can afford a specific type of salesperson, the company should

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estimate when the job description is written how valuable such a sales person will be. If a job requires
extensive travel, aggressive pioneering, or contacts with difficult customers the pay may have to be
higher. But the salesperson’s compensation level should compare at least roughly, with the pay scale of
the other companies.
Sales compensation plans typically rely heavily on incentives in the form of sales commission. However
Vietnam Star Automobile could also build a set of straight salaries and a combination of salary and
commissions for its staffs. For example, it can pay salespeople fixed salaries (perhaps with occasional
incentives in the form of bonuses, sales contest prices and the like). Straight salaries particularly make
sense when main task involves prospecting (finding new clients) or when it mostly involves account
servicing (such as executing product training programs for a customer’s sales force or participating in
trade shows). Straight commission plans pay sales people for results. Under these plans, salespeople have
the greatest incentive. Commission plans tend to attract high performing salespeople who see that effort
clearly produces rewards.
2.3.3

The third tentative problem: low satisfaction in management skills

The writer has a discussion with Ms. Tho, the Human resource manager and asks for her idea about the
recent phenomenon in VSAL. She says that “Our managers need to maintain good relationship not only
with the customers but also with their staffs. I think it is very important in order to improve our staffs’
morale, keep them for long term commitment and motivate them to achieve sales target”. According to
her, management skills are crucial to senior managers and supervisors, the ones who directly work with
staffs as a team. Management skills include planning and making decision, meeting and communication
as well as management staffs and themselves. A good manager is a good management skills holder.
Ms. Trang, the chief accountant, and Ms. Thu
, the administration manager also agrees that the company should focus on enhancing and advancing more
skills for managers and supervisors. The skills must be fashionable and adaptable to new employee

19



generation. To modern employees, they expect from their managers more than the benefits of company.
They always ask for professional and skillful managers who they can lean on in difficulty. Moreover,
good managers are respected from staffs and good samples for staffs to follow.
The writer conducts a small survey to investigate ideas of staffs about skills of their managers. The
purpose knows whether staffs satisfy with their managers and whether staffs receive proper supporting
from their managers.
The questionnaire is combined two questions and delivered to 30 staffs. The first one evaluates how
regularly staffs have contact to their supervisors. The second one gives staffs a chance to appraise some
important skills of their supervisors.
The result is presented following.
Table 5: Management skills assessment survey
Questions

Not

Rarely

Sometimes

at all

Most of the

All of the

time

time


3

2

1. How much
contact do you
have with your

0

9

16

direct
supervisor?
2. How often your direct supervisors show the following characteristics?
Professionalism (Sự
chuyên nghiệp)

0

11

9

7

3


1

5

14

7

3

Competence (Năng
lực

20


Business knowledge
(Kiến thức kinh

0

4

10

9

7

7


5

12

5

1

0

6

11

8

5

2

14

7

2

5

0


8

13

6

3

0

7

12

5

6

doanh)
Fairness (Công bằng)

Ability to motivate
(Khả năng động viên
NV)
Constructive criticism
(Phê bình xây dựng)

Good communication
skills (Kỹ năng giao

tiếp)

Problem solving
skills (Kỹ năng giải
quyết vấn đề)

For the question one that asks employees about how often they have contact with their supervisors. There
is 30% of responses say that they almost never have contact with their supervisors whereas 53% of them
often have contact with the supervisors and only 17%, equivalent to 5 people, usually and very usually
have contact. The difference arises from the different in positions of each staff. For those who work
directly with their supervisors and managers will commonly contact to them. For those who work via
their seniors will not really often contact to the managers. It also depends on the relationship between

21