Employee Loyalty Essay Example

changed.

In order to keep and encourage excellent employees in the company, one of the best ways are company’s top management must improve the working environment or to a broaden extend is to build the company culture.

• So it is the time to study the questions?
• What is the Company culture?
• What is the employee loyalty?
• Will the innovation in Company Culture results in better Employee Loyalty?

What are the implications of the study in Vietnam?This review of the literature on Company culture & Employee Loyalty focuses on these four above questions.

Review Of The Literature

What is the Company culture? “Culture” in general is the woven systems of knowledge such as traditions, legends, beliefs and faiths, experiences, rules, values...

shared by a relatively large group of people in the human society. Company culture concept is a little different from Socio-culture because a company is established under business environment for making profit, it is not a natural human environment. Company Culture is a variable with different value in the eyes of researchers.There is a lot of different Company Culture types which depend on the scale or the original of a company.

For instant, a company forces its entire employees to gather together in an area of 100 km from their home. Employees have to shout company’ slogans while practicing strange actions for 12 hours / day for 2 days then them all have to wake up and at 1. 00 AM of the third day for walking 30 km with shouting on the top of their voice in the middle night. Do you think it is the culture of an American, German, Korean or Vietnamese company?Yes, it was a Culture training

program of LG Electronics Vietnam. Thorsen, D. (http://www.culturebuilders. com/definition_of_corporate_culture. htm) defined Corporate Culture as: “

1. an energy field that is created whenever a group of people come together to collaborate;
2. foundation for all decisions and actions within an organization;
3. the way things are around here”.

Company Culture therefore was naturally created when people work together in the group. Each company has its own Culture and culture is the direction of all members’ identity, thinking, and behavior.In my opinion, we can divide Company Culture into two characteristics: Physical Company Culture and Spiritual Company Culture. The Physical Company Culture can easily be observed such as uniform, office interior and equipments, corporate identities, organizational structure ...

and more directly related to employees criterion are salary, welfare, business trip expense and so on that concerning to money. Basically, employees are working for a living and they need a compensation system that deserve with what they contribute to the company.Proper Physical Company Culture therefore must be fair between internal and external. The Spiritual Company Culture is something invisible such as slogan, discipline, communication, solidarity, beliefs, tradition, company codes of conduct, encouragements, recognition, emotional cares, treating rules, point of views...

The Spiritual Company Culture is very important and in many cases it is not a money concerning. President Ho Chi Minh leaded Vietnamese people to defeat France, Japan and America army forces during the 20th century because he taught Vietnamese soldiers fighting by spirit, not by salary.Nowadays the wars had passed, but Ho Chi Minh thoughts still alive and can be applied in many cases of business administration. No company can last for long if the top managements forget to foster the company’s spiritual

culture.

What is the Employee Loyalty? In Vietnam, a lot of employees and leaders think that Employee Loyalty is a moral commitment, its outcome stay long and obey of orders. This concept is very popular not only in Vietnam but also in all the countries influenced by Confucius (Kung tzu, 551-479BC) such as China, Japan. This definition is presented for Oriental traditional style.In a press release of The New York Times Company (5/7/03), Beta Research Corporation, on behalf of The New York Times Job Market, conducted telephone interviews with 250 hiring managers and 200 job seekers in the New York metropolitan area. Job seekers are defined as those who are currently looking or plan to look for a new job in the next six months. Definition of Loyalty More hiring managers and job seekers in 2003 defines loyalty as "being motivated to do good work.

" A comparison of how respondents defined loyalty shows: Definition of Employee Loyalty isHiring ManagersJob Seekers

This survey shows a different in definition of Employee Loyalty between Occident and Oriental. By the way, we can conclude that two main manifestations of Employee Loyalty are Long-term Commitment (Oriental’s) and Positive Working Performance (Occident’s). The employees’ satisfaction not just only effected to their stay commitments but also effect to their positive working performance (the two manifestations of Employee Loyalty as identified).In the other hand, employees’ satisfaction is effected by working environment such as the office location, management styles, colleagueship, motivations of work... those are identified as elements to construct a Company culture. In summarize, the chain of effects is: Company Culture —effect> Employee Satisfaction —effect> Employee Loyalty.

So far, the hypothesis: “There is a relationship between

Company Culture and Employee Loyalty” seems to be supported. The hypothesis can be visualized as below: In order to research the hypothesis more clearly, let me show you some case-studies of Vietnamese typical companies.There are 3 main kinds of company in Vietnam: State-owned Enterprises (SOE); Private Companies; and Foreign Direct Investment (FDI) Companies. I am myself luckily having had chances to benchmark all of those three types of company cultures. The typical case study of FDI Companies is LG Electronics Vietnam (LGEVN), who is an early adopter of global progressive knowledge. LG Electronics world wide subsidiaries have implemented the so called “Business Culture Innovation” actions to change their corporate culture since 2001 (see the appendix 1).

In Vietnam, LGEVN’s “Business Culture Innovation” has been improving both its Physical Spiritual Company Culture and Spiritual Company Culture to make employees contribute positive working performance. Besides providing the best working facilities, diversify compensation methods by adequate salary, cash awards... LGEVN also focusing on mind-set activities; recognizing valuable staff by “Great Company – Great People” philosophy to make employees be proud under LG culture; creating clear communication system from top management to every employee..

.As a result, LGEVN Company Culture is getting better and better, simultaneously the Employee Loyalty is increasing accordingly. LGEVN employees became more ambitious, willing to face any kind of challenges, contribute positive working performance to the company and all of them committed working for LGEVN for long. In this case, the correlation between Company Culture and Employee loyalty is being supported.

Second typical case study is Vietnamese State-owned Enterprises (SOEs). In general, SOEs operating with the communism philosophy, 100% of SOEs have parallel managements of Business administration and

Communist party’s agent administration.The promotion policy in SOEs discriminates between Communist party members and normal labors. In the SOEs culture, mind-setting programs to encourage employees’ spirit and moral are frequently held. But due to the limitation of communism’s leveling orientation, management of SOEs cannot distinguish compensation systems between positive and negative working performers. In other words, SOEs focus too much on fostering Spiritual Culture while Physical Culture is abandoned, therefore Company Culture in SOEs is unbalanced and lack of vitality.

As a result, the Employee Loyalty in SOEs is weak leading to negative working performances, corruption. Excellent employees tent to move to where Company Culture is healthier such as FDI Companies. In this case, the correlation between Company Culture and Employee loyalty is also being supported. Further more the Spiritual Culture training in SOEs resulted to long time stay of almost employees (not the excellent ones), but weak Physical Culture leaded can’t help improving the positive working performance. The third typical case study is Vietnamese Private Companies.This type of company is young, small or medium sized; and just appeared after Vietnamese Government change from Centralized management economy to Market oriented economy.

Company culture in this type of companies is not very popular though it is emerging in few ones which are led by new-thought directors. In common cases, Company Culture in Vietnamese private companies is similar to family culture. Private entrepreneurs usually entrust their close blood relatives and assign to key management position regardless their relatives’ ability. There is no spiritual encouraging policy focused while compensation system is base on family pattern.Employees in Vietnamese private companies therefore consider their company as a transit station and willing to

take the next cruise until their find out desired destination, a large SOE or FDI company.

Result And Discussion

Will the innovation in Company Culture results to better Employee Loyalty? From the above research, the conclusion: “There is a Positive Correlation between Company Culture and Employee Loyalty” is drawn out.

Obviously the innovation in Company Culture will impact on improvement of Employee Loyalty, which results in Positive working performance and Long-term working commitment.Nowadays, employees are identified as the most valuable asset of any company, who contribute to the success or failure of a business. If Vietnamese enterprises want to boost their growth and be competitive in international market, they should be aware of the importance of their corporate culture. In order to enhance or improve a company’s culture in Vietnam in particular, factors that influenced most on its employee’s loyalty must be identified for this purpose both physically and spiritually.

Appendix

Case study of LG Electronics (Korea) about Corporate Business Culture Innovation.Concept of LG Electronics business culture innovation cycle.

Before the Culture innovation take place, LGEs culture is identified as: -Weak winning spirit: the employee did not have the persistence to win in a competition and the mind “average is good enough” was the common thinking. -No culture of challenge: weak practice because strategies and actions were not connected. -Low level of satisfaction: employees had negative attitude because “it doesn’t matter how well they do” -Weak unity: since the strategic goals were vague and promotion policy suffered discrimination.After analyzing the situation, LGE based on the concept of its “Business Culture Innovation cycle” to drawn out the “Business Culture Innovation” campaign with the detail improvement fields as follow:

• All Employees have a
  

vision together: make Vision and Strategy easy, simple, Clear; Vision thorough involvement.

References

1. Thorsen, D. (unknown date) Definition of Corporate Culture.Culture Builders Corporation. Retrieved March 17, 2006, from http://www. culturebuilders. com/definition_of_corporate_culture. htm The New York Times Company Investor Relations.
2. Press release. Retrieved March 15, 2006, from http://www. corporate-ir. net/ireye/ir_site. zhtml? ticker=NYT&script=461&layout=-6&item_id=4...
3. Navigos Group. Online survey results. Retrieved Mar 16, 2006, from http://www. vietnamworks. com/survey/survey_lists. php LG Electronics (2001). Fighting spirit – Think differently.

2001 Post conference.