Company introduction
Company background
South Tax Consulting Co., Ltd (STC), established in July 2011 and located in Phu Nhuan District, Ho Chi Minh City, specializes in providing accounting services for small and medium-sized enterprises (SMEs) in the area Led by CEO Mr Vuong, who brings over a decade of experience in the accounting sector, the company features a straightforward organizational structure.
The company consists of 11 employees, including 10 in the Accounting department—comprising 4 senior accountants with varying experience (2 with over 3 years and 2 with more than 2 years) and 6 junior accountants with up to 1 year of experience Additionally, there is 1 delivery man responsible for managing the receipt and delivery of accounting documents between the company and its clients The CEO, Mr Vuong, oversees general management, develops new customer relationships, maintains existing customer satisfaction, and supervises the accounting department.
Figure 1 Company structure of South Tax Consulting Co., Ltd – March 2019 (Source: South Tax Consulting Co., Ltd)
As of the end of 2018, South Tax Consulting Co., Ltd (STC) served 182 clients across four primary business sectors: service, manufacturing, construction, and trading Customers are categorized by size into three revenue groups: those generating under 10 billion VND, between 10 to 50 billion VND, and over 50 billion VND annually Notably, the majority of STC's clientele, accounting for 65 out of 182 customers, consists of trading companies with annual revenues below 10 billion VND, highlighting the firm's focus on smaller corporate clients This information is in accordance with Clause 1, Article 6 of Decree 39/2018/ND-CP, enacted on March 11.
2018 about Determining Small and Medium-sized Enterprises, this group of customer is determining as micro enterprises Thus the main group of customers of STC is micro enterprises in trading
Figure 2 Number of customers in each group of business of South Tax Consulting Co., Ltd at the end of 2018 (Source: South Tax Consulting Co., Ltd)
Customers prioritize reliability as a key measure of accounting service quality, often influenced by recommendations from their partners The primary focus on reliability emphasizes the importance of delivering promised services accurately and dependably STC's competitive advantage lies in its strong relationships with the tax authority across Phu Nhuan, Binh Thanh, Tan Binh, and Go Vap Districts, which supports local businesses and offers services at competitive prices As a micro enterprise, STC generates a revenue of 3.7 billion VND.
In 2018, accounting service providers in Phu Nhuan District, Ho Chi Minh City, held a minimal market share, with little differentiation in service offerings and pricing According to Mr Vuong, three companies are identified as key competitors in this region.
In the district, several corporations offer identical services to customers, with their pricing structures being comparable In terms of company size, their revenue in 2018 ranged from approximately 3.3 to 5 billion VND.
Name of company Year of establishing
Revenue in 2018 (VND) - in rounded
Price (VND/issuer client/month)
Bo Cong Anh Co., Ltd 2010 4,500,000,000 1,000,000 - 5,500,000 South Tax Consulting Co., Ltd 2011 3,703,273,200 1,000,000 - 4,000,000
Table 1 Fundamental information about competitors of South Tax Consulting Co., Ltd – March 2019 (Source: South Tax Consulting Co., Ltd)
The pricing for services offered by four companies ranges from 800,000 to 6,000,000 VND per issuer client per month, as outlined in Table 1 According to Mr Vuong, this pricing is influenced by the customer's revenue and the volume of invoices and documents processed in their accounting reports The competitive landscape reveals minimal price variation among rivals, making their offerings highly competitive in the market.
Supplementary service Classifying, arranging and storing accounting documents
Table 2 Categories of service provided by South Tax Consulting Co., Ltd – March
2019 (Source: South Tax Consulting Co., Ltd)
STC offers two primary types of services to its customers: core services and supplementary services The core service encompasses essential accounting services, such as preparing tax reports, maintaining accounting books, and generating financial reports, which serve as the main revenue source for the company In addition, STC provides supplementary services at no extra cost, which include the classification, organization, and storage of accounting documents for clients.
The process for main accounting service such as preparing tax reports, financial reports and accounting books for customers at STC is presented as below diagram
Figure 3 Process in accounting service of South Tax Consulting Co., Ltd – March
2019 (Source: South Tax Consulting Co., Ltd)
Figure 3 illustrates the key steps in the accounting services provided by STC, which include the preparation of tax reports, financial reports, and accounting books The process begins with the collection of accounting documents from clients and culminates in the completion of tax reports and financial reports, which are then submitted to the tax authority Additionally, clients receive their accounting books and all related documents for the entire calendar year upon completion of the services.
Business performance
Between 2014 and 2018, the company's revenue demonstrated a consistent upward trend, culminating in a significant increase of 554 million VND in 2018, which reflects a growth rate of 17.6% compared to 2014 Specifically, revenue rose from 3.15 billion VND in 2014 to 3.75 billion VND by 2017.
19%) In 2018, the revenue decreases slightly from 3.75 billion VND to 3.7 billion VND (equivalent to the growth rate of -1.22%)
Revenue (VND) Net Profit (VND)
Figure 4 Revenue and profit from 2014 to 2018 of South Tax Consulting Co., Ltd (Source: South Tax Consulting Co., Ltd)
The growth rate of revenue tends to decrease from 10.57% in 2015 down to minus 1.22% in 2018 The revenue growth rate tends to decrease continuously from 2015 to
In 2018, South Tax Consulting Co., Ltd encountered significant challenges that threaten its business operations To prevent further decline, it is crucial to identify the underlying issues and implement appropriate solutions.
Based on data that the company provided, revenue in each group of customer is listed as follows:
> 50 billion VND/year Total (VND)
Table 3 Revenue in each group of customer at South Tax Consulting Co., Ltd in 2018 (Source: South Tax Consulting Co., Ltd)
From Table 3, group of trading customer contribute the most in revenue of South Tax Consulting Co., Ltd in 2018, with the value of 1.99 billion VND in sales, equivalent to
53.7% over total sales Particularly, the group of micro trading customer takes 65.8% sales in trading group This is the one that contributes the most in total revenue at STC
In the Vietnamese market, businesses can be categorized based on their annual sales figures across various sectors For services, companies with sales below 10 billion VND per year, between 10 billion and 50 billion VND, and exceeding 50 billion VND represent distinct segments Similarly, the manufacturing sector is divided into three categories based on the same sales thresholds The construction industry also follows this pattern, with classifications for sales under 10 billion VND, between 10 billion and 50 billion VND, and above 50 billion VND Lastly, in the trading sector, businesses are categorized based on their sales, with groups for those earning less than 10 billion VND, between 10 billion and 50 billion VND, and those surpassing 50 billion VND annually.
Figure 5 Revenue in each group of customer of South Tax Consulting Co., Ltd in 2018 (Source: South Tax Consulting Co., Ltd)
According to company data, three primary customer groups significantly contribute to revenue: trading customers with sales under 10 billion VND per year (35.29%), trading customers with sales between 10 to 50 billion VND per year (16.93%), and construction customers with sales under 10 billion VND per year (12.83%) Notably, the trading group with sales under 10 billion VND annually is the largest contributor to STC's revenue, making micro trading customers the focal point of this study The following chart illustrates the revenue growth rate of micro trading customers from 2015 to 2018.
Figure 6 The revenue growth rate of micro trading customers at South Tax Consulting Co., Ltd from 2015 to 2018 (Source: South Tax Consulting Co., Ltd)
Between 2015 and 2018, the revenue growth rate for the micro trading customer group showed a consistent decline, starting at 9.52% in 2015 and dropping to -1.79% by 2018.
2018 In the next part, the symptom that links to sequential decrease in revenue growth rate of this group of customer will be figured out.
Symptoms
As interview with Mr Vuong – CEO:
In recent years, my company has faced declining performance, with a slowing revenue growth rate, particularly among our primary customer base of micro trading clients The rate of existing customers leaving has outpaced the acquisition of new customers, significantly impacting our overall revenue (Mr Vuong, CEO of STC, 34 years old)
Mr Vuong noted a recent slowdown in revenue growth, attributing it to a decline in existing customers that has surpassed the increase in new clients, ultimately affecting the company's overall revenue The accompanying chart illustrates the year-end number of micro trading customers at STC during this period.
Number of micro trading customers
Figure 7 Number of micro trading customers at the year end in the period of 2014 –
2018 (Source: South Tax Consulting Co., Ltd)
In general, the number of micro trading customers increase in the period of 2014 –
2018, in particularly, there were from 53 customers in 2014 up to 64 customers in
2018 However, the growth rate of customer of the firm tends to decrease in this period We can see that the increment in number of customers each year from 2014 to
2018 has decreased continuously in this period of time In 2018, number of micro trading customers in STC is 64, decreased 2 customers compared to the one in 2017
Between 2014 and 2018, STC experienced a decline in its customer base, as the number of clients discontinuing their use of the company’s accounting services surpassed the influx of new customers, particularly in 2018.
During this period, 23 firms represent 29.87% of STC's total ex-customers, making this group the primary contributor to STC's revenue The significance of these customers on the overall financial performance of STC is substantial.
At the beginning of year 47 53 61 65 66
At the end of year 53 61 65 66 64
Table 4 Fluctuation in number of micro trading customer of South Tax Consulting Co., Ltd in the period of 2014 - 2018 (Source: South Tax Consulting Co., Ltd)
Between 2014 and 2018, the number of customers leaving the company increased significantly, rising from 2 to 8, with a notable spike from 2016 to 2018, where 5 customers left in 2016, 7 in 2017, and 8 in 2018 Conversely, the number of new customers declined during the same period, dropping from 9 in 2016 to just 6 in 2018.
From 2014 to 2018, there was a decline in customer numbers, particularly among micro trading enterprises, mirroring the overall trend of the company's total customer portfolio This suggests that the downturn in micro trading reflects the broader customer base of the company However, during this period, there were significant fluctuations in customer engagement.
Between 2016 and 2018, STC experienced a decline in sales growth due to a reduction in both new customers and the loss of existing customers within its micro trading segment.
The revenue of STC is derived from both existing and new customers, making the decline in total customer numbers a significant concern for the business To address this issue, it is essential to investigate two key factors: the rising number of existing customers who are leaving and the decrease in new customer acquisitions Applying the Pareto Principle, or the 80/20 rule, the study will concentrate on micro trading customers, as they may reflect the broader customer base's challenges Understanding the reasons behind the attrition of micro trading customers is crucial, as it can shed light on the overall business problems at STC Furthermore, research highlights the importance of fostering long-term relationships with existing customers to enhance profitability, emphasizing the need to prioritize the retention of current customers over the pursuit of new ones Thus, this study will specifically examine the increasing departure of existing micro trading customers from STC.
Why number of existing micro trading customers leaving the company increase?
As responses of Mr Sang – CEO of Minh Sang Co., Ltd:
Mr Sang, the 38-year-old CEO of Minh Sang Co., Ltd, expressed his dissatisfaction with STC's accounting services due to the inaccurate preparation of his company's tax reports, which resulted in fines from the tax authority As a result, he no longer trusts STC for his accounting needs.
Minh Sang Co., Ltd faced penalties from the tax authority due to South Tax Consulting Co., Ltd's preparation of tax reports that inaccurately reported corporate tax values As a result, customers were required to submit supplementary tax payments and fines, leading to financial losses and dissatisfaction This incident has eroded customer trust in the quality of accounting services provided by South Tax Consulting Co., Ltd.
As interview Mr Vuong – CEO of South Tax Consulting Co., Ltd:
To meet customer expectations, it is essential to ensure both accuracy in tax report preparation and timely delivery of these reports Recently, STC has faced several issues, particularly concerning the preparation of accurate corporate income tax reports, highlighting the importance of precise calculations for client satisfaction.
Mr Vuong emphasizes the critical need for accuracy and timeliness in tax report preparation from accounting service providers However, a significant issue has emerged at South Tax Consulting Co., Ltd, highlighted by an interview with Mr Vuong and company data, revealing inaccuracies in corporate income tax calculations Following the 2018 tax finalization, the firm lost 8 out of 25 clients, particularly from its focus group of micro trading customers, due to these discrepancies.
According to responses from Mr Vuong:
During the corporate tax finalization process, companies often face penalties from tax authorities due to underreported corporate taxes When a firm submits insufficient tax, it must not only pay the additional tax owed but also incur fines for the late submission of that amount.
Mr Vuong highlighted that if his company prepares customer tax reports reflecting a deficit in corporate tax value, it results in clients submitting insufficient corporate tax to the tax authority During tax finalization, the tax authority identifies this shortfall and requires the corporate to submit supplementary tax along with fines for late submission, leading to client dissatisfaction with the accounting services provided by STC, which may result in clients terminating their contracts Instances of inaccuracies in corporate tax values in tax reports are detailed below.
No Name of customer Year of report Missing tax (VND) Total fine (VND)
Table 5 Details about cases that inaccurate in tax reports in micro trading group – announced by tax authority in 2018 (Source: South Tax Consulting Co., Ltd)
In 2018, STC inaccurately prepared tax reports for eight micro trading customers, leading to their departure from the company The tax authority imposed a total fine of 103,012,137 VND on these cases due to discrepancies in the corporate tax values reported As a result, customers were liable to pay corporate taxes based on STC's incorrect calculations When the tax authority audited these reports, they identified the inaccuracies, resulting in penalties for the firms, which included submitting corrected tax amounts and fines for late submissions.
Problem analysis
Problem identification
In accounting process in STC, there are four elements that participate in the process to make tax reports such as customers, accountants of STC, accounting supervisor in
Mr Vuong's company, STC, utilizes CeAC accounting software, which may contribute to errors in clients' corporate income tax reports To identify the specific factors leading to these mistakes, an interview was conducted to analyze the elements affecting the accuracy of the tax reports prepared by STC for its customers.
„After reviewing inaccurate cases that announced by tax authority, I figured out that faults came from my company.‟ (Mr Vuong, CEO of STC, 34 years old)
In an interview with Mr Vuong, it was revealed that inaccuracies in customer tax reports, particularly deficits in tax values, often result in fines from tax authorities If STC prepares incorrect corporate tax values in these reports, customers may end up submitting erroneous tax amounts, leading to potential penalties when tax authorities conduct finalizations To address this issue, the interview focused on identifying the root causes of these mistakes in tax report preparation, involving Mr Vuong and his accounting team The subsequent analysis will present an initial cause-and-effect map that encapsulates the findings from the interview, aiming to propose solutions to mitigate these recurring problems.
3.1.1 Initial cause and effect map
An in-depth interview with STC's CEO, Mr Vuong, and his team of ten accountants revealed a summary of the underlying issues affecting corporate tax reporting The primary symptoms identified include a deficit in corporate tax value on client tax reports, insufficient customer tax submissions to the tax authority, and subsequent penalties from the tax authority for these deficiencies The root cause of the tax value deficit stems from discrepancies in reported sales or costs Accountants attribute these discrepancies to several factors: inaccurate invoice values entered into accounting software, inadequate invoice input, insufficient manipulation of the accounting software, and incorrect account classification Additionally, Mr Vuong highlighted that a lack of managerial supervision contributes to undetected errors in client tax reports, further exacerbating the discrepancies in reported sales or costs.
Figure 8: Initial cause and effect map (Author synthesis)
Discrepancy in sales or costs value in client’s tax reports
South Tax Consulting Co., Ltd has identified discrepancies in clients' sales and costs, which can impact corporate tax values According to Mr Vuong and his accounting team, these discrepancies often arise from missed steps in accounting software or incorrect account classifications by accountants Each of these issues will be detailed further in the following sections.
Inserting inaccurate invoice value to accounting software
To prepare tax reports in STC, customers submit their accounting documents to the service provider After receiving these invoices, STC accountants input the invoice data into their accounting software However, it is common for accountants at STC to make errors by entering incorrect invoice values into the system.
As response from Ms Oanh – accountant in STC:
Accurate input of invoice values is crucial, as any discrepancies can result in errors in customer sales and tax reporting.
Inaccurate invoice values inputted by STC's accountants lead to discrepancies in revenue and expenses for client firms, ultimately affecting their corporate tax submissions As a result, many clients find that the tax amounts they initially submitted are insufficient, necessitating supplementary tax payments and incurring fines for late submissions to the tax authority.
In 2018, following the finalization of taxes, several instances arose where my accountants entered inadequate output invoices from customers into the accounting software, resulting in an undervaluation of revenue in our tax reports (Mr Vuong, CEO of STC, 34 years old)
Mr Vuong highlighted that inadequate invoice submissions can adversely affect the corporate tax obligations that businesses must report to the tax authority During corporate tax finalization, the tax authority reviews the output invoices submitted by the business By examining the accounting documents and tax reports, discrepancies in the number of invoices can be identified If a corporation submits fewer output invoices than required, it results in an underreported revenue, leading to a negative discrepancy in the corporate tax owed Consequently, the tax amount initially submitted is insufficient, necessitating the submission of supplementary taxes along with penalties for late payment to the tax authority.
Insufficient manipulation on accounting software; Wrong account determination
In an interview with Mr Vuong, he highlighted the critical importance of accounting software in his business operations He noted that appropriate accounting software significantly reduces manual data entry and minimizes errors in data processing Currently, his company utilizes the basic package of CeAC accounting software, which has been effective in supporting his work However, Mr Vuong expressed concerns about certain inconveniences within the software that could potentially affect the accuracy of customer tax reports.
Despite advancements in software, key functions like account determination, closing, and the handling of coincident codes remain manual processes This reliance on manual checks by accountants can lead to inaccuracies in tax reports, as highlighted by Mr Vuong, CEO of STC.
In an interview with Ms Nga, an accountant at STC, it was revealed that she overlooked a crucial step in the accounting software while preparing tax reports for T&F Co., Ltd Specifically, she failed to close and forward the revenue account for May 2017, resulting in a revenue shortfall of 527 million VND This deficiency adversely affected T&F Co., Ltd's revenue for the second quarter of 2017, leading to a decrease of 105 million VND in the income tax owed to the tax authority Consequently, T&F Co., Ltd is required to submit supplementary taxes and face fines for the late submission of this amount Additionally, as noted by Ms Thanh, another accountant at STC, incorrect account determinations can cause further errors in clients' tax reports.
„Account determination is very important However, with inexperienced accountants, it is difficult for them to accurately determinate account in complex case.‟ (Phan Thanh Thanh, STC accountant, 24 years old)
Inexperienced accountants often struggle with account determination, a crucial step in the accounting process, particularly when using current accounting software in STC that requires manual entry, increasing the likelihood of errors According to experts, accounting reports involve various account types, each with its specific use, and incorrect account selection for a particular expense can compromise the accuracy of a client's tax reports Insufficient familiarity with accounting software and incorrect account determination can significantly impact the accuracy of tax reports prepared by STC for its clients, as evident from the experiences of accountants who have encountered such challenges early in their careers.
Insufficient manager’s supervision; Hidden mistakes in client’s tax reports
According to responses from Mr Vuong and his accountants, they mentioned about lacking prompt supervision from manager, in specific:
Currently, there is insufficient oversight from Mr Vuong, the manager, which hinders the timely review of the accounting team's work and limits the support provided to us.
In the accounting process, Mr Vuong, the manager, is responsible for overseeing three key stages: after accountants input data into the software, following the export of draft tax declarations, and upon exporting draft tax reports However, due to his multiple roles—such as developing new clients, managing existing ones, and overseeing accounting—he lacks the time to adequately supervise the accounting team's performance This has led to numerous undetected errors, adversely affecting the accuracy of customer tax reports Additionally, Mr Vuong sometimes delegates the supervision of junior employees to senior staff without proper cross-checking, resulting in further inaccuracies, as these senior employees also struggle to manage their own workloads effectively This highlights the critical importance of Mr Vuong's supervision in ensuring the quality of accounting work, as insufficient oversight can lead to significant discrepancies in clients' tax reports.
Problem validation
Analysis has identified several potential issues affecting employee performance, including work overload, lack of qualified knowledge and skills, insufficient supervisor support, and low motivation Notably, the "busy season" for accountants occurs in the first quarter of the year, leading to heightened work demands that can exacerbate these challenges.
During tax season, accounting professionals often face significant challenges such as work overload, time pressure, and the necessity for overtime Mr Vuong highlighted that his company experiences a heightened workload during this period, a common scenario across the accounting service industry He views the demands of meeting client deadlines for tax report submissions to tax authorities as typical, indicating that employees in this field must adapt to these pressures Consequently, this potential issue is effectively managed within the industry.
Mr Vuong faces challenges in recruiting qualified employees due to his company's small size, as many candidates view it as a temporary stop before moving to larger firms for career advancement This often leads to hiring fresh graduates with relevant degrees in accounting, resulting in inexperience and errors in their work To address this issue, Mr Vuong recognizes the importance of training, as literature suggests that training plays a crucial role in helping employees acquire necessary knowledge and skills, ultimately enhancing corporate performance Accepting the reality of his situation, Mr Vuong is committed to training and guiding his employees to mitigate potential problems and improve overall productivity.
Insufficient supervisor support significantly impacts employee performance, as highlighted by Mr Vuong of STC, who acknowledged his limited availability to support his team due to his extensive management responsibilities Research indicates that top managers in small companies often experience unplanned, hectic workdays, requiring them to frequently shift roles Mr Vuong believes that directly overseeing key functions is essential to mitigate potential issues Additionally, he admitted to neglecting employee motivation, focusing primarily on maintaining customer relationships for immediate business survival rather than investing in long-term employee development Literature suggests that small business owners often prioritize basic needs and self-ownership satisfaction, aligning with Mr Vuong's current approach However, recognizing the importance of fostering employee motivation is crucial for sustainable business success Mr Vuong is now committed to identifying motivational factors to enhance employee engagement and address the challenges faced by STC, making low employee motivation a primary concern to resolve.
Main problem definition and consequences
Main problem definition
The term "motivation" originates from the Latin word "movere," meaning "to move or stimulate." It is defined as the desire and willingness to exert significant effort to achieve corporate goals, driven by individual expectations, needs, or desires Motivation is an intangible force that compels people to take action Research identifies two types of motivation: intrinsic and extrinsic Intrinsic motivation stems from an internal desire for success, while extrinsic motivation involves external actions and programs implemented by corporations to encourage employee performance.
Organizational performance is the ultimate goal that drives all strategies within a firm, reflecting its ability to achieve stated objectives through effective operations and governance Key factors influencing this performance include financial performance, operational performance, and employee attitudes and behavior Among these, employee motivation plays a crucial role, significantly impacting attitudes and behaviors that contribute to overall organizational success.
Work motivation is a crucial driver that influences employee behavior and performance, stemming from both internal and external sources Key factors that enhance work motivation include salary, healthy relationships with colleagues and supervisors, responsibility, opportunities for promotion, job security, recognition, favorable working conditions, company policies, engaging tasks, and autonomy Research indicates that strong motivation fosters a positive employee attitude, commitment, collaboration, and a sense of belonging, which collectively enhance performance and work quality while reducing stress, accidents, mistakes, dissatisfaction, and turnover Ultimately, these elements contribute significantly to the overall success of the company.
Main problem consequences
According to an interview and data from South Tax Consulting Co., Ltd, inaccuracies in tax report preparation have caused customers to submit insufficient corporate tax filings, resulting in fines from the tax authority This has led to dissatisfaction with the quality of accounting services provided by STC, prompting many customers to terminate their contracts Consequently, there has been a noticeable increase in customer defections within the micro trading group during this period.
Between 2014 and 2018, the micro trading group experienced a slower growth in new customers compared to the rate of customer defections, which negatively affected the company's revenue This trend was consistent across the entire company, where data on both new and defection customers was collected and analyzed.
At the beginning of year 152 170 185 189 190
At the end of year 170 185 189 190 182
Table 12 Fluctuation in number of customers at South Tax Consulting Co., Ltd in
2014 – 2018 (Source: South Tax Consulting Co., Ltd)
Refer to Table 12, the number of customers cut accounting service contract with STC dramatically increase in the period of 2014 – 2018, in specific, 25 customers leaving in
Between 2014 and 2018, the number of customers leaving STC increased significantly, rising from 7 in 2014 to a staggering 3.56 times that number by 2018 Additionally, new customer acquisitions saw a decline of 32% over the same period This drop in both new and existing customers has adversely affected STC's revenue The accompanying chart illustrates the revenue growth rate of STC from 2015 to 2018, highlighting these concerning trends.
Figure 10 The growth rate of revenue from 2015 to 2018 of South Tax Consulting Co., Ltd (Source: South Tax Consulting Co., Ltd)
Refer to Figure 10, the growth rate of revenue decreases consecutively from 2015 to
From 2015 to 2018, South Tax Consulting Co., Ltd experienced a significant decline in revenue growth, dropping from 10.57% to -1.22% This downward trend indicates a serious downturn in the company's business performance, primarily attributed to the issue of inaccurately preparing tax reports for customers, which has severely impacted overall performance.
Service quality is fundamentally determined by promptness and accuracy in service delivery, which significantly affects customer satisfaction Low perceived service quality leads to weakened relationship quality between customers and service providers, diminishing the likelihood of repeat business and referrals This decline in customer loyalty adversely impacts the overall performance of service providers In the case of STC, errors in customer tax reports have resulted in fines from tax authorities, severely harming the company's performance Consequently, many customers are terminating their accounting service contracts with STC due to unacceptable service quality, and they are reluctant to recommend STC to others Therefore, addressing these issues promptly is crucial for improving STC's performance.
Cause analysis
Potential causes
Based on the information collected from interview, main ideas are summarized in the following fish bone diagram
Figure 11 Fish bone diagram of main problem in South Tax Consulting Co., Ltd (Author synthesis)
No promotion and career advancement for current employee
Unqualified for mid level supervisor position
Working office impacted by so much noise
No appreciation for job well done
No performance appraisal system Insufficient trust from manager No compliment from manager for outstanding employee Poorly designed office
The primary issue identified is low employee work motivation, which negatively affects the accuracy of tax reports prepared by accountants at STC To investigate the factors influencing employee motivation at STC, in-depth interviews were conducted with Mr Vuong and his accounting team.
5.1.1 No appreciation for job well done 5.1.1.1 No performance appraisal system
As Mr Vuong mentioned in the interview:
Mr Vuong, the 34-year-old CEO of STC, believes that a performance appraisal system is unnecessary for his small company, which employs only 10 accountants.
Mr Vuong, the owner of a small company with 10 employees, has not established a performance appraisal system for evaluating the accountants' performance He does not categorize his employees as performing well or poorly, believing that completing assigned tasks on time is simply part of their duties and responsibilities.
Accountants at STC expressed that the absence of a performance appraisal system leads to equal evaluations of their work results, which negatively affects their motivation to perform at their best.
The lack of employee performance evaluations at the company leads to a diminished sense of accountability among staff As a result, employees like Phan Thanh Thanh, a 24-year-old accountant at STC, feel indifferent about their work outcomes, believing that whether they excel or underperform makes little difference.
Accountants at STC perceive their responsibilities as solely focused on submitting customer tax reports on time, regardless of the quality of their work This mindset leads to a uniform outcome in their performance, as they believe that meeting deadlines is more important than the accuracy or thoroughness of their submissions, which ultimately reflects the same result for Mr Vuong.
Mr Vuong assumes responsibility for identifying and correcting errors in customer tax reports, providing guidance to ensure accuracy When accountants complete their tasks effectively, no issues arise, highlighting a lack of intrinsic motivation among them This situation is further compounded by the absence of a performance appraisal system, which diminishes their incentive to excel in their assigned duties.
The performance appraisal system is a crucial factor in enhancing employee motivation, influencing both intrinsic and extrinsic motivation levels within an organization Consequently, the absence of a performance appraisal system may negatively impact employee motivation at STC.
5.1.1.2 No compliment from manager for outstanding employee
„I do not think that a compliment is important.‟ (Mr Vuong, CEO of STC, 34 years old)
Mr Vuong believes that praising employees is insignificant, as he views their salary as sufficient compensation for their work He feels that employees are responsible for fulfilling their duties and, therefore, rarely offers compliments to his accountants, even when they perform well This perspective highlights a lack of recognition for the efforts of his staff, which may impact morale and motivation.
As responses of accountants in STC:
Mr Vuong seldom offers compliments to his team, leading Tran Thi Lan, a 24-year-old accountant at STC, to believe that he is indifferent to their need for recognition from their boss.
Accountants at STC express dissatisfaction with their manager's lack of appreciation for their work, feeling that their efforts go unrecognized and that each day is monotonous The only source of motivation for employees is their monthly salary, which diminishes their enthusiasm for work Literature suggests that public recognition, such as a simple "Thank you," significantly boosts employee morale and motivation The absence of compliments from management can lead to decreased motivation among employees, as recognition fosters a sense of belonging and encourages better performance Therefore, the lack of acknowledgment at STC may contribute to low motivation levels among its employees.
5.1.2 No promotion and career advancement for current employee 5.1.2.1 Unqualified for mid level supervisor position
As accountants‟ responses, they feel hesitate to commit for long working at STC due to lacking of promotion and career development In specific, Ms Oanh stated as follows:
„It is a pity that even if I work for STC for a long time, I still have no promotion or career developing here.‟ (Bui Thi My Oanh, STC accountant, 25 years old)
Mr Vuong acknowledges that the small size of STC limits career advancement opportunities for even the most outstanding employees, which can affect their long-term motivation to stay with the company As a result, some employees may opt to transition to larger companies after two years at STC.
Mr Vuong, the 34-year-old CEO of STC, is currently seeking a mid-level supervisor to assist in managing the accounting team, as none of the existing employees meet his qualifications for the role.
Mr Vuong is unable to select any of his current accountants for the Chef Accountant position at STC due to their lack of necessary experience, knowledge, skills, and abilities This situation contributes to a perception among employees that there is no future for career growth at STC, ultimately diminishing their motivation to work for the company According to Maslow's hierarchy of needs, the highest level is "self-actualization," which emphasizes the importance of personal growth and fulfillment in the workplace.
Research indicates that employees generally do not anticipate staying in the same position indefinitely; therefore, when a company offers opportunities for advancement, it can significantly boost employee motivation and satisfaction In the case of STC, the lack of qualifications for mid-level supervisory roles has led to a stagnation in promotions and career growth for current accountants, contributing to low motivation levels among the staff.
As accountants‟ responses, they stated that they did not feel trust form manager, in details:
Cause validation
Mr Vuong discussed the factors affecting employee motivation in his company, identifying a lack of job appreciation, promotion opportunities, and an unpleasant workspace as key issues He noted that the small size of the company made a performance appraisal system unnecessary, limiting his ability to recognize high-performing employees and provide career advancement Additionally, the simple organizational structure meant there were no mid-level management positions, and current employees lacked the qualifications for such roles, leading to a lack of trust in their long-term commitment Consequently, the primary issue affecting motivation was identified as an unpleasant work environment Research indicates that a positive workspace significantly enhances employee productivity, satisfaction, and overall performance Therefore, addressing the unpleasant work conditions is crucial for improving employee motivation at STC.
In general, final cause and effect map in the case of STC is presented as follows:
Figure 12 Final cause and effect map (Author synthesis)
A poorly designed office environment, inadequate equipment, and excessive noise can significantly contribute to an unpleasant workplace, ultimately leading to low employee work motivation This, in turn, negatively impacts the work quality of accountants at STC, resulting in a higher likelihood of mistakes in customer tax reports.
Working office impacted by so much noise
Tax authority‟s punishment for insufficient tax submission
Insufficient in customer‟s tax submission to tax authority
Deficit in corporate tax value in client‟s tax reports
Main cause and sub causes Main problem Symptoms
Insufficient tax submissions by customers result in fines from tax authorities, leading to dissatisfaction with the accounting services provided by STC This dissatisfaction often causes customers to withdraw their business, ultimately impacting STC's revenue negatively.
Alternative solutions
Alternative solution 1: Investing in necessary equipment for working
Recent research highlights the significant impact of the Internet on the business world, particularly through advancements like cloud computing, which has transformed the accounting sector The adoption of cloud accounting software is on the rise, offering numerous benefits such as enhanced convenience, expansive data storage, and improved data processing capabilities Essential tools for accountants include computers and accounting software, which can boost motivation and efficiency in their work Consequently, investing in ten new computers and cloud accounting software is recommended as a viable solution, with detailed costs and benefits outlined in Table 16.
CPU HP slimline 270-P013L Z8H31AA 9,680,000 Total cost for 10 computers (1) 111,600,000
Types of enterprise Price for software
Price for installing, training, consulting (VND)
Total cost for accounting software (2) 47,400,000
Table 16 Costs for alternative solution 1 (Author synthesis)
Besides monetary cost for investing in cloud accounting software, there are several disadvantages that STC should consider in advanced such as customer information security and high initial investment (63)
Cloud accounting software offers numerous advantages over traditional desktop systems, including automatic data updates, rapid data processing, and substantial storage capacity By transitioning to cloud-based solutions, companies like STC can significantly reduce costs associated with system upgrades, maintenance, and server errors, which currently amount to 500,000 VND per month, resulting in annual savings of 6,000,000 VND Additionally, this software minimizes unnecessary manual tasks, reducing the likelihood of errors during data entry With integrated features for generating various accounting reports, accountants no longer need to prepare separate reports in Excel, thereby eliminating discrepancies in data management.
The new computers at STC offer significant advantages over the older models, including enhanced configurations that lead to fewer crashes, faster data processing, and compatibility with cloud accounting software According to Phong Vu's website, the HP Slimline 270-P013L Z8H31AA features an Intel Core i5 7400T processor with speeds ranging from 2.40 GHz to 3.00 GHz and supports up to 4GB of RAM across two slots In contrast, the existing computers at STC are equipped with a Core 2 Duo processor operating at 1.87 GHz and also have two RAM slots Therefore, the upgraded computers provide a superior configuration, ensuring improved performance and reliability for users.
Alternative solution 2: Redecorating the current office
The office's current design is deemed inadequate, prompting the recommendation to redecorate Mr Vuong's house, measuring 60 m² over two floors, will have the first floor dedicated to office space and the second for family living The accounting team's room will be expanded to 35 m² with soundproof walls to minimize noise disturbances Research indicates that a well-designed office can significantly enhance employee productivity and motivation Therefore, STC must redecorate its office to improve the work quality of accountants and boost their motivation Additionally, effective soundproofing is crucial for reducing noise pollution, especially in urban settings The literature emphasizes the importance of proper arrangement and furnishing in the workplace, which directly influences employee performance and attitudes Incorporating green spaces within the office is also vital for promoting health and motivation among employees Thus, STC should invest in soundproof walls, create green areas, and furnish the office appropriately to foster a professional and conducive working environment The associated costs and benefits of this solution will be detailed further.
Cost for contractors (work package contract) 160,000,000
Table 17 Cost for alternative solution 2 (Author synthesis)
Redecorating the office offers numerous advantages, including increased employee satisfaction and motivation, which can lead to enhanced productivity It also helps reduce distracting noises that may affect focus and supports a healthier work environment Feedback from STC accountants highlights the appreciation for a redesigned office that effectively separates work and home spaces, fostering a more professional atmosphere and providing employees with a better environment to concentrate on their tasks.
Alternative solution 3: Renting new office
Renting a new office is a viable solution, as research indicates that employee satisfaction and motivation are significantly influenced by the office environment Additionally, previous studies highlight the critical role of an appropriate workspace in fostering business growth and workplace development.
STC currently operates in a noisy and inadequate office space that hampers the productivity of its accountants As the company grows, Mr Vuong's private residence is unlikely to suffice for the increasing number of employees Therefore, it is advisable for STC to rent a larger office in a more suitable location Research indicates that an appropriately designed workspace can enhance employee performance and work quality To improve motivation and efficiency, STC should not only find a new office but also focus on redecoration, professional furnishings, and effective soundproofing to mitigate noise pollution, particularly in locations near busy streets By prioritizing these elements, STC can create a professional and conducive working environment for its employees.
Costs for renting and office decoration are as follows:
Renting price for 2 first year (VND/year) 216,000,000 Renting price for next 3 years (VND/year) 237,600,000
Length of renting contract 5 years
Table 18 Cost for renting – alternative solution 3 (Author synthesis)
Cost for contractors (work package contract) 160,000,000
Table 19 Costs for office decoration – alternative solution (Author synthesis)
Renting a new office offers numerous advantages, including the separation of workspaces from personal living areas, which is highly endorsed by STC accountants This arrangement fosters a professional environment that allows employees to concentrate better and minimizes distractions from unexpected noises Additionally, working in an office enhances employee satisfaction, leading to increased motivation and improved work quality and productivity Furthermore, it contributes to better health conditions for employees, creating a more effective and supportive work atmosphere.
Solution justification
As discussion with Mr Vuong about the budget for best solution, Mr Vuong said that:
„With net profit of 1,156,360,479 VND in 2018, I can spend around 400,000,000 VND for this investment.‟ (Mr Vuong, STC CEO, 34 years old)
After analyzing the costs and benefits of three alternative solutions, a discussion with Mr Vuong was held to determine the best option for his company He concluded that renting a dedicated office space is essential for his long-term vision, rather than continuing to operate from his home Additionally, investing in new computers and accounting software is both affordable and necessary for improving work efficiency.
Mr Vuong advocates for the integration of alternative solutions 1 and 3 to enhance working conditions for accountants at STC Research highlights the significance of favorable working environments in boosting employee motivation, particularly among female workers Given that all accountants at STC are female, it is evident that improving working conditions can positively influence their motivation and overall job performance, as supported by existing literature.
Accountants at STC expressed that having a new professional office equipped with modern technology and free from noise pollution could significantly enhance their motivation and overall job performance.
The excitement surrounding the company's new office and upgraded equipment is palpable, as it promises to enhance motivation and improve overall working conditions for employees Phan Kim Thy, a 23-year-old accountant at STC, expresses optimism that these changes will foster a more engaging and productive work environment.
Accountants express a strong desire for a new office equipped with high-quality tools to enhance their daily work experience A modern workspace would eliminate disruptive noises, contributing to a more focused environment Improved working conditions provided by the company are expected to boost employee motivation and encourage a more consistent office presence.
CPU HP slimline 270-P013L Z8H31AA 9,680,000 Total cost for 10 computers 111,600,000
Types of enterprise Price for software
Price for installing, training, consulting (VND)
Total cost for accounting software 47,400,000 Total costs of Categories 1 (1) 159,000,000
Renting designer for redecorating 7,000,000 Cost for contractors (work package contract) 160,000,000
-Soundproofed wall construction 15,000,000 -Purchasing furniture (tables, chairs…) 125,000,000 Total costs of Categories 2 (2) 167,000,000
Renting price for 2 first year (VND/year) 216,000,000 Renting price for next 3 years (VND/year) 237,600,000
Length of renting contract 5 years
Renting price for 2 first year (VND/year) 216,000,000 Renting price for next 3 years (VND/year) 237,600,000
Table 20 Costs for best solution (Author synthesis)
The optimal solution involves combining alternative solution 1 and alternative solution 3, which entails investing in essential equipment and renting a new office space The total initial investment cost amounts to 380,000,000 VND, as detailed in Table 20 This includes 326,000,000 VND for purchasing 10 new computers and decorating the office, along with the first month's rent of 18,000,000 VND and a deposit of 36,000,000 VND Given that this expenditure aligns with STC's budget, the proposed solution is deemed feasible for implementation.
Change plan design
Objectives
The objectives to implement the selected solution are:
Providing necessary equipment that qualifies for accountant‟s work
Creating professional working office for employees at STC
Limiting noise pollution that can impact accountant‟s work
Targeted outcomes
An in-depth interview was conducted with Mr Vuong and his accountants to understand their anticipated outcomes regarding the proposed change plan.
Number of mistakes that happen in accountants‟ daily job that related to customer‟s tax reports will decrease at least 70% after 6 months working in new office with appropriate equipment
After six months of transitioning to a new office, accountants can expect a reduction of at least 10% in the time spent on daily tasks This shift will decrease their average workday from 10 hours to 9 hours, enhancing overall productivity and efficiency.
Feedback from employees about new office: 100% positive feedback from employee that their motivation increases after working in new office
After 6 months working in new office, the work quality and feedback of accountants in STC will be recorded for later check whether the aforesaid action plan positively impacts their working motivation or not
The action plan, derived from the selected best solution, comprises 12 key tasks to be executed over a 53-day period, spanning from July 1, 2019, to September 11, 2019 Mr Vuong and his accountant will be responsible for implementing this plan, with further details and a Gantt chart provided for clarity.
No Task Duration Start date Personnel involved
1 Purchasing computer 3 days 1-Jul-19 Mr Vuong
2 Purchasing - installing accounting software 3 days 4-Jul-19 Mr Vuong
3 Learning new accounting software 5 days 9-Jul-19 Mr Vuong + all accountants
4 Finding suited location and contact for renting office 7 days 16-Jul-19 Mr Vuong
5 Negotiating and signing renting contract 1 day 25-Jul-19 Mr Vuong
6 Contact for designer 3 days 26-Jul-19 Mr Vuong
7 Discuss for decorating the office 7 days 30-July-19 Mr Vuong
8 Negotiating and signing decoration contract 1 day 8-Aug-19 Mr Vuong
9 Decoration time 15 days 9-Aug-19 Outsource
10 Moving furniture to new office 2 days 30-Aug-19 Mr Vuong + all accountants
11 Announce to customers about changing office address 7 days 12-Aug-19 Mr Vuong + all accountants
12 Changing company address in The Department of Planning and Investment 7 days 3-Sep-19 Mr Vuong
Table 21 Action plan (Author synthesis)
Figure 13 Gantt-chart for action plan (Author synthesis)
Detailed description and objective for specific task are listed as follows:
Finding computer with strong configuration to fit new accounting system
Going to electronic supermarket to check and compare price and model of computer that is most suitable (For example: Dien May Xanh, Nguyen Kim, FPT…)
Purchasing and installing new accounting software
Contact accounting system firm to purchase cloud accounting software
Contacting to the firm that has most suited accounting system – Fast Accounting Co., Ltd Dealing and purchasing necessary cloud accounting software
Training for using new accounting software
Mr Vuong and all accountants will join in training course to learn how to use new accounting software
The training course takes 5 days
Finding suited location and contact for renting office
Finding suited location Contacting for renting office
Finding suited location It needs to meet the requirements: located in Phu Nhuan District, square around 60 – 80 m 2 , airy space, soundproof wall and suitable price
Contacting to building owner for renting
Negotiating and signing renting contract
Negotiating for suitable price, length and other condition in the contract and signing renting contract
Finding con contacting for design corporation for decoration consulting
Discuss for decorating the office
Discuss the idea with designer and finding the best decoration style for the office
Discuss with designer about the idea for an office with open and green space in order to help the employee feel comfortable when they work in the office
Negotiating and signing decoration contract
Negotiating for suitable price and other condition in the contract and signing decoration contract
9 Decoration time Waiting for designer to decorate the office
Waiting for designer to decorate the office Follow the timeline of decorating
Acceptance for completing decoration contract
Moving furniture to new office
Moving to new office Moving furniture to new office
Announce to customers about changing office address
Aware customers with company address changing in order to contact in case needed
Announcing to customers about company address changing by email/letter/direct call
Changing company address in The Department of Planning and Investment
Announcing to The Department of Planning and Investment about changing company address
Announcing to The Department of Planning and Investment for changing company address Waiting for The Department of Planning and Investment process document for updating company address
Table 22 Detailed description and objective for specific task (Author synthesis)
South Tax Consulting Co., Ltd has faced a decline in revenue primarily due to an increase in customer defections, driven by dissatisfaction with service quality, particularly inaccuracies in accounting reports Research indicates that the core issue is low employee work motivation, stemming from a lack of appreciation, limited career advancement opportunities, and an unpleasant work environment To address this, the company has identified the need to improve the workspace by investing in new equipment and relocating to a more conducive office This strategy aims to enhance employee productivity by minimizing distractions and creating a professional atmosphere, ultimately leading to improved customer satisfaction and a rebound in company performance.
This study aims to identify the primary issues and root causes contributing to inaccuracies in accounting reports for STC, while considering the constraints of time and budget It will also propose effective solutions to address these challenges.
Primary data: Qualitative research and quantitative research
Secondary data: STC‟s company structure, accounting process, financial statements reports, customer statistics, literatures in journals and researches Type of research tools to collect primary data:
Qualitative research: in-depth interview and focus group (CEO – Mr Vuong, STC accountants and micro trading customers)
Quantitative research: survey for accountants at STC
The primary objective of this research is to investigate the key issues leading to inaccuracies in customer tax reports, which can result in penalties from tax authorities By identifying the root causes of these inaccuracies, the study aims to propose effective solutions to address the underlying problems.
Duration time: 10 – 20 minutes/interview Interviewees
Mr Vuong – CEO of STC
Micro trading customers Overall discussion guideline – timeline:
No Main session Objective Timing
1 Overall information Approaching to the current situation of the business at STC 2 – 3 minutes
Identifying main problem and main cause
Identifying main problem that leads to the symptom Identifying main cause that leads to main problem 5 – 10 minutes
Identifying best solution amongst potential alternative solutions 3 – 7 minutes
No Question CEO of STC STC accountants
1 Can you please introduce a little bit about your self? (name, age, working experience…) x x
2 Can you please tell me about your company? (company background, business performance, groups of customer…) x
3 Can you please share about the reasons that customer were fined by tax authority? x x
4 What happen with STC in case customers were fined by tax authority? x x
5 What are potential problems that lead to the issue that was identified? x x
6 What is the main problem that leads to the issue of STC? x x
7 What are potential causes that lead to main problem? x x
8 What is the main cause that leads to main problem? x x
9 Do you have any suggestion to solve that main cause of STC? x x
10 In your opinion, which is the best solution for the problem that
Time for interviewing: 8 AM – 28 January 2019 Duration for each respondent: 10 – 20 minutes Location: STC office, Phu Nhuan District, Ho Chi Minh City
Title: CEO of South Tax Consulting Co., Ltd
Working experience: over 10 years in accounting service
Good morning, Mr Vuong Thank you for meeting with me today to discuss your company and the challenges it is currently facing I want to assure you that the information you provide will be used solely for my thesis and will remain confidential Please feel free to share any insights about your company.
Mr Vuong: Of course, you can ask me about what you concern
Trang: Can you please tell me a little bit about your company?
South Tax Consulting Co., Ltd., founded by Mr Vuong in July 2011, is located in Phu Nhuan District, Ho Chi Minh City The firm specializes in providing accounting services for small and medium-sized enterprises in the region With three years of prior experience in the accounting sector, Mr Vuong established the company, which currently employs 11 staff members.
Our accounting department consists of 10 members, including 2 experienced employees with over 3 years of service, 2 with over 2 years, and 6 with around 1 year of experience, supported by a dedicated delivery man As the general manager, my key responsibilities encompass developing new customer relationships, nurturing existing ones, and overseeing the accounting department To date, we have successfully acquired over 182 clients, spanning four primary business areas: service, manufacturing, construction, and trading Our customer base is also categorized into three revenue-based groups, with the majority being small to medium-sized trading corporations generating under 10 billion VND in annual revenue Our competitive edge lies in our strong relationships with local tax authorities in Phu Nhuan, Binh Thanh, Tan Binh, and Go Vap districts, combined with our competitively priced services, which have contributed to a revenue of approximately 3.7 billion VND in 2018.
Trang: How about your business recently?
Mr Vuong reports that his company's performance has declined in recent years, with a slowing revenue growth rate While new customer acquisition remains steady at 10-15% annually, the increasing number of existing customers leaving the company is negatively affecting overall revenue.
Trang: In your business, what is the thing that customers expect from your service?
Mr Vuong emphasizes that in the service industry, the quality of service is crucial for fostering customer loyalty and generating positive referrals High service quality not only encourages repeat business but also enhances the likelihood of customers recommending the company to others Conversely, any shortcomings in service quality can lead to customer dissatisfaction, prompting them to seek alternative accounting service providers To meet customer expectations, it is essential to ensure both accuracy in preparing accounting reports and timeliness in their delivery Unfortunately, recent incidents in the company have highlighted failures in these areas, with reports being prepared inaccurately and delivered late, which jeopardizes customer satisfaction.
Trang: Between inaccuracy and timeliness, which is the issue that impacts the most to customer in case mistakes happen?
Mr Vuong emphasizes that inaccuracies in accounting reports are more critical than delays in their delivery Since tax authorities require finalization only once every few years, any mistakes from previous years can lead to substantial supplementary taxes and fines for customers.
Trang: What impacts to the accuracy in customer‟s tax reports?
Mr Vuong: Perhaps, it is due to insufficient input data, inaccuracy in inserting invoice value, insufficient manipulation on accounting software or wrong account determination
Trang: In your opinion, what is the possible problems that lead to the issue that your accountants prepare customer‟s tax reports inaccurately?
Mr Vuong identifies four key challenges: excessive workload, inadequate knowledge and skills among accountants, insufficient supervision from management, and a lack of motivation among staff.
Trang: Why do you think that workload is the problem?
Mr Vuong emphasizes the critical importance of timely tax report preparation for clients, as delays can lead to fines from tax authorities He believes that employees must complete their tasks on schedule to ensure that client tax reports are submitted punctually If accountants fall behind, he encourages them to expedite their work, even suggesting that they stay late during tax season or come in on Sundays if necessary to meet deadlines.
Trang: Why do you think that unqualified knowledge, skill and abilities of your accountants are the problem?
Mr Vuong: My company is small thus it is very difficult for me to recruit high level accountants Thus in recruiting, most of my accountants are fresh and inexperienced