internship report on analysis of remuneration situation to improve the efficiency and equity of human resorse utilization at bbraun limited company

– Head of HR department of BBraun limited company and all my colleagues at the company for all their supports during my internship.. 3 ABSTRACT I have applied flexibly the theories and m

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INTERNSHIP REPORT ON

ANALYSIS OF REMUNERATION SITUATION TO IMPROVE THE EFFICIENCY AND EQUITY OF HUMAN RESORSE UTILIZATION

AT BBRAUN LIMITED COMPANY

Submitted by: Tong Van Tuan AMI8A

Academic Supervisor

Assoc Professor, Doctor Le Thai Phong

Thang Long University

Company Supervisor Mrs Nguyen Quynh Trang

Head HR Department of BBraun limited

Company

Ha noi, September 2018

Acknowledgements

I would like to express my deep thankfulness to my academic supervisor Assoc

Professor, Doctor Le Thai Phong for his passionate and enthusiastic guidance to help me

complete my internship report

I also would like to deeply thank to Mrs Nguyễn Quỳnh Trang – Head of HR department of BBraun limited company and all my colleagues at the company for all their supports during my internship

Finally, I would like to say thank you to all the professors and teachers who gave me a lot of exciting and useful lectures in AMI course at Thang Long University

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ABSTRACT

I have applied flexibly the theories and management methods studied from MBA course of University of Nice Sophia Antipolis in practice at BBraun Vietnam limited company to analyze the remaining issues in paying compensation and bonus systems for employees and offering some solutions to solve it

Especially in relation to personal management of the company I have studied the problem of its remuneration systems, comparing the theory and practice to comprehend it more clearly

In this report, I mainly focus on review of the company’s business result, analyzing the compensation and bonus system to its employees and offering some solutions to increase equity and encourage better their labor’s loyalty

INTRODUCTION

Human Resource play a central role in all business activities, whether the business is successful or not due to the main part from labor In order to increase the competitiveness of enterprises, it is required to have highly qualified, encouraged and trustworthy employees So that, Human resource management (HRM) is more and more important and integral part of modern enterprises

HRM is activities that enhance an individual’s effective contribution to an organization’s goal while at the same time striving to achieve personal’ goals

A good remuneration system is a must for every business organization, as it gives an labor a reason to stick to the company

We can say that compensation management is required as it encourages the employees to perform better and show their excellence as well as provides growth and development options to the worthy employees

The compensation management is so important, but not many Vietnam’s businesses have paid attention to the need for this issue and to focus on attracting talent

During the internship at BBraun Vietnam limited company I realize that compensation

system if it still have some uncompleted points, for this reason I choose the topic “Analysis of remuneration situation to improve the efficiency and equity of human resource utilization at BBraun limited company”

This internship report focused on research and making suggestion to resolve weak points of company’ remuneration

CHAPTER 2: BACKGROUND OF BBRAUN VN LIMITED COMPANY…… … 6

1.1 Overview on BBraun VN Limited Company 6

1.2 Overview on income statement of BBraun VN Limited Company in 2016-2017 8

1.3 The Strategic goal of the Company in the period to 2020 9

1.4 Human resource information 12

CHAPTER 2: ORGANIZATION STRUCTURE AND CHARACTERISTIC OF HUMAN RESOURSE AT BBRAUN VIETNAM LIMITED COMPANY 13

CHAPTER 3: THE MISSION: ASSIGNED TASKS AND GOALS OF THE INTERNSHIP 18

3.1 The tasks assigned to the internship position 18

3.2.The link between subject matter and internship mission 18

3.3 The goal of internship position 19

3.4.The internship contribution to company 19

3.5 The theoretical knowledge put into practice 19

CHAPTER 4: DEVELOPMENT 21

4.1 Overview remuneration system 21

4.2 The existing limitations 34

Chapter 5: CONCLUSION 38

5.1 Complete the assigned tasks 38

5.2.Goal achievements 38

5.3 Limitations of the internship process 39

5.4 Suggestions for the company 39

5.5 Conclusion 40

List of Tables: ……….41

List of Figures:… ……… 42

CHAPTER 1 BACKGROUND OF BBRAUN VN LIMITED COMPANY

1.1 Overview on BBraun VN Limited Company

BBraun VN ltd Co is one of the biggest turnover enterprise in pharmaceutical products and medical devices The company have 2 factories in Viet Nam that one factory produce a infusion fluid, other factory produce medical device supply for domestic market and the main part is export to EU market

BBraun Vietnam is a wholly-owned subsidiary of B.Braun pharmaceutical Group , headquartered in Germany

Registration name: BBraun Việt Nam Limited Company

Head office: Thanh Oai complex, Thanh Oai district, Ha Noi city, Viet Nam Phone: +84 243 5110088

B.Braun Pharmaceutical Group was founded in 1839 in Melsulgen, Germany is a leading company in the field of pharmaceutical production with over 160 years’ experience Experts in the field of medical device production and distribution of medical consumables together with hi-tech equipment, B.Braun machinery is a reputable facility for hospitals all over the world, in the Asia Pacific B.Braun company laid the foundation from years 1981 in the region of Penang, Malaysia there are factories producing intravenous infusion of medical instruments consumed by plastic products used in the filter artificial kidneys and peritoneal dialysis, along with other surgical instruments The companies of B.Braun international group with annual revenue more than $ 6.7 billion in 2017 It is one of the largest family companies in the world With head office located in Melsulgen, Germany and has more than 150 representative offices and other branches Worldwide, B.Braun Group operates under four sub-sectors:

+ Drugs and equipment used in a hospital

+ High tech medical equipment (artificial kidney filter) + Surgical Instruments (Aesculap)

7 In 1992, B Braun was officially established in Vietnam as a representative office in Ho Chi Minh City Next in Hanoi, Danang and Hue

BBraun Vietnam Company limited was established in VietNam pursuant to the Investment License No 1519/GP, date 22 March 1996 which was issued by the Ministry of Planning and Investment The Company was initially established as a joint venture between BBraun Pharmaceutical Industries sdn.bhn, a company incorporate in Malaysia and Hanoi Pharmaceutical stock Company (Vietnam), a company incorporated in Vietnam

In 1996, the first factory was launched and inaugurated in 1997 at 170 La Thanh street, Dong Da district, Ha Noi The factory has been producing infusion solutions , HD concentrate, disinfection products, plastic medical devices for solution transfusion and Hemodialysis such as Glucose 5%,10%, Ringer lactate, natri clorua, …etc

Two years later, the plant was expanded for the first time and received the first GMP certificate for the factory of fluids infusion in Vietnam

Ha Noi pharmaceutical stock company (Vietnam) withdrew from the join venture, since 2004 after 10 years of this Join venture suffered loss profit continuously

On 20 January 2004, The Company was converted into a 100% foreign-owned company of BBraun Medical industries Sdn.bhd in accordance with the investment License No 1519A/GP

On 1 February 2007, The Company received the Investment Certificate No 011043000085 issued by the Hanoi People’s Committee to become a limited liability company with one member This Investment Certificate has been amended several times to reflect the company’ principal activities and the grant of new investment project

In 2007, started construction of the first medical equipment factory of B.Braun This plant was officially opened in 2011 with the participation of the prime minister Angela Merkel, Minister of Health Nguyen Thi Kim Tien and Dr Heinz-Walter Große, Chairman of the Board of Directors of B Braun Melsungen AG B Braun invested € 32.6 million in new IV facilities, making it the largest medical facility in Vietnam This factory has been manufacturing almost plastic medical devices for solution transfusion and Hemodialysis, almost this product is exported to EU market

Currently, B Braun Vietnam is a subsidiary of B Braun Group with approximately 1,200 employees The establishment of the medical device plant marks another milestone in Vietnam's commitment to Vietnam, with 200 new jobs expected to be created next year

1.2 Overview on income statement of BBraun VN Limited Company in 2016-2017

Table 1.1: Summarizing income statement for the year end 31 December 2017

10 General and administration expenses (58,477,138,062) (55,757,559,281)

15 Net accounting profit before tax 279,297,211,900 251,138,509,508 16 Business income tax – current (57,169,912,700) (53,780,399,456) 17 Business income tax – deferred (425,974,798) 2,375,034,803

(Source: B.Braun Limited company financial statement 2016-2017)

9 Through the income statement of BBraun Limited Company in 2016-2017, We could see quit clearly that:

Total sales revenue in 2017 is 2,105 billion VND compared to 1,875 billion in 2016, rose up about 10% to 230 billion vnd, so the cost of goods sold increased correlatively to 235 billion VND

Gross profit went up slightly from 514 billion to 529 billion, up 5% to 15 billion

However, financial income in 2017 tripled in 2016, from 3,335 billion vnd to 11,292 billion On the contrary, financial expenses reduced from 26,570 billion to 16,793 billion VND Thus, selling expense and G&A expense go straightly in 2017 and 2016 Therefore Net operating profit increased approximately 10% from 250 billion to 275 billion

Thus, net other income ascended sharply from 333 million to 4,181 billion, Net accounting profit before taxes increase in 2017 by 4 billion than in 2016

The impact of the new drug law and government’s circulars on pharmaceuticals and tenders has made it difficult for pharmaceutical companies to have high quality products like the company So net profit on sales of the company is only about 10% in 2016-2017 This profit is lower than expected and lower than other pharmaceutical companies

1.3 The Strategic goal of the Company in the period to 2020

About the global strategy of BBraun group to 2020, The Group target to: - Excellence in services and processes

Drive a differentiated selling approach to asset our customers in achieving improved patient outcomes at a lower total cost of care

- Excellence in integration

Strengthen our collaboration with suppliers and drive greater efficiencies in all business areas through standard work initiatives, improved internal processes, and focus on raw materials and indirect spending opportunities

- Motivated and competent employees in every position at each workplace

Maintain the highest level of ethics and compliance and continue to cultivate an environment of continuous improvement

- Achieve revenue target of 7.8 billion Euro in 2020 and CAGR of 8%

Achieve on-time delivery performance of our projects, secure GPO contracts, and increase market share across the portfolio

- Achieve operating profit target of 18% EBITDA

Develop and implement strategic pricing initiatives the leverage our product portfolio to the benefit of customer

Figure 1.1: Strategy of BBraun to 2020

(Source: BBraun Group Strategy 2020)

The strategy of BBraun in Vietnam as well as the Global Group but added some criteria suitable for locality is clearly show in Powerhouse Viet Nam chart

16-18% EBITDA 7.8 billion

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Figure 1.2: BBraun Vietnam ambition to 2020

(Source: BBraun Vietnam Ambition to 2020, internal information)

- BBraun’s vision of the Future in Vietnam :

o Investments of 270 Mio USD within the next 7 to 9 years will allow us o to satisfy the demand our global and domestic customers

o to offer a wide range of high- quality products that are Made in Vietnam

o to create an additional 1,000 to 1,300 regular jobs + 2,000 to 2,500 secondary jobs o to further develop the skills of our employees (e.g dual vocational training) o to generate a high Value Added in Vietnam

o to install and maintain state-of- the-art manufacturing equipment o to design & construct sustainable, eco- friendly and aesthetic buildings

1.4 Human resource information

Figure 1.3: Increasing headcount from 1990 to 2017

(Source: HR department information of BBraun Vietnam limited)

(Source: BBraun Vietnam’ organizational structure, HR department information)

A glance at this chart provide reveals BBraun‘s organization structure, General Director accept fully responsibility for all company’s operations Now, General Director’s name is Roman Kuebler who come from Germany

Table 2.2: Total employees of The Company

Head of HR department: Nguyen Quynh Trang

- Government affair Department:

Coordinate legislative efforts by working with state, local, and federal governments as well as the media They help their organization meet legislative goals by creating policy proposals and working with government agencies and citizens

Allow the company to monitor external stakeholder relationship and activities related to policy development

Head of this department is Ms Ngo Kieu Anh

- Legal and internal audit Department:

To ensure the implementation and dissemination of appropriate guidelines in accordance with Group Organizational Guidelines

Head of the department is Mrs Le Thi Lien

- Strategic Project:

To establish new strategic and ambition of the company

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II Financial sector

The Finance Department is in charge of any work related to Accounting and Financing Head of the department: Chief Financial Officer: Mr Nguyen Viet Hung

- Tax and treasury

Responsible for corporate liquidity, investments, and risk management related to the company's financial activities

- Supply chain management

Co-ordinates the logistics of all aspects of the supply chain

- IT

Be responsible and accountable for the smooth running of our computer systems within the limits of requirements, specifications, costs and timelines You will supervise the implementation and maintenance of our company’s computing needs

III Sale and Marketing sector

This sale and marketing sector have 130 employees who divided four division and regulatory affair department

Figure 3.5: Sales by division, 2017 (In Mio USD, total 92.7 Mio USD)

(Source: Sale and marketing of BBraun Vietnam limited, 2017)

Figure 3.6: Sale increased in all fields (in Mio USD)

(Source: BBraun Vietnam report in 2017) - Hospital care division:

- Aesculap division - Avitum division - OPM division - Regulatory affair

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IV Production sector

BBraun Vietnam have 2 factories, Pharmaceutical factory have 265 workers, and medical factory have 718 employees

Responsible for the whole process from the point of sales until the products are delivered to customers with happiness

Chief operation officer is Mor Vamos, also responsible for Medical plant to produce a well medical devices

Omka Patil is in charge of Pharmaceutical plant to produce a fluid solution such as: Natriclorid, Glucose, RL solutions…

Quality management manager is Vu Thi Minh Thu, responsible for all quality product before selling

CHAPTER 3: THE MISSION: ASSIGNED TASKS AND GOALS IN THE INTERNSHIP.

1 The tasks assigned to the internship position

I was assigned as Officer - Compensation & Benefits at Human resource (HR) Department during the internship at BBraun Vietnam limited Company from 1st June to 28thSeptember 2018 Plus, I also had detail instruction and training from all of HR staff so I gain the best condition to complete the internship report at the company

The main tasks of this position and job description include:

- Coordinate various compensation related activities to ensure that the organization’s compensation and benefit administration activities are processed accurately and on time

- Activities may include:

 Calculation of payroll / bonus / incentive / other compensation  Distributing and preparing payroll components

 Prepare relevant internal and statutory reports, maintain relevant records in respected accountabilities

- Resolve enquiries from managers and employees on compensation and benefit administration

- May conduct the cross check of others’ work (timesheet, employee lifecycle documentation) to ensure that required compensation and benefit administration activities are processed accurately

2 The link between subject matter and internship mission

During the internship as trainee in HR department during 4 months, I had been able to access the company’ compensation system which I could comprehend it and its situation In addition, I had a chance to communicate with many colleagues in another departments, to work any department in order to comprehend its situation and solve it

19 The more I work with my colleagues, the more I recognize the staff ’needs, what they are expecting from the company

3 The goal of internship position

To complete the internship with the instruction of my teacher and my supervisor, I have managed to set my own goals as below:

- Learn actively about the company history and milestones: need to know a structure of organization, function of each department, role

- Comprehend the company's internal policies, strategies and ambitions - Study company’s compensation system

- Analysis the remuneration system: understand the actual situation of the company’s compensation system and find solutions to improve the current state

4 The internship contribution to company

While I had work my internship in BBraun limited Company I paid attention to approaching all my knowledge which I had studied from the school and contribute my efforts to the company I managed to complete the own goals by my supervisor and my teacher At the same time, I tried to build the best relationship with the staffs of other departments and do my best to support my work when possible

5 The theoretical knowledge put into practice

Almost of courses in the MBA course not only helped me broaden my knowledge but also gave help me apply the knowledge in the internship

Table 3.3: The MBA subjects and their usefulness

1 International economics and globalization

- Fourth Industrial Revolution

Challenge & Opportunity of pharmaceutical factory in Vietnam

- Recognize the advantages and disadvantages faced by Vietnamese businesses when

- Any financial risks may be forecast and are managed to control it

3 Business game

- Analysis of the performance each

department/employee and the net profit will affect the recruitment of the company

4 Industrial property right - protect the corporation from any unanticipated conditions and authorized tricky might happen

5 International Accounting

Comprehending the structure of Balance Sheet, Financial Report and analysis it

6 Dimensions of Human resource Management

- What Strategic HR management is? - What Organizational culture is?

- How to manage compensation systems - How many key factors in managing

motivation for employee are?

- How to engage diversity management in HR fields

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CHAPTER 4: DEVELOPMENT

1 Overview remuneration system

Like as almost other companies, before workers sign a labor contract, their salary and basic compensation will be discussed with the HR department The basic formula that the

company is applying to calculate employee’s salary is as follow: Work real = Work per day x Day working In this:

Work real: the official salary that the employee is received each month Day working: the actual working day of employee

Paying wages linked with actual workdays and salary coefficient creates fairness,

encourages staff to work more fully Simple repayment mode has simple advantages, easy calculation, bring stable income for employees

The simple formula to calculate the total of salary accompanied with allowance: Work basis = Work real + Allowances

In this:

Work basis: basic wage includes allowances

Allowances: executive allowance, seniority allowance

And the total salary each month for employee really gets paid after deducts social insurance, health insurance, unemployment insurance, as follow:

Wage mothly = Wage basis – (Insurance social + Insurance healthy + Insurance unemployment)

Wage monthly: The total of basic salary that an employee gets paid monthly Insurance social: social insurance