High turnover rate in ZPI department of ABC corporation

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Le Do Phuong Uyen HIGH TURNOVER RATE IN ZPI DEPARTMENT OF ABC CORPORATION MASTER OF BUSINESS ADMINISTRATION THESIS ADVISOR: ASSOC PROF TRAN HA MINH QUAN Ho Chi Minh City – Year 2020 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Le Do Phuong Uyen HIGH TURNOVER RATE IN ZPI DEPARTMENT OF ABC CORPORATION MASTER OF BUSINESS ADMINISTRATION THESIS ADVISOR: ASSOC PROF TRAN HA MINH QUAN Ho Chi Minh City – Year 2020 ACKNOWLEDGEMENT I would also like to acknowledge my advisor Assoc Prof Tran Ha Minh Quan for his enthusiastic encouragement, immense knowledge, and guidance with many trouble spots and of my thesis! I really want to show my profoundly recognize to whole ISB’s advisory board, lecturers, educational counsellors, … for the invaluable assistance that you all provided during my study CONTENTS Acknowledgement Executive summary Chapter background I Company introduction 1.1 ABC Joint Stock Company 1.2 ZION Company Limited – ZION Co., Ltd 1.3 ZPI E-wallet Introduction 1.4 ZPI Department (ZPI) II Problem context 2.1 Symptom analysis 2.2.1 Barrier of finding appropriate replacements 2.3 Personal reason 15 2.4 Low employees' job satisfaction 16 2.5 Unproductive teamwork 18 III Problem exploration 19 3.1 Theoretical framework 19 IV Problem validation 21 V Main problem identification 22 Chapter 3: Causes validation and solutions 33 I Potential causes analysis33 1.Ineffective leadership 33 2.Perceived lack of fairness 34 II Causes validation 34 Ineffective leadership 34 Perceived lack of fairness 34 III Main-cause identification 37 IV Sub-causes identification 35 Organizational politics 35 Theoretical framework 35 Sub-causes validation 42 Root-cause validation 43 V Informed-theoretical solutions…………………………………………………… 44 Alternative Solution 1: Alternative Dispute Resolution (ADR) practices 44 Alternative Solution 2: Analytic Hierarchy Process (AHP) technique……………….44 References 57 APPENDIX 63 A Supporting information 1.1.4 Interviewee’s Demographic 63 1.2 Interview guide 64 1.2.1 Introduction 63 1.2.2 Warm – up question 63 1.2.3 Main body of interview 63 Executive summary Over the span of many millennia, science and technology have made many glowing achievements and breakthroughs in an ever-changing society Henceforth, they accelerate the booming development of IT industry to enhance the quality of life as well as productive working performance Although the general public could not deny the imperative and crucial role of human beings, even we have novel and state-of-art technical machinery For this reason, any corporations also attach much importance to the workforce; somehow, IT industry has been facing encounters to attract and retain staff due to the fast-paced, competitive advancement A turnover analysis on IT (Information Technology) industry reflects the pessimistic impact of high turnover rates could be significantly harmful to IT companies (1) In fact, the employees are the most valuable asset in this industry, which forms a stable development team to guarantee the fulfillment of conditions and terms of clients’ contracts On the upshot, recruiting and developing new replacements for the fitting organization could cost much more huge time, effort and finance of recruiting, training new counterparts than maintaining current ones High staff turnover is acknowledged to be a detrimental and potential threat to the business's revenue The main purpose of this thesis is to explore the causes that lead to a high turnover rate at ZPI Department The finding of the study indicated that ineffective leader style is the main drive why employees decided to leave the company and recommend some apt and applicable solutions to retain employees based on the method of using validated data from secondary data, in-depth interviews, statistical surveys in combination with theory-based approach / CHAPTER BACKGROUND I COMPANY INTRODUCTION 1.1 ABC Joint Stock Company ABC Joint Stock Company is a leading technology company in the digital and IT industry in Vietnam market (Forbes, 2016) The company was founded in September 2014 by two founders: Bryan Pelz, and CEO Le Hong Minh ABC Corporation is an enterprise serving more than 80% of Internet users in Vietnam and is also the largest game publisher and developer in Vietnam ABC currently has more than 2000 employees working with the spirit “Embracing challenge” for the mission “Make the Internet change Vietnamese lives.” ABC is one of the 100th ideal working in Vietnam, which was voted by Anphabe and Nielsen during the past three years In ABC, members' abilities and contributions are recognized not only by monthly salaries but also receive rewards from projects, products, year-end rewards, stocks that commensurate with work experience The environment drives creativity, ABC-ers open-mindedly welcome those who dare to embrace the challenges to pursue a passion Currently, ABC operates and operates on four main product lines: digital content including news, training and online entertainment, community links and e-commerce; software and utilities; e-commerce, payment gateway products The company has constantly made efforts to invest, develop, build Vietnamese products and bring the traditional cultural and educational elements of Vietnam into foreign online entertainment products ABC’s products are constructed as an ecology on the Internet, including online entertainment, news, social network products and platforms connected to the online payment system Table Summary table of business lines of ABC Joint Stock Company ITEM NAME OF SECTOR Production of electronic components Production of computers and peripheral devices of computers Production of communication equipment Producing civil, electrical goods Retailing computers, peripheral devices, software and telecommunication equipment in specialized stores Retail of audiovisual equipment in specialized stores (Source: Internal report – ABC Portal) 1.3 ZPI Department ZPI department comprises 05 main divisions (Building_Product, Use_Insight, Product_Design, Operation, ZMB) with 26 employees in total (not including 02 missing positions: product director, product manager) Core_Payment team & P2P teamwork under the control and managing of Building_Product division (Div.) Their tasks are considered as one of the most complexes in e-wallet development, and these two teams must operate simultaneously To be particularly, P2P (Peer to Peer Payment) is the high-speed form of online payment which transfers directly between two individuals Users need Core_Payment team to support them to open a provider's account for connecting bank account’s services and sending money to the account for transactions and payments with other individuals also have accounts at that supplier) Besides, ZPI Dept supervises, monitors both Product_design Div and User_insight Div to draw up and illustrate the product’s interface for responding to customers’ behavior’s demand ZMB division has the vital role of integrating ZPI ecosystem into Zalo platform, developing features for TOPUP services (allowing customers with bank accounts to deposit money directly into prepaid accounts (Airtime) of telecom companies, online games, consulting, e-wallets, etc via SMS, GPRS, Internet or bank account to pay 3G/4G mobile fee; water and electricity bills; booking tickets, hotels or airlines, etc.) Operation division administers 02 lines – Promotion (providing campaigns, publicity to attract new users’ attention) and Operating (offer incentives to provide the loyal customer base) Figure ZPI Department’s structure (Internal source, HRBP Report, 2018) II PROBLEM CONTEXT 2.1 Symptom analysis On the authority of ABC’s annual financial reports and internal data along with executives’ analysis from 2016 to Quarter 1/2020, ZPI Department has experienced the hardship, difficulties in the field of solving the workforce crisis due to the high turnover rate Figure ABC’s overall numbers of leaving employees from 2018 – Q1/2020 (Source: HRBP Report – ZPI, Updated to 1st Mar 2020) As can be seen from the graphs, ZPI Dept has taken the major quantity of leaving employees in ABC from 2018 to present, ranging from 11 employees (Q1/2020) to 24 employees (2018) These numbers reflect the significant human depletion at ZPI dept in these recent years Figure Turnover trends at ZPI Dept from 2017 – Q1/2020 (Source: HRBP Report – ZPI, Updated to 1st Mar 2020) From the fiscal year 2017 to Q1/2020, the turnover rate has demonstrated remarkable upward trends Notably, the fiscal year 2018 witnessed the highest ratio of turnover (92,31%), followed by 2019 (65,38%) Although the turnover rate in 2019 decreased by 26.93%, Quarter 1/2020 has taken over nearly two-fold (40,74%) compared to the turnover rate of 2018 Figure Average turnover rate and retention rate counted per quarters from 2017-2019 (Source: Financial Report & HRBP Report, 2016, 2017 & 2018; ABC’s internal portal source) According to HRBP’s internal report about ZPI Dept, the number of resigned employees was pretty high throughout months from Q1/2018 to Q1/2020 To be more precise, the high turnover rate takes the major part in the first half of the years; especially in the late Q2 – mid Q3 (June-August), which is extremely abnormal to ABC (listed in 100 best working places in Vietnam) At the heart of this matter, this fact should be concerned as a weird issue since the months recorded strong fluctuation in turnover rate not occurring in the leaving season (Jan-Mar period) 30 Islam T, ur Rehman S, Ahmed I Investigating the mediating role of organizational politics between leadership style and followers' behavioral outcomes Business Strategy Series 2013 31 Andrews DR, Wan TT The importance of mental health to the experience of job strain: an evidence‐guided approach to improve retention Journal of nursing Management 2009;17(3):340-51 32 Miller NG, Erickson A, Yust BL Sense of place in the workplace: The relationship between personal objects and job satisfaction and motivation Journal of Interior Design 2001;27(1):35-44 33 Wells M, Thelen L What does your workspace say about you? 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(SMT members, HRBP supporters, current and ex-employees) - Do you intend to work here for a long time? (Current employees) - Do you know the reasons why ZPI Dept has the high turnover? (Current employees) 63 - Why did you leave ZPI? (Ex-employees) - … …………… A Interview transcript 2.3.1 Interview with HR Director cum Vice President (Chief Operation Office) The purpose of an in-depth interview with HR Director – Mr.Tiennhh, who is not only a key role to almost HR activities of the company but K also get the overview of company situation, is investigating the main drives to the high turnover rate as well as low retention rate situation within ZPI Dept However, the interview with Mr.Tien did not reveal some specific causes because those ones could be overlapped and under cover of lower hierarchical management levels In terms of his external dept.’s perspective, he mentioned that in rat-race IT industry, even SMEs or start-ups are also redoubtable competitors not including hulks as BOSCH, VinID – Vingroup, FPT Corp, Cybersoft and so forth They also provide good C&B (Compensation & Benefits) as ABC – Zion, green working space, attractive salary and bonus; somehow, they have more on-site project that give staffs the chance to challenge in order to enhance their hands-on experience; which is fewer in ABC due to the fact that ZPI has just published in Vietnamese market Figure 2.1 Summary of in-depth interview’s HR Director cum Vice President, COO 2.3.2 Interview with Human Resources General Manager (Mrs.Camvtd) During the in-depth interview with HR General Manager – Mrs.Camvtd, she mentioned the key factor which may affect the turnover rate of 64 technical staffs is monetary budget and allowances; particularly supplying the private laptop, days-off, health insurance, etc She also thought former employees might not share with her honestly, her perspective based on the labour market’s observation and annual survey (Firgue ) She also shares the view that BOD at ABC really focus on human development through lowered profit consecutively (Fig.) Mrs Cam also provides 2018 salary reports of Navigos Group and TopIT survey (2) to corroborate her point of view, several IT companies have to face with high number of employees who are willing to leave their position after working in next future by not offering the better and handsome income It means that high turnover rate is not only the problem of individual organization but also the issue of many businesses which join in this market recently if they could not satisfy their wants of making a living Actually, the salary range of ABC is a bit little higher than several rivals, but not at all Therefore, retaining staff at ABCZion should also concern this prominent factor Figure 2.2 Summary of in-depth interview’s Human Resources General Manager 2.3.4 Interview with Human Resources Business Partner Manager (Mrs Phuongvn) Followed by HRBP in charge of ZPI dept belonged to Zalo Field Mrs Phuongvn also know that the high turnover rate as well as low retention rate derived from serious individual issues – struggling among management levels and staffs, which were viral and spread to her through daily dialogues However, the high tide occurs in the quarterly meeting of SMT (Senior Management Team – including Mr Dungdv – Head of Zalo.Payment Business ) and BOD have some arguments whether to cut down the workload by hiring more headcounts (HCs) approximately 10 persons for ZPI or not In fact, the amount of assigned task is huge due to having small number of employees not even listing missing positions and vacancies; BOD really would imply HCs ranging from 25 – 30 numbers for keeping confidential some data towards ZPI All these mentioned piece of information revealed that inappropriate work allocation profoundly lower the employees’ satisfaction by pending KPIs (Key Performance Index) and create antithesis perceptions within company Therefore, Mr.Dung perceived that he has no decision-making right then he voluntarily resigns job, which influence significantly on whole dept because he is the most respectful nerve-centre person for always caring his staffs’ 65 benefits Consequently, the large number of major employees has uncomfortable, scared sense and decide to leave job by feeling untrustworthy, vague justice Figure 2.3 Summary of in-depth interview’s HRBP Manager 2.3.5 Interview with Human Resources Business Partner – Zalo Line(Mrs.Quantl) Mrs.Quantl is also the main person take the specific HR activities in Zalo including ZPI, she addresses that though ABC is the best company to him that create the good working environment; somehow, in terms of financial making-decision is limited and conflict to Mrs.Thanhtt who is in charge of budgeting and controlling ABC’s finance mainly This fact is also mentioned in Mr Dungdv (Former CEO of Uber Vietnam then working as Head of Payment Business at ABC Corp) quitted in October/2018) for upper line manager conflict about the making decision to enhance the competitive advantage of ZPI dept by enhancing workforce and divide the workload fairly Besides, Mrs Quan also claimed that workforce crisis came to leader conflict by different mindset between developers and line managers, dept heads and another reason stem from the intense debate in power & position competition among management levels 66 Figure 2.4 Summary of in-depth interview’s Senior HRBP – Zalo sector (including ZPI) 2.3.6 Interview with Senior Talent Acquisition Partners (Mrs.Huongvt, Mrs.Huent2, Mr.Longpp, Mrs.Hienntn, Mr.Kynt, Mrs.Tuyennp) According to interview of Ms Huongvt – Senior Talent Acquisition Executive, who is the key person that interview and process recruitment high and middle managers for ZPI , she mentioned that operation in ZPI dept worked well, ZPI has good human asset Somehow, ZPI lost them by not implying well the manager skills In both Mr.Longpp, Mrs.Hienntn’s perspective, who are in charge of recruiting mainly workforce for Zalo and ZPI response that high and middle manager in ZPI are quite conservative, hot-temper and want to show-off, which create the bureaucracy, intense power gap among them, lower the teamwork activities Whereas most of others point out that the performance-based salary for IT staffs will be the motivation factor to push the sales and revenue which income increase parallel with KPI increase is the key success of business organization Hence, they have had to deal difficulties in hiring candidates because ABC is not only the company pay high for employees 67 2.3.7 In-depth interview with current employees in ZPI Dept For answering the reason why Mrs.Trucnt (VG-07135) and Mr.Dulh (VG-045354) – who are remaining staffs in ZPI at current, favour in ZPI All of them response that energetic working environment and having experiences on making helpful, innovative products as ZPI are the key attributes to keep them stay loyal with company and ZPI Somehow, in terms of female aspects, Mrs Truc also does not moving another companies for aiming at stable jobs; yet, in fact, she has perceived the environment less active than BO (Business Operation) division which is the previous unit before HR assigned her to ZPI Supporting her views, Mr.Du have claim that some product managers started working after they had recruited, so they could know deeply the corporate culture of department as well Sometimes, they mentor and direct followed by bureaucratic leadership, which create the strain, high-pressure atmosphere IT employees are often well-trained and educated, even in the case they receive good compensations, they could definitely dissatisfied low morale, unethical behavior due to the fact that companies in this area always make the staffs enjoyable to stimulate creative ideas and control accuracy Learning & Development Dept should take this problem into consideration and have some training programs not only for top managers but also staffs because everyone could be a mentor for another even they are freshers or juniors At the heart of this matter, employees could only attend to training program if they could get well performance in continuous two terms consecutively and their leadership is adequate For those who does not achieve excellent performance, it would take a long time to participate in the development program because of high-position limitation 2.3.8 In-depth interview with resigned employees in ZPI Dept 2.3.8.1 Interview’s results of Former Key Product Owner (Mr.Tamph) The nurture of work at ZPI Dept is more quite complex than any other projects, particularly the late year period near Tet Holidays for developing and accomplish platform features, especially Lucky money attribute All staff should bring to an end the flawless finished product on target and on scheduled time from design steps (brochures, marketing ads, UI/UX design, etc.), marketing (casting, TVCs, celebrity endorsements, KOLs, etc.), technical aspects (front-ends, back-ends, etc.) and etcetera Therefore, the KPIs may hard for them to achieve successfully; meanwhile, ABC – Zion would have dismissal for poor performance if they cannot target the KPI of projects or products for 03 consecutive periods, or their negative project management calibration results previous year rating Bottom/ Middle for consecutive years, even they were rated poor performance by Dept 68 Head Indeed, almost resigned staffs have not fired, somehow, some of them feel unsafe because few line managers, direct mentors often assess outcomes unequally and one-sidely A spotlight for this case is Product manager of Core Payment team and P2P team has extreme strain conflicts caused by office politics Sometimes, the tension drives to the high-level that ZPI used to perform at the same 15th Floor - FV office (Le Dai Hanh Str.side); yet, after intense debates, P2P Product manager insist on voluntarily asked for moving his team’s workplace to 15th floor – SV office (Phu Tho stadium side) Consequently, the working performance is also pending for not having direct and good cooperation between two teams In fact, the linkage was affected badly that lead to delay progress as well as make the subordinate staff confuse and not know how to follow whose perception 2.3.8.2 Interview result with senior employees Figure 2.7 Summary of in-depth interview’s Former Key Product Owner in ZPI Dept 2.3.8.2 Interview’s results of with senior resigned employees As a figure 3.3 below, personal reason was a reason, which accounted second-ranked percentage, was chosen by 03 members (Ms Vanptn VG-04486 and Mr Chanhlt2 -VG-04234, Ms Thenv3 - VG-07135) of in-depth interviews when they leave job In details, Ms Van has planned to migrate with her family (3) and learn post-graduate degrees majoring data mining in Netherlands, while Mr Chanh decided to start-up, he also give 69 further explanation about not favor with the strategy of moving to the new headquarter – ABC Campus in the next future since his living place will be far from workplace and the leadership which is mentioned below Actually, almost IT developers are unsatisfied with the OT working, the intense pressure and strain stress affecting to their work-life balance and health issues, (4), (5), (6), PWC’s suvey, 2011, therefore, Ms Thenv3 - VG-07135 would able to change another career path or working for SMEs that could reduce the workload and have more extra time in weekend especially in the holiday for her parents (3) Mr Chanhlt2 has stated that after Mr Dungdv resigned in October/2018, Mr.Chanh perceived unsafe for the next organizational re-structuring due to the fact that he really admires and appreciate towards Mr Dung Furthermore, Ms Trangpvt - VG-07260 shared: “Before changing the reporting line to Ms ThiNTK (Seniors – Trangpvt’s mentor), the former does not achieve as expected In this time, there were very few participation in the project, which only happen when the concerned issues near to the due day It seems that there has never been a tool on HRS to try out the pending feature.” Figure 2.8 Summary of in-depth interview’s senior resigned employees in ZPI Dept 70 2.3.8.3 Interview’s results of with junior resigned employees Mr.Anlt- VG-00676 and Mr.tuannh3- VG-03174 give their thought in the first stage after having a new product manager – P2P team, the organization is not good because he has no effective organizing skills They think leaders need teaching with better management skills On the other hand, the most disappointed in the Core Payment Division has had less opportunities to work Furthermore, working as individual structure, each person often avoid responsibility, or push work to other teams if possible (except team building) After changing the Dept head, new types of processes make the work stagnant and depressed and only fix and correct short-term faults temporarily, yet rarely develop or improve the root causes” Mr Luannk - VG-04759 realized that he has many bewildered times when he looks back in reality of what he does and his current position – it was far too far apart Actually, seniors and juniors really work super hard and develop the basis and background of the platform, but no product owners knew this concept, reviewed or recognized our performance, they get all the fame, achievements from our sweat blood, contribution Therefore, a leader and manager should be a person who can connect, spread fire to all employees and lead well to new people become objective, fair and goodwill to all members In particularly, Mr Namth3 - VG-04534 show the unsatisfied matter about the responsibilities’ level since company should not focus on employees, who really work, contribute to each part of ABC, if the goal fails, they not target to the previous managers instead of blaming on employees are just people who are called to work, they must it, but they are not the ones who choose that goal Figure 2.9 Summary of in-depth interview’s junior resigned employees in ZPI Dept 71 ...UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Le Do Phuong Uyen HIGH TURNOVER RATE IN ZPI DEPARTMENT OF ABC CORPORATION MASTER OF BUSINESS ADMINISTRATION... affecting the high turnover rate, which could be the main drive to the huge loss in profit 2018 of ABC- Zion The targeted intention in this study is investigating the causes leading to employee turnover. .. ecology on the Internet, including online entertainment, news, social network products and platforms connected to the online payment system Table Summary table of business lines of ABC Joint Stock