Low working morale at the coffee house ho chi minh

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyễn Phạm Hoàng Yến LOW WORKING MORALE AT THE COFFEE HOUSE HO CHI MINH MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DR ĐOÀN ANH TUẤN Ho Chi Minh City – Year 2020 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Nguyễn Phạm Hoàng Yến LOW WORKING MORALE AT THE COFFEE HOUSE HO CHI MINH MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DR ĐOÀN ANH TUẤN Ho Chi Minh City – Year 2020 Table of Contents Executive Summary List of Tables List of Figures 3 Company background 1.1 The Coffee House 1.2 Human resources Symptoms 2.1 Exceptionally high employee turnover rate 2.2 Intention to leave 2.3 The importance of symptom 10 Problem identification 11 3.1 3.1.1 Low working morale 13 3.1.2 Better offer from other companies 20 3.2 Potential problems 11 Validating problems 20 3.2.1 Management perspective 21 3.2.2 Employee’s perspectives 23 Cause analysis 23 4.1 Potential causes 23 4.2 Validating causes 26 Alternative solutions 27 5.1 Developing a task assigning system and description to effectively allocate jobs and tasks among employees to give them equal opportunities for development 28 5.2 Revising the internal policies for the company’s trainings on resolutions of poor working environment or revising the internal policies and procedures in relation to HR management for a healthy working environment 32 Action plan 36 Supporting information 40 7.1 Interviewees’ demographic 40 7.2 Interview guide 42 Appendices 48 Appendix A: Survey Questionnaire 48 Appendix B: Interview transcript 51 Executive Summary This thesis paper is dedicated to exploring potential causative drivers determining the exceptional high employee turnover rate at The Coffee House and to defining sound retention strategies to achieve as well as retain employee turnover rate at a healthy, productive and profitable level Cafes in Vietnam have long since had significantly high levels of employee turnover The high employee turnover rate has translated into serious negative influences on The Coffee House’s management and operations with creating a challenged reference for replacement resources It is identified that high employee turnover rate not only increases the company’s expenditure on recruitment and training but also leads to low workplace moral, deteriorating service quality, and reduction in marketing return on investment as well This thesis will explore the major causes of high employee turnover rate at The Coffee House from the perspectives of current staff and managers at The Coffee House This group is targeted because they are regarded as those who potentially provide the most honest and meaningful responses An ontology approach within the quantitative method will be employed to examine the problems and solutions concerning the exceptional attrition at The Coffee House By incorporating the previous studies on employee turnover, the author intends to develop the questionnaire to measure the major reasons causing employees’ resignation at The Coffee House Depending on identified causes, some sound treatment strategies are proposed to reduce employee turnover rate at a fruitful and profitable level List of Tables Table 1.1: Company description Table 1.2: Characteristics of employees Table 2.1: Intention to leave at The Coffee House Table 5.1: Budgets for two solutions of the first cause 31 Table 5.2: Budgets for two solutions of the second cause 35 List of Figures Figure 1.1: Organizational structure Figure 2.1: Employee turnover rate at The Coffee House during 2017-2019 Figure 3.1: Cause-effect map 12 Figure 3.2: Absence rate at The Coffee House during 2017-2019 13 Figure 3.3: Average actual working hours for part-time and full-time workers 15 Figure 3.4: Desire to be engaged with a new task by employees 17 Figure 3.5: Willingness to share knowledges or practical skills within the team 19 Figure 4.1: Causes of intentions to leave the current jobs by employees 26 Company background 1.1 The Coffee House Vietnam Coffee & Tea Service Trading Corporation, here from The Coffee House, was founded in 2014 as a local coffee shop chain with the first Signature coffee store in Ho Chi Minh City Table 1.1 describes some basic information about The Coffee House Table 1.1: Company description Company information Registered name Descriptions Vietnam Coffee & Tea Service Trading Corporation (The Coffee House) Founded 2014 Headquarter location Ho Chi Minh City, Vietnam Website http://www.thecoffeehouse.vn Industry Food & Beverage Revenue (2019) VND 669 billion Number of stores 150 outlets Target market Domestic (Vietnam) Specialties Tea & Coffee Company size 2000-3000 employees According to Nikkei Asian Review (1), through attempting to make a difference and delivering the excellence of products and service The Coffee House has become the coffee shop chain experiencing the fastest growth regarding both domestic and international brands The annual report reveals that as the end of August 2019 the total number of stores has reached 140 stores; it is expected that this number will amount to more than 700 stores nationwide in the next five years (2) It is estimated that The Coffee House serves more than 40,000 customers per day In terms of organizational structure, The Coffee House has employed the hierarchical structure based on geography in which employees are managed with reference to their store location Store managers are those who directly manage store operations and employees while they report to district managers The Coffee House’s organizational structure is presented in Figure 1.1: Source: The Coffee House website Figure 1.1: Organizational structure The next section will describe human resources at The Coffee House under the hierarchical model 1.2 Human resources It is reported that as the end of August 2019, the total number of employees, including full- time and part-time employees, has amounted to more than 2500 people in both managerial or nonmanagerial positions Core values which governs attitudes and behaviors of employees at The Coffee House include service mindset, enrollment of kindness, teamwork and integrity while employees are motivated by inspiration, empowerment, human touch and positive working environment Table 1.2 presents employee information at The Coffee House: Table 1.2: Characteristics of employees Category Gender Age Working position Employment status Employee information Female % 1566 61.73% Male 971 38.27% 18-24 1034 40.76% 24-34 783 30.86% 35-44 512 20.18% More than 45 208 8.20% Managerial 612 24.12% Non-managerial 1925 75.88% Part-time 1739 68.55% Full-time 798 31.45% 1347 53.09% 1-3 years 672 26.49% 3-5 years 244 9.62% More than years 274 10.80% Less than one year Years of experience F (F: Frequency; %: Percentage) Table 1.2 shows demographic characteristics of The Coffee House’s current workforce as the end of 2019 Gender The total number of employees at The Coffee House is recorded at 2537 1566 employees are female, accounting for 61.73% while the rest (38.27%) are male employees Age It is shown in Table 1.2 that the majority of employees at The Coffee House are Generation X and millennials in the age range of 18-24 years old and 24-34 years old Firstly, more than two fifths of the total employees at The Coffee House (40.76%) are aged from 18-24 years old while 25-34-year-olds make up for 30.86% Those employees aging from 35-44 years old represent 20.18%; and only 8.20% of employees are above 45 years old and healthy administration and current working employment environment human resources to current of employees support and promote the implementation employees Analyzing the HR survey data department of predetermined Integrating the HR target of the business survey results department into the policies and procedures Revising policies HR and department procedures Getting HR approval the for department, revised Board policies and Director procedures 39 of Conducting training for employees Preparing HR training department materials Reviewing and HR getting department, approval Board of Director Conducting HR training department Supporting information 7.1 No Interviewees’ demographic Full name Nguyen Van Hung Gender Male Position Branch’s Working experience Working experience Time of Place of (in years) at The Coffee House interview interview 10 11:00AM The Coffee House’s manager branch 40 No Full name Duong Thi Nhung Gender Female Position HR Working experience Working experience Time of Place of (in years) at The Coffee House interview interview 10:30AM The Coffee House’s Manager branch Dang Kim Chi Female Staff 1 13:30PM The Coffee House’s branch Truong Duc Hieu Male Bartender 14:45PM The Coffee House’s branch Pham Quoc Thang Male Staff 0.5 0.5 16:00PM The Coffee House’s branch 41 7.2 Interview guide Introduction What is your name? Where you live? How old are you? What is your position at The Coffee House? If applicable, what gender you identify as? Prompt: male, female, does not want to disclose How long have you been working? How long have you been working at The Coffee House (in year)? Main body interview What is your opinion about The Coffee House? Do you think the current HR management at The Coffee House being effective? Why? 10 What points about HR management you think The Coffee House needs to improve? Prompt: working environment, coworkers’ relation, benefits, HR’s policies and procedures, etc 11 The turnover rate at The Coffee House is high, does it have any impact on your work? 12 What you think is the reason for this high turnover rate? 13 Do you have heard other employees or coworkers mentioning about leaving the company? 14 Do you have intention to leave the company in next 01 to 03 months? 15 How are you getting along with other employees? 16 Does your job meet your personal needs? Prompt: salaries, encouragement, benefits, job promotion, acknowledgement, etc 17 How is your current job? Prompt: Suitability of job descriptions, job challenges, recognition 18 Do you have any distresses? Do you have any complains? Prompt: salaries, encouragement, benefits, job promotion, acknowledgement, etc 42 19 Do you have a place within the company to fill a complaint or to resolve your problem? Prompt: HR department, internal control, direct manager, etc 20 How are you dealing with your manager/your boss? How does your boss affect your performance? 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to quit my job at The Coffee House I think there is an increase in the number of employees quitting their Yes No Yes No jobs at The Coffee House An increase in the number of employees quitting jobs leads to more responsibilities and duties Less experienced employees increase existing employees’ workload C Consequences when employees leave Please select your answers No Statements Because of more employees quitting their jobs, more training sessions are organized, which leads to increased expenditure on recruitment and training Workplace atmosphere becomes more serious when there are more employees quitting their jobs at The Coffee House Customers tends to complain about service quality when more employees quit their jobs at The Coffee House Productivity tends to decrease when there are more employees quitting their jobs at The Coffee House 49 Managers seems to get more troubles when there are more employees quitting their jobs at The Coffee House D Causes of intention to leave Please select your answers No Statements I will quit my job at The Coffee House if I receive a better job offer from other companies I tend to quit my job because of lack of available range of benefits I tend to quit my job because of lack of recognition and rewarding I tend to quit my job because of inadequate payment in relation to responsibilities and duties I tend to quit my job because wages are usually not paid on time I tend to quit my job because there are only a few opportunities for career advancement I tend to quit my job because there are only a few training and development programs available for employees I tend to quit my job because my co-workers not listen to and value my ideas I tend to quit my job because of the poor relationship with my supervisors 10 I tend to quit my job because of lack of resources for task fulfillment 50 Yes No 11 I tend to quit my job because of challenging tasks 12 I tend to quit my job because of stressful working environment 13 I tend to quit my job because of lack of work-life balance Appendix B: Interview transcript Question 1: In your opinion, is the employee turnover rate at The Coffee House troublesome? Additional information: Exceptionally high employee turnover rate 63.19% in Q4/2019 - Actually, I have to admit that the employee turnover rate at our company has become alarming with the peak at 63.19% in Q4/2019 This exceptional high employee turnover rate has forced us to consider causes and generate measures to control employee turnover at a reasonable level… - Although in comparison to other companies in the same industry, our employee turnover rate is relatively, it reached the highest rate in Q4/2019 with 63.19% The sudden increase in the number of employees quitting jobs have troubles us in many aspects of store management Question 2: Can you list some problems causing high employee turnover rate or employee’s intention to leave at The Coffee House? Prompt: Other job offers; Low working morale - There are many factors may influence employees’ decision to quit their jobs at Our Company Some of them may be better job offers from other chains of coffee shops with higher wages and benefits, opportunities for career development, relationships with supervisors and co-workers at the workplace, and so on - Actually, there are many reasons responsible for employee turnover at The Coffee House; however, low working morale may be the most important actors driving the intention to leave of employees Question 3: Can you list some issues resulting from employee quitting their jobs at The Coffee House? 51 Prompt: Increased work load, Decreased service quality, Decreased productivity, Management frustration - An unhealthy employee turnover rate is the root of many problems at The Coffee House for example increased workload, more costs on training and development, customer dissatisfaction, poor working morale, lower performance and productivity and so on There are many employees complaining about a huge amount of duties in daily operations because of an increase in the number of employees quitting their jobs Moreover, in comparison to the same period in 2018, in Q4/2019 it cost the Coffee House VND 792 million in recruitment and training which is more than twice as much as that in Q4/2018 Furthermore, our report also indicated that the absence rate also reached 2.26% in Q4/2019 which is alarming - As a store manager, I can realize actual problems caused by high employee turnover rate Among the problems, increased work load, low working morale, and decreased service quality are the most serious problems Additionally, cost for customer acquisition also experienced a rising trend which caused a decrease in marketing return on investment Question 4: What is the most serious problem from your point of view? Prompt: Low working morale - There is no doubt that low working morale is the most serious problem because working morale is the factor which determine the way employees work and contribute to the company This factor also influences how employees serve customers - Through my observations at my store, employees with high working morale tend to deliver better services to customers and stay longer with the company Moreover, absence rate of employees with high working morale is also much lower than those with poor working morale Question 5: Do you have any suggestions to tackle problems related to high employee turnover rate at The Coffee House? Prompt: Improved workplace relationships and improve working tasks to be more challenged - I suppose that a good remuneration system concerning wages and benefit for employee should be developed in implemented through the Coffee House to promote employee 52 satisfaction and motivate them to stay longer with The Coffee House Additionally, my employees seem to pay much attention to development opportunities; therefore, we should focus on this aspect to reduce turnover rate - My staffs at store desire to receive higher salaries in relation to their responsibilities Furthermore, how to improve workplace relationships between co-workers and managers also may influence their intention to leave 53 ... rate at The Coffee House The discussions with the Head of HR Department also pointed out that low working morale is regarded as the most direct problem of the employee turnover at The Coffee House. .. with the HR manager and store managers at The Coffee House that there are many problems related to the exceptionally high employee turnover rate at The Coffee House in 2019 such as low employee working. .. OF ECONOMICS HO CHI MINH CITY International School of Business Nguyễn Phạm Ho? ?ng Yến LOW WORKING MORALE AT THE COFFEE HOUSE HO CHI MINH MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: