Turnover rate and unfair paying salary and benefit at tin nghia petrol joint stock company

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business LE ĐOAN NHAN TURNOVER RATE AND UNFAIR PAYING SALARY AND BENEFIT AT TIN NGHIA PETROL JOINT STOCK COMPANY MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2018 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business LE ĐOAN NHAN TURNOVER RATE AND UNFAIR PAYING SALARY AND BENEFIT AT TIN NGHIA PETROL JOINT STOCK COMPANY ID: 22140032 MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: PHAN THI MINH THU Ho Chi Minh City – Year 2018 Executive summary There are potentially existing problems in Tin Nghia Petrol Company which may reduce the competition edge of organization and harm to its culture This research was commissioned to examine what problem in the company, the causes leading to problem are and to suggest the validated solutions to deal with problem, which are in line with company’s policy and resources The main purpose of this thesis is to explore the causes of high turnover rate through the current problems with staffs at Tin Nghia Petrol Company Method of analysis is combined between validated data and theory-informed which collected through in-depth interview and company survey to explore the causes of problem The findings of the study revealed that unfair paying salary and benefit tend to play a significant role in turnover intention of staffs The findings are discussed in details in the research along with some recommendations for the company and management board to increase the level of employee satisfaction and reduce the turnover intention in Tin Nghia Petrol Company The solutions focus on main cause of unfair paying salary and benefit: - Setting up paying salary and benefit based on performance - Build the performance appraisal logic and fairly combine setting up KPIs system with clear job description Total cost to implement above solutions is approximately 250milion VND In currently, this cost is really high but it will be strategic objective to 2030, the company aim for investing in human resource Acknowledgements I would like to acknowledge all who supported me during my studies without I wouldn’t be where I am today I would especially like to thank my supervisor – Professor Phan Thi Minh Thu for all her advice and guidance, without her help this could not finish my thesis I also would like to show my gratitude to my colleagues at work and classmates at ISB for their continuous support Table of content INTRODUCTION 1.1 The company background 1.2 Company structure and mission PROBLEM CONTEXT 2.1 The turnover rate status in the Tin Nghia Company 2.2 Background of the symptom PROBLEM INDENTIFICATION 11 3.1.1 Unfair assigned workload to staff of supervisor 11 3.1.2 Unfair paying and benefit 12 3.1.3 Promotion appraisal bias 13 3.1.4 Repeated and boring working 14 3.2 Justify problem in term of importance 15 3.3 Final Causes and effect map 16 3.4 Cause validation 17 ALTERNATIVE SOLUTIONS 20 4.1 The first alternative solution: Setting up salary and benefit policy based on performance 4.2 The second alternative solution: build the performance appraisal logic and fairly combine setting up KPIs system with clear job description 4.3 The third alternative solution: Proving some training programs to low performance staffs EVALUATION OF SOLUTIONS AND ORGANIZATION OF ACTION 5.1 Evaluation of solutions 22 5.2 Organization of actions 23 SUPPORTING INFORMATION 25 Appendices 25 References LIST OF FIGURES Figure Staff of age at Company in 2016 Figure Quantity of staffs leaving in each age period from 2013-2016 Figure Result of evaluated performance of staff position in detail each group of age Figure Ratio of staff with high performance in detail each group of age period from 2013 to 2016 LIST OF TABLE Table The number of employees left period from 2013-2016 Table Table salary scale period 2015 to 2017 INTRODUCTION 1.1 THE COMPANY BACKGROUND General information: Tin Nghia Petrol Joint Stock Company officially operated st as a Joint Stock Company on January , 2009 based on the conversion from Tin Nghia Petrol One Member Company Limited (established in 1999 – a subsidiary company of Tin Nghia Corparation) With two petrol stations from the beginning stage, the output was only some of million liters per year; up to now, the company has a wide distribution network in Dong Nai Province with sale volume of hundreds million liters per year turnover reached trillions of VND per year and many consecutive years have been name in Top 500 largest enterprises in Vietnam Apart from company’s retail system, also distribute many agencies and industrial customers in and out of Dong Nai province Petroleum trading is the main business with turnover more than 90% of total revenue and continuous development over many years Foundation and development process: Through nearly 20 years of foundation and development, with over 350 employees, Tin Nghia’s brand name gradually affirms in Dong Nai market as well as Southeast region, and attracts more and more customers Distribution system includes 44 locations in Bien Hoa and some towns as Vinh Cuu, Cam My, Xuan Loc, Long Thanh, and so on In addition, the company has 30 petroleum agencies, nearly 200 industrial customers (including factories, companies using petroleum oil as fuel) and more than 1,000 other customers (such as garages, transportation units…) Annual output increased from 7% to 10% sale reached over 3,000 billion VND With 16 tankers and trucks, we provide transportation service for all trading activities such as gasoline, lubricant and gas tanks to internal petrol station and company’s suppliers Annual transportation volume increase from 10% to 15% and reaches 200 million liters of gasoline and over 2,000 tons of gas tanks 1.2 Company structure and mission General Director Vice General Director Sale Department The first petrol stations area Tin Nghia Petrol Organization Structure The second alternative solution is build the performance appraisal logic and fairly combine setting up KPIs system with clear job description This is effective to avoid the performance appraisal biases from supervisors have been examined by considering their salary and benefit Because when income of staffs based on their performance is the most important requirement of evaluation staff performance is just and exactly Mrs Tran Thi Quynh Tam-chief accountant of company share that: In her opinion, which factors for staffs to job well and improve engaged with company is setting up performance evaluation system clearly, logic and fairly Mrs Tran Thi Ngoc Ngan, a general accountant, 35 years old, who left company for years, share that: She satisfies her job at new company because it have performance evaluation system for every position clearly and logic Addition, it very is fair for every position to assign workload and paying salary For me, KPI is effective method for using in Tin Nghia Comapy and Tin Nghia should apply 25 Charles et al stated that using good appraisal system to evaluate performance could lower levels of turnover in organizations The third alternative solution is proving some training programs to low performance staffs This solution is difficult to solve effectively because it belongs to human psychology and personal sense Proving some training programs will waste money if the staffs satisfy themselves and they just completed their task as acceptable level rather than taking time to investigate the new things Therefore, it is not necessary to apply 5.2 Organization of actions Human resources department should be responsible for the implementation plan which lasts for one year and is applies to functional department Objective of change plan is clearly to implement three mentioned alternative solutions within timeline and budget approve The actions list is built following timeline below to ensure the actions will happen in 2017 On June 2017: HR Manager to communicate with Board of director about the problem high turnover rate of staffs is happening in functional departments, potential cause which is validated through evidence and informed by theory Then Board of Director will discuss to set time line and budget for three mentioned alternative solutions On July 2017: HR Department decide to choice Vietnam Chamber of Commerce and Industry (VCCI) for setting up new salary and benefit system and KPIs 23 system for each position based on the specific context of Tin Nghia Company Paying salary and benefit policy with factor performance  Cost: Effective setting up new salary and benefit system and KPIs for each position cost is estimated about VND 250,000,000 based on the quotation from VCCI No Description Meetings between departments, Human Re Department and VCCI Group to get ideas a assessment criteria for each position, key p question, job position indicators The draft table salary scale focus on paying b performance follow Specifically work and real environment at Tin Nghia Company The method to paying salary and benefit sy effective and exactly Criteria salary for retention and attractive t Allowance for expert/designer Total Total cost to implement above solutions is approximately 250 milion VND In currently, this cost is really high but it will be strategic objective to 2030, the company aim for investing in human resource, and attract more and more employees with high performance This human resource will play an important role in business operation because they satisfy all working supervisor’s requirement perfectly, they are good at major subject and their solution in work quickly and exactly On October 2017: Test application new paying salary and benefit policy during to months During this time, HR department will analysis the survey result and receive feedback from functional team and make correction At this time, supervisor of functional teams to start discussion and review job description with their subordinate to get full and detail working activities of the staffs, considering to clarify the job requirement and benefit to know that functional staffs may receive as working at this position Under guidance of HR manager, supervisor of functional teams apply the performance appraisal process combine setting up KPIs system with clear job description On January 2018: Apply new paying salary and benefit policy officially and performance appraisal logic and fairly combine setting up KPIs system with clear job description 24 SUPPORTING INFORMATION The first, secondary data were collected in this thesis consists of literatures, journals, Human management books, researches and the report, statistical number of Human Resources department The second, primary data is collected through conducting a qualitative research The main method for collecting qualitative data is in-depth interviews The purpose of the interview is to collect general data and opinions of interviewees about the existence of problem as well as its potential causes and their suggested solutions The in-depth interview session are conducted from main groups, first group: managers/supervisors; second group: staffs had left the company/staffs with high performance and third group current staffs/staffs spent for a long time at the company INTERVIEW GUIDE Research objectives: The existence of problem, finding out the potential reason why the staffs decide to leave the company and propose the solutions to solve it Overall discussion framework: Key content The existence of problem Explore the cause of high turnover rate and the main reasons The solutions Appendix Group 1: Managers/supervisors who are currently working for Tin Nghia Company Mrs Phan Thi Loi - Human Resources Manager Mr Tran Thanh Tung Planning and Development Department Manager Mr.Tran Duc Tuan - Technology and Development Supervisor Mrs Tran Thi Quynh Tam-chief accountant of company Question: In your opinion, Could you share the reason why many talent staffs at Tin Nghia left the company? In your point of view, what is the main cause that leads to high turnover rate? Why you think so? Do you think that the staffs spent for a long time at the company is more experience and high performance than staffs spend for short time? In your opinion, which factors for staffs to job well and engaged high with company? 25 No Question 01 In your opinion, Could you share the reason why many talent staffs at Tin Nghia left the company? 02 What is the main cause that leads to high turnover rate? 03 Do you think that the staffs spent for a long time at the company is more experience and high performance than staffs spend for short time? 04 In your opinion, which factors for staffs to job well and improve engaged with company? 26 Appendix Group 2: The staffs had left several years ago Mr Nguyen The Anh-IT staff, 28years old, who left company year ago He worked at Tin Nghia company for years Mr Duy- a sale man, 32 years old, who left company for year He worked at Tin Nghia company for years Mrs Tran Thi Ngoc Ngan, a general accountant, 35 years old, who left company for years She worked at Tin Nghia company for 10 years Mr Nguyen Hoai Nam, an electrical engineer, 26 years old and Mr Nguyen Van Thanh, technology staff, 30 years old They left company for year and had worked at the company for years Question: Could you please share me the reasons why you decided to leave Tin Nghia Company? Could you please share me the main reason and the details about that you have mentioned about the unfair paying salary and benefit factor? Do you feel a great sense of personal satisfaction with your current job after you have left Tin Nghia Company? Why you have this satisfaction? No Question 01 Mr Nguyen The Anh-IT staff 27 02 Mr Duy- a sale man, 32 years old 03 Mrs Tran Thi Ngoc Ngan, a general accountant, 35 years old 04 Mr Nguyen Hoai Nam, an electrical engineer, 26 years old and Mr Nguyen Van Thanh, technology staff, 30 years old 28 Appendix Group 3: The staffs are working at Tin Nghia Company These current staffs focus on who are up 35 years old and seniority more than 10 years Mrs Luong Thi My Chi, accountant, 42 years old, has worked at company for 15 years Mrs Nguyen Thi Phuong, administration staff, 45 years old, has worked for 18 years Mr Le Van Nga, sale man, 50 years old, has worked at company for 20 years Question: I know that you have spent more time at Tin Nghia Company Do you satisfy your current job? Could you share me detail about this? Could you share me your point of view about high turnover rate of staffs in recent years? The company will set up new some policies to change unsuitable one and if this affect passive to your benefit (example paying salary and benefit policy, performance related pay, not based on seniority factor) what will you do? No Question 01 I know that you have spent more time at Tin Nghia Company Do you satisfy your current job? Can you share me detail about this? 02 Could you share me your point of view about high turnover rate of staffs in recent years? 29 03 The company will set up new some policies to change unsuitable one and if this affect passive to your benefit (example paying salary and benefit policy, performance related pay, not based on seniority factor) what will you do? 30 Reference [1] Price JL, Mueller CW A causal model of turnover for nurses Acad Manage J 1981;24(3):543-65 [2] Michael A, tephen T Armstrong s handbook of human resource management practice th ed London: Kogan Page; 2009 [3] Arie CG, Erik HB Is high employee turnover really harmful? 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International School of Business LE ĐOAN NHAN TURNOVER RATE AND UNFAIR PAYING SALARY AND BENEFIT AT TIN NGHIA PETROL JOINT STOCK COMPANY ID: 22140032 MASTER OF BUSINESS ADMINISTRATION... Table Table salary scale period 2015 to 2017 1 INTRODUCTION 1.1 THE COMPANY BACKGROUND General information: Tin Nghia Petrol Joint Stock Company officially operated st as a Joint Stock Company on... petrol stations area Tin Nghia Petrol Organization Structure PROBLEM CONTEXT 2.1 The turnover rate status in the Tin Nghia Company According to the statistics shown in the company? ??s reports, the