UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------- NGUYEN THANH TUAN SOLUTIONS FOR DECREASING PERSONNEL FLUCTUATION: THE CASE OF OCB CHO LON BRANCH MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Ph. LY THI MINH CHAU Ho Chi Minh City, year 2020 0 TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS Executive Summary -------------------------------------------------------------------------------------- 02 1. Symptom Validation and Justification: -------------------------------------------------------------- 07 1. Diagram of Symptoms and Potential Problems: ------------------------------------------------- 12 1.
Problem Justification: ------------------------------------------------------------------------------------- 17 2 CAUSE VALIDATION: ------------------------------------------------------------------------- 20 2. Evaluation of Solutions ------------------------------------------------------------------------- 28 3. ACTION PLAN IN ORGANIZATION ------------------------------------------------------- 32 4. SUPPORTING INFORMATION--------------------------------------------------------------- 35 APPENDIX ----------------------------------------------------------------------------------------------- 36 REFERENCES ------------------------------------------------------------------------------------------- 48 1 TIEU LUAN MOI download : skknchat@gmail.com Executive summary Banking is considered as one of the most intense competitive jobs in Vietnam and on the world.
The thesis is going to explicit what has been happening in the bank, particularly in the sales department in the OCB Cho Lon branch. Actually, according to Churchill et al. (1) salesmen’s role is of central importance to the company and major impact on the success or failure of organizations. Thus, salespeople are those who determine revenue-producing efforts of corporations.
However, sales job is such a kind of job not easy to work these days. Salesmen have to face with a lot of obstacles in their job including target pressure, workload and customer – cares. These things easily make salesmen get burnout and leading to high level of leaving intention. By conducting examination in the OBC Cho Lon branch with sales department, many troubles are found out such as job stress, work-life imbalance, job dissatisfaction and even co- worker conflicts.
With these problems, the finding is investigated through in-depth interviews and real key issues are identified meticulously then. After discovering the source of the root cause – work overload that affects the job stress in the bank, alternative solutions are designed and justified to abolish this hindrance with benefits bringing to the company and estimating how much the firm needs to be suffered. Then, the implementation steps of action plan are also described in details to demonstrate effectiveness of the solution – job redesign that provides salesmen a job satisfaction. 2 TIEU LUAN MOI download : skknchat@gmail.1 Company background: Ocean Commercial Bank (OCB) was established on June 10, 1996; the corporation has nearly 200 trading units in 120 transaction points in all major cities and economic zones in the country.
OCB has affirmed its leading position with more than 5,000 staffs with high level of expertise, modern technology foundation and well-loved brands. Over the years, OCB has experienced double the average growth rate of the industry. The bad debt ratio has always been controlled at a low level, ensuring high and stable operating ratios. OCB, the first Vietnamese bank, has completed a risk management project under Basel II (2017); that was rated by Moody's (one of the three most prestigious credit rating agencies in the world) and ranked B2 - the highest level of commercial banks in Vietnam; and OCB is the first bank in Vietnam having integrated channel, with the Omni Channel (2018).
OCB always maintains to be among top banks in Vietnam and become a global prestigious bank in the near future. Slogan "Belief and Prosperity" affirms that OCB brings value, prosperity to customers, partners, and shareholders; this will create a firm belief and support from customers, partners and shareholders for the Bank's operations. Vision: Become a Leader of multi-functional bank in retail banking and small and medium enterprises in Vietnam. Mission: Create the optimal solutions to bring the highest value to customers and investors, actively contributing to the common development of the community and society by building enthusiasm labor forced, understand the customer needs.
OCB Cho Lon branch Established in June of 2006 with only one transaction office and some employees. At the moment, Cho Lon OCB branch has operated with four transaction offices and over 80 employees. The personnel are divided in four departments including transaction department with 50 employees, sales department containing 24 salespersons, and legal department accounting for 6 members and 1 person with a role of cashier. The OCB Cho Lon known as one of three branches having highest target and annual branch performance accounting for 8% of the corporation.
The key function of the OCB Cho Lon branch offers loan and capital mobilization that are also the same functions as other branches in the company and other of competitive banks. The organization chart of OCB branch and the numbers of employees are showed up in the Figure 1 as below. 3 TIEU LUAN MOI download : skknchat@gmail.com (Sources from OCB Cho Lon branch) Figure 1: OCB Cho Lon branch organization chart With right business strategies, OCB Cho Lon in the previous two years successfully achieved the target of the year performance in such a way of over-expectation. However, the fiscal year 2019 of the OCB Cho Lon branch was ended without good index of performance result.
Because of no target achievement of the year, this directly contributed to the whole organization in term of revenue decrease. The financial statement of the year 2019 is to be analyzed in the Figure 2 as below for demonstration. Financial Statement (vnd bil) 2310 2500 2072 2032,8 1820,4 1850 2000 1480 1464 1500 1200 1305 1500 1132,8 960 1000 500 0 Target Achievement Target Achievement Target Achievement Fiscal year 2017 Fiscal year 2018 Fiscal year 2019 Loan Capital mobilization Source: Human Resource Department of OCB Cho Lon Figure 2. Turnover rate in Sales Department of OCB Cho Lon From the financial statement above, it is easy to recognize that OCB Cho Lon, in the fiscal year 2017 regarding to loan segment, gained 123% over far from the target, and obtained 4 TIEU LUAN MOI download : skknchat@gmail.com 118% for the capital mobilization factor.
In the fiscal year 2018, the branch also achieved 112% over target toward to the loan section and acquired 118% for the capital mobilization element. This is considered as an amazing result for the company in general and for the OCB Cho Lon branch in particular. In the contrast, the fiscal year 2019 was considered as “noticeable year” to be analyzed to explore the reason why OCB could not achieve the expectations and target as expected. The year performance just attained 88% regarding to loan criteria and only 87% for capital mobilization.
By further observation, the result in the fiscal year 2019 was even a little bit lower than the year 2018. Through analyses, the fiscal year 2019 of OCB Cho Lon negatively affected the business performance of the whole company. Furthermore, going through the personnel – especially in the sales department - in the OCB Cho Lon, the voluntary turnover rate is notified with 8 people left the company compared to 4 in the previous year at the percentage double higher. Therefore, this is also a point that needs to be concerned in the research.
From the literature reviews, according to Ampomah and Cubjor (2), the company may be negatively affected on providing services to customer when losing talent or key employees who have a profound impact on organizations. Similarly, Aguinis (3) postulated that if a key performer leaves the company, it likely happens in such a way that a replacement for this position never obtains the same level. Take a look at reality happening in the OCB Cho Lon branch, the deputy branch director shared: “High turnover rate has recently influenced to branch performance. Take a sales team 3 for example, eight salesmen left the company, especially including an elite employee; and as the consequence the team 3 has been staying in the bottom position in results between 3 sales teams in the branch.
Seldom did this happen in some previous years when the team had this person’s service; and he frequency presented in the top 10 bestsellers of the year in the corporation.” In general, employees titled talent are long-term assets of firms, and this was confirmed by Martin and Schmidt (4). Michael et al. (5) published employees are assets of companies, so turnover is a high cost for companies in both tangible and intangible features and affecting to organization’s performance. Additionally, Shaw et al.
(6) advocated, high turnover rate negatively effects workforce performance in term of low profitability levels and harmfully influences financial performance in term of hiring and training costs. Thus, there were many findings mentioned in this section, and Solomon as cited by Sturman et al. (7) established costs that organizations have to be suffered are calculated from 1.5 times of annual salary of laborer. Overall, this can affect organizations’ performance and lead the company to another way if these talent people left the company and worked for competitors in the same industry.
5 TIEU LUAN MOI download : skknchat@gmail.com Therefore, high voluntary turnover rate could be a symptom that needs to be validated, and then the problems need to be identified. Analyzing and diagnosing the problems is essential to be taken place to discover potential causes. Once root cause is identified, the thesis will provide the solutions and implementation plans to improve the company situation.1 Symptoms: The finding is conducted with three groups: Group one consisting of deputy branch director, sales manager and salesmen who are still working for the OCB Cho Lon branch, the second group with salesmen who left the Cho Lon branch already, and the last group including three sales managers in HCM, Ben Thanh and Phu Nhuan branch. Based on the data from Human Resource Department of OCB Cho Lon provided by the deputy branch director, the voluntary turnover rate of salesmen in the fiscal year 2019 is higher than two previous fiscal years.
To clearly demonstrate about this, the table 1 as below shows the result of turnover rate of the OCB Cho Lon branch. Fiscal year Fiscal year Fiscal year Fiscal year Turnover Rate in Sales Department 2017 2018 2019 2020 Average Number of Sales Managers 3 3 3 3 Quit 0 0 0 Turnover Rate 0% 0% 0% Average Number of Salesmen 14 18 21 24 Quit 2 4 8 Turnover Rate 14.1% Source: Human Resource Department of OCB Cho Lon Table 1. Turnover rate in Sales Department of OCB Cho Lon 2019 From the table above, it showed that the turnover rate of Salesmen in the fiscal year (FY) 2019 at 38.1 percent, which significantly higher than the FY 2018 and far over double higher than FY 2017. This means that the voluntary turnover rate is straight upward and no signal of stopping.
In this case, the number of turn overate 38.1 percent seems to illuminate that working in the banking industry is not easy at all. As the matter of the fact, banking is known as a difficult industry for employees to work in, and this can be more demonstrated through the post survey from seminar report of Talentnet-Mercer in October 2018 (8) (Table 2) - the voluntary turnover rate of Banking with 19.6 percent was in the top 2 industries in Vietnam market. Compared to turnover rate in Sales Department of OCB Cho Lon branch in the previous year 6 TIEU LUAN MOI download : skknchat@gmail.com 2018, the data reveals that turnover rate of salesmen in the FY18 is higher than the market’s as well. Post Survey Seminar Report of Talentnet - Mercer shared to participants 1.2 Symptom Validation and Justification: To understand clearly about this, through the interview, deputy branch director in OCB Cho Lon shared: “Salesmen left the job because they could not achieve the target offered by the company that made these employees received unexpected incomes.
Furthermore, with the company’s policy, those who cannot achieve the target offered in three straight months will receive only 80 percent of basic salary. This is also a key factor that laborers quit the job.” He added “In the year 2019, the salespeople quit the job higher than last one; therefore, the company had to recruit others to replace these positions.