UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business TO NGUYEN QUYNH TRANG SOLUTIONS FOR LOW COMPENSATION OF TECHNICIAN TEAM IN PRESTIGE SPORTS CARS COMPANY MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2018 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business TO NGUYEN QUYNH TRANG SOLUTIONS FOR LOW COMPENSATION OF TECHNICIAN TEAM IN PRESTIGE SPORTS CARS COMPANY MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: PHAN THI MINH THU Ho Chi Minh City – Year 2018 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Contents Executive Summary. 1 Chapter 1: Background Information. The High Turnover Rate. Decrease of Productivity Index and ASI Index.
The Fluctuation of total After Sale’s Revenue. 9 Chapter 2: Problem Identification. Identifying and Diagnosing Tentative Problems. The first tentative problem: Excessive workload.
The second tentative problem: Low compensation for technician team. The third tentative problem: Ineffective leadership. Central problem: Low compensation for technician team. Causes and possible solutions.
Analyzing causes of the problem. Potential causes of the problem. Main causes of the problem. Choosing the most suitable set solution for company.
Action plan for set solution 1. 47 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. 58 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Executive Summary Recently, Prestige Sports Car Company Limited - an official distributor of Porsche cars in Vietnam, is facing with some serious issues, in which the high turn overate of technician team is the most significant issue. Since technician team play an essential role in company operation, this issue will surely lead to some negative results with company.
And the most noticeable signal is the increase of the training and recruitment cost for technician team along with the decrease of after sale’s department revenue. Therefore, this thesis will focus to analyze these issues with technician team and figure out what is the main problem of these things through the data from company and from some qualitative research. Not only that, this thesis will evaluate and raise the most suitable solution as well as detail actions plan for solving problem. And as finding from the research, the main problem lead to the high turn overate of technician team is the low compensation of company.
Through the depth interview with technician team, it is found that the base salary of company is low compare to other competitors in the market. Not only that, the performance bonus with the benefit package is not really attractive. Therefore, many technician of company feel disappointed and they decide to leave. And through qualitative research as well as theories, it can be stated that this problem does exist due to the limited pay structure, the expense control of company and the subjective evaluation of manager.
Hence, it is suggested that company should design a new compensation plan by creating a new base salary range, keeping the same performance bonus and increasing benefits for employees. The cost for applying this set solution is high, but the return benefit will help improve company performance, surely. 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Chapter 1: Background Information 1. Company Background Prestige Sports Cars Co., Ltd ( herein call “PSCL”) is the official Porsche Distributor in Vietnam with currently two branches in Vietnam, located in Ho Chi Minh City and Ha Noi City.
The entire model range of Porsche can be named as the 911 – an exclusive sport car, the Boxster, the Cayman as well as some famous SUV cars for family purposes like Cayenne or Macan. And the thing that makes Porsche so special and different from other cars company in the world is the sportiness and the designation of the car. With Porsche, customers have their right to choose in the variety option to make their car unique and outstanding. Not only that, Company also offers one of the highest quality cars in the world along with the excellent safety equipment for customers.
In Vietnam, Porsche has been well established firstly in Ho Chi Minh City since 2007. And five year later, another center has been set in Ha Noi. Both outlet center has been working quiet effective and bring to Vietnam customers this excellent cars. For both outlets, total 97 employees have been working in.
There are five departments in PSCL: Sales, After Sales, Marketing, HR & Admin and Finance; in which After Sales is the department with highest number of employees: 44 employees. Please refer to below figure 1 for more information about the organizational chart of After Sales department. In After Sales department, there are 30 technicians, 8 service advisors, 3 service executive, two workshop foremen and one manager. The responsibility of the whole department is to keep the service process smoothly and to ensure the quality of each car bought by customers.
In which, the service advisor team will schedule the repair appointments considering workshop capacities and control the quality of serviced vehicles while technician teams will repair and maintain cars in accordance with manufacturer’s procedures and diagnosis guidelines. 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com After Sale manager Workshop Service advisor foremance Service Technnician Executive Figure 1: Organizational chart of After Sales department Hence, it can be said that After Sales department plays an essential role in company working operation and every small effect from this department will lead to significant result for company. In After Sales department, technician staffs achieve the highest percentage with 68%, which means almost jobs will be done by technician team. Therefore, this essay will discuss on the problems that After Sales, especial technician team, have been facing in recent years and create the detailed action plan to improve the problem.
Company Symptoms It can be seen that After Sales team have been struggling with one of the hardest time since many symptoms have been proved as below. The High Turnover Rate. The most significant important symptom that needs to mention here is the turnover rate of technician team in recent year. Since technician team plays an essential role in company operation, it is no doubt to say the high turnover rate will lead to significant negative impact to the whole company.
3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com To figure out if the turnover rate is high or not, normally, it need to be compared with the average industry. Unfortunately, it is extremely difficult to have this data in Vietnam market since there are no research company provided this information. Therefore, the turnover rate of technician team will be put in comparison with other departments of company. And below Figure 2 will demonstrate the turnover rate of technician team as well as the turnover rate of the whole company for the period from 2015 to 2017.00 2015 2016 2017 Figure 2: The turnover rate of technician team and the whole company from 2015 to 2017 Source: Data of HR team The line chart compares the turn overate of technician team and the whole company.
It can be seen that the turnover rate of technician team significantly increased, whereas the opposite was true of the figures for the whole company from 2015 to 2017. The signal can be seen here is that the ratio of technician team increases dramatically from 8.65% in 2017 while this ratio of the company decreases slightly from 4. This symptom needs to be considered carefully to figure out the main reason lead to that result. And when employees resign from company, the cost for new recruitment will increase because HR team needs to find more candidates for the vacancies.
Therefore, company has to pay money to advertise the vacancy and may incur costs related to finding the 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com new vacancies. Not only that, high turnover rate also costs company time in addition to money. Managers or HR team have to spend time to conduct interviews, advertise the job and recruit candidates. Moreover, their colleagues have to cover their job until a new employee is hired and begins working.
When new employees start their job in company, they also need to be trained to perform their jobs completely. The new employee may take several months to fully learn the job and achieve competency in the position. Hence, the cost for replacement training will increase. Therefore, company will face with serious problem if the turnover rate of company is high.
Firstly, the recruitment cost of team will surely increase along with the high turnover rate. The recruitment cost in company will be calculated here as only advertising fee for the vacancies. The below figure 3 will demonstrate the recruitment cost for technician team and other departments in company for giving research period. From 2015 to 2017, there are a dramatically increase in the recruitment cost for technician team, from 124.8 million Vietnamese dongs into 185.6 million Vietnamese dongs, nearly 48.
In the opposite, the amount spent on other departments gradually decline.6 Unit: Million Dongs Figure 3: The recruitment cost of technician team and other departments from 2015 to 2017 Source: Data of HR team 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Secondly, the replacement training fee also incurs for guiding the new technician how to repair and fix one Porsche car following the typical standard of company. Normally, it took from six months to one year to train one technician to perform jobs completely. The length of time will be depended on the existed experience of the technician and the ability to learn the new things of them. Through that time, company has to pay money not only for outside and inside training but also for foreign training.
Technician will be sent to training centers in Penang and Singapore to learn the Porsche procedures. Therefore, the cost training arrangement like transportation and accommodation will be high, along with the cost for hiring professional trainer to hold a class. The below figure 4 will illustrate the training cost for technician team in the period three years from 2015 to 2017. This data is calculated based on data from HR team.
1,200,000,000 1,123,245,144 1,000,000,000 929,089,095 800,000,000 708,138,783 600,000,000 400,000,000 200,000,000 - 1 2 3 Figure 4: The training cost of technician team from 2015 to 2017 Source: Data of HR team It can be seen that the training cost increase dramatically from 2015 to 2017. It can be explained by the high number of resigned employees of the team. Therefore, the issue of high turnover rate should be concerned carefully by the management. If not, it will lead to some negative results for company, in which the total cost of company will have impact firstly because of the increasing of recruitment 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com cost and replacement cost as above stipulated.
As a result, the profit of company will be decreased, surely. Decrease of Productivity Index and ASI Index Productivity Index. In After Sales team, each technician will have a computer that records their working schedule for each car. When they start to fix the car, the computer will count the time until that car is completely ready to transfer customers.
Every small item will be calculated to identify the percentage to perform the job for all technicians. And at the end of the month, each technician will receive the average productivity index and then their bonus will be calculated based on their ranking. The formula for calculating the productivity index is as below: Productive time Productivity (%) = *100 Attended working time In which, productive time is the time clocked onto job cards. The attended time includes idle time, but excludes clocking time for other tasks than repair jobs (“Workshop” clocking).
The productivity calculation data is recorded and monitored via the Employee Project Clock Program system.