UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ PHAN THUY LOAN LOW ENGAGEMENT OF PRODUCTION TEAM IN KIMBERLY CLARK VIETNAM MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DR. TRAN PHUONG THAO Ho Chi Minh City – Year 2018 TIEU LUAN MOI download : skknchat@gmail.com Table of Contents List of acronyms. 2 List of Figures. 3 List of Tables.
3 CHAPTER 1: PROBLEM IDENTIFICATION .1 Industrial overview and Company overview .3 Initial Cause-effect map .2 Ineffective recruitment process .3 Low employee engagement. 21 CHAPTER 2: SUGGESTED SOLUTION. 28 Team Leader Relations .1 Apply evaluation process for the payment structure .2 Apply Market-based compensation system for the payment structure.3 Action plan in an organization. 44 CHAPTER 3: SUPPORTING INFORMATION.
60 1 TIEU LUAN MOI download : skknchat@gmail.com List of acronyms KC: Kimberly Clark KCV: Kimberly Clark Viet Nam FMCG: Fast moving consumer goods EHS: Environment, Health and Safety IT: Information Technology HR: Human Resource OT: Ovetime Fav: Favorite Unfav: Unfavorite KPIs: Key performance indicators BD: Binh Duong OP: production operator Lead OP: Lead production operator IDP: Individual development plan ISO: International Organization for Standardization JD: Job description ETQ: Excellence through quality JEC: Job Evaluation Committee PR: Purchase requisition PO: Purchase Order JERF: Job Evaluation Review Form C&B: Compensation and benefit SAP: Systems, Applications and Products in Data Processing 2 TIEU LUAN MOI download : skknchat@gmail.com List of Figures Figure 1: FMCG growth nationwide in quarter 1/2018 (Source: Market Pulse Report Q1/2018- Nielsen). 5 Figure 2: Structure of Kimberly Clark Viet Nam. 7 Figure 3: Number of leaving staff in person (Source: Human Resource Department). 8 Figure 4: Number of leaving staff in percentage (Source: Human Resource Department).
9 Figure 5: Average Voluntary Attrition Rate 2016-2017. 10 Figure 6: Initial cause and effect map. 18 Figure 7: Number of leaving staff by experience (Source: Human Resource Department). 20 Figure 8: Overtime reasons Jan-Jun 2018 (Source: Human resource department).
22 Figure 9: Performance of machines (first 6 months in 2018). 24 Figure 10: Waste of machines (first 6 months in 2018). 24 Figure 11: Updated cause and effect map. 25 Figure 12: The result of an employee engagement survey in 2017.
26 Figure 13: Fish bone map. 31 Figure 14: Final map. 32 Figure 15: Market-based compensation process. 43 Figure 16: Summary of manager's perspective.
58 Figure 17: Summary of the leader's perspective. 58 Figure 18: Summary of employees’ perspective. 58 List of Tables Table 1: Voluntary/ Involuntary turnover ratio in 2016-2018 (first 6 months). 10 Table 2: Turnover ratio by department 2017-2018 (first 6 months).
11 Table 3: Turnover ratio by position 2016-2018 (first 6 months). 12 Table 4: Working experience at KC of leaving staff in 2016-2018 (first 6 months). 13 Table 5: Performance at KC of leaving staff 2017-2018 (first 6 months). 14 Table 6: Average Overtime per person Jan-Jun 2018 in percentage.
22 Table 7: Hiring cost in 2018 (Source: Human resource department). 23 Table 8: List of promotion of production (Source: Human Resource Department). 28 Table 9: summary of two solutions. 44 3 TIEU LUAN MOI download : skknchat@gmail.com EXECUTIVE SUMMARY Human is an important asset in the organization in general and production operators are the heart of manufacturing.
Production operators are direct labor who participate in the process to make product and account for more than 50 percentage headcount of the mill. In 2018, the turn-over rate is increasing sharply and 85% falls into production team. The high turnover rate in this group has a negative effect such as low skill workers, high demand for training, high overtime payment and high hiring-cost which is around more than 10 million VND each new comer. Attracting people is hard but retaining talent is harder things.
The turnover ratio or attrition rate is one of the most essential ratios to show how the efficiency of manage people of the company. The higher turnover rate the higher risk in the organization. The main purpose of the thesis is to explore the causes of the high turnover rate of production operator in Kimberly Clark Viet Nam. The thesis using theory-informed to group possible problem based on interviews and theory- confirmed combined with depth-interview to figure out the main problem.
The finding of the thesis revealed that salary package is not attractive and it is one of factor of employee engagement. The solution for this is “Apply Market-based compensation system for the payment structure” to see that as if the salary for production team is competitive or not. 4 TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 1: PROBLEM IDENTIFICATION 1.1 Industrial overview and Company overview Industrial overview According to Market Pulse Report Survey quarter 1/2018 released by Nielsen Viet Nam- a global measurement and data company, fast moving consumer goods in traditional trade drop down significantly to -1% and modern trade drop to 2. According to the Recruitment market overview 2017 released by Faro- an international staffing solutions company, manufacturing takes lead in recruitment with 82%.
In addition, we should understand the “vicious circle” of labor turnover. When turnover increase, it start circle process include decreasing average length of service, entry standards are relaxed cause deadline of recruitment, spending a lot of time to search candidates, losing a caring current employee and they start to leave due to isolation from leader or manager and turnover keep increasing (3). Overall, the market is slowing down and FMCG companies jump to a fierce battle to gain market share and high demand in recruitment will be one of the hard things for enterprises in general for Kimberly Clark Viet Nam in specific. Figure 1: FMCG growth nationwide in quarter 1/2018 (Source: Market Pulse Report Q1/2018-Nielsen) 5 TIEU LUAN MOI download : skknchat@gmail.com Company overview Kimberly Clark Corporation (KC) was established in 1872, the United State.
Nowadays, KC’s headquartered is in Texas, USA and are proud that nearly one-quarter of the World’s population use our products every day. We have a number 1 or number 2 position in more than 80 countries and there are 175 countries where our leading brands are sold. With the mission that is to create new value for our customers through products and services of superior quality, and to contribute towards a better and more sustainable world. Kimberly Clark Viet Nam has established in 2000 with three distributions in South, Middle of Viet Nam and North.
From this, KC product can reach out to every family through Viet Nam. Consumer brands: • Feminine Care: Kotex. Kotex is one of the leading Vietnam brands within the feminine hygiene category. • Baby child care: Huggies.
Huggies nappies and related products are developed and manufactured with the best quality. Industry: Fast moving consumer goods industry Competitors: The main competitor is Unicharm Company with Diana and Bobby branch. Kimberly Clark Viet Nam structure Kimberly Clark Viet Nam has two sites which are head office and mill. There are six departments with more than 200 employees in head office such as Sales Department, Finance Department, Marketing Department, Customer Supply Chain Department, Procurement Department, and Human Resource + IT Department.
There are five departments with more than 400 employees in a mill such as the Production Department, Engineering Department, Quality Department, Logistics Department and Environment, Health and Safety (EHS) Department. Head office and Binh Duong mill have separately key performance indicator. In this research, we only focus on the Binh Duong mill. 6 TIEU LUAN MOI download : skknchat@gmail.com Sales Department Finance Department Marketing Department Head office Customer Supply Chain Department Procurement Department HR + IT Kimberly Clark Viet Nam Production Department Engineering Department Binh Duong Quality Department Mill Logistics Department EHS Department Figure 2: Structure of Kimberly Clark Viet Nam (Source: Human Resource Department) 1.1 Symptoms In the year-end party which organized at Adora convention center (198 Hoang Van Thu Street, Ward 9, Phu Nhuan District) in 1st December 2017, Mr.
Praneeth Yendamuri, Managing Director of KCV said in the opening of the party: “In Vietnam, as one of the leaders in the categories we play in – over the years, Kimberly Clark Viet Nam has ensured millions of babies are kept comfortable and thrive through our Huggies brand and similarly millions of women are ensured of superior comfortable protection for their feminine intimate care needs through our Kotex brand. Moreover, Viet Nam has many competitive advantages and one of that is the workforce with high skill. So that there is no reason to stop us to be the pride of Asia. Together, we will make it comes true.” To achieve that vision, KCV needs to focus on people, operation, and working environment.
And the most important thing is about human. Based on turnover data provided by Tran Xuan Binh- Human Resource Manager in the weekly meeting which organized with attendance of function head such as Production Department, Engineering 7 TIEU LUAN MOI download : skknchat@gmail.com Department, Logistics Department, Quality Department at Binh Duong Mill every Monday of March, he raised concern related to turnover rate keep going up and need support from other head of department to talk with their team member to figure out problem. Yet all managers did not set priority on that because they still have other key performance indicators need to deliver. In the other hands, they might think that the trend is always high after Tet is a normal thing.
And the number is increasing next two month raise big concern from Mill manager- Mr. Duong Minh Hoai. This is a big issue related to the workforce. He stated in that meeting: “The turnover rate is increasing sharply over months, especially in production.
It impacts strongly on the mill performance and we are losing talent. HR and all function heads need to figure out reasons and take action as soon as possible to avoid impact to the business.” According to data provided by the HR department at the end of June 2018, turn-over rate has been increasing sharply in the quarter I of 2018 (Figure 3). It was nearly double the number of last year from 16 to 30 persons resigned. The rate has a continuous increase in the next quarter with 36 persons resigned and still higher than the same period last year.
The total leaving employees in 6 first month of 2018 is nearly equal to the amount of total turnover number of 2017 (66/72). The number is unusual and need to be focused on by the management team. Leaving staff in number 40 36 35 30 30 24 25 21 20 16 15 11 10 5 0 quarter I quarter II quarter III quarter IV 2017 leaving staff (person) 2018 leaving staff (person) (first 6 months) Figure 3: Number of leaving staff in person (Source: Human Resource Department) 8 TIEU LUAN MOI download : skknchat@gmail.com The chart below (Figure 4) is about leaving staff in percentage. It makes data easier to understand.
The number of turnovers will be used to divide the total number of employees which are 426 to get the percentage. The target of turnover rate in 2018 is 13% but the number hits to 7% in the only quarter I 2018 and 8% in quarter II 2018. It means the turnover target fails with 15% in June 2018. High turn-over will be a big problem of human resources in efficiency.
In the quarterly meeting, the management team requires to find reasons and action plans to reduce the ratio of turn-over. Leaving staf in percentage 10% 8% 8% 7% 6% 6% 5% 4% 4% 3% 2% 0% quarter I quarter II quarter III quarter IV 2017 leaving staff (%) 2018 leaving staff (%) (first 6 months) Figure 4: Number of leaving staff in percentage (Source: Human Resource Department) To ensure that it is the issue happened in the company not the problem of the industry, it necessary to compare data with numbers of consumer goods industry.