UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ THAI QUOC BAO EMPLOYEE DISENGAGEMENT WITH LGC COMPANY MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2019 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ THAI QUOC BAO EMPLOYEE DISENGAGEMENT WITH LGC COMPANY MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Associate Professor NGUYEN THI MAI TRANG Ho Chi Minh City – Year 2019 TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENTS I would like to expressed my thankful to my Supervisor – Associate Professor Nguyen Thi Mai Trang. Without the support and dedicated involvement in every step during the thesis, my thesis would have never been accomplished. I would like to thank you very much for your support and understanding. TIEU LUAN MOI download : skknchat@gmail.com Table of Contents Executive summary.
Total turnover rate. Turnover rate of Manager. Employee Performance Low. Unprofessional working environment.
Lack of career growth. Solution 1: Improving employee professional working skills for more sharing. Solution 2: Motivate employees challenge themselves. 46 1 TIEU LUAN MOI download : skknchat@gmail.com LIST OF ABBREVIATION LGC: LGC financial consulting company limited HR: Human Resource IT: Information Technology Department QC: Quality Control HCMC: Ho Chi Minh City BOD: Board of Director 2 TIEU LUAN MOI download : skknchat@gmail.com LIST OF TABLES Table 1: Total emmployee turnover rate at LGC (Source: LGC's Headcount report).
8 Table 2: Manager turnover rate at LGC (Source: LGC's Headcount report). 9 LIST OF FIGURES Figure 1:LGC Organization Structure (Source: LGC's data).6 Figure 2: Employee Turnover rate in LGC (Source: LGC Headcount Report) .8 Figure 3: The turnover rate of Manager in LGC.9 Figure 4: The cause and effect tree (Source: Author data) .19 3 TIEU LUAN MOI download : skknchat@gmail.com Executive summary As every enterprise around the world admitted that, Human Capital is the most important for each enterprise that can compete with other, can win in the competition and can create more differences compared to others cannot copy. Especially, key position such expertise, manager, director, etc. These employees will bring too many benefits and values to the company.
In general, Human capital is the effective competitive advantage of many enterprises if they spend times and money for it. Many companies in Vietnam do not pay more attention in Human resource, the cause of this is that they thought its waste their time and money. If they want, they can cooperate with expertise or some excellent people and they just pay a little bit higher for these kind of resource, they do not need to spend more for their existing employees. The author agrees with them, but that is not a smart way and that is a short term way for business if they want to growth sustainably in the future.
This way is just suitable for running project in few years – we need their experience to run project to meet deadline and low cost. Because we just hire one to two expertise for each project. And now, studying about LGC for my thesis. The author saw that LGC has been facing a high turnover rate of their employees for few years due to its performance is always low.
The author has using in-depth interview and some kind of literature to analyzed. This study concentrate on what is the main problems, why it happened, how is it important and how it is affect to the company. Furthermore, employees are feeling frustrated and no motivation when they work and never meet target, it means that company will fail in short term. This study will help BOD find out the main cause of the problem and give the best solutions to solve it then push everything run smoothly and drive in the right track not only for decrease the turnover rate but also meet the company target.
4 TIEU LUAN MOI download : skknchat@gmail. About Company LGC is one of subsidiary of Finstar Financial Group. LGC is Financial consulting limited company and it was established in 2015. It was found just few years in Vietnam but their business is very good and continuously developing year by year.
LGC owns doctordong.vn website that is an online lending, it gives the best solution about financial to customers who need to borrow small amount of money but cannot asking from the bank. Realized that, LGC cooperates with its partners to provide small loans in the shortest period and simplest procedures. It business meet the customers need. Customers who just need to do few clicks to register personal information then consultant will contact them within 30 minutes to guide them finish their loans.
If ok, customer loans will be disbursement within 24 hours and their first loan about 1 million to 10 million based on their borrowing history, the second loan will be higher the first one. LGC is always flexible in its operation to satisfy customers, and willing to adapt customer needs if they come to LGC. Everything is transparent and legal at LGC at the beginning. Although most of thing seems to be on the right track and advantage about finance from Finstar Group but LGC Also face lot of challenges from external – competitors and Vietnam law, and many things from internal but the most outstanding is employee turnover rate.
In this thesis, the author will show them the causes and how it affected to the business and development in the future. 5 TIEU LUAN MOI download : skknchat@gmail. Organizational structure LGC located in HCMC and has totally 138 local employees and 17 expats who are working in 8 departments: Human Resource, Quality Control, IT, Collection, Finance and Accounting, Project, Marketing, Operation. The Country director who is responsible for all activities and drive LGC going on the right track and aligned with the head quarter strategy and each division played an important role that supporting country director to expand and growth business in Vietnam.
Country Director Quality Finance and Project (R & HR & Admin Collection IT Operation Marketing Control Accounting D) Field Phone Telesale collection collection Verification Customer service Figure 1:LGC Organization Structure (Source: LGC's data) 6 TIEU LUAN MOI download : skknchat@gmail. Symptoms Identify symptom is the first thing to do when we are going to find the root causes of the problem. Because we will find wrong problem if we cannot distinguish problem and symptom. No symptom means no problem.
Marlon (1) stated that it is significantly important to distinguish the problem and symptom. The author has carefully doing research and interview some head of department and based on data in 2017 -2018. I found symptom that happening at LGC is high turnover rate but in this study I just mention the turnover rate of supervisors, mangers and top levels. This symptom will be analyzed in detail as the following: 2.
Total turnover rate Human Resource is very important to each enterprise, its creating value and bring benefit to company. According to Backer et al. (2) beside other traditional tools like money, technology and so on, human resource is the unique tool which can make the company sustainable growth and creating competitive advantage to cope with rivals but no one can copy. Actually, we can imitate everything but we cannot copy human resource.
It plays an important role in business, that is why there are many survey and research about human resource conducting every year in order to get the insight about HR. The company looks referred to this report to improve its HR system. It will be the advantage if the company has sustainable human resources. High turnover rate means that the company lost its advantage and one of critical tool to compete in the market.
According to Mercer - Talentnet report (3) the average turnover rate in 2016 is 17,8% and 2017 is 10,5% - the highest turnover rate belong to retail sector 32,2% and the lowest turnover rate belong to oil industry 5,3 %. And Anphabe (4) forecasted the turnover rate in 2018 is 20%. And below is the turnover rate of LGC, it shown in table and also in graph as well. 7 TIEU LUAN MOI download : skknchat@gmail.com Year 2016 2017 2018 Total employee 155 149 138 Total resigned 77 66 75 Total turnover rate 50% 44% 54% Table 1: Total employee turnover rate at LGC (Source: LGC's Headcount report) 60% 54% 50% 50% 44% 40% 30% 20% 10% 0% 2016 2017 2018 Figure 2: Employee Turnover rate in LGC (Source: LGC Headcount Report) As we can see the table and the chart above shown that the turnover rate in LGC is very high.
Nearly 50% employee leave LGC each year, total employee also decreased from 155 in 2016 compare to 138 in 2018. The total employee decrease but the turnover rate still increased. Only the year 2017, the turnover rate is 44%, which is a little bit less than two years left but it is also higher than the average turnover rate of thee research above, 44% compared to 10,5 about four times higher. In general, the table and the chart above illustrated that the turn overate rate in LGC is worth to considering.
And if it still happened like that, the company will get into trouble and very difficult to expand business in the future. 8 TIEU LUAN MOI download : skknchat@gmail. Turnover rate of Manager From now on, employees considered as managers. In this study, the author would like to focus more on the turnover percentage of employees, because this is the key persons who are directly execute the company strategy and guiding, motivating their subordinate go ahead to reach the company objectives.
These managers play important roles but the turnover rate is also high. It is shown in the Table and the chart below: Year 2016 2017 2018 Total manager 9 9 11 Total resigned 5 6 9 Turnover rate of manager 56% 67% 82% Table 2: Manager turnover rate at LGC (Source: LGC's Headcount report) 90% 82% 80% 67% 70% 60% 56% 50% 40% 30% 20% 10% 0% 2016 2017 2018 Figure 3: The turnover rate of Manager in LGC (Source: LGC Headcount report management level) 9 TIEU LUAN MOI download : skknchat@gmail.com As we can see the number above shown that the percentage turnover of management level increase year by year. Compared between 2017 to 2016, it increased 11% and 2018 to 2017, it increased 15%. And compared these numbers to the report of Mercer – Talentnet in 2016 is 17,8% and 2017 is 10,5%, the turnover rate of LGC in 2016 and 2017 is 56% and 67%.
These numbers shown that, the Human capital at LGC is a big concern for management. In 2018, there are nine managers who has left and only two remained, manager is a level which is rarely quit their job but why there are many managers leaving their work? The management who must to find out and solve this issue thoroughly if they want to grow in the future. Based on the information shown above, it demonstrated that the wave of resignation is happening at LGC. With the very high turnover rate of manger, it is a great symptom that must be solved immediately if LGC wants its business grow as its expectation.
Potential problems Based on in-depth interview and the turnover rate that analyzed above, there are some potential problems listed as the following: 3. Employee disengagement We can see all information above that illustrated that the percentage of employee turnover rate at LGC is very high and increased every year. Through in depth interview with employees, I would like to show some results as follows: Through the interview with Mr. Tung – Chief Financial Officer stated that The reason for leaving their job is dissatisfaction due to low motivation, not commitment and they do not have chance to improve themselves.