UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ---------------------------------- Nguyen Ho Thanh An HIGH TURNOVER RATE AND JOB STRESS OF SALESMAN IN ORIENT COMMERCIAL BANK MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City, Year 2018 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ---------------------------------- Nguyen Ho Thanh An HIGH TURNOVER RATE AND JOB STRESS OF SALESMAN IN ORIENT COMMERCIAL BANK MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: PROF. NGUYEN THI MAI TRANG Ho Chi Minh City, Year 2018 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Executive Summary Banking industry has been witnessing a lot of growth, improving on its technological and global competition within banks. With the strategy to expand the market, OCB has a plan to establish more than 20 branches and agencies throughout Vietnam from 2017-2020, it create the need of a huge human resource to run this business plan. However, the turnover rate of OCB has been continuously growing by recent years.
The objective of this research is to find out what problems are affecting OCB employee retention and making high turnover rate over recent years. Using secondary data from the HR department and primary data from in-depth interviews with two groups of interviewees who are the current employees and ex-employees who quit job at OCB, the research found out that the job stress is the central business problem that leads to the high turnover rate. Next, in deeper analysis about potential causes of the problem, it is found that work overload, and work-life imbalance or work-family conflict are root causes leading to job stress. Forwards, the paper suggests that the alternatives which is mixed combination of the redesign and apply the new model to put the right person into right function in sales team are proposed to reduce the job stress of OCB salesman.
Finally, the action plan with detailed steps was presented to implement this solution. 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Acknowledgements I would like to acknowledge all people who supported me during my studies. First, I would like to thank my supervisor – Professor Nguyen Thi Mai Trang for all her advice and guidance, without her help this could not have been possible. Then, I also would like to show my gratitude to my manager, my colleagues at OCB who gave me chance to conduct the research and spent time on interviews with me to come up the result of this thesis.
I also send my sincere thankfulness to my parents and friends for their support and encouragement. 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS 1 PROBLEM IDENTIFICATION .2 Company Vision, Mission and Core Value .1 Problem symptoms – Turnover rate status in OCB .2 Justify the consequences of the selected symptoms that lead to further investigation .3 Potential problems and justify the main problem .1 Income dissatisfaction and high turnover rate .2 Lack of career development opportunity and high turnover rate .3 Job stress and high turnover rate .4 Initial Cause and Effect map: .1 Potential causes of problem and justification – The factors cause job stress .2 Work family conflict/ work-life imbalance .2 Cause and Effect Map: .1 The first alternative solution: Redesign job to enhance specializations and place the employees in appropriate job .2 The second alternative solution: increase training, coaching and sharing in workplace.3 Justification and select the solution:.29 Detailed action plan.1 Group 1: Manager/ staff/ saleman who are currently working at Company OCB .2 Group 2: Salemans who already left OCB Company.37 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.2 SUMMARY OF TRANSCRIPTS .1 Group 1: Manager/ staff/ saleman who are currently working at Company OCB .38 First session: To find the problem in OCB.38 Second session: To find the solution .2 Group 2: Salemans who already left OCB Company.68 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 1: OCB structure - From OCB Annual Report 2016 .9 Figure 2:Cause and Effect Map .21 LIST OF TABLES Table 1: Yearly turnover rate in OCB .9 Table 3: Yearly turnover rate in OCB, break down in each group .10 Table 4: Change in recruitment cost and training cost .11 Table 6: Budget to conduct the first solution .24 Table 7: Budget to conduct the second solution .27 7 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 1 PROBLEM IDENTIFICATION 1.1 Company history Established on June 10, 1996 in Ho Chi Minh City, Orient commercial joint stock bank (OCB) is providing the financial services for corporation and retail, there are three main segments: Big Enterprises, SMEs and Individual customers. Nowadays, OCB has nearly 200 business units in 120 transaction points nationwide with around 5000 employees, and presented in all major cities and economic zones in the Vietnam. Over the years, OCB has experienced double the average growth rate of the industry, The bad debt rate has always been controlled at the low level, ensuring the high and stable operating ratios (1).
In 2017, total assets of OCB reached 84,353 billion, up 32. Notably, pre-tax profit reached 1.018 billion; NPLs was controlled at 1. At the same year, OCB accomplished the Basel II – risk management project and OCB got ranking B2 by Moody’s (one of the three most prestigious credit rating agencies in the world) – the highest level of commercial banks in Vietnam.2 Company Vision, Mission and Core Value Vision: Become a top commercial bank in financial service for retail and small - medium enterprises (SMEs) in Vietnam. Mission: Create the effective financial solutions to bring the highest value to customers and investors, contribute positively to the development of community and society by building enthusiastic and customer-oriented workforce.
Friendliness 8 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.3 Company structure Figure 1: OCB structure - From OCB Annual Report 2016 Notes: *: there are some sub – internal complex departments inside.1 Problem symptoms – Turnover rate status in OCB In the period of 2017-2020, OCB targets to increase the average scale from 30 to 40% per year. With the strategy to expand the market, OCB has a plan to establish more than 20 branches and agencies throughout Vietnam from 2017-2020, it create the need of a huge human resource to run this business plan. However, the turnover rate of OCB, is higher than the industry average which is 16.8% in 2014 (Compared with industry average turnover rate is around 13.6% for Banking and finance sector - Tower Watson (3) ) and it has been increasing in next three years from 2015 – 2017 as the table below. Table 1: Yearly turnover rate in OCB Year 2014 2015 2016 2017 Turnover rate 16,8% 17,2% 18.1% Source: Statistic of HR Department OCB from 2014-2017 9 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.2 Justify the consequences of the selected symptoms that lead to further investigation Although the turnover rate of all departments are quite high, turnover rate of salesman is chosen as the objective of the problem identification due to some reasons: First, in branches, the turnover rate of salesman is the highest with 20%.
Second, the percentage of salesman among OCB employee is about 65% with over 3000 salesman in 2016 and it takes the highest portion. Last but not least, if the turnover rate of salesman continue to increase, it increases recruitment and training cost for new salesman, it takes time for new employees are recruited and overcome the probation, so there might be not enough employees for the expanding strategy. Therefore, it is harmful for the company to achieve the sale goal in following years and the expanding strategy of OCB if the turnover rate of salesman is till high. As can be seen from the statistics of HR department, the turnover rate of OCB is so high in both head office and branches, especially in sales department.
Table 2: Yearly turnover rate in OCB, break down in each group Average number of Number of Leave- job Ratio employee employee Head Office 812 136 16.3% Head of department 59 10 16.9% Source: Statistic of HR Department OCB in 2016 Talking about the seriousness of this issue, Mrs. A – Deputy of HR manager stated that: “OCB has faced the problems related to high turnover rate of staffs. The turnover rate is very high compare to industry average rate is 15. Company could not recruit more staff quickly to be in charge of new jobs.” 10 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com The recruitment cost and training cost for new salesman are estimated to rise a lot in 2017.
Table 3: Change in recruitment cost and training cost Increasing Year 2016 2017 percentage of cost * Employee number of 5 employees 15 employees 300% Recruitment team for sale Employee number of 7 employees 12 employees 172% Training center Number of Training course 154 basic courses 306 basis courses 198% for new salesman for new salesman Source: HR fluctuation report and training report In the next part, the problem identification will be discussed and investigated.3 Potential problems and justify the main problem It is important to figure out the reasons for high turnover rate of salesman in OCB and its consequences. In addition, to investigate the causes lead to high turnover rate in salesman, 3 in-depth interview sessions are conducted with two main objective interviewee groups (first group: managers/supervisors/workers who are currently working in OCB, second group: workers who already left OCB). From results of in-depth interview, it can be seen there are a variety of view about some groups of factors lead to high turnover rate. However, there are three potential problems are suggested are income dissatisfaction, lack of career development opportunity and job stress.1 Income dissatisfaction and high turnover rate Regarding to income, Carraher SM (4) showed that there is a relationship between pay satisfaction and turnover.
To retain employees, the company needs to make better salary policy than what competitor’s offers. From in-depth interviews, it is found that the income dissatisfaction exists in OCB, however manager of OCB and staffs (included still working and leaving OCB) have some different views about the C&B policy and income of salesman in OCB. While employees said that people who have low performance or who are young with less customer relationship cannot stand with this salary policy. 11 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.
D – Employee who left and change the job, also gave some opinions: “The salary does not increase but the target increases quickly. Wages based on the level of completion of business targets, so if anyone cannot meet the sale target, the salary is low, even not enough for living cost.” Whereas most of high and middle manager point out that the C&B policy and income are reasonable because the performance-based salary for salesman will be the motivation factor to push the sale and revenue of OCB. In addition, they have also claimed the efficiency of this policy in increasing the productivity in business. A- Deputy of HR manager of OCB stated that: “It is clear that the C&B policy in which income increase parallel with KPI increase is the key success of business organization.
C – Sale manager of South area of OCB said that: “I think the C&B policy for salemans is acceptable because it increases along with the KPI employee achieve. Now OCB has been changing the incentive policy in which employee get over KPI will get the attractive bonus, so I think it is acceptable.” Because the range of salary is confidential, I could not ask more information to compare with other bank range outside. Additionally, the conflict in view between two sides who are managers and who are employees in OCB and the salary issue need more time to investigate. Therefore, it will be discussed more but not in this report.