UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ TRẦN THỊ MỸ YẾN HIGH TURNOVER RATE OF PETROVIETNAM IN MALAYSIA PROJECT 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 ------------------------------ TRẦN THỊ MỸ YẾN HIGH TURNOVER RATE OF PETROVIETNAM IN MALAYSIA PROJECT MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: LÊ THỊ THANH XUÂN Ho Chi Minh City – Year 2018 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT This thesis study high turnover rate in purchasing department of PVE, its reasons and its effect on company’s performance. Turnover rate is more and more considered as an important factor to any business. In depth interview was used to collect and analyze data of the study. From the result of interviews, high turnover rate really exists in the company. The three consequences of high turnover rate are productivity loss, delay of schedule, and turnover intention. Job satisfaction in terms of pay and organizational commitment in terms of affective commitment were found to have negative relationship with high turnover rate. This study also provides solutions and implementation plans for PVE to reduce turnover rate and increase its performance. Company Profile Background Petrovietnam Investment Consultancy and Design JSC (PVE) was set up from the equalization of State-owned Petroleum Investment Consultant Company (PVICC). April 10, 1998 from the equalization of State Owned Enterprise. Vietnam Petroleum Corporation (Petrovietnam). In 2005, Petro Vietnam Engineering (PVE) turned into a Joint Stock Company. Also, in 2011, hierarchical structure is exchanged to Mother - Mother Subsidiary. The oil and gas industry are a key industry in the nation, with potential for improvement in the coming years. PetroVietnam's technique keeps on connecting with global markets, open doors for PVE to infiltrate remote markets through PVN's tasks. Right now, PVE has been allotted by Petro Vietnam to do numerous significant activities in the business. Particularly, after the consummation of the change into the parent-backup demonstrate, PVE reinforced its situation in the non-oil fields. It working in wander and building consultancy for oil and gas, civil and industrial projects. 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Key business activities: Consulting on topographic survey, geological survey, current status survey, NDT test and technical services for offshore and offshore oil and gas, deep-water projects and other industrial projects. Consultancy on management of construction investment projects, supervision of projects belonging to the group or units of the Group, including projects on oil and gas, biofuels and other specialized projects. Implementing EPC services, providing project management and supervisory services in upstream and downstream oil and gas and other industrial projects; Providing consulting services on geological topography and non-destructive inspection and testing for industrial and petroleum projects’ Organization PVE’s mission PV Engineering's mission is to become the number one corporation in Vietnam and one of the leading companies in the region, providing high quality services at competitive prices to meet the needs of all customers. Inside and outside Petro Vietnam. 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Problem Analysis Problem context In 2015, PVE become sub-contractor of TECHNICAS in RAPID project in Malaysia with contract value over 51 million USD in 4 packages: SMP, E & I, Painting, Fire Proofing, Civil. The RAPID project is one of the largest scale refinery projects in the world. This petrochemical refinery has a capacity of 300,000 barrels per day and supplies naphtha and gas to petrochemical complexes and produces petrol and oil according to European standards. Petrochemicals to increase the value of olefins from water separation towers and the production of commercial petrochemical products including propane, polyethylene, synthetic rubber. In the domestic market, PVE has relatively few competitors, mainly foreign ones. Therefore, the expansion of the Malaysian market will be an opportunity for PVE to improve its capacity as well as its position.In order to serve the project implementation, PV Engineering has the need of recruiting 250 engineers and 500 workers who have experience and project ad speak English fluently from difference position to work through recruitment website and newspaper. In the first time of project, PVE try to recruit the local worker but the salary is quite high and they did not hard working if compare with Vietnamese worker. After that, PVE - human resource change the plan to recruit Vietnamese engineer and worker to save money and achieve better results. - Working condition: + The working time starts from 7:30 am to 10 pm, from Monday to Saturday. + Transportation: From the living place to job site take 40 minutes by bus. - Compensation: The Company will pay for food, house allowance and ticket back to Vietnam every six months working. Benefit: one-month salary for bonus every end of Year if working above 1 year. - Living condition: + Accommodation: The Company rents the staff for a 40 'ride to the site 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com + Water: In Johor Bahru, fresh water is very scarce and the dormitory which PVE rent did not have tap water. Every day, the company will buy water from supplier to use. Sometime per week, water for living is not enough. Two-day bath time is very common. + Food: Malaysia is a Muslim country, so only the Chinese markets have food such as in Vietnam. The main food is chicken and beef, very rare green vegetables. + Entertainment: On Sunday, staff can take ferry to Singapore, take bus to central city for coffee, shopping or stay at dormitory to play football, volley ball. - Insurance: Employees will be insured under Vietnamese law - Recruitment expense: Item 2015 2016 2017 Expense (USD) 131,579 186,886 158,721 Percentage (%) 26.14% Number of employment recruit to replace 203 287 243 Recruitment expense (USD/ person) 648.17 This is the first project that PVE has executed abroad; hence, PVE can’t avoid problems relating to culture, working routine, communication among engineers, workers from many countries. - Number of resigned employee from 2015 to 2017 2015 2016 2017 Jan 0 6 7 Feb 0 15 18 Mar 0 13 10 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Apr 0 12 11 May 0 9 13 Jun 0 11 7 Jul 0 8 12 Aug 0 15 11 Sept 2 7 9 Oct 1 8 15 Nov 8 6 8 Dec 7 5 9 Total resigned employee 18 115 130 Total employee 180 550 590 % 10% 21% 22% - Project status Complete % Contract date as Estimate complete Value Start contract time until (million Package Description date signed complete now usd) Civil & Building Package 3 works and SMP Jul-15 Mar-18 Jun-18 87% 46 Electro Mechanical Package 3 works Jul-15 Jun-18 Nov-18 75% 24 Package 11 Civil - Building 11 Apr-16 Aug-18 Jan-19 82.17% 17 Package 6A SMP Jul-16 Sep-18 Aug-19 57% 12 Based on the progress of the project, we can see that the project implementation time is slower than the time stipulated in the contract signed. 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com In Aug, 2017, PVE was invited to bid for two packages of 13 and 14 with a value around of 46 million USD. However, due to high bidding prices and unpredictable progress from the previous contracts, PVE have been missed these packages. There are many reasons for delaying the progress, but one of the main reasons that PVE has to deal with is the shortage of human resources and staff turnover. The extension of the construction period compared to the original contract affects many parties involved in the project such as: Owner, design consultant, monitoring consultant, contractor construction. Delayed progress reduces the credibility of the investment decision, for the investor. The contractor have to increase costs, reduce the profitability of the project, reduce prestige and brand company. To avoid this situation in future, we go to analysis symptom to know that why high turnover rate quite high and what should we do to improve it.Symptoms analysis To justify the existence and importance of problem why high turnover rate high, the first interview was conducted with Human Resource Manager and 04 staffs who have leave and certain information about the issue to get their perceptions of the existence and effect of this issue in the organization. From Interview with leave staff It is easy to see that when an employee resigns, they never say their true reason. There are dozens of reasons given by employees, such as: feeling inadequate, inadequacy of job capacity, inadequacy of job requirements, inadequate culture / school of the company. There are also very personal reasons such as getting married, wanting to go to school, wanting to quit work at home to take care of children, houses . All of these are benign and do not offend people, but for human resource management, we need to know the real reason to keep employees in the company. The reasons above may be true, may be wrong for each person but it seems to have become some of the sample and "available to use" for employees looking to find another position. 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com In the meantime, the reason for the actual shift and could be difficult to say such as inadequate wages, inadequate corporate policies, or simply discord with a colleague in the company. It may be because of your behavior: favoring one person over another, overemphasizing someone and having "shady" actions such as having a very private meeting with a member of a company / A group that other people in the same department cannot understand is happening or is there a new project or job? After conducting the interview with the leaving staffs, the main reasons of leaving are recognized. There are three main reasons of leaving that include no attractive compensation, job stress and poor working environment. Most of the leaving staff provided that they leave the company because the compensation policy is not suitable for them. They shared that working abroad is especial job which is different to other jobs. Their working time depends to project schedule which company signed with customer. They have to day and night to keep the timelines. According to one of leaving staffs, “When I interview, they just talk about working time from Monday to Saturday as normal but when I come here I have to wake up from 5am and working until 10 or 11 pm everyday”. About Working environment, other guide complaint that “Very terrible. We did not have enough water to washing, cleaning. Sometime when I start to take a bath, the water is not enough. The company pay for food and house but I cannot eat meal with Malaysia style. And when I asked about compensation, most of them said that It was not fair. One guide talks like that “I think it is low. I work very hard, from 7am and back to dormitory around 10 pm. My friend work in head office, he just working 8 hours per days but he received bonus like me. It is not fair. Maybe in here, nothing is fair.” The interview investigated the main reasons of leaving are about the poor compensation policy, poor working environment and job stress. To understand more about these policies, the interview with the Human Resource Manager is executed. This interview with her will assist to find the way to solve the problem of the company. 7 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com From Interview with Human Resource Manager The interview with the Human Resource Manager to understand more about the compensation policy of company. Also, it assists to recognize the reasons of setting up these policies. After interviewing, it is found out that the HR manager had good evaluation on the performance of leaving staffs. The HR manager said these staffs left the company because they did not have opportunities for promotion, job stress and low salary.
