UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ---------------------------- Nguyen Cao Duc IMPROVING PETROL STATIONS EMPLOYEES’ MOTIVATION: A STUDY OF PETROVIETNAM OIL CORPORATION MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – 2018 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Nguyen Cao Duc IMPROVING PETROL STATIONS EMPLOYEES’ MOTIVATION: A STUDY OF PETROVIETNAM OIL CORPORATION MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Dr. Nguyen Thi Mai Trang Ho Chi Minh City - 2018 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Executive summary Many researches recently have show that: motivation of employees play a very important role in business activity. They have pointed out: if the level of motivation is high, the employee can perform better, the worker can get higher productivity and the company can achieve business goal and objective effectively. On the opposite, if the motivational level is low, it could lead to low sales performance, it may weaken the company performance and thus it can affect business success.
Understanding the significant role of employee motivation, the objective of this thesis was (1) to find out the impact of employee motivation on organization effectiveness and productivity, (2) to identify what factors motivating employees at PetrolVietnam Oil Corporation’s (in short, it would be called PVOIL in this thesis) petrol stations and examine the major factors that increase motivation of employees the most. After carefully reviewing many theory regarding employee motivation, I found that: there are many factors that motivate employees, including both financial factors and non- financial factors. There exists a strong relationship between employees’ motivation and organizational effectiveness. The more motivated the employees are, the more contribution they bring, thus the more profitable and successful is the business.
The findings of the study revealed that financial factors plays the most important role in motivating employees at PVOIL petrol stations. The findings are discussed in details in the research along with suggestions for PVOIL and managers/leaders at PVOIL in order to increase the employee’s motivational level. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Acknowledgements I would especially like to show my gratefulness and special thanks to my supervisor – Dr. Nguyen Thi Mai Trang for all her continuous supports, advices and instructions through the process of researching and writing this thesis.
Without her enthusiastic help, this thesis could not have been accomplished. I also would like to show my gratitude to ISB lecturers, my colleagues at work, my classmates at ISB for their valuable knowledge and continuous support. I also send my sincere thankfulness to my family for their support and encouragement throughout my years of study. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS Executive summary Acknowledgements 1.2 Company structure, mission and vision .1 The labor productivity and motivation in Vietnam.
The labor productivity at petrol stations owned by PVOIL. Situations of workers at petrol stations owned by PVOIL.1 Payment and welfare policy .2 Working condition and environment .3 Promotion and career policy. CAUSE - EFFECT MAP .The first alternative solution: Welfare programmes for petrol stations employees .The second alternative solution: Fair payment policy .The third alternative solution: Long-time contribution recognition in payment policy. ORGANIZATION OF ACTIONS.
48 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 1. PVOIL organizational structure. Hertzberg's Two Factor Theory. Number of workers at petrol stations owned by PVOIL.
Educational level of workers at petrol stations owned by PVOIL. Age classification of workers at PVOIL petrol stations in 2016. Working time for PVOIL of workers at petrol stations up to 2016. Number of newly- recruited of workers at PVOIL petrol station.
Cause-effect map. Self-evaluate the motivational level by employee. Factors affecting workers motivation. 23-24 LIST OF TABLES Table 1.
Statistics petrol stations owned by PVOIL from 2008 to 2016. Labor productivity by industry from 2014 to 2016. Labor productivity of petroleum industry from 2014 to 2016. Statistics of market share and quantity of petrol stations in 2016.
Sales volume at petrol stations owned by Petrolimex and PVOIL in 2016. Labor productivity at PVOIL and Petrolimex petrol stations. Average income of workers at petrol stations. Action plan to improve employee motivation.
34 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Company background PetroVietnam Oil Corporation (PVOIL) is a State-owned Enterprise, established in 2008 with five main functions: Crude Oil Import – Export, International Crude Oil Trading, Petroleum Products Trading in Domestic (both whole and retail) and International Marketplaces, Petroleum Products Processing and Bio-fuel Processing and Distribution. PVOIL’s capital 550 million USD; turnover 2,5 billion USD. Now, it ranks number 2 among oil distributors in Vietnam with its market share is around 22% (the market is controlled by Petrolimex with 50% market share and Petrolimex is also the biggest competitor of PVOIL).
Company structure, mission and vision Figure 1. PVOIL organizational structure (Source: PVOIL) LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 2 At present, PVOIL has more than 3.000 petrol stations, include above 500 COCO (Company Owned –Company Operated) petrol stations and more than 2.500 DODO (Dealer owned-Dealer Operated) petrol stations. The number of employees is around 6. Total quantity of petroleum distribution (via 3 channel of wholesale to agents, business- to-business contracts (B2B) and retail sales) achieves 3,2 – 3,5 millions m3/ton per year.
With the mission “PVOIL consistently pursues valuable goals in life” and the vision “PVOIL is to become a leading brand name in Vietnam”, in the future, PVOIL aims to expand its share of the domestic oil and petrol retail market from 22 percent to at least 35 percent by 2020 through increasing number of petrol stations. To achieve this target, Mr Cao Hoai Duong, General Director of PVOIL shared that: Sales retail through channel of petrol stations always play the most important role in our sales strategy. 75 percent total revenue of PVOIL come from retail sales. PVOIL continues seeking to increase its number of petrol stations nationwide, especially in small cities and rural areas along with taking many solutions to increase the sales performance at petrol stations.
Statistics petrol stations owned by PVOIL from 2008 to 2016. 2008 2009 2010 2011 2012 2013 2014 2015 2016 Number of 82 100 105 243 312 344 464 485 500 petrol stations % Growth 22% 5% 131% 28% 10% 35% 5% 3% (Source: PVOIL) As can be seen from the Table above, the number of petrol stations owned by PVOIL increased year by year for the period 2008 – 2016. After 8 years, the number of petrol stations in 2016 is 6 times bigger than in 2008. PVOIL focus on developing the number of petrol station nationwide because the retail sales of petroleum products to end-users at petrol stations plays the most important role in bringing the highest profit and ensuring the sustainable development for business.
LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 3 All the daily retail at petrol stations of PVOIL is undertaken by the direct labor workforce-workers. They are front-line employees who contact first with the customers with their duty is selling products. However, according to the statistics shown in the company’s report, the labor productivity of workers at petrol stations owned by PVOIL has a very poor performance compared with the labor productivity of its rival – Petrolimex. Ofelia Robescu1 addressed that motivating employees became today an important objective for organizations that want to remain viable on the market today.
Motivation of human resources in the organization will bring extra performance to the manager that hopes to reach the organization's goals. With 50 petrol stations based in Ho Chi Minh City (only 10% total number of PVOIL petrol stations nationwide), Ho Chi Minh City is one of the most important market in Vietnam for PVOIL where take account for more than 20% of its sales volume nationwide. PVOIL always has to face with severe competition from other big oil companies in this key market. Although the workload of workers at petrol stations in big city like Ho Chi Minh City often face with many difficulties than others in the remote area, such as: high work pressure due to the continuously sales activity, unhealthy working environment, narrow working space, … but there’s seem to be no difference in interests and benefits of these workers compared with other places.
Understanding the important role of Ho Chi Minh city market as well as the role of retail sales at petrol station, in this thesis, the motivation of workers at petrol stations located in Ho Chi Minh City center district owned by PVOIL will be the main objects of the study and to find what affected the motivation of workers will help to improve the sales performance and labor productivity of workers at petrol stations owned by PVOIL. LUAN VAN CHAT LUONG download : add luanvanchat@agmail. The labor productivity and motivation in Vietnam According to statistics form General Statistics Office of Vietnam, for the period from 2014 to 2015, the average growth rate of labor productivity is about 6,9 %/year. In the three main sectors of the economy, Agriculture, forestry and fishery has the lowest labor productivity, Industrial and construction has the highest labor productivity.
Within Industrial and construction sector, the mining and quarrying has labor productivity 14 times bigger than the average labor productivity of sector. Labor productivity by industry from 2014 to 2016. Unit: VND million/person 1549 2016 113 120 33 1696 2015 96 115 31 1,683 2014 90 116 29 2014 2015 2016 Mining and quarrying 1,683 1696 1549 Services 90 96 113 Industrial and construction 116 115 120 Agriculture, forestry and fishing 29 31 33 (Source : General Statistics Office of Vietnam) For petroleum industry in Vietnam, in recent years, petroleum industry always has the highest contribution to GDP of Vietnam (take account for around 18% of GDP), thus the labor productivity of petroleum industry always take the leading position nationwide. However, due to the negative effect from the fluctuation of the world oil price from 2014 to 2016 (the oil price averaged $40.68 per barrel in 2016, down from $49.49/bbl in 2015 and $96.29/bbl in 2014), the revenue of petroleum industry in Vietnam (mainly come LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 5 from exporting crude oil and selling petroleum products in domestic market) had to suffer a decrease for three consecutive year 2014 to 2016.
Labor productivity of petroleum industry from 2014 to 2016.500 Number of laborers (people) 70.600 Labor productivity (VND bil/person) 10,6 8,0 6,5 (Source : Vietnam National Oil and Gas Group) As can be seen from the above table, due to the negative effect from the fluctuation of the world oil price, the revenue of petroleum industry had to suffer a decrease for three consecutive year 2014 to 2016. Labour productivity is concerned with the amount or volume of output (revenue) that is obtained from each employee. Labor productivity is calculated by using the formula: Revenue per period Labor productivity = Number of employees at work Thus, the labor productivity of petroleum industry in Vietnam has a downward trend respectively from 2014 to 2016 with a rate of 21,6%/year. The productive use of labour has a closely link to business efficiency and profitability.
Labour productivity need to be regularly measured and monitored to remain competitiveness of a business. Regarding the problem of changing in labor productivity, Vietnam National Productivity Institute (VNPI) indicated in Vietnam Productivity Report 2015 2 that there is a wide range of the fundamental factors driving Vietnam’s labor productivity, namely structural change, labor quality, labor market flexibility, facility and infrastructure investment and scientific and technological development. In addition to these factors, report from VNPI also confirmed the prominent role of the Productivity Motivation, Productivity Motivation Programs and support activities to boost labor productivity in the business sector. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.