UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Nguyen Thi Diem Thu INEFFECTIVE PERFORMANCE APPRAISAL METHOD AT XYZ VIETNAM MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2018 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Nguyen Thi Diem Thu INEFFECTIVE PERFORMANCE APPRAISAL METHOD AT XYZ VIETNAM MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Dr. THU PHAN Ho Chi Minh City – Year 2018 TIEU LUAN MOI download : skknchat@gmail.com CONTENTS ACKNOWLEDGEMENTS. Overview of auditing and tax service field .5 CHAPTER 2: PROBLEM IDENTIFICATION. Company’s context and general symptoms:.
Initial identification of problems:. Ineffective task assigning method. Lack of training. Raising of competitor.
Ineffective performance appraisal method:. Definition of ineffective performance appraisal. Justify the existence of the problem. Justify the importance of the problem.23 CHAPTER 3: ALTERNATIVE SOLUTIONS.
Unclear performance criteria and structure:. Lack of rating skills in conducting performance appraisal: .24 TIEU LUAN MOI download : skknchat@gmail. Unfair rating from rater:. Ineffective feedback to employees:.
Alternative solutions for unclear performance criteria and structures. Alternative solutions for lack of rating skills in conducting performance 30 3.39 APPENDIX 1: Transcript of interviews .67 TIEU LUAN MOI download : skknchat@gmail.com Figure 1: Top 10 Auditing firms with the highest total revenue in 2017 .4 Figure 2: Operation structure of XYZ Vietnam.6 Figure 3: Top 10 Auditing firms with the highest total revenue from tax services .7 Figure 4: Initial Cause-effect Map .14 Figure 5: Updated causes-effect map.20 Figure 6: Final cause - effect map .23 Figure 7: Solution Map .27 Table 1: Performance of teams in 2018 .8 Table 2: Stress condition of employees 2018 .10 Table 3: Rate of achieved revenue in 2016, 2017 and 2018 .10 Table 4: Number of customers terminating and signing service contract .13 TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENTS I would like to express my very appreciation for two years study in ISB Ho Chi Minh City. Besides, I would like to offer my special thanks to my research supervisor, Dr Thu Phan for her patient guidance, valuable and constructive suggestions and her assistance in keeping my progress on schedule. I would also like to extend my thanks to my family and my classmate in MBUS 7 class for their support and encouragement throughout my study.
1 TIEU LUAN MOI download : skknchat@gmail.com EXECUTIVE SUMMARY This thesis is conducted to analyze the problem of XYZ Vietnam. The symptom of the Company is large different of achieve ratio between teams. The thesis is consisted of three chapters which are company introduction, problem identification, and alternative solutions. The thesis also contains supporting information.
In Chapter 1, there is an overview of auditing situation in Vietnam and the background of XYZ Vietnam as well as pay attention to the tax team of the Company The chapter also has figures as supporting information In Chapter 2, the thesis discuss about the identification of problem of the Company. Through data of the company as well as interview information, the central problem of the Company which is ineffective performance appraisal has been addressed. The Chapter 3 is about causes and alternative solutions. In this scope of thesis, the causes which are lack of rating skills in conducting and unclear performance criteria and structures will be selected as major causes for the central problem.
Rating scale will be chosen for unclear performance criteria and structures and Coverdale training will be chosen for lack of rating skills. An action plan to implement the solutions is made for the Company. In order to conduct this plan, it will cost the Company about VND 31,000,000. The result will be observed and analyzed in order to improve the performance appraisal of the Company so that team performance will be accurately evaluated A Conclusion will summarize all of our thesis and our purpose in doing this thesis.
The last part will contain information to support the thesis such as interview questions and answers. 2 TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 1: INTRODUCTION 1. Overview of auditing and tax service field History of Auditing firms in Vietnam The audit history of Vietnam dates back to the 1991 when the first two local firms, namely VACO (Deloitte) and AASC were established in response to the changes in Vietnam economy from a centrally planned to an open market economy. According to statistics of the Vietnam Association of Certified Public Accountants (VACPA) from 1991 to 2005, the market for independent auditing services has nearly 150 qualified auditing firms, with nearly 11,000 employees working at audit firms across the country.
In 2016, the process of "purification" takes place so that the independent audit market develops. Auditing firms which are small, weak performance, and cannot meet the strict requirements for service provision will be M&A or dissolve. The number of audit firms will lower but more quality. The latest statistic of the audit professional organization also shows that in 2014, the total revenue of the independent auditing industry reached 4,583 billion VND, in which the main services of auditing firms which are auditing and financial reporting services have reached 2,329.76 billion VND, accounting for 50% of the total revenue of the whole sector, the rest are belonged to other services.
In 2015, revenue of the independent auditing sector reached more than 5,000 billion VND (1) According to Vietnam Association of Certified Public Accountants (“VACPA”), top 10 auditing firms that have the highest revenue in 2017 3 TIEU LUAN MOI download : skknchat@gmail.com Figure 1: Top 10 Auditing firms with the highest total revenue in 2017 In 2018 and following years, there are increasing positive forecasts for growth in foreign investment, healthy financial market, increasing in number of listed and public companies. Furthermore, there will be more M&A and equitization activities as well as major changes in auditing and accounting regulations. At the same time, the Government will make a decision regarding the application of International Financial Reporting Standards in Vietnam. This will be a foundation for the strong development of auditing and accounting sector in Vietnam for the following years.
(2) Therefore, in the coming time, in order for the domestic audit firms in particular and the market of independent audit services in general to be able to develop quickly and sustainably, meet the requirements of innovation, integration, competitiveness, the following solutions should be addressed Tax services field in Vietnam Since July 2007, along with the unified and integrated implementation the self- declaration and self-apply, the establishment of Law on Tax Administration has set up the regulations for tax services. Tax payer can sign contract with tax agents to receive tax services. However, the tax service market in Vietnam has not really developed. The number of enterprises providing tax services to date is too small compared to actual 4 TIEU LUAN MOI download : skknchat@gmail.com requirements, only equal to 0.021% of enterprises that conducting declaration activities managed by Tax Authorities.
In which, the majority of small-scale enterprises, both in terms of business capital and the number of employees who have practice certificates as tax procedure services, have affected the ability to conduct high value consultancy contracts and the chance to provide services to big firms (3). Vietnam’s General Department of Taxation had issued Official Letter 5339/TCT- TT in November 2017 directing local tax offices to create a tax audit plan for 2018. Taxation is a major component of the state budget revenues and as the country’s budget deficit increases, taxpayers and enterprises will continue to face increased scrutiny from tax authorities trying to meet their revenue targets. Company’s background XYZ Vietnam is one of the leading mid-tier accounting and advisory firms in Vietnam, which was established in July 2001.
XYZ Vietnam has become a member of XYZ network since August 2012. Under its core purpose of being the firm of choice for growing businesses looking for high quality and personalized services, XYZ Vietnam assists clients in achieving their goals through audit, tax, advisory and outsourcing services. XYZ Vietnam has more than 200 professionals and staff serving mid to large public-listed, multi-national and private companies in various industries. XYZ Vietnam serves clients worldwide as an independent and highly integrated member of the XYZ network which is ranked among the top 6 global accounting networks with more than 41,400 people in 120 countries around the world.
XYZ Vietnam was founded by the group of the certified public auditors (CPAs) and accredited consultants, who had worked in the field of the auditing and consulting since the very first days of this industry in Vietnam. With these advantages, XYZ Vietnam has possessed the valuable manpower resources to confidently provide professional services requiring full understanding of Vietnam business climate and with international quality standards. History Timeline 2001 XYZ Vietnam was established 5 TIEU LUAN MOI download : skknchat@gmail.com 2010 Total employees close to 150 people 2012 Established Hanoi Branch 2015 Established Da Nang Branch 2016 The Company reached USD 1 million in profit 2017 – Now Provided services to many big international firms Structure General Director Deputy Director Admin and HR Deputy Director Department Audit Team 1 Audit Team 2 Advisory Team 1 Advisory Team 2 SM Vietnam Figure 2: Operation structure of XYZ Company Limited Tax department XYZ Vietnam understands that the tax issues are the focal point of all public concerns, the Company provides tax advice as top priority to meet clients' need for their desired effectiveness. With our personnel's expertise experience and knowledge of tax issues in Vietnam, the Company maintains good relationships with the central, city and provincial tax authorities in the interest of clients XYZ Vietnam helps its clients with effectively planning and dealing with taxes imposed on individual entities and assist clients in attaining their goals and reducing unfavorable tax effects on business transactions.
XYZ Vietnam offers high quality and effective tax services. Some of them are: • Tax health check 6 TIEU LUAN MOI download : skknchat@gmail.com • Tax risk management • Tax retainer • Tax audit assistance • Tax review and tax filing assistance • Application for tax incentives • Tax structuring • Reviewing client tax returns • Preparing tax returns for individuals who should file returns directly • Working with tax authorities on behalf of clients • Assisting clients in tax planning According to Vietnam Association of Certified Public Accountants (“VACPA”), XYZ Vietnam is ranked at 6th place out of the top 10 firms that have highest total revenue from tax services: Figure 3: Top 10 Auditing firms with the highest total revenue from tax services Tax department is the important department in the Company. Tax Department provides many professional services to big firms, brings in so much profit and clients to the Company. The profit which is earned from this Department is about 50% of the total profit of the Company.
7 TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 2: PROBLEM IDENTIFICATION 2. Company’s context and general symptoms: The tax department of XYZ Vietnam usually brings higher profit than the audit department. Although it shows that the tax department is in a good condition, however the tax department also has a difficult matter to solve. There is a big difference in achieving target profit between tax teams.
Some teams will achieve their target profit quickly, but it is also a different story for other teams. Beside, in 2018, based on the estimated reached revenue, it seems that the possibility to achieve the estimated target profit in 2018 is not feasible compare with previous years because the rate of achieving target profit of teams is about 50% for this year. The above ratio in 2016, 2017 is 71% and 85% respectively. The target profit will be set up at the beginning of fiscal year and based on the growth rate every year of the Company and teams.