UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ NGUYEN VAN HA THE IMPACT OF INEFFECTIVENESS TRAINING PROGRAM ON TURNOVER INTENTION AT VPBANK MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DR. PHAM PHU QUOC HO CHI MINH, YEAR 2018 1 TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS EXECUTIVE SUMMARY. 3 I - BACKGROUND INFORMATION OF VPBANK. Introduction and the current context at VPBank .1 About VPBank and recent achievements 4 1.2 Technology advancement at VPBank 4 1.3 The importance of human resources management at VPBank 5 2.
Symptoms and problem identification at VPBank .1 Symptoms of problem in human resources management at VPBank 6 2.1 Highest turnover rate in banking sector 6 2.2 Turnover intention occurred mostly in junior levels 7 2.2 Potential problems in human resources management at VPBank 9 2.1 Interview results of employees with turnover intention 9 2.2 Initial Cause - Effect Map 10 2.3 Theoritical framework regarding employee's turnover intention 11 2.4 Updated Cause - Effect Map 13 2.3 Central problem identification 14 II - PROBLEM JUSTIFICATION. Definition of "Effective training". Justify the existence of ineffective training program. Error! Bookmark not defined.1 Current training program at VPBank 15 2.2 Quantitative research and results 17 3.
Justify the importance of effective training program .2 Waste of money & resources 19 3.3 Employees become the biggest liability 19 4. Identify potential causes of ineffective training. Final Cause - Effect Map. 20 III - ALTERNATIVE SOLUTIONS.
Training Center must be restructured. Digitalizing training programs. 24 IV – ACTION PLANS. Decide on the method of training .2 Online training courses .3 Interactive training courses .4 Utilizing the current training center’s workforce.
Detailed action plans. 45 2 TIEU LUAN MOI download : skknchat@gmail.com EXECUTIVE SUMMARY Becoming one of the largest commercial bank in Vietnam, Vietnam Prosperity Join-stock Commercial Bank (VPBANK) has to face many obstacles and challenges to maintain its status and develop sustainably. Maintaining capable workforce is a critical responsibility of human resources management to achieve this goal. This thesis will figure out the current problem in human resource management, using current symptoms analysis along with the analysis of qualitative and quantitative research based on primary data at VPBank.
After discovering the central problem of ineffective training program for junior levels, the thesis would evaluate the causes and consequences of the problem in order to create probable solutions and action plans to enhance the employees’ commitment with the organization. Seeing the importance of retaining the young work force for sustainable growth at VPBank, this research is critical for human resources management to control the situation and improve the quality and productivity within the bank. 3 TIEU LUAN MOI download : skknchat@gmail. BACKGROUND INFORMATION OF VPBANK 1.
Introduction and the current context at VPBank 1.1 About VPBank and recent achievements Vietnam Prosperity Joint-Stock Commercial Bank (VPBANK) is a local bank with 25 years of operation and development in Vietnam. In the last five year, VPBank has achieved some remarkable development and success. VPBank has the charter capital increased from 5,770 billion in 2012 to VND 15,706 billion in 2017, with more than 215 branches and around 12,000 official employees including official employees and collaborators. In 2018, VPBank is listed in the top 40 most valuable brands in Vietnam, ranked 13th with the brand value of USD 99.2 million, which outperforming other joint stock commercial banks in Vietnam.
In addition, with many other awards in 2017, it is also announced as the “Best Unsecured Lending Product in Vietnam” and “Best Digital Banking Initiative in Vietnam” by Asian Banker. These awards prove that VPBank has run on the right track with its mission to focus on retail banking with advanced technology and digital application. Follow these achievements, in the next 5 years, VPBank has the challenging objectives to remain top 3 leading retail join-stock commercial banks with sustainable but aggressive organic growth, as well as focus on digital bank for retail customers and small and medium enterprises.2 Technology advancement at VPBank Along with the expansion nationwide, VPBank has faced many challenges of managing the work force and the operation cost. Strategically, it has built a strong foundation systems in terms of organization, human resources, technology and operation.
Until 2017, almost all of these systems has been setup (SAP System for Human Resources, Finance and Administration; LOS and T24 System for Loan Operating System and Auto Approval System, etc. Even the IT division is operated as a full-circle IT service organization. However, with the banking system with more than 12,000 employees, the challenge is how to keep the employees on track with 4 TIEU LUAN MOI download : skknchat@gmail.com the bank advancement. According to Akyüz et al, given extensive training, employees would felt trusted and invested, thus they would want to commit and contribute to the organization with the knowledge and skills they are provided.3 The importance of human resources management at VPBank According to the HR Strategy Model (Appendix 1), it is critical for human resources management to control all factors related to the organization strategy’s goal.
Especially at VPBank with the significant growth recently, the bigger the organization become, the more difficult and complicated for human resource management in training & development, recruitment and other staffing issues. Considering characteristic of banking operation, there are complicated products and procedures as well as banking specialization that needed training. Otherwise, there will be internal fraud and breach of regulations that employees would do without knowing. Sometimes, the cases would even need the participation of authority to investigate.
In recent years, there are several cases of fraud in Vietnam banking & financial market that worry the employees, which lead to more fluctuation in the banking workforce. In 2008, Fulbert confirmed that banking regulation can keep the bank from crisis, and also contribute to the economic growth and stability. Regarding VPBank with the focus on retail customers (both unsecured and secured loans), the risk is higher in banking operation as well as human resources management. For example, the bad debt from retail loans is not significant compared to the size of the bank, but hundreds or thousands of them would lead to serious problem.
If the personal bankers (sales persons) are extensively trained about the banking operation and products and those risks, the total bad debt might decrease considerably. Moreover, focusing on the retail segments, the collection team are much needed to remind their customers about the pre-due debt or on-going debt. It would require specific skillset to do it properly, and imagine there are several hundreds of collectors to acquire these kind of skills. The question for human resources management is how to manage these teams with suitable payment and 5 TIEU LUAN MOI download : skknchat@gmail.com fringe benefits for retaining the work force (i.
training & development), but also manage it with minimum cost for the bank. Additionally, VPBank is a young-generation organization with more than half of the work force at the age of below 30, even with the managing level with only 3 - 6 year working experiences. In term of recruitment, the hiring process is quite strict and selective. Only fresh graduates who pass the test (given by another independent test supplier) or experienced candidates with at least 1 years working in financial/ banking sector have chances to interview.
The interview panel including hiring managers, superiors of hiring manager, and HR representative would decide the suitable candidates for the available positions. However, the expectations of fresh graduates and junior levels are different from the experienced ones. They not only want experiences, but also learning and development. In the research of Jusoh et al (2011), the employers are not satisfying graduates’ expectations.
It means they would actively find another working places that they hope would meet their expectations. As the next five year vision of VPBank is sustainable development, human resource managers would have to find solutions for balancing between young employees’ expectations with minimum cost of human resources for higher profit. Symptoms and problem identification at VPBank 2.1 Symptoms of problem in human resources management 2.1 Highest turnover rate in banking sector According to Navigos Search Annual Report in 2017, 43% of total surveyed banks have the turnover rate from 11 to 20%, and only 11% of total surveyed banks have the highest turnover rate at more than 20% (Firgue 1). Considering the small banking market with only total of under 20 banks, it means only 2 banks have the turnover rate of more than 20% and VPBank is one of them.
Following the human resources data for exiting employees, it is alarming that the turnover rate at VPBank is 23% last year. Compared to the market common turnover rate at 11 – 20%, the turnover rate at VPBank is significantly high and needed in-depth analysis to prevent the number to 6 TIEU LUAN MOI download : skknchat@gmail.com increase in the following years. Considering VPBank has gained the top position in the list of Top Asia Employer Brand 2017, the flows of employees leaving the bank would impact on the reputation of the bank, thus lead to less attractive employer branding and more instable organization. BANKING INDUSTRY TURNOVER SITUATION 11% 16% 30% 43% of total surveyed banks Turnover rate at below 5% Turnover rate from 5% to 10% Turnover rate from 11% to 20% Turnover rate at above 11% Figure 1: Navigos Search Annual Report 2.2 Turnover intention occurred mostly in junior levels Due to the human resources report annually from 2015 to 2017, there is gradually increasing trend of turnover rate from 17.
Combined with the significant growth of the bank in the last five years, it can be seen that the bank transformation has affected on the workforce in the short-term. However, it should not be a long-term problem because resources for labor force are limited, especially in banking sector. 7 TIEU LUAN MOI download : skknchat@gmail.com Turnover rate AT VPBANK 25.00% 2015 2016 2017 Figure 2: Turnover data in VPBank Furthermore, it can be clearly seen in figure 3 about the turnover analysis of leaving employees segmentation. The junior levels (who have less than three year working experience) consist of 83.39% of total leaving employees in the first half of 2018.
It means every 10 leaving employees, 8 of them are junior ones. This number increase considerably compared to the junior levels leaving the company in 2017 at only 66.62% of total exiting cases.62% % Junior levels Senior levels Junior levels Senior levels Manager levels Manager levels Figure 3: Turnover segmentation at VPBank 8 TIEU LUAN MOI download : skknchat@gmail.com Due to the human resources report as above, it can be concluded that the turnover intention for employees at VPBank, especially the junior ones, is the warning sign for the human resources division to figure out the reasons that lead to the brain draining to the market. It would lead to increase in the operation cost and human resources management cost. Moreover, as can be seen in figure 4, the recruitment over turnover rate shows that every 1.6 employees onboarding, there is another one exiting.
The rate even decrease to 1.17 in the first half of 2018, which means almost a new comer onboarding replace for a person who left. Because the headcount planning in 2018 increase in total of more than 2100 new employees, even with high rate of recruitment, this rate of turnover would cause the bank not grow as expected. First half of Second half First half of 2017 of 2017 2018 Every recruiting per exiting (employees) 1.17 Figure 4: Recruitment replacing for exiting cases 2.2 Potential problems in human resources management at VPBank 2.1 Interview results of employees with turnover intention It need to be conducted an in-depth survey for leaving employees on their reasons to leave. The informants for qualitative research should be the employees who recently have leaving application.
There are six employees to be interviewed.