UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Le Do Phuong Uyen HIGH TURNOVER RATE IN ZPI DEPARTMENT OF ABC CORPORATION MASTER OF BUSINESS ADMINISTRATION THESIS ADVISOR: ASSOC. TRAN HA MINH QUAN Ho Chi Minh City – Year 2020 123doc UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Le Do Phuong Uyen HIGH TURNOVER RATE IN ZPI DEPARTMENT OF ABC CORPORATION MASTER OF BUSINESS ADMINISTRATION THESIS ADVISOR: ASSOC. TRAN HA MINH QUAN Ho Chi Minh City – Year 2020 123doc ACKNOWLEDGEMENT I would also like to acknowledge my advisor Assoc. Tran Ha Minh Quan for his enthusiastic encouragement, immense knowledge, and guidance with many trouble spots and of my thesis! I really want to show my profoundly recognize to whole ISB’s advisory board, lecturers, educational counsellors, … for the invaluable assistance that you all provided during my study.
1 123doc CONTENTS Acknowledgement .1 ABC Joint Stock Company .2 ZION Company Limited – ZION Co.3 ZPI E-wallet Introduction .1 Barrier of finding appropriate replacements. Low employees' job satisfaction. Main problem identification. 22 Chapter 3: Causes validation and solutions.
Potential causes analysis33 1.Perceived lack of fairness. Perceived lack of fairness. Main-cause identification. Sub-causes identification.
Sub-causes validation. Root-cause validation. Informed-theoretical solutions……………………………………………………. Alternative Solution 1: Alternative Dispute Resolution (ADR) practices.
Alternative Solution 2: Analytic Hierarchy Process (AHP) technique……………….2 Warm – up question.3 Main body of interview. 63 3 123doc Executive summary Over the span of many millennia, science and technology have made many glowing achievements and breakthroughs in an ever-changing society. Henceforth, they accelerate the booming development of IT industry to enhance the quality of life as well as productive working performance. Although the general public could not deny the imperative and crucial role of human beings, even we have novel and state-of-art technical machinery.
For this reason, any corporations also attach much importance to the workforce; somehow, IT industry has been facing encounters to attract and retain staff due to the fast-paced, competitive advancement. A turnover analysis on IT (Information Technology) industry reflects the pessimistic impact of high turnover rates could be significantly harmful to IT companies (1). In fact, the employees are the most valuable asset in this industry, which forms a stable development team to guarantee the fulfillment of conditions and terms of clients’ contracts. On the upshot, recruiting and developing new replacements for the fitting organization could cost much more huge time, effort and finance of recruiting, training new counterparts than maintaining current ones.
High staff turnover is acknowledged to be a detrimental and potential threat to the business's revenue. The main purpose of this thesis is to explore the causes that lead to a high turnover rate at ZPI Department. The finding of the study indicated that ineffective leader style is the main drive why employees decided to leave the company and recommend some apt and applicable solutions to retain employees based on the method of using validated data from secondary data, in-depth interviews, statistical surveys in combination with theory-based approach. 4 123doc CHAPTER 1 BACKGROUND I.1 ABC Joint Stock Company ABC Joint Stock Company is a leading technology company in the digital and IT industry in Vietnam market (Forbes, 2016).
The company was founded in September 2014 by two founders: Bryan Pelz, and CEO Le Hong Minh. ABC Corporation is an enterprise serving more than 80% of Internet users in Vietnam and is also the largest game publisher and developer in Vietnam. ABC currently has more than 2000 employees working with the spirit “Embracing challenge” for the mission “Make the Internet change Vietnamese lives.” ABC is one of the 100th ideal working in Vietnam, which was voted by Anphabe and Nielsen during the past three years. In ABC, members' abilities and contributions are recognized not only by monthly salaries but also receive rewards from projects, products, year-end rewards, stocks that commensurate with work experience.
The environment drives creativity, ABC-ers open-mindedly welcome those who dare to embrace the challenges to pursue a passion. Currently, ABC operates and operates on four main product lines: digital content including news, training and online entertainment, community links and e-commerce; software and utilities; e-commerce, payment gateway products. The company has constantly made efforts to invest, develop, build Vietnamese products and bring the traditional cultural and educational elements of Vietnam into foreign online entertainment products. ABC’s products are constructed as an ecology on the Internet, including online entertainment, news, social network products and platforms connected to the online payment system.
Summary table of business lines of ABC Joint Stock Company ITEM NAME OF SECTOR 1 Production of electronic components 2 Production of computers and peripheral devices of computers 3 Production of communication equipment 4 Producing civil, electrical goods Retailing computers, peripheral devices, software and telecommunication 5 equipment in specialized stores 6 Retail of audiovisual equipment in specialized stores (Source: Internal report – ABC Portal) 5 123doc 1.3 ZPI Department ZPI department comprises 05 main divisions (Building_Product, Use_Insight, Product_Design, Operation, ZMB) with 26 employees in total (not including 02 missing positions: product director, product manager). Core_Payment team & P2P teamwork under the control and managing of Building_Product division (Div. Their tasks are considered as one of the most complexes in e-wallet development, and these two teams must operate simultaneously. To be particularly, P2P (Peer to Peer Payment) is the high-speed form of online payment which transfers directly between two individuals.
Users need Core_Payment team to support them to open a provider's account for connecting bank account’s services and sending money to the account for transactions and payments with other individuals also have accounts at that supplier). Besides, ZPI Dept. supervises, monitors both Product_design Div. and User_insight Div.
to draw up and illustrate the product’s interface for responding to customers’ behavior’s demand. ZMB division has the vital role of integrating ZPI ecosystem into Zalo platform, developing features for TOPUP services (allowing customers with bank accounts to deposit money directly into prepaid accounts (Airtime) of telecom companies, online games, consulting, e-wallets, etc. via SMS, GPRS, Internet or bank account to pay 3G/4G mobile fee; water and electricity bills; booking tickets, hotels or airlines, etc.) Operation division administers 02 lines – Promotion (providing campaigns, publicity to attract new users’ attention) and Operating (offer incentives to provide the loyal customer base). ZPI Department’s structure (Internal source, HRBP Report, 2018) 6 123doc II.1 Symptom analysis On the authority of ABC’s annual financial reports and internal data along with executives’ analysis from 2016 to Quarter 1/2020, ZPI Department has experienced the hardship, difficulties in the field of solving the workforce crisis due to the high turnover rate.
ABC’s overall numbers of leaving employees from 2018 – Q1/2020 (Source: HRBP Report – ZPI, Updated to 1st Mar 2020) As can be seen from the graphs, ZPI Dept. has taken the major quantity of leaving employees in ABC from 2018 to present, ranging from 11 employees (Q1/2020) to 24 employees (2018). These numbers reflect the significant human depletion at ZPI dept. in these recent years.
Turnover trends at ZPI Dept. from 2017 – Q1/2020 (Source: HRBP Report – ZPI, Updated to 1st Mar 2020) 7 123doc From the fiscal year 2017 to Q1/2020, the turnover rate has demonstrated remarkable upward trends. Notably, the fiscal year 2018 witnessed the highest ratio of turnover (92,31%), followed by 2019 (65,38%). Although the turnover rate in 2019 decreased by 26.93%, Quarter 1/2020 has taken over nearly two-fold (40,74%) compared to the turnover rate of 2018.
Average turnover rate and retention rate counted per quarters from 2017-2019 (Source: Financial Report & HRBP Report, 2016, 2017 & 2018; ABC’s internal portal source) According to HRBP’s internal report about ZPI Dept, the number of resigned employees was pretty high throughout months from Q1/2018 to Q1/2020. To be more precise, the high turnover rate takes the major part in the first half of the years; especially in the late Q2 – mid Q3 (June-August), which is extremely abnormal to ABC (listed in 100 best working places in Vietnam). At the heart of this matter, this fact should be concerned as a weird issue since the months recorded strong fluctuation in turnover rate not occurring in the leaving season (Jan-Mar period). 8 123doc As can be seen from figure 2.6, the average turnover rate of ZPI Dept.
in 2018 takes over greater than the year 2017’s counterparts. Moreover, this is pretty significant from Q1/2018 to Q4/2018 (October & November) consecutively, which outweighs outweigh roughly twofold than the same time in 2017. Particularly, Q4/2018 counted from October to November had the higher amount average percentage of 03 months in Q1/2018 that demonstrate the positive workforce crisis. Based on the graph, although the Q4/2018 only includes 02 months (October and November); however, the revenue is only less than ¼ and ½ of the revenue of the Q1 -Q2/2018 respectively.
Meanwhile, the turnover rate reached higher 1.75 times than such these phases.2 Business consequences reflected by symptom Figure 5. Consequences of the business symptoms (Source: Author’s synthesis) 2.1 Barrier of finding appropriate replacements IT sector has been concerned as the billion-dollar industry due to its huge profits; therefore, almost companies working in this field highly appreciate of attracting and retaining technical manpower. Actually, ZPI Dept. has been facing such a complex issue for recruiting employees having experience in mobile payment, which is in short supply.
Besides, those ones could have good in-sight knowledge of customer behavior, market trend along with wide networking, connections as banks, providers, dealers or shopkeepers, etc. Actually, voluntary employee turnover directly involves the cost of hiring and training new employees, cost of lost time until new employees achieve full productivity and cost of unused production capacity during the period of adjustment of new employees (1). 9 123doc Employee turnover cost is concerned as the cost to hire a replacement taking a huge amount of budget to pay internal recruiters (Travelling costs to candidates or HR staffs, post- and- after interviewing costs, celebrating career fair for sourcing, etc.) or at least third parties – headhunters, advertising agency to place an ad for vacancies; opportunity costs are also the intangible must-paid expenses to any companies. Therefore, companies or organizations should realize that turnover is an issue which can affect badly for finance, operation situation in one company or organization Indeed, the average time to fill in a replacement at ABC has increased years by years.
The more time the vacancies are not fulfilled, the more stagnant, efficient the performance is. We have the formula to calculate how long the recruiter or talent acquisition business partner could find appropriate candidates for ZPI dept. Average time to fill replacements at ZPI Dept. 2016 2017 2018 Manager 31 days 37 days 45 - 55 days Seniors 23 days 28 days 31 - 36 days Juniors 16 days 19 days 21 days (Source: HRBP Report – ZPI Dept., ABC, 2018) Besides, the depletion of the workforce could create an overlapped and overwhelming task for taking a long time to recruit new appropriate replacements, even training time.
Absolutely, as can be observed, resigned employees’ workload would be transferred to current employees. As a result, the employees definitely endure high-intense job stress caused by a vast transferred workload. Therefore, all remarked facts could thrust to product image as well for not having enough labor forces so as to enable the platform’s advantage, which pretty fiercely meet the customer demands then shrink market share undoubtedly. According to FT Confidential Research (2018), the results reflect that ZPI possesses roughly half of the national market share after homegrown Momo.
Additionally, followed by the internal information and Mr.Tam Phan (Former Key Product Owner), the market share in terms of both online and offline markets from Q1 to mid-Q3/2018 reached just approximately 4%, indicating the dramatic and significant decreased outcome.