UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ NGUYEN THI HONG HUONG TURNOVER RATE AND PROMOTION FAVORITISM FROM SALES MANAGER AT AVERY DENNISON RBIS VIETNAM MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2017 123doc UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ NGUYEN THI HONG HUONG TURNOVER RATE AND PROMOTION FAVORITISM FROM SALES MANAGER AT AVERY DENNISON RBIS VIETNAM MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: NGUYEN PHONG NGUYEN Ho Chi Minh City – Year 2017 123doc EXECUTIVE SUMMARY The sales industry usually faces a huge challenge for businesses to retain staff. Developing new staff into high performers costs time, effort and money, but companies will take advantage of the positive impact later on the business. Therefore, they know how the important of retaining these key employees. A high staff turnover and low retention within a sales department is acknowledged to be harmful and potentially damaging to the businesses revenue because of the cost of recruiting replacements, training and the time spent to train new employees.
It has been found that constant recruitment is not only linked to the reduction of sales performance but also has a bad impact on existing staff members’ morale. The main purpose of this thesis is to explore the causes of high turnover rate of over-achieved sales employees at Avery Dennison RBIS Vietnam. Method of analysis is combined between validated data and theory-informed which collected through in-depth interview and company survey to explore the causes of problem. The finding of the study revealed that promotion favoritism from sales manager is the key reason why over-achieved sales employees decided to leave the company.
The findings also proposed some solutions to retain high performance sales employees. The solutions focus on two main causes of promotion favoritism from sales manager, which are Unweight and unclear on employees assessment form and personal favoritism from sales manager. This research also proposed three suitable solutions: - Build the performance appraisal and promotion process 123doc - Make a communication a priority - Improve personal favoritism from sales manager. Total cost to implement above solutions is approximately 150mil VND while benefit from the solutions is 809.
The cost saving is 659. Because the time is limited and the ideas of interviewees may not represent all sales people, therefore, the research still exist some limitations. However, the research provides validated data in combination with theory to propose solutions for Avery Dennison RBIS Vietnam to retain its high performers. 123doc ACKNOWLEDGEMENTS I wish to express my appreciation to Professor Nguyen Phong Nguyen for his time and valuable guidance.
I would never have been able to finish my thesis without help from Professor Nguyen. I am grateful for what I learned from all professors and lecturers for their exciting and valuable lectures as well as precious answers to our questions. I would like to acknowledge and thank Mrs. Dao and all sales staffs of Avery Dennison RBIS Vietnam who contributed towards the successful completion of this research.
I would also like to extend my appreciation to most important of my life: my father, my big family, my little family and close friends for their unconditional support to bring this thesis to completion. Lastly, I would like to dedicate my thesis to the memory of my mother who could not see my thesis to its conclusion. My memories of her inspired me to keep moving forward. 123doc TABLE OF CONTENT Executive Summary Acknowledgements LIST OF FIGURES LIST OF TABLE Chapter I: Background.
Avery Dennison RBIS Vietnam Co. Avery Dennison RBIS Vietnam structure………………………………. Background of the symptom ………. Initial cause effect map…………………………………………………………….
Updated cause effect map…………………………………………………………………. Work-life imbalance…………………………………………………………………. Unequal workload allocation……………………………………………………………19 Define the central problem…………………………………………………………….………20 Initial cause effect map……………………………………………………………….28 Updated cause effect map…………………………………………………….29 Chapter II: Problems Justification ………………………………………. Justify problem in term of existence ……………………………………….
Justify problem in term of importance ……………………. The impact of sales force turnover on Avery Dennison RBIS Vietnam…………………. The impact of sales force turnover on HR effectiveness……………………………. The impact of sales force turnover on employee performance…………………………39 123doc IV.
The impact of sales force turnover on working attitude of remaining staff…………….42 Chapter III: Causes validation and solutions………………………………………………. List of causes………………………………………………………………………………. Unweight and unclear indicators on staff assessment form………………………………. Personal favoritism from manager…………………………………………………………43 II.
Build the performance appraisal and promotion system………………………………. Make a communication a priority…………………………………………………. Improve personal favoritism from sales manager……………………………. Success measurement after taking action………………………………………….
Keep the customers’ faithfulness………………………………………………. Increase the sales avenue………………………………………………. Introduce Avery Dennison Corporation……………………….60 Interview transcripts……………………………………………………………………………62 The Qualitative Research In-depth interview report ……………….91 123doc LIST OF TABLES Table 1. Sales Employees’ turnover rate………………………….
Sales employees’ turnover rate in Garment, Textile & Footwear Industry…………. Analysis of tenure of existing employees……………………………………. Tenure of leaving employees……………………………………………………. Reasons for leaving year 2015…………………………………………….
Reasons for leaving year 2016……………………………………………. Health Problems caused from long working hours………………………. Average time-to-fill……………………………………………………. Percentage of companies complying with the overtime regulations…….
Recruitment cost per new sales employee………………………………. Out-of-Job training cost for New Sales Employee……………………. Training cost by Asia Best Seller………………………………………. Adapting time for new sales employee…………………………………….
Time allocation for current workload and handover workload…………………. Working time allocation in the high season…………………………………. Working time allocation…………………………………………………………. Sales Avenues and quantity of customers: Vietnam and Cambodia market…….
Sales Avenues and quantity of customers: Vietnam market……………………. Customers’ complaints report……………………………………………………. Expectation of HR Department and Sales Department……………………………. Cost benefit of alternative solutions…………………………………………………56 Table 24.
In-depth Interview report …………………………………………………….89 123doc LIST OF FIGURES Figure 1. Avery Dennison RBIS Vietnam structure……………………………………………. Voluntary Staff Turnover Rate………………………………………………. Reasons for leaving 2015…………………………………………………………….
Reasons for leaving 2016……………………………………………………………. Salary and benefits in comparison with garment and textile industry………. Hot jobs in 2015: difficult to recruit and retain………………………. Avery Dennison workforce age ………………………………………….
What work-life balance means to Millennials …………………………. Millennials believe in life after work………………………………………. Initial Cause and Effect tree…………………………………. Updated Cause and Effect tree………………………………….
The top 3 sourcing destination over the next 5 years………….39 123doc 1 CHAPTER I: BACKGROUND I. Avery Dennison Vietnam RBIS Co. The first factory of Avery Dennison Retail Branding and Information Solutions (Avery Dennison RBIS) Vietnam Co., Ltd was established in Binh Duong in 2003. In July 2015, it opened a new distribution center located in Binh Tan district, Hochiminh City.
On 18th January, 2016, Avery Dennison RBIS opened its latest manufacturing facility in Long An province. Since its entry in Vietnam in 2003, Avery Dennison RBIS has invested $40 million to date, with the new Long An manufacturing facility representing the next milestone of the company's ongoing investment in the country. Moreover, Avery Dennison has the sales office in Hanoi, covering Vietnam and Cambodia markets. Total employee in Vietnam is 2,500.
Avery Dennison RBIS Vietnam structure: In Avery Dennison RBIS Vietnam, there are 3 functions: Commercial, Finance and Plant. In Commercial Functions, there are some departments like: Business Partners Department includes HR and IT, Sales Departments and Customer Services Department. The Finance Function includes Finance and Accounting Department. The Plant Function has some departments such as: The production department, the logistics department and purchasing department.
123doc 2 Figure 1: Avery Dennison RBIS Vietnam structure (Source: Human Resource Department) II. Background of the symptom In the opening ceremony the new facility, Rishi Pardal, vice president/general manager, North Asia, Avery Dennison RBIS expressed: “We will continue to invest in new innovations and technologies to increase our capabilities and help our customers elevate their products and brands. Our aim is to deliver better value for our customers by leveraging our rich 80 years of expertise, in addition to our expansive, global network. Together, we will grow and support Vietnam’s ambition to become the world’s manufacturing hub”.
To implement the business plan, Avery Dennison invests not only in new innovations and technologies but also workforce. Talent development remains a key pillar of success at Avery Dennison and employees will undergo leadership development and skill enhancement programs in Vietnam. Although the turnover status of the company has not been public due to 123doc 3 the security and confidentiality regulations of the company; but in the speech at the Annual Management Team Meeting 2016, Mrs. Nguyen Cuu Thanh Chau, General Director of Avery Dennison RBIS Vietnam stated that “The sales employees’ turnover rate had negative impacted to the company business plan and results.
Even the sales avenue is good, but the company always take care sales employees very carefully to avoid bad effects from the sales employees’ turnover” Jason et al.1 stated that employees’ turnover is a much studied phenomenon. Micheal et al.2 indicated that employee turnover is one of the persisting problems in organizations. Sami et al.3 stated that employee turnover is the rotation of workers around the labor market. James4 stated that turnover is the ratio of the number of organizational members who have left during the period being considered divided by the average number of people in that organization during the period.
Barry et al.5 stated that turnover is any departure beyond organizational boundaries. Barry et al.6 stated that turnover is the degree of individual movement across the membership boundary of a social system. Robert7 stated that “frequently, managers refer to turnover as the entire process associated with filling a vacancy: each time a position is vacated, either voluntarily or involuntarily, a new employee must be hired and trained. This replacement cycle is known as turnover.” There are two types of turnover: Voluntary and Involuntary.
US Bureau of Labor Statistics defined that voluntary turnover refers to termination initiated by an individual employee. James4 defined that involuntary turnover is movement not initiated by an individual employee. All companies need to generate revenue to stay in business. Besides, revenue is needed for further the company goals such as: developing and innovating new products and services.
But 123doc 4 how can a company generate revenue? The sales department in the company is primarily responsible for generating sales revenue. Staffs in general and sales staffs in specific are the most valuable asset in companies. Andrew et al.8 found that: “The sales job is deserving of special attention for its importance, prevalence, and unique characteristics”. Because the role of sales force on their business is important, therefore, Avery Dennison Vietnam needs to retain the sales force because: Employees in sales jobs work under a high pressure.
They work with the buyers to get orders/ contracts to company. If they quit, it will affect directly to the revenue of the companies. The Peppers & Rogers Group’s research showed that customers rely on their emotional experiences with salespeople more than any of the traditional factors 9 Customers’ demands are increasing; in today’s economy. Diane et al.10 stated that many companies tend to upgrade sales force effectiveness with continuously rising performance targets.
Alan et al.11 indicated that in many companies, “acceptable” performance of salespeople is inadequate for achieving companies’ success in the marketplace. Dao, sales manager of factory sales division, shares that the sales department divides into two divisions including Factory Sales and Retail Branding Organization. The sales department has 24 members, in which factory sales accounts for 16 members. Dao expressed that all of the sales employees who quit Avery Dennison are belong to factory sales employees.
Dao shares the working process from beginning to produce a label order as below: 123doc 5 Sign frame contract Hubs (Regional Sales Dept.) Retail fashion Companies List of processing companies Get frame contract & Give frame contract and list of processing companies list of processing companies Sign frame contract RBO Sales Fashion companies Sales Department (Vietnam) List of processing companies+ fashion companies Get the project + instruct to send orders to CS Factory sales Processing Companies Forecast material needed+ Give the project Fashion Companies Production plan Materials + timing needed Actual orders + Planning Dept. Place PO Buying Dept. samples (new) Send orders Orders Send design Customer services Dept. Design + print label Prepress department Avery Dennison believes that employees’ opinions are important, hence, by the end 0f 2016, they hire Tiro Company to do the staff survey for internal use.