unlicensed high turnover rate and performance appraisals bias by supervisor in FPT telecom JSC region 5

After that, this report will use those information and data to give some recommendations what the board of director of FPT Telecom Joint Stock Company – Region 5 should do to decrease th

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

NGUYEN MANH TUAN

(HIGH TURNOVER RATE AND PERFORMANCE APPRAISALS BIAS

BY SUPERVISOR IN FPT TELECOM

JSC REGION 5)

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2019

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

NGUYEN MANH TUAN

(HIGH TURNOVER RATE AND PERFORMANCE APPRAISALS BIAS

BY SUPERVISOR IN FPT TELECOM

JSC REGION 5)

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: PROF TRAN HA MINH QUAN

Ho Chi Minh City – Year 2019

EXCUTIVE SUMMARY

With the development of all aspects of life from society, culture, education to technology,

the quality of people’s lives is increasingly enhanced However, along with these

developments as well as the rise of the people’s demands, they will have to work so hard

that they can satisfy all their needs as well as take care of their family perfectly

According to Deborah Jian Lee (2014), most of people nowadays pay so much attention

to work that the time for their own family or their own personal life is increasingly

shortened They cannot get rid of the whirl of work so they also cannot balance their own

lives, balance between the time for working and the time for living This problem lasts

for a while will easily make them feel stressful and tired And the result is that they will

give up easily all the things they are been doing and consider it as a release for them from

pressure

This report will use both primary research and secondary research to analyze as well as

conduct the results about how the work – life balance effects on the turnover rate in FPT

Telecom Joint Stock Company – Region 5 After that, this report will use those

information and data to give some recommendations what the board of director of FPT

Telecom Joint Stock Company – Region 5 should do to decrease the turnover rate as well

as improve the cohesion of employee with the company so that the FPT Telecom Joint

Stock Company – Region 5 can complete the assigned business plan

ACKNOWLEDGEMENTS

I would like to acknowledge all my family, my wife, my friends, my colleagues, my

classmates at ISB and FPT Telecom for their supporting, helping and encouragement

during my studies Without them, I would not be where I am today

Especially, I would like to thank my supervisor - Professor Tran Ha Minh Quan for

supporting me, give me the best advices, as well as guidance me all the time of making

this report I will not complete this report without his wholeheartedly help

1 N UMBER OF SALE VOLUME IN FPT T ELECOM & THE DECREASING IN FPT T ELECOM –

RATE

1 The first possible solution: biases from inexperience and untrained supervisors

2 The second possible solution: biases caused by inconsistency across supervisors

3 The third possible solution: recency bias and personal bias from supervisors’

performance appraisal

CONCLUSTION 40

I INTRODUCTION

1 The company background

FPT Telecom Joint Stock Company (FPT Telecom) is a member of FPT Group – a

Vietnam’s leading technology group Established in 1997, FPT Telecom has three main products Those are FPT Television, FPT Internet and FPT Play box After

20 years of operation and development, FPT Telecom now has more than 200

transaction offices of more than 80 branches in 54 provinces and cities in the

country with more than 7,000 official employees and become the leading company

in technology industry in Vietnam Moreover, FPT Telecom also has launched 8

branches in Cambodia as well as having the licensed in order to provide services

in Myanmar They become one of the telecommunication and Internet service

providers who are trusted and loved by customers all over Vietnam and the region

From the beginning of establishing, FPT Telecom

and their board of director set up their pioneering

mission are bringing internet products and services to

the Vietnamese people They expect that every

Vietnamese family will use at least one service of

FPT Telecom with the motto "Customer is the most important" Along with their

development and reputation, FPT Telecom is always trying to invest more in

infrastructure, constantly upgrade the quality of products and services as well as

enhance the application of new technologies so that they can provide their

customers with superior service experience

2 The structure

HR Department Customer Services

Center International Sales Department

Training

Department

Research Center

Network Center Financial

Firuge 1 FPT Telecom’s structure

(Source: FPT Telecom Human Resources)

II PROBLEM CONTEXT

1 Number of sale volume in FPT Telecom & the decreasing in FPT Telecom –

Region 5

Firuge 2 Number of sales in FPT Telecom

(Source: FPT Telecom Business Department)

FPT Telecom is separated into 7 regions for management and administration

easily Those regions are Region 1 – Ha Noi Capital, Region 2 – Northwest,

Region 3 – Northeast, Region 4 – Central, Region 5 – Ho Chi Minh City, Region 6

– Southeast and Region 7 – Southwest Region 5 – Ho Chi Minh City is the biggest region because it contributes about 30 percent of FPT Telecom’s profit

Besides, Region 5 is also rated as the most effective area with the highest sales

volume compared to the remaining six regions in the country from 2015 to 2018

However, in 2018, the turnover rate of Region 5 is 11%, highest compared to the

rest regions in the country and the sale volume in Region 5 in 2018 decreased

strongly, about 13% compared to the increasing of others regions

Firuge 3 Growth rate of sales volume in FPT Telecom

(Source: FPT Telecom Business Department) The lack of human resources in FPT Telecom Region 5 may be the reason

leading to reduce number of sales In fact, if Region 5 is not enough sales

employees to sale the products of FPT Telecom, the sales volume in Region 5

will decrease and the business results will decline The consequence is the

results of whole FPT Telecom will be going down too

2 The turnover rate in FPT Telecom compared to the telecom industry’s

turnover rate

According to Michael Booz (2018), the turnover rate in telecommunication is

more than 10% These sectors are two of sectors that have the highest turnover

rate compared to the other sectors like oil & energy, aero/auto/transport,

healthcare & pharmaceutical…

Firuge 4 The turnover rate in some sectors

(Source: Linked in) Like we talked above, FPT Telecom has seven regions Based on the scale of the

market of each region, the board of director of FPT Telecom will allow them to

recruit a certain number of employees in order to implement the business plan of

their own region The number of sales employees that Region 5 is allowed to

recruit is 60 people while the other regions are from 25 people to 50 people

However, the actual number of sales employees or salesmen is always less than

the number of employees is allowed to recruit in order to implement the business

plan effectively

Firuge 5 The number of salesmen in FPT Telecom compared to

the quota of salesmen that they are approved (Source: FPT Telecom Human Resources)

This lack of human resources makes the implementing of assigned business

plan seem quite hard in most of the time of year

Besides, one of the reasons for this situation also comes from the fact that the

actual number of sales employees or salesmen is always less than the number

of employees is allowed to recruit is the number of leaving employees or the

turnover rates in FPT Telecom are quite high compared to the

telecommunications’ turnover rate

Year 2018 Total employees Sales employees OUT Turnover Rate

Table 1 The turnover rate in FPT Telecom

(Source: FPT Telecom Human Resources)

Based on the total current employees and the number of leaving employees, we

can have the turnover rate in seven regions in FPT Telecom through in 2018 The

turnover rate in Region 5 is the highest one, approximately 12% compared to the

other regions, just from 8% to 10% This Region 5’s turnover rate is even higher

than the turnover rate of telecommunication sectors – approximately 10% This

means the lack of human resources in FPT Telecom – Region 5 seems more

serious in this time compared to the other regions and the board of director of FPT

Telecom need to be cared and solve so that Region 5 could complete the business

plan in the best way and contribute more for the profits of FPT Telecom

Firuge 6 The turnover rate in FPT Telecom

(Source: FPT Telecom Human Resources)

3 The turnover rate in Region 5 – Ho Chi Minh City in FPT Telecom

Returning to the past, FPT Telecom just focused on two regions that are Hanoi and

Ho Chi Minh City They just begin focusing on the other provinces and cities like

Cao Bang, Lang Son, Tuyen Quang, Ninh Binh, Dong Nai, Ninh Thuan, Lam

Dong, Ca Mau, Hai Phong, Da Nang… in five recent years In the opposite, the

competitors of FPT Telecom like Viettel Telecom and VNPT Telecom had their

own position in 64 provinces and cities in Vietnam for a long time Therefore, this

expansion of FPT Telecom is supposedly late and in order to dominate the rest

region as fast as possible, FPT Telecom needs to have enough employees to

expand their products as well as maintain the current market segment

In fact, FPT Telecom does not have enough people to expand the products into 64

provinces and cities in the country like they wished, especially in Region 5

Region 5 is the biggest region in FPT Telecom so it will be allowed to have60

salesmen in maximum However, the actual number of salesmen in FPT Telecom

– Region 5 is just about 40 – 45 people through 2018.And it just takes under 75%

of the demand of Region 5’s human resources

Table 2 The number of salesmen in FPT Telecom – Region 5 in 2018

(Source: FPT Telecom Human Resources)

Besides, the lack of human resources, the number of salesmen in Region 5 is also

going down because there are a number of salesmen leaving the jobs There are

many reasons for their leaving such as the salary and benefits is low, the job is

very stressful and pressure, the time for family and themselves is too little…

work) 4 5 2 7 2 4 3 3 1 5 4 2

Table 3 The In / Out Ratio in FPT Telecom – Region 5 in 2018

(Source: FPT Telecom Human Resources)

In fact, in 2018, the number of leaving employees was 42 people while the number

of newly recruited employees was only 18 people in FPT Telecom – Region 5

The turnover rate of Region 5 is 12%, higher than the turnover rate of

telecommunication sectors (10.3%) and seems too serious to ignore

III PROBLEM IDENTIFICATION

It is very important to find out reason why the turnover rate in FPT Telecom –

Region 5 is quite high compared to the other regions and the turnover rate of

telecommunication sector because Region 5 – Ho Chi Minh City is the biggest

region which contributes about 30 percent of FPT Telecom’s profits The high

turnover rate of Region 5 will lead to the lack of human resources to implement

the region 5’s business plan

Firuge 7 Growth rate of sales volume in FPT Telecom

(Source: FPT Telecom Business Department) Moreover, like we talked above, FPT Telecom – Region 5 is rated as the most

effective area with the highest sales volume in the country for many years from

2015 to 2018 If Region 5 is not enough sales employees to sale the products of

FPT Telecom, the sales volume in Region 5 will decrease and the business results

will decline In fact, in 2018, the sale volume in Region 5 in 2018 decreased

strongly, about 13% compared to the increasing of others regions

After conducting five in - depth interviews from 4 groups (the first group is the

salesmen who are still working in Region 5, the second group is salesmen who

already left the sale jobs in Region 5, the third group is the salesmen who intended

to leave but decided to stay, and the final group manager/supervisor who are

working in sales department in Region5), there are some main reasons that they

mentioned for the high turnover rate in Region 5, including work – life balance,

errors in recruitment, salary and benefits and performance appraisals bias

1 Work – life balance

In FPT Telecom, there are 3 main departments Those are FPT Internet -

responsible for sale volume of internet and related internet service; FPT Television

- responsible for increasing subscriber installation and use of FPT IPTV (Internet

Protocol Television) and FPT Play box Department, established last year, is

responsible for selling FPT play box – a new product of FPT Telecom that help

customers to watch movies, music, TV without FPT Internet The employees of

FPT Telecom will be responsible for sale volume of FPT internet FPT television

cable and FPT play box

In order to get the assigned sales volume in month, the salesmen have to work so

hard from Monday to Sunday, there is no day offs for them They even work

overtime in evening until 9pm or 10 pm because that is the time that their

customers feel free to listen to the introducing of FPT Telecom products In some

situations, when their customers have some technical problems while using FPT

Telecom products, they have to come to their house and handle the problem for

customers Based on the actual situation, there is not any balance between the time

for work and the time for the own lives and families of these salesmen

One of our interviewees – Mr Nguyen Ngoc Phuoc – the manager of sales

department in Region 5, said that the sales employees have to manage their own

time in an effective way so that they can balance between the time for working

and the time for family as well as for themselves The people who already left the

sales department because of feeling stressful when they do not have time for their

family or their own is the people who cannot create a reasonable timetable and

make it become routine And when this situation lasts in a long time, the sales

employees will feel very stressful and tired because their family will begin being

unsatisfied and complain about why they always work and do not care about the

other meaning things in life The consequence in this time is that they maybe give

up the current jobs and looking for the new one that they can have more time for

family and themselves Besides, too much workload will make them feel tired

after a long working day Instead of having a good meal after working time, they

will just want to sleep after coming home and this is also not good for their health

in a long time

2 Salary and benefits

According to Jonathan Ehimen (2014), the financial incentive has more important

role than the non – financial incentives because salary and benefits are rated first,

then is promotion, rewards and recognition at year end party

According to salary policy of FPT Telecom, salesmen's salaries are paid based on

2 elements: base pay and job performance/KPIs Base pay, which takes about 50%

of total salesmen’s income, is quite low from 3 to 4 million per month based on

the number of days worked during the month Salaries paid based on job

performance/KPIs accounting for the rest 50% of income is evaluated by the

supervisor based on productivity (the number of FPT Telecom’s products that they

can sale in month), teamwork, compliance with regulations at work and attitude in

working In fact, for salesmen with working time under one year, the average

salary is just about 7 - 8million Vietnam Dong per month This is not a reasonable

salary compared to the time that salesmen spent and the pressure that salesmen

had to handle from working Moreover, we can see that 50% of salesmen’s income

is based on the evaluation from their supervisors This is quite emotional and non-

transparent

Mr Nguyen Lam Dong – salesman, who left FPT Telecom 5 months ago, said that

he left the jobs for taking a new position at the other company because he is paid

higher and he is willing to work hard in order to gain better salary so that he can

take care for his family well According to Mohamed, Ahmed A.; Mohamad,

Mohamad Saad; Awad, Ahmed E (2017), there is a relationship between the pay

satisfaction and the turnover rate in company The pay satisfaction is the amount

of negative or positive feelings that the employees have toward their pay while

working for a company If the salary and benefits are good, they will feel satisfied

and commit with their company for a long time If the salary is so low that they

cannot take care of life by themselves, they will tend to give up their current job

and find a better job with higher salary

Besides, the lack of promotion, reward as well as recognition is also the reason for

sales employees decided to leave FPT Telecom In fact, when the employees

receive more benefits based on their good performance at work, their intention to

quit the job is lower than other employees (Mohamed, Ahmed A.; Mohamad,

Mohamad Saad; Awad, Ahmed E, 2017)

3 Errors in Recruitment

Firuge 8 In / Out Ratio in FPT Telecom – Region 5 in 2018 (Source: FPT

Telecom Human Resources)

The recruitment process in a company always has an important role in the

development strategy because a good recruitment program will provide a good

impact on increasing commitment of employees as well as increasing the

productivity and working quality of employees In 2018, the recruitment process

of FPT Telecom – Region 5 did not seem good because the turnover rate is high

while the number of new recruitment staff is quite low

Mr Nguyen Hoang Vu – salesman who intended to leave but decided to stay,

claimed that from the beginning, he was interviewed by a manager who just

worked for 3 years in sales department in Region 5 In addition, the interview only

took 15 minutes, ended quite quickly and then he was admitted to work while he

feels unsure about what actual work he has to do This shows that the recruitment

process of salesmen is not methodical and professional, lead to the failures in

recruitment The new recruited salesmen will feel hard to understand the work as

well as unsure about what job really is because the job description is not clearly

In addition, the employees have the rights to know more about their jobs, their

career paths in the future as well as take part in the development of the company

by working and making business decisions This will increase the commitment of

employees to the company Besides, the information in recruitment process as well

as working process should be known from many multiple information channels,

not just from the information of supervisors in order to avoid the situation that the

managers or supervisors give false about the information of company or purposely

make the misleading information or hide the information deliberately so that they

can get the individual benefits

According to Hong Y Park, Raymond L Christie and Gail E Sype (2014), when

the employees are allowed to access to many sources of information, allowed to

take part in decision making at work more, the results of work are often better than

just based on the understanding of their supervisors Moreover, this will help not

only reducing the supervisors’ bias in making decision but also decreasing the

intention to quit jobs of the employees, reducing the turnover rate

To sum up, the recruitment process is one of the most important processes in an

organization If the recruitment process is good, the understanding about the job of

employees will be increase, the commitment of them to the organization will be

also enhanced and the turnover rate of employees will reduce Therefore, the board

of director as well as the managers of a company has to focus more on developing

their recruitment strategies in order to maintain the employees’ loyalty with the

company

4 Performance Appraisals Bias

Like we talked above, 50% of salesmen’s income is based on the evaluation of

their supervisors in the number of FPT Telecom’s products that they can sale in

month, the teamwork, compliance with regulations at work and attitude in

working This may not be unfair for the salesmen because every supervisor will

have the different evaluation criteria For instance, in Region 5, Mr Nguyen Minh

Toan, supervisor of a ten – salesmen team, worked in FPT Telecom for 3 years,

would like to evaluate his salesmen based on the number of products which are

sold in months as well as complete the assigned work on time In the opposite,

according to Mr Nguyen Hoang Vu, salesman who intended to leave but decided

to stay, said that his supervisor like to evaluate the salesmen’s performance based

on the process of working and the efforts of the employees while working This

seems unfair to salesmen because there is no consistency across the supervisors in

evaluating the results of salesmen every month

According to Mahmoud Javidmehr and Mehrdad Ebrahimpour (2015), the less the

errors as well as bias in performance appraisal for employee from managers and

supervisors, the better employee performance as well as the commitment of

employee will be higher to the company In fact, employees who were regarded by

supervisors or managers as having a good performance will be less likely to quit

their jobs For example, Mr Nguyen Hoang Vu said that the reason makes him

decided to stay at FPT Telecom – Region 5 is the recognition from his supervisors

He also stated that the employee will leave the company when they feel do not

have any supports from their supervisors or managers or they and their

supervisors/managers cannot communicate with each other’s, feel that the

information about assigned work by supervisors is not clear, easily in making

misunderstanding and the results of salesmen's work do not evaluate properly

Moreover, if there is any misunderstanding or incompatibility between the

salesmen and the supervisor, the performance evaluation of salesmen based on

supervisors in this situation is no longer objective For instance, some salesmen

who had good performance but did not have good relationship with supervisors

may not be recognized and rewarded truly while the board of director and human

resources manager in FPT Telecom do not care about how good the salesmen

perform, only just care about the evaluation from salesmen’s direct supervisors

and pay salary for salesmen based on it This is the recency bias or personal bias

error in evaluation system of salesmen’s work that FPT Telecom in generally and

FPT Telecom – Region 5 in particularly need to be concerned about in order to

reduce the number of leaving employees compared to the number of leaving

salesmen in Region 5 in 2018.In addition, the error in performance appraisal also

comes from the evaluation in short term about salesmen’s work from supervisor

instead of evaluation in long term of what salesmen worked This is a dangerous

error because this makes inaccurate in performance appraisal of salesmen

compared to what they try to perform

Finally, the performance appraisal bias from supervisors maybe comes from the

lack of experience of supervisors or the fact that they are not be trained well for

the supervisor position It also comes from the family background, the core values

as well as the ways of thinking or believing of every supervisor According to Mr

Nguyen Ngoc Phuoc – the manager of sales department in Region 5, most of the

supervisors in FPT Telecom are people who just work at FPT Telecomfrom 2

years to 3 years Hence, the experience in work as well as the experience in

solving problems between them and their salesmen is not well Besides, too much

workload makes these supervisors cannot take the time for learning as well as

taking part in the leadership training class For instance, Mr Nguyen Minh Toan a

supervisor in Region 5, said that he took a supervisory position for 3 years but

only attended one training class about how a supervisor should do to manage

salesmen and maximize the number of sales so that his team can complete the

assigned business plan

5 Cause – Effect Map

24

IV CAUSE VALIDATION

Based on the above cause and effect map, based on five in-depth interviews from

4 groups (the first group is the salesmen who are still working in Region 5, the

second group is salesmen who already left the sale jobs in Region 5, the third

group is the salesmen who intended to leave but decided to stay, and the final

group manager/supervisor who are working in sales department in Region 5),

based on the secondary data research as well as the theories informed, we can state

that the main causes leading to high turnover of salesmen in FPT Telecom –

Region 5 are the bias in performance appraisal and the errors in recruitment

process It is very important for the board of director of FPT Telecom – Region 5

to have an action plan to solve these problems immediately

1 Salary and benefits

The issue about salary and benefits of salesmen in FPT Telecom – Region 5 is not

too serious to need to be solved right now because of some reasons as follows The

first reason is that the board of director as well as the human resources department

of FPT Telecom cannot change all the salary and benefits policies immediately

because it will increase strongly the cost of the company The board of director

just can improve the salary or give more bonuses for the salesmen who have the

best performance now Secondly, the current average salary that salesmen receive

from FPT Telecom is quite competitive compared to the other companies in the

same industry like Viettel Telecom and VNPT Telecom and high than the Vietnam

average monthly wages (see more Figure 9)