Microsoft word THAI QUOC BAO FINAL (1)

Microsoft Word THAI QUOC BAO FINAL (1) docx UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business THAI QUOC BAO EMPLOYEE DISENGAGEMENT WITH LGC COMPANY MASTER OF BUSINESS ADMINISTR[.]

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-THAI QUOC BAO

EMPLOYEE DISENGAGEMENT WITH LGC

COMPANY

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2019

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-THAI QUOC BAO

EMPLOYEE DISENGAGEMENT WITH LGC

COMPANY

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: Associate Professor NGUYEN THI MAI TRANG

Ho Chi Minh City – Year 2019

ACKNOWLEDGEMENTS

I would like to expressed my thankful to my Supervisor – Associate Professor Nguyen Thi Mai Trang Without the support and dedicated involvement in every step during the thesis, my thesis would have never been accomplished I would like to thank you very much for your support and understanding

Table of Contents

Executive summary 4

1 Company overview 5

1.1 About Company 5

1.2 Organizational structure 6

2 Symptoms 7

2.1 Total turnover rate 7

2.2 Turnover rate of Manager 9

3 Potential problems 10

3.1 Employee disengagement 10

3.2 Transformational leadership 12

3.3 Knowledge sharing 13

3.4 Problems Validation 14

4 Potential causes 18

4.1 Employee Performance Low 19

4.2 Unprofessional working environment 20

4.3 Lack of career growth 21

4.4 Validating causes 21

5 Alternative Solutions 23

5.1 Solution 1: Improving employee professional working skills for more sharing 23

5.2 Solution 2: Motivate employees challenge themselves 25

5.3 Solution justifications: 27

6 Action plan 27

7 Supporting information 30

7.1 Interviewee demographic 30

7.2 Interview guide 30

7.3 Interview Transcription 31

References: 46

LIST OF TABLES

Table 1: Total emmployee turnover rate at LGC (Source: LGC's Headcount report) 8

Table 2: Manager turnover rate at LGC (Source: LGC's Headcount report) 9

LIST OF FIGURES

Figure 2: Employee Turnover rate in LGC (Source: LGC Headcount Report) 8

Figure 3: The turnover rate of Manager in LGC 9

Figure 4: The cause and effect tree (Source: Author data) 19

In general, Human capital is the effective competitive advantage of many enterprises if they spend times and money for it Many companies in Vietnam do not pay more attention

in Human resource, the cause of this is that they thought its waste their time and money If they want, they can cooperate with expertise or some excellent people and they just pay a little bit higher for these kind of resource, they do not need to spend more for their existing employees The author agrees with them, but that is not a smart way and that is a short term way for business if they want to growth sustainably in the future This way is just suitable for running project in few years – we need their experience to run project to meet deadline and low cost Because we just hire one to two expertise for each project And now, studying about LGC for my thesis The author saw that LGC has been facing a high turnover rate of their employees for few years due to its performance is always low

The author has using in-depth interview and some kind of literature to analyzed This study concentrate on what is the main problems, why it happened, how is it important and how

it is affect to the company

Furthermore, employees are feeling frustrated and no motivation when they work and never meet target, it means that company will fail in short term This study will help BOD find out the main cause of the problem and give the best solutions to solve it then push everything run smoothly and drive in the right track not only for decrease the turnover rate but also meet the company target

1 Company overview 1.1 About Company

LGC is one of subsidiary of Finstar Financial Group LGC is Financial consulting limited company and it was established in 2015 It was found just few years in Vietnam but their business is very good and continuously developing year by year

LGC owns doctordong.vn website that is an online lending, it gives the best solution about financial to customers who need to borrow small amount of money but cannot asking from the bank Realized that, LGC cooperates with its partners to provide small loans in the shortest period and simplest procedures It business meet the customers need Customers who just need to do few clicks to register personal information then consultant will contact them within 30 minutes to guide them finish their loans If ok, customer loans will be disbursement within 24 hours and their first loan about 1 million to 10 million based on their borrowing history, the second loan will be higher the first one

LGC is always flexible in its operation to satisfy customers, and willing to adapt customer needs if they come to LGC Everything is transparent and legal at LGC at the beginning

Although most of thing seems to be on the right track and advantage about finance from Finstar Group but LGC Also face lot of challenges from external – competitors and Vietnam law, and many things from internal but the most outstanding is employee turnover rate

In this thesis, the author will show them the causes and how it affected to the business and development in the future

1.2 Organizational structure

LGC located in HCMC and has totally 138 local employees and 17 expats who are working in 8 departments: Human Resource, Quality Control, IT, Collection, Finance and Accounting, Project, Marketing, Operation The Country director who

is responsible for all activities and drive LGC going on the right track and aligned with the head quarter strategy and each division played an important role that supporting country director to expand and growth business in Vietnam

Figure 1:LGC Organization Structure (Source: LGC's data)

Country Director

HR & Admin Quality Control Finance and Accounting Collection

Field collection collectionPhone

IT Operation

Telesale

Customer service Verification

Project (R &

D) Marketing

2 Symptoms

Identify symptom is the first thing to do when we are going to find the root causes of the problem Because we will find wrong problem if we cannot distinguish problem and symptom No symptom means no problem Marlon (1)stated that it is significantly important to distinguish the problem and symptom The author has carefully doing research and interview some head of department and based on data in 2017 -2018 I found symptom that happening at LGC is high turnover rate but in this study I just mention the turnover rate of supervisors, mangers and top levels This symptom will

be analyzed in detail as the following:

2.1 Total turnover rate

Human Resource is very important to each enterprise, its creating value and bring benefit to company According to Backer et al (2) beside other traditional tools like money, technology and so on, human resource is the unique tool which can make the company sustainable growth and creating competitive advantage to cope with rivals but no one can copy Actually, we can imitate everything but we cannot copy human resource It plays an important role in business, that is why there are many survey and research about human resource conducting every year in order to get the insight about HR The company looks referred to this report to improve its HR system It will be the advantage if the company has sustainable human resources

High turnover rate means that the company lost its advantage and one of critical tool

to compete in the market According to Mercer - Talentnet report (3) the average turnover rate in 2016 is 17,8% and 2017 is 10,5% - the highest turnover rate belong

to retail sector 32,2% and the lowest turnover rate belong to oil industry 5,3 % And Anphabe (4) forecasted the turnover rate in 2018 is 20% And below is the turnover rate of LGC, it shown in table and also in graph as well

Table 1: Total employee turnover rate at LGC (Source: LGC's Headcount report)

Figure 2: Employee Turnover rate in LGC (Source: LGC Headcount Report)

As we can see the table and the chart above shown that the turnover rate in LGC is very high Nearly 50% employee leave LGC each year, total employee also decreased from 155 in 2016 compare to 138 in 2018 The total employee decrease but the turnover rate still increased Only the year 2017, the turnover rate is 44%, which is a little bit less than two years left but it is also higher than the average turnover rate of thee research above, 44% compared to 10,5 about four times higher

In general, the table and the chart above illustrated that the turn overate rate in LGC

is worth to considering And if it still happened like that, the company will get into trouble and very difficult to expand business in the future

2.2 Turnover rate of Manager

From now on, employees considered as managers

In this study, the author would like to focus more on the turnover percentage of employees, because this is the key persons who are directly execute the company strategy and guiding, motivating their subordinate go ahead to reach the company objectives These managers play important roles but the turnover rate is also high

It is shown in the Table and the chart below:

Table 2: Manager turnover rate at LGC (Source: LGC's Headcount report)

Figure 3: The turnover rate of Manager in LGC (Source: LGC Headcount report management level)

in 2016 and 2017 is 56% and 67% These numbers shown that, the Human capital

at LGC is a big concern for management In 2018, there are nine managers who has left and only two remained, manager is a level which is rarely quit their job but why there are many managers leaving their work? The management who must to find out and solve this issue thoroughly if they want to grow in the future

Based on the information shown above, it demonstrated that the wave of resignation

is happening at LGC With the very high turnover rate of manger, it is a great symptom that must be solved immediately if LGC wants its business grow as its expectation

Through the interview with Mr Tung – Chief Financial Officer stated that The reason for leaving their job is dissatisfaction due to low motivation, not commitment and they do not have chance to improve themselves.

And Ms Lua – Head of Operation also comment that

I am so headache with the percentage of resignation of my subordinate because they do not have chance for development due to working environment and opportunity to update skills

And most of interviewees admitted that they are all intending working at LGC for a short time because of money They do not engage with company because they do not see their future

As Vindia (5) indicated that employee engagement has profoundly impact on performance in the workplace, it is not only created more pleasant and funny in the workplace but also have a connection to be more efficient and more productivity

Employee engagement bring better communication, more interaction and positive collaboration between staffs and finally it is improving the performance of entire company Because higher rate of employee engagement that lead to higher job satisfaction which motivates staffs to perform at their best at all times

Furthermore, once employee engaged with company, it can be brings so many other benefits such loyalty rate increase, cost for retention decrease, employee working more productively

Monique (6) admitted that employee engagement is extremely important that is essential to the overall success of business High rate of engaged employee can transform the company from inside, boosting productivity, innovation, customer satisfaction and greater collaboration Furthermore, it is also a factor to retention staffs, creating dynamic and industrious working environment

Ms Ngan – Collection manager and Mr Quan – Chief Accountant are both also stated that

In addition to receive high salary, we do not have any opportunity to upgrade our skills and lack of motivation to work here We do not see any support from colleagues and boring working environment, we will leave if we found better chance

After conducted in depth interview some employees – most of them are managers, the author found that they are not happy with enterprise due to none chance for learning and growing, no supporting from peers and BOD Most of them intend to work for a short time, they do not have any commitment to the company and they just working here because they paid well They all looking for the better opportunity and will be quit without consideration

3.2 Transformational leadership

As Sarah (7) indicated that transformational leadership is a leadership style that leaders motivate, inspire and encourage staffs to innovate and create change that shape the success of the enterprise Managements play a strategic role in each enterprises They are not only like a leader in company but also a brother in family

They are train/coach employees to be a great one who can bring many differences

to them and they are the active listener and always fair, they are drive employee going on the right track – that is a great leader

In opposite, the poor leader can destroy talents because they do not know how to maximize talents They always want employee show the best results but do not care anything beside that They are not a listener but a dictator who are always wants employee serving them and doing without complaints, they are manage in detail – This is happening at LGC Many people leave their job because leader

Mr Phong – Marketing Manager said that

I am not happy with my Boss due to is management styles that is micromanagement, I feel uncomfortable when working with him and, he does not respect and even blame me in front

of others

And Ms Nhi – Customer service supervisor also complaint about her Boss

My Boss sometime asks me unrelated things but I have to answer If not, he yelled me why

I did not know about that I feel stress when working with him He does not motivate his employees but always complaints He is unfair in some cases For example, if he like someone, everything is right and vice versa

According to Mr Ni – IT Manager Sometime, I did not understand clearly in his Boss decisions, sometime say yes, sometime say no then say yes again There are many managers like me who are confusing and they do not know that what is right and wrong and frustrated with the and then leaving their job According to Sarah (7), transformational leaders who are inspire and innovate their workforce without micromanaging and give employees more room to be creative, find new solutions and look to the future

Kendra (8) stated that transformational leaders who are inspire and stimulate followers to both attain extraordinary outcomes and develop their own leadership capacity, they also help employees grow and develop into leaders

According to Rene (9), employees who can solve any problems on their own if the manager used the suitable type of behaviors to talking with them By contrast, they just accomplished their job with average result or will quit if this is happening regularly Employees are valuable asset of each enterprise, especially the high level like manager That’s why attracting and retaining these employees is the best way for any enterprises to ensure success in the future

Melissa stated that (10) about 75% employees quit their job because of clashed with the manager so manage team is engage employee rather than push them out And manager should inspire employee rather than manage in detail and demotivating employee

Management style is one of the potential reason for leaving work The Boss who must to change their mind and flexible in management to motivate subordinates achieve objectives if they want to grow in business

3.3 Knowledge sharing

George et al (11) indicated communication in organization is very importance in each businesses, its enhancing employees motivation, increased company productivity, maintain good working environment base on employees dedications, collaboration and teamwork and the final is employees loyal with enterprises and ensure the long term success of the company

Tim (12) has also comment that, poor communication is a critical challenge at workplace, it is a barrier of enterprises and employees can exploit thoroughly their full potential

Ms Thanh – QC Manager admitted that Sometime, I do not have not enough information to accomplish work because no one shared

me, my colleagues are very busy and not willing to share anything they known It is really difficult for me and take time to complete my work That is why I was evaluated under

performance in 2018 I have to do a lot of task to finished my task and some time she very tired because over workload I was stressful and consider for leaving her work

Ms Ngan – Collection Manager also mentioned like Thanh

I feels stress because I always in high workload, it is not because I was in charge more task but I have to do my work without supporting, I did not have enough information due to lack information I cannot ask for support because no one willing to do that Even it is very difficult to talk to the Boss

Based on the interview data, not only difficult to communicate between staff and manager but also very hard to communicate between colleagues because every people have high workload and they are not willing to share They do not have opportunity for sharing each other, and no event for employee connection

In order to improve the better working environment, LGC should create more events, opportunity for employees who can sharing and doing teamwork to get employees closer Employees will create more surprises when the company spend time and money for them When they know anything and helping other grow together the company will success

Actually, the managers who needs to be transparent in everything and lead their employee going on the right track Based on Holly (15) statement when bad manager still remain, the employee productivity and morale will be affected Employee turnover will increase if bad manager still remained and increasing stress Olivia (16) also listed five signs of poor management as follow: micromanagement, poor communication, unwillingness to listen, cannot exploit employee capacity, bad attitude

And according to the interview with manager in, there are many managers come and

go within a year and even just few months because they do not have any inspirations from the boss, they never feel happy to work in this working environment

Based on information that mentioned above, the author thought that poor management is one of potential problem that happening in LGC and need to improve immediately if LCG wants to retain talents and develop sustainable

Moreover, poor communication is also happening in LGC now It is cause of leaving, too Most of manager admitted that, they are boring, they are tired because lack of information to accomplished their job and there are no event to connect employee together Neil (17) advocated that poor communication is barrier to maximize company performance It’s limited employee engagement and prohibit building trust Indeed, management levels did not trust each other so they do not want to share anything, they just working individually And David (18) studied show that poor communication has significant impact in the workplace, it likes a virus which is spreading very fast and infecting entire company Communication is very important because it is a heart of successful of businesses That’s why Leslie A(19)

stated poor communication will cost business too much such increase turnover rate

– replacement cost will be higher employee’s annual salary, poor service – lack of information and not sharing to grow, and so on

Communication is a part of life, especially in the workplace because all of employee spend more than 8 hours in the company where we can work in a team and increasing productivity Annie (20) stated poor communication is a cause of employees stress, bad performance, demoralization, break relationship and become a chronic of workplace issue

As Kevin (21) stated employee engagement is the emotional commitment that mean engaged employee is not only care about work but also care about the company

They do not work for a high paid or just for a promotion but they work on behalf of company’s goals When employee care mean that they are engaged and they will work as their best Engaged employee who always lead to the best outcome of business, quality, productivity, higher customer satisfaction, shareholder return, etc

In addition, Bulbul et al (22) stated that employee engagement played a critical role

to the success of business Engaged employee give their stellar performances by continuously striving their best to outperform and always set new standards of excellence Employees have just engaged with enterprise if it has a healthy working culture and communication where they can express their concerns and have opportunity to grow and develop their potential

Moreover, in today business we coped with many big company and multinational company with strong finance resource If company cannot retain its talents, it will loss the biggest advantage competition and will failed very quickly To decrease employee turnover rate, company has to make employee engaged, loyal with company as long as possible

To support my comment The author would like to quote the saying of Mr Phong – Marketing Manager

LGC has no training program for employees and has no event for sharing that is one of the cause of employee low performance due to lack of skills and information to accomplished the job well That is why they quitted

And Mr Ni – IT Manager also stated that

We do not intend to work here for a long time because of we do not see our future career and the motivation program that inspire us stay with the company.

Moreover, during the interview, most of them said that company should has training programs to update knowledge and skill for them They just come and work without training for improving, without supporting and they considered for leaving because their bad performance, they leave LGC due to overload and dissatisfaction about BOD and unhealthy working environment

It is very clear, employee disengaged with the company is the biggest problems of LGC that need to improve immediately to decrease the employees turnover rate and sustainable develop in the future

Manager’s perspectives about main problem

Most of opinions from the interview is that they need to work in a better working environment where they can develop career, learn and growth and happy every working day Because the current working environment is so boring, there is no activity to connect employees, no mutual support, no sharing, etc

Some perspective for more detail as follows

Ms Lua – Head of operations said that Training is very important to company because it improved our skill and knowledge and then our performance will be better When our skill updated, we can share with other and will be closer to other employee and we can help each other growth

In addition, Mr Tung – Chief Finance Officer suggested that Company should have some events for connection like teambuilding, training, coaching to update, beside issuing benefits to attract and retain them In addition of update employee skill, company needs to motivate them to challenge themselves By that way, we can improve employee performance and they will be satisfied with their job.

Ms Ngan – Collection Manager who also comment that All employees have not opportunity for improving, connection, they have less communicated with other that cause of unwilling to share, to support others That is why their performance was low They feel boring and did not want to work anymore.

The importance of main problems

Employee engagement is always a hot topic of many forums and workshop about

HR But it is still remaining less company pay attention to this issue because of time, money and measuring tools In my point of view, employee engagement is the final result of many activities that HR department performed and lead to It is very important and directly impact to business result Why I am saying like that, because

of employee engaged with enterprise that can reduce employee turnover, increase productivity and efficiency, retain customers at a high percentage of satisfaction them make more values, more profits The most important is employee is happier

When they engaged, they inspired to others and everything they do with highly energy and enthusiasm

Solomon et al (23) studies have found the directly impact between employee engagement and enterprise performance outcome such as staff retention, more productivity and profitability, customer loyalty and safety, it is also indicate that the more engaged employee are the more likely company exceed in its industry average revenue growth Natalie (24) indicated that employee engagement considered as a miracle drug for workplace challenges in these days It may not a silver bullet but can have some pretty miraculous impact on the organization, it does not just correlate with great organizations but it can create great organizations Alison (25) also stated that employee engagement has become a main point in the workforce of each enterprise because companies are finally understood that in order to keep customers happy, they need to have happy and engaged employees She has listed out six benefits of employee engagement as follows: higher employee satisfaction, high retention and lower turnover, higher productivity, increased profitability, less absenteeism and finally is increased employee loyalty

Demotivation

Employee disengagement

Lack of career growth

Low Performance

Unprofessional Working environment

Lack of sharing

Lack of collaboration Lack of supporting

4.1 Employee Performance Low

In order to compete and sustainable development, human resource considered to be one of the most importance resource And enterprises have to spend more for improving this resource because it created differentiate and bring benefits to company According to Nda et al (26) in order to remain sustainable development

in the market, enterprises should have employees who have the ability to adapt and adjusting to dynamic economics They also stated that, company provides development program to its employees for the purpose of enhance employee capacity in order to retain employees as well as the company success

Employee performance is not only affected to itself but also influenced to company performance Ralph (27) indicated that low performance of employees will become

a burden of company budget, employee morale and manager’s time – it makes high

In general, employees who always need to be train to growth Although they are university graduated but lack of working skill and experience So, enterprise needs

to provide training program to update knowledge and skill for employees Equip updated skill for employees is strategic ways to do business and for the growing in the future, its aims to enhancing quality performance of employees to help company meet its goals Samuel (29) advocated everything is growing faster and changing so fast, even our knowledge and experience that is going to obsolete and we need to look at the fact and re-educate our self the most updated knowledge Actually, we need to avoid being proud of success in the past because everything changes day by day Beside provided the training course to upgrade skill for employee, company needs to have some policies and activities to motivate employee that can push them try their best and their performance will be better

4.2 Unprofessional working environment

As everybody known that, most of us spend a huge of time in our life at work That

is why employees in today who are prefer to work for a professional working environment or happy workplace It is up to the working environment that affect to enterprises in a good side or bad side Jonny (30) stated working environment is the key factors in employee satisfaction, if someone feeling down they will bring everyone else down with them and poor working environment it is not only decrease productivity but also the cause of employee resignation There are many complains from the interviewee that they have no supporting from others and they did not see any events to connect employees together, even they are envy and unfair competition, they cannot collaborate with others to complete the job well

According to Abdul et al (31) poor working environment is a barrier for employees

to promote their capability and achieve their full potential So it forces enterprises

to recognize the importance of working environment

4.3 Lack of career growth

Doing business is never easy Doing business in today is more difficult because we have to cope with many challenges not only outside but also inside of company The company issue now is quality of human resource and how to keep them stay with company LGC is just paid high wage to attract talents but this is not a good way in long term development There are many employees left the company not because the salary but also other reason such as working conditions, working environment, especially their career in the future Enterprise will be successful and sustainable development if they hold talents who are ready to take over new role immediately and this will cost company less than invite someone outside in This method is also decrease staff turnover Stephen et al (32) admitted in order to decrease staffs turnover and retain talents for the company successful in long term, the effective tool for company is paying attention to develop talents such roll out career development program with transparent policies and let them have voice and making the decision in their scope, this is less cost than others

For example: the cost for replacement is extremely high due to recruitment cost, low productivity, training cost and the opportunity cost because new employee need time

to integrate with company

4.4 Validating causes

Human resource is one of the key successful factors of businesses Company needs

to constantly nurture and improving this resource to adapt its expectation in the future Improving skill and knowledge in employee is increasing quality performance When they have enough skill, it is easy to accomplish their job with high performance and positive effect to others When they are happy and satisfaction

of employees hear do not have motivation to work and want to leave the company

Indeed, unhealthy working environment is greatly affect to morale of staff then negative effect to performances of themselves and organization Abdul et al (31) advocated that working environment plays a crucial role to employee job satisfaction, unprofessional working environment restrict the employees capacity and their potential capacity In order to increase the employee motivation and employee commitment, organizations need to contribute more for improving working environment

In addition, Mr Ni complaints that Company needs to innovate the working environment to be healthier to retain and attract talents.

Based on the in depth interview with employees at LGC, most of them admitted that they feel unhappy and demotivation when working here due to the unprofessional working such employee are jealous each other, no teamwork, no sharing, no supporting Working environment is everything around staffs that effect on employee performance and employee satisfaction with their, that’s why company needs to improve their working environment for the successful (33)

The world is changing so fast, company needs to transform and employees who also need to update knowledge and skill to adapt new challenges Keeping up to date skill is important because its reflect the employee commitment to accomplish its job well (34) We are going to obsolete and will be backward and our performance will be low due to lack of professional working environment It is very bad if employee performance is usually under expectation

And company needs to retain and improve knowledge for its talents for succession strategy This is the most important tool to keep talents engaged with organization because they can see their opportunity and their career in the future Company needs