Low engagement of production team in kimberly clark vietnam

7 Figure 3: Number of leaving staff in person Source: Human Resource Department .... 8 Figure 4: Number of leaving staff in percentage Source: Human Resource Department .... 18 Figure 7:

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-PHAN THUY LOAN

LOW ENGAGEMENT OF PRODUCTION TEAM IN KIMBERLY

CLARK VIETNAM

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: DR TRAN PHUONG THAO

Ho Chi Minh City – Year 2018

Table of Contents

List of acronyms 2

List of Figures 3

List of Tables 3

CHAPTER 1: PROBLEM IDENTIFICATION 5

1.1 Industrial overview and Company overview 5

Industrial overview 5

Company overview 6

1.2 Problem mess 7

1.2.1 Symptoms 7

1.2.2 Situation analysis 10

1.2.3 Initial Cause-effect map 14

1.3 Problem identification 18

1.3.1 Heavy workload 18

1.3.2 Ineffective recruitment process 19

1.3.3 Low employee engagement 20

1.3.4 Consequence 21

CHAPTER 2: SUGGESTED SOLUTION 26

2.1 Cause validation 26

Reward & Recognition 27

Development Opportunities 28

Team Leader Relations 29

Pay 29

2.2 Alternative solution 32

2.2.1 Apply evaluation process for the payment structure 33

2.2.2 Apply Market-based compensation system for the payment structure 39

2.3 Action plan in an organization 44

CHAPTER 3: SUPPORTING INFORMATION 48

3.1 Methodology 48

3.2 Interview transcript 48

References 60

List of acronyms

KC: Kimberly Clark

KCV: Kimberly Clark Viet Nam

FMCG: Fast moving consumer goods

EHS: Environment, Health and Safety

IT: Information Technology

OP: production operator

Lead OP: Lead production operator

IDP: Individual development plan

ISO: International Organization for Standardization

JD: Job description

ETQ: Excellence through quality

JEC: Job Evaluation Committee

PR: Purchase requisition

PO: Purchase Order

JERF: Job Evaluation Review Form

C&B: Compensation and benefit

SAP: Systems, Applications and Products in Data Processing

List of Figures

Figure 1: FMCG growth nationwide in quarter 1/2018 (Source: Market Pulse Report

Q1/2018-Nielsen) 5

Figure 2: Structure of Kimberly Clark Viet Nam 7

Figure 3: Number of leaving staff in person (Source: Human Resource Department) 8

Figure 4: Number of leaving staff in percentage (Source: Human Resource Department) 9

Figure 5: Average Voluntary Attrition Rate 2016-2017 10

Figure 6: Initial cause and effect map 18

Figure 7: Number of leaving staff by experience (Source: Human Resource Department) 20

Figure 8: Overtime reasons Jan-Jun 2018 (Source: Human resource department) 22

Figure 9: Performance of machines (first 6 months in 2018) 24

Figure 10: Waste of machines (first 6 months in 2018) 24

Figure 11: Updated cause and effect map 25

Figure 12: The result of an employee engagement survey in 2017 26

Figure 13: Fish bone map 31

Figure 14: Final map 32

Figure 15: Market-based compensation process 43

Figure 16: Summary of manager's perspective 58

Figure 17: Summary of the leader's perspective 58

Figure 18: Summary of employees’ perspective 58

List of Tables Table 1: Voluntary/ Involuntary turnover ratio in 2016-2018 (first 6 months) 10

Table 2: Turnover ratio by department 2017-2018 (first 6 months) 11

Table 3: Turnover ratio by position 2016-2018 (first 6 months) 12

Table 4: Working experience at KC of leaving staff in 2016-2018 (first 6 months) 13

Table 5: Performance at KC of leaving staff 2017-2018 (first 6 months) 14

Table 6: Average Overtime per person Jan-Jun 2018 in percentage 22

Table 7: Hiring cost in 2018 (Source: Human resource department) 23

Table 8: List of promotion of production (Source: Human Resource Department) 28

Table 9: summary of two solutions 44

EXECUTIVE SUMMARY

Human is an important asset in the organization in general and production operators are the heart of manufacturing Production operators are direct labor who participate in the process to make product and account for more than 50 percentage headcount of the mill

In 2018, the turn-over rate is increasing sharply and 85% falls into production team

The high turnover rate in this group has a negative effect such as low skill workers, high demand for training, high overtime payment and high hiring-cost which is around more than 10 million VND each new comer Attracting people is hard but retaining talent is harder things The turnover ratio or attrition rate is one of the most essential ratios to show how the efficiency of manage people of the company The higher turnover rate the higher risk in the organization The main purpose of the thesis is to explore the causes of the high turnover rate of production operator in Kimberly Clark Viet Nam The thesis using theory-informed to group possible problem based on interviews and theory-

confirmed combined with depth-interview to figure out the main problem The finding of the thesis revealed that salary package is not attractive and it is one of factor of employee engagement The solution for this is “Apply Market-based compensation system for the payment structure” to see that as if the salary for production team is competitive or not

CHAPTER 1: PROBLEM IDENTIFICATION 1.1 Industrial overview and Company overview

Industrial overview

According to Market Pulse Report Survey quarter 1/2018 released by Nielsen Viet Nam-

a global measurement and data company, fast moving consumer goods in traditional trade drop down significantly to -1% and modern trade drop to 2.7% (1)

According to the Recruitment market overview 2017 released by Faro- an international staffing solutions company, manufacturing takes lead in recruitment with 82% Retail & FMCG (79%) and Tech & Telecom (73%) follow the lead (2) In addition, we should understand the “vicious circle” of labor turnover When turnover increase, it start circle process include decreasing average length of service, entry standards are relaxed cause deadline of recruitment, spending a lot of time to search candidates, losing a caring

current employee and they start to leave due to isolation from leader or manager and turnover keep increasing (3)

Overall, the market is slowing down and FMCG companies jump to a fierce battle to gain market share and high demand in recruitment will be one of the hard things for enterprises

in general for Kimberly Clark Viet Nam in specific

Figure 1: FMCG growth nationwide in quarter 1/2018 (Source: Market Pulse Report Q1/2018-Nielsen)

Company overview

Kimberly Clark Corporation (KC) was established in 1872, the United State Nowadays, KC’s headquartered is in Texas, USA and are proud that nearly one-quarter of the

World’s population use our products every day We have a number 1 or number 2

position in more than 80 countries and there are 175 countries where our leading brands are sold With the mission that is to create new value for our customers through products and services of superior quality, and to contribute towards a better and more sustainable world

Kimberly Clark Viet Nam has established in 2000 with three distributions in South,

Middle of Viet Nam and North From this, KC product can reach out to every family through Viet Nam

Industry: Fast moving consumer goods industry

Competitors: The main competitor is Unicharm Company with Diana and Bobby branch Kimberly Clark Viet Nam structure

Kimberly Clark Viet Nam has two sites which are head office and mill There are six departments with more than 200 employees in head office such as Sales Department, Finance Department, Marketing Department, Customer Supply Chain Department,

Procurement Department, and Human Resource + IT Department There are five

departments with more than 400 employees in a mill such as the Production Department, Engineering Department, Quality Department, Logistics Department and Environment, Health and Safety (EHS) Department Head office and Binh Duong mill have separately key performance indicator In this research, we only focus on the Binh Duong mill

Figure 2: Structure of Kimberly Clark Viet Nam

(Source: Human Resource Department)

1.2 Problem mess

1.2.1 Symptoms

In the year-end party which organized at Adora convention center (198 Hoang Van Thu

Street, Ward 9, Phu Nhuan District) in 1st December 2017, Mr Praneeth Yendamuri,

Managing Director of KCV said in the opening of the party:

“In Vietnam, as one of the leaders in the categories we play in – over the years, Kimberly

Clark Viet Nam has ensured millions of babies are kept comfortable and thrive through

our Huggies brand and similarly millions of women are ensured of superior comfortable

protection for their feminine intimate care needs through our Kotex brand Moreover, Viet

Nam has many competitive advantages and one of that is the workforce with high skill

So that there is no reason to stop us to be the pride of Asia Together, we will make it

comes true.”

To achieve that vision, KCV needs to focus on people, operation, and working

environment And the most important thing is about human Based on turnover data

provided by Tran Xuan Binh- Human Resource Manager in the weekly meeting which

organized with attendance of function head such as Production Department, Engineering

Kimberly Clark Viet Nam

Head office

Sales Department Finance Department Marketing Department Customer Supply Chain Department Procurement Department

HR + IT

Binh Duong Mill

Production Department Engineering Department Quality Department Logistics Department EHS Department

Department, Logistics Department, Quality Department at Binh Duong Mill every

Monday of March, he raised concern related to turnover rate keep going up and need support from other head of department to talk with their team member to figure out

problem Yet all managers did not set priority on that because they still have other key performance indicators need to deliver In the other hands, they might think that the trend

is always high after Tet is a normal thing And the number is increasing next two month raise big concern from Mill manager- Mr Duong Minh Hoai This is a big issue related to the workforce He stated in that meeting:

“The turnover rate is increasing sharply over months, especially in production It impacts strongly on the mill performance and we are losing talent HR and all function heads need

to figure out reasons and take action as soon as possible to avoid impact to the business.” According to data provided by the HR department at the end of June 2018, turn-over rate has been increasing sharply in the quarter I of 2018 (Figure 3) It was nearly double the number of last year from 16 to 30 persons resigned The rate has a continuous increase in the next quarter with 36 persons resigned and still higher than the same period last year The total leaving employees in 6 first month of 2018 is nearly equal to the amount of total turnover number of 2017 (66/72) The number is unusual and need to be focused on by the management team

Figure 3: Number of leaving staff in person (Source: Human Resource Department)

quarter I quarter II quarter III quarter IV

Leaving staff in number

2017 leaving staff (person) 2018 leaving staff (person)

(first 6 months)

The chart below (Figure 4) is about leaving staff in percentage It makes data easier to understand The number of turnovers will be used to divide the total number of

employees which are 426 to get the percentage The target of turnover rate in 2018 is 13% but the number hits to 7% in the only quarter I 2018 and 8% in quarter II 2018 It means the turnover target fails with 15% in June 2018 High turn-over will be a big problem of human resources in efficiency In the quarterly meeting, the management team requires to find reasons and action plans to reduce the ratio of turn-over

Figure 4: Number of leaving staff in percentage (Source: Human Resource Department)

To ensure that it is the issue happened in the company not the problem of the industry, it necessary to compare data with numbers of consumer goods industry Based on data from

2017 Asia Pacific Market Pulse Survey (Figure 5), the voluntary attrition rate of

consumer goods decreases from 17.1% (2016) to 12.8% (September 2017) while

Kimberly Clark Viet Nam 2017 attrition rate is 18% and 2018 attrition rate is 15% at the end of June It is too high compared with the number of the industry Therefore, it is possible to believe that a high turnover rate is an issue need to be solved

quarter I quarter II quarter III quarter IV

Leaving staf in percentage

2017 leaving staff (%) 2018 leaving staff (%)

(first 6 months)

Figure 5: Average Voluntary Attrition Rate 2016-2017 Source: 2017Asia Pacific Market Pulse Survey –Published in January 2018 (155 companies)

of In-voluntary group is negligible (Table 1) So that, the study will focus on the

Voluntary group to find factor impact on the high turnover rate

Table 1: Voluntary/ Involuntary turnover ratio in 2016-2018 (first 6 months)

(Source: Human Resource Department)

With all the data above, we can see that the turnover increase dramatically but do not know exactly which department Therefore, the Turnover ratio by department 2017-2018

(first 6 months) data will show that where we should start to study (Table 2) The findings are about the Production department with the highest percentage increase over the years Specifically, the number of turnover 2017 of production department is 57/72 persons who resigned in total and account for 79% of total 2017; the number of turnover 2018 of

production department is 56/66 persons who resigned in total and account for 85% of total

2018 The turnover percentage of others is negligible

Table 2: Turnover ratio by department 2017-2018 (first 6 months)

(Source: Human Resource Department)

The study continues to deepen the data into positions in the production department Based

on Turnover ratio by position 2017-2018 table (Table 3), we can see which position

contribute turnover rate of the department Production department has many positions which including direct labor and indirect labor Direct labor includes Production Operator and Lead Operator position Indirect labor includes the rest of the positions on the list (Table 3) There are 57 operators resigned in 2017 and 56 in the first 6 months of 2018 Therein, the highest turnover group is a group of operators

Table 3: Turnover ratio by position 2016-2018 (first 6 months)

(Source: Human Resource Department)

Next, the study analysis turnover rate by service year and performance The data shows group by service year and performance to help clarify experience and capability of

resigned employees and management team will design schemes which is suitable for each participant to attract and retain staff

Performance rating includes four level as below:

o The exceptional group includes employees who have good behaviors and deliver excellent performance Moreover, they might be the successor to their leaders If the number of this group is high it will be a problem From the data below, there is 1 the case year 2017

o The strong group includes employees who have good behaviors and deliver good performance The number of this group increased significantly in 2017 and keep increasing in 2018 This is a big issue with workforce planning

o The inconsistent group includes employees who sometimes could not reach any expectation of the target or behaviors, or both The data of this group increase over 2 years

o Too new to rate group include newcomer who joined the company under 1 year This group increased in 2017 and a decrease in 2018

Based on Working experience at KC of leaving staff in 2016-2018 (first 6 months), the number shows high turnover rate fall into strong performance group (Table 4) Employees who have 1-3 experience years increase significantly in 2017 and continuously increase in

2018 An employee who has more than 3 experience year increase steadily over the year

It means there is something change in mindset or expectation of strong performance group lead to leave the company The exceptional performance just has one case in 2017

so we can focus on it later (Table 5) For the inconsistent group, we no need to have action because they cannot deliver target as company expectation so replacement is

needed Therefore, the study will focus on strong performance group with more than year experience of working

Table 4: Working experience at KC of leaving staff in 2016-2018 (first 6 months)

(Source: Human Resource Department)

Table 5: Performance at KC of leaving staff 2017-2018 (first 6 months)

(Source: Human Resource Department)

Based on the date above, the study will focus on turnover of production operator group who has strong performance and experience “1-3 years” more than 3 years

1.2.3 Initial Cause-effect map

To ensure the information without bias, qualitative research is conducted by depth-

interviews method not only for operation group but also for leader and manager level Therefore, whole matters will be set on the table to find the main problem The

participants attend the interview include:

Manager role: Mr Vu Minh- Production Manager

Leader role: Mr Ha Van Dien- Asset Leader

Team member role- who leaved company: Mr Bui Nhut Qui- Production Operator who has worked 8 years, Mr Pham Ngoc Tu- Production Operator who has worked 6 years,

Mr Vo Huynh Quang Hung- Production Operator who has worked 1 year, Mr Phan Quoc Viet- Production Operator who has worked 3 years

The unstructured interview guide (Appendix) is conducted to get more data to build Initial cause and effect map

From a manager’s perspective

Based on the interview with Mr Vu Minh- Production manager (Appendix), the cause of high turnover involve wrong project evaluation lead to low production performance as well as market lead to low employee bonus It effected on employee motivation Then, employee engagement is going down

“Last year, Binh Duong mill received Dream project which is overwhelming to the team and it fails to lead to low performance at the mill Moreover, KC faced challenging from

a competitor so that our 2017 bonus result is not good It may reason make turnover rate too high this year”

Besides that, regional workforce strategy wants to minimize organization in the next few years This information makes employee worry and wants to look for new opportunities

“This year still have many projects to run Yet, regional workforce strategy is to keep headcount and may reduce in the next several years It affected the workload and stability

of work It makes the employee feel worried and look for a new job.”

He explained more about employee naturally look for a new job when they have a low bonus He said:

“Operator thinks simple Their nature behaviors will look for another job when they got a lower bonus.”

The summary of the manager’s perspective is mentioned in figure 10 in chapter 3

From a leader’s perspective

Based on an interview with Mr Ha Van Dien- Asset Leader (Appendix) who is in charge

of managing the workforce and performance of the machine Asset leader will manage 3 machines Indeed, there is 20 employee who directly making product multiply with 3 machines equal to 60 employees under an Asset leader He supposed high demand for worker and quality of recruitment is one of the main problems Therefore, their

adaptability is low and they easily quit a job to find a simpler job Production operator in Kimberly Clark is not only working as an operator but also maintenance staff to minimize minor stop of the machine and maximize productivity For the high demand worker from the market, it is from an external element so that we just only review our compensation program to ensure it interesting On the other hand, the quality of recruitment is important thing need to focus Newcomer with low adaptability will give up daily obstacles and leave very soon It waste of time and money

“I think because they have a good offer from another company It is good for the

employee But we have to look back as if our policy is reasonable On the other hand, the quality and adaptability of candidate recently are low They easily quit the job HR should review source to get a higher quality candidate KC employee worked under high

pressure of target such as time, waste, productivities, minor stop, time of change-over Therefore, newcomers will be hard to follow at the beginning.”

The summary of the leader’s perspective is mentioned in figure 11 in chapter 3

From the employees’ perspective

Based on the interview with staff that leaving (Appendix), Mr Vo Huynh Quang Hung- Operator, he said that he wants to get higher education and he gets a new job as an

engineer with daytime working It will support his study schedule at the university

Although his leader said that he will support him during Hung’s study time but he still chooses to leave the company

“My leader and colleagues told me that they ready to support me to study They also told

me that there is some colleague still do that but after many days of thinking I still keep my decision I want to get a higher education and get a better job as an engineer.”

He also mentions the fluctuation demand of production lead to feeling stressful in a short time It will be great if the production plan spread out

“Workload that I have is not too much but it is not allocated for a whole month Some weeks are over workload make me feel tired and some weeks are not busy like that.”

Based on the interview with staff that leaving (Appendix), Mr Pham Ngoc Tu- Operator level I, he mentioned about increasing allowance

“…it should be more allowance In other companies, basic wages general is not higher than KC but there is more allowance The benefit of KC is good for example insurance, annual health check Yet employee wants to receive a salary in money monthly more than that.”

Additionally, he shared a good point about choosing a person to guide newcomer will affect directly to engage them to stay with KC

“The target is increasing year-by-year will make newcomers fell stressful The current employee with more experience at KC may be used to it In my opinion, it takes time for them to get acquainted with it Besides that, Asset Leader and leader OP should have met and chosen enthusiast Lead OP to take care of newcomer In fact, there are some Lead

Ops do not have the enthusiasm to have, sometimes they scream newcomers and make them hurt.”

Based on the interview with staff that leaving (Appendix), Mr Bui Nhut Qui- Operator level I, he talked about a new point which related to unclear promotion process It is redundancy

“I have worked for 8 years at KC and got 1 promotion recently to operator level 1 I think

it is too long for the promotion Recently, there is a lot of promthe otion for the operator from level 0 to level 1 but they do not know the reason I think it may come from the high turnover rate.”

The summary of employees’ perspective is mentioned in figure 12 in chapter 3

Based on all interview data from manager, leader and production employees, the study consolidates information and merge all data to make Initial cause and effect map as

below There are 6 causes-effect was found after depth interviews Firstly, the low

performance of work leads to a low salary or allowance Decreasing incomes make the employee feel de-motivated and do not want to engage with the company anymore

Secondly, employees do not understand clearly about performance evaluation It makes them feel unclear assessment process and this leads to low motivation and low

engagement Thirdly, employees feel high pressure on their job because of two factors One is reducing headcount to the compact organization The other one is a lot of change over which is changing parts of the machine to run a new product line The higher change over the higher project It means that the workload is heavy year by year Fourthly,

newcomers had poor adaptability with the job Leaders think that low quality of

candidates is a problem and a shortage of resource of candidates make ineffective

recruitment process Fifthly, the employees who work in night shift hard to study if they want to get higher education as their aspiration Last but not least, Viet Nam workforce has an advantage about low cost, a young population so that competition between local and multinational companies is so intense The employee may receive new opportunities with higher salary from competitors or other companies This external factor impacted also high turnover rate

High turnover rate

Over workload on job

Heavy workload A lot of changeover

Unsuitable for study

Low quality of candidates

New opportunities with higher salary

Low motivation

Shortage resource of candidates

Fierce compensation in recruitment

Based on data collected from depth interviews, Initial cause and effect map was

developed The thesis is focused on company problem not personal and external problem

Therefore, the factors which include external and internal factors will be removed from

the study Besides, it necessary to find theories or literature reviews to choose the main

problem

1.3.1 Heavy workload

Firstly, the study will find theories to clarify heavy workload definition As Brown

mentioned in his study, the workload can be understood that work is overload It makes

people feel tired and cause of low productivity (5) According to Taylor, Repetti, and

Seeman (1997), workers who work overload for a long time will impact on their health

There are some studies point out that work overload is the main factor of chronic

stress(6) Besides, there is a cause and effect relationship between heavy workload with a

job commitment It is a negative impact on the engagement of actions (7) With the study

of Mueller, Boyer, Price, & Iverson in 1994, they show that heavy workload leads to

increase turnover rate (8) So heavy workload not only impact on productivity,

employee’s health, job commitment but also turnover rate The theories show the

importance of heavy workload then we use collected data from the depth interview to find out whether it is the main cause of high turnover rate or not From the theories, the

varibale of “heavy workload” may be a main factor of the problem Yet, we will compare with data collected from exit interview to define as if it is a critical issue or not

Based on data from interview Vo Huynh Quang Hung-1 experience year worker who left the company, he does not feel overload in work Yet he said that it is not spread out

“Workload that I have is not too much but it is not allocated for a whole month Some weeks are over workload make me feel tired and some weeks are not busy like that.”

From data from interview an experienced worker- Pham Ngoc Tu, he said that he was used to it There is nothing make him frustrated at work

“I had worked at KC for 6 years so that I felt ok with the workload It is not too much with me but it might be difficult for newcomer”

Based on data form theories, heavy workload is factor let employee down and feel tired Therefore lead them to quit the job With all information which collected form exit

interview, the resigned employees think that there is heavy workload sometime but it not the key factor push them to looking for new job It also means that heavy workload is not the main cause lead to high turn over rate

1.3.2 Ineffective recruitment process

Secondly, we continue to find the definition of the ineffective recruitment process from other literature reviews The recruitment process is an important part of human resource management which is mentioned in the Human Resource Management book Human resource management includes talent acquisition, training development, assessment, and

reward (10) Having a good recruitment process, it will an important part to find a good

person for the right job As Taylor mentioned in “Organizational recruitment activities and applicants' reactions at different stages of the recruitment process” study, the

recruitment process includes many activities in it to attract talent for the organization (11) According to Heneman, Schwab, Fossum, & Dyer study, this process includes seeking

talent from many resources and show them good compensation and benefits package to attract them to join the company (12) The recruitment process can call in the other name which is “talent acquisition” When doing good talent acquisition the productivity will increase also (13)

With all data above, the thing that not doing good recruitment process will have a

negative impact on workforce and talent pool Then, this study will compare with data from the company to define whether it is the main cause or not Based on “Leaving staff

by experience” data (Figure 6) provided by Human Resource in 2017 and first six months

in 2018 The number of leaving staff who has under 1 pear experience at Kimberly Clark

is going down The number for this is 6 newcomers in the first 6 months in 2018 It shows that the quality of the recruitment process is not the main problem of turn over Moreover, the highest turnover rate falls into the group who has strong performance it strongly

supports that the recruitment process is not the main cause which should focus on

Figure 7: Number of leaving staff by experience (Source: Human Resource Department)

1.3.3 Low employee engagement

Lastly, this study will find the definition of low employee engagement from other studies

to compare with actual data to figure out whether it is the main problem Based on Bakker study, employee engagement is the thing that employees uses their energy including a physical, emotional and mental focus on their role to deliver the highest result It is the way to express the one also (14) The other definition of employee engagement by

Andrew OC, Sofian S shows that employee engagement is an essential part of the

1-3 years < 1 year > 3 years 1-3 years < 1 year > 3 years 1-3 years < 1 year 1-3 years

Exceptional Inconsistent Strong Too new to rate

leaving staff by experience

2017 2018

organization It helps to build a strong foundation of the organization An employee who works with passion will contribute their full potential to get a higher level of performance (15) In Bakker study (2008), he an agreed that employee with higher energy will deliver the better result (16) With all definition above, the employee engagement is a crucial part

in the development journey of the company

In addition, The Initial cause and effect map which merge data from the interview

employees, leader and manager also shows low employee engagement is a problem of organization

From a manager’s perspective, Mr Vu Minh- Production Manager think that low bonus will lead to low motivation and loyalty of employee

From a leader’s perspective, Mr Ha Van Dien- Asset Leader think that uncompetitive compensation package makes employee demotivate lead to low engagement

From the employees’ perspective, they think that uncompetitive allowance and salary make them leave the company

With all the information above, employee engagement is very important in the company The higher engagement scores the higher loyalty and they will deliver high performance

1.3.4 Consequence

To strengthen the important of the main problem, the study will show the possible result when the company has low engagement score High turn-over will increase costs which include overtime payment and hiring cost It takes time for newcomers to learn and adopt new environment and might a reason for low performance A newcomer needs at least three months to do smoothly their daily work Newcomers need to be trained by current employees and they have to work overtime to teach new hires This lead to increase high overtime payment Besides that, when lacking resource the rest of the team have to work overtime to cover the workload of the vacancy Therefore, it is necessary to find the main

problem of high turnover to minimize waste of money

According to Figure 7 below, the highest overtime payment paid for replacing equivalent

to 8 hours per person per month The percentage of overtime payment for replacing is 20% (Table 6) which is equal to 5,881,886 VND (Table 7) per new hire monthly On the

other hand, the related cost for newcomers will be waste if they just join the company for

a few months and quit The total amount maybe estimates around 10,687,108 VND Then, the amount the company had paid for 66 resignation cases is around 705,349,128 VND for the first 6 months In case there is no one leave company at least one year, it will be investment costly Yet if there is any newcomer quit the job, it will be waste of time and money Then, the whole recruitment process needs to be restarted with a double cost

Figure 8: Overtime reasons Jan-Jun 2018 (Source: Human resource department)

Table 6: Average Overtime per person Jan-Jun 2018 in percentage

(Source: Human resource Department)

8 7 7 7 6 4

3

replace people others project supporting training kaizen/problem solving

Description Cost

Table 7: Hiring cost in 2018 (Source: Human resource department)

It’s not only cost of time to recruit but also cost of building talent and retain staff

Especially, operators who are directly involved in the production process, New operator need three to six months to understand and operate smoothly It means that there is the amount of money need to be paid for training and overtime of current experience

employee to take care of the new one during that time If newcomers pass probation time and keep delivering good performance, it is still a good investment with long term

Lacking operator resource will decrease productivity and increasing waste When

turnover is high means that lacking human resource with experience The new comers need a lot of time to adapt and understand the process and how to do problem solving The current employees not only try to cover the workload of the vacancies but also train new comers as fast as possible Then, they can do their job smoothly Figure 8 and 9 show that the performance of machines are not meet the target for the first 6 months in 2018 and the waste is higher than the target of 2018 The year to date for OEE is 88.4% versus target is 90.3% Moreover, the Waste year to date is 1.2% versus target 0.71% Thus, the Binh Duong mill will not meet performance at the end of the year and directly impact to profit and bonus in the end of the year of whole company

Figure 9: Performance of machines (first 6 months in 2018) (Source: Kimberly Clark mid-year business review 2018)

Figure 10: Waste of machines (first 6 months in 2018) (Source: Kimberly Clark mid-year business review 2018)

In the weekly meeting at Binh Duong mill, Mill manager said among the board of

management: “engagement activities are going down recently and it is not interesting anymore We have to face huge competition in the market so there is a lot of projects developed to win market shares It is necessary to make the engagement program more interesting.” Human Resource Manager agreed with Mr Hoai in the same meeting:

engagement is one of the important things need to focus to retain talent

With all data given above, both un-control factors which are external and personal factor will be eliminated because the company cannot control them It should be focused on what the company can changes which are the process of recruitment, reviewing workload

2018 Target

Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 2018

YTDPerformance of machines

2018 Target

Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 2018

YTDWaste of machines

of each job, re-assessment of employee engagement ratio to investigate which is big factor impact to hug turnover Furthermore, the theories prove that low engagement, works stress or ineffective talent acquisition will be main cause make employees leave the company By collecting data from exit interview, focus group and employee engagement survey’s result, the main cause is defined The main cause is about uncompetitive salary and this is one of key factor of low engagement dimensions

High turnover rate Over workload on job

Low allowance/

Salary Low engagement

Reduce headcount

Low quality of candidates

Low motivation

Shortage resource of candidates

CHAPTER 2: SUGGESTED SOLUTION 2.1 Cause validation

There is an employee engagement survey which conducted once per two years at

Kimberly Clark in September All employees required to do the survey The number of employees who attend an engagement survey in 2017 is 426 staff The result of 2017 survey founded top 4 big dimensions to improve:

✓ Pay

✓ Reward & Recognition

✓ Development Opportunities

✓ Team Leader Relations (or Poor leader performance)

Figure 12: The result of an employee engagement survey in 2017

(Source: Human Resource Department)

The column on the left side shows dimensions which are affected by employee

engagement The percentage of Fav means Favorite group who agree with the company about the dimension The percentage of Neutral means Neutral group who do not have an idea about dimensions Most of the employee in this group come from a new employee

The percentage of Unfav means Unfavorite group who do not agree about dimensions If the board of management wants to increase employee engagement score, they should focus on an action plan for this group Mr Hoai- Mill Manager totally agreed with the result He required all function head making an action plan Mr Binh-HR Manager

organizes 4 sessions for the operator group to get their opinion on each factor in 1 and 3 November 2017 The data collected from the focus group are below

Reward & Recognition

In Performance management book of Herman Aguinis, assessment if one of step in

performance management process which including identifying, measuring and developing

for staff in organization strategy (17) Data below is summary of Reward and Recognition

To deepen data, there is a couple of interviews was conducted with the operator Tran

Duc Loc- operator in BD24 machine said that “my leader is caring about us He often stays at the company after work when we run the hard to project For example, the speed

up project which was run in March is successful He sent a recognition card to us

Besides that, he sent an email to Mill manager and Production Manager for recognizing us.”

The interview with Kieu Ngoc Han- Lead Operator in BD04 machine mentioned “my leader is not sending recognition card for me often, but I don’t care I think the most important thing he knows what I have done and rating right in the year-end assessment.”

In the other interview, Pham Hung Cuong- Lead Operator in the BD07 machine “it is good when the leader recognizes us but we like salary or bonus more than that.”

Therefore, the Reward and Recognition is not the main cause of low engagement The result of in 2017 may not reflect the current situation in 2018 anymore

Development Opportunities

Machine

New position

Total Lead Production Operator Production Operator I

Table 8: List of promotion of production (Source: Human Resource Department)

Table 8 is a summary of development Opportunities dimension

- The team leader has not provided or focused on career discussion with team members

- No frequent job opportunities/ promotions

- Unclear about the career ladder

- The team does not have real IDP and closely monitor tracking on progress

Besides that, from data of HR team (Table 8), there is 2 Operator I was promoted to Lead Operator and 52 Operator was promoted to Operator level I total number account for ¼

of a total of operator group So that, the data can prove that Development Opportunities is not a main cause of the study

Team Leader Relations

Based on the Pulakos study, he mentioned the result when performance management doing good or bad When doing performance management well it helps achieve the target and contribute to developing the strategy of the organization When doing this process not well it will make team members feel demotivation and distrust Thus, the team will be

weak and hard to achieve goals (18) According to Chandler study, he mentioned the

relationship between supervisory support and reward system will help to create a culture

with innovation (19) A good team leader should know team member characteristic to

manage them effectively The management including setting clearly objective, coaching, feedback, and assessment The data collected from the focus group session is below

- The employee has not seen the effectiveness of coaching and feedback from

managers, team leaders The coaching & feedback is not regularly and specifically

to improve skills and performance The leader just focuses on daily operational issues

- Employees do not feel that they receive sincere care and concern as a person The managers, team leaders are not really available when employee need, not really accommodating when an employee has a family, personal matters to attend to Based on data from the interview of Tran Duc Loc- operator in BD24, he thinks his leader

has good leadership style and care about team member “my leader is caring about us He often stays at the company after work when we run the hard to project.”

From the interview with Vo Huynh Quang Hung- Operator who leave the company, he said that his leader already to support him if he wants to get a higher education Yet he refused just because he wants to keep his decision

Therefore, Team Leader Relations is also not the main cause we need to focus

Pay

Pay had the lowest score of engagement survey After having the result, there are

4 sessions “focus group meeting” organized to collect more data They said that even HR

is playing a key role to provide support, coaching for team leaders, team members on PAY but the employee still doesn’t understand clearly about pay philosophy, methods,

and structure Besides that, employees have a big concerned on current pay for

performance as well as market pricing Data below is a summary of their queries:

• Which companies are being compared with KCV about pay package?

• What is KC pay philosophy?

• What next if their salary reaches 100% of their pay grade?

• Heavy workload compares with the same position of other companies

• Base salary and allowance are low

To clarify employees’ concerns, there are two “Market based compensation” training sessions which held to provide employees a deeper understanding of K-C’s compensation philosophy, practices During the training, almost employees’ concerns are explained clearly but there are two things are not satisfied They are:

✓ The job description of some positions is out of date so that they cannot reflect their workload

✓ Base salary and allowance are low

Besides, based on data provided from resigned employees during exit interviews, most of them mentioned uncompetitive compensation package which is including salary and allowance The percentage of increasing salary yearly As Mr Pham Ngoc Tu- Operator said that:

“I think my salary is it ok for now Yet, for an employee who is working for 2-3 years feel the percentage increase in wages is the low cause of inflation.”

He thinks for newcomers the percentage of increasing salary is low

As Mr Bui Nhut Qui- Operator mentioned in the interview, he got a higher-level job with

a higher salary and working in daytime

“Actually, I got a new job as an electrical technician I will work daytime and a higher salary This is an opportunity for my career.”

Based on data provided by Mr Phan Quoc Viet- Operator, he also wants to find a new job with higher wages