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 NUMBER OF SALE VOLUME IN FPT TELECOM & THE DECREASING IN FPT TELECOM –

2 THE TURNOVER RATE IN FPT TELECOM COMPARED TO TELECOM INDUSTRY’S TURNOVER RATE

3 TURNOVER RATE IN REGION 5 – HO CHI MINH CITY IN FPT TELECOM

2 SALARY AND BENEFITS

3 ERRORS IN RECRUITMENT & PERFORMANCE APPRAISALS BIAS

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

Firuge 1 FPT Telecom’s structure

(Source: FPT Telecom Human Resources)

Annual General Meeting Board of Directors

Board of Supervisors

Management &

Development Center of Head Cable

Research Center

Infrastructure Center

Third-Party Supporting Department Network Center

FPT International Telecom Limited Company

FPT Software Solution for Business Limited

Company Tan Thuan Telecom Limited Company

FPT Telecom Tan ThuanJoint Stock

Company FPT Online Joint Stock Company

Branches of 7 Regions International Sales

Department

NUMBER OF SALES VOLUME

Region 1 Region 2 Region 3 Region 4 Region 5 Region 6 Region 7

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

0 10 20 30 40 50 60 70 Region 1

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…

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 transparent

non-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

In (Join for work) Out (leave work)

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

HIGH TURNOVER RATE IN FPT TELECOM – REGION 5

ERRORS IN

BALANCE

PERFORMANCE APPRAISALS BIAS FROM SUPERVISOR

SALARY AND BENEFITS

Unclear Job Description

Lack of professional in recruitment

Work overload

Unhealthy lifestyles

Lack of reward &

recognition

Unfair salary

Supervisors are not trained &

inexperienced

Inconsistency across

supervisors

Recency bias &

personal bias error

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)