C OMPANY OVERVIEW
Phuong Dong Garment JSC, established in 2015, specializes in the production and sale of apparel while also trading in materials, equipment, spare parts, and various cloth materials Additionally, the company is involved in food technology trading and offers a range of office stationery and artisan products.
Since its inception in 1988, the company has experienced significant growth, starting with the establishment of its first factory and the hiring of over 500 employees Nearly two decades later, it began directly exporting garments to the European market on a free-on-board (FOB) basis, focusing primarily on sportswear and waterproof clothing To accommodate rising demand from both EU and US markets, the company expanded its operations with the construction of its second and third factories in 2016 and 2019, respectively These new facilities are designed to produce specific types of goods, allowing the company to better cater to diverse market orders.
C APABILITIES
Production
Phuong Dong specializes in clothing production, offering services such as seam sealing, casual laser cutting, welding, bonding, and seamless line bonding The company is committed to developing highly skilled workers and designers, supported by an advanced management framework aimed at expanding its product portfolio This vision is realized through continuous investment in world-class machinery, enhancing technological processes to boost domestic design creativity Currently, Phuong Dong operates three factories with 80 production lines, sourcing most of its machinery from countries like Singapore, China, Thailand, and Japan While the first factory's equipment has been in use for over ten years, it remains operational, and the company has invested in new equipment for its two newer plants established in 2016 and 2019 Overall, Phuong Dong boasts a production capacity exceeding 90%, averaging 400 to 500 products daily.
Products and partner’s portfolio
The firm envisions becoming one of the top five largest companies in the Vietnamese textile industry, with a specific goal of leading in backpack and bag manufacturing Currently, it produces millions of garments annually for renowned brands in Europe and the US, making this objective attainable While focusing on bags and backpacks, the company also manufactures a variety of other products, including fleece jackets, pants, and children's suits Sweatshirts and fleece pants constitute the majority of production at 53%, followed by bags and backpacks at 22%, with jeans and men's suits making up 10% and 5%, respectively The company collaborates with a diverse range of partners across various sectors, including notable names like Lee, Costco, Zara, Next, Matalan, and Decathlon, providing a strong foundation for its ambitious goals.
Organizational overview
Phuong Dong began operations in 1988 and became a joint stock company in 2004, currently listed on the UPCoM exchange platform, which suggests a closed organizational structure The company's financial reports clearly outline its Board of Directors and Board of Management, reflecting stability in leadership under CEO Mrs Nguyen Bao Tran, with no significant changes reported in management This consistency indicates the firm's resilience amid challenging economic conditions.
Figure 1: Phuong Dong Corporation’s organization structure
(Source: Phuong Dong Human Resource Department)
Our company has a simple structure divided in 4 departments with total of 2065 employees at 30/06/2020 (excluding the Inspection Committee), which are: Planning department
& showroom (20 employees), Sample & technical room (12 employees), Cutting & sewing
(1846 employees/workers) – our main focus for this paper, which is contain more than 89% of total employees, and Warehousing & packaging (187 employees/workers)
More detail at the Cutting & sewing segment’s structure, further divided into:
1) Supervisor: ~ 5% of total workers, which are the team captain of each sewing line
2) Skilled worker: ~ 70% of total workers, each sewing line have about 20-30 employees
3) Apprentice: 20% of total workers, around 5 employees each line
4) Office: ~5% total workers, in charge the report and inspect the production procedure.
Financial situation
Revenue in the couple of years has been stable around 510 billion VND/year, in which:
Phuong Dong generates approximately $21 million in annual export revenue, which constitutes about 90% of its total income The company primarily collaborates with two major partners, Desipro and Motives, who are its largest customers.
8 intermediate body in supplying orders from European, American and a few Asian economies
In 2019, the company generated a domestic revenue of 39 billion VND, leveraging its extensive workforce and manufacturing capabilities It produces shirts and T-shirts under its local brands, F.House and Wrap.U, while also fulfilling orders for various clothing items such as sweatshirts and jeans for domestic businesses.
Its net working capital is always maintained at 20 billion VND
In general, the company’s financial strength is moderate and no signs of cease operation in the future.
F UTURE OUTLOOK
Phuong Dong, a well-performing SME in the textile industry, is focused on investment and expansion, particularly in the export market With strong financial health and secured liquidity, the company is poised to expand its factory and invest in new machinery in Cho Gao, Tien Giang, with a total capital expenditure of 180 billion VND The firm plans to secure a loan covering 70% of this investment, amounting to 126 billion VND Given its extensive experience in the apparel sector, this expansion is deemed feasible and is expected to enhance internal productivity and increase output to meet rising customer orders Currently, Phuong Dong meets 80% of its partners' demands, with some orders being outsourced to other entities.
S YMPTOMS
Phuong Dong has maintained stable operations and expanded its scale, yet employee turnover remains a significant concern, exacerbated by the ongoing pandemic A comprehensive analysis is essential to uncover the underlying causes of this issue, which will inform effective solutions for the company.
Based on the data collected from Human Resource Department of Phuong Dong, the turnover rate of employees is briefly illustrated in Table 1 as below:
Table 1 Total employee turnover rate at Phuong Dong
Total resigned in the year 211 501 454 350 147
(Source: Phuong Dong Human Resource Department)
In 2019, the overall employee turnover rate was 19%, a decrease from the significantly higher rate in 2017 Notably, the turnover rate for the first half of 2020 dropped to just 7%, attributed to the reporting method that included all employees without accounting for those who had resigned To provide a clearer picture, Table 2 focuses on the Cutting & Sewing department, which comprises over 89% of the total workforce, as detailed in the Company’s structure section.
Table 2 Total employee turnover rate at Phuong Dong at Cutting & Sewing segment
(newly recruited in the year) 121 658 491 295 203
Total resigned in the year 211 501 454 350 147
(Source: Phuong Dong Human Resource Department)
The turnover rate at Phuong Dong has become a significant concern, particularly highlighted in 2019 when 350 employees resigned while fewer than 300 were hired The situation deteriorated in 2020 due to the widespread chaos caused by the Covid-19 pandemic, leading to an anticipated resignation rate that could match or exceed the previous year's figures This trend is not unusual given the challenges many businesses are facing during the pandemic.
The Vietnam textile industry faces significant challenges, including a workforce with low education levels and a reduced headcount stemming from decreased production during the pandemic.
In this analysis, the author compares Phuong Dong Joint Stock Company with its sibling company, Tex-Giang Joint Stock Company, both led by Chairman Vu Duc Giang, who also chairs VINATEX (The Vietnam Textile and Garment Group) This comparison is relevant due to their shared leadership, as Mr Giang oversees several textile enterprises in southern Vietnam, including Phuong Dong JSC in Ho Chi Minh City and Tex-Giang in Tien Giang Province, in addition to his role as CEO of Viet Tien Garment JSC and a major shareholder of Phong Phu Corp Both companies operate within the same industry and employ a similar workforce, making this analysis insightful The turnover rate for Tex-Giang is detailed in Table 3.
Table 3 Total employee turnover rate at Tex-Giang, re-presented
(newly recruited in the year)
Total resigned in the year 278 327 221 319 112
(Source: Tex-Giang Human Resource Department)
The distinction between the two sibling companies, Phuong Dong and Tex-Giang, is evident, particularly in their turnover rates While geographical factors and average salaries, influenced by the living standards of Ho Chi Minh City and Tien Giang Province, are not the focus here, the noticeable difference in employee retention speaks volumes about their operational environments.
A comparison of the turnover rate at Phuong Dong with the general trends in the US and Tex-Giang company in Vietnam reveals an unusually high rate for Phuong Dong According to a 2019 report by FPT, the textile industry is expected to thrive in developing countries like Vietnam, while it faces a slowdown in developed economies Vietnam is recognized as a leading nation in this sector, boasting an impressive growth rate of 12.9% annually from 2014 to 2019.
Therefore, it has to be taken a consideration in the turnover rate of the apparel industry globally to better benchmark Phuong Dong’s high rate.
Figure 2 Size and growth rate of a few nations’ apparel industry
(Source: Global Competitiveness, Wazir Advisors)
Figure 2 showed that the actual growth rate of 12.9% of Vietnam in a period of 2014-
2019 was quite high However, Vietnamese productivity in manufacturing was relatively low, not to say that it was the lowest
Figure 3 Productivity index of manufacturing sector
(Source: UNIDO China statistical yearbook)
The high turnover rate at Phuong Dong, one of Vietnam's leading apparel companies, can be attributed to various factors However, due to the differing sizes and transparency levels among textile businesses, a direct comparison with its competitors is challenging, as many do not disclose their operational data.
In terms of detail, the breakdown turnover rate data for 3-year from 2016 to 5 months of
2020 was structured as in Table 3 below in absolute Figure 4 is shown as supplementary evidence to illustrate comprehensively the picture of employee turnover at Phuong Dong
Table 4 Breakdown employee leaving in absolute terms in 2016-2020
Figure 4 Employee turnover rate breakdown to job position in 2016-2020
In 2019, employee turnover was notably high, with apprentices exhibiting the greatest volatility Confidential internal data reveals that this group typically departed the company after roughly one year of employment.
S YMPTOM VALIDATION AND JUSTIFICATION
Data from Phuong Dong's employee records indicate that production sector workers, particularly apprentices, experience the highest turnover rates and the shortest tenure The focus on apprentice workers over office employees—who number fewer than 30—was intentional, as their experiences more accurately reflect the challenges faced in the workforce An HR staff member confirmed that many workers tend to leave the company quickly upon recognizing harsh working conditions.
Many employees in training often feel undervalued due to their salaries and bonuses, which do not reflect their contributions This lack of engagement can lead to feelings of discouragement, as their tasks may seem monotonous and unappealing.
Research by Ken Moon from Wharton reveals that high employee turnover rates were prevalent in the early 1900s, with Ford experiencing a staggering 400% turnover in 1913, necessitating the replacement of each worker four times within a year However, the following year, Ford's factories saw a dramatic turnaround after implementing a $5 wage increase, demonstrating the significant impact that compensation can have on employee retention.
We are recruiting new employees on Mondays, providing training on Tuesdays and Wednesdays, but often find their badges discarded by Thursday or Friday, never to see them again.
A recent article in the MIT Sloan Management Review highlights the rapid turnover of employees in the manufacturing sector, while a Wharton article notes that manufacturers are simplifying tasks, a trend referred to as "de-skilling," which allows one worker to handle duties previously requiring multiple personnel due to technological advancements However, this trend does not apply to Phuong Dong, suggesting that the firm's high turnover rate cannot be attributed to this phenomenon.
Worker turnover is widely regarded as a costly issue for the industry, impacting firms significantly For Phuong Dong, the expenses associated with training new employees were substantial, as detailed in Table 5.
Table 5 Expenses for recruiting employees
VNDm VNDm VNDm VNDm VNDm
(Source: Phuong Dong Human Resource Department)
Employee training expenses at Phuong Dong were estimated by HR due to the confidentiality of the data These costs were prorated based on staff position levels and adjusted according to employee growth rates, indicating that higher job levels incurred greater training expenses Additionally, training costs showed a linear correlation with the annual changes in newly hired staff.
In 2017, Phuong Dong JSC experienced its highest staff recruitment in four years, predominantly hiring apprentice-level workers This trend indicated a concerning turnover rate, as many of these employees left after just one to two years Despite the high turnover, the associated costs for this group were relatively low The following section of the thesis will explore the underlying issues faced by Phuong Dong Corp.
P ROBLEM MESS
For the beginning, finding the problems leading to high turnover rate in Sewing and Cutting Segment of Phuong Dong JSC is crucial for our company operation The author would
16 use the qualitative research method such as in-depth interviews and surveys have been conducted
The interview would focus on both manager-level and workers The managers consist of
Ms Nguyen Bao Tran – CEO and Mr Tran Manh Tung – Hr Director The workers would be various people, either left or current working at the company
Mr Tran Manh Tung, the HR Director, revealed that many employees resigned due to dissatisfaction with low salaries and inadequate benefits His interviews highlighted key reasons for their departure, including limited career growth opportunities and job instability.
The CEO's perspective aligns with the HR Director's assessment, highlighting that the Sewing and Cutting segment operates with minimal interaction among employees, as each individual is solely responsible for their own tasks and primarily follows directives from their line manager Additionally, the work environment is characterized by significant noise from various machines, requiring workers to maintain intense focus to ensure the quality of their output.
Interviews with current and former employees highlighted key reasons for their decision to leave, including low salaries, unequal benefits, feelings of isolation, job insecurity, lack of retention efforts, and limited opportunities for career growth and development This feedback reveals significant issues that can be illustrated in a preliminary cause and effect diagram.
Figure 5 Preliminary cause and effect tree
P OSSIBLE PROBLEMS
Income dissatisfaction
The author conducts various interviews with Phuong Dong’s employees
In the office segment, HR staff Ms A highlighted that employee departures were primarily linked to wage-related issues, with many finding similar positions that offered better salaries Additionally, some employees noted that their new roles were less demanding than their current jobs at Phuong Dong, while others expressed dissatisfaction with the benefits provided.
Current employees at the company express mixed opinions about their work experiences An anonymous apprentice worker, Mr B, who stands at the production line during his 8-hour shifts, revealed that he often works double shifts to supplement his income He highlighted that his basic salary is insufficient to support his family of three.
An interview with Mrs C, a back office staff member who has worked for the company for nearly two years, reveals a different perspective Although her role involves administrative tasks that she finds manageable, she feels her salary is not competitive Despite this, she appreciates the stability of her position and expresses a desire for a salary increase to maintain her motivation; otherwise, she fears she may become discouraged in the future.
Employee satisfaction regarding salaries varies across job positions, with those in manufacturing roles expressing significant dissatisfaction Conversely, back office staff also indicated a desire for salary increases, highlighting a broader concern about wage satisfaction This aligns with Mercy et al (14), who assert that salary plays a crucial role in measuring employee satisfaction and motivation When employees feel adequately compensated, they are more energized to enhance their performance and are likely to remain with the company.
Akhtar, Awan, Saeed, Ali, and Qurban describe turnover as a "curse" affecting all organizations, while Johnsrud and Rosser argue that it is not a permanent issue They suggest that with effective solutions addressing the underlying causes of turnover, institutions can improve their situation.
Phuong Dong experienced high turnover primarily due to apprentice workers leaving their positions, which negatively impacted the company's efficiency While some studies suggest that this situation could be advantageous for the firm, the departure of high-skilled employees would exacerbate the issue Numerous research papers have identified income as a critical factor influencing employee retention.
19 employees to retain the firm or not (11) (12), (13) This, in turn, pointed to the fact that employees would not stay if their wages were not worthwhile paid
More interviewing with a manager of HR department, Mr D shared his opinion:
“Phuong Dong JSC issued a policy of review salary and bonus scheme and that this policy has been applied for years.”
Employees may not realize that the company's wage scheme is competitively structured compared to industry peers While salaries may not be at the highest level, they are deemed fair for each job position However, factors contributing to income dissatisfaction, which may lead workers to leave the firm, could be linked to working conditions, as discussed in the following segment.
Insufficient working environment
A positive working environment is essential for employee retention, as highlighted by Rossberg et al (15), who noted that unfavorable working conditions can lead to higher turnover rates Anitha (16) emphasized the significance of employee engagement in enhancing organizational performance and retention Supporting this, Raziq and Maulabakhsh (17) found a positive correlation between a supportive working environment and job satisfaction, indicating that companies must prioritize improving working conditions to boost employee satisfaction.
In 1992, researchers identified organizational culture as a key factor influencing employee retention within companies Dimitrios defined this concept as the set of policies governing recruitment and management practices that shape how employees engage with the organization.
A positive working environment and favorable working conditions are essential components of workplace culture According to Xiaoming and Junchen, strong employee relationships play a crucial role in fostering this culture When employees maintain harmonious and friendly interactions, it significantly contributes to their retention within the organization.
At Phuong Dong, HR manager Mr D emphasized that employee turnover is more influenced by work discipline than by salary He noted that the company has established a competitive salary structure and conducts annual performance reviews, making it misleading to claim that low income is the primary reason for employees leaving their jobs.
Kurniawan and Heryanto (21) found that work discipline negatively affects work motivation, with working conditions being a significant influencing factor An interview with Mrs E, a production department employee with three years of experience, revealed her concerns about working in a hazardous environment despite the company providing insurance She feels insecure due to frequent accidents in the apparel industry and is further stressed by her restricted location Although she sometimes feels unwell, she hesitates to take time off for fear of salary deductions, a concern shared by employees at other companies as well.
A 2017 report by Nguyen highlighted that the most significant violation in workplace safety across various enterprises in 2015 was the lack of a developed safety plan for workers, accounting for 42.11% The next most common issue was that safety policies were either not fully satisfied or inappropriate for the firm's actual conditions Additionally, there were failures to adhere to established policies and a lack of soliciting feedback from employees regarding safety measures.
Table 6 The percentage of violation of working environment regulations
(Source: Excerpted from the report (ibid))
In an interview with Mrs F, a factory worker, she expressed feelings of isolation during her shifts, stating that her focus is solely on work, leaving little time for interaction with colleagues This lack of connection, she believes, contributes to employees leaving the company without strong emotional ties.
Mr D, the HR manager, and Mr E, the production manager, disagreed with the notion that employees lacked adequate break times, asserting that workers have designated lunch or dinner breaks based on their shifts, and that rest periods are not strictly enforced They emphasized the company's commitment to employee well-being Despite management's claims of adhering to safety regulations and fostering a positive work culture, feedback from employees suggests a disconnect between their experiences and the managers' assertions, indicating potential miscommunication within the organization.
Isolation among employees can lead to missed signals and is characterized as a form of working detachment, as defined by Munir et al This detachment can be categorized into two types: isolation from the company, which indicates a lack of supportive relationships, and isolation from colleagues In the case of Mrs F, the issue was specifically colleague isolation This suggests that the firm may be overly focused on organizational-level concerns while neglecting individual employee needs.
Low level of motivation
A study by Ahmad, Tariq, and Hussain identified three key strategies for employee retention in Pakistan's banking sector: attractive rewards and recognition, annual performance reviews, and training opportunities These strategies highlight the importance of income-related human resource practices and career development This trend is not limited to Pakistan but reflects a global shift in human resource practices amid changing demographics and technological advancements, as noted by Ohmae Such changes create opportunities for employees to transition between roles or companies Research has shown a positive relationship between career motivation and key employee behaviors, including turnover rates, job satisfaction, and organizational commitment, as demonstrated by Alnıaỗık et al.
A recent study involving 250 employees across various industries revealed that career motivation significantly increases when managers provide support and encourage their staff to set and pursue career goals Noe (28) emphasized the importance of overcoming workplace challenges, suggesting that positive reinforcement, such as compliments, constructive feedback, and salary appraisals, plays a crucial role in fostering this motivation.
Mrs F, an employee at a factory, expressed her concerns about the irregularity of managerial praise, noting that while her manager occasionally acknowledges good performance, it lacks consistency Her role on the production line involves repetitive tasks, limiting her opportunities to exceed expectations Additionally, she feels disheartened by her low base salary, with bonuses only awarded during holidays, which occur two to three times a year This discouragement has led her to consider quitting, as the demanding nature of her job does not justify the meager income.
High turnover rates at Phuong Dong can be attributed to unequal benefits among employees at different levels HR Manager Mr D noted that this disparity has become increasingly pronounced, leading to employee envy and some departures from the company Although various practices have been implemented to address this issue, the positive effects will take time to materialize, as only current employees will benefit from these changes The company is committed to rewarding those who demonstrate effort and effectiveness, with ongoing job evaluations to support this initiative.
A limited number of employees are recruited through HR agents rather than being directly hired by the company, resulting in their wages and bonuses not being covered by the organization This situation may lead to employee turnover However, due to the confidential nature of this data, detailed statistics will not be disclosed and will not be the focus of this thesis.
In interviews with Mr G, a former production worker, and Mr H, a former back office employee at Phuong Dong, they reveal a concerning trend of career de-motivation linked to unequal benefits within the company Their experiences highlight the reasons behind their decision to leave, shedding light on the negative impact of disparities in employee treatment.
Many employees leave their jobs due to inadequate salaries that do not align with their family needs Additionally, even if compensation is acceptable, feelings of discouragement arise from unequal treatment among different departments, ultimately leading to their decision to quit.
SLazaroiu (29) revealed that unequal benefits are a significant factor contributing to the high turnover rate among employees, ultimately diminishing their job satisfaction and reducing retention intentions.
C AUSES AND EFFECT MAP
Gathering and summing the information presented in the previous sector, the causes and effects map are drawn
Figure 6 Causes and effects map of Phuong Dong’s high turnover rate at Sewing and Cutting workers
P ROBLEM VALIDATION
High voluntary turnover rates among apprentice workers at Phuong Dong are primarily driven by three key issues: income dissatisfaction, an inadequate working environment, and a lack of career motivation.
To identify clearly about the current problem of company, a survey was conducted
The Human Resources department conducted a survey involving approximately 100 apprentice employees in the Cutting and Sewing segment, gathering their feedback on various aspects of their experience The survey featured five yes/no questions, and the results are summarized in the table below.
No Survey Type of response Response
1 Job after leave Name of company
2 Income after leave Higher, Lower, Same
3 Low-paid (found better attractive company) Yes/No 86% 14%
4 Insufficient working environment (Isolation, hazardous) Yes/No 64%, 36%
5 Low level of motivation (No career development,…) Yes/No 70% 30% (Source: Phuong Dong Human Resource Department)
The survey results indicate that the most significant concern among the three potential problems is low pay, with 86% of respondents agreeing it is an issue This is followed by low motivation levels at 70%, while the working environment ranks lowest, with 64% of participants expressing concern.
The salary issue at Phuong Dong is more a matter of perception than reality, as it is comparatively higher than those offered by other textile companies The company enjoys stable production and business operations, with financial strength exceeding the industry average Additionally, being situated in Ho Chi Minh City, where the minimum wage is higher than in rural areas, contributes to their competitive salary offerings A survey conducted among three textile companies—Phuong Dong, Tex-Giang, and Phong Phu Corp—located in District 9, HCMC, supports these findings.
Table 8 Average salary (million VND/month)
Phuong Dong Tex-Giang Phong Phu
(Source: Phuong Dong Human Resource Department & other internal HR)
The average salary at Phuong Dong is relatively competitive; however, workers often express dissatisfaction due to their desire for higher pay Skilled employees earn below the average salary, with potential earnings reaching up to 12 million VND per month for extra shifts Young apprentice workers, typically aged 18-20, frequently change jobs, believing that "the grass is always greener on the other side." This issue is complex and influenced by various factors, including the company's business activities and decisions made by the Board of Directors, which is why a deeper investigation into the problem may not be feasible.
The issue of an insufficient working environment in HCMC is more conceptual than actual, as it varies significantly based on multiple factors Comparing the working conditions of urban companies to those in rural areas is not straightforward, especially considering external factors like air quality and pollution Many workers, particularly from rural provinces, migrate to HCMC seeking better salaries, such as those offered by Phuong Dong, and they often accept the challenges that come with this transition Internal issues, such as isolation and hazardous work conditions, are inherent to the job, with workers facing long hours in dusty environments filled with cloth dust, glue, and chemicals Addressing these challenges is complex due to the interplay of company operations, decisions made by the Board of Directors, and geographical factors.
The author aims to thoroughly explore the issue of career demotivation among apprentice workers, identified as a significant concern based on survey results, where it ranks as the second highest response To provide further justification for this investigation, three key factors will be examined.
27 apprentice workers (current working or already leaf) are randomized select and share their though:
Mr Pham Truc – left employee, shared his thought: “I feel unhappy that the benefits of Phuong Dong are lower than the others in the same company”
Ms Nguyen Lan, a current back office employee, expressed her worries about her future due to job insecurity and the absence of a career development plan, which has left her feeling demotivated.
Mr Nguyen Thong, an employee in the Cutting & Sewing segment, expressed his concerns about the lack of career development opportunities at his workplace, stating that the absence of growth plans diminishes his motivation and inspiration to work.
An interview with Ms Cao Phuong Nga, HR Manager, highlighted key factors contributing to the high turnover rate in the Data Analysis team She noted that unequal benefits and the absence of a retention plan lead to employee demotivation, which is a primary reason for the turnover Ms Nga expressed hope for solutions that could inspire employees and enhance their work spirit to help reduce turnover rates.
Motivation plays a crucial role in enhancing employee spirit and performance, as highlighted by Keighley and cited by Joshua-Amadi Without motivation, employees often exhibit negative behaviors and unproductive attitudes, resulting in decreased productivity and increased turnover rates, which ultimately raise company costs Consequently, motivation is a key factor influencing turnover rates within organizations Therefore, it can be concluded that low motivation levels are a significant issue contributing to the high turnover rate at Phuong Dong JSC.
To ensure a stable workforce and enhance company performance, Phuong Dong JSC must implement effective motivation strategies, particularly for young apprentice workers The following section will delve into the underlying causes and potential solutions for these critical issues.
P OTENTIAL CAUSES
Lack of Intrinsic motivation
Intrinsic motivation, as highlighted by Ryan et al (33), is driven by employees' interests in their work, encouraging them to pursue personal benefits Organizations should focus on attracting talent through intrinsic rewards, such as providing meaningful jobs, opportunities for career growth, and avenues for personal development However, at Phuong Dong JSC, particularly within the Sewing and Cutting segment, there is a lack of career development plans and growth opportunities, leading to employee dissatisfaction.
Ms Pham Hoang Lan – left employee, shared her though: “No development other than working hours and hours makes me feel bored and unhappy.”
Ms Nguyen Truc, a current employee, expressed her worries about the lack of a clear career development plan, stating that she has been performing the same tasks for the past three years She highlighted the limited opportunities for advancement, even to higher positions such as line captain, noting that many long-term employees remain in regular worker roles since the company's inception.
Further interviews with the managers at Phuong Dong JSC has revealed some information about the intrinsic motivation in the company
Ms Nguyen Bao Tran - CEO, stated her though: “We currently have no development plans for regular worker as they are considered as short-term workforce”
According to research by Tokarz-Kocik, providing opportunities for employees to develop their skills is a key motivator that enhances engagement Additionally, limited promotion and career development options, alongside low salaries, are significant factors driving employees to leave a company Therefore, when organizations offer avenues for knowledge enhancement, they foster employee motivation and loyalty Conversely, the absence of career growth opportunities can lead to higher turnover rates.
The literature review indicates that a lack of intrinsic motivation, stemming from the absence of career development plans and growth opportunities, is a significant factor contributing to employee turnover in the Data Analysis team.
Low level of Extrinsic motivation
Interviews reveal that Phuong Dong faces low extrinsic motivation among employees due to perceived benefit inequity and job insecurity The disparity in benefits stems from differing policies for experienced workers versus apprentices Furthermore, the one-year contract terms with the agency contribute to a sense of instability for apprentice employees, negatively impacting their motivation and work spirit.
The interviews with employees working in Sewing and Cutting segment revealed some noticeable information:
Ms Nguyen Truc, an employee at Phuong Dong, expressed her concerns regarding the unequal benefits among different departments She stated, "Other lines have benefits that we don’t have, making us feel unfairly treated and unhappy." Nguyen also mentioned her uncertainty about her future at the company, indicating that she might consider seeking employment elsewhere if another company offers better salary and benefits.
Ms Pham Hoang Lan, a former employee, expressed concerns about the disparity in benefits between different segments, stating that while her segment faces a heavier workload, the Storage segment enjoys better benefits despite offering lower salaries.
Furthermore, the interviews with Managers showed that Data Analysis team at Phuong Dong has benefits inequity and job insecurity
Ms Nguyen Bao Tran, the CEO, highlighted that apprentice workers on short-term contracts lack the benefits afforded to experienced employees, such as comprehensive healthcare insurance for their families, improved leave time, and enhanced overtime compensation.
Lazaroiu (29) highlights that feelings of dissatisfaction among employees can lead to demotivation and a higher likelihood of quitting Consequently, it can be concluded that unequal benefits within a company contribute to employee dissatisfaction, ultimately increasing their decision to leave.
Evidence suggests that low extrinsic motivation, driven by perceived inequity in benefits and job insecurity, significantly contributes to the decision of employees in Cutting and Sewing to leave Phuong Dong.
From the interview results with three group of managers and employees of Phuong Dong, together with motivation theories, the cause-and-effect map is drawn as below:
Figure 7 Cause and effect map
C AUSE JUSTIFICATION
The low level of motivation at Phuong Dong JSC can be attributed to two primary factors: a lack of intrinsic motivation and a low level of extrinsic motivation, as identified through the author's interview and literature research.
Intrinsic factors serve as motivators, while extrinsic factors focus on achieving specific external goals (Mafini et al.) Among these, net income, which includes salary and bonuses, stands out as a significant motivator, as it makes repetitive tasks more worthwhile for employees (Joshua-Amadi) Additionally, according to Maslow's hierarchy of needs, employees are driven to fulfill external necessities, including basic physiological needs like air, water, and food, as well as safety and security needs such as job security, a safe living environment, retirement plans, and healthcare (Lazaroiu).
Figure 7 Cause and effect tree map
According to Adams’ Equity Theory, inequity can lead employees to reduce their work efforts, highlighting the importance of ensuring employee satisfaction with extrinsic motivation before addressing intrinsic motivation Interviews at Phuong Dong JSC revealed that apprentice employees in the Sewing and Cutting segment experience low extrinsic motivation due to perceived benefits inequity and job insecurity, resulting in demotivation and higher turnover rates Therefore, it is essential to implement effective solutions to enhance extrinsic motivation, as this is a significant factor contributing to the elevated turnover rate.
The author continues to conduct another quick survey, 10 on the current employees and
10 on the employees who have retired
No Survey Question Most answered %
1 How long have you been at your current position? Under 1 year 65%
2 What is the level/title of your current position? Apprentice workers 70%
4.2.1.1 3 How motivated are you at your current job? Demotivated 30%
4 What motivated you the most? (Extrinsic factor) Salary, bonus 70%
5 What motivated you the most? (Intrinsic factor) Recognition 75%
A recent survey revealed that only 65% of employees feel motivated in their current roles Motivation, defined as the drive to work for various rewards—be they physical, emotional, social, or monetary—is crucial for employee engagement Without motivation, employees may seek opportunities elsewhere Notably, 70% of respondents identified salary as the primary motivator, while 75% expressed the need for a recognition program to enhance motivation within the company.
Based on that, we realized that the main cause for our problem is the lack of recognition, damaging the employee’s motivation at work According to Feys & Wille (36) ,
Employee recognition is an increasingly vital motivational strategy that significantly impacts both employees and organizations Acknowledging achievements in the workplace fosters a positive environment, enhancing employee morale and productivity while contributing to overall organizational success.
After discussing the issue with Ms Trân, we identified that the primary challenge is a lack of motivation among employees, largely due to insufficient recognition programs To enhance workplace morale and motivation, it is crucial to implement rewards such as cash bonuses, training opportunities, and promotions These incentives serve as acknowledgment of employees' achievements and contributions to the company, which can lead to improved motivation and a reduction in turnover rates, as noted by Salie S.
According to Schlechter A (37), implementing a reward system significantly enhances employee motivation, fostering greater loyalty and encouraging contributions to the workplace When employees feel appreciated and well-compensated for their efforts, their performance improves, leading to better overall outcomes Conversely, a lack of rewards or recognition can hinder employee engagement and productivity.
34 calculate working process of employees’ performances, it will result in the failure in inspiring employees and lower their motivation, causing depression among remaining employees
The high turnover rate among apprentice workers at Phuong Dong JSC is primarily due to a lack of intrinsic motivation To address this issue effectively, enhancing the company's recognition program is a crucial step toward improving employee retention.
Our analysis identifies two key factors contributing to low intrinsic motivation at Phuong Dong JSC: lack of recognition and limited career growth opportunities To enhance employee motivation and loyalty, the company must address these issues Research consistently shows that employees are the backbone of any organization, making their retention crucial for overall success.
To address the primary issue of lack of motivation at work, which stems from insufficient recognition and limited career growth, it is crucial for employees to perceive a fair structure that fosters understanding and confidence in their roles According to Wilson B (39), effective reward structures should differentiate based on individual contributions, particularly regarding involvement Therefore, creating comprehensive job descriptions and conducting thorough job evaluations are essential steps before managers can establish an equitable pay structure.
A LTERNATIVE SOLUTIONS
Updated job descriptions and creating a reward system based on KPI
Mentioned on above analysis, one should be recognized that the Cutting & Sewing segment has endure the consequences of high employee turnover rate due to the current
According to Korir I and Kepkebut D, many organizations lack effective reward and recognition systems, leading to diminished performance, decreased employee morale, and reduced motivation to collaborate towards shared goals An impartial rewards distribution system is crucial, as it reflects management's commitment to valuing employees Additionally, Howard LW and Dougherty TW emphasize the significant link between the performance management system and the organization’s reward system, highlighting the importance of aligning these elements for overall success.
Reward systems, as identified in Armstrong M's studies, are categorized into financial and non-financial rewards Financial rewards include salaries, benefits, incentives, and bonuses, while non-financial rewards encompass career growth opportunities, recognition, autonomy, and responsibility These systems are crucial for attracting, retaining, motivating, and satisfying employees in the workplace Ejumudo KBO emphasizes that reward systems are central to employee performance, significantly impacting output quantity, quality, timeliness, attendance, and teamwork in achieving organizational goals Modern businesses are shifting away from traditional qualification and seniority-based pay, opting instead to base salaries on employee capabilities and performance This approach is justified, as ineffective employees can hinder business efficiency and profitability Therefore, implementing reward systems requires a comprehensive understanding of employee activities and effective evaluation methods.
Managers must ensure that rewards are fair, equitable, and consistent, as employees who feel valued are more likely to cooperate and contribute to overall business development.
Interviews with current employees at Phuong Dong JSC reveal a strong preference for financial rewards over non-financial incentives, as these rewards are directly linked to performance and can enhance work efforts Managers concur with this sentiment but face budget constraints, prompting a need for precise employee recognition based on a revised KPI evaluation system Currently, the company's KPI framework lacks individual tracking, focusing instead on overall production metrics, which makes it challenging to assess individual contributions accurately To address this issue, it is essential to establish clear performance criteria for each employee, enabling more effective evaluations and fostering various organizational benefits.
✓ Allowing employees to clarify what needs to be done to improve their segment;
✓ Finding weak individual earlier and timely solution;
✓ Employers could manage work more objectively and keep doing the right things;
✓ Employees’ efforts will be recognised and their achievements will be rewarded;
✓ Employees will have more self-confidence and enjoy their job more;
The author suggests an update KPI as below:
Part I - Evaluating the accomplishment of objectives criteria:
The line captain collaborates with the Board of Directors to establish clear goals and targets They are responsible for overseeing line production and reviewing the Key Performance Indicators (KPIs) for each team member within their line.
2 Ensure the sufficient supply of products 20%
Part II – Evaluating the completion of working attitude criteria:
A detailed description of the rating scale for mandatory criteria is attached
To effectively assess current employees, the KPI system incorporates a dual rating scale that evaluates both performance and work attitude By revising and updating this KPI system with suggested criteria, managers can more easily reward employees in a fair, equitable, and consistent manner.
Revised evaluation system
The current evaluation system lacked recognition of employees’ endeavor, didn’t have adequate rewards so could not evoke job motivation As mentioned above, revising the current
A reward system is essential for fostering a sense of belonging among employees, enhancing their understanding and confidence in their roles, and boosting their pride and motivation at work According to Wilson B, rewards play a crucial role in reinforcing this positive organizational culture.
To effectively differentiate between various levels of individual contributions, it is crucial to assess involvement during the development of a reward structure The optimal opportunities for this assessment arise during the creation of job descriptions and the job evaluation process Therefore, revising job descriptions is essential before managers can successfully establish any pay structure.
The revised evaluation system should incorporate two key components based on extensive research into effective evaluation methods First, the 360-degree feedback approach, as highlighted by Vidya R, allows all employees—regardless of their level—to provide and receive feedback from peers, subordinates, and even external sources such as customers and competitors Second, the force distribution method, studied by Lawler III, categorizes performance into fixed percentage ranks across departments, typically including A (outstanding performance at 10%), B (above average at 30%), C (average at 40%), D (barely meets expectations at 15%), and E (does not meet requirements) This method is gaining popularity among FDI companies and is being adopted by Vietnamese firms Additionally, the Management by Objective (MBO) method, according to Hayes, enhances organizational output by establishing clear, mutually agreed-upon objectives, fostering employee participation and commitment while aligning goals throughout the company.
S OLUTION JUSTIFICATION
The author did the evaluation of advantages and disadvantages between each method, generalized the table below:
Appraisal method Advantages Disadvantages Cost (the most economical propose)
✓ Simple and easy to implement
✓ Builds Confidence and Boosts Morale
✓ Increase distrust in the managers
✓ Costly, for it is not easy to conduct a reliable feedback form
200M VND for hiring feedback agency, including create feedback form and one year of consultant
✓ Increased productivity and identify key employees
✓ Easy to conduct training for each rank
✓ Limits employee’s spirit and make them demoralized
50M VND for training courses for HR employees/Line captain to become specialist
✓ Encourages managers to do detail planning
✓ Low level workers feel to be more connected with company’s goal
Improves their morale and commitment
✓ Maximum Utilization of Human Resources
✓ Costly and Time Consuming Process
✓ Hard to training and implement
✓ Long Gestation Period: it is take 3-5 years for a reliable result
A comprehensive package is available for 650 million VND, which includes detailed planning and objectives for a long-term program spanning 3 to 5 years However, this approach is the most expensive and time-consuming, as it relies heavily on outsourcing specialists for effective implementation.
An analysis of the Board of Directors, along with the author's proposal, was conducted to identify the most effective and suitable methods for implementation within our company Key arguments presented in this discussion include the importance of strategic decision-making and the need for improved governance practices.
Ms Nguyen Bao Tran, the CEO, believes that both proposed solutions are adequate and appropriate for the company She acknowledges the current absence of detailed job descriptions for each role and a suitable evaluation system After thoroughly reviewing the suggested solutions, she identifies the 360-degree feedback system as an innovative approach that could effectively benefit the organization.
Mr D, the HR Manager, expressed his concern about the project's cost-effectiveness, especially given the ongoing peak of the Covid-19 pandemic, which has limited available funds for a large and expensive campaign.
Ms S, a line captain, emphasized the demanding nature of clothing processing, noting that spare time is limited She stated that if new ideas are to be implemented, the evaluation time for each employee must not exceed 30 minutes per day.
The author compiles various opinions and conducts further literature research Ms Nguyen Bao Tran believes, as noted by Vidya R (43), that 360-degree feedback is the optimal solution for current company needs However, the author argues that this approach falls short, as it lacks detailed rankings necessary for evaluating employees for rewards or promotions, which are essential for enhancing employee motivation.
Going to Mr D – Hr Manager, his main concern is about the cost effective of the project
In light of the ongoing challenges posed by the Covid-19 pandemic, it is crucial for companies to reserve funds for potential difficulties The author has identified the Force Distribution Method as a viable solution to address these concerns This method not only offers significant cost savings but also serves as an effective alternative to the traditional 360-degree feedback approach By categorizing employees into groups A, B, and C, the Force Distribution Method ensures a structured evaluation process that aligns with the company’s financial strategies.
The Force Distribution method simplifies the evaluation and reward process for Line Captains, making it easy to implement and learn This efficient approach requires minimal time investment, allowing Line Captains to assess a production line of approximately 10 people in under 30 minutes each day.
Based on gathered opinions, the Management by Objectives method is currently unsuitable for our company due to its high costs and time demands Instead, the author recommends implementing a combination of 360-degree feedback and the Force Distribution method as a more effective solution for our needs.
After considering the author's insights on employee opinions and justifications, the Board of Directors has opted to implement a new evaluation system that integrates both 360-degree feedback and the Force Distribution method.
Appraiser Director, manager, workers, self-assessment, and employee feedback each other
(managers to workers, workers to managers, managers to director…)
Quantitative: Production output, defective rate, time consuming, number of errors,
Qualitative: Cooperation, Problem solving skill, Working attitude,…
KPI tracker Tracking by HR and managing by director
Periodic Monthly, quarterly and yearly
Reward Salary increase, promotion, bonuses, training, recognition,…
A CTION PLAN
Since that we have opted for the solution, an action plan with details must be made with a costs budget Some requirements must be archived are listed below:
• A well-defined description of the goal to be achieved
• Tasks/ steps that need to be carried out to reach the goal
• People who will be in charge of carrying out each task
• When will these tasks be completed (deadlines and milestones)
• Resources needed to complete the tasks (cost distribution)
Our timeline of implementation should be as follow:
Figure 8: Action plan time line and budget of costs to be implemented
Select courses & training HR for
Setup KPI and feedback form
First month trial phase (at HR Dept)
Corrective and follow up action
Official phase for whole company
(official phase) & report to Director
Monthly (the last week of the month) 40
No Task description Person in charge Duration
WEEK Cost implement estimated (million VND)
The high turnover rate is a significant issue within companies, leading to increased operational costs and decreased employee morale, ultimately threatening the organization's competitiveness in today's challenging market Beyond salary, fair and equitable treatment of employees is essential for retention This essay highlights the turnover challenges at Phuong Dong JSC and examines their implications Addressing this issue requires the collective effort of all employees, from the Board of Directors to regular staff, and must be approached with utmost seriousness for effective resolution.
The author has gained valuable insights into the textile industry and improved their writing and grammar skills through this research paper With this knowledge, they are now equipped to pursue further research and engage in both professional and scientific activities.
A SET OF QUESTIONS FOR AN INTERVIEW
A set of questions for interview is breakdown as details as below
1 In the last three years, how many working years after do employees deciding to leave their jobs?
Several factors contribute to individuals deciding to quit their jobs, which can be categorized into external and internal influences External factors such as family issues, health concerns, or shifts in career paths often play a significant role in this decision Conversely, internal factors, including company policies, years of service, and personal aspirations for career change, also heavily influence employees' choices to leave their positions Understanding these dynamics is crucial for organizations aiming to improve retention rates and employee satisfaction.
Sub question: in which, what is the reason with the highest percentage?
3 Does the issue of employeers quitting their jobs affect the firm and in which way?
4 What are advantages in bonus and welfare of the firm considered better compared to peers?
5 Does the firm offer employees a work-life balance?
6 How do peers attarct employees?
7 Please give a few solutions that the firm has applied to keep employees.
I NTERVIEW 1: CEO – M S N GUYEN B AO T RAN
(key answer) INTRODUCTION and WARM UP
Thank you for meeting with me today; I appreciate your time As outlined in the invitation, the purpose of our discussion is clear, so I will begin the conversation to make the most of our time together.
+ Could you please introduce a little bit about your position and your responsibilities?
+ How long have you been working for the company?
As the CEO of Phuong Dong Jsc, I bring a decade of experience to the company, having begun my career as a sales executive at Viet Tien Garment JSC With the invaluable support of Mr Vu Duc Giang, I now oversee the entire operations of the factory, ensuring efficiency and growth.
Q1 Could you share some information about the turnover rate of the company in this year?
PROBE: How much turnover rate percentage? Comparing to previous years?
Our company are not usually confronting the high turnover rate
Our experienced workers boast an average tenure of over five years, while apprentice workers show a concerning trend with a high quit rate of 40-60% within their first year, as highlighted in the HR report.
Q2 Which department or segment has the highest turnover rate?
PROBE: Do you know the reason?
Our report indicates that the Sewing and Cutting segment experiences the highest turnover rate, which is largely due to its significant employee base and the ease of recruitment in this area.
Q3 Can you share your opinions on which reasons caused high turnover?
PROBE: Any change in working environment, management, policies?
Our HR department regularly conducts exit interviews with departing employees, revealing that many leave for job offers with higher salaries or due to dissatisfaction with their current benefits.
While I recognize the urgency of addressing these issues, we currently lack a clear strategy for resolution Our companies have faced numerous challenges due to the Covid-19 pandemic, making it difficult to maintain jobs and salaries What I require now is a viable and cost-effective solution to effectively tackle these problems.
Q4 Please give your thoughts on the difficulties you have to face with on high turnover rate?
Recruiting new employees involves significant costs, including agency fees that can reach up to twice the monthly salary Additionally, the induction and training process typically takes around two months, during which overtime wages may be necessary to ensure task completion This period also demands valuable time from managers for interviewing and training new hires, further contributing to the overall expense of recruitment.
Our company's salary rates align with market standards, as confirmed by salary surveys Some employees may feel dissatisfied with their compensation due to a lack of awareness about prevailing market rates and having inflated salary expectations.
Recruitment fees, training costs, overtime wages
Q Thank you for spending your time to have meeting with me today
+ How are you? How is your current job?
+ How long have you been working for the company?
No.1 I am working here for about 3 years 3 years
No.2 I’ve just joined for 6 months 6 months
No.3 I am working with the company for 1 year 1 year
Q1 How are your daily tasks? How do you feel about your daily tasks?
PROBE: Do you like your job? Are you happy with your tasks?
No.1 Nothing special It’s routine tasks, nothing interesting, but it’s also no challenging Just doing my work for the salary
No.2 I am new in the team and am still learning from others, but I think my tasks are quite easy It’s ok for me to do these types of works
No.3 Normal This is the same as other textile factory I worked before
Neutral Working environment Q2 Do you have any difficulty in your daily tasks?
PROBE: working environment, income, colleagues, line manager?
No.1 My work is easy; the same repeating works every day But I enjoy the co-workers We share our difficulties, and help each other in and out of work
No.2 People here are very helpful Whenever I have troubles in my work, they will teach me and help me to settle it, especially my manager
No.3 I think the working environment is not bad, I just hope the salary could be higher Live in a big city is not easy for us worker
Q3 What do you think about your salary? How is your opinion on HR policies?
No.1 I have yearly salary reviewed and increased, so
I think my salary is acceptable
Income Company policy No.2 I just working for 6 months, my salary is kind Do not happy Company
The benefits I receive as an employee are significantly lower compared to others, and I currently do not have access to essential perks such as healthcare insurance or unemployment benefits However, with several factories under construction in my hometown, I would consider returning to work there if the salary and benefits offered are competitive.
Do not have some benefits as others policies
No.3 My salary is not very attractive I know that the salary will be reviewed and increased every year, but the percentage of increasing is not much
Besides, our team don’t have some benefits that others have, this makes us feel unequally treated and demotivated
Q5 What is the worst point makes you dissatisfied in your job?
According to company policy, employees are eligible to transition from a short-term contract to an indefinite contract after three years With only two months remaining in my current contract, I am concerned as I have not received any information regarding this transition.
Not sure if contract will continue be signed Feel unstable
Unfair benefits within company policies negatively impact our segment, leading to a lack of motivation Additionally, the absence of career development and growth opportunities diminishes my inspiration at work, making it challenging to stay engaged and motivated in my role.