Luận Văn High Turnover Rate Of Petrovietnam In Malaysia Project.doc

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------
TRẦN THỊ MỸ YẾN
HIGH TURNOVER RATE OF
PETROVIETNAM IN
MALAYSIA PROJECT
MASTER OF BUSINESS ADMINISTRATION

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------
TRẦN THỊ MỸ YẾN
HIGH TURNOVER RATE OF
PETROVIETNAM IN MALAYSIA
PROJECT
MASTER OF BUSINESS ADMINISTRATION
SUPERVISOR: LÊ THỊ THANH XUÂN

ABSTRACT
This thesis study high turnover rate in purchasing department of PVE, its reasons and its
effect on company’s performance. Turnover rate is more and more considered as an
important factor to any business. In depth interview was used to collect and analyze data
of the study. From the result of interviews, high turnover rate really exists in the
company. The three consequences of high turnover rate are productivity loss, delay of
schedule, and turnover intention. Job satisfaction in terms of pay and organizational
commitment in terms of affective commitment were found to have negative relationship
with high turnover rate. This study also provides solutions and implementation plans for
PVE to reduce turnover rate and increase its performance.
I. INTRODUCTION
1. Company Profile
Background
Petrovietnam Investment Consultancy and Design JSC (PVE) was set up from the
equalization of State-owned Petroleum Investment Consultant Company (PVICC). April
10, 1998 from the equalization of State Owned Enterprise. Vietnam Petroleum
Corporation (Petrovietnam)... In 2005, Petro Vietnam Engineering (PVE) turned into a
Joint Stock Company. Also, in 2011, hierarchical structure is exchanged to Mother -
Mother Subsidiary. The oil and gas industry are a key industry in the nation, with
potential for improvement in the coming years. PetroVietnam's technique keeps on
connecting with global markets, open doors for PVE to infiltrate remote markets through
PVN's tasks. Right now, PVE has been allotted by Petro Vietnam to do numerous
significant activities in the business. Particularly, after the consummation of the change
into the parent-backup demonstrate, PVE reinforced its situation in the non-oil fields. It
working in wander and building consultancy for oil and gas, civil and industrial projects.
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Key business activities:
Consulting on topographic survey, geological survey, current status survey, NDT
test and technical services for offshore and offshore oil and gas, deep-water
projects and other industrial projects.
Consultancy on management of construction investment projects, supervision of
projects belonging to the group or units of the Group, including projects on oil and
gas, biofuels and other specialized projects.
Implementing EPC services, providing project management and supervisory
services in upstream and downstream oil and gas and other industrial projects;
Providing consulting services on geological topography and non-destructive
inspection and testing for industrial and petroleum projects’
Organization
PVE’s mission
PV Engineering's mission is to become the number one corporation in Vietnam and one
of the leading companies in the region, providing high quality services at competitive
prices to meet the needs of all customers. Inside and outside Petro Vietnam.
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2. Problem Analysis
Problem context
In 2015, PVE become sub-contractor of TECHNICAS in RAPID project in Malaysia with
contract value over 51 million USD in 4 packages: SMP, E & I, Painting, Fire Proofing,
Civil. The RAPID project is one of the largest scale refinery projects in the world. This
petrochemical refinery has a capacity of 300,000 barrels per day and supplies naphtha and
gas to petrochemical complexes and produces petrol and oil according to European
standards. Petrochemicals to increase the value of olefins from water separation towers and
the production of commercial petrochemical products including propane, polyethylene,
synthetic rubber. In the domestic market, PVE has relatively few competitors, mainly foreign
ones. Therefore, the expansion of the Malaysian market will be an opportunity for PVE to
improve its capacity as well as its position.In order to serve the project implementation, PV
Engineering has the need of recruiting 250 engineers and 500 workers who have experience
and project ad speak English fluently from difference position to work through recruitment
website and newspaper. In the first time of project, PVE try to recruit the local worker but
the salary is quite high and they did not hard working if compare with Vietnamese worker.
After that, PVE - human resource change the plan to recruit Vietnamese engineer and worker
to save money and achieve better results.
- Working condition:
+ The working time starts from 7:30 am to 10 pm, from Monday to Saturday.
+ Transportation: From the living place to job site take 40 minutes by bus.
- Compensation: The Company will pay for food, house allowance and ticket back to
Vietnam every six months working. Benefit: one-month salary for bonus every end of
Year if working above 1 year.
- Living condition:
+ Accommodation: The Company rents the staff for a 40 'ride to the site
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+ Water: In Johor Bahru, fresh water is very scarce and the dormitory which PVE rent
did not have tap water. Every day, the company will buy water from supplier to use.
Sometime per week, water for living is not enough. Two-day bath time is very common.
+ Food: Malaysia is a Muslim country, so only the Chinese markets have food such as in
Vietnam. The main food is chicken and beef, very rare green vegetables.
+ Entertainment: On Sunday, staff can take ferry to Singapore, take bus to central city for
coffee, shopping or stay at dormitory to play football, volley ball.
- Insurance: Employees will be insured under Vietnamese law
- Recruitment expense:
Item 2015 2016 2017
Expense (USD) 131,579 186,886 158,721
Percentage (%) 26.12% 25.14%
Number of employment recruit to
replace 203 287 243
Recruitment expense (USD/
person) 648.17 651.17 653.17
This is the first project that PVE has executed abroad; hence, PVE can’t avoid problems
relating to culture, working routine, communication among engineers, workers from
many countries.
- Number of resigned employee from 2015 to 2017
2015 2016 2017
Jan 0 6 7
Feb 0 15 18
Mar 0 13 10
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Apr 0 12 11
May 0 9 13
Jun 0 11 7
Jul 0 8 12
Aug 0 15 11
Sept 2 7 9
Oct 1 8 15
Nov 8 6 8
Dec 7 5 9
Total resigned employee 18 115 130
Total employee 180 550 590
% 10% 21% 22%
- Project status
Complete % Contract
date as Estimate complete Value
Start contract time until (million
Package Description date signed complete now usd)
Civil & Building
Package 3 works and SMP Jul-15 Mar-18 Jun-18 87% 46
Electro Mechanical
Package 3 works Jul-15 Jun-18 Nov-18 75% 24
Package 11 Civil - Building 11 Apr-16 Aug-18 Jan-19 82.17% 17
Package 6A SMP Jul-16 Sep-18 Aug-19 57% 12
Based on the progress of the project, we can see that the project implementation time is
slower than the time stipulated in the contract signed.
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In Aug, 2017, PVE was invited to bid for two packages of 13 and 14 with a value around
of 46 million USD. However, due to high bidding prices and unpredictable progress from
the previous contracts, PVE have been missed these packages.
There are many reasons for delaying the progress, but one of the main reasons that PVE
has to deal with is the shortage of human resources and staff turnover. The extension of
the construction period compared to the original contract affects many parties involved in
the project such as: Owner, design consultant, monitoring consultant, contractor
construction. Delayed progress reduces the credibility of the investment decision, for the
investor. The contractor have to increase costs, reduce the profitability of the project,
reduce prestige and brand company. To avoid this situation in future, we go to analysis
symptom to know that why high turnover rate quite high and what should we do to
improve it.Symptoms analysis
To justify the existence and importance of problem why high turnover rate high, the first
interview was conducted with Human Resource Manager and 04 staffs who have leave
and certain information about the issue to get their perceptions of the existence and effect
of this issue in the organization.
From Interview with leave staff
It is easy to see that when an employee resigns, they never say their true reason.
There are dozens of reasons given by employees, such as: feeling inadequate, inadequacy
of job capacity, inadequacy of job requirements, inadequate culture / school of the
company. There are also very personal reasons such as getting married, wanting to go to
school, wanting to quit work at home to take care of children, houses ...
All of these are benign and do not offend people, but for human resource management,
we need to know the real reason to keep employees in the company. The reasons above
may be true, may be wrong for each person but it seems to have become some of the
sample and "available to use" for employees looking to find another position.
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In the meantime, the reason for the actual shift and could be difficult to say such as
inadequate wages, inadequate corporate policies, or simply discord with a colleague in
the company. It may be because of your behavior: favoring one person over another,
overemphasizing someone and having "shady" actions such as having a very private
meeting with a member of a company / A group that other people in the same department
cannot understand is happening or is there a new project or job?
After conducting the interview with the leaving staffs, the main reasons of leaving are
recognized. There are three main reasons of leaving that include no attractive
compensation, job stress and poor working environment. Most of the leaving staff
provided that they leave the company because the compensation policy is not suitable for
them. They shared that working abroad is especial job which is different to other jobs.
Their working time depends to project schedule which company signed with customer.
They have to day and night to keep the timelines. According to one of leaving staffs,
“When I interview, they just talk about working time from Monday to Saturday as normal
but when I come here I have to wake up from 5am and working until 10 or 11 pm
everyday”. About Working environment, other guide complaint that “Very terrible. We
did not have enough water to washing, cleaning. Sometime when I start to take a bath, the
water is not enough. The company pay for food and house but I cannot eat meal with
Malaysia style. And when I asked about compensation, most of them said that It was not
fair. One guide talks like that “I think it is low. I work very hard, from 7am and back to
dormitory around 10 pm. My friend work in head office, he just working 8 hours per days
but he received bonus like me. It is not fair. Maybe in here, nothing is fair.”
The interview investigated the main reasons of leaving are about the poor compensation
policy, poor working environment and job stress.
To understand more about these policies, the interview with the Human Resource
Manager is executed. This interview with her will assist to find the way to solve the
problem of the company.
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From Interview with Human Resource Manager
The interview with the Human Resource Manager to understand more about the
compensation policy of company. Also, it assists to recognize the reasons of setting up
these policies.
After interviewing, it is found out that the HR manager had good evaluation on the
performance of leaving staffs. The HR manager said these staffs left the company
because they did not have opportunities for promotion, job stress and low salary. It seems
to be that the HR manager did not know the real reasons but she also consider how to
change it. She explained that this policy was unfair for everyone and make them unhappy
because they have to work harder if compare with Vietnam office. The CEO did not
know the difficulties of uncomfortable time when sale staffs comply with this policy.
At the beginning, the CEO thought if company paid high salary, the staffs had to be
responsible to work hard. However, after discussion, she understood that the
compensation policy for abroad staff is so important to keep the high-performance staffs.
Good staffs will feel unfair when they contribute too much for the company but they do
not receive any thing. The CEO stated that “If this is the reason that sale staffs leave the
company, I will set up the commission policy to keep the good performance staffs
because they are main staffs to earn the profit for company.” But how to change, she said
“I think that must be change the thinking of Board of Director because you know, we are
government company for long time before become joint stock company.
There are a lot of symptoms but we can find down three main symptoms as show below:
Firstly, high stress on regular tasks, and the gap in term of working skills are the symptoms
that were observed by the HR managers PVE. This project require person who have
experience in oil and gas civil work but not all of them have that. The PVE staff shared their
feeling about work overload because of the daily operation. To explain for the symptoms, the
project team staffs expressed that they have to face with a lot of difficulties: progress issues,
political relations, technical risks, resources, safety pressure, language,
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complaint from general contractor, project investor ... and they consider that their
experience enough to handle the contractor’s requests or not. In addition, the current
employees also need to do the additional to catch project timeline.
Secondly, the increasing of the complaint from the clients about the progress time. Some
of the complaints which were recorded from PVE system showed that main contractor
complaints increase negatively with schedule because lack of manpower. As Human
Resource manager confirm, the turnover from 20-30%. Every month, she had to recruit to
refill the number of engineer resign. As the results, the labor shortage forces them to
work more than two and half hour per day and working on Sunday is common.
With the above results, PVE has participated in several quotations but failed to win any
new bids despite the low price. The main reason is due to the main contractor's concern
about personnel as well as the technical compatibility of PVE.
Now the company is facing with problem of high turnover rate leading to productivity
loss and process delay.
Turnover rate is characterized as the progressions or the revolution in the work showcase,
and between the associations, firms, or it is the progressions from business and
joblessness he objection from the clients
According to Abassi, 2000, Turnover rate is characterized as the progressions or the
revolution in the work advertise, and between the associations, firms, or it is the progressions
from business and joblessness (1). Furthermore, Price supposed the issues in the methods
that “the ratio of the employees of organization who left in a particular period of time with
the average number of employees in that organization during the same period of time” (2).
The work turnover is classified into the deliberate and automatic turnover. In points of
interest, willful turnover is seen as the workers settle on their own decision for leaving the
association. On the other side, in research of Abdali (2001), at the point when the
representatives must choose between limited options to leave the association as a result of
death, disorder, or the end, it is worried as the automatic turnover (3).
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As per Ingram (2017), turnover rate communicates the rate that representatives leave
work in an organization and are supplanted by newcomers (4). Reasons of high turnover
rate for the most part identified with representatives' disappointment with the activity that
incorporates long working hours, low pay, poor working conditions or insufficient
advantages (May, 2017) (5). There are two sorts of turnover that incorporates intentional
and automatic turnover. Willful turnover happens when the workers intentionally leave
the employments for a few reasons. Automatic turnover is the point at which a worker is
laid off or terminated by the organization (Reh, 2017) (6).
"Agent turnover rate" suggests the level of laborers who leave an association in the midst
of a particular time period. Three numbers are used to figure turnover rate that join the
amount of dynamic delegates toward the begin, and toward the complete of period, and
the amount of laborers who left in the midst of the period. (Pavlou, 2017)
Pavlou (2017) additionally expressed that if top entertainers are leaving, the organization
should make prompt move. Something else, the execution of the organization will be flag
(7).
As indicated by Woods (2017), effect of turnover on an organization incorporates trouble
of filling the position, the measure of preparing and particular costs, for example, spotter
expenses or promotions. Woods (2017) likewise communicated that turnover expenses
could be both immediate and roundabout. Coordinate turnover costs incorporate the
expenses of contracting and preparing new workers to fill the position. Circuitous
turnover costs incorporate lost deals or clients that prompt diminishing benefit of the
organization (8)
With all of the symptoms above, there are three main problems is listed to explain for the
symptoms. They are the compensation, the job stress and the working environment.
Base on the interview result, and the literature review, we could determine the central
problem through initial cause effect map as below:
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II. PROBLEM IDENTIFICATION
1. Possible problem
According to initial cause effect map above, we can see that the poor international
compensation, Poor working environment and job stress that lead to the high turnover
rate at PVE. As the interview with the Human Resource manager
The 1st
problem: Poor international compensation policy
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The factors lead poor compensation policy for International Human resource was
collected from interviews with 03 main reason such as no promotion program, no
attractive benefit and no attractive salary policy
- No promotion program: Career promotion opportunities are the primary inspiration for
drawing in and holding representatives, however a large portion of members said PVE
did not have an inside advancement approach. The employee feel stuck in their current
position and decided to quit a job to find a higher position.
- No attractive benefit: The right treatment policy will increase the motivation of
employees, thereby contributing to the overall goal of the business. In PVE, the abroad
employee will receive the benefit such as insurance according Vietnamese law, food,
house allowance, ticket back to Vietnam every six months working and only one-month
salary for bonus every end of Year if working above 1 year. This benefit is not much
different between staff working in Malaysia and Vietnam although the workload in
Malaysia is much higher.
- No attractive salary policy: According to survey of Robert Walter about salary in
Malaysia, we can see that for position project engineer, Civil & Infrastructure Engineer,
supply and demand is around 66,000 USD to 120,000 USD per year (9) but in PVE, the
salary around 18,000 USD to 30,000 USD per year.
12

Table: Malaysia salary survey 2016 (Robert Walter)
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The 2nd
tentative problem: Poor living environment
For employee working in this project, the company will provide food, transportation, and
house. PVE have pantry to service food for employee three meal per day. Malaysia is a
Muslim country, so only the Chinese markets have food such as in Vietnam. The main
food is chicken and beef, very rare green vegetables. This kind of food not suitable to
Vietnamese. In other hand, in Johor Bahru, fresh water is very scarce and the dormitory
which PVE rent did not have tap water. Every day, the company must buy water from
supplier to use. Sometime per week, water for living is not enough. Two-day bath time is
very common. Some of interviewer are woman said that they can not working there
because not enough water for daily use.
The 3rd
tentative problem: Job stress
- Working overload: The project requires working time from Monday to Saturday and
start from 7 am to 10 pm because not project schedule and not enough manpower to do.
That’s reason why most of them have to work in difference position such as procurement
and civil engineer, customer service…They complaint that they are tired of the heavy
workload, while the work schedule is too long, the rest time, the shortened family time,
and the holidays. less and less ...
- High pressure: Rapid is a new, important and difficult project. Everybody has to do
their best to complete the schedule, to go back late, meet, evaluate, research new
technology, deployment plan ... More worries about life They do not sleep enough to
make them really tired and see their minds are always stretched like a string. They are
easy to irritate anyone, have to stay up late but still complain to others because of the
effect. The working rate is not high. Excessive pressure for a long time causes severe
stress, memory loss, low productivity, and they are always in a state of insecurity and
anxiety because of the workload that remains.
Working in a stressful environment not only limits the potential for development, it
reduces the creativity that some recent research finds, and work pressure leaves long-term
14

consequences both physically and mentally. For people, from depression, anxiety
disorders, weight gain, metabolic syndrome ... to being able to break relationships. Many
studies have shown that people who work more than 08hours a day more likely to suffer
from blood disease than those who work more than 08 hours a day. People working in
less than 8 hours per day. On the other hand, when more and more work if we do not
know how to balance your personal life will be affected. It's always stressful.
2. Problem justification
In view of interviews and literatures, this report gives 03 central issue that have relevance
to symptom above and they include the compensation policy; working environment and
job stress.
Problem definition
As indicated by Gerhart et. al. (1992), the principle determinant of the business relationship
is pay which is critical factor to both of bosses and representatives (10). Staff is nearly
depending on compensation, wage as a substantial part of wage and medical coverage.
Besides, Vince (2005) concurred that grabbing the representatives' request can manufacture
the dedication of worker with organization, the pioneer of association ought to empower their
staffs by perceiving and granting for execution over spending plan. It will invigorate
representatives to work harder and being more faithful with organization. "(11)
The effort of organization such as training and development system, review job content,
compensation practices, working conditions… need to show the effort of the
organization to concern about their employee (Safdar, 2012). Compensation represents
both the intrinsic and extrinsic rewards employees receive for their performance.
- Direct compensation: According to NaukriHub (2013), “direct compensation refers to
monetary benefits offered and provided to employees in return of the services they
provide to the organization”. Direct compensation comprises wages, salaries,
allowances, commissions and bonuses. (13)
15

- Indirect compensation: Indirect compensation policy is also important to keep the
talent for sticking with the company. According to HRZone (2017), indirect
compensation comprises non-monetary remuneration provided to employees such as
annual leave, health and life insurance, pension fund, overtime pay, mobile phone and
company cars. A good compensation package will motivate the employees to increase
the productivity and assist the organization to operate effectively and accomplish the
goals. Furthermore, competitive compensation will assist the organization to attract and
sustain the best talent (NaukriHub, 2015). (14)
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Problem Existence
To identify the problem existence, I conducted second interview with in-depth interview
method. The participants are four leave staff, Human Resource Manager and Project
Manager. According to Hsieh &Hamp; Shannon, qualitative content analysis is defined
as a research method for the subjective interpretation of the content of text data through
the systematic classification process of coding and identifying themes or patterns. The
goal of qualitative research is to examine, screen and identify the relationships among the
variables in the theoretical model, thereby proposing the research model. (15)
Through interviews, all staff, Human Resource manager and Project manager agree that
poor of international compensation, Job stress and working environment these main
reasons that lead to the unfairness performance appraisal. Besides, some staffs said that
absence involvement also cause unfair appraisal
With the working environment and job stress, it is very difficult to change because it
totally depends on project location, cultural of each country and project timeline.
As the interview with the Human Resource manager, the common problems of the
department which is absence of labor because of the poor international compensation policy.
With the information that collected from the interview and the literature review, we can
detect the central problem is poor of compensation policy for International Human Resource
and we have the updated of initial causes and effects map as chart below:
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Problem Important
Compensation is one of the most important human resource management activities that have
a strong influence on employee performance and therefore results in the achievement of the
goals of each business. For Vietnamese enterprises, as a result of their economies of scale
and economies of scale, they often provide incentives for staffing, thus easing the "low cost"
trap. The labor force is not high. Therefore, renovation policy treatment
Employees of Vietnamese companies can be a breakthrough to help Vietnamese businesses
improve their business efficiency directly and can bring indirect benefits such as improving
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the quality of human resources. , creating momentum to improve the competitiveness of
enterprises.
The results of Towers Watson, 2014 show many of the advantages of having the right
treatment. Companies have superior levels of incentive (formally built on strategies and
business plans, well implemented, tailored to each segment of the staff, and other
businesses. It is more efficient than the company to have only tactical systems
(unofficially linked to business strategies and plans, lack of treatment strategies and
integrated talent management). Specifically, the company has superior compensation that
records employee engagement levels three times higher, and the financial performance
index is 1.5 times higher than other companies.
Similar to PVE, many companies pay competitive salary to keep the good staffs rather
than create a good benefit policy. However, benefit is an important policy that
incentivizes the employees to produce more work efficiency. Furthermore, it assists to
reward and recognize staffs who perform most productively.
Interviews show that compensation is most of resign reason in PVE. Human Resource
manager said that company profit going down and more complaint from customer about
project schedule because lack of manpower. More and more staff are going down their
motivation; in particularly. 02 employees also said that their motivation and job appetite
have been reduced significantly after working for PVE long time but cannot promote to
higher position. Moreover, with difference performance result, and workload but the
benefit which they receive is the same with staffs who work in Vietnam. These symptoms
can lead to a serious consequence that the company performance will be going down.
Cause Validation
There are some potential causes that lead to the poor compensation policy and in order to
find out list of real cause, after search the literature and found potential causes, I found
that have three causes as follow:
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- No Promotion Opportunities:
As stated by Leigh Branham (2005) (16), the employee insights that lead them
should belief that a company won't sufficient opportunity as below:
 Actual limits in opportunity for growth and development.

 A selection process that appears unfair or biased.

 Perceived preference in advancement.

 Poor preparing and proficient advancement programs.

 Other issues, for example, vocation improvement not being clarified or underlined.
According to a LinkedIn survey conducted during January to March 2016 with more than
26,000 experts, 25% of surveyor said they were expecting to be promoted. It is means
that they do not want to resign from their company and want to stay in there and hope of
getting higher positions.
When asked what the main reasons that led to the decision to quit or move jobs, 57%
of the survey respondents said they did not see opportunities for promotion or personal
development in their current job. This is reflect the company's policy or leader's
recommendation.
- No attractive benefit
In the research of Chelius and Smith (1990) gave suggestive confirmation that benefit
sharing lessens the frequency of cutbacks even with diminished item request. Other than
that, as indicated by Scoppa (2003) assume that organizations utilize performance
related pay when the expenses related with turnover are high and settled pay when the
expenses related with turnover are low.
In many companies, it is accepted that bonuses for employees are effective in motivating
and motivating workers to increase productivity and work better in their work in general.
In PVE, most of interviewer agreed that the bonus which they receive is not fair. That one
reason leads them to resign.
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- No attractive salary:
Shaw, Gupta, and Delery (2005) found that high turnover rates have deleterious effects
on outcomes such as organizations’ productivity, efficiency, and cost of manufacturing
in both the service as well as health care industries (18).
Guthrie (2001) showed that turnover can undermine organizational performance by
affecting the morale among employees. In study of Walumbwa et al., (2009) mentioned
A high turnover rate affects employees’ trust toward their employers, and further affects
the quality of the employment relationship. (19)
Salaries are very important to business. Therefore, cost reduction methods that are not
beneficial to employees will inevitably be ineffective in the long run. Rewards always have a
great impact on the satisfaction or dissatisfaction of every employee in the company. Most
people agree that employees should be paid well for the jobs they do really well.
III. SOLUTION ANALYSIS
1. Solution definition
The presence and advancement of a business depends incredibly on the effective misuse
and utilization of assets, for example, capital, offices, logical and mechanical advance,
and specialists. have a cozy relationship and associate with each other. Factors, for
example, apparatus, material merchandise, innovation can be bought, learned, imitated,
however human can't. It is in this manner conceivable to attest that human asset
administration assumes a basic part in the survival and advancement of the business.
Human resource administration adds to tending to the social and financial parts of work
issues. It is a typical issue of society, and each monetary movement all in all goes to a
reason at some point or another, so laborers can appreciate the outcomes they create.
Human asset administration is necessary to any association, any association ought to have
a human asset office. Human asset administration is an imperative component of
administration, it has roots and branches spread all through the association. Human asset
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administration is available in each division, any administration level has subordinate staff so
should have HR administration. Human asset administration makes a social environment for
a business. This is also one of the factors that determine the success of a business.
From literature review:
Financial benefits to staff are important to draw employee engagement and in this case it
is more important. However, non-financial benefits are the types of rewards which cost
company little money but they bring significant support to retain good employees.
Types of financial benefits
 Pay and allowances

 Performance-based cash bonuses

 Increase in base pay

 Profit sharing

 Stock options
In order to grow business for any enterprise, the big issue is to set up compensating for
international human resource effectively to encourage sales force. There are some
companies pay project staff with straight salaries only, the others just focus on
commission. These two approaches are too extreme. It is necessary to combine pay mix
of basic pay and variable pay such as commission and performance-based bonuses
which they are up to the business goal.
According to Worddat Work surveyed 18% percent of respondents used a mix of 80 %
salary and 20 % commission. 18% used a 70 % salary, 30 % commission ration. And 14
% reported a mix of 60 % salary and 40 % commission. (20)
How to structure pay formula, it depends on some factors: the role of the sales person,
the kind of selling, the sales cycle in a certain business.
Other than the above pay and money related advantage, the another sort of non-budgetary
motivating forces which the kinds of prizes that are not identified with representative's
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compensation. They cost organizations minimal expenditure yet influence much
profitability of representative.
One of non-financial incentives
 Recognition

 Rewards

 Opportunity

 Flexibility
Herein after we would like to analysis much more in non-financial incentives which are
more powerful motivation to employee
According to Hill, Charles W.L in International Business: competing in the global market
book (21), they mentioned about:
Income policy
A compelling and fair pay framework is particularly critical for work force administration.
Such a framework is intended to draw in and hold the best representatives and reward them
for their work. Because of the way that every nation's compensation is gotten from its way of
life, lawful framework and financial framework, the assurance of compensation can be very
perplexing in various nations. Here we just examination the pay of officials working abroad.
Their gross pay incorporates essential pay, welfare, benefits and rewards.
- Basic compensation: The measure of cash a worker gets in the nation of origin. In
various nations the essential compensation fluctuates.
- Benefits: Include medical coverage, government managed savings, retirement
advantages, excursion and get-away costs for supervisors and their families.
- Recompense is the measure of pay because of changes in living condition and work.
Subsistence costs include: Subsidies for the distinction in everyday costs between the
home and abroad, for example, recompenses for movement, lodging, instruction for
offspring of administration staff and exceptional challenges of the work environment.
23

+ Price sponsorship: Normally add up to compensation is diverse for chiefs in various
organizations, for reasons unknown it is hard to decide the proper compensation. As a
matter of first importance, the effect of living expenses ought to be considered, including
components, for example, nourishment costs, eateries, dress, lodging, school charges,
human services, travel and power and water. In a few nations, customer costs are more
costly than others. In addition, in a similar nation, the average cost for basic items in
enormous urban areas is very different than in different territories and in the wide open.
Most organizations pay less to abroad supervisors than to household officials,
organizations still need to take care of the expenses of abroad administrators.
+Transition stipend: Usually incorporates travel costs, dispatching and dealing with
expenses of the supervisor when voyaging.
+ Housing allowance: is the cost associated with renting a house.
Difficult subsidies are special allowances for people traveling to work in areas with
special difficulties such as those in developing countries, war-torn countries or unsecured
social security. Difficult subsidies are calculated in proportion to the basic salary,
generally around 15-20%.
International labor relations
From a vital point of view, the key issue of global work relations is to restrain clashes in the
execution of objectives between worker's parties and worldwide business. A business that
can extend and merge its worldwide business activities to exploit economies of scale and
area and lessen costs. Worker's parties can make the business neglect to accomplish that
objective. Comprehension and dealing with great global work relations is one of the elements
that assistance worldwide organizations to execute their business methodologies.
Employees are often concerned with remuneration, occupational safety, working
conditions, and so on.
The league attempts to enable its individuals to get paid more, have more secure working
conditions, and better working conditions through a concurrence with the organization
24

administrator. The worker's guild's aggregate dealing power relies upon their capacity to
debilitate generation disturbance, either strikes or different types of dissent, for example,
not working extra time. Be that as it may, the risk will be weight as long as directors have
no other decision and will undoubtedly connect with the guild.
Local worker's organizations additionally need to realize that multinationals are
organizations that can move their creation to another nation if the alliance makes
exorbitant requests
Global organizations tend to keep innovative employments in their nation of origin, and
just exchange low-tech occupations to their outside offshoots. Consequently, they can
without much of a stretch move their generation to a more positive nation. The quality of
the worker's party understandings might be decreased by the effect of these conditions.
From Interview
With problem mention above, we should improve compensation policy for international
human resource. After interviewed with Human Resource Manager and Project Manager,
both of them agree that “I think PVE is forced to change its vision and strategy”. This is
mean time Board of Director (BOD) must be change in mind to develop human resource
in Malaysia.
First of all, they must understand human resource management of multinational company
through international business. HR Manager recommends that company should invite a
Business Training Institution to increase the knowledge about International human
resource.
Second thing, to lead to reduce the injustice in assessment process and the raters, who
have enough knowledge and experience through training course, can solve problems of
staffs about the performance appraisal result more specific and fair. Furthermore, she
thinks that company should declare officially assessment criteria and the result of
appraisal for all employees in order to reduce the injustice.
From literature review and interview result, I suggest some potential solution as below:
25

- Solution 1: Built key performance indicator for abroad project and set up clear set the
standard for assess the current capacity of each employee against the standard capacity of
the position.
According to Fletcher (2001) claim that performance appraisal is a series of different
activities through which companies can evaluate staffs, improve their capacity, boots
performance and allocate incentive. Judge and Ferris (1993), performance appraisal is
known as one of the most vital human resource method.
This requirement must be expressed in every aspect of policy and is ideological
throughout the policy. This principle stems from the principle of labor distribution:
"equal pay for equal work". That is to say, when stipulating wages and bonuses for
employees, it is imperative that enterprises are not discriminated against from the age and
ethnicity but that they must be paid to everyone in proportion to the quantity and quality
they contribute to. enterprise. To maintain good employees in addition to high salaries
must also be fair within the enterprise. In cases of unfair pay, workers will feel
uncomfortable, inhibited, depressed and easily leave the business.
-Solution 2: Investigate the current salary level of the industry to make changes
accordingly.
Salary must be competitive. The salary of the enterprise must be equal or higher than that
of other enterprises, especially the enterprises in the sector, in order to attract qualified
workers. This principle of enforcement will ensure the attractiveness of enterprises in the
labor market. Job seekers often do not know the exact pay for similar jobs. They often
find it difficult to compare the benefits, bonuses, career advancement opportunities, job
challenges, job challenges. The recommended salary when recruiting is usually the basic
factor for the candidate to decide whether to work in the business or not. In order to
ensure the principle of competition, HR Manager and Project Manager agree that must
conduct a survey of the labor market. In addition, it is necessary to base on the
26

reality of the business to classify personnel, introduce a salary policy that allows to attract
and create a core workforce.
2. Action plan
Person in
Task Activities Deadline
Charge
Survey the HR Department will be created
satisfaction of the survey to estimate the satisfaction of
project staff staff who is working on Rapid
project
HR Department will make report
HR End of May
Department 2018
Project
Managers and
all employees
in Malaysia.
Get advisory HR Department needs to find and HR Apr 2018
from professional select the professional advisory department,
Human resource company which have more Managers and
company to built experience in human resource for all employees.
up fair KPI multinational company and sign
international contract.
HRM
Cost around 50,000 USD
Compare internal After HR department receive the HR One week
and external result of Survey the satisfaction of department after having
report the project staff, they will check and and Mangers the final
compare with report from third party, report and
give the final result to BOD. survey result.
27

Change the mind
of BOD about
how to do human
management in
abroad
HR get approval to sign contract
with profession Human resource
company to organize International
HRM Course
HR One week
department after send
BOD
final report to
BOD
IV. CONCLUSION
As mentioned, human being is the factor that constitutes the enterprise, determines the
existence and development of the enterprise. Nowadays, in the context of the society is
moving to the knowledge economy, human resource gray matter is increasingly
important, enterprises are aware of the problem and focus more on the human factor. Do
not exaggerate to say that this is intellectual, intangible assets, capable of endless, not
easy to exploit that the boss is holding. Human resources can be trained, advanced to
improve and meet the requirements of work; Make a profit, ensure all the creative
resources of the organization. The purpose of this report is to show some symptoms that
are incurring at PVE including: high turnover, decrease the productivity and conflict
between compensation policy and desire of staff are impacting adversely to the business
performance of PVE. Besides that, this report also illustrates some central problems that
causes these symptoms above and injustice performance assessment is identified the main
cause. After that, based on interviews with key people at PVE and some literature
reviews, I recommend some solutions and detail of solutions implementation schedule to
apply them on the actual business of company. It is expected that these solutions will
assist to improve the operation and more development of PVE in the near future.
28

REFFERENCES:
1. Abassi, S. (2000). Turnover: the real bottom line. (3), 333-342.
2. Price, J. (2001). Reflections on the Determinants of Voluntary Turnover.
International Journal of Manpower(22), 600-624.
3. Abdali, F. (2001). Impact of Employee Turnover on Sustainable Growth of
Organization in Computer Graphics Sector of Karachi, Pakistan. Afro Asian
Journal of Social Sciences, 2(2.4).
4. Ingram, D. (2017). The Definition of High Turnover Rate. Retrieved April 15, 2017,
from http://smallbusiness.chron.com/definition-high-turnover-rate-11272.html
5. May, K. (2017). Causes & Effects of High & Low Staff Turnover. Retrieved April 15,
2017, from http://smallbusiness.chron.com/causes-effects-high-low-staff-turnover-
33939.html
6. Reh, F. J. (2017). Employee Turnover. Retrieved April 15, 2017, from
https://www.thebalance.com/employee-turnover-2275788
7. Pavlou, C. (2017). How to calculate employee turnover rate. Retrieved April 15,
2017, from https://resources.workable.com/tutorial/calculate-employee-turnover-rate
8. Woods, C. (2017). What Is Employee Turnover?- Definition, Cost & Reasons.
Retrieved April 15, 2017, from http://study.com/academy/lesson/what-is-employee-
turnover-definition-cost-reasons.html
9. Expat salary in Malaysia:
https://www.robertwalters.com.my/content/dam/robert-
walters/country/malaysia/files/salary-survey/malaysia-salary-survey-2016.pdf
10. Gerhart, B., & Milkovich, G. T. (1992). Employee compensation: Research and
practice (CAHRS Working Paper #92-26). Ithaca, NY: Cornell University, School
of Industrial and Labor Relations, Center for Advanced Human Resource Studies.
11. Chartedred Institute of Personnel and Development. (2011). Diversity in the
workplace: an overview. London: CIPD.
29

12. Ongori, H. (2007, May 22). A review of the literature on employee turnover .
African Journal of Business Management, 49-54.
13. NaukriHub (2013). Direct Compensation. Retrieved May 12, 2017,
from http://www.naukrihub.com/payroll/direct-compensation.html
14. NaukriHub (2012). Indirect Compensation. Retrieved March 31, 2017,
from http://www.naukrihub.com/payroll/indirect-compensation.html
15. Hsieh, H.-F.; Shannon, S. E. (2005). Three approaches to qualitative content analysis.
Qualitative Health Research, 15(9), 1277-1288.
16. Scoppa, V. (2003), “The role of turnover costs in the enforcement of performance‐ related pay contracts”, Metroeconomica, Vol. 51 No. 1, pp. 60‐78.
17. Chelius, J. and Smith, R.S. (1990), “Profit sharing and employment stability”, Industrial and Labor Relations Review, Vol. 43 No. 3, pp. 256S‐73S.
18. Leigh, Branham (2005). The 7 Hidden Reasons Employees Leave: How to Recognize
the Subtle Signs and Act Before It’s Too Late. New York: AMACOM.
19. Shaw, J. D., Gupta, N., & Delery, J. E. (2005). Alternative conceptualizations of the
relationship between voluntary turnover and organizational performance. Academy
of Management Journal, 48(1), 50–68
20. Guthrie, J. P. (2001). High-involvement work practices, turnover, and productivity:
Evidence from New Zealand. Academy of Management Journal, 44(1), 180–190
21. Woods, C. (2017). What Is Employee Turnover?- Definition, Cost & Reasons.
Retrieved April 15, 2017, from http://study.com/academy/lesson/what-is-employee-
turnover-definition-cost-reasons.html
22. Hill, Charles W.L in International Business, 2008, International – Chapter 18:
Global human recourse management
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past absenteeism and work attitudes. Career Development International, 12(5), 416-
432. doi:http://dx.doi.org/10.1108/13620430710773745
30

24. Muse, L., Harris, S. G., Giles, W. F., & Feild, H. S. (2008). Worklife benefits
and positive organizational behavior: is there a connection? Journal of
Organizational Behavior, 29(2), 171–192.
31

Appendix 1:
1st
Round Interview: 4 leave staff and Human Resource Manager
Interview with HR Manager
1) Good morning! How are you today?
A: Sure! I am fine.
2) Can you give me an interview now!
A: Of course, Please start your interview! I am ready now!
3) Thank you very much! How long have you been at this position?
A: I have been at this position over 10 years.
4) in your opinion, what were difficult problems that you have to solve?
A: This is the time I have to face with high turnover rate in over past three year. In my
viewpoint, it is quite hard to find good employee for right position.
5) Form 2015 until now, I see that there were some new and old employees from Rapid
project leave our company. How do you think about this?
A: Before they leave our firm, I have and interview with us. Most of them said that they
leave our company because they have to work hard and salary is not high if compare with
workload
6) So, what is your opinion about their comments?
A: Honestly, I find that their comments are right and the main cause comes from our
salary al system. Our company is government company for a long time. So, very difficult
to change it.
7) I understand. Thank you for your answering. Have a nice day!
32

Interview with 4 leave staffs
Transcript 1
Age 29
Location Ho Chi Minh City
Gender Male
Marital Status Single
Occupation Procurement
Salary 1,500 USD/ Month
Working Experience at PVE 1 years
1) Hi! How are you today?
A: I am fine. Thank you.
2) I saw that decide to resign from PVE. Do you have any issue?
A: well, after working 06 months, I feel very stress because the workload are not the
same with my expectation.
3) Workload? Can you share with me?
A: I have to wake up early and sleep very late. Meeting until midnight every day. It make
me stress. Furthermore, I don’t know how much incentive that I can receive if I work
after one year
Q: Thank you for your sharing.
33

Transcript 2
Age 29
Gender Male
Marital Status Single
Occupation Procurement
1) Hi, how are you?
A: Fine, how are you? Still working in PVE?
2) Yes, of course. But why you resign? I didn’t see you for long time
A: I have to take care my children and family. When I interview, they didn’t talk that I
will stay there 02-03 year until project finish. So, I quick
3) Do you have othe reason to share with me?
A: I think it salary. My salary if compare with other engineering in Malaysia is not high.
That’s all
4) Thank you for your sharing.
34

Transcript 3
Age 25
Gender Male
Marital Status Married
Occupation Civil engineering
Working Experience at PVE 1,5 years
1) Good morning! How are you today? Can you give me an interview
now! A: I am fine. You can start your interview. I am ready.
2) After working 1.5 years in PVE, you decided to resign. So, could you let me know
what happened to you?
A: There is not any serious problem. I just feel no motivation to work.
3) What is going on with you?
A: I think that our system is injustice. Sometime, my supervisor assigns me more difficult
works and some of them are new job so I didn’t do before. After that, I try my best to
complete this job and my supervisor gives me good reviews but I’m sure that I never
have a change to promote. They just give that for friend or family
35

4) Really, I don’t know about this issue. I will represent it to supervisors. Do you want to
share more things?
A: Honesty, there is one more issue that I want to share that no fair bonus for people who is
working in Malaysia and Vietnam. I hope that this will be changed but nothing happens.
5) I totally agree with your opinion. Thank you so much. We should have a suggestion
about this issue. Have a nice day.
Transcript 4
Age 30
Gender Male
Marital Status Married
Occupation Civil engineering
1) Good morning! How are you today? Can you give me an interview
now! A: Good, I’m ready now
2) After working 01 years in PVE, you decided to resign. So, could you let me know
what happened to you?
A: I would like to find another better job
3) What is going on with you?
36

A: After 01 year working very hard in here, I’m tired and I don’t know what will I be in
the future, no promote, low salary, stress.
4) Really, I don’t know about this issue. I will represent it to supervisors. Do you want to
share more things?
A: Yes, I have to work almost whole week and very tired after back from work, but the
result which I receive in end of year is the same with office staff. Do you think it fair?
Thank you so much. We should have a suggestion about this issue. Have a nice day.
37

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