RESEARCH PROPOSAL HOW TO RETAIN KEY EMPLOYEES IN FPT CORPORATION FOR THE NEXT 5 YEARS TRN NGUYN CHN

PHNG INTAKE 2, MBA-MCI

I. INTRODUCTION Background FPT, one of the four biggest IT companies of Vietnam, has a history of over 20 years establishing and developing. FPT Corporation was established in 1988 on the base of Foodstuff Technology Company and equitized in 2002. FPT is a multinational company engaged in six business lines including information technology, telecommunication, distribution, real estate, education, and financial services. It mainly supplies embedded systems, customized software, and Enterprise Resources Planning (ERP) services. In telecommunication, the Company acts as Internet Services Provider (ISP) and offers online entertainment, media, and advertisement solutions. In distribution business, it assembles and distributes computers, hand phones, and other technological products, as well as provides maintenance and repair services. In real estate, the Company offers property agencies and industrial park management services. In education, it operates one tertiary education institute and other training centers. In financial services, the Company works with its affiliates in securities brokerage, fund management, and commercial banking sectors. FPT Corporation has 7 subsidiaries and associates. Its network is spread across the country with branches in Ho Chi Minh City, Da Nang City, Can Tho City and over 10 countries throughout the world. FPT has approximately 60 famous partners including IBM, Lenovo, Microsoft, HP, Nokia, Toshiba, Oracle, Samsung, Motorola Cisco, Veritas, Computer Associates, Apple, and Intel Symantec. Additionally, FPT is also proud of their talented and large pool of workforce. In December 2010, FPT reached 12,300 employees in total. Five years ago, when FPT just had around 9,000 employees, it was an ideal company for many candidates but now it is not the first choice because of some reasons. One of the top considered by many candidates is that the recent turnover rate of FPT is too high, even if FPT has already recognized the importance of human assets as they state in their website:

Page |2

www.fpt.com.vn: FPTs success is a result of all FPT employees collective effort and FPT is proud to have assembled the largest team of IT experts in Vietnam. They are FPTs invaluable assets, forming the basis for each success of the Company. So the question raised here is why. Some managers cannot understand why with such an environment as good as FPTs still cannot keep key employees and only average people stay. They offered a lot of benefits such as bonus, allowance, FPT care, employee discount when purchasing FPTs products and services and especially long term training course called mini MBA for key employees in order to keep them for a long time with company, however, their key staffs still continue leaving the company. As the result of that, finding a solution for this problem is one of the highest-priority tasks of FPT. Research problem A companys greatest assets are its employees, and that will continue to be the case in the foreseeable future (Beverly Kaye and Sharon Jordan-Evans, 2000). However, large, forprofit corporations are experiencing difficulty in retaining their most talented workers (Hay, 2002). Various estimates suggest that losing a middle manager costs an organization up to 100 percent of his salary (Susan M. Heathfield, 2010). Moreover, replacing the more professional and executive people can cost as much as 7 times the annual salary of the individual (Thatcher, Stepina and Boyle, 2002). There are also intrinsic costs of losing the most talented of the workers, beyond the monetary factors (Panchak, 2003). What is more, there is a new pattern in employment and turnover in todays corporate environment. People change several jobs within a year rather than choose to grow in one; and this has also been a problem for corporate management. FPT is not an exception case. FPT has lower prestige than five years ago when becoming staff of FPT was not only pride of employees but also their families. At that time, not only just graduated students would like to join and grow with FPT but also experienced employees wanted to become FPTers for a long time. In recent times, FPT has been seen as famous and

Page |3

prestige training school and good employee pool for the IT industry. Just graduated and unskilled students joined FPT to be trained and got experience. After one year, when they improve their working skills, they left FPT. With the seniors, they have come to FPT to experience new environment but after short time, they quit because of not getting along with the culture here. When key employees leave, FPT loses many things. There are expenses for recruitment, orientation, training, coaching as well as cost for rehiring, reorientation, retraining, and re-coaching; decreased productivity until the new employee is up to speed, and loss of customers who were loyal to the departed employee; and reduction of company image and prestige. In addition, after FPT issued its stock in an Initial Public Offering (IPO) in 2006, many FPT managers became billionaires. They were shocked with their fortunes and lost their motivation. They did not try to accomplish their job with acceptable productivity, let alone thought of how to build up and retain their subordinate. FPT key employees have left their managers and supervisors more often than they have left FPT or their jobs ever since. Moreover, by 2015 when the tariff with China becomes zero, many big IT companies of China, one of the biggest IT industries in the world, will open business in Vietnam. At that time, Vietnam IT industry in general and FPT in specific will be in struggle with huge competitors. Consequently, the war of keeping key employees will become fiercer than ever. If FPT does not have any human resource strategy now, they will suffer shortage of key employees, which affects directly to their business performance in the near future. Above analyses lead to prove the fact that attracting and retaining key employees now is the vital issue of FPT and need to be considered foremost. FPT recognized this and tried to open for salary negotiation, set up incentive scheme, open training and coaching opportunities, give health care programs designed specific for FPT and their family with the purpose of keeping key employees longer as much as possible. However, some key

Page |4

employees still leave FPT; some ones still stay but they work with lower productivity than their abilities and look for new opportunity to where they have good managers, or where their achievements can be appreciated. This proved the fact that it is not just good salary, benefits as well as career development opportunities, which could keep key employees if they do not like FPT culture, their colleagues, their managers, or the way that they are treated and recognized. What do FPTs key employees think and how have they been satisfied with their jobs? What are their expectations? Are those salary and benefit satisfactions, good managers, friendly and nice co-workers, dynamic culture, motivation working environment, as well as career development opportunity in FPT? What are the main factors and which one is the most important? What are the gaps existing in meeting those? Why FPT turnover rate is still high after too many efforts? How can FPT fix this issue? Up to now, there have been no official researches about these concerns in FPT. This study attempts to address above-mentioned questions. It first figures out the current status of FPT key employees satisfaction. After that, main factors and their related effects on FPT key employees expectation are identified and analyzed. The findings are then used to develop multifactors system for retention of FPT key employees. Research objectives This study is designed to give FPT an answer to the question: How to retain their key employees for the next 5 years. Based on the above-mentioned problem, this research is formulated towards the following objectives: To understand the current status of FPT key employees satisfaction. To identify key determinants as well as analyze their effects on FPT key employees expectation. To recommend multi-factors system in order to retain key employees in FPT.

Page |5

Scope and limitation of the research This research focuses on studying the retention FPT key employees. FPT Corporate has 7 subsidiaries and associates: FPT Telecom, FPT Software, FPT Information System, FPT Education, FPT Trading, FPT Information Services, and FPT Investment. Each one is corporation itself with many subsidiaries and associates. Although the head office of FPT Corporation is in Hanoi but every company has its subsidiaries in Ho Chi Minh City. Due to time and finance constraints, this research is just within the context of 6 typical units of FPT Corporation in Ho Chi Minh City: FPT Software Development Co., Ltd, Global Business Development Center, and FPT ERP Services Co., Ltd of FPT Information System Co., Ltd; FPT University of FPT Education; FPT Software HCMC of FPT Software Co., Ltd; and FPT Telecom South Co., Ltd of FPT Telecom Joint Stock Company. Furthermore, it is the fact that recruitment and retention are not addressed as separated issues. However, this study focuses only on analyzing the issue of retaining key employees after they are recruited. Managerial implication The results of this paper may help 6 selected FPT companies above in specific and other FPT companies in general to realize the expectation of their key employees. This study is also expected to provide FPT with the determinants that affect to key employees turnover together with their relative importance. Based on those results, FPT may develop appropriate human resource strategies that help increase the level of satisfaction of key employees, and then accordingly keep persistency at low turnover rate to contribute to good business performance of FPT, maintain sustainable growth as well. II. LITERATURE REVIEW AND HYPOTHESES The following session focuses on key terms and concepts in the research topic. It then describes theoretical background and arguments leading to 4 hypotheses.

Page |6

Key employees Key employees are those who have outstanding performance than their coworkers in some fields. They are also those who eager to learn and experience new things with full energy and motivation as well as desire to lead in their professional fields. They frequently seek opportunities to learn and grow in their careers, knowledge and skills. They easily feel boring and stagnate without the opportunity to try new things, sit on challenging committees, attend seminars, read and discuss books. They contribute significantly to the business performance and profit. In other words, it is difficult to replace them. They could be at all levels and functions of the organization including managers, supervisors, senior or junior employees. Best managers Best managers are those who treat employees as the most important assets that they have. They are also those who give or even find opportunities for employees that promote their professional growth. They could also make employees know exactly and clearly what is expected from them in their daily work as well as see their bright future in the company. On the other hand, they have a critical role to employee retention. Anything the supervisor does to make an employee feel unvalued will contribute to turnover rate. The Gallup study (1999) found that people were not necessarily loyal to the company, but rather direct supervisor. Top reasons make people want to stay A 2000 Beverly Kaye and Sharon Jordan-Evans research of more than 2,000 respondents from diverse industries and functions found that of 50 retention factors, pay was the least important. Based on their study, here are the most common reasons respondents gave for wanting to stay with a company: 1. Career growth, learning, and development 2. Exciting work and challenge
Page |7

3. Meaningful work, making a difference and a contribution 4. Great people 5. Being part of a team 6. Good boss 7. Recognition for work well done 8. Autonomy, sense of control over ones work 9. Flexible work hours and dress code 10. Fair pay and benefits. Ninety percent of the respondents cited at least one of the first three items as primary. Top reasons make people want to leave A study of Saratoga Institute for the American Management Association (1999) cites three reasons will make people leave their jobs. 1. Poor supervisor skills 2. No growth opportunities 3. Inability to speak freely Hypotheses Review of previous research indicates that there are so many reasons for key employees to stay or leave the company. However, they are the general studies for almost industries not specific for FPT. Based on careful and empirical observation of over 11 years working for FPT, I would like to suggest 4 hypotheses as following: 1. Hypothesis 1: Better supervisor skills is associated with higher job satisfaction

Page |8

2. Hypothesis 2: More growth, learning and development opportunities is associated with higher job satisfaction 3. Hypothesis 3: Higher job pay and benefit is associated with higher job satisfaction 4. Hypothesis 4: Higher friendly and open working environment is associated with higher job satisfaction These above hypotheses are my proposed so they are subjective and probably should be revised after making some desk analyses and conducting some interviews with focus group in order to adapt it to FPT situation. III. RESEARCH DESIGN

In order to realize the objective of this study the research strategy needs to be designed. This session comprises 3 contents: research method, sample size and method of data analysis. Research method This is primarily as an exploratory study with quantitative approach. The study is based mainly on the collection and analysis of primary data from field surveys including questionnaire survey and focus group. It has 5 steps as following: a. Step 1: Collect and analyze all turnover and exit-interview data. The interviewer should be independent in order to get correct information because only if the departed employee trusts the interviewer, the exit-interview information is valid. Based on data collected, make a list of factors determining dissatisfaction of departed employees. b. Step 2: Conduct stay interviews with focus group to learn why they stay. Focus group should be longer-tenured employees typifying various departments as well as levels in the organization. Based on the information collected, make a list of factors attract key employees to stay with FPT.

Page |9

c. Step 3: Design a questionnaire to evaluate the current status of FPT high turnover rate as well as to explore key employees satisfaction and their expectation. Then pretest the questionnaire with 20 key employees of 6 units above. Respondents will be explicitly asked to indicate any ambiguities or potential error stemming for the format or the wording of the questionnaire. d. Step 4: Survey respondents representing multiple levels and functions of 6 units above based on refined questionnaire in step 3. Data will be collected through face-to-face structured interviews. e. Step 5: Develop multi-factors system to improve the retention of key employees in FPT. Sample size The sample size is envisaged as 200 key employees in 6 units above. The allocation will be made in proportion to human resources of each unit: 35 in FPT Software Development Co., Ltd, 35 in Global Business Development Center, 30 in FPT ERP Services Co., Ltd, 30 in FPT University; 35 in FPT Software HCMC; and 35 in FPT Telecom South Co., Ltd. With each unit, the sample will cover both males and females and the quotas will be set equally between two groups. Method of data analysis The Computer Statistic Package for Social Science (SPSS) software will be used to process and analyze data collected. At first, it will be applied to assess the reliability and validity of the measures. Second phase is the analysis of our full model with the use of multiple regressions. IV.REFERENCES Beverly Kaye and Sharon Jordan-Evans (2000), Retention: Tag, Youre It, ASTD's Training & Development

P a g e | 10

Dr. Maynard Brusman (2006), Love Em Or Lose Em: Retaining Talented Employees, Working Resources The Hay Group (2002), Strategies for survival in the war of talent, Career Development International, Bradford, 7(1), pp. 52-56 Susan M. Heathfield (2010), Top Ten Ways to Retain Your Great Employee , About.com Thatcher, J. B., Stepina, L. P. & Boyle & Randall, J. B. (2002), Turnover of information technology workers: Examining empirically the influence of attitudes, job characteristics and external markets, Journal of Management Information Systems, 19(3), pp. 231-261. M. E. Sharpe, Inc Panchak, P. (2003), Nuturing the motivated workforce, Industry Week, 252(3). Buckingham, Marcus and Curt Coffman (1999), First Break All the Rules: What the World's Greatest Managers Do Differently, Simon & Schuster.

P a g e | 11