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Employee Engagement & Retention in Vietnam SummaryFebruary 2011
Presentation to the American Chamber of Commerce
by Dr. Brent Ruge
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Food for Thought…
The Vietnam economy continues to grow quickly, and this is driving a war on talent. What effect do you think this will have on:Employee Turnover?Employee Engagement?
What factors do you think would drive turnover intentions higher?External pay perceptionsBenefitsPlentiful opportunities for employment at other companiesCareer opportunities
What about the business aspect? Do you think that Vietnamese employees sense that their companies are doing well on the following business imperatives:InnovationMarket responsivenessStrategy
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Engagement & Employee Turnover: Currently, employee engagement levels in Vietnam are higher than in the Asia Pacific Region, but employee intent to stay is lower.
In general, many areas of employee opinion in Vietnam have remained stable over the 5-year period (2006 – 2010), and most of these opinion areas are currently more positive than in the Asia Pacific region, except for:
Stress, Balance, & Workload – excessive workload and job pressurePay & Rewards – internal pay equity and matching pay to performanceBenefits – suitability and superiority of benefits programExternal Job Opportunities
Although employee opinion on Competitiveness in Vietnam is currently more positive than in the Asia Pacific Region, it is on a declining trend in the past 2 years, and this includes competitiveness on:
Quality of products/ services and customer serviceDevelopment of new products/ services, and responding to market changes
Summary
Possible causes for lower employee intent to stay
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Other areas in which employee opinion in Vietnam is currently more positive than in the Asia Pacific region include:
Top management’s strategy & directionEmployee perceptions of Company Image Effective performance evaluationsEmpowerment via an innovative climate and involvement in problemsolvingIncreased sophistication in company systems and practices
Summary
Possible causes for higher employee engagement
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Vietnam Employee Engagement & Retention Levels
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To be fully engaged, employees must:
THINK – Rational / cognitive understanding of the organisation’s strategic goals, values, and how employees fit
FEEL – Emotional / affective attachment to the organisation
ACT – Motivation and willingness to invest discretionary effort to go above and beyond
Engagement Model: Leveraging business outcomes through employee engagement
Act
Engagement
FeelThink
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Bottom Line: Evidence that employee Engagement drives company performance
3-Year Study of 40 Global Companies
3.74
2.06
-2.01-1.38
-5-4
-3-2
-101
23
45
Operating Margin Net Profit Margin
High Engagement Companies Low Engagement Companies
12-Month Study of 50 Global Companies
19.213.7
27.8
-32.7
-3.8-11.2
-40
-30
-20
-10
0
10
20
30
40
12-Month Changein Operating
Income
12-Month NetIncome Growth
Rate
12-Month EPSGrowth Rate
Perc
ent C
hang
e
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7775
747373
7171
6969
68656565
6362
6161
6060
595757
5555
5454
4848
4443
ThailandNorway
PhilippinesBrazil
IndonesiaAustria
NetherlandsCanada
New ZealandVietnamGermany
SpainUnited States
AustraliaSouth Africa
IrelandMalaysia
ItalySweden
IndiaFranceGreecePoland
United KingdomSingapore
KoreaPRC
TaiwanHong Kong
Japan
Switzerland% PERCENT FAVOURABLE RESPONSE
78
Cultural Context: National culture has a huge effect on employee perceptions
Actual DataActual Data
"Taking everything into account, how
satisfied are you with your company as a
place to work?"
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Global Norm Strength: Towers Watson maintains one of the world’s largest employee opinion databases, populated with data updated on a regular basis from surveys of nearly 4 million employees working for a cross-geography, cross-industry group of companiesVietnam Norms: The norm is developed from surveys of employees working in client organisations in Vietnam, and the current version of the norm includes 28 companies* and data from 3,722 employeesContent: This presentation summarises major changes in the norm over the past 5 years (2006 – 2010), and describes the major topic areas driving employee engagement and retentionThe Asia Pacific Norm: Newly created in 2010, so no trends are available for this benchmark
About the Vietnam National Norm
* Includes companies such as Alticor, AREVA, AstraZeneca, Baxter Healthcare, British American Tobacco, Citibank, GroupeDanone, KPMG, Lloyds, Maybank Group, Merck, Moet Hennessy, Novartis, Schindler, Tetra Pak, Thomson Reuters, & TNT
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Employee Engagement in Vietnam: Holding steady over past few years, and currently ahead of the Asia Pacific Region
Employee Engagement
78%
74%
77% 77%78%
60%
70%
80%
90%
2007 2008 2009 2010
% F
avor
able
Opi
nion
Vietnam Asia Pacific
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Employee Intent to Stay in Vietnam: Holding steady over past 4 years, but currently lagging behind Asia Pacific Region
At the present time, are you seriously considering leaving this company?
54%
61%
55%53%
54% 54%
40%
50%
60%
70%
2006 2007 2008 2009 2010
% F
avor
able
Opi
nion
Vietnam Asia Pacific
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Vietnam Employee Opinion Trend Highlights & Comparison to Asia
Pacific Region
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Total Favorable
40a. I believe top management has: A well formulated business strategy for the present 17 *
23a. This company is highly regarded by: The general public 17 *
Total Good
51a. How do you rate your last performance review on the following: Helping you identify your strengths and weaknesses 17 *
Total Favorable
61b. My supervisor involves me in: Solving problems related to our work 16 *
46b. This company has established a climate where: Innovative ideas can fail without penalty to the originating person or group 16 *
Top 10 Differences From Benchmark Tot Fav Diff
Tot Fav Diff
Tot Fav Diff
86
89
69
93
68
* indicates a statistically significant difference
Largest Regional Gaps: Employee Opinion Items with the largest positive differences against Asia Pacific Region
Strategy & Direction
I believe top management has a well formulated business strategy for the present
Image This company is highly regarded by the general Public
Performance Evaluation
How do you rate your last performance review on the following helping you identify your strengths and weaknesses
My supervisor involves me in solving problems related to our workSupervision
This company has established a climate where innovative ideas can fail without penalty to the originating person or group
Empowerment
Progressive Employee Practices Could be Driving Up Perceptions of Company Image
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Total Favorable
53. I am often bothered by excessive pressure on my job. (N) -15 *
54. I think my workload is excessive. (N) -7 *
No
105. At the present time, are you seriously considering leaving this company? -7 *
Total Good
38a. Regarding pay, how good a job do you feel the company is doing in the following areas: Matching pay to performance -3 *
Total Favorable
36. Compared with other people working here, I think I am paid fairly. -2
Bottom 10 Differences From Benchmark Tot Fav Diff
Tot Fav Diff
Tot Fav Diff
Tot Fav Diff
24
33
54
28
46
* indicates a statistically significant difference(N) indicates 'Disagreeing' is the Favorable Response
Largest Regional Gaps: Employee Opinion Items with the largest gaps (negative differences) against Asia Pacific Region
I am often bothered by excessive pressure on my job
I think my workload is excessive
At the present time, are you seriously considering leaving this company?Intent to Quit
Regarding pay, how good a job do you feel the company is doing in the following areas: Matching pay to performancePay &
RewardsCompared with other people working here, I think I am paid fairly
Stress, Balance, & Workload
High Stress + Lower Perception of Rewards => Strain on the Employee Value Proposition
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Declining Pay Perceptions: Employee opinion on Pay & Rewards in Vietnam on slight decline over past 5 years, but still comparable to Asia Pacific Region in 2010
Pay & Rewards
46%40%
40%39%
38% 38%
30%
40%
50%
60%
2006 2007 2008 2009 2010
% F
avor
able
Opi
nion
Vietnam Asia Pacific
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Steady Stress Levels: Employee opinion on Stress, Balance, & Workload in Vietnam stable over past few years, and comparable to Asia Pacific Region in 2010
Stress, Balance, & Workload
40%
44%
41% 41%42%
30%
40%
50%
60%
2007 2008 2009 2010
% F
avor
able
Opi
nion
Vietnam Asia Pacific
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Employee Opinion on Benefits: On a slight decline since 2008, but still comparable to Asia Pacific Region in 2010
Benefits
60%59%
65%
62%
59%
57%
40%
50%
60%
70%
2006 2007 2008 2009 2010
% F
avor
able
Opi
nion
Vietnam Asia Pacific
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Employee Opinions of Competitiveness in Vietnam: On the decline since 2008, but ahead of Asia Pacific Region in 2010
Competitiveness
60%61%
62%
56%
53%
49%
40%
50%
60%
70%
2006 2007 2008 2009 2010
% F
avor
able
Opi
nion
Vietnam Asia Pacific
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Summary & Conclusions
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StressTime away from familyLack of authorityLack of freedom
SecurityMoneyBenefitsAccomplishmentSelf worth
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Conclusions
Perceptions of Pay & Reward: Are becoming more negative, but internal pay practices are having a bigger effect than what’s going on in the external environment.
Stress and Workload: Perceptions are becoming more negative over time, but most of this is not due to staffing issues.
Benefits: There is a slight decrease in perceptions that benefits fit peoples’ needs, but a slight increase in perceptions that company benefits are as good compared to the local labour market
Competitiveness: People feel as if their companies are doing a better job of developing new products and services, but there is increased negativity regarding the quality of these products and services.
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Recommendations
Pay Attention to the Overall Employee Value Proposition: Balancing Effort & Reward: As stress levels are increasing, people need to feel that what they get in return is commensurateDifferentiating Performance: Ensure that internal pay practices are fair and effectively differentiate high performers from lower performersFocus on Talent: Ensure that there is a strong link between pay and superior performanceRewards Benchmarking: Ensure that pay and benefits have been benchmarked against local market practices
Competitiveness:Consider Quality Before Products are Launched: Build quality considerations into initial development process for new products and servicesGet Employee Input Regarding Quality: Ensure that employees have proper input on quality issues before new products go to marketRewarding Quality: Reward employees for improvements on product and service quality
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Introducing: The Vietnam Engagement Indicator Survey
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Towers Watson Surveys Background
Who we are: We are a world leading employee survey businessWho we work with: We work with some of the world’s largest and most successful organisationsWhat we do: We advise our clients on how to become high performance organisationsHow we do it: We help them ensure their people cultures support their business strategiesWho we work with: In 2009 we surveyed 4.1 million employees for 375 different organizations in over 35 languages, 140,000 manager reports and 957,000 verbatim commentsOur advantage:
Cutting-edge analyses and technology pinpoint the actions that drive themost changeWe maintain the largest database of employee opinions available, and provide our clients access to national, industry, functional and performance norms
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Survey Design & Administration
Population: Up to 1000 employees from your company
Questionnaire: 54 opinion questions that measure over 16 key workplace topics (15 minutes to complete)
Languages: Questionnaire in English and Vietnamese
Coding: 4 coding questions (e.g.. Job level, age, tenure, department/function)
Key Driver Analysis: 1 Key Driver Analysis to determine priority areas having the greatest impact on Employee Engagement
Benchmarks: Comparison with 2 benchmarks (1 industry and 1 national), for setting clear priorities within the proper context
Administration: Towers Watson’s server to support the on-line administration of survey and reminders
Normal Cost: US$4700
Limited-time Discounted Cost: US$3000
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Contains 54 questions over 16 categories
Key workplace factors measured are:
The Engagement Indicator Survey Content
Leadership
Strategy & Direction
Supervision
Communication
Organisational Change
Working Relationships
Empowerment
Training
Work Tools and Conditions
Stress Balance & Workload
Training
Engagement
Pay & Reward
Quality
Customer Focus
Organisational Culture
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“Should Management be concerned with Pay or Working Relationships?”
PAY (Demo data)
Pay as good as or better than the pay in other organisations.
WORKING RELATIONSHIPS
Good cooperation between departments.
45
0 20 40 60 80 10035
55
0 20 40 60 80 10070
Total % Favourable
Total % Favourable
Benchmarking Clarifies Data Interpretation
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Unparalleled global database of benchmark norms
Country/Region Performance NormsTransitioning CompaniesHigh Performing Companies
Senior ManagementManagement
Job Level NormsSenior ManagementManagement HourlyUnion and Non-Union
Job Function NormsResearch and DevelopmentCall CentersManufacturing FunctionsHuman ResourcesInformation TechnologyFinanceSalesMarketing
Industry NormsEnergyAirlinesManufacturingTelecommunicationsGovernmentHigh TechnologyPharmaceuticalProfessional ServicesFinancial ServicesConsumer GoodsConstruction & EngineeringOil & Chemicals
Personal DemographicsRace/EthnicityGenderAge
All norms are updated annually
Over 250 National, Sector, Function and Performance Norms
ArgentinaAustriaAustraliaBelgium BrazilBulgariaCanadaCroatiaCzech RepublicDenmarkFinlandFranceGermanyGreeceHong KongHungaryIndiaIndonesiaIrelandItalyJapanKazakhstanKoreaLatvia
LithuaniaMalaysiaMexicoNetherlandsNew ZealandNorwayPhilippinesPolandPortugalP.R. ChinaRomaniaRussiaSingaporeSlovakiaSouth AfricaSpainSwedenSwitzerlandTaiwanThailandTurkeyUkraineUnited KingdomUnited StatesVietnam
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Results Generated
Report: Active XL Interactive tool to drill down specific issues within demographic groups and to easily export to PowerPoint
Advanced Analysis: Key drivers analysis determines the areas most likely to impact your employees’ engagement within the context of your company, strategy, and current initiatives
Expert Recommendations: Tailor-designed PowerPoint presentation pack of your organisation’s results with specific consultant recommendations
Results Presentation: A face-to-face presentation and facilitated discussion with your leadership group
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Towers Watson Expertise
Full Project Management Support: Assistance and coordination during survey design, coding, administration, results and follow up
Flexibility: Ability to amend aspects of package to suit your organisation
Expert Advice: Masters/PhD qualified Consultants to facilitate process and workable solutions
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Timeframe for Engagement Indicator Survey 2011
This is a time-limited opportunity
Survey launched on March 28th
Results ready within one month of survey close
MayResults generated
May-JuneResults presentation
delivered
March 28-April 22Survey Launch and
Administered
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Act Phase: Turning results-into-action
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Example Survey Insights Towers Watson Solutions
Senior management not sincerely interested in employee well-being
Leadership developmentCommunication strategyDeal alignmentEmployee Advisory Team to leadership
Haven’t improved my skills and capabilities over the last year
Learning and development strategyCompetency developmentCareer maps / Communication on career frameworkPerformance management
No input into decision making in my department
Role/job designManager capabilityGovernanceOrganisational culture
Organisation doesn’t quickly resolve customer concerns
Role/job designCommunication strategyAlignment of pay systems & PM systemsManager capability
Insufficient career advancement opportunities Talent management Career laddersCompetency developmentWorkforce planning
Implementing Real Change: Towers Watson a range of consulting solutions to help address your engagement gaps and create positive change
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Contact Information
Jessica LuManaging ConsultantSuite 808, 8th Floor, Sun Wah Tower,115 Nguyen Hue Blvd., District 1Ho Chi Minh City, Vietnam+84 8 3821 9488 ext. [email protected]
Kieu Thi Phuong DungConsultantSuite 808, 8th Floor, Sun Wah Tower,115 Nguyen Hue Blvd., District 1Ho Chi Minh City, Vietnam+84 8 3821 9488 ext. [email protected]