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© 2010 Towers Watson. All rights reserved.

Employee Engagement & Retention in Vietnam SummaryFebruary 2011

Presentation to the American Chamber of Commerce

by Dr. Brent Ruge

© 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.towerswatson.com

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


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


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


Vietnam Employee Engagement & Retention Levels


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


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


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?"


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


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


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 Employee Opinion Trend Highlights & Comparison to Asia

Pacific Region


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


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


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



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



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



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



Summary & Conclusions


StressTime away from familyLack of authorityLack of freedom

SecurityMoneyBenefitsAccomplishmentSelf worth


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.


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


Introducing: The Vietnam Engagement Indicator Survey


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


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


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


“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


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


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


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


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


Act Phase: Turning results-into-action


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

© 2010 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.towerswatson.com 3535

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]

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