Report on

BAX GLOBAL LIMITED: STAFF TURNOVER IN MAINLAND CHINA

REPORT ON
BAX GLOBAL LIMITED: STAFF TURNOVER IN MAINLAND CHINA

PREPARED BY
Name: Mohammed Aftab ID# 101 0017 030 Section: 14 Course: MGT351

SUBMITTED TO
Instructor: Mr. Shadat Khan (StN) Lecturer School of Business North South University Dhaka.

Date of Submission: 17th October 2011

MGT351 CASE# 1 BAX GLOBAL LIMITED: STAFF TURNOVER IN MAINLAND CHINA

(Answer the following questions.)

Problem Definition
- What problem does Carol Cai face? - How big is this problem now? -Will it get better or worse in the future? -What are the strategic implications of this problem? -What are the internal implications of this problem?

Motivations
-Why do some employees leave BAX China? - Why do some employees stay with BAX china? - What external/ Market factors influence their decisions? -What internal factors influence their decisions?

Key Success Factors

-What are the key success factors for a logistics company in mainland China? -What are the qualities/ qualifications that BAX China needs in its employees? What do they need to be good at? The answers will vary between organizational levels.

 BAX Assessment
-What is your assessment of BAX Chinas human resource practices, specifically with regard to recruitment, selection, training, socialization, compensation and benefits? -How do these practices relate to the key success factors and job requirements? - How well are these practices addressing the turnover issue?

Solutions
What should Cai do to address the turnover problem from this point onward? Consider her priorities and create an action plan. Would any practices from your current employer or past employers help BAX China?

Problem Definition

What problem does Carol Cai face?

Ans As a Human Resource Manager for Logistics and Supply Chain management firm BAX China, Carol Cai was facing problems in retaining the potential employees of the company. Because, in China most logistics worker had a tendency of switching job very frequently in search of higher salary and position. As a result, Cai was facing the problem of Employee Turnover, and as a consequence the company started to lose also its potential customers day by day.

How big is this problem now?

Ans This has become a real big problem. As we all know, China is the worlds ThirdLargest trading nation. Moreover, Mainland Chinas Import-Export activity created intense demand for logistics and supply chain management services. So, day by day competition among the Logistics and Supply chain management firms is increasing. Eventually it is creating huge pressure on labor market. If a company fails to fulfill the demands of the potential employees then the company will lose its potential employees and for sure face employee crisis due to Employee-Turnover. Moreover, lack of potential and efficient employees reduces productivity and eventually company loses its reputation and fails to create goodwill.

Will it get better or worse in the future?

Ans This problem will definitely get worse in the future, if corrective actions are not taken and important strategic changes are not made. Any firm which is providing Logistics and Supply Chain Management services will face difficulties in surviving in the market due to potential employee crisis and through competition among firms. In the consumers point of view Logistics customers are always focused on time and price, more than delivery mode. As a result, logistics firms will face difficulties in retaining their potential and loyal customers, due to the availability of different options in the market for the customers.

What are the strategic implications of this problem?

Ans

Hiring Process High price of recruiting, interviewing and hiring new workers, in addition to lost

productivity. Actual Cost The U.S. Department of Labor estimates that it costs about 33 percent of a new employee's salary to replace the worker who left. This means major companies can spend millions of dollars a year on turnover costs. Lack of Staff High turnover rates can create a lack of staff to complete essential daily functions of a company. This can result in overworked, frustrated employees and dissatisfied customers.

Loss of Productivity New employees take some time to get up to speed, particularly in complex jobs. Customer Dissatisfaction For service-oriented careers such as account management and customer service, high

turnover can lead to customer dissatisfaction. Newer representatives lack expertise

What are the internal implications of this problem?

Ans 1. Loss of faith in Management, 2. Feeling Unappreciated 3. Feeling Bored or Unchallenged 4. Negative impact on Employee morale, 5. Losing a close colleague can change the positive perception towards the Company, 6. A decrease in employee Efficiency (Employee doesnt give enough effort for job) 7. Putting the personal interests of an employee above what is best for the company, same goes with the Managers.

MOTIVATIONS

Why do some employees leave BAX China?

Ans

Some employees leave BAX China in favor of better opportunities in the China Market. A Chinese Logistics worker who changes their employers frequently progresses faster than other workers and their income level also rapidly rises.

Why do some employees stay with BAX china?

Ans Some employees stay with BAX China because they wanted to get the best out of themselves, as they knew loyal employees developed more experience and skills. Moreover, BAX China offered many effective options for employee career development, also provided some external training and development program facilities which was considered the process of sharing knowledge by BAX China. In general, the scenarios in which employees want to stay with a company: 1. Expected work is known to employee 2. Availability of materials and equipment which helps to do well in the job 3. Opportunity of doing the best which an employee are capable of doing everyday. 4. Recognition or Praise for doing good work.

5. Good Employee-Supervisor relationship. 6. Presence of inspiring leaders 7. The feeling of being important to Company 8. The mission or purpose of the company which helps to understand the employees, the jobs importance. 9. Cooperation among employees and unidirectional effort.

What external/ Market factors influence their decisions?

Ans External factors include family life, better salary and benefits offered by competitor companies, availability of other jobs, Specific Market demands and other business relationships

What internal factors influence their decisions?

Ans Employee behavior and decisions, is a result of factors that influence the ways employees respond to their work, leadership and customers. Identifying the internal and external factors that affect their decisions can help the company understand why employees are committed and motivated and why they are not. Internal factors:

Fair treatment, Good leadership, Organizational structure, The corporate culture, and Opportunities for career development.

KEY SUCCESS FACTORS

What are the key success factors for a logistics company in mainland China?

Ans

COST

Competitive pricing: all units/incremental units discounts Inco terms: Excellent understanding of pricing structures Budget for Employee Training and career development facilities.

Goal: the right product at the right time and at the right place

QUALITY

Delivery time: Shorter Delivery date: On time delivery Delivery quality: Avoid quantitative & qualitative defects en route Systematic Work flow and maintaining Corporate Governance

FLEXIBILITY

Delivery flexibility: Respond quickly to changes requested by the customer Readiness to provide information at all stages Flexibility in recruiting employees in short time period and short term realistic Job Preview facilities. Ability/Eagerness to employ the latest concepts and technologies in transportation logistics Technology should be used to evaluate employee performance and assessing employee job satisfaction level.

TECHNOLOGY

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What are the qualities/ qualifications that BAX China needs in its employees? What do they need to be good at? The answers will vary between organizational levels.

Ans

Logistics is a service industry, which is therefore a people business. To excel in the service sector, strong customer service orientation is essential. Of course, logistics industry experience is also beneficial in understanding the dynamics of the supply chain and how it impacts our customers businesses. In addition, resourcefulness, initiative, and the ability to work in a dynamic environment are also essential. Top (Higher) Management: Attention to detail, Self Control and dependability, Making independent decisions, IT knowledge.

Middle Management: Personal flexibility In working within different groups and employees, Communication and Cooperation,

Lower Management (Supervisors): Initiative, persistence, and independence, Focused towards Future Career Development. Stable Mentality (Towards job, Towards Company), Enthusiastic, and Energetic,

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BAX ASSESSMENT

What is your assessment of BAX Chinas human resource practices, specifically with regard to recruitment, selection, training, socialization, compensation and benefits?

Ans

Recruitment: According to my findings, BAX Chinas corrective recruitment procedures are very effective. Employees recruited from selected universities where logistics and supply chain management related courses are available ensure availability of fresh employees with fresh knowledge in related field. And the approach of attracting mid-level high-level and functional level staffs from the competitors and the labor market also ensure experienced and skilled employees. Selection: While recruiting, Employee motivation was gauged, and searched the employees who did not changed jobs frequently before. This reflects employee enthusiasm, mental stability, and sincerity towards the job and the company. Training: Aside from salaries BAX Chinas primary means of combating employee turnover was its focus on training and development. BAX china provided many external training development facilities and programs to better its employees. Socialization: Employees recruited based on their positive attitude and enthusiasm can be trained well

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and eventually socialization process becomes much easier with these types of employees.

These types of employees are maximum time acts as a team player and always possess friendly nature. Compensation and benefits: BAX China had established scholarship programs with two universities that did have programs in the logistics field. The company also offered internships to some of the scholarship winners. Moreover, to convince potential employees the company offered attractive salary.

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How do these practices relate to the key success factors and job requirements?

Ans

Recruitment and Selection

Effective recruitment and selection helps to get the perfect employee for the perfect job. A skilled employee works efficiently and increases the company productivity and eventually helps the company in cost cutting and ensuring the best quality.

Training

Providing training facilities and skill development facilities will enhance employee performance. Training will help the company in technological upgrading. Moreover, training facilities fosters the employee work flexibility.

Socialization

Socialization helps to enhance employee efficiency and company productivity. When employees feels free to work, and maintain a good positive Employee-Supervisor relationship it automatically helps to reduce extra company costs and helps to create flexibility.

Compensation and Benefits

Better salary and compensation helps to attract better employee, it helps to motivate employees. A motivated employee ensures good quality of their work, and eventually helps maintaining quality and constant costs.

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How well are these practices addressing the turnover issue?

Ans Through innovative and effective recruitment process BAX China is recruiting from selected sources which is allowing the company to pick the perfect employee for the perfect job, this type of approach reduces Employee-Turnover risk. BAX China is offering attractive compensation and benefits which will to some extent reduce the Employee-Turnover percentage as employees remains satisfied and also motivated. BAX China also offering few effective Training facilities, and also career development programs which is very essential for any employee. And at last after recruiting and selecting potential employees and through different training services BAX China trying to enhance a positive Socialization process for the new recruits so that they can work more freely and comfortably and thus give their best effort.

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SOLUTIONS

What should Cai do to address the turnover problem from this point onward? Consider her priorities and create an action plan.

Ans

Training and development opportunities A safe working environment A healthy working environment Responsive scheduling Positive employee-supervisor relationships Reasonable job demands Competitive pay and benefits Employee communication and influence Personally rewarding work Job security Thoughtful job design

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Would any practices from your current employer or past employers help BAX China?

Ans The Company I worked for is very small compared to BAX China, so I dont think any practices from my past employer can help BAX China. But based on my findings I can propose a standard model or suggest a solution map for BAX China which will help them in many ways. Logistics providers need to manage all the complexities for their customers, across borders and through various modes of transport. The following items are presented as the key HR Best Practices that I have found, and that can be practiced in BAX China. Analyzing every job: Taking the time to conduct a job analysis and write job descriptions for all of positions. Effectively recruiting new people: o Developing customized recruitment strategies o Providing interim human resource and accounting professionals o Engaging a retained search for key positions o Designing and implementing a college recruitment program o Outsourcing specific staffing functions o Providing assistance and support with job fairs, job sites and interviewing o Applying market research, salary surveys, and competitive analysis. Making well-informed hiring decisions: There are substantial costs associated with hiring the wrong person for an opening. This is relevant for hourly workers, but even more so for managerial and supervisory positions. Poor hiring decisions are related to many negative outcomes, from increased turnover to legal fees to lower quality. Conduct realistic job previews: All prospective employees should be given a realistic job preview of where they will be working, what they will be doing, and when and how they will be doing it (i.e., shift work).

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Maintaining fair and competitive compensation: Paying higher wages attracts better quality people who in turn increase companies productivity and profitability. Results suggest that the increased cost of paying higher wages is offset by increased profitability.

Making work meaningful: Offering training programs, showing employees the importance of their work, or enhancing their ability to contribute to company goals and objectives will eventually expand employee knowledge.

Foster good communication: Good communication is not only a key component of your human resources system; it is also a hallmark of good management. Company leaders should regularly communicate downward to employees, but should also encourage and be open to upward communication from the hourly ranks.

Enhancing supervisory skills: Leaders should keep in mind the saying that People dont leave companies, they leave supervisors. Training production supervisors in people management skills is likely to represent a small investment that could yield performance improvements within a short time frame and over time contribute to longterm competitive sustainability.

Offer skill testing: If they want to decrease employee turn-around, they can perform skill tests on their job applicants. This is one of the tools that will help determine whether they have found the best fit for each position the company has open. Not only that, but it also cuts down on your new applicant recruitment costs.

Holding regular review sessions: When employees are closely attached to their management team, they are more likely to feel involved. More involved employees tend to perform at a higher level and are more likely to achieve longer tenure.

Doing exit interviews: Labor laws suggest that we cannot hold a person from leaving. When an employee goes, he/she just has to go. It will be very beneficial to know the cause of why the employee chose to leave. Possible factors may be: a better job offer, pursuit for growth, poor colleague relationships, below average compensation, dislike for the nature of work, etc. Knowing what problems to address, and taking action on them, will eventually lessen turnover rates in the future.

Giving awards and rewards for achievement: Awards can be items such as employees pins for good attendance or cash incentives for increased department productivity.

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Offering employees the option of cross-training: Though there are many employees who only want to know their own job, many get bored and like the challenge of learning new skills. Having employees who know more than just their own job benefits both to company and them.

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