Luận văn Employee compensation at the Ho Chi Minh Museum Construction JSC

earch approach there are three different forms; induction, deduction and abduction. Bryman & Bell (2005) define induction as when the theory is generated from practice. However, deduction is the most common understanding of how the relationship between theory and practice works in the social science. It begins with the knowledge and the theory in the field, and then the researcher deduces hypothesizes which will be tested in an empirical study (Bryman & Bell, 2005). According to the case study that has been made, abduction is the most suitable research approach. The abductive method is according to Dubois & Gadde (2002) a combination of induction and deduction, and therefore not an approach in itself, however it is a method to use when moving back and forth between the theoretical world and empirical world. When doing so, the understanding of both worlds will be further extended, since it is not possible to understand the whole picture with just one of the two parts. To decide which strategy is the most appropriate one, the research question is the most important factor. According to the research problem of this dissertation, case study approach is the most suitable strategy. Yin (2003, 13), defines a case study as “…an empirical inquiry that investigates a contemporary phenomenon within its real-life context, especially when the boundaries between phenomenon and context are not clearly evident.” The case study of Ho Chi Minh Museum Construction JSC was chosen to be examined in depth, because it provides events which are aligned to the research problem of this dissertation. Also, the reason for choosing a single case study research is because the research question is about trying to understand a specific social phenomenon (Yin, 2003). When doing case study as the research methodology, multiple sources of data have been used. Data have been collected from open-ended interviews, observations, and documents/databases, which will be described more in details in the later part. Also, quantitative and qualitative studies have been conducted based on statistics information. Data analysis is chiefly based on qualitative approach and interpretation of the data collected during research. Data collection methods To conduct this dissertation, both secondary and primary data have been used. Secondary data are collected from both academic literatures and popular writings. They include legal regulations, previous scholar findings (new definitions, calculations, key facts and survey results), in research papers, published books, journal articles, and from the World Wide Web. One important source of secondary data for this dissertation is the internal circulated documents from Ho Chi Minh Museum Construction JSC. Organizational documents such as administrative reports, agendas, letters, minutes, and news clippings were gathered and studied. Primary data are gathered mainly by qualitative methods, which are participant observations, conducting unstructured interviews and interpreting secondary information. A short placement in the company’s Finance and Accounting Department was helpful to gain insights into the payroll job of the company, because it provided opportunities to observe the processes and conduct interviews with the staff, including the Chief Accountant of the company and other employees. Thus, the author can gather documents and details of the company’s payroll policies, how they are carried out, and understanding as well as attitudes of employees (white-collar employees) towards the company’s policies. Research Methodology: Case Study The methodology of this research is to study the case of Ho Chi Minh Museum Construction JSC. Case study research can lead to understanding of this complex issue of payroll in State-owned companies, also extend experience and add strength to previous researches’ findings. This case study will provide detailed contextual analysis of a limited number of events, conditions and their relationships relating to the payroll activity in the investigated construction company. Researcher Robert K. Yin defines the case study research method as an empirical inquiry that investigates a contemporary phenomenon within its real-life context; when the boundaries between phenomenon and context are not clearly evident; and in which multiple sources of evidence are used (Yin, 1983, p. 24). Critics of the case study method believe that the study of a small number of cases can offer no grounds for establishing reliability or generality of finding (web). However, it is possible to generalize the theories based from the results (case study), but not to specify frequencies (Yin, 2003). Nevertheless, the Ho Chi Minh Museum Construction JSC was chosen because it is a typical State-owned enterprise working in construction field, which payroll policy has been practiced for a long time. Therefore, it can reflect more or less the payroll systems that Vietnamese public construction companies are using. Also, the aim of this study is not to generalize the results and make them valid also for other organizations, but to look deeper into the case of the company and analyze their payroll process. Chapter 4: EMPIRICAL RESULTS Overview of the HOCHIMINH Museum Construction JSC. Transaction Name: HOCHIMINH MUSEUM CONSTRUCTION JOINT STOCK COMPANY. Abbreviation: HCMCJSC. Legal form: HCMCJSC is an equitized state enterprise which both retains the existing state capital in the enterprise and issues more shares to increase its charter capital. However, the state still holds controlling shares. The Board of Management consists of five members, two of which are senior member of the Board of Directors. The Vice Chairman is also Executive Director. The Company’s Headquarter is located at 48A Lang Ha, Dong Da District, Hanoi. Head office is at 381 Doi Can Ward, Lieu Giai, Ba Dinh District, Hanoi. The Company has representative offices and/or branches in some provinces and cities in Vietnam, as well as in foreign countries in accordance with the law. Through 35 years of development, Ho Chi Minh Museum Construction Company has undergone many changes in its name, legal form and size of the business. Ho Chi Minh Museum Construction Company was established on July 30, 1975 according to the decision numbered 389/BXD-TC of the Minister of Construction, formerly known as Construction Site 75808 under Ministry of Construction, constructing the Ho Chi Minh Mausoleum. Renamed in 1977 to Construction Company No.3, the Company remained under the Ministry of Construction, according to Decision No. 105/BXD-TC dated July 7, 1977 of Ministry of Construction. It was renamed again in 1985 to Ho Chi Minh Museum Construction Company, under the Hanoi Construction Corporation, by Decision No. 618/BXD-TCCB on April 23, 1985 of Ministry of Construction. In 1993, it was reformed to be a State Enterprise in accordance with Decree 388/HDBT and once again renamed Ho Chi Minh Museum Construction Company, by Decision No. 144A/BXD-TCLD, dated March 26, 1993 of Ministry of Construction. In 2005 it was Ho Chi Minh Museum Construction Joint Stock Company according to Decision numbered 2055/QĐ-BXD, dated October 31, 2005 of Ministry of Construction. The Company has business registry number of 0103010768, given by the Department of Planning and Investing of Hanoi, on February 9, 2006, recognizing Headquarter at 381 Doi Can, Ba Dinh, Hanoi. The Company was regconized as in Category I by Decision No. 1218/BXD-TCLĐ dated September 21, and Decision No. 1554/QĐ-BXD dated December of the Ministry of Construction. It was certificated ISO 9001 – 2000 by AFQ-ASCERT International on January 9, 2002. Since 1990, the Company has been awarded with 26 Gold Medal of Quality and Quality-Assured Flags for 26 buildings that the Company constructed. Current charter capital is of 60 billion. Fixed assets are of 92.1 billion VND. Current assets are of 20.41 billion VND. The Company constructed many politic and diplomatic purposely-built structures, for examples the Hall of Ba Dinh, the Ho Chi Minh Mausoleum, Ho Chi Minh Museum, Van Phuc Diplomatic Compound, Vietnam Meeting Centre, and Bac Son Martyr Monument. It was also in charge of the construction of academic buildings such as the Vietnam Institute of Science, University of Foreign Languages, and commercial and/or residential ones, for instance, the 25-storey Twin Tower at 191 Ba Trieu (Vincom), the 30-storey Twin Tower of EVN, the 16-storey apartment at Thang Long International Village, and the 25-storey CROWN Plaza Hotel. Ho Chi Minh Museum Construction Company also has projects outside Hanoi, it has built the Bac Kan People Committee’s house, A9-95, Thanh Hoa People’s Council’s headquarter, and the 100-metres cement plant in Tam Diep. The staff of the Company is organized into 10 factories, 1 construction consultancy, 2 condominium management boards, 8 teams and workshops. The below illustration is the organizational chart of the Company. Figure 4.1: Organizational Structure of Ho Chi Minh Museum Construction JSCShareholders’ Meeting Board of Management Board of Supersivion Executive Director Deputy Director 2 Chief Accountant Deputy Director 1 Const. MATL Center No. 1 Contr. and Proj. Mgmt.Dep. Business Planning Dep. Admin. Dep. Human Resources Dep. Finance and Accoun-ting Dep. CQC Dep. MEP Dep. Safety and Health The Company now has a total number of employees (including seasonal workers) of 2,336 people, of which 124 people are female. Due to the working conditions of a construction Company, which requires a great amount of time working outdoors, and heavy physical strains, the low rate of female labor (only 5.3%) is reasonable. Quantity and quality of the workforce is expressed through the following table: Table 4.1: Quantity and Quality of Technical and Management Staff No. Positions Total no. Age Professional Qualifications From 18 - 40 40+ Postgraduates Graduates Vocational 1 Manager positions 94 33 61 3 75 13 2 Engineers and Technicians 118 101 17 106 12 3 Departmental employees 60 43 17 40 18 4 Heath care 1 1 5 Office administrative 7 4 3 4 1 6 Labor representatives 1 1 1 TOTAL 281 181 100 3 226 44 (Source: Human Resources Department) As Table 4.1 shows, the level of technical expertise of scientific and technical staff is high. 226 people graduate with a degree, postgraduate or undergraduate, accounting for 80.43% of total employees, 44 people have finished voluntary schools, representing 15.66% of total employees. Moreover, they have extensive working experience in construction and engineering, which help the Company stand firm and constantly develop. Table 4.2: Quantity and Quality of Blue-Collar Workers No. Categories Total Average ratings I Technical workers 214 4,32 1 Construction site workers 71 5,18 2 Construction drivers/Heavy equipment operators 49 3,67 3 Assembly workers 4 Mechanics 86 4,07 5 Material production workers 6 Surveyors 8 3,38 II Security staff and general laborers 14 1,36 TOTAL 228 4,14 ( Source: Human Resources Department) As the above table shows, the average rate of craftsmen is 4.32, implying that the Company has a team of technical workers with advanced skills. This is one of the strengths that help HCMC JSC improve its product quality and competitiveness in the market. Table 4.3: Financial Results of the Company from 2007 to 2009 Unit: VND No. Financial Data 2007 2008 2009 1 Total assets 428.235.950.291 558.279.755.187 669.238.716.255 2 Total liabilities 346.700.894.011 457.369.299.408 547.672.002.413,5 3 Current assets 365.804.333.666 472.766.367.948 575.841.950.456 4 Total current liabilities 333.946.921.226 441.677.050.465 543.938.709.963,5 5 Net incomes 433.451.652.132 501.970.779.144 522.864.418.198 6 Gross profits 26.370.981.151 28.012.748.880 77.799.472.436 7 Other gains 3.475.936.762 969.689.652 921.288.498 8 Profits before tax 19.756.652.536 15.143.396.394 59.949.191.825 9 Profits after tax 19.756.652.536 13.019.194.616 52.455.542.847 (Source: Finance - Accounting Department) From Table 4.3, we can see clearly that financial results of the Company fluctuated adequately throughout 3 years. In 2008, although affected by the world’s economic crisis, the total assets, revenue, gross profit of the Company still effectively increased from those of 2007. Total assets in 2008 rose by 130 043 804 896 VND, equivalent to 30.37% increase from 2007. Revenue grew by 68,519,127,012 VND, equivalent to 16% increase over the last year. Gross profit increased by 1,641,767,729 VND, up 6.23% over 2007. In 2007, the Company’s ‘Other gains’ account was substantially big, more than triple the accounts in 2008 and 2009, as it was returned the construction warranty deposits for previous projects. Also, this was the last year the Company was waived the corporate income tax, so the pretax profit in 2008 decreased by 4,613,256,142 VND compared to 2007, equivalent to 23.35% reduction, and after-tax profit decreased by 6,737,457,920 VND, equal to 34.1% decline. By 2009, from numbers in the Table, the performance increased sufficiently compared to which of 2008. Total assets in 2009 increased by 110 958,961,069 VND, equivalent to 19.88% increase over the last year. Revenue rose by 20,893,639,054 VND, rate of growth was 4.16%. In 2008, the prices of construction materials increased, the costs increased, reducing gross profits. By 2009 especially the first month of the year, as real estate market froze the prices of construction materials fell sharply. Costs reduced, while net sales increased, in 2009 gross profit increased by 77,799,472,436 VND, equivalent to 177.73% increase, profit after tax increased by 39,436,348,231 VND, equivalent to 302.91% increase compared to 2008. Apart from financial data, the Company’s performance was also indicated by the following financial ratios: Table 4.4: Performance-indicated Ratios No. Performance 2007 2008 2009 1 Debt ratio 0.81 0,819 0,818 2 Liquidity ratio 1.1 1.07 1,06 3 Return on assets 0.05 0.03 0,09 4 Profit margin 0.05 0.03 0,12 (Source: Finance - Accounting Department) The debt ratio increased in 2008 compared to that of 2007, proving that the Company had used debts to finance more of their assets. In 2009, the proportion of assets funded by capital liabilities decreased but only slightly, showing that the Company’s total assets was still largely funded by capital liabilities. Debt ratios of the Company throughout the years, despite reducing, were still bigger than 1, which ensured the financial stability of the Company. In 2008, the return on total assets and profit margin were downwards, which is not a good sign. Company needs to determine the cause, whether it is due to the impact of the crisis, or the new corporate income tax payable, or other reason, and determine the main causes. Then the Company should base on which to have the right direction and an appropriate business strategy. In 2009, the return on total assets and profit margin increased significantly. As such, the Company had stabilized its operations and achieved positive business results. In summary, analyzing the indicators suggests that, due to the impact of the world’s economic crisis and having to pay the corporate income tax for the first year, the Company’s business performance in 2008 was poorer than in 2007. But in 2009, the Company had had the right strategy to bounce back and obtain significant achievements. Current regime of paying salary/wage and bonus at the Ho Chi Minh Museum Construction JSC. Regulations on minimum payment of salary/wage and income The minimum wage is the wage of unskilled or semi-skilled workers doing the most simple, without training jobs (also known as general workers), in normal working conditions and environment. On that basis, the Company has specified the minimum rate of pay as follows: For general workers/tradesmen: Payment will be made based on product outputs. The quantity and quality of outputs, economic and technical norms of the state and the industry serve as the basis for determining the payment rate. The wage distribution among labor groups and in each of them must be based on the laborers’ workdays, pay grade and participation rate of each labor. For Managers, Technicians, other Departmental staffs who are indirectly in charge of construction jobs: Payment will be made based on length of service and overall performances of the production and business units. But the minimum wages to be paid to officers and employees who fulfilled their responsibilities and tasks are defined as follow: Engineers and other university-graduates, working fulltime and fulfilling all duties must be paid the minimum: 2,100,000 VND for the grade 1 / 8 and 1.5 million VND for fresh-graduated engineers who are in the probation period. Graduates from college and vocational schools, working fulltime and fulfilling every task, must be paid salaries equal to at least: 1.7 million VND for the grade 1 / 12 and 1.2 million VND during short-term contract trial. Salary paid to other tiers according to the formula: TLTT = Minimum Salary = Salary Coefficient ´ Minimum State Salary ´ 2.20 Or more specifically: Minimum salary of a permanent staff = His/her current salary coefficient ´ 1,350,000 ´ 2,20 The minimum state salary is determined by the State, and uniformed in all enterprises within the country. When the State changes this amount, the Company’s salaries will be changed proportionately. The new statutory minimum wage is 830,000 VND (implemented from May 1st, 2011); however the minimum wage in Hanoi region according to decree 108/2010/NĐ-CP is 1,350,000 VND since January 1st, 2011. Thus, the minimum wage that the Company is applying is the minimum wage adjusted for Hanoi region today, 1,350,000 VND. In addition to the above provisions of minimum wage, the Company encourages firms, workshops and units to pay higher salaries for officials and employees who perform their jobs well, and adjust the basic salaries based on specific job characteristics and working conditions. If staff does not complete the task and the unit pays less than the minimum regulated amount, they must report to the Director for approval. Typically employees are paid on the 15th and 30th day of each month. If the 15th or 30th of the month falls on a Saturday, Sunday, or national holiday, the employees will be paid the weekday before, usually a Friday. The payment on the 15th is known as advancement pay, and the pay on the 30th is remainder pay. Regulations on the Company’s pay table as follow: - Because Ho Chi Minh Museum Construction JSC is a state-owned enterprise, its pay grades and pay scales shall comply with the laws on public sector’s payment. - The salary grades and positions of employees who only used to calculate the mode of social insurance, health insurance, overtime pay, night work, work stoppage, annual leave, holidays and other absences of employees action. Also is the basis for calculating salary for each time    Here is the salary scales and payrolls of a number of components: Table 4.5: Pay Table for Members of the Board Unit: 1,000 VND Positions Salary coefficients and ranges 1. Chairman of the Board - Coefficients 6.97 -7.30 - Salary range 6,830.6 – 7,154 2. Members of the Board (excluding Executive Directors, Deputy Directors) - Coefficients 5.98 – 6.31 - Salary range 5,860.4 – 6,183.8 (Source: Human Resources Department) Table 4.6: Pay Table for Executive Director, Deputy Directors, and Chief Accountant Unit: 1,000 VND Positions Salary coefficients and range 1. Executive Director, Directors - Coefficients 6.44 – 6.97 - Salary range 6,311.2 – 6,830.6 2. Deputy Directors - Coefficients 5.98 – 6.31 - Salary range 5,860.4 – 6,183.8 3. Chief Accountant - Coefficients 5.65 – 5.98 - Salary range 5,537 – 5,860.4 (Source: Human Resources Department) Table 4.7: Pay Table for Professional / Departmental Staff Unit: 1,000 VND Positions Salary coefficients and ranges 1 2 3 4 5 6 7 8 9 10 11 12 1. Senior engineers, employees in economics/business divisions and professional departments - Coefficients 5.58 5.92 6.26 6.60 - Salary number (1,000 VND) 5,468 5,802 6,135 6,468 2. Intermediate-level engineers, employees in economics/business professional departments - Coefficients 4.00 4.33 4.66 4.99 5.32 5.65 - Salary number (1,000 VND) 3,920 4,243 4,567 4,890 5,214 5,537 3. Regular engineers, employees in economics/business divisions and other professional departments - Coefficients 2.34 2.65 2.96 3.27 3.58 3.89 4.20 4.51 - Salary number (1,000 VND) 2,293 2,597 2,901 3,205 3,508 3,812 4,116 4,420 4. Regular staff, technical supporting staff - Coefficients 1.80 1.99 2.18 2.37 2.56 2.75 2.94 3.13 3.32 3.51 3.70 3.89 - Salary number (1,000 VND) 1,764 1,950 2,136 2,323 2,509 2,695 2,881 3,067 3,254 3,440 3,626 3,812 (Source: Human Resources Department) Table 4.8: Status allowances for Head of Department, Deputy Head of Department Unit: 1,000 VND NO. Positions Salary coefficients and ranges 1 Head of Department or a similar rank - Coefficients 0.5 - Salary ranges 490 2 Deputy Head of Department or a similar rank - Coefficients 0.4 - Salary ranges 392 From the above tables, we can see that high-level officers have high salary coefficients, and the salaries they receive are higher than the other grades. Therefore, it will encourage them to strengthen their sense of responsibility and contribute more in the work of management. Meanwhile, it also creates incentives for workers, because in order to be promoted, they have to continuously improve their professional qualifications and work effectiveness. Table 4.9: Pay Table for Manual Construction Workers Unit: 1,000 VND Industries/Groups of industries Craft levels, salary coefficients and ranges I II III IV V VI VII 1. Electrification, electricity and IT Group I - Coefficients 1.55 1.82 2.16 2.55 3.01 3.56 4.2 - Salary number (1,000 VND) 1,519 1,784 2,117 2,499 2,950 3,489 4,116 Group II - Coefficients 1.67 1.96 2.31 2.71 3.19 3.74 4.4 - Salary number (1,000 VND) 1,636.6 1,921 2,264 2,656 3,126 3,665 4,312 Group III - Coefficients 1.78 2.1 2.48 2.92 3,.45 4.07 4.8 - Salary number (1,000 VND) 1,744.4 2,058 2,430 2,862 3,381 3,989 4,704 2. Basic construction, building materials: ceramics, glass Group I - Coefficients 1.55 1.83 2.16 2.55 3.01 3.56 4.2 - Salary number (1,000 VND) 1,519 1,793 2,117 2,499 2,950 3,489 4,116 Group II - Coefficients 1.67 1.96 2.31 2.71 3.19 3.74 4.4 - Salary number (1,000 VND) 1,636.6 1,921 2,264 2,656 3,126 3,665 4,312 Group III - Coefficients 1.85 2.18 2.56 3.01 3.54 4.17 4.9 - Salary number (1,000 VND) 1,813 2,136 2,509 2,950 3,469 4,087 4,802 (Source: Human Resources Department) Table 4.9 shows, for direct production workers, the wages they receive are proportionally corresponding to their craftsman level. This is the motivation for workers to constantly learn and improve their skills. Therefore the Company’s average craft level will increase, contributing to improve the construction quality as well as the Company's reputation. Construction of budgets for salary/wage and bonus payment The construction of the Company's payroll account is based on a number of facilities such as production and business results of the Company, the unit wage assignment, the Company's revenue and other funds. Therefore, constructing the payroll account is very difficult. However, putting together salary and bonus plans are necessary and important because the income of workers depends on salary, bonus fund. If the business makes profits, the salary, bonus fund will be big, the income of the employees will be high. And reversely, if the business was stagnant, the income of workers will be reduced accordingly. The formula that the Company uses to determine salary under the production plans and business results: VTH = (E * DT) + VBS + VDP Of which: VTH: Planned salary budget E: Wage unit costs DT: Turnover of the Company corresponding to the wage unit costs VBS: Salary supplement fund VDP: Salary reserve fund from the previous year Table 4.10: Report of salary in the years from 2007 to 2009 Data 2007 2008 2009 Average number of workers (persons) 2,524 2,594 2,509 VTH n (million VND) 66,363.3 94,600.635 123,711.97 VTH n+1/VTH n (%) 142.5 130.77 Revenue (million VND) 433,451.652 501,970.779 522,864.418 VTH n / Revenue (%) 15.31 18.85 23.66 Through the above data we can see, in recent years, the salary budge