Domestic enterprises will continue to face stiff competition from foreign enterprises in attracting and retaining talent and skilled employees.
In mid-December Mobile World (MWG), the owner of the thegioidicong.com and dienmayxanh.com electronics supermarket chains, issued nearly 7 million shares worth VND527 billion ($23.1 million) to 886 employees of the company and its subsidiaries. Though special conditions apply, with no share sales permitted in the first year and only 50 per cent permitted in the following year, the issuance marked the first time a Vietnamese company has paid out such a huge bonus to its employees.
Ms. Hoa Nguyen from Mercer Remuneration Surveys & HR Consulting at Talentnet said that local companies have increasingly provided higher bonuses than multinational corporations (MNCs) to attract and retain talent. “In order to attract and retain the best employees and those with the most potential, local companies often use long-term incentive tools such as stock grants, stock options, or long-term cash loans,” she said.
MWG is just one of a number of local companies that have become aware of the importance of attracting and retaining their best employees, but the fact is that foreign-invested enterprises (FIEs) and MNCs still attract the most attention from jobseekers.
FIEs on top
In 1998 Unilever was the first FIE in Vietnam to launch a management trainee program. In 2010 the program became the more ambitious Unilever Future Leaders Program (UFLP), which recruits high caliber students with leadership potential. A Unilever global program, UFLP takes three years to complete and encompasses tests, presentations, group work, and coaching. Coaching and, more importantly, mentoring, are the key elements of the training program, said Ms. Nguyen Tam Trang, Vice President, Human Resources, at Unilever Vietnam, as it teaches trainees to understand the corporate culture and the necessary qualities needed to be a future leader.
Representatives of other FIEs doing business in Vietnam said they usually have human resources (HR) strategies as soon as they set foot in the country. In the early days they may appoint foreigners to management positions to train the local workforce. In the next stage they send local staff abroad to build a workforce with strategic vision as they approach multinational cultures and become the next generation of management in Vietnam.
Mr. Ton That Anh Vu, Head of HR at HSBC Vietnam, said that businesses should understand and define their vision, study HR policies, and follow and understand their companies’ position and ranking in the market. “Training strategies should go together with business strategies,” he said. “One important thing is that companies should build up their training plan in line with their business strategy to have investment plans for their employees.”
Ms. Trang added that each company should adopt a three- to five-year view in terms of developing their HR. “Any company wishing to increase productivity should pay attention to improving the quality of their staff,” she said. Unilever Vietnam has been rated as the best place to work in Vietnam and the Number 1 workplace in Vietnam for growing its people.
Ms. Thanh Le, Associate Director of Robert Walters Vietnam, agreed that foreign enterprises remain the employer of choice for a large proportion of Vietnamese talent. “This is because multinationals offer professionals career development and opportunities to perform the full functions of a division, which is important to candidates,” she said. “Professionals with an MNC background are also perceived as having better future job opportunities.”
The HR management at local enterprises, meanwhile, still bears many shortcomings, which limits their competitiveness in the race to attract talent.
Domestic enterprises have had to face stiff competition from foreign enterprises since Vietnam joined the WTO and the competition will become even fiercer with free trade agreements (FTAs) and the TPP coming into effect. If businesses cannot attract and retain talent and skilled employees it will be quite difficult for them to survive in a competitive global environment. “Foreign enterprises will continue to invest in Vietnam, and while they may not open an office in the country they will still attract a lot of local staff,” said Mr. Ngo Hung Phuong, Managing Director of CSC. “This will create more competition among local companies to attract HR.”
Local companies are, however, able to compete with FIEs, he believes, because they possess certain advantages in culture and foundations but they must demonstrate to talent how individuals can benefit in their employment, regarding training, promotion, salaries, bonuses, and share issuances.
More than 300 HR and business professionals gathered in Ho Chi Minh City in December for the most anticipated HR event of the year, entitled “Diversity Management in Human Capital in the Post-TPP Era”. There it was acknowledged that as the ASEAN Economic Community (AEC) and the TPP are set to liberalize the movement of labor, HR management in Vietnam still has many shortcomings compared to other member states in the region and the world.
A recent report from the International Labor Organization (ILO) showed that Vietnam’s productivity in 2013 was among the lowest in Asia, at 15 times lower than in Singapore, eleven times lower than in Japan, and ten times lower than in South Korea. Another report stated that despite considerable improvement in recent years, productivity remains decades behind regional countries. The opportunity for Vietnam is in increasing the skills of its workforce to rapidly improve the productivity of its workforce.
The World Bank report “Skilling up Vietnam: Preparing the Workforce for a Modern Market Economy” states that “Equipping its workforce with the right skills […] will be an important part of Vietnam’s effort to accelerate economic growth and further its economic modernization in the coming decade and more.” Efficient and effective education and training is therefore integral to the development of Vietnam’s workforce and economic growth.