Locating Leaders

Locating Leaders

January 10, 2017

With changes and turnover in senior management levels in 2016, there are a number of issues that business leaders in Vietnam should think carefully about in 2017 for their company’s future development.

Locating Leaders

With changes and turnover in senior management levels in 2016, there are a number of issues that business leaders in Vietnam should think carefully about in 2017 for their company’s future development.

Generally speaking, in 2016 the labor market for senior positions in Vietnam saw no substantial changes. Unlike previous years, appointments at senior management levels at multinational companies (MNCs) were usually filling vacancies rather than establishing new roles. The reasons behind this is the trend to capitalize on existing human resources, such as internal transfers and promotions or to expand the scope of work of the company’s talent, which not only enhances training and development but also creates more opportunities for self-study and growth. This is a modern model in human resources (HR) management around the world.

Locating leaders

The situation in domestic organizations, however, is somewhat different. The noticeable trend is the growth in the middle management level. In order to make the business viable and prepare for business development, regional integration as well as to fill the CEO skills gap many local organizations have “forked out” and invested in high level positions. They are spending more on attracting highly-skilled managers from MNCs and at the same time aren’t hesitating to offer attractive packages to “headhunt” leadership candidates from abroad to reach their objectives. This is a positive sign for local companies, as they will be exposed to new workplace methods and thinking by foreign managers who are typically praised for their managerial skills. On the other hand, however, it raises alarms about the inferior quality of Vietnamese candidates regarding competencies as well as managerial skills compared to their foreign counterparts. With regional trade and commercial agreements signed and to be signed, Vietnam’s labor market needs to get ready to deliver highly-skilled and competitive human resources or else it will stand little chance of providing talent to the region.

More investment of people agenda

There is certainly no such thing as a perfect human resource management & planning, since each employee has specific demands and expectations. However, in 2016 corporations made great strides forwards in expanding their budgets on talent development, compensation, and retention.

Over 30 per cent more Vietnamese organizations participated in our 2016 Salary Survey compared to 2015. This is compelling evidence of Vietnamese organizations’ desire to understand the labor market and have better benchmarking of their HR efficiency and effectiveness in order to readjust their HR strategy and become more professional and strategic. If this figure continues to rise in coming years – and I firmly believe it will – Vietnamese organizations will attract more talent and at the same time bridge the talent attraction gap between local companies and MNCs.

One of the traditional strengths of MNCs that is gradually improving among many local organizations is increasingly attractive total rewards policies for senior management positions. The salary offered by Vietnamese companies, however, is still 31 per cent lower than for similar positions at MNCs, according to figures from the Mercer-Talentnet Remuneration Survey 2016. The report also showed that Vietnamese companies are attempting to compile a more reasonable and attractive total rewards policy despite the 31 per cent pay difference.

There are also some specific “downfalls” in the recruitment and retention strategies of organizations. For example, enterprise leaders are still to recognize the immense importance of their people strategy regarding senior levels. These include (i) underestimating HR’s overall role in business strategy; (ii) seasonal and unplanned recruitment of talent for top management positions, which only aims to fill an on-the-spot vacancy instead of a long-term talent selection scheme properly aligned with the company’s business strategies and targets; (iii) reluctance to empower top level managers and allow for errors and misjudgments, which dents the passion for conquering challenges – a determining factor for any successful leader; (iv)  lack of  total rewards strategy, which are not fully customized for different levels and positions;.

To manage diversified and multi-generation in the organization

In my opinion, in 2017 recruitment markets for top managerial positions will develop tremendously on a regional scale, not just in Vietnam like before. MNCs continue to engage highly-skilled expatriates together with their relocations. For local organizations, two trends will be conspicuous: first, the welcoming of top management positions from abroad into Vietnam to speed up professionalization and specialization, and secondly, the investment in developing potential talents so that they can be ready to move to next level. investment 

This means that, in the near future, Vietnam’s labor market will be more exciting and more integrated and also more competitive. This competition will not be confined to Vietnam alone and will expand to foreign HR. Therefore, we need to rapidly upgrade HR systems to advance Vietnamese employees’ competencies and quality. 

In particular, average salary of highly-skilled managers in Vietnam is as competitive as other countries such as Indonesia, the Philippines and Thailand. Some Vietnamese companies reveal that they favor local employees for higher managerial positions thanks to advantages such as comprehensive knowledge of the local culture, inquisitiveness, flexibility, commitment, and loyalty. Thus, we can tap into this and turn it into a foundation to increase the competitive advantages of Vietnamese organization.  

Senior human management: high alert

After many years working in the HR consultancy field and experiencing different HR management models in different organizations, I would like to emphasize once more that there is no one-size-fits-all strategy, because for senior executives their expectations are varied and obviously high-end. However, there are some strategic steps that I think are worth considering for organizations.

Firstly, it is necessary to devise HR management strategies in alignment with business strategies, as HR plays an essential role in business planning, as well as creating and handling the employee-centered activities of an organization so that employees can better develop and perform.

Secondly, expand staff benefits, customized to each employee. This means the total rewards policy needs to be flexible for different groups of employees and vary according to an employee’s age group and different expectations. Both total and non-total rewards need to adequately reflect staff performance and desires. For instance, while junior positions want a clear vision for their career path, middle-career levels are more eager for new challenges, and senior levels, with their experience in the field, will aim to reinforce their role in influencing people and creating positive changes in terms of corporate operations.

Thirdly, strategic thinking on a regional scale. When businesses are increasingly expanding, an enterprise’s strategic thinking needs to be lifted to be more “updated”.

For MNCs, HR models should be refined and more agile to fully adapt to the market. Vietnamese companies, meanwhile, should strive harder to build effective HR strategy and operational procedures so that they can provide better support to business expansion and growth.

Food for thought

In recent years we have seen more forums and symposiums held between organizations and authorities of all levels to build mutual understanding on both sides. Many issues have been raised for discussion at these forums by local organizations, such as how to balance total expenses to create a product or service from the beginning to the end at a competitive price without sacrificing quality. Compared to MNCs, Vietnamese organizations must spend more on manufacturing the same product due to extra costs for establishment of processes, procedures, and internal operational systems. Thus, if Vietnamese organizations receive more favorable subsidy programs and policies from the government, starting with leading industries, the burden of building and developing everything from scratch will be lessened considerably.

On the other hand, government agencies could experiment with models of HR management on their own, observe whether the model reaches development objectives in the short and long terms, then make reasonable amendments to their HR: cutting or increasing headcounts, organizing skill and competency enhancement workshops and training, implementing a transparent benefit system, introducing a fair recruitment and selection program, and applying comprehensive and credible methods into efficiency evaluation and measurement, etc. Afterwards, the successful experimental model can be duplicated on a large scale, which will help to improve the entire system of HR or people management in the country as well as promote Vietnam’s status in the regional labor market.

Source: Vietnam Economic Times, January 2017

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