Private firms should adapt their strategy in attracting and retaining talent in order to enhance their competitive edge. Shanmuga Retnam, country director for Vietnam of executive search firm RSI International Asia, gives insights on how employers could retain their skilled workforce for their operations in Vietnam.
Shanmuga Retnam, country director for Vietnam of RSI International Asia
Vietnam enjoyed GDP growth of 7.08 per cent in 2018, at peak levels since 2008. This growth was primarily buoyed by increased levels of exports and the flow of foreign investment. However, the country remains in the infancy of its economic development with a healthily low unemployment rate of 2.09 per cent.
Boston Consulting Group has pinpointed the development of privately-owned enterprises as a driving force for sustainable economic development. Close linkages between local businesses and foreign-invested enterprises are expected to generate a positive spillover effect for the entire economy.
Following Singaporean model
Singapore is a good example of how to grow into a global hub for business and world-class workforce. The island country has kept its doors open to highly skilled foreign workers ever since gaining independence, however it has only been since the late 1980s that it began to take a more active approach to recruitment.
After starting out with a labor-intensive economy, Singapore gradually developed a more advanced economic structure while steadily increasing its GDP per capita. It aimed to have a technology-intensive economy during the 1990s, and for a knowledge and innovation intensive economy in the 2000s. Thus, the island nation attached a great deal of importance to highly skilled workers in order to achieve these goals.
However, the small population of Singapore and the country’s declining birth rate meant that the domestic supply of highly skilled workers was unable to keep pace with increasing demand. While working to develop their own human resources, the island nation turned to overseas recruitment to make up the shortfall of highly skilled workers.
In 1988, Singapore launched the “Eminent Entrepreneurs/Professionals Scheme,” a program designed to encourage the relocation of elite highly skilled workers from Hong Kong (China) to Singapore by offering them permanent residence.
For Vietnam, it was indeed encouraging when Prime Minister Nguyen Xuan Phuc stressed at the Vietnam Business Forum 2018 that the Vietnamese Government lays a focus on improving the quality of human resources.
The Government considers human resources a golden key to the country’s future success while actively seeking solutions to develop highly qualified human resources to support sustainable development.
The executive search firm RSI International Asia has predicted the trend of more international companies selecting Vietnam as regional headquarters for the Greater Mekong Subregion (GMS).
Last year, RSI established a representative presence in Vietnam to meet growing demands for top talent to support the organizational transformation of existing small and medium-sized enterprises (SMEs) and international companies in many localities, including Hanoi, Nghe An, Danang, Ba Ria - Vung Tau, and Ho Chi Minh City.
To keep pace with the regionalization trend, Vietnam needs a workforce that is adaptable in cross-culture and makes sense of the dynamics of regional markets.
While Vietnam has sufficient manpower for skills to support the growth of information technology, manufacturing, and agricultural sectors, the country is lacking quality talent in leadership roles.
In 2018, RSI International Asia has registered a 40 per cent increase for senior executive roles compared to the previous year. The figure is expected to rise by another 10 per cent in 2019, specifically in manufacturing, banking, legal, logistics, pharmaceuticals, and infrastructure-related investments. The surge augurs well for the economy.
Charles Anderson, Managing Director of RSI Asia International, said that “we will never have sufficient talent of our own in Vietnam and that is why we need to work with the best to grow the economy.”
“We are now faced with a challenge to quickly embrace different type of skills and business models to help us along this path of accelerated economic growth over the next ten years.”
Tapping into proven methods
A proven methodology which should be applied in Vietnam is to tap on returning talents by seeking for Vietnamese people who are living abroad and have accumulated a wealth of knowledge and experience and those well equipped and ready to return and contribute to their home land.
RSI International Asia has successfully developed the methodology with Electrolux in Philippines, Roca in Myanmar and BCG in Indonesia. The executive search firm is teaming up with the leadership of leading entities such as HSBC, Tetra Pak, Cargill, Baker Mckenzie in Vietnam to evaluate their talent needs and prepare the Board of Directors to manage the expectations of foreign talents for senior roles within the company.
Obviously, international companies will have an edge over local public interest entities (PIE)’s as the former use the proven global human resource policies and practices to attract and retain talents. Corporate culture, empowerment, continual training and respect for the inpidual are ingrained as core values.
For instance, 3M, a global US giant operating in Vietnam, stated in the 3M Sustainability Report 2017 that the firm “is committed to fostering an inclusive environment, build on our respectful workplace principle, where employees thrive, feel safe and respected, involved, valued and fee to be their real selves.”
Recent changes have been seen in Vietnamese firms’ recruitment tactics as many have revised their remuneration package to make them competitive with multinational corporations (MNCs).
It is gratifying to note that home grown Vietnam companies such as TH Group and Techcombank have recognized the value of global talents and strive to embrace a preferred employer culture.
TH Group stated in its human resource strategy that a nation is made up of its citizens, the mental and physical development of the people is the fundamental drive for the development of the country. This also comes true in building a company as the group believes that investing in human resources is the core of success.
Vinfast, an arm of Vietnam’s conglomerate Vingroup, is another example. The subsidiary is set to become the largest car manufacturer in Southeast Asia, with a designed capacity of half million automobiles and a million electric motorcycles by 2025.
To leapfrog to the scale, Vinfast acquired intellectual property rights from world famous brands such as Pininfarina, BMW, Siemens, and Bosch while attracting foreign and Vietnamese talents from MNCs.
Attracting global talents is a whole–of-nation effort with public, private and industry participation to profile Vietnam to the world as a worthy country to live, work and visit.
Vietnam was ranked 18th in the world by expatriates in the HSBC Expat Explorer Survey 2019 which polled more than 22,000 expats to identify the best destinations to work in the world.
The findings revealed disposable income, work life balance and career progression as the positive indicators which favoured Vietnam among other Southeast Asian countries.
Ensuring high living standards must be part of the country’s talent retention strategy. Besides attracting global talents, companies must give equal attention to retaining talents so they can contribute to the long term economic transformation and also transfer best practices to the local workforce.
In order to grow into a preferred employer, local companies should improve their reputation and work culture. Focus on bettering corporate culture, empowerment and continual training is also needed.
Employers should spend more of the operating expense on training when recruiting new staff. In 2018, the average cost for training in Vietnam was only 5.7 per cent of business costs.
In short, coordinated efforts from local policy makers and private sector are needed to reinforce the brand positioning of Vietnam and raise the professionalism
of workforce to be adaptable and able to interact with the international community.