Theories and practices of managerial human resource development in Vietnam Rubber Group

nistration instruments for managerial human resource development in economic groups. Therefore, the author selected the topic “Solutions for Developing Managerial Human Resources in Vietnam Rubber Group” for his dissertation. 1.2. Methodology 1.2.1. Research approach The dissertation takes the economic management approach: It studies State administration instruments to develop managerial human resources in State-owned economic groups, namely, legal regulations, policies, plans and programs on managerial human resource development in economic groups and corporation activities for developing managerial human resources at top level under the State decentralization. The dissertation limits the research subject to the development of corporate managerial human resources at top level, including: Current top managers and managers under the succession planning for top level. 1.2.2. Research process The study is conducted in this process from identifying research aims to suggesting implications on policies. 1.2.3. Data collect Secondary data: Materials, coursebooks, ministry-level projects, articles on trade journals, national and international conference proceedings on State administration, corporate human resource management and controlling managerial human resources in economic groups. Secondary data on Vietnam Rubber Group is mainly collected from the organizing division of the group and member companies, including regulations on charters, organization, human resources, development of managerial human resources of the group and member companies at top level; the implementation of plans, policies and results; resources, business results of Vietnam Rubber Group; the corporate governance through reports filed in the relevant departments of the group and members. Primary data: Questionnaire and interview. Questionnaire: Participants are top and middle managers under succession planning for top level; and those who involve in planning and appointing managerial human resources at top level of the group. Questionnaires are given to participants (154 people). Interview: Participants are leaders of State administration agencies regulating Vietnam Rubber Group, including Ministry of Agriculture and Rural Development, Ministry of Internal Affairs and consulting agencies for Prime Minister on the development of managerial human resources at top level in Vietnam Rubber Group. The interviews focus on advantages, limitations and their causes in laws, policies, plans and programs on development of managerial human resources at top level in Vietnam Rubber Group (17 people). 1.2.4. Data analysis The author uses the analysis, synthesis and generalization to analyze, interpret and summarize theoretical and practical issues on managerial human resource development in economic groups, with a focus on managerial human resources at top level of the group, including the current and potential top managers and draw lessons on developing managerial human resources at top level in Vietnam Rubber Group, then suggest feasible solutions. Descriptive statistics is used to systematize the factors affecting the development of top managerial human resources, analyze and evaluate primary data on issues and activities of managerial human resource development in Vietnam Rubber Group. CHAPTER 2 FUNDAMENTAL THEORIES ON DEVELOPMENT OF MANAGERIAL HUMAN RESOURCES IN ECONOMIC GROUPS 2.1. Economic groups, State-owned economic groups and roles of State-owned economic groups 2.1.1. Definitions and features of Economic groups, State-owned economic groups Definitions and features economic groups: According to the author, Economic groups are groups of companies connected by stock ownership, equity or others. Economic groups are not a type of businesses, so they are not a legal entity. Economic groups consist of a parent company, subsidiaries and other member companies. The parent company, subsidiaries and each member company in economic groups have the rights and duties of independent businesses under legal regulations. Definitions and features of State-owned economic groups: State-owned economic groups in Vietnam are groups of companies including a parent company, subsidiaries and affiliated businesses; the corporations are not legal entities, but their parent companies are; parent companies have huge capital owned by the State or with controlling stake of the State. They operate in many sectors with large size. The State manages State-owned economic groups by establishing, dissolving, reorganizing, changing the equity rate, approving the corporate charters, regulations, appointing, dismissing corporate managers, approving plans and issuing policies, supervising the implementation by direct checks or reporting scheme. 2.1.2. Roles of State-owned economic groups First, State-owned economic groups play a significant role in the process of industrialization and modernization in Vietnam. It is important to build up State-owned economic groups to protect domestic production against the competition of foreign companies and expand in the world market. Second, State-owned economic groups have the economies of scale in terms of organization and technologies that overcome the limited resources of individual company. Third, State-owned economic groups can enhance research and development (R&D), application of new technologies to production. Fourth, the formation of State-owned economic groups helps improve management efficiency, utilize economies of scale and apply specialization to diversified business and separate State administration from business management. 2.2. Managerial personnel and development of managerial human resources in State-owned economic groups 2.2.1. Definitions of human resources, human resource development In the author’s opinion, human resources are the power of each person and consist of three factors, namely, physical strength, mental strength, qualities/ attitudes to ensure the creation of material and spiritual wealth for the society. Under social view, human resources of a company are the groups of workers who have sufficient physical and mental strength and willingness to work for that organization. Human resource development is to increase in number, improve the quality and adjust the structure to meet the need for human resources to efficiently achieve socio-economic objectives. 2.2.2. Definitions of managerial human resources and development of managerial human resources in Economic groups Under social view, managerial human resources of an organization are groups of managers with sufficient physical, mental strengths and qualifications to fulfill managerial tasks in the management system. Development of managerial human resources in economic groups is to increase in number, improve the quality and ensure the appropriate structure to meet the requirements for management at all levels in economic groups. 2.2.3. Issues on development of managerial human resources in economic groups Objectives of controlling the development of managerial human resources in Economic groups: It is important to ensure sufficient number and structure of managerial human resources in economic groups: (i) The group and member companies should have plans for developing managerial human resources from the current workforce, (ii) The group should deploy strategies to attract managerial human resources from external sources or shuffle managers among member companies. The development activities have to be based on the required scale and structure of management at all levels. Developing managerial human resources in terms of quality is to improve the physical strength and managerial competence (knowledge, skills and professional proficiency) of managers at different levels and divisions in economic groups. State administration in the development of managerial human resources in State-owned economic groups: From the perspective of State administration, State administration agencies manage the development of top managerial human resources, managers at lower levels are managed by the group and its member companies. As Vietnam Rubber Group has not had strategies for business and human resources as well as managerial human resources, the dissertation focuses on studying the current State administration instruments for managerial human resources in Vietnam Rubber Group including planning, policies and plans for managerial human resource development in economic groups. - Planning for top managerial human resource development include (i) Requirements of human resource planning, (ii) Issues of planning, (iii) Procedures of planning corporate managerial personnel of the group and member companies. - Policies on development of managerial human resources: The State policies on corporate managerial human resources consist of planning, recruitment, training, development and remuneration. - Plans and programs on managerial human resource development in economic groups: State administration agencies should build shorter-term plans and programs on managerial human resource development in economic groups, during 1 - 2 years. 2.2.4. Criteria for managerial human resource development in Vietnam Rubber Group Regarding State administration in different economic sectors, the author uses 4 criteria: (i) Efficiency, (ii) Effectiveness, (iii) Relevance, (iv) Sustainability. 2.3. Factors affecting the development of managerial human resources in State-owned economic groups 2.3.1. External factors Macro-environment: Macro-economic factors such as economic growth, recession, transitions, strategies and policies on economic, political, cultural development and integration have great impacts on the business and corporate governance, thus affect the requirements for competence and qualities of corporate managers, managerial personnel and corporate managerial personnel markets. Industry: In the market economy, the competition for managerial personnel among corporations is fierce because of the decisive role of managerial human resources in the success and failure of companies. The success in production mainly depends on the ability to attract managerial personnel by attraction, employment and remuneration policies for managerial human resources of the State and State-owned economic groups. Training system: The training system for managerial human resources influences the number, quality and structure of trained managers; the training capacity of the system decides the competence of the management and the fulfillment of requirements for corporate governance in the highly competitive environment. 2.3.2. Internal factors Features of State-owned economic groups: Business sectors, products, markets and competition can have great effects on the managerial human resource development in economic groups. Therefore, the corporate managers have to be professionally trained in the management of their own areas. Activities for developing managerial human resources from sourcing, planning, recruitment, training, development and rewards have to focus on the business sectors of the group and take place systematically. Strategy and policy on managerial human resource development in State-owned economic groups: Strategies for developing corporate human resources and managerial human resources in economic groups are long-term plans for the development of managerial human resources, which are formulated and approved by the State to ensure the implementation of business strategies. The formulation and implementation of strategies on managerial human resources can decide the success of the corporate management. Policies on managerial human resource development and detailed plans are important to implement the strategies on managerial human resource development in economic groups. Perception of top executives towards managerial human resource development: Perception of top executives towards managerial human resource development in economic groups plays an important role in allocating resources, formulating strategies and making right decisions on the managerial human resource development at present and in the future. Competence of the existing corporate management: Competence of the existing corporate managers can have an effect on the managerial human resource development in economic groups. In case the competence is good, the State and the group can save money on training, or vice versa. Size and financial resources of the group: Corporations with large scale, multi-sector business and fierce competition require large investment in managerial human resource development in economic groups. 2.4. Practices of human resource development in some countries and lessons for Vietnam Rubber Group 2.4.1. Experiences of some countries and corporations In the US: There are development strategies for high quality human resources, especially managerial personnel. The U.S. human resource strategies focus on training and acquiring talents. In Japan: There are incentives in training, recruiting and using high quality personnel. Japan encourages workers’ initiatives, creates good working environment and conditions and provides advanced knowledge, technology and know-how. In Singapore: It aims to develop the economy based on high quality human resources, in which the Government formulate and implement strategies for high quality human resource development. In China: It pays attention to strategies on human resource development, especially high quality personnel. It considers human resources the leading factor and issue education strategies for building China and national policies to build a learning society. Practices of Samsung: It actively training corporate top personnel. Samsung designs suitable training programs for different positions, qualification and requirements of international business environment to implement corporate development strategies. Practices of Toyota: It formulates and implements managerial human resource development strategies based on the maximum competence of each manager; specific standards of each management level, the operating conditions of the managers to build typical training programs for different types of trainees, positions and job titles. 2.4.2. Lessons on managerial human resource development in Vietnam Rubber Group For State administration: The State needs to motivate the development of education institutes for training managerial human resources at different levels; specify instructions which see human resource training, especially managerial personnel as the most important task. It is necessary to attract foreign investments into training, call for investments from corporations, enterprises and individuals for training managerial personnel. The State should offer more authority and accountability to corporations in formulating strategies on developing human resources and managerial human resource in economic groups. It is important to specify standards for managers into typical criteria for each job titles, planning, appointment and appraisal of corporate managers. There should be required budget for training in the corporations (certain percentage of the expenses). It is vital to attract talents and experts for training and corporations from countries in the world by immigration and talent attraction policies; retain managerial talents by remuneration, good working environment and compensation including those with master degrees from developed countries; encourage overseas study. It is needed to grant the authority and accountability to the group chairman; the State only issues instructions and policies on managerial human resource development and guidance and supervision. For economic groups in Vietnam: It is essential to build specific criteria for each managerial positions, create competitive environment for human resources, implement training programs for managers, organize training by managerial tasks, allocate sufficient budget to training managers at all levels, and issues better policies to attract managerial talents from the labor market. CHAPTER 3 CURRENT SITUATION OF MANAGERIAL HUMAN RESOURCE DEVELOPMENT IN VIETNAM RUBBER GROUP 3.1. Overview on Vietnam Rubber Group and managerial human resources 3.1.1. Establishment and development of Vietnam Rubber Group It was originally Southern Rubber Department, then reformed into Rubber Division and to Vietnam Rubber Corporation. In 2006, it was piloted to form Vietnam Rubber Group and the parent company – Vietnam Rubber Group, then the State-owned one-member limited liability company. In June 2018, the parent company was equitized to become Vietnam Rubber Group – a joint stock company. 3.1.2. Functions, tasks and organizational structure of Vietnam Rubber Group Before 2018, Vietnam Rubber Group consisted of 127 units, namely the parent company, 4 general companies and 122 companies operating in such fields as planting and processing rubber latex, processing wood, industrial zones, rubber industry, hydro-power, banking, securities, facilities, warehousing and real estate, etc. Functions, tasks and structure of parent company: The parent company is controlled and operated under the Charter by Board of Directors, Supervisory Board and Executive Management Board. Its functions, tasks and authorities are stated in Decree No. 28/2014/ND-CP and organized into Board of Directors, Supervisory Board and Executive Management Board and functional departments. Organizational chart and operations of the group: Shareholders’ meeting, Supervisory Board, Board of Directors, President Board, functional departments and member units. 3.1.3. Overview on resources of Vietnam Rubber Group Capital and facilities: By 2018, the total area of rubber forests was 407,997.36 hectares; the total State capital reached nearly VND36,500 billion; investments in infrastructure, facilities and equipment increased steadily. In terms of equity, the audited value in 2018 was over VND40,000 billion. Workforce: In 2018, the total workforce of the group was 81,771 including 39% of female, and 28.6% of ethnic minority. 3.1.4. Business performance of Vietnam Rubber Group Business operations of the group during 2016-2018 focused on unprocessed rubber products, with the highest percentage of rubber latex, followed by processing wood products, rubber processing industry and services. 3.2. Current situation of managerial human resource development in Vietnam Rubber Group 3.2.1. State administration for managerial human resources in Vietnam Rubber Group Functions, tasks, authority and organization of State administration for managerial human resources in Vietnam Rubber Group before the equitization of the parent company: The Government controls the top corporate managerial human resources and the managerial personnel under succession planning for top level by establishing the group and appointing top corporate managerial human resources; issuing the organization charter and operations, decrees and decisions related to the jobholders in the one-member limited liability company; guiding the development by approving plans and policies on the development of top corporate managerial human resources. In order to control the top managerial human resources in State-owned economic groups, the State organizes the structure of State administration for top corporate human resource development, which specifies the functions, tasks and authority of each State agency in the system and Vietnam Rubber Group. After the establishment of Commission for the Management of State Capital at Enterprises and formation of Vietnam Rubber Group – a joint-stock company: Since June 1, 2018, Vietnam Rubber Group has been equitized into a state-controlled joint stock company with legal entity. The management is performed by the Board of Directors with 7 members. Therefore, the key managerial positions in Vietnam Rubber Group are still decided by the State. State administration for managerial human resources in Vietnam Rubber Group – a joint stock company: In February 2018, the Government set up Commission for the Management of State Capital at Enterprises (CMSC) to exercise rights and duties of representatives of state capital at enterprises. In the organization of State administration for managerial human resources in Vietnam Rubber Group, CMSC is the controller of the state capital Vietnam Rubber Group through its representatives. 3.2.2. Impacts of factors on managerial human resource development in Vietnam Rubber Group Macro-environment factors: Vietnam Rubber Group was restructured to operate in many sectors, so it is affected by the macro-environment factors not only in Vietnam but in Laos and Cambodia where Vietnam Rubber Group plants, exploits and processes rubber latex as well as exports. Therefore, it is necessary to change policies on managerial human resource development in the group and its members to meet the requirements of restructuring and managerial competence. Industry factors: Vietnam Rubber Group has recently faced some competitors with great potentials of capital, technology, performance, high product quality and great supply in the world market. The increasing competition requires VRG to improve its technological application, corporate governance and competence of the management. In the management force of Vietnam Rubber Group 80% are not well-trained in management and market economy and international integration with limited language and IT skills, which lead to limitations in accessing foreign partners and business regulations and policies in other countries, export markets and technology transfer partners. Training in domestic and international management training centers: Most universities in economics and management have majors in management, economic management and industrial economics, which would facilitate the training for managerial knowledge, skills and practices. However, most of them focus on training bachelors of business administration, enterprise management or general management instead of special programs for managers at all levels. The training courses for managers are mainly made to order. Business operations of Vietnam Rubber Group: Vietnam Rubber Group operates in large scale and many sectors and the international environment, so managers are required to have specialized knowledge and skills to ensure the effective management. However, the corporate managers have not been well trained, especially managerial knowledge, skills and practices. Managerial personnel policies of Vietnam Rubber Group: Managerial personnel policies specify criteria on managerial experience and qualification; methods and procedures of recruitment and appointment of leading positions Perception of top executives in Vietnam Rubber Group towards managerial human resource development: In the interviews with the top managers, they all appreciated the managerial personnel development and top managerial personnel development in particular. However, they have not paid adequate attention to the activities of developing top managerial human resources. The group has not had any official strategies for managerial human resource development; Training potential managers has been limited in quality, especially the appraisal. Current competence of managers in Vietnam Rubber Group: Most managers in Vietnam Rubber Group and top executives have bachelor degrees, but they have not been officially trained in management, management in the market economy, language and IT skills are still limited. Scale of Vietnam Rubber Group: Vietnam Rubber Group is a State-owned economic group established from Vietnam Rubber Corporation with the main operation in planting, exploiting, processing and exporting rubber latex. The corporate managers have originally been managers at Vietnam Rubber Corporation, so they still lack expertise and experience in managing a large, multi-sector organization in the market economy. Financial resources of Vietnam Rubber Group for managerial human resource development: The budget for activities of managerial human resource development is available, but the policies on financial assistance to training managers are limited, which is reflected in the financial plans for training. Remuneration for corporate managers is low compared to the market and irrelevant to the performance of the managers. 3.2.3. Evaluation on the current situation of managerial human resource development in Vietnam Rubber Group by secondary data Quantity, quality and structure: In terms of quantity, top management posts are now held by sufficient number of managers. The planning source for top executives is in accordance with regulations of State administration agencies. In terms of quality, the current top executives can meet the standards for top managers under regulations of State administration. Some potential