Background - Vietnam Economic Situation

In the past few years, from 1988 up to the present, Vietnam's economy has seen a rapid transformation from a centralized command to a market economy

Chapter Introduction 1.1 Background - Vietnam Economic Situation In the past few years, from 1988 up to the present, Vietnam's economy has seen a rapid transformation from a centralized command to a market economy To catch up with the pace of development in the Asia-Pacific region, the Vietnamese Government have launched an ambitious development program to the year 2000 During a relatively short period of time, some success has been achieved in the economy: the annual economic development of the country reached an average of 7.8% between 1991 and 1994 and is expected to increase to 9.5-10% in 1996 and 10-11% to the year 2005 (see Vietnam Investment Review, 7-13 August, 1995); one-digit inflation has been recorded in the years 1992-1993 and the rate of inflation has been maintained at about 10-14% during the last two years; production has increased; the socio-economic situation has visibly improved and the economy has become more flexible and more dynamic In 1988, The Law on Foreign Investment was promulgated, followed by The Law on Foreign Technology Transfer into Vietnam in 1989 These two laws enabled foreign businesses to enter Vietnam in the form of joint-venture and foreign direct investment (FDI) The number of foreign investors who come to Vietnam seeking business opportunities increases from year to year According to the Saigon Times magazine, 31 Aug 1995 (Source: State Committee of Cooperation and Investment -SCCI), 1,183 foreign investment project licenses with a total investment capital of US$ 16,008,091,692 were granted According to the Ministry of Planning and Investment, in 1995, foreign investment in Vietnam increased by 30% from the previous years (The foreign Investment Story of 1995, Vietnam Economics news No 52, Dec 29/ 1995- Jan 4/ 1996, p.20) The foreign investors come with a new way to business and create a competitive environment The private sector is growing from year to year both in size and number and is starting to challenge the state-owned organizations Smuggling of goods remains a formidable obstacle to the local businesspersons All these factors encourage a new way to business, and a new way to manage an organization Evaluating the achievements of Economic Renovation in Vietnam, in his article "Ten Years of Economic Renovation in the Eyes of Foreigners" in an Economy and Forecast Review in the Ministry of Planning and Investment, Thai Van Long stated that Vietnam is lacking competent and flexible business managers capable of steering an economic development of the country in the transformation period In August 1995, Vietnam became a member of ASEAN and the need for management experts who can take part in ASEAN' activities has become an urgent issue of the government level Besides, in the process of joining into regional and global economic development, the need for business managers who can deal with competition locally and internationally becomes a vital problem for all Vietnamese companies, both state-owned and private alike (see Businessmen Face Tough Competition, Vietnam Investment Review, 31 July-6 August, 1995 p.5) Virtually every facet of the country is being affected Education, especially management training, is becoming a national priority which constitutes a motivator and a 30 fundamental condition to ensure the implementation of socio-economic goals, building and defending the country Vietnam is currently facing a critical shortage of entrepreneurs Likewise, managers familiar with up-to-date technologies are needed for development in almost all sectors of the economy There are particular deficiencies in the areas of economics and business management (see Education and Human Resources Sector Analysis: Synthesis Report, October 1992) All these explain the reasons why the Southeast Asian Ministers of Education Organization (SEAMEO) pays its attention to Management Training in Vietnam 1.2 Demand and Supply of Management Training The training and recycling capable managers is an important issue of any country, any economic system, and therefore, is a regular duty For Vietnam today, this problem becomes more actual as more foreign companies open their offices and factories in Vietnam, and as local companies become more market oriented The need for a new generation of managers who can meet new requirements of economic development is becoming an urgent problem On the other hand, the switch from the former rigid and bureaucratic mechanism of government administration to a more responsive, flexible mechanism in the market-oriented economy has required government officials to be retrained in order to serve their country better Vietnam therefore urgently needs to train new managers as well as re-train, recycle existing ones in order to meet the new requirements of the country’s economic development The need on this issue of management training is one of the hottest issues in the country According to Mr Le Vinh, General Secretary of the Association of Economists of Vietnam, the managers that need to be re-trained can be divided into three groups:    The first group should consist of people who have been trained in command economics; The second group should be made up of managers who have had hands-on technical experience but who don’t have much management knowledge; The third group would be people who have not had any training whatsoever but they have just picked up what knowledge they could along the way There were some common agreements on the huge demand for management training The Vietnam Ministry of Education and Training held a seminar on MBA training from to July, 1995 in Vung Tau Institutions that are considered good in the field (with both training curriculum and books available) are the SAV program, the HCM City University of Technology, Hanoi National University of Economics, and the HCM City Open University At undergraduate level, management training programs in Vietnam are still somehow affected by the old theories of economics In recent years, state institutions have been changing their programs to adapt to new requirements of the society Courses provided are mostly in the basic theories of capitalist economies Students study management theories passively or theoretically The result is that graduates’ capability are not competent to the requirements from business community 1.3 Problem Statement 31 Up to now, the huge demand on management training is agreed commonly, but there are only few researches on the actual demand in management skills were carried out in Vietnam Some other researches also tried to find out appropriate courses and retraining, recycling forms that should be provided for existing managers in state, private economic sectors and in the public administration sectors In order to meet the training needs in the future, it is very important to have current, accurate information on exactly what kind of managerial training is needed by domestic and foreign businesses and Vietnamese government agencies Then, training modules can be custom-designed and targeted to fit the needs of different industries and branches By this way, the effective use of scarce resources can be maximized and the most critical needs can be addressed first 1.4 Objectives of the study This study will identify the various training needs for mid-level managers in Vietnam It will define the topical nature of courses required, the most appropriate training styles, and, somehow, the course format which is most likely to be accepted The focus of the research will be on key industries of the country (e.g Petroleum, Processing industries, jointventures) In addition, government agencies will be included in the research, to assess official needs for upgrading management skills in government First stage - Preliminary study: Current management training programs in Vietnam Second stage     Estimates by trainers, executives of needs at middle management level during the next three to four years Assessment by mid-level managers on skills and knowledge needed to be upgraded Estimates on the level of support private companies are willing to provide for employees who participate in training programs Pricing and promotion strategy 1.5 Methodology The research will be conducted in Ho Chi Minh City, and Hanoi, Vietnam, the nation's two most developed cities in terms of trading, transportation, and communication They have been the most attractive spots for foreign investment in Vietnam due to better infrastructure and more active trading and processing industries Preliminary research will be conducted in the third term break (August, 1995) with the following activities in HCM City and Hanoi: Secondary data collection of research and studies of the local and foreign institutes and centers, publications of media concerning management training need 32 Interviews with some officials of these centers for more information on their curriculum and their opinions on the current needs of management skills for mid-level managers at Vietnamese agencies, domestic industries, and foreign firms in Vietnam In the second stage, the market research will require in-depth interviews with about 20 representatives from key industries officials who are familiar with the management needs in the government This pilot will allow us to define the needs of industries and government in more detail before further research for a feasibility study Respondents will be chosen among senior managers, government officials in Hanoi, Hai Phong, Ho Chi Minh City, Dong Nai, Vung Tau Those senior managers are the ones who have substantial experience operating in Vietnam and therefore are very familiar with the problems of recruiting and retraining, recycling qualified mid-level managers The study would help to determine the magnitude of demand for the training services, as well as the level of willingness to pay for training, which kind of training companies want and need and what the appropriate fees should be During the research implementation, a pilot quantitative survey was designed to give a better understanding of the opinions of various types of local respondents and to obtain the necessary experience for the next step of the study The questionnaire is then designed to reveal the most essential management skills and the most appropriate forms of training expected by the local existing and future (MBAstudents) managers The respondents are chosen from senior students of some MBA programs such as CFVG, MBA in industrial management, from attendants of the second-undergraduate diploma at HCMC Economic University, from participants of some seminars organized by SAV and UNESCAP in Ho Chi Minh City, Hanoi and finally from the managers of some corporations and companies in Ho Chi Minh City and Dong Nai province 33 Chapter Literature Review 2.1 Definitions of Terms 2.1.1 Skill Skill is the transfer of knowledge or perception into action Skill is practical knowledge combined with ability A skill can be improved through practice or training Many authors have introduced different sets of management skills according to the types of managers under study Skill in general WHETTEN & KAMARON (1980) state in their Introduction to Management Skill Development that there are nine critical management skills that managers have to master There are (see Appendix 1): Developing self-awareness Managing Personnel Stress Solving Problems Creatively Establishing Supportive Communication Gaining Power and Influence Improving Employee Performance Through Motivation Delegating and Decision Making Managing Conflict Conducting Effective Group Meeting These nine Management Skills are selected based on the results of an extensive Survey of literature as well as on their own study of over 400 practicing managers in a variety of public and private organizations They select some critical characteristics of the skills that they consider in more detail The criteria for choosing are:    Management skills which contain a combination of personal (e.g stress management) and interpersonal (e.g conflict resolution) skills, since both are critical prerequisites for effective management Focus on proven characteristics of high- performing managers Only characteristics that are trainable behavioral components are assessed Topics like leadership are not included because, in their mind, they involve too broad a range of behaviors Focus on "generic" management skills because they avoid highly situation techniques that are best suited for on-the-job training 34 Skills for Supervisors THAMHAIN (1992) studies the skills needed for engineering management He says that there is no single formula guaranteeing success in the management of R&D or engineering programs However, research shows consistently that high- performing managers have specific skills in common ACHECK's list of 42 skills (see Appendix 2) that are considered crucial for doing their jobs effectively is shown This set of skills is organized into three categories: Leadership and people skills, technical skills and administrative skills The right mixture of skills depends on the engineering task, the techniques employed, the people assigned and the organizational structure To be effective, engineering managers must consider all facets of getting the job done Their managing style must facilitate the integration of multi-disciplinary program resources for synergistic operation The days of managers who get by with technical expertise alone, or with pure administrative skills, is long gone (THAMHAIN, 1992) Technical skills and administrative skills are widely accepted as trainable skills If trained, they can provide immediate and measurable results But what about training programs that target leadership development, information giving, or personal growth? MARGER (1962), known as the father of criterion-referenced instruction, differentiated between performance-based attributes and nonperformance-based attributes of the objectives of training program: Performance-based objectives keep trainers on a goaloriented track and offer the promise of results He say that the trainers should describe performance-based objectives so that each trainer interprets those objectives the same way and so that they can measure how close they come to achieving them STONEAL (1992) explains that in training for performance-based objectives, we envision a "before" and an "after" Before, employees not know how to their jobs or they make errors What they expect after helps determine our objectives In other words, what can employees after training that they could not before? Increasingly, organizations are asking trainers to conduct training on topics involving "soft skills" such as time management, and personal issues such as substance abuse In these cases, the results or changes occur over time and can't be easily quantified For example, trainers may convey information that may have no immediate job application such as an executive's view of the state of an industry And for soft skills, the training may simply remind and motivate employees to what they already know how to but don't always carry out Consequently, it is difficult to measure the acquisition of soft skills The true test of time management, for example, is not being able to answer questions about time management; it is being able to manage time Another important training topic, leadership, has to with changing and clarifying values Value issues involve changes in people's perceptions, habits, and relationships These changes happen only gradually 35 Information-giving, lifestyle-changes, interpersonal skills, emotional issues, and personal growth require flexible training objectives, performance-based objectives and non performance-based objectives SWIERCZEK (1985) lists 57 Management skills that he groups into sections: Communication, Directing, Problem-Solving, Training, Hiring, Planning, Performance Review, and Decision-making (see appendix 3) The list covers nontechnical skills that are important for mid-level managers It can be seen that the skills selected in this list relate relatively closely to actions The reason for the choice is to avoid the vague nature of need (SWIERCZEK 1985) Society and the workplace today have become increasingly complex and diverse Managers in organizations can play various roles according to the situation This requires managers to master a variety of skills The list of skills needed for them can, therefore, be lengthened Skills for Performance Management SHNEIER, BEATTY AND BAIRD (1986) suggest a performance Management System considered as an approach to skill identification The system is established on this basic notion: the job of managers is to manage the performance of their subordinates By providing managers with performance management perspectives, by dealing a set of sequential activities, and by building their performance management skills, they have shown that performance appraisal is integral to their job The eight-step performance management cycle is briefly described as follows (see Appendix 4): 1- Choose performance appraisal measures and standards (Theme 1) Those aspects of job performance that have an impact on success, differentiate between successful and unsuccessful performers and are at least partially within the control of the person being rated, should be identified as performance measures A job analysis and a position description are the basis for determining performance measures There are three possible measures: What people achieve, What people and What people are In other words, they translate into assessing results, assessing behavior, and assessing personal characteristics A performance could be rated something like exceptional, superior, fully successful, borderline, or unacceptable 2- Communicate performance expectation (Theme 2) Once appraisal measures have been determined and performance expectations defined for each level of performance, these performances must be communicated to those being rated 3- Plan for performance (Theme 3) Managers help subordinate to develop strategy to meet performance expectations and secure required resources Action plans are necessary, as are budgets and time schedules 4- Monitor, assist, and control performance (Theme 4) One popular method is "Management by wandering around" which recognizes that managers need to be away from their desks, observing performance, comparing this to their expectations, and intervening on the ongoing process using behavior-based language to improve performance This is a key 36 part of performance management which managers conduct each day, all year long, providing ongoing feedback while perhaps only giving a performance appraisal once a year 5-Performance appraisal (Theme 5) Performance observations are recalled and judgments are made, comparing what is recalled to the rating interpretation of the standard sets of the first step to be effective, rating person must be trained how to complete forms or address possible errors such as "leniency' or "halo" Training programs for rating person should emphasize such skills as communication, coaching, planning, listening, negotiating, observing, problem-solving and those skills-related to various phases of the performance management style 6- Provide performance feedback (Theme 6) This is a formal report made subsequent to appraisal Here, superiors provide a rational for their evaluation and allow rated people to participate in the discussion The most useful feedback contains facts about behavior and not interference or conclusion Feedback should also be specific and should not overemphasize the negative 7- Using performance results for decision-making (Theme 7) Subsequent to final rating and performance review sessions, various decisions can be made, based on the appraisal results Decisions related to promotion, demotion, or termination; to allocation of monetary and other types of incentives and awards; and to a job assignment are examples To ensure success, the results of the appraisal process must be used to affect people's jobs, careers and rewards 8- Developing performance (Theme 8) This is the final step in the ongoing performance management cycle The supervisor, individual, and organization each have responsibilities to develop and improve performance The organization might provide funds for furthering formal education or offer in-house training and self-assessment The supervisor might agree to coach a subordinate more frequently or provide an opportunity to enhance job responsibilities The individual might plan to read current technical information or learn a new skill, etc Executive skills SMITH (1992) focuses on searching skills for executives pointing out the importance of finding out what skills executives need to lead their organizations This question is basic to succession planning and executive development Many approaches are possible but the search for executive skills should consider several problems Size of organizations impacts more or less the required skills of corresponding managers In dealing with a small population such as the executive of a company, it is tempting to use a generic sets of skills But there is some debate over the extent to which the executive's requirements are general or situational Complicating the task further, executives often have trouble articulating what they that makes them successful In order to convince the executives that the skills found are necessary and applicable to their own situation, the researcher must demonstrate that the skill set is rooted in the organization It is not simply a matter of identifying the skills 37 Increasingly sophisticated technology will demand greater skills and training Future technology will entail tasks that require judgment, diagnosis, and inference Consequently, many skilled workers will be needed for entry-level jobs COHEN (1991) presents some skill emphases required for employees and managers in 1990 (See table 2.1) Prominent characteristics of skill emphasis are the process of learning in skill development and multi-cultural and global cooperation in today business The pledged market economy of Vietnam cannot stray from this trend GEBELEIN (1989) suggests a profile of managers who find themselves influencing fellow employees over whom they have no direct job responsibility He points out that the managers find themselves in three primary roles: initiator, expert, and facilitator Table 2.1: Relative skill emphasis of the 1990s Skill Area Managing change and ambiguity Teamwork Thinking Learning Empowerment Personal effectiveness Business practice Future focus Diversity Employees adaptability Managers versatility interpersonal creativity learn-how initiative self-management and dignity honesty mission or purpose culture tolerance collaboration innovation developing others courage courage and integrity ethics vision global citizenship The "initiator" can be responsible for a specific job and he then must initiate the issue with his subordinates and get into a position of influence with the subordinates The "expert" is often contacted by the subordinates for their specialized knowledge The expert role can be seductive; pontificating on the basis of one's vast experience and valuable expertise is a heady business The "facilitator" is charged with helping the subordinates to solve their own problems He may help the subordinates diagnose the problem and may teach the subordinates how to facilitate problem-solving among employees GEBELEIN introduces twenty skills that he considers most critical to the success of managers (See table 2.2) Table 2.2: Manager's Skill Profile 38 Personal - Adaptability - Trust and integrity - Result - Service orientation Interpersonal - Relationship building - Facilitating skills - Managing conflicts - Ability to give feedback Problem-solving - Diagnosing - Decision making - Business knowledge - Technical knowledge Communication - Speaking and informing - Listening Administrative - Priority and time management - Project management Influence - Leadership - Influencing - Organizational savvy - Coaching and advising Source: GEBELEIN, (Training and Development, Mach 1989) The skills, which reflect the essential people-oriented nature, cluster around six areas: influence, administration, communication, problem-solving, interpersonal relations, and personal factors 1- Influence Managers must know how to initiate action and mobilize others to achieve results They have to be comfortable standing in front and getting others to follow them (Leadership) They have to build their credibility, visibility, and involvement with business issues They must be able to build a network of people in the organization to support and promote ideas and projects (Influencing) They are able to help themselves to be more successful They must be easily accessible and ready to use a tailored approach in coaching (Coaching and advising) They have to understand politically how to make things happen in the organizations, using whatever formal and informal channels to build a net work of support (Organizational savvy) 2-Administrative Most managers have busy schedules, balancing commitments to a variety people and departments Establishing priority and managing time are an essential part of the job Managers often work with project teams or lead the projects themselves They should manage the situation, whether it is an hour-long conversation or a three-month project 3- Communication Managers must be able to speak effectively and make presentations one-on-one or in groups The skills of informing go hand-in-hand with those of influencing Conversely, they must be able to draw information when listening and communicate that they have absorbed what has been said 39 ... - Trust and integrity - Result - Service orientation Interpersonal - Relationship building - Facilitating skills - Managing conflicts - Ability to give feedback Problem-solving - Diagnosing -. .. making - Business knowledge - Technical knowledge Communication - Speaking and informing - Listening Administrative - Priority and time management - Project management Influence - Leadership - Influencing... should manage the situation, whether it is an hour-long conversation or a three-month project 3- Communication Managers must be able to speak effectively and make presentations one-on-one or in groups