Summary of Doctoral thesis of Economics: Employee motivation in state-owned economics corporations in Vietnam

General research objective providing an intensve literature review on motives and employee motivation; on which the thesis conducts the examination into the practical situations to propose solutions the improvements in Vietnam SOCs employee motivation in either macro-ecomic or micro-economic perspectives.

MINISTRY OF EDUCATION AND TRAINING MINISTRY OF PLANNING AND INVESTMENT CENTRAL INSTITUTE FOR ECONOMIC MANAGEMENT PHAN MINH DUC EMPLOYEE MOTIVATION IN STATE-OWNED ECONOMIC CORPORATIONS IN VIETNAM Major: Economic Management Code: 34 04 10 SUMMARY OF DOCTORAL THESIS OF ECONOMICS HA NOI – 2018 This thesis has been completed at: Central Institute for Economic Management Scientific supervisors: Dr Vo Tri Thanh Dr Tran Thi Thanh Hong Reviewer 1: Associate Prof.Dr Nguyen Viet Vuong Reviewer 2: Associate Prof.Dr Mac Van Tien Reviewer 3: Associate Prof.Dr Bui Van Huyen This thesis shall be defended in front of the Institute-level Thesis Examination Council of Central Institute for Economic Management at … ……………… on …………………… 2018 This is also stored for referencing in : - Central Institute for Economic Management library - National Library, Hanoi INTRODUCTION Rationale of the thesis topic The importance of human resource development to the national economic growth has been recognised widely To fruitfully utilise that resource for the development of the entrepreneurial community, the practical management process needs to be professionally implemented in all of the management phases, including human resource planning, selecting, recruiting, motivating the employees by orienting, training, developing, performance appraising, compensating them and their career path nurturing With the huge potential and incomparable priorities on the uses of the resources that the state-owned economic corporations (SOCs) receive from the Government, the business performance indicators have not been really satisfactory enough Typically, having around 490,000 employees recently, the after-income-tax profits that the 8/10 of the SOCs (excluding PVN and Viettel) can generate are of merely 15,000 billion VND Thus, as per the productivity, one employee of these SOCs annually can only bring about 30,612,244 VND in average This cannot be compared to the 2016 profit generation of the private Vingroup corporation employees (each of about 125,000,000 VND), so we realise that there are still chances to improve the productivity of the SOCs’ employees by motivating their working spirit toward their better working performance Moreover, the 11th and 12th National Congresses of Viet Nam Communist Party have addressed the strategic breakthrough aspects of the period of 2011 – 2020: “(1) Building the socialism- oriented market mechanism with the core of establishing an equal business environment and administration procedure reform; (2) Fostering the development of the human resources, especially the high quality ones, by fundamentally and extensively renovating the national education, incorporating the human resource development with the advances and applications of science and technology; (3) Building an integrated system of infrastructure with some state-ofthe-art sites, focusing on transport and metropolitan areas” Therefore, the author has chosen the topic of Employee motivation in state-owned economic corporations in Vietnam for his doctorate thesis to help analyse the employee motivation process in the Vietnam SOCs for a new and more suitable approach to be proposed Objectives, meanings of researching the thesis topic General research objective: Providing an intensive literature review on motives and employee motivation; on which, the thesis conducts the examination into the practical situations to propose solutions to the improvements in Vietnam SOCs’ employee motivation in either macro-economic or micro-economic perspectives Structure of the thesis Apart from the introduction, conclusion parts, list of references and the appendices, the thesis has been presented in major chapters of content, including: Chapter - Literature review on employee motivation in the state-owned economic corporations Chapter - Theoretical foundation of employee motivation and governmental management of employee motivation in the stateowned economic corporations Chapter - Status quo of employee motivation and governmental management of employee motivation in the stateowned economic corporations Chapter - Directions and solutions to employee motivation and governmental management of employee motivation renovation in the state-owned economic corporations in the upcoming time CHAPTER LITERATURE REVIEW ON EMPLOYEE MOTIVATION IN THE STATE-OWNED ECONOMIC CORPORATIONS 1.1 Literature review on employee motivation in the state-owned economic corporations 1.1.1 Published researches abroad On motives and employee motivation Raymond N.Cheser (1998) has laid the American employee motivation on the comparative perspectives for absorbing the possitive influences from the Japanese business managers This research has shown that with the shift from traditional management methods of the American manufacturers to the Japanese inherited ones, the employees’ productivity has been improved dramatically Afterwards, Ovidiu-Iliuta Dobre (2013) has revealed the fact that in the current world of open economies with many competitors and competitive manoeuvres like today, the care that the companies has put on the employee motivation is a strategically significant longterm vision On economic corporations and their employees As for the biggest economy in the world, the giant industrial economic corporations had become increasingly important as the pillars of the economic growth since 1905 in the context of rights and responsibilities being transferred to the businesses, and the institution of stock exchange market, investment banks and the smooth movement of capital development On governmental management of the economic corporations In United States of America, the governmental interference into the production and businesses of the corporations is obvious In France, on the other side, is the “invisibe reform”, which takes a long time to take effects, and in China is the trial-and-error method in managing the corporations On the roles of the government on the employee motivation of the economic corporations With the Baltic nations, the enforcement of the adult employee training activities has been crucial to the adequate formation of the pool of skilled labour With the other European developed countries, the policy focuses are on the application of active or passive labour policies toward the employment issue in the economy 1.1.2 Published domestic researches On motives and employee motivation Dao Phu Quy (2010) has done a thorough research into the hierarchy of needs of A.Maslow, which is widely recognised and adopted in the economic field of study in general and the management science in particular Nguyen Van Hiep, Nguyen Thi Quynh (2014) have done 322 valid surveys in the FDI companies in Dong Nai province, in which the authors have revealed the directly affecting factors on the workers’ working motives in these types of enterprises On economic corporations and their employees Tran Dinh Thien and his counterparts (2014) have proved the necessity of state-owned enterprise structural reform, especially with the SOCs in Vietnam, because they are possessing huge number of resources but being inefficient in their businesses Nguyen Khuong (2012), on the other side, has shown in his research the contemporary characteristics of the SOCs with clear development strategy recommendations On governmental management of the economic corporations Tran Kim Hao and his counterparts (2015) have resulted in some significant suggestions in their research, including: (i) change people’s mindset on the economic corporations; (ii) eradicate the policy discrimination between the economic corporations and the other kinds of companies; (iii) enforce the adoption of market rules in the establishment and development of the economic corporations of all fields; (iv) readjust the economic corporations’ positions and roles according to the new context; (v) apply the modern, world-class organisational structure and management expertise in the economic corporations; (vi) maintain the consistency of administrative control over the economic corporations, regardless of ownership sources On the roles of the government on the employee motivation of the economic corporations Le Thi My Linh (2009) has proposed the diverse set of solutions to the small and medium enterprises of Vietnam on human resources management, such as employee motivation-related contents of issuing policies, strategies for human resource development, employee training, career development, talent management, performance appraisal, and corporate culture building Afterwards, Luu Duc Hai (2015) also came with valuable recommendations, including: (i) redefine the high-quality human resources and high-quality human resources development; (ii) assure that the high-quality human resource is the breakthrough factor in Central Party and Government’s perspectives; (iii) set a common list of criteria in assessing high-quality human resources 1.1.3 Unsolved issues in the realm of the thesis topic in the published researches The published researches have neither mentioned the profound aspects of employee motivation, especially in the SOCs nor stated the roles of motivation in developing the high-quality human resources nor figured out the new and renovative employee motivation model to bring about the valuable research conclusions for the circumstances of Vietnam 1.1.4 Focus of the thesis in solving issues through research Theoretical model regarding the research approach to the SOCs of Vietnam; Viewpoints on employee motivation through policy making; Viewpoints of the labour towards the motivation policies; Directions in overcoming the existed shortcomings of the policy-making process and the SOCs' human resource management 1.2 Directions in solving the research problems of the thesis 1.2.1 Research objectives and research questions of the thesis topic Research objectives: Researching and making clear the theoretical issues and the typical situations in global employee motivation to form the knowledge background as well as the empirical lessons to the Vietnam legislators and the SOCs’ leaders; Researching and making clear the practical situations of employee motivation process in the SOCs of Vietnam to get a correct view of the current issues for better analyses and suggestions for overcoming the shortcomings and weaknesses in the upcoming time; Incorporating the surveying and document-based methods to analyse the data for policy recommendations to the governmental management and corporations’ control over the human resources in SOCs, heading for renovations in employee motivation process therein Research questions: (1) What are the theoretical issues regarding motives and motivation?; (2) How is the practical situation of the governmental management of employee motivation in Vietnam SOCs?; (3) What are the context, directions and solutions to the renovation of SOCs' employee motivation process in Vietnam? 1.2.2 Research objects and scope of the thesis topic The core objects of the research are in the following aspects: Vietnam SOCs’ human resources management and employee motivation process; SOCs’ employees, especially the office staffs and the direct employees in producing and providing the corporations’ services; the legislation authorities’ labour-policy points of view; globally known employee motivation-centric human resource management models and some chosen institutions and policies regarding the labour market countries’ Scopes of research Contents: The thesis concentrates on motives and employee motivation (definitions, roles, methods, implementation models) in all related domestic and international researches Especially, the research approaches the employee motivation issues through the basis of governmental policies Nevertheless, the practical situations of employee motivation in Vietnam SOCs are also of high priority in the thesis Timing: The thesis is conducted in the years 2014-2017 However, the practical situations shall be studied in the period of 2009 – 2017 because of the big milestone in pilot establishment, organisation, operation and management of the Vietnam SOCs since the promulgation of the Decree No.101/2009/ND-CP of the Government Spatial constraints: The SOCs, including parent companies and member companies in the nation within the related circumstances of Vietnam; governments and economic corporations in the continents (Asia, Europe, Africa) for the empirical lessons to Vietnam state governance 1.2.3 Research approaches and methods Research approach The author has realised the significance of exactly determining the subjects and objects of the employee motivation process The subjects can be the governments, corporations, and even the professional associations The objects, on the other side, are the employees of Vietnam SOCs (almost are office staffs and direct employees in providing services and products in the research) Specific research methods Secondary data collection: The thesis uses popular 11 the ability to meet the first-tier demands at the bottom of the hierarchy turns out to be much obvious, and as a consequence the other higher demands shall definitely require to be satisfied as well Two-factor theory of Frederick Herzberg (1959): states that the hygiene factors should be best tackled by establishing a suitable mechanism for alleviating the negative feelings inside the employees’ mind because only they can that The possible solutions are arranged in a descending order of: company policies, supervision, industrial relations, working conditions and colleague relationship respectively Expectancy value motivation theory of David McClelland (1961): each person, regardless of gender, culture or age, shall have demands on achievement, affiliation and power due to their own motives Those incentives mostly depend on our culture and real-life experiences Expectancy motivation theory of Victor Vroom (1964): revolves around the key factors: expectancy (Expectation), instrumentality (Outcome) and valance (Reward) Job characteristics theory of Hackman and Oldham (1980): figures out basic contents of job descriptions that lead to positive mental states, motivating the employees to work and contribute better 2.2 State-owned economic corporations’ employees and stakeholders in motivating the employees in the state-owned economic corporations 2.2.1 State-owned economic corporations and the classification of employees in the state-owned economic corporations 12 Decree No.101/2009/ND-CP of the Government, dated November 2009, has set forth the direction for the establishment of Vietnam SOCs on the basis of previously formed state-owned companies and incorporations Till January 2018, there are 10 SOCs which are still in operation, including EVN, PVN, Vincomin, VNPT, Vinatex, Viettel, Vinachem, VRG, Bao Viet and Petrolimex The employees in those SOCs can be categorised into different working positions as below: Managing employees: include both strategic managers and functional managers of the departments of the corporations; Direct employees: include those who have high, medium and low level of professional skills and knowledge due to their own ability and accumulated certificates and/or degrees; Indirect employees: include those who work in the offices and functional departments without managing roles 2.2.2 Roles of the entities in motivating the employees of the stateowned economic corporations The government with the role of the manger in motivating SOCs’ employees; The government with the role of owner and invester in motivating SOCs’ employees; Strategic managers with the role of motivating SOCs’ employees; Functional managers with the role of motivating SOCs’ employees; Socio-political organisations and unions in the corporations with the role of motivating SOCs’ employees 2.3 Governmental management of state-owned economic corporations’ employees motivation process Governmental management of SOCs’ employees motivation process should be understood as the act of the government in using 13 instruments like legal documents, under-law documents, or the use of human beings in the managing process to create a motivating working environment for the employees’ creation, activeness and contributions, heading towards better business performance results in the corporations 2.4 International experiences of some governments on the economic corporations’ employee motivation and lessons learnt for Vietnam German case - Rule-abiding and procedure-following characteristics have been shown in the German policy on the labour market - At a certain economic development phase, the countries normally face with the aging population At that time, a possible solution that can be adopted is to complement the domestic human resources with experienced, skilled and healthy labour from the outside of the countries South African case - Inequality in recruiting employees that bases on skin color, gender, religious faith or health conditions shall not be acceptable in a modern and civilised labour market - The legislators should frequently supervise and revise the impacts of the policies regarding the labour market to find out the unbeneficial groups of employees for better compensation Chinese case - Reducing the scope of the businesses of the state-owned enterprises is an inevitable tendency of development in the world - Centralised policy-making and planning system regarding 14 labour issues hinders the development of the market greatly - The reforms in the labour-related policies can only be implemented if the system of the length of service is replaced by the objective system of performance-based and competency-based appraisal CHAPTER STATUS QUO OF EMPLOYEE MOTIVATION AND GOVERNMENTAL MANAGEMENT OF EMPLOYEE MOTIVATION IN THE STATE-OWNED ECONOMIC CORPORATIONS 3.1 Overview of the practical situation of labour and employee motivation in the state-owned economic corporations in Vietnam 3.1.1 Overview of Vietnam state-owned economic corporations Production: Heavy industry: EVN, Petrolimex, PVN, Vinachem, Vinacomin and VRG; Service – Information – Finance: Bao Viet, Viettel and VNPT; Light industry: Vinatex Market share: In Vietnam market, we can have a certain statement on the leading roles of the SOCs in almost all of the main businesses that they are working in PVN, Viettel or VNPT are the ones with vast locations of business with internationalised orientations On the contrary, some other corporations have not developed the international market up to their potential Finance: Viettel and PVN have emerged as the SOCs with the most positive financial status among the Vietnam SOCs at the moment They have earned high revenue rates and high ratios of profit/revenue throughout some recent years Petrolimex, EVN and Vinacomin, on the other side, are the ones with remarkably high revenues but with low profit/revenue ratios, which are not up to their 15 potential 3.1.2 Practical situation of labour and employee deployment in the Vietnam state-owned economic corporations PVN, Viettel are the two SOCs in Vietnam with the highest average income for the employees On the contrary, VRG, Vinatex, Petrolimex, Vinachem and Vinacomin are in the other end of the list with the lowest levels of financial compensation to their staff The middle group, including EVN, VNPT and Bao Viet, are with the employees’ average income of 12 – 20 million VND per month 3.1.3 Practical situation of methods and models in employee motivation of the Vietnam state-owned economic corporations The methods of employee motivating in the SOCs have been merely the right and adequate applications of labour-related laws and the randomly self-generated ideas of the business leaders (senior and middle), whereas the community of the employees is let to develop naturally without any clear directions of the companies 3.1.4 Practical situation of the roles of the entities in motivating the employees in Vietnam state-owned economic corporations The Government: mainly concentrates on the labour-marketrelated policy-making role; The strategic leaders: mainly conduct their orientation process through the subordinate departments/divisions; The functional managers: mainly take the instructions from the higher level of management into practice; The socio-political organisations: mainly carry out their regulated supervising roles ineffectively over the employee motivation process 3.1.5 Assessment of employee motivation results of Vietnam stateowned economic corporations 16 On physiological needs; on safety needs; on social needs; on self-esteem needs; on self-actualisation needs 3.2 Analysis of the pratical situation of governmental management of employee motivation process in the Vietnam state-owned economic corporations 3.2.1 Analysis of governmental policies on labour motivation in Vietnam Governmental policy on wage system and infrastructure: Labour Code 2012; Law on cadres and civil servants, No 22/2008/QH12; Law on officials, No.58/2010/QH12; Decision, No.1055/QD-TTg; Decree, No.49/2013/ND-CP; No.51/2016/ND-CP; Decision, No.58/2015/QD-TTg; Decree, No.69/2014/ND-CP; Enterprises 2014; Decree, Law on Decree, No.149/2013/ND-CP; Decree, No.101/2014/ND-CP; Law on thrift practice and waste combat, No.44/2013/QH13; Law, No.84/2015/QH13 Governmental policy on job security, labour safety and insurance: Labour No.58/2014/QH13; No.05/QD-TTg; Code 2012; Decision, Law on Law on social insurance, No.2281/QD-TTg; occupational safety Decision, and health, No.84/2015/QH13; Circular, No.07/2016/TT-BLDTBXH; Decree, No.39/2016/ND-CP; No.46/2014/QH13; Decree, Decree, No.44/2016/ND-CP; No.105/2014/ND-CP; Law, Law on employment, No.38/2013/QH13 Governmental policy on relationship with colleagues, employers and community: Law on Trade Union, No.12/2012/QH13; Labour Code 2012; Decree, No.60/2013/ND-CP; Decree, 17 No.91/2015/ND-CP; Law, No.69/2014/QH13 Governmental policy on commendation and career path: Law on emulation and commendation, No.15/2003/QH11; Decree, No.91/2017/ND-CP; Decree, No.91/2015/ND-CP; Decree, No.87/2015/ND-CP; Labour Code 2012 Governmental policy on study chances for knowledge improving and suitable deployment of human resources in terms of profession and degree: Decision, No.707/QD-TTg; Decree, No.69/2014/ND-CP; Labour Code 2012; Law on vocational education, No.74/2014/QH13 3.2.2 Analysis of employees’ assessment of motivation process of the Vietnam state-owned economic corporations Sample description: The research on practical situation of employee motivation in Vietnam SOCs involves the online survey with 896 staff who are working for of the 10 SOCs Multivariate regression analysis of SOCs’ employee motivation: The aim of this part is to conduct an anlysis of the collected data from the SOCs’ employees, using the techniques of multivariate regression to figure out the connection between dependent variable, Employee Motivation Status (EMS) and other independent variables The EMS variable has been brought about objectively by counting the average of the data that the employee respondents have put into the form to describe the levels of motivation that they are having This way of calculation has helped avoid the subjectivity in asking the repondents about their own ideas on their levels of being motivated after what have been done by the SOCs to them 18 At first, the credibility of the questions is measured through the Cronbach’s Alpha ( ) testing method, in which 21 credible tested variables are kept Then, the exploratory factor analysis (EFA) has been deployed by using the Principal Component Analysis in combination with Varimax rotation at the Eigenvalues 1 The following multivariate regression model is used to analyse the Vietnam SOCs’ employee motivation: EMS = 0+ 6ES32+ 1PS31+ 7SE32+ 2SE12+ 8SE33+ 3PS23+ 9ES31+ 4SO21+ 5PS33+ i In which, 0, 1, 2, 3, 4, 5, 6, 7, 8, are the constant regression coefficients; and i is residual (a random independent variable, conformed to a standard distribution with an average of and a constant variance of 2) After the SPSS analyses, we have R2 = 0,932; Sig = 0,000 < 0,05 and all of the VIF