Human Resource Management in Hanoi: Theory Building

7. Analysis

From the data, seven categories emerged, some with their own subcategories:

  1. Vietnamese Style Human Resource Management
  2. Reward (Primary, Secondary and Tertiary)
  3. Recruitment (Social Networks and Formal)
  4. Legal
  5. Training & Development (Western Education and In-house provision)
  6. Motivation
  7. Culture (Face and Collectivism)

Analyses of the data showed that Reward and Motivation are closely related and that three categories, Vietnamese Style Human Resource Management, Recruitment and Rewards & Motivation, provided the best opportunities for theory building.

7.1 Vietnamese Human Resource Management

A recurring topic in all interviews was the existence and nature of a Vietnamese style of Human Resource Management. Most companies were in the process of researching Western and Japanese Human Resource Management methodologies and implementing these in their own organisations. There was a strong perception among the interviewed Vietnamese managers that the Western model of Human Resource Management is something to strive for. Although, methods were used selectively to ensure organisational and cultural fit.

Interviewees were not able to pinpoint the type of methodologies they believed to be suitable in a Vietnamese context and which were not. Vietnamese managers are embedded in their own culture and are not necessarily acutely self-aware of the differences between occidental and oriental culture. The fact that they have a personal preference for a certain management approach is an illustration of the culture in which they are embedded.

The need to research the suitability of existing management methodologies in emerging countries has been identified by several scholars (Budhwar 2009; Meyer 2006; Rowley and Abdul-Rahman 2008). Recent research by Thang et al. (2007) has shown that foreign practices which tend to be in harmony with the norms, beliefs and assumptions of Vietnamese culture have the best chance to improve business performance. Practices that are based on confrontation or impose ethnocentric methods are likely to fail. This was illustrated by Mr B, who lamented that Vietnamese managers in his organisation shy away from confrontation, something which he saw as necessary to create a healthy dialogue. This is consistent with the pluralistic approach preferred in Europe, as shown in Figure 3.1.

Another aspect that was mentioned in several interviews and site visits was management training. Most managers expressed a preference for a Western style management education. Larger companies send their people overseas to further their education. This aligns with the common Vietnamese tendency to prefer foreign products over locally made things. This attitude can be traced back to the time before Doi Moi, typified by a lack of quantity and quality of consumer goods (Thang et al. 2007: 125). The popularity of Western management education in Vietnam can also be seen as a result of the many development projects over the past decades, providing management education (Napier 2008).

From the observed salience for foreign Human Resource Management approaches a first hypothesis can be formulated.

H1 : Vietnamese managers have a preference for adopting Human Resource Management practices with a foreign origin.

This hypothesis may actually be proven incorrect in that the co-importation of capital and Human Resource Management practices outlined in Chapter 3 has led to Western Human Resource Management training being more widely available rather than being preferred. No firm conclusion can be drawn from the obtained data.

7.2 Reward & Motivation

Reward mechanisms can be categorised in three distinct types. Primary reward is the monetary remuneration an employee receives. Secondary reward refers to all non-financial entitlements, such as annual leave, lunch breaks and so on. Tertiary reward refers to social benefits of being part of an organisation, but which are not part of the formal employment relationship. Primary reward mechanisms outlined in the site visits and interviews all follow methodologies very familiar to those used in Australian organisations, i.e. a focus on individual reward. All companies use a salary scale to value different jobs and maintain a bonus system to reward performance of staff. Secondary reward was provided in all organisations in accordance with the Labour Laws of Vietnam (Chee and Dung 2008).

Most interesting was the emphasis of many organisations on tertiary rewards, such as staff outings, interest free loans, transport to weddings and funerals, buying the occasional unexpected gift and also providing a “pleasant work space” was mentioned. One company that excelled in this area was Company D. The businesses they manage are well known among travellers and expatriates in Hanoi and Ho Chi Min City because of the excellent service provided by staff. Staff seem to be much more motivated to provide great service than in other Vietnamese businesses. For example, in Company B, the manager expressed that staff were not self-motivated to provide service, which he attributed to Vietnamese culture. While Company D focuses on tertiary rewards and is achieving great results, Company B focuses on individual rewards and faces motivation problems. From these observations a second hypothesis can be formulated:

H2 : In collectivist cultures, tertiary rewards are more likely to motivate staff than primary and secondary rewards.

The hypothesis is theoretically supported through Vroom’s Expectancy Theory (Robbins and Judge 2007) and empirical research that indicates that Vietnam and most other South-East Asian countries, are collectivist in nature (Hofstede 1993).

According to Vroom, who follows a behaviourist model of psychology, the “strength of a tendency to act in a certain way depends on the strength of an expectation that the act will be followed by an outcome and on the attractiveness of that outcome” (Robbins and Judge 2007: 208). Vroom’s model uses three concepts to explain motivation.

Figure 7.1: Expectancy Theory (Robbins and Judge 2007: 208).

Figure 7.1: Expectancy Theory (Robbins and Judge 2007: 208).

  1. Expectancy: the likelihood, as perceived by the individual, that exerting a given amount of effort will lead to performance.
  2. Instrumentality: the degree to which the individual is convinced that performing at a certain level will lead to desired rewards.
  3. Valance: the degree to which organisational rewards match an individual’s personal goals.

The basic utility of Expectancy Theory is that, in order to enhance performance of individuals, rewards need to be linked to the required behaviour and that these rewards are anticipated and wanted by employees. An employment relationship is underpinned by principles of mutuality and reciprocity (Heap 2008) in that employees expect a return for their efforts, as outlined in Expectancy Theory.

A return can be provided to employees on three levels, as outlined above. Following the principle of Valance in Vroom’s theory, rewards in a society with a predominantly collective nature should reflect this. In other words, a focus on tertiary rewards and social benefits will theoretically lead to a better performance outcome.

The data obtained in this research does, however, not provide sufficient evidence to confirm nor falsify this hypothesis and further researched is required to test its validity.

7.3 Recruitment & Selection

The third result emerging from the data is the preference for social networks in recruitment of new staff, this contrasts with Australian firms where newspaper advertisements are the prevalent way to attract applicants to new positions (Wooden and Harding 1998). The third hypothesis is thus:

H3 : Recruitment in countries with a collective nature, such as Vietnam, is primarily conducted through social networks.

The purpose of recruitment is to communicate the existence of a vacancy to those segments of the job market that an organisation seeks to recruit from (de Cieriet al. 2008). The recruitment process is influenced by several factors, as illustrated in figure Figure 7.2.

It is the recruiters task to increase the likelihood of a match between applicant and vacancy characteristics, in other words, to achieve job fit’. Job fit is bidirectional as vacancy characteristics need to match applicant characteristics and vice versa. Only a bidirectional job fit ensures that the incumbent will be in the best possible position to contribute positively to the organisation. This is achieved by controlling the three influencing factors. Human resource policies affect the characteristics of the vacancy (job design). Recruitment sources determine which segment of the job market is targeted and thus influence applicant characteristics. The recruiters themselves also influence the job choice through their impact on both job design and applicant characteristics. Using social networks as a source of recruitment influences applicant characteristics because the criteria upon which the social network is defined determine who will be considered for the position.

Research by Breaugh (1981: 145) showed that the source of recruitment is “strongly related to subsequent job performance, absenteeism and work attitudes”. People placed through universities and to a lesser extent those sourced through newspapers, were “inferior in performance” to applicants who were sourced through advertisements in professional publications (Breaugh 1981: 145), which is a form of social network. People recruited through newspaper advertisement missed almost twice as many days as those recruited through other sources, such as employee referrals (Breaugh 1981). The field study was conducted in one particular research organisation in the USA.

Figure 7.2: Factors influencing the recruitment process (de Cieri et al. 2008: 260).

Figure 7.2: Factors influencing the recruitment process (de Cieri et al. 2008: 260).

A possible explanation of this phenomenon is the Individual Difference Hypothesis in which it is stated that recruitment sources differ in the types of the applicants they reach (education, class, self-image and so on), which results in different performance outcomes. Following this theory, people recruited through employee referrals may be more capable or have a better cultural fit than individuals recruited from public sources because current employees and other members of the social network screen potential applicants before they consider them for a position in the organisation as their own reputation is at stake (Breaugh and Starke 2000).

It should be noted that recruitment and selection are two distinctly different aspects of Human Resource Management. Although people are recruited because they are a member of a social network, this does not imply that they are necessarily selected because of this. All respondents acknowledged that an interview formed part of the selection process and in some instances psychological and technical aptitude tests were used to determine the most suitable candidate.

7.4 Core Category

Following the analysis of the identified categories, a core category emerged. The core category, i.e. the concept that ties the findings together, is the collective nature of Vietnamese society. This concept has been widely discussed in management literature, spearheaded by the research undertaken by Dutch sociologist Geert Hofstede (1983).

Collectivism emphasises human interdependence and the importance of a group. On the other end of the spectrum, individualism is the degree to which people give primacy to the individual over the group to which they belong. Countries with a high level of individualism (IDV, see Figure 7.3), such as Australia, prioritise individual rights over the rights of the collective. In countries with low scores in IDV, the collectivist societies, such as Vietnam, the rights of the individual are often subordinated to the collective (Hofstede 1983, 1993). The preference for using social networks as a means of recruiting staff is an expression of the collective nature of Vietnamese culture. Although this research was conducted with limited data, the preference for social network recruiting was also confirmed in many informal conversations with Vietnamese managers not partaking in the interviews.

The use of social networks is contrasted with the preference of newspaper advertisements in Australian firms, as identified by Wooden and Harding (1998). This is in line with the core category as Australia is considered an individualistic country (Figure 7.3) and newspaper advertisements focus on random individuals. Collectivism was apparent in how businesses manage staff performance. There seems to be a focus on tertiary rewards, which are also an expression of the collectivist nature of Vietnam. With regards to Primary and Secondary rewards, Thang et al. (2007) investigated the transferability of occidental management practices into Vietnam and found that individualism is one of the underlying assumptions for a pay-for-performance system. The long-held Confucian collectivist values in Vietnamese society will, however, make it difficult for these methods to be successful. A pay for performance system is more likely to be applicable to the younger generations. As the per capita Gross Domestic Product of Vietnam rises, the level of individualism is also expected to rise, as shown by Hofstede (1993).

Figure 7.3: Cultural dimensions for Australia and Vietnam (Hofstede 2009).

Figure 7.3: Cultural dimensions for Australia and Vietnam (Hofstede 2009).

8. Conclusions

They say you come to Vietnam and you understand a lot in a few minutes.
But the rest has got to be lived.
Graham Greene (1977), The Quiet American.

The research in Vietnam and associated literature review has unearthed some interesting prospects for further research into Human Resource Management in this country.

Firstly, even only a very limited amount of interviews were conducted, the contextually rich nature of the data and using the Grounded Theory approach allowed for the formulation of some promising hypotheses. It is, however, because of the limited number of observation that were able to be made that the results can only be considered hypotheses at this time. Grounded Theory is thus a potentially successful method for researching Human Resource Management practices in Vietnam. Given that many scholars recommend in depth research in this region an opportunity is created to enhance the findings of this report through follow-up studies.

The first hypotheses states that Vietnamese managers have a preference for adopting Human Resource Management practices with a foreign origin. This preference may be because of a perceived superiority of foreign models or simply because Vietnamese practices are not very well documented. This illustrates the importance of foundational research into the actual methods used in Vietnamese organisations in order to be able to enhance the global body of knowledge in this area.

The second hypotheses, which states that in collectivist cultures, tertiary rewards are more likely to motivate staff than primary and secondary rewards, is based on only two observations, but is supported by Vroom’s expectancy theory and Hofstdede’s work on national cultures. Should this assertion be proven to be correct after subsequent research, it may have significant impact on how both Vietnamese and foreign companies structure their reward portfolio.

Lastly, the finding that recruitment in the researched organisations is primarily conducted through social networks, combined with earlier research on correlations between recruitment source and staff performance, warrants further research. Australian organisations cast wide nets in their search for new staff members by advertising in newspapers distributed to anyone with an interest in local matters. If this hypothesis is confirmed, a model can be developed to manage social network recruiting, which could possibly lead to lower recruitment cost. This would be a recognition of Vietnamese Human Resource Management and alleviate the need to introduce models from the USA, which have shown to be not always successful.

Table of Contents

  1. Introduction
  2. Literature Review
  3. Hanoi Expedition
  4. Theory Building

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