Top executive recruitment in Vietnam: Local or Expatriate?

Online, March 11, 2010 (Newswire.com) - Observing the recruitment market in Vietnam in recent years, it has been found that the case in which local companies hire top executives who are expatriates is more common than it was before. Or it is to say the growth of many local brands, such as Pho 24, Trung Nguyen... can't fail to mention the contribution of expatriate workforce. However, not all "Local Company - Expatriate Executive" marriage come to a happy ending due to countless reasons.

Search for foreign executives among the thousands

There can be hundreds of reasons why large local companies want to hunt foreign executives. According to Ms. Vo Thi Hong Van, Administration manager of Ecolap Vietnam, "It might be due to foreign-favored psychology of the Vietnamese". She also added though the salary range for foreign workforce is much higher than for local workforce, the performance they achieve is much higher with fewer resources, which is top priority of many companies. In such cases, foreign executive is a better choice.

To survive and stay ahead in a pressured business environment like in Vietnam where foreign companies dominate the market with extreme advantages in finance and technology, local companies should take advantage of the local knowledge to navigate the market with wise business plans. Meanwhile, consolidating the professional organization structures is a must. In this case, foreign executives with more experience and knowledge in modeling and implementing professional organization structures will outperform the local executive with less experience.

The fact is not all the "Local Company - Expatriate Executive" marriage come to a happy ending. There are a lot of cases where the marriage becomes "nightmare" after some time. I can quote a case of a Viet Kieu working as a Chief Investment Officer for 2 large fund management companies in Vietnam and came back to his country after 2 years. He shared, "I placed too much expectation while working in Vietnam, but my performance here is so poor. In the end, I came to realize that the experience I gained during my time working in the US did not work in Vietnam". This is one case among many that implies the mismatch of the "Local Company - Expatriate Executive" marriage.

"Many owners might put too much expectation on these executives, but the results cultivated hurt themselves", said Mr. Nguyen Quoc Hoan, Executive Search Vice Director at VIPsearch. He explains there is a gap between foreign and local companies in terms of organization structure and culture. Whether an executive can achieve a high performance level in a local company where support systems, resources and culture are not the same as in a foreign company is still a question mark. Moreover, the compensation package for these foreign executives needs owner's much consideration before reaching a final decision whether to hire them or not.

On the other hand, so much pressure is placed on these executives to produce fruitful business results as they produced at multinational and foreign companies. During their tenure, many of their proposals and business strategies are somehow rejected, which gradually daunted their expectation and their involvement into company operation is much looser. This can be explained by the difference between local and foreign companies, according to Mr. Ly Truong Chien, senior consultant specializing in business restructure and strategy. He explains at international companies there's a clear line of responsibilities and authorities between the board of directors and board of management, or the ownership authority and management authority is clearly defined. And furthermore, a chairman or shareholders (ownership) can have a seat in the board of management and vice versus. While the picture in Vietnam is quite different, there exists confusion between the ownership and management of the company, especially at fast expanding companies where old management concepts and mindsets are outdated. Invest heavily in these grey matters; the owners come to the psychology of early cultivation of fruitful business results. This very mindset somehow puts more negative pressure on the new hired executives.

Carving the local talents

In contrast to the previous picture, there exists another picture in which local talents are gaining confidence and considerable positions in the eyes of both foreign and local companies. After many years of experience gained at multinational company, local senior executives now have a bigger voice and position in the recruitment market and become the most "hunted" executives. They are tied to some titles such as the Best Hire in Vietnam or the Best Marketer in Vietnam.

Is it true that local talents now can outcompete their foreign colleagues? "The case can be traced back since Vietnam opened the economy to welcome entry of multinational companies. At that time, they recruited local talents who had experience and understanding of the local market from law and regulation system to business environment. Moreover recruiting local talents was a wise strategy to quickly capture and understand the local market insights to gain the market share", Ms. Cap Thi Minh Trang, Senior Consultant at NhanViet Management Group explains. She also adds that while establishing operation at new markets, these multinational companies step by step implement their international level business model and organization structure. What they need is to recruit and train the local talents to execute their plans. The approach ensures effective and efficient output and costs.

Ms. Pham Thi Thu Huong, Former HR Director at Robert Borsch Vietnam shares her experience recruiting top executives. She says besides competences and experiences, these top executives must possess a wide market knowledge, local culture, business culture, local law and regulation system, etc., which are dominant advantages of local executives. As a result, foreign owned and foreign invested companies have localized their top executives. On the other hand, recruiting local talents gains lots of benefits for these companies such as compensation package for local is only 1/6 as much as for expatriate, fewer administration procedures. Another benefit to mention is the retention, local executives can stay their tenure longer than their expatriate colleagues in Vietnam.

Local or expatriate, a roadmap is a must

In a recent seminar on Organization restructure, Mr. Ly Truong Chien shares that HR strategy should align with business strategy restructure. To achieve success, companies need to fine tune strategies base on analysis and evaluation of their resources and company culture. All stakeholders should be noticed and hold hand to execute the plans. A detailed implementation and execution roadmap should be in place and a tracking system will ensure results are measured on a routine basis. According to Mr. Chien, recruiting the right executives is accountability of top executives, not the owners, of the whole HR department, not the HR Directors individual.

In fact, whether new hired local or foreign executives, it requires culture fit and it takes time! Culture fit should be accessed besides the personal competence, proven working records, leadership, etc. When recruited, executives should be empowered to manage the company.

Mr. Nguyen Quoc Hoan agrees, "Given new empowerment, company should recognize the transferring and adapting period for culture fit"

Written by VIPsearch - A division of NhanViet Management Group and A member of Glasford International. For more information about this article, please contact us at:
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