Hiring CEO in Vietnam Still Facing Many Shortcomings

So far, the trial employment of directors in State-owned enterprises exposed many shortcomings from selection and appointment to governance. Presidents of the board of CEOs of several business groups said, with the current confidence vote regime to evaluate executives for promotion, it was impractical to recruit Ceos for State-owned enterprises. Thus, the employment of CEOs was not popular after a period of time.

Many managers with rich experience in working for leading foreign companies failed to lead SOEs because both internal and external factors dragged them down. In fact, many SOEs went public but the State still keeps more than 51 per cent of stakes, the power of CEOs is not strong enough to make desired changes. Ceos at State-led enterprises do usually make strong, definitive decisions to personnel apparatus because they shun other inside and outside powers.

 

Hiring CEOs should be brought into life as Vietnam is penetrating deeper into global economies. Directorship should be regarded as a career. Enterprises can hire directors. Of course, directors are not the owners.

 

In fact, CEOs of SOEs are the direct representatives of the State for the State’s assets and capital and they have eligible legal status and power to use and manage those things. However, central and local authorities usually intervene into business and production activities in SOEs. It is not clear who are the real owners of the enterprises.

 

To deal with such shortcomings, the government picked up several enterprises to pilot business group models (Corporation 91) and corporation model (Corporation 90). In personnel structure, the board of directors is the direct representative of the State ownership in SOEs while State administrative bodies exercise State management. After more than 10 years, State administrative bodies still confused State administrative management with production and business management.

 

In developed market economies, the effective use of assets is the top priority and practical governance is very varied. There is a clear boundary between owners and employees. Thus, the owners are not the direct managers of enterprises. The owners hire people with better governance abilities to manage their businesses. Thus, there are clear functions and powers of owners over the power and accountability of hired managers.

According to Dr. Nguyen Duc Van, a senior specialist at the Government Office, to widen opportunity for good managers, the Government should issue regulations on recruiting directors for State-owned enterprises and consider this a breakthrough test in personnel development.

 

The regulations on recruiting directors must have specific criteria. Particularly, the examination principle must base on actual demand, ensure democracy and fairness and base on talent of candidates. Recruited directors must satisfy quantitative requirements for argument and practice. According to the Law on State-owned Enterprise, criteria and conditions for recruiting directors for SOEs abide by the Clause 1, Article 24. The examination should be organised at the national level and each member of examination board must have sufficient knowledge in tested professions. Besides, training is also an urgent demand. At present, Vietnam lacks a specialised executive training establishment.

 

The Ho Chi Minh Politics and Administrative Institute is responsible for providing State administrative management knowledge. Therefore, Vietnam needs a professional and experienced establishment for training directors for enterprises.

 

Also according to Dr. Nguyen Duc Van, the Government should set the roadmap with specific points of time for implementation. Otherwise, director recruitment for SOEs will remain a pilot project.