Better Human Resource Management Needed in Tough Time

“Experience in many countries has shown that, in order to develop sustainably, enterprises should pay close attention to a stable human resource strategy. Take Japan for an example. When facing an economic downturn, Japanese enterprises retain lifetime workers, lay off temporary ones, reduce bonuses and move some to other production fields”. This is a view about how to take advantage of human resource in context of economic turmoil, given in the Forum on “Human resource management in difficult periods” recently held by Vietnam Chamber of Commerce and Industry (VCCI), the Ministry of Labour, Invalids and Social Affairs, and Vietnam Business Forum Magazine in Hanoi.

 

According to VCCI, by the end of 2011, Vietnam had about 622,977 enterprises, 79,014 of which have been dissolved. Among those are 2,082 private enterprises, 16,784 one – member limited liability companies and 18,826 multi – member limited liability companies. The largest number is joint stock companies, with 41,357 cases, while the smallest is partnership companies, with only 1 case. In 2011, 7,611 among 77,548 newly established enterprises throughout the country had to close down.

 

In the “storm” of world economic downturn and macro-economic volatilities, many enterprises have made less revenue and profit; several enterprises have even had to close down or temporarily stop producing. In this tough situation, each enterprise has to choose for itself a suitable management method. Many enterprises are facing human resource restructuring. Improvement of human resource quality is a necessary task to help enterprises optimize chances of survival in the market.

According to Dr Vu Tien Loc, VCCI President, the current difficult context turns out to be the most important time to reposition Vietnam’s enterprises. Actually, low competitiveness of Vietnam’s enterprises is caused by low product quality, ineffective marketing, and limited distribution; however, another main reason is incompetent human resources and unsatisfactory human resource management. This is a suitable moment for enterprises to spend more time studying and improving corporate management.

 

When enterprises have to face losses, stagnant production, or even bankruptcy; many of their well qualified employees will manage to find other jobs with better chances of promotion. This fact is confirmed by Mr Nguyen Manh Hung, Director of Thai Ha Joint Stock Company: “The large number of bankrupt enterprises creates great opportunities to make money and recruit high quality labour force. This is a chance for us to get high quality human resources and do away with incompetent employees,” said Mr Hung.

 

It is worth mentioning that in difficult times, enterprises try to ultimately cut both costs and human resource. However, these movements may cause severe consequences, such as widespread dissatisfaction among remaining employees, even causing loss of clients or technological know-how into the hands of competitors.

 

So how to maintain good spirit and keep high quality employees in a difficult period? According to Mr Nguyen Trung Hung, CEO of Kangaroo, enterprises have to build up a relationship between employers and employees, in order to jointly create and enjoy a labour value. At the same time, enterprises must have long term investment policies and care for their staff with insurance, benefits, and long term working contract; with high-level personnel, enterprises can encourage them to contribute capital to have profit share later.

 

According to Mr Pham Minh Huan, Deputy Minister of Labour, Invalids and Social Affairs, enterprises should actively and dynamically build up, train and create more opportunities for human resources to take the most advantage of their professional capacity, in order to overcome current difficulties as well as to encourage long term, sustainable development of enterprises. A wider target is to use better national labour force, aiming to fulfil national requirements and interests of enterprises in the difficult period.

 

Many speakers in the conference also said that enterprises should consider the crisis time a “low point” in business, and take advantage of this period to promote staff training. Training requires a handsome cost, but it is an investment for the future. Better human resource quality will help enterprises overcome difficulties and outdo competition.

 

“Difficulties will seed opportunities. Those which manage to restructure their resources, especially human resources, will be more successful when the economy revives,” confirmed Mr Loc.