With FDI flowing into Vietnam at unprecedented rates and the internationalization of the economy on the back of some of the biggest free trade agreements signed in SEA recently, it’s time to examine common issues faced by foreign managers and business owners in Vietnam. These are issues that arise from intercultural barriers, low employee engagement, and high turnover rates. These issues come from westerners having “western expectations” and being unable to adapt to, and learn about, the local culture, language, and traditions as well as getting used to incredibly different education levels. Here is a comprehensive guide to the issues and some actionable solutions:
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Brain drain in Vietnam
Due to the pandemic and strict lockdowns, the last two years have led to a lot of ex-pats leaving Vietnam for good and going home to their countries. While in the last 10 years we have seen a sharp rise in local and overseas Vietnamese management talents due to international schooling, careers in international companies, and a rise of international certifications (e.g. PMP), there could be a lack of specialists for certain management positions or industries.
Recruitment Issues in Vietnam
Our experience living over 10 years in Vietnam and working for several companies like Home Credit, Lazada, Citibank in mid-and high management positions, is that in Vietnam the recruitment is on development stage, rather than on full fit (technical skills, soft skills, and cultural fit). Vietnamese employees are amazingly hard-working and eager to learn but often fall short on, especially Western hiring and soft skill requirements. This is especially true when they left traditional, state-owned, companies or universities. So rather than looking for a full fit on topics like idea generation, proactiveness, outspoken character, leadership, etc. we advise hiring on the right basic technical skills and motivation and have onboarding and training ready to develop your new hires into your desired soft skills.
The organizational structure of the company
As in any organization, the middle management makes, or breaks the organization and you should hire or develop strong local managers as the Vietnamese language is needed with most staff levels, especially outside Ho-Chi-Minh-City and tech/start-up related industries. Of course, you can also hire some foreign middle managers but make sure that the living standards and the pay gap are not too high as local middle managers normally have families to take care of and are looking for stable, well-paid long-term engagement. As mentioned in the previous paragraph, learning opportunities and training are very important, either in the form of seminars or coaching on the job assignments. Due to previous experience, we would also highly advise having at least 50% of C-Level jobs open for locals so that middle management can have development and career goals, a company with only HR & Legal run by Vietnamese is not state of the art anymore.
Vietnam’s Business Culture
Based on the cultural model of Lewis , Vietnam has one of the most passive and reactive cultures in the world, which leads foreign ex-pats to constantly underestimate Vietnamese counterparts or subordinates.
In typical Western-run meetings in which people voice their opinions immediately and pinpoint issues, Vietnamese tend to be more reflective and silent at the beginning and state their points in a later stage of the meeting or in follow-up 1:1 conversation to not lose face or make people uncomfortable. Therefore building trust with Vietnamese colleagues is the first paramount task and challenge of any foreigner working in Vietnam, which means that reactions should be predictable, demands should be fair and reasonable and the work environment is based on mutual respect. Once trust is built, meetings will get more lively and discussions will get more open.
Employee Satisfaction & Engagement
Vietnamese employees look for financial safety and the possibility to gradually improve their lifestyle, which is one of the strongest development drivers in the last 30 – 40 years in Vietnam, coming from a war-torn devastated country to one of the fastest-growing developing economies in the world. On top of financial safety, we already stated above the high interest in learning and career opportunities. Besides, organizations and teams should provide a safe and respectful environment that respects local habits (e.g. lunch break from 12 to 1 including office napping, team outings like eating & Karaoke, shared team meals in and outside the office, safe motorbike parking & delivery drop-offs, etc.)
To engage Vietnamese employees, Asia PMO, a local Project / OKR Management & Employee Experience Consulting company recommends starting with more anonymous driven tools like surveys or virtual brainstorming sessions before expecting that everybody voices up their opinion loudly. Listen in confidential 1:1 meetings with your colleagues and take part in any informal habits of your companies (e.g. locals bring office lunch to the canteen, ice coffee corner in the morning, badminton & soccer groups, etc.). Also start to learn more about Vietnamese culture (food, greetings, etc.) and begin to learn the language and at least one Karaoke song in Vietnamese (that’s our best icebreaker on company or team outings when foreigners can sing one local song).
Given the development and the flexibility of the market, companies in Vietnam tend to have a high turnover rate on all levels and especially fear the “Tet exit” (Most companies pay yearly bonuses in January or February and people tend to leave after the lunar new year holidays to other companies). One quick fix could be more regular bonuses, benefits, or incentives than just after Tet and connecting them to achievements rather than on specific dates.
As Asia PMO, we recommend to you as a foreign manager to interact, engage and better understand your local counterparts and employees. We can support you to adapt your management style, to build an effective but culturally sensitive organization, and to measure employee satisfaction and engagement regularly so you can react timely on expectations, needs or issues and build successful teams and businesses.