FOREIGN TRADE UNIVERSITY FACULTY OF BUSINESS ADMINISTRATION - GRADUATION THESIS Major: International Business Management HUMAN RESOURCE MANAGEMENT IN VIETNAMESE STARTUPS: A CASE STUDY OF COC COC COMPANY Student name : Trinh Thi Hoai Thuong Student code : 1211260036 Class : Advanced Business Administration Intake : 51 Supervisor : Assoc Prof Dr Nguyen Thu Thuy Hanoi, May 2016 ACKNOWLEDGEMENTS First I would like to send my most sincere gratitude to my thesis supervisor Associate Professor Dr Nguyen Thu Thuy for her incredible expertise, gentleness and kindness in instructing me throughout this difficult process Without her great orientation and support, I would not have been able to complete this thesis Working with and learning from her has been one of the best privileges and inspiration I have had in my student life, which played an important part in shaping my future dreams and ambition Credits also go to my dear friends, Dang Quang Huy, Le Nguyen Ha An and Nguyen Vinh Bao for great access to wonderful sources of research and references I could not manage to find elsewhere Also let me express my love to the most fun and helpful roommate in the world, Tran Thi Phuong Thao, whose tolerance and kindness knew no bounds when she helped me out through such a busy and stressful time I am also indebted to my program manager, Dr Nguyen Thuy Anh, my amazing classmates and lecturers for making my FTU memory priceless And above all, my heart goes to the most wonderful blessing of my life: my family for all their unfailing listening, loving and caring who are desperate to have their child home but had to patiently wait until graduation thesis - my last mission is completely done This is the beginning of a new chapter we are going to go through together I am grateful to have you all in my life Hoai Thuong LIST OF ABBREVIATIONS HR Human resource HRM Human resource management HCM Ho Chi Minh KPI Key performance indicator FMCG Fast-moving consumer goods TABLE OF CONTENTS LIST OF FIGURES Age groups of respondents……………………………………………61 Figure 4.11 O*net job analysis…………………………………………………….78 LIST OF TABLES CHAPTER INTRODUCTION 1.1 Background The new evolving business environment under profound changes and soaring competition has pressurized worldwide organizations to focus intensely on the human factor Across from service to manufacturing and traditional sector, gone are the days when employees have to shape themselves to fit into work system Instead, it is firms and companies’ responsibility to create the best working environment possible for staff to bring out their best The fifth edition of RSM insight by Erasmus Mundus university (Rotterdam) points out: “Understanding how workplaces can be designed with people in mind should be of great interest to organizations” Growing appreciation of how properly selected, trained and rewarded workers can help a business step forward means Human Resource Management occupies more power than ever All over the world vibrant HRM practices are maintaining and developing Since 1973, out of the famous “People-Service-Profit” philosophy, FedEx corporation - top delivery company has applied cutting-edge technology to keep track of its employee satisfaction That system was invented based on an annual survey and a feedback action program Meanwhile, HRM at Twitter is strongly engaged with creativity and leadership, keeping the company on Glassdoor’s list of leading workplaces of the tech industry More innovatively, there even rises a trend for companies to make an app exclusively for attracting, hiring and training new talents It is no doubt that Human resource professionals have come to view workforce planning as part of strategic development that requires careful consideration as well as data and analytic tools to assist Given its prime importance, how does the HRM landscape in Vietnam look like? Except for MNCs which employ globally standardized HR frameworks and models from outside, namely Unilever, HSBC, Samsung, SONY,… HRM still remains a function largely overlooked by top management executives elsewhere Most of these business owners not participate in formal management courses to equip themselves with full understanding of modern business administration Under the title of “Common human resource practices in Vietnam SMEs”, a nation-wide research by the National center for information and forecast of social economy points out: only few SMEs make long-term manpower planning As low as 25% of all companies advertise job vacancies on mass media while slightly more than a third make recruitment evaluation The vast majority (85%) of companies produce human resource forecast based on labor turnover rate, whereas only 15% refer to technological advances, service demand and supply, capital scale,… for broader perspectives In addition, assessment of labor shortage or surplus is also carried out solely by individual department in proportion with current workload and totally without direct involvement of Human resource department In addition, human resource executives in those companies not come from a professional training background and also take on such irrelevant work as accounting and administration Common HR tasks concern only hiring, maternity leave, insurance, timekeeping and other legal procedures, all of which are rarely done with a strategic approach That explains why Vietnamese companies on average can only take advantage of 40% of employees’ capability, as proclaimed by Chamber of Commerce and Industry of Vietnam at the conference “HR leverage in improving business performance” on May 28th 2015 The 2014’s meeting between the Prime Minister and small and medium business leaders revealed a worrying fact about Vietnam economy: SMEs still predominantly account for 97.5% of all enterprises Typically, an enterprise in VietNam is an SME with 22 employees on average and billion of registered capital Since the startup wave in 2013, domestic economy has seen a boom in the number of business registrations, rising from 69,874 in 2012 (Ministry of planning and investment, 2013) to over twice as many in 2013 The uprising of the startup community is one of the major factors that brought about FDI’s five-time increase between 2005 and 2013, 10 according to Wall Street Journal Vietnamese startups are mainly tech-based with approximate consumption of E-commerce reaching $1 billion in free market, as estimated by annual Government’s report Likewise, Techlist.asia suggests that the number of startups in Vietnam is over 1400 as of 2015 and will continue to rise the coming years Top startup names in Vietnam include Foody.vn, Tiki.vn, Sendo.vn, giaohangnhanh, vexere, , to name but a few In order for startups to survive the fact that 92% of them fail (Allmand Law, 2013), three criteria have to be met: a good product in demand, a good team and smart spending As part of the SME-dominant economy where HR practice is still lagging behind the world, how these Vietnamese startups optimize limited human resource to thrive? This still remains a question open for academic studies because few researchers have looked at this research area upon which an in-depth overview and guidance for startup founders can be built Aiming to find out part of the above question, the author chose to pick out a successful, representative startup company to examine its HR formulation and implementation from beginning to present, which is Coc Coc Web Browser and Search Engine As a Vietnamese startup that offers web-browsing tool, online map and online advertising, Coc Coc went from enormous financial difficulties, understaffing problem and low-profile status to becoming the most successful Vietnamese startup in 2015, attracting $14 million from a German media giant, only years after establishment Therefore, the study “Human resource management in Vietnamese startups: a case study of Coc Coc company” will view Coc Coc story from a human resource perspective to see how the company manage its people to achieve so much success Overall, the research contributes to current knowledge of HR concepts, HR functions, HR process put forth in a VIetnamese startup environmeFnt Coc Coc, as the selected organisation, will provide good insights and meaningful lessons for other existing and future domestic startups, informing them of costly HR mistakes 1.2 Research objectives 82 The next year that amount rose to $1.500.000 when the HR doubled in size One year later, in 2012, $9.000.000 of funding flowed, feeding in this growing organization of 200 employees Strikingly, in 2013 came $15.000.000 to Coc Coc where 300 employees were already on board This figure reflects a very steady and firm development of Coc Coc and the trust it builds and maintains with investors Had it been for such potentials, Coc Coc would not have been able to achieve so much success in such a short period of time Internet is a breeding ground for tech startup with a lot of funding available Coc Coc does not settle with its web browser and search engine In fact, it has experimented with many kinds of products, such as: the utility app Question – Answer, which is supposedly the Vietnamese version of Quora.com, 360 Go Coc Coc video, Coc Coc maps, Coc Coc ads Vietnamese is globally recognized as a blossoming market for smartphone for the past few years Coc Coc is making the best use of its competent developers to come up with more useful products/features that boost the netizens’ reliance on it And the advertising service Coc Coc provides is seen as a groundbreaking feature for browser in Vietnam That is the greatest source of income for Coc Coc with nearly half a million dollar of revenues per month For keyword advertising, it is 140 million searches/months, for Advertising by user’s search history, there are 17 million views/ day, for News Advertising: 69 million views/day, for Advertising on Coc Coc’s partners’ websites, there are 16 million views/day, for Exclusive Banners, the number is 17 million views/day It can be said that Coc Coc is well known among young users who are quick to update Internet technology, social trends and entertainment Another advantage Coc Coc should embrace is the fact that it is a technology company, which means it can create its own management system at a much lower cost than the ones that have to purchase outsourced services For example, Coc Coc built the company portal itself and is absolutely able to build an HR online site where employees can professionally keep track of their performance More than merely an HR tool, Coc Coc can go further by designing its own attendance checking software which is yet to be set up at Coc Coc, given the fact employees 83 are divided on four different floors of a tall building without getting their attendance checked Last, but not least, Coc Coc’s personnel is made up mostly of young individuals (Only 0.05 of workers are over the age of 40, according to Coc Coc’s 2015 HR report), which means it can adapt to new changes quickly and is more likely to innovate Cultural diversity and dynamism make a great recipe for Coc Coc’s development later on 5.1.2 Weaknesses Coupled with the strengths are the weaknesses of to be found at Coc Coc First of all, Coc Coc is a young company beginning from a humble startup 2016 is the second year since its first significant expansion That means rules, regulations and HR philosophies are not fully developed In fact, Coc Coc is in the middle of experimenting its HR solutions and if those are not working, it takes time to fix Also, Coc Coc has not really had an inspiring organizational culture to please current workers and attract talents outside As a Vietnamese startup and most employees are Vietnamese, Coc Coc is still much influenced by the local working style and work ethics Bureaucracy and high distance culture persists that prevents people from thinking outside the box, challenge status quo and speak up The implication is worth noting for the company now rose to more than 400 employees This, without doubt, takes great management efforts to shape the culture full of openness, fairness and activeness 5.1.3 Opportunities Opportunities are many for the Coc Coc in its own situation Those are the opportunities to recruit high-quality workers from the whole South East Asia thanks to the coming Asian Free Trade Agreements Highly experienced workers from Singapore, Philippines and Malaysia would have the chance to work at Coc Coc, which can sort out the scarcity of developers in Vietnam Coc Coc is suffering from 84 Also, Coc Coc has the opportunity to send its developers to Yandex (Russia) for on-site training, get those developers work trained by the top developers in the world and come back to Viet Nam to contribute Another business opportunity identified for Coc Coc is the forecast growth of the internet community and popularity of new-generation technology in Vietnam (Apple identifies Vietnam as the country where a new Iphone is bought at the fastest rate) Thanks to this, all the products Coc Coc has been and will build have chances to be tested and improved over time 5.1.4 Challenges The current limited ability to attract talents represents a tough challenge for Coc Coc company given the harsh competition from bigger, more established multicultural companies like big FMCG like: P&G, Unilever, Big4, OgiIvy &Mather,etc They are companies already on top of the best companies in Vietnam and has attracted the best fresh graduates for their trainee management program There are very few such great talents for Coc Coc in Ha Noi and Ho Chi Minh city While Coc Coc has not developed its own talent attraction and retaining strategy/program, it is very difficult to persuade young talents to work long term in the company Yet another challenge for Coc Coc HR is the poor quality of software university where good developers can be found As mentioned earlier, Coc Coc is a technology that aims high However, national supply of high-quality developers is short, what makes it hard for Coc Coc to realize its objective to defeat Google Coc Coc has already hired expats but the cost is huge and they are not long-term, permanent workers At the same time, top workers in the industry are invited to reputable tech companies like Microsoft, Dell, Intel, etc for attractive compensation package and foreseeable career path 85 Still, the current economic downturn and high inflation rates make it hard for Coc Coc to catch up on the compensation plans of its employees while keeping the HR budget tight and optimal 5.2 Recommendations To improve its HRM, Coc Coc needs to focus on: • Develop early on a talent attraction program (so-called management trainee program) to stand out in the labor market and draw capable fresh graduates to work for the company The best graduates in Vietnam are limited and they tend to work for top FMCG companies like Unilever, P&G and other global giant companies like Bosch, British Tobacco, Dell, Microsoft, … Management trainee is a must-have and an excellent tool to market and popularize the company’s name This program should start around May to attract talents from all over Vietnam who are about to graduate and looking for jobs For back office recruitment, Foreign Trade University and National Economics University, RMIT are best places to approach the talent pool For the technical departments, FPT and Institute of Technology and Communication are suitable places to hold career orientation seminars and quickly get the Coc Coc’s names around the student community It is good for Coc Coc to organize more career talks and give students true inspiration about a desirable workplace to spend the years after graduation Competition with leading FMCG and technology companies is hard However, the labor market is too small for Coc Coc to not step in and win over its talent pool Coc Coc should also offer free office tour, showing students around the office and give them a close look at the day-to-day activities at Coc Coc This company should sponsor more competitions and events to bring their names closer to the students who are already too obsessed with the common names • Organize more team building activities to bring the expats and local Vietnamese workers together Connection and cultural understanding are the 86 key to building an active and relaxing, fun working environment Only where people feel comfortable about themselves can they come up with wonderful ideas and solutions It is best for Coc Coc to outsource this service given its small HR team size.it is critical for Coc Coc to clearly define its culture and bring more characters into the office, can be either through interesting day-to-day routines, nice and fun decorations to give people positive feelings when they start the day fresh Since the first day, Coc Coc has never invited the whole staff of a few hundred people to have a road trip together Outside teambuilding somewhere is an excellent idea to bring expats and locals in the most natural way Besides, more company lunches, buffets and competitions are proper to unfold the many different cultures The company, similarly, can ask expats to teach their mother tongue classes to local workers and vice versa • Develop an internal HR portal where everyone has access to their daily and monthly performances and how they are getting along compared to others in the companies A company handbook also needs to be published soon in order to give the employees motivation and orientation early on • Invest on one or two another recreational rooms where the employees can gather together and relax after long working hours It is an opportunity for expats and local Vietnamese to get to know each other and more sharing Colorful, fun and exciting playgrounds like those at Google are extremely useful when it comes to nurturing creativity and create a more fun, relaxing atmosphere for co-workers • Employ more precise metrics to measure recruitment cost and training costs to keep close track of the budget and every individual’s performance, to later update on the pending HR internal site All dimensions meant to evaluate a worker’s performance, such as retention, hiring and development, new positions available, turnover (voluntary and requested), hiring cost, tenure and promotions To assess staff engagement, the company needs to compute 87 the engagement index For retaining staff, it is quality of leavers, for recruiting strong candidates that is quality of hires To know the current reward levels, it needs pay benchmarks To know if employees are delivering good customers service, external customer survey is a must The Civil Aviation Authority (CAA) approach is a perfect choice It assumes people cost is the greatest cost (>60%) The bottom lines for this are: external customer perception (ECP), Achievement of objectives and assessment of staff expertise Level 1: Workforce Data Level 2: Operational Data Level 3: Outcome measures Level 4: Performance measures Another assessment tool is HR scorecard, which is widely used across nations It is a process for assigning financial and non-financial goals or metrics to the HR-related chain of activities HRIS is another tool for improved talent management 88 Figure 5.1 HRIS checklist of HR metrics Source: Dressler, 2012 • HR audits is highly recommended for the Coc Coc compay as well HR audits re-evaluate where the company currently stands and what it has done to get to the vision According to Dressler (2012), the area of HR audit are:  Roles and head count (including job descriptions, and employees by exempt nonexempt and full/part-time status)  Legal issues (compliance with federal, state, local employment related legislation  Recruitment and selection (including selection tools, background checks, and so on  Compensation (policies, incentives, survey procedures, and so on) 89  Employee relations (union agreements, performance management, disciplinary procedures, employee recognition)  Mandated benefits (social security, unemployment insurance, workers’ compensation, and so on)  Group benefits (insurance, time off, flexible benefits, and so on)  Payroll (internal versus external payroll options, FLSA compliance)  Documentation and record keeping (HR information systems, personnel fil I-9 and other forms, and so on)  Training and development (new employee orientation, workforce development technical and safety, career planning, and so on)  Employee communications (employee handbook, newsletter, recognition programs)  Internal communications (policies and procedures, and so on)  Termination and transition policies and practices com • Regarding the recruitment process which is not professional enough, HR executives at Coc Coc had better develop a detailed plan on the interview design, of many rounds with optimal formalization Interview at Coc Coc at present only ranges from or rounds HR, as a result, needs to diversify it and adds more kinds of structure, including behavioral and structured ones If the Coc Coc HR team cannot handle the whole process themselves, it’s best if they purchase outside HR service from HR agencies for cost optimization and effectiveness Especially, the structured interview should be implemented by setting up many managers at a time and ask candidates the questions about the responsibilities, problem solving skills and experience • A technique to be introduced to the HR team is the Quantitative Job Analysis Techniques Because job analysis cannot base merely on qualitative assessment Coc Coc had better use the position analysis questionnaires This questionnaire usually has 194 items on it For example, it is about decisionmaking/communication/social responsibilities and equipment literacy, those 90 questions that are unconventional for a startup and for an average company An internet-based Job analysis can be another suggestion to save time and cost • Another extremely useful catering specifically for the small capacity of HR team at Coc Coc is the O*net tool ((http://online.onetcenter.org).HR just needs to decide on a plan, develop an organizational chart, use a job analysis questionnaire, and then job analysis from O*net can be obtained precisely Then HR can go ahead and obtain the job description The result would coout like this: Figure 4.11 O*net job analysis CONCLUSION Coc Coc is a prime example of startup that overcame its HR struggles in the early beginning to soar However, there is still a lot of room for improvement at Coc Coc 91 for better staff quality and management Coc Coc represents the startup community of Vietnam Vietnamese startups are thrilling to work for However, they are known for uncertainty and poor finance that are hurdles to retaining people To tackle this, founders had better create an HR strategy early on and showcase the people-focused of the startups, continually making sure employees are appreciated to redeem other shortcomings And it is never too early for startups to hire an experienced HR specialist to take care of people’s well-beng and satisfaction Not having the right policies in place is the number one mistake that startups fall into and follows the not hiring and firing smart mistake A solid HR plan should come ahead of any other plans before a startup gets going Vietnamese startups can learn from the Coc Coc’s case and also learn from its costly mistakes Given its early success, massive expansion was vital for the company to catch up with its potential Organizational expansion of Coc Coc, however, exceeds that of people management, even before Coc Coc itself could establish a firm and exciting culture For its reputation on the labor market to measure up to Coc Coc especially it has gone big with huge funding from investors, its culture needs to be attractive desirable After receiving large funding, Coc Coc HR team only looked for new hires based on the monetary aspects, not quite the cultural side, which was a big mistake Coc Coc is trying to fix Diversity 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Vietnamese startups manage their human resource in general Chapter 4: Human resource management practices at Coc Coc company This chapter looks at how Coc Coc sets up, maintains and develops... strategic approach That explains why Vietnamese companies on average can only take advantage of 40% of employees’ capability, as proclaimed by Chamber of Commerce and Industry of Vietnam at the