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Attracting and Keeping Staff in Vietnam
Latest Update: December 6, 2021
This is relevant for: Foreign companies employing staff in Vietnam
Human resources are the most important factor to a company's success. Finding good employees is not easy, to keep them staying may be even more difficult. Within this article, we will discuss employer branding and incentives improving the employer's attractiveness.
Turnover Rates and How to Keep them Down
In the last pre-COVID year of 2019 with "normal" business conditions, the employee turnover rate in Vietnam reached an alarming rate of 24% according to HR consultancy Anphabe. For most Western employers the situation may not have been as dire though: We mostly hear of turnover rates between 2 and 5% which seems to be very well manageable. Still, employee retention still is on the top of the agenda of Western companies because in the overheating Vietnamese HR market it is hard to find and to keep qualified personnel.
According to HR consultancy Navigos, there are basically two levers that employers can pull to attract and retain staff:
Employee benefits, e.g. salary, bonuses and private insurance. The "hard incentives", so to say.
Employer branding, e.g. corporate culture and leadership style. This are the "soft incentives".
In a 2021 survey, Navigos found that 60% favor employee benefits over employer branding (40%).
🤑 Employee Benefits (Hard Incentives)
Salary and Bonus
This is - as may be expected - the most important benefit employees look at. Especially married employees will have a keen eye on outstanding and stable remuneration to support their families. In contrast, singles might be looking more to "soft" factors. More information on salary here.
Supplementary Health Insurance
While Vietnam’s health care system is quite well developed considering its economic development stage, its public health insurance scheme leaves much to be desired. Many services at hospitals have to be paid out of pocket by patients apart from social insurance. Employees are therefore thankful if their employer grants them supplementary health insurance.
😍 Employer Branding (Soft Incentives)
Inviting key personnel to company headquarters in Europe is a well-received incentive. For staff, they offer an opportunity to get to know the home country their employer, do some sightseeing as well as some shopping for them and the extended family. At the same time the employer may use the occasion to create a deeper understanding of the employee for the company’s culture and management structure. The visit could also be arranged in the form of a global sales or sourcing meeting bringing together staff from around the globe.
Once a year, every reputable Vietnamese employer is offering a team building event to staff. For smaller companies and the management team of larger enterprises these activities will typically encompass a whole weekend. They often take place at one of Vietnam’s famous beaches or other scenic destinations and thus involve flights as well as hotel stays. The team building events are mostly “just for fun” without any strategic discussions or workshops. Staff expects entertainment with lots of relaxation, games, culinary highlights, and party. They are – in their core – a way to improve bonds within the team.
This video from Bosch illustrates quite well what team building might look like in Vietnam.
Many Vietnamese companies also offer lavish year-end parties which might show up in the calculation of Total Employment Costs. Here is an example from another German investor, AudienceServ:
Education is held in high esteem in Vietnam because of its Confucian heritage. It is therefore no surprise that staff often expects certain training measures from their employers. These may be organized internally or externally. There is an increasing number of providers of further education for professionals. Many employ international specialists offering workshops on specific topics. Following costs may be reserved annually.
As the Vietnamese HR market is heating up, employers have to offer a lot regarding offices. There are basically two factors important to employees:
Location: The office building should be located centrally in a city. This makes it easily accessible and shows the "status" of a company (because it is able to afford high rents here). More info on offices here.
Setup: The design and fitting-out of the office should be modern and high-quality. Open-plan office arrangements are the norm and well accepted. There should be space for common activities, e.g. rooms for dining/coffee or even sleeping compartments (Vietnamese love to have a lunch nap). Industrial style and simple designs, as they can be found in Europe, are becoming more and more common.
As a Confucian country, Vietnamese hierarchies know a strict top-to-bottom approach (more info here). While this is not completely challenged by staff, Gen Z is demanding a more accommodating leadership style from their superiors. And this trend seems to be here to stay. Because many companies from Western countries have been used to a more employee-centric management approach they are in an excellent position to attract talent.
Generally speaking, a company can make itself attractive by raising salaries. However, same as in Western countries personal fulfillment and work-life-balance play an increasingly important role in Vietnam, especially with Gen Z. Employers therefore should take a keen eye on their "branding" by improving on soft factors.
Navigos HR Report accessible here
FAQ - Employing Staff in Vietnam accessible here
Total Employment Costs accessible here
Recruiting Staff accessible here
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