savina's hrm policies and practices

HRM Course - Assignment Part-time MBA Program, Solvay Brussels School of

Economics & Management, Brussels, Belgium.

A case study of HRM policies and practices at Samsung Vina Electronics Co. Ltd.

(SAVINA), a subsidiary of Samsung Electronics Co. Ltd. (SEC) in Vietnam.

2015

Group 4

MBAVB9

2/28/2015

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Acknowledgments

We are grateful to our teacher, Mr. VERSTRAETEN Michel for sharing your great knowledge in HRM

with us during the class time. We also appreciate Mr. Sug-In Chang for his article ‘Study on human

resource management in Korea's chaebol enterprise: a case study of Samsung Electronics’, which

supports us very much in doing research for our assignment.

Case Study

Groups of 5 individuals

1. Description of the HR politics and practices in 1 company: HR planning, motivation

systems, career management, training, recruitment and selection, payment system and

assessment. Base your description the audit-questions proposed during the course (4 to 6

pages + appendix).

2. Critical analysis (3-4 pages): advantages and drawbacks, efficiency of the systems, links

with strategy, what should be improved and why, etc…

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Table of Contents

1. DESCRIPTION OF SAVINA’S HRM POLICIES AND PRACTICES .................................................. 3

1.1. Background of SEC and its HRM ........................................................................................................... 3

1.2. SAVINA’s HRM strategies and planning ............................................................................................... 4

1.3. Motivation system ..................................................................................................................................... 4

1.4. Career management ................................................................................................................................ 5

1.5. Training system and HR development .................................................................................................. 6

1.6. Recruitment and selection ....................................................................................................................... 7

1.7. Payment system ..................................................................................................................................... 11

1.8. Appraisal system .................................................................................................................................... 12

2. CRITICAL ANALYSIS OF SAVINA’S HRM POLICIES AND PRACTICES ................................... 13

2.1. Advantages and drawbacks of SAVINA’s HRM systems – What should be improved? ............. 13

2.2. Efficiency of SAVINA’s HRM systems and its performance ............................................................ 15

Appendix 1, 2 & 3.

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1. DESCRIPTION OF SAVINA’S HRM POLICIES AND PRACTICES

1.1. Background of SEC and its HRM

Samsung Group was founded by Byung-Chull Lee in the 1930s as a fruit and sundry-goods

export company. SEC is a chief affiliate of South Korea’s giant Samsung Group, the largest chaebol

in South Korea and one of the largest manufacturers of consumer electronic devices in the world.

Before the 1997 Asian financial crisis, the characteristics of SEC’s organizational structure were

controlled by Headquarters Executive Staff. Its name as of 2007 is Group Strategic Planning Office

(GSPO), although many still call it by its original name. Its core functions include finance/accounting,

auditing, planning, public relations, and the hiring/firing of all executives within Samsung Group. It is

inferred that a centralized GSPO decision-making style regarding affiliates and subsidiaries formed

a situation in which HRM strategies were implemented without consideration of company

characteristics. Subsequent to the crisis, Samsung Group dropped 20 of its 65 subsidiaries. It also

liquidated 236 businesses and dismissed approximately 50,000 employees.

To reform executive and employee obsession with quantitative growth and encourage creativity,

Samsung implemented the 7.4 system. The idea was to have employees come to work at 7:00 in the

morning and leave at 4:00 in the afternoon instead of working from 8:30 am to 6 pm, giving them free

time to devote to personal development. SEC employed approximately 117,000 people at home and

abroad in 2010. Roughly 66,000 employees work in Korea. Among these employees, 27,000 are

working in the R&D field, which accounts for 41% of domestic employees. The total number of local

employees overseas is roughly 51,000. They work not only in sales and production but also in small

branches or R&D offices. As shown in Figure 1, the total number of SEC employees in 2010 sharply

increased in comparison with the number of employees in 2001. However, the ratio of domestic

employees to those abroad remains more or less the same.

Figure 1. The number of employees in SEC (in thousands).

Data Source: Segae-Ilbo (January 20, 2005) for 2001, 2003, 2005; Saesayon.org (February 2, 2010) for 2010.

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1.2. SAVINA’s HRM strategies and planning

SAVINA is was incorporated in 1995 in partnership with SEC and TIE Vietnam. Operations

started in May 1996, producing CTV’s for domestic market. SAVINA began to assemble washing

machines in December 1999, refrigerators in May 2000, and then monitors in October 2001. SAVINA

insists that from 2001, CTV’s, monitors, and DVD players were its top sellers. Encouraged by the

rapid growth of Vietnamese market and a rich pool of skilled labor, Samsung Group held an Asian

strategy conference in Vietnam in July 2005. In October 2007, SEC convened another conference

in which the heads of each subsidiary in Southeast Asia participated. At this conference, they

discussed whether Samsung should establish a mobile phone production facility in Vietnam (David I

Steinberg 2010). Till the end of 2014, SAVINA has more than 600 employees are working all over

Vietnam (SAVINA’s internal data).

With an equity share of 80%, SEC puts SAVINA under control in almost fields as a subsidiary,

including HR strategies and planning. Therefore, SAVINA HR policies and practices are almost

united with the global ones in SEC.

SEC has the ambitious goal of becoming one of the world’s top 10 electronics companies in the

twenty-first century (Samsung Electronics 1997, Annual Report 1996). To achieve this, SEC must

not only adapt to survive fierce open competition but also build the capabilities to self-develop

advanced products in the global economic environment. The New Management Movement of SEC

Chairman Kun-Hee Lee, initiated in the Frankfurt Conference on June 1993, addresses these

concerns. New Management Movement is the ever-present philosophy of whichever Samsung

affiliated company one enters.

SEC headquarters requires not only a more globally open recruiting effort but also a more

balanced HR cycle. Stroh and Caligiuri (1998) support the hypothesis that global business strategies

must be congruent with all states in global HR practices (recruitment, selection, and socialization).

An imbalance in the HR cycle has proved to result in high employee turnover and a huge cost. Thus

from the supporting research, an argument can be made that enterprises like SEC, which emphasize

technological innovation, should adopt aggressive approaches to recruitment and adopt appraisal,

promotion, and payment strategies that are congruent with employee expectations and company

goals. SEC’s recruitment are trying to be globally embracing through various internships and a

recruiting direction toward those with no Korean background. There are equal in-step changes within

the appraisal, payment, promotion, and development of the HR cycle.

Besides that, SAVINA also has some adjustments and flexibilities to make its HRM strategies

and planning fit well with Vietnamese culture.

1.3. Motivation system

In order to attract and retain talents, motivation has been recognized as one of the key attributes

of ongoing human resources management process. Survey has been conducted on the topic of job

resignation at SAVINA and the result exposed that the employees left jobs with main reasons in

ranking order such as changing occupations, family reason, study, health problem and dissatisfied

with type of work. When an employee’s main wish is to be recognized by others, money is not a

powerful incentive as public praise, power or status. For incentives to be a powerful motivator, they

have to be in agreement with the individual’s desires. Different treatments applied to different types

of activities in accordance with the employees’ needs. SAVINA has applied fundamental approaches

that favorably considered.

Training: Since the world is constantly changing and short product cycle life is in this

business; the importance of employees’ training is indisputable. Through the training,

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SAVINA can define where the company wants to be as an organization and expectation

from the employees. Training is one of the tools that enhance employees’ performance

and job satisfaction. At the first phase of recruitment and selection process, SAVINA is

very much interested in qualified workers with a degree from a college or university in the

sense of having potential to perform better than others. When an employee is given the

chance to work at SAVINA, they are provided with hour-professional training a year.

Training courses have been designed domestically or internationally with well-known

instructors in order to retain talents in particular and create new products, keep up with

new technology etc. as a whole. Those who treasure training as important part of their

career management, training shall be very powerful tool to be used.

Communication: To create linkage between employees and SAVINA, internal

communication is a crucial part of HR motivation including top-down communication (from

higher to lower levels) and bottom-up communication (from lower to higher levels). Due to

enormous employees at low levels, the bottom-up communication is seldom occurred.

During the appraisal process once a year, the bottom-up communication is applied for

those dissatisfied with the work and conversation between the employee and line

managers shall be conducted.

Compensation: Payment for sales people has long been an issue; many enterprises have

struggled to discover the right approach for compensating sales people on base pay and

incentive typically. SAVINA has applied reasonable basic salary and incentive for sales

people to encourage sales people to cross the target set at the beginning of each year

and to be in same pace with the practices of direct competitors and with the market. The

employees have been given challenges and felt achievement when crossing obstacles,

praises from superior, to be promoted at higher position etc.

SAVINA believes that the employees will stay as long as they feel their contribution valued and

they are able to do meaningful work in stimulating and challenging environment. Therefore, no

specific rules or regulations applied, based on actual situations, HR policies and practices shall be

adjusted to make employees believe in the system and feel rewards can be resulted from better

performance and better effort.

1.4. Career management

As SEC, career management at SAVINA is divided in 3 steps: planning, acting and evaluation.

At the end of every year, each staff submits his own career management plan. It consists of last year

review and the plan for future. He must select either short time or long time goals or objectives for

himself. Base on it, the line manager will held a one-on-one meeting with his staff to discuss and

adjust the plan to accommodate with company’s vision. During the working year, staff can discuss

with line manager to revise his career plan. And when the year ends, he will evaluate his result with

the line manager and prepare for next year.

To develop the staffs’ career, SAVINA usually organizes some career training courses or sends

some staffs to Head Quarter for learning. It’s the reward for who delivers the good performance at

working. In another hand, SEC introduced a merit-oriented personnel system. To focus the job

grading system as a career development mechanism, promotion is determined mainly by length of

service, job performance evaluations, and awards received whereas promotion for managers has

moved more toward the ability-oriented system. The grading function is provided the meaning of

promotion into a kind of motivation for improving the ability of employees.

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Band Title

S7 1 Director

S6 1

Senior Manager 2

S5 1

Manager 2

S4 1

Assistant Manager 2

S3 1

Senior Staff 2

S2 1

Staff 2

S1 1

Junior Staff 2

Table 1. Job grading & job family at SAVINA

In general, SAVINA members will manage his career as well as the line manager and company

will help him to achieve his goals. The job grading is one of the motivation tools for the staff to improve

his personal career.

1.5. Training system and HR development

SEC believes that employee education is the core of the company’s success. CEO Lee Kun Hee

attempts to develop elites based on two principles: ‘the right people for the right position’ and

‘incentive compensation’. According to this philosophy, SAVINA has a team called Learning &

Development (L&D), belongs to HR Department. That team organizes & manages all the training

courses for SAVINA staffs. And there has 2 basic kind of training: on-boarding program & on-working

training program. The on-boarding training is created for newcomers, and the other is for current

staffs.

With on-boarding program, new employees go through in-house training at SAVINA training

center to transform a college graduate into a ‘Samsung-man’. After this course, they will know about

Samsung Group history, values, culture & profile. In general, this course helps the newcomer

understanding and adapting the SAVINA working environment.

On-working training, L&D team creates a system to control all training courses, either career

knowledge or soft skill training. The employees register themselves on system at the beginning of

every year; they can choose any courses that they feel good for them, like marketing essentials, time

management, presentation skills, etc. After that, list of nomination will be finalized and verified by

Head of department and finally approved by General Director to ensure highly participation rate of

training, hence increase effectively of training and productivity of employee after training. After that,

L&D will inform staffs about the courses that they can join and the date & time for training. Depend

on requirement of training, L&D team will choose the trainer from the employee of SAVINA or will

hire from outside. There is a final examination or evaluation at the end of training. And 3 months after

courses, the line manager will send out his appraisal about the development of his staff and the

efficiency of training course through his staff’s performance to L&D team. Base on it, L&D team will

adjust and improve the training plan of company.

Specially, due to particular situation, the company will held special training for who it’s concerned.

And moreover, SAVINA will sponsor the scholarship for good staff to attend some outside courses

as a reward for his good performance.

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In conclusion, the training system in SAVINA is very clear & helpful with the staffs. They can

choose, learn the course that fit with them and after that, they will get the appraisal about the

efficiency from his managers.

Table 2. Education system for each grade at SEC

Source: SEC’s internal data.

1.6. Recruitment and selection

The ‘buy’ strategy seeks to acquire core competencies through the external labor market (Bae,

Chen and Lawler 1998). From the perspective of ‘buy’ strategy, the term ‘globalization’ denotes

overcoming the shortcomings of a small home-base talent pool through extensive recruiting of foreign

born/educated talent. Efforts to globalize the selection process of the SAVINA’s HR cycle are seen

through the acceptance of a more diverse applicant pool, implementation of international internship

programs, and greater overseas recruiting efforts. Given SAVINA’s position, one of its top priorities

is to invest more in attracting and retaining a highly talented workforce from abroad to fill its core

business needs, focusing especially on qualified scientists and engineers. In particular, it would seem

that the so-called war for talent (that is, an attraction strategy to recruit top talent) is the most

prominent issue of late at SAVINA. SAVINA hires super-competent people, and its ability to assign

employees to divisions most suitable to their strengths is relatively supreme compared with other

Vietnamese companies.

In 1957, Samsung started gong-chae, an open employment system that makes employment

opportunities public through advertisements on television, in newspapers, and on the SEC

homepage (Lee 1997). This system is not very different from the hiring system of Westerners, but

makes a substantial impact on the traditional system. Gong-chae usually starts with written

examinations of English proficiency, a general knowledge test, and an essay test on specific topics

(Lee 1997). In a bid to evaluate candidates, Samsung developed the Samsung Aptitude Test (SSAT)

with the aim of selecting those most apt for working in Samsung. SSAT consists of an SAT segment

and a personality segment. The SAT section tests the students on Korean, mathematics, statistics,

reasoning, mental faculties, and current event knowledge. To evaluate innate personality

characteristics of candidates, SAVINA employs particularly structured interview questions and

observations to evaluate factors such as personal background, past behavior, and perception of

future situations. Evaluation tools consist of problem-solving assignments, case analysis, and group-

based discussion. In addition to traditional recruiting tools, SAVINA recruits college students and

graduates through scholarships and internship programs. To entice star players to work at SAVINA,

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high-level and sometimes even executive-level positions are offered to draw them away from other

companies.

Basically, to recruit and select a vacancy position, HR Department (HRD) and related Line

Manager (LM) will collaborate closely and implement all the steps as follows:

a. Recruitment Process:

To start the process, a recruitment request will be submitted to Head of Department

(HOD) and HR Manager (HRM) to get approval by LM. HRD is responsible to check

the correspondence between the requirements and the yearly approval headcount

budget and yearly approval salary budget. HRM will inform the salary range of vacant

position to related recruiter.

HRD is responsible for searching the candidates to find out at least 5 qualified

candidates for the first Test.

New employees are recruited through a number of channels as bellows:

- Internal:

A vacancy announcement will be informed internally to get referral.

Searching the available internal database to find the appropriated candidates.

- External:

If the internal sources do not meet the demand, HRD will use another source:

headhunter, recruitment service, online applications (Samsung’s website, Job site)

to have qualified candidates.

Global Scholarship Program (GSP)

In order to select outstanding young people and nurture them into future leaders of

operations.

- The rule of recruitment:

Fair opportunities for all candidates.

Keep confidential of related information of candidates.

b. Selection Process

Application review:

- Submitted documents are reviewed to check the authenticity and whether the applicant

is eligible with recruitment’s requirement by HRD.

- Key criteria: qualifications, candidate’s background, relevant experience,

- Make phone calls / send invitation letter to qualified candidate to arrange the 1st Test.

SAT: Global Samsung Aptitude Test

- Candidates is requested to do a Samsung Aptitude Test which including 45 questions

in about 1 hour. The content of the test depends on the position of candidate, basically

it have two parts: the basic relevant skills, and logical reasoning.

- The system will access the candidate base on the defined ranking.

- HRD follow this process, and keep in touch with the qualified candidates to move to

next steps.

The first face to face (FTF) interview : HR round

- The candidates who passed the test will be invited to a face to face interview with HR

(usually HR recruitment specialist) in about 10-15 minutes.

- The main purpose of this interview is to check the concordance between the candidates

and the company’s culture/ company’s vision; identify the language proficiency,

communication skills.

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Reference check:

- HRD will make a reference check by phone, after get acceptance of candidates.

The second FTF interview:

- The qualified candidates will be interviewed by LM.

- Duration: 45 minutes for each selected member.

- The content of questions based on C, C++, Java, Mathematical puzzle. Salary will be

mentioned in this round.

- Interview report form must be completed by all Interviewers, clarify the strengths,

weakness of candidates, expected salary.

The third FTF interview:

- Usually HOD will interview the almost selected candidates.

Select and offer job.

According to the result of each round (the filled in - interview report form), HOD, LM, HRM

will select the suitable candidate and send the offer letter to him/her.

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Figure 2. Recruitment and selection process of SAVINA

Source: SAVINA’s internal data.

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1.7. Payment system

Total rewards at SAVINA are relatively high considered comparing to other enterprises in

Vietnam. The rewards can be in form of cash such as basic salary and incentive or in forms of

benefits and non-financial rewards.

Basic salary

Basic salary differences among employees can be interpreted that weighted compensable

factors are identified during job evaluation to point out which the positions/employees

should be paid. Some compensable factors that favorably considered are responsibility,

years of working experience, functional expertise, challenging job, education (as potential

to perform well), and cost of living in Ho Chi Minh City, etc.

Furthermore, the basic salary has been compared to market line from time to time to be

sure that it is fair and reasonable to the employees. As a result, basic salary will be ranged

in a certain extent.

Incentive

Incentive regulation system is paid according to collective results including productivity

incentive and profit sharing. Productivity incentive varied by the division and individual

based on evaluation of management performance and based on accomplishment of

management objectives semi-annually. In addition, the employees can also receive cash

bonuses as part of profit sharing scheme which distributed up to 50% their annually salary

for exceeding a target level among all employees according to the performance of their

divisions; however, the average bonus has been in range from 8% to 35% of annually

salary in general. Since incentive has been described as percentage of total profit after

tax, the incentive budget can be assured that will not be exploded.

Even though incentive is not a great tool to motivate employees, SAVINA believes that

such incentive motivates employees to operate faster and encourages salesman to

perform well to reach the sales target appointed at the beginning of each year. In the same

pace of other enterprises, incentive has significantly applied in sales department in

SAVINA as well.

Benefits

SAVINA offers benefits required by law as well as internal benefit programs to enhance

quality of life for employees. The employees can take advantages of numerous benefits

including social insurance, family medical insurance, physical exams, financial aid for

medical costs, and use of leisure facilities such as fitness gym, library, entertainment etc.

Non-financial rewards

The employees are valued at SAVINA; therefore, they can motivated by non-financial

rewards such as appreciation from superior, feeling of usefulness, authorization to act at

certain extent etc.

SAVINA’s payment system has been highly deemed as formalization in comparison with

local enterprises due to subjective judgment on payment or cutting payment budget. In

fact, SAVINA enjoys stable labor forces outlook due to good payment applied. Feeling of

fairness on payment system among colleagues and on market line have also built up and

retained employees in long term relationship.

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PAYMENT SYSTEM AT SEC

Source: Appendix 2, p.30.

1.8. Appraisal system

Individual SAVINA performance appraisal, used mainly for promotional or/and payment

purposes, is conducted at different times throughout the year and uses different criteria. Within the

appraisal section of the SAVINA HR cycle, there are 180 or 360 performance reviews, as the system

is heavily influenced by a merit pay system and an incentive system.

Employee performance appraisal at SAVINA is divided into performance appraisal and

competency appraisal. The performance evaluations are conducted twice a year for promotions and

bonuses in June and November. Competency evaluation is done yearly in September. The

consequences of performance and competence evaluations exert a profound impact on career

success. The performance appraisal is first evaluated by the direct supervisor and then by the higher-

level managers or executives. In contrast to the performance appraisal, the first evaluators of the

competency appraisal are higher-level managers or executives and the second evaluator is the direct

supervisor. The first evaluator in both appraisals determines the final grade. Performance appraisal

is mainly founded on the improvement of quality on behalf of the achievement of quantitative

objectives, while competency appraisal is founded on developing the personnel ability required to

take the company well into the twenty-first century. In the performance appraisal, however, there are

other things to note. For new employees, the first two years of employment involve an employee

training and development period during which there is no performance evaluation. Instead, there is

a concentration on the development of morality, character, aptitude, and ability.

Manager evaluation in the competency appraisal focuses on three factors: employee-oriented

characteristics, problem-solving competence, and leadership skills. Factors of employee-oriented

Total rewards

Financial rewards

Basic salary Incentive

Productivity Incentive Profit share

Benefits

Non-financial rewards

Appreciation/ praise from superior/ Title

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characteristics include personality, good human nature and morality, the ability to meet challenges,

concentration, progressiveness, effort for self-improvement, and a willingness to share knowledge

and experience with others. Problem-solving competence is made up of plan-making ability,

decision-making ability, and the ability to manage organizations and motivate affiliates. To increase

credibility and fairness, SAVINA introduced a 360-degree evaluation method. The opinions of

employee peers including both colleagues and subordinates are now deliberated along with the

supervisor opinions in determining the final appraisal grade. The manager attempts to encourage

subordinates and, in association with them, finds ways to improve upon their weaknesses. SAVINA

introduced self-assessment appraisal in this newly developing appraisal system in a bid to increase

employee motivation, appraisal fairness, and career development.

2. CRITICAL ANALYSIS OF SAVINA’S HRM POLICIES AND PRACTICES

2.1. Advantages and drawbacks of SAVINA’s HRM systems – What should be improved?

Base on the HRM policies and practices at SAVINA, the advantages and drawbacks of the HRM

systems are listed as below:

Criteria Advantages Drawbacks

Career management

- It’s a clear job grading structure. - The career management rule is very helpful for the staffs. - The line manager guides a lot for the staffs to achieve his goals.

- It takes so much time to go to

the next level. - It conflicts between the current staffs & the new hired employee with higher level.

Motivation

- Good working environment. - Professional training courses provided.

- Relatively low links between the effort and outcome to achieve sales target. - Seldom bottom-up communication. - High management level positions have been appointed by Head Office.

Training

- SAVINA creates Learning & Development team to manage all training courses. - The on-boarding program is helpful to the newcomers for quick adapting. - L&D system is clearly for all staffs with a lot of courses.

- Due to L&D schedule, some staffs cannot join their courses because of not fit time. - It takes time for staff to register, for Head of Department to approve. - Sometimes, the employee cannot join the course they want because their manager doesn’t approve for them.

Payment

- Encourage collectively result as a team. - Reasonably basic salary to cover living expenses. - Good policy of benefits.

- Frustration of high sales target for incentive payment. - Salary differences in terms of education such as university or college or vocational training degree.

Appraisal

- Transparent policy of appraisal.

- With enormous employees, performance appraisal and competency appraisal may be time-consuming.

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- Top-down appraisal applied only, no other methods from colleagues/self/customer appraisal.

Recruitment and selection

Recruitment and selection process

Formal and rigorous process, it help recruiter select suitable person with real capacity.

- Long procedure, take time.

Internal database

Rich internal database: recording system records all candidates’ information in every step of the process

- High cost to control and manage the database system.

Internal application for other position is not allowed

Stabilize the existing structure. - De-motivate some employee, ‘transmotivation’, the risk of leaving.

Career management suggestion:

As company’s rule, promotion is determined mainly by length of service, job performance

evaluations, and awards received. In this part, we will focus on length of service. Depends on the

level, the required time to be promoted to the next level is different. For example, to be promoted

from senior staff level to assistant manager level, minimum 3 years working for SAVINA is required.

Firstly, some employees will be disappointed with this one. They feel it’s not a good policy because

although they achieve a great goals, they cannot move to next level if don’t have enough limit time.

Secondly, they feel unfair between them and the new hired employee. Some of newcomers can get

the higher level while the current staffs need to wait some years to get it. And one more point, some

employee resigns to join the smaller company to get the high title then get back to SAVINA with the

new title. To avoid this point, SAVINA should get the flexible policy for promotion, there have not the

required time. Besides, should promote the current staffs more than hire the new ones.

Motivation suggestion for no linkage between effort and outcome to perform sales target:

In the same pace with market, SAVINA has also offered incentive. This policy could be explained

that:

SAVINA has been in charge of sales across Vietnam; therefore, the focus on sales volume

has been highly concerned.

Direct competitors have also offered incentive in accordance with employee’s

performance.

Comparing to foreign enterprises in ASEAN, Vietnam is one of the low pay countries in

terms of manufacturing and non-manufacturing industries (referring to Table 3).

Based on the above reasons, incentive payment is necessarily applied in SAVINA particularly

and in Vietnam as a whole. SAVINA’s incentive payment has been allocated in accordance with the

employee’s performance; however, sales target that is the key factor for employee appraisal at the

end of each year has highly been set. Since unachievable target, the employees have felt frustrated

to perform the tasks and linkage of efforts and outcome cannot be seen. Bad impact could be on

employees in extrinsic and intrinsic forms. Sales target ought not to be extremely set at unachievable

levels but reasonable levels in regard of Vietnam macro-economy, legal frame, politics situation,

competitors, electronic device industry, consuming Vietnam market, market share, sales volume

previous year of SAVINA, input material, seasonal consumption etc. Realistic sales volume target

could be more effective and efficient than unrealistic one and the employee could be motivated inside

and out.

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(Unit: US. Dollars)

Countries

Manufacturing industry Non-manufacturing

industry

Production worker

Engineer Manager Staff Manager

Singapore 26.285 48.435 69.548 39.119 72.640

China 8.204 13.045 22.921 15.411 35.786

Malaysia 7.630 15.641 29.499 14.439 30.829

Thailand 7.120 12.444 25.143 11.049 26.109

Indonesia 4.481 7.215 16.468 7.263 19.213

Philippines 4.012 6.611 15.807 7.678 19.742

India 3.618 8.693 20.123 8.615 23.513

Vietnam 2.989 5.800 13.499 7.848 18.452

Myanmar 2.062 4.700 12.312 5.178 13.776

Cambodia 1.887 3.996 9.054 5.599 13.811

Laos 1.718 2.615 12.153 4.802 17.422

Table 3. Employee Expenses in Foreign Investment Enterprises

Source: VNExpress, Vietnam 2014.

2.2. Efficiency of SAVINA’s HRM systems and its performance

Most researchers agree on the positive link between HRM systems and their performance. As in

the cases of the Kanban system of Toyota Automobile Corporation, the Work-Out program of GE,

and the Human Resource Development System of IBM, these firms have created HRM systems and

practices adaptable to a worldwide market on the basis of their own unique organizational culture.

Furthermore, they are constantly seeking changes and innovations to adapt to the changing

management environment. Results of a series of in-depth interviews with SAVINA’s manager, found

that the five most important core factors that influence SAVINA’s HRM system’s strong corporate

performance are more flexibility and team-orientation thus faster and more fluid HRM practices, the

training of the workforce, strong owner-manager leadership style, an excellent payment system, and

cooperative and participative management.

With regard to the first core factor, the greater flexibility, and team-orientation, the faster and

more fluid the HRM practices are, the more likely it is that the changes in the right direction will occur.

The flexibility of HRM practices such as team-based job designs, a flexible workforce, quality

improvement practices, and employee empowerment has led to better corporate performance.

Specifically, fast decisions according to environment changes have often kept the limited resources

from flowing into the areas that did not desperately need them.

The second HRM core factor for corporate performance is strong employee training. According

to the interviewees, training of the workforce is the best way of investing within SAVINA. SAVINA

was able to recruit highly qualified personnel from a large pool of people who preferred international

business. Through Employee Educational Support Systems and the International Management

Research Institute, which SAVINA has supported from their inception, SAVINA was able to train

talented employees into competent international businessmen who, in turn, have strengthened the

international competitiveness of the company.

The third core factor that allows the HRM system to produce strong corporate performance is

the owner-manager leadership style at SAVINA. In the case of SAVINA, corporate performance has

been strongly influenced by top managerial leadership style, especially by the owner-manager.

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The fourth core factor is an excellent payment system. For regular employees and assistants,

SAVINA adopts an efficient salary system. Their salary and welfare is far above the market average,

which reinforces these experienced mechanics’ loyalty to the company and, in turn, enhances

performance.

The fifth core factor is the reinforcement of cooperative and participative management in the

fiercely competitive environment within SAVINA. Through cooperative management, not only the top

management but also the workers have been able to agree on common goals and assume

responsibility for achieving these goals. In the process, they have been able to rectify various

problems in the workplace, enhance workers’ commitment and morals, and eventually improve the

organization’s performance. From HRM strategies’ perspective, one junior manager in SAVINA’s

HRM department argued that corporate performance is noteworthy as ‘it is the result of a very

carefully crafted strategy following an evolutionary learning process from simple to more complex

technologies, prevailing employees’ appraisal systems, with strong emphasis on individual as well

as teamwork, and utilizing synergy effects by synchronizing the variable strategies of different

dimensions, all supported by SAVINA’s highly disciplined corporate culture’./.

References:

- Bae, J., Chen, S., and Lawler, J. (1998), ‘Variations in Human Resource Management in Asian

Countries: MNC Home-Country and Host-Country Effects,’ International Journal of Human

Resource Management, 9, 4, August, 653– 670.

- David I Steinberg (2010), Korea's changing roles in Southeast Asia: expanding influence and

relations, Singapore: Institute of Southeast Asian Studies; Seoul: ASEAN-Korea Centre.

- Lee, B.G., Gang, H.C., Lee, L.W., and Cho, J.H. (2002), Samsung Rising, Seoul: The Korea

Economic Daily Co.

- Lee, H.C. (1997), Organizational Behavior, Seoul: Segung Press.

- Sug-In Chang (2011): Study on human resource management in Korea's chaebol enterprise:

a case study of Samsung Electronics, The International Journal of Human Resource

Management.

- Stroh, L.K., and Caligiuri, P.A. (1998), ‘Strategic Human Resource: A New Source for

Competitive Advantage in the Global Arena,’The International Journal of Human Resource

Management, 9, 1.

savina's hrm policies and practices

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