DEVELOPING AND TRAINING HUMAN RESOURCE IN PVFC (MASTER OF BUSINESS ADMINSTRATION THESIS)

ace, while making sure that things are going all right. I always found her highly accessible and I thank her for the weekly meeting that kept me motivated and suggested idea to complete my thesis. Secondly, without the kind support of board of directors, managers and employees of Petro Vietnam finance company (PVFC) for their participation in my survey, my thesis never becomes such a real case so I would like to express my great acknowledge to them. Moreover, I thank Ms Duong for reminding me to submit thesis on time and others supports in the process of writing thesis. Last but not least, I also want to express my thanks to my family who gave me enthusiastic support and shared house work with me during the last two years while I was doing my master study. Thank you very much. Hanoi, May 2008 Nguyen Hong Nhung TABLE OF CONTENTS LIST OF ABBREVIATIONS: HR : HUMAN RESOURCE HRM : HUMAN RESOURCE MANAGEMENT PVFC : PETRO VIETNAM FINANCE COMAPANY WTO : WORLD TRADE ORGANIZATION MOF : MINISTRY OF FINANCE MPI : MINISTRY OF PLANNING AND INVESTMENT LIST OF FIGURES Page Figure 1-1: Number and percent of people evaluate the suistability between current job with own ability. 33 Figure 1-2: Number and percent of people evaluate the suistability vailable knowledge between with current job. 34 Figure 1-3: Number and percent of people evaluate the satisfaction of their experience and skills with their current job. 35 Figure 1-4: Number and percent of people evaluation about the suistability between PVFC’ HR ability with their current job. 36 Figure 1-5: Number and percent of people rating about PVFC’ HR ualification. 37 Figure 1-6: Number and percent of people rating about skills and nowledge of PVFC’s HR. 38 Figure 1-7: Number and percent of people - the training contents which attended suitable with PVFC’s business objective sand necessary for job. 47 Figure 1-8: Number and percent of people - the training programs which have attended good to improve work performance. 48 Figure 1-9: Number and percent of people - put in order the following items which make to improve development and training activity of PVFC. 49 LIST OF TABLES Table 1.1: PVFC’s business results from 2002 to 2006 29 Table 1.2: Scale and structure of PVFC HR in terms of education/ unit (person) 31 Table 1.3: Scale and structure of PVFC HR in term of age 31 Table 1.4: Responding percentages of PVFC’ staff 33 Table 1.5: Responding percentages of PVFC’ staff 35 Table 1.6: Responding percentages on policies and their impact to quality of work performance 40 Table 1.7: Number of staff participated in training courses over the years. 44 Table 1.8: Staff point of views on content of training courses. 45 Table 1.9: The people participate in the training courses in VN and foreign country. 46 Table 1.10: The cost of training activity in VN and foreign country. 46 Table 1.11: The detail of training activity in foreign country in 2007 in PVFC 50 Table 1.12: The investment of training HR in PVFC 51 LIST OF APPENDICES Appendix 1: Survey Questionnaire (for staff) Appendix 2: In depth interview questions (for managers) Appendix 3: The organizational chart of PVFC. CHAPTER I: INTRODUCTION 1.1 Necessity of research Human resource is one of the most important resources in every organization because of its human aspect. Having a good human resource creates big advantages for company to get success on the market. Management of Human resource is both art and science. A company which managers people well will be possible to get a high quality human resource. Of all contents of human resource management, development and training of HR is one of the most necessary and important ones for an organization to improve quality of its HR. Petro Vietnam Finance Company is a state owned company, a non-banking credit institution and a wholly owned subsidiary of Petro Vietnam, was established according to the Decision No 04/2000/QD-VPCP dated 30th March, 2000 by Director of Government’s Office. PVFC is now operating with a head office in Hanoi and 8 branches in Vung tau, Da nang, Hai phong, Can tho, Nam dinh, Sai gon, Thang long, Hanoi, with a total of 1200 employees as a date. Its objective is to become a top-ranking financial institution in Vietnam. By 2015, PVFC will have to become the most important Finance Holdings and the backbone of Petro Vietnam and to meet the maximize demand of Petro Vietnam’s projects. PVFC’s strategy throughout the development process relies on its fame, financial capability, and financial demand of Petro Vietnam, making PVFC become a leading financial group, in both capital scale and banking technology. Which fulfill the requirement to cooperate and integrate with other financial institutions in Vietnam and in the world. Being able to meet the investment demand, capital investment management and operating in financial market, capital market of Petro Vietnam. After joining the World Trade Organization of VN in the 1st 2007, there are many new banks and financial institutions established in Viet Nam. In the situation new, PVFC has to face with the following difficulties: Firstly, intense competition from domestic credit and financial organizations who are increasingly improving their organizational scale and structure as well as from oversea financial corporations. Secondly, threats of hard competition after Vietnam became a member of WTO. Those are the competition from foreign competitors who have strong financed capacity, advanced technology and especially business experiences. Thirdly, there is a shortage of PVFC’ resources to cope with the development. Especially, human resource _ key success factor are representing the problems that reduce the development. The company has no long term human resource development plan. Staff of PVFC are educated but lack of experience. Training plan are very poor. Training content is not updated. For the above reasons, development an training of HR is always the urgent and the first priority of PVFC. 1.2 Research objectives This thesis aims to get the following objectives: To systematize theory relating on development and training of HR. To identify the requirements of human resource to keep up with the future situation and business objectives of PVFC. To evaluate quality of work performance to determine actual situation about skills, knowledge and attitudes of the staff of PVFC. To define the specific gaps between current situation and future requirement as well as find out problems of human resource development and training of PVFC. To propose some appropriate recommendation for improving training activities and developing human resource in PVFC. 1.3 Research question What are the requirements for developing HR in PVFC to meet its future development? What is current situation of quality and performance of HR in PVFC ? What problems are PVFC facing in development and training of its HR that affect to quality and performance of HR ? What should be done to improve quality and performance of HR in terms of HR development and training ? 1.4 Research methodology This research has used both primary and secondary data. The secondary data has been collected through PVFC business report, reports and studies done by the ministry of finance, ministry of planning and investment, articles in vietnamese and foreign newspapers and magazines, textbook and internet. The primary data were collected by surveys and in depth interviews. The quantitative surveys were completed with 150 questionnaires sending to PVFC’ staff in Hanoi, Ho Chi Minh, Can Tho, Vung Tau, Hai Phong, Nam Dinh and Thanh Hoa province, 100 of which were return. The in depth interview were also planned to enrich the data collected and bring more explanations to the results concluded through the surveys. The questionnaires are designed into 2 main parts: Part 1 aims to collect general information about the position, job title, knowledge and practical experience of the respondents; Parts 2 aims to get the respondents’ opinions on PVFC’ current situation of quality and performance of HR and their need for developing and training , and their suggestions for improvements; The questionnaire was originally made in Vietnamese and later on was translated into English as attachment to this thesis. With the aim to support for basic data and information collected by quantitative methods above,16 in depth interviews were made to PVFC’ CEO and managers of PVFC. Beside getting information about current situation of HR and HR developing and training at PVFC, the questions for manager also aim to know the requirements and PVFC’ s HR developing strategy to meet its future business development. Based on gap between current situation and future requirements, the appropriate suggestions will be proposed to improve HR developing and training activity. The author of this thesis is a member of PVFC who did not face any barriers in collecting the data and have succeeded in getting valuable information for the research. Analyzing data: Based on the information collecting from interviews and survey, the thesis used quantitative and qualitative methods to analyse and process the information. The excel program has been used. 1.5 Scope of research Content of the thesis focuses mainly on development and training of HR. However, to have a deep understanding the development of HR, it is necessary to identify and analyse other factors that impact to the process such as HR planning, recruitment, motivation and evaluation of HR. The research takes place within the head office of PVFC and 8 braches in Da Nang, Ho Chi Minh, Vung Tau, Can Tho, Nam Dinh, Hai Phong, Thang Long and Sai Gon. The data are collected for the time period of 2002-2006. 1.6 Limitation A more appropriate survey requires to be done with larger sample size, in as much as possible PVFC over the country. With this reason, the PVFC’ staff are studied to get data for evaluation and taking sample. Accuracy of information is also constraint for this research because of change in management board of PVFC as well as intention of interviewees.One more thing can be considered, as limitation has been the assessment to the previous study so far. The policy restriction has prevented the researcher to approach some documents that will help to define more correctly actual conditions and to give more comments in this study. 1.7 Structure of thesis Apart from acknowledgement, table of contents, executive summary, list of abbreviations, list of figures, list of tables, list of appendices, the main body of the thesis is divided into 4 chapters as follows: Chapter 1: Introduction Chapter 2: Theoretical Background. Chapter 3: Human resource development and training activity in Petro Vietnam Finance Company. Chapter 4: Recommendation for improving HR development and training activity at PVFC. CHARTER II: THEORETICAL BACKGROUND 2.1 Overviews of human resource and human resource development Human resource is the perceived need, on the part of a member of large organization, to improve their competitive positions both nationally an internationally. Today, the HR plays a vital role in the organization’s strategic planning process. This trend is increasing pressure from the global marketplace and from stockholders, both of which push for ever-higher levels of productivity and profitability. This pressure is compounded by increased recruitment and benefit costs, an aging workforce, an increasing number of health and safety regulations, and an increasingly litigious society. Human resource management can be defined as that part of management concerned with: All the decisions, strategies, factors, principles, operations, practices, functions, activities and methods related to the management of people as employees in any type of organization; All the dimensions related to people in their employment relationships and all the dynamics that flow from it. Human resource management is the effective management of people at work. HRM examines what can or should be done to make working people more productive and satisfied. HRM is specifically charged with programs concerned with people, the employees. Human resource management is the function performed in organizational and individual goals. Whether a human resource management function or department exists in a firm, every manager must be concerned with people. Human resource management is a necessary function. Effectively performed, it can make the difference between successful and unsuccessful organization. HRM activities are now tied to the bottom line, where it is considered a “profit center” rather than a “cost center.” The HRM function was merely a tagalong unit in many organizations until upper management recognized the critical role that people play in meeting organizational objectives. Today, the importance of recruiting, selection, training, developing, rewarding, compensating, and motivating is recognized by managers in every unit and functional area of an organization. Effective HRM add value to the delivery of goods and services and to the quality of work life for employees, by helping to ensure continuous organizational success in transformative environments. Effective HRM helps stimulate development of HR. Development of HR refers to the development acquisition of knowledge, skills and behaviors that improve employees ability to meet changes in job requirements and internal or external customer demands. Human resource development combines administration with the management of resources. Integration is one of the key features of human resource management. The first role played by human resource development is being a support system. It can provide guidance and supervision for people management in the workplace. The second role is that of human resource. This means that it will include necessary tasks such as training, development, recruitment, motivation, evaluation and planning. The next role is strategic management, playing an important part within the corporate strategy. Strategic human resource management is a key part of the decision making cycle. When discussing the subject of human resources, there are many terms that look similar, but have different meanings. One example of this is human resource development and personnel management. It would be easy that two terms have the same meaning, but this is not the case. The differences between human resource management and personnel management are simple enough. Human resource development is a proactive approach. By planning for any problems, these problems can be avoided. Personnel management, on the other hand, is a reactive approach that only deals with problems as they arise. Personnel management considerations are fully integrated with strategic decision making in the human resource development model. Human resource development is more concerned with training and development, while personnel management is a form of support system. Features of human resource development: HR development has the following key features that classify it from personal management: Human resource development is seen as proactive and long term Human resource development facilitates employee commitment Human resource development is seen as essentially unitary, involving no apparent conflict of interest between employers and employees. Human resource development operates most effectively in organic, fluid organizational structures Human resource development is essentially focused on maximizing the contribution of human resources to organizational effectiveness. The role of human resource development within the new business environment as follow To integrate the aspects of the new business environment with the existing policies and strategies of the organization. Human resource management must nurture and develop a company intellectual capital and recruitment , retain, develop and manage the human assets for the company to have a competitive advantages. 2.2 Nesecity of development and training human resource in business Developing and training HR are processes that attempt to provide an employee with information, skills, and an understanding of the organization and its goals. Developing and training are designed to help a person continue to make positive contributions in the form of good performance. Developing and training HR always require top ranking, decide to the success of businesses and develop human potentiality. It’s important role as follow: Developing and training HR help improve skills, knowledge and behaviors of employees make them be ready to do new tasks and respond quickly with changing of environment. It provide companies with new labor force to fullfil the empty spaces of business, to satisfy the HR requirement of business. Developing and training HR builds stable and dynamic business environment even in case the company lacks of key persons to do business. Developing and training HR help reduce/ monitoring and controlling cost, increase quality of work performance and reduce accident because employees are trained well. The quality of HR in almost Vietnamese business today is limited, that is not enough to do their job as requirement of new development. To repair this, it is very necessary to improve quality of development and training HR in business. 2.3 Content of training and development human resource in business Training and development HR have 3 main parts: performance appraisal, training and development. Performance appraisal is a process by which a superior valuates and judges the work performance of a subordinate. Performance appraisal systems include the processes and procedures involved in implementing, managing, and communicating the events involved in performance appraisal. The purpose of performance appraisal: to improve employee performance in the present job, to prepare employees for future opportunities that may arise in the organization, then to provide a record of employee performance that can be used as a basic for future management decisions. Performance appraisal data are valuable for use in every human resource functional area such as Human resource planning: a well designed appraisal system provides a profile of the organization human resource strengths and weaknesses to support the promotion process; Recruitment and selection: Provide for evaluation applicants responds obtained through behavior description interview; Training and development: Point out an employee’s specific needs. The task of determining training and development needs; Career planning and development: may be viewed from either an individual or an organization viewpoint. Managers may use such information to counsel subordinates and assist them in developing and implementing their career plans. Training is a form of education to which the following learning principles can be applied: Trainee must be motivated to learn. Trainee must be able to learn. Learning must be reinforced. Training must provide for practical of the material. Material presented must be meaningful. Material taught must transfer to the job. Management development is the process by which managers gain the experience, skills, and attitudes to become or remain successful leaders in their organization. Training is one of the important activities of developing the human resource that the company should be aware, but we can not talk about HR development without the presence of other important factors that the company should take into account such as HR planning, recruitment, motivation and HR appraisal. 2.4 Method of training and development human resource in business After needs and objectives have been determined and trainees and trainers have been selected, the program is run. This phase includes selection of methods to be used and the actual training and development method. There are two main methods of training and development human resource: The first is on the job training. On the job training is common method of training. It is used by many company. It is an economic way in training. Staffs learn through observing their manager performing the job and try to imitate their behavior. On the job training can be useful for training newly employee upgraping experienced employees skill when new technology is introduced, cross training employee with a department. On the job training (for managers, these include coaching and counseling, transitory experiences and transfers and rotation) Advantages of the first method on the job training+ Useful for training newly employee upgraping experienced employees skill when new technology is introduced, cross training employee with a department. + Less costly + Easy to organize and train many people at the same time Disadvantages of the first method on the job training + The teacher not have experience about training + The teacher teach not enthusiasm The second method is off the job training, Off the job training is training methodology based on available training course of outdoor organization. It means that the company sends their employee to attend seminars, training course in university or training center. This method is valuated tool to help staff to exchange experience, upgrade their knowledge. It spends a lot of money when company send employee to oversea for training. Off the job training has methods such as ( discussion, programmed instruction and computer assited technologies including virtual reality multimedia based training, distance learning and video training. Internet is developing very fast so that distance and internet based training often are used. Distance learning methods include traditional paper as well as internet based classes. Advantages of the first method off the job training: + attach every staff enjoy, express different point of views, do the decision + help staff to analyse, do problems practical Disadvantages of the first method off the job training + Costly very high Most organizations use coaching and counseling as either a formal or in formal management development. 2.5 Process of HR training and development in business. The process of HR training and development consists of the following steps: Training needs assessment Training design Training implementation Training evaluation Training needs assessment: Training needs assessment analyze the organization’ needs; the knowledge, skill, and ability needed to perform the job; and the person’ needs. The organization needs assessment requires an examination of the long or short term objectives of the firm. Training needs assessment shall be conducted for all staff as part of the annual performance development review. New staff may need to have their training needs assessed more regularly. Training needs assessment for all staff is also conducted to indentify staff need on capacity building and to give staff on opportunity to have their full participation in the discussion on the need. All employees are encouraged to discuss the training from which they feel they could most benefit. Wherever possible, staff will be offered training relevant to their positions. Training is an opportunity not a right and therefore it is not possible to offer staff training in skills which are not directly linked to there positions. Training design: Training design is a process that requires a blend of instructional learning principles and media selection. After assessing training needs, it is necessary to design courses for training such as setting up training objectives, methods, materials and contents. All training facilities are essential for any training course and need to be prepared carefully. Human resource department can not carry out this step. Sometimes, in house training course to help staff understand clearly on jobs. It can save cost for the organization but does not meet staff expectation on training effectiveness. Training implementation: Location, time and other logistic arrangement for training are informed to staff timely. The teachers prepare not only training contents/ material but also other related knowledge/ suitable method/ skills. The subjects of training also are identified suitable to the content of training. Training conduction is carried out right after every preparation steps are ready. However, it can not be realistic occasionally because almost staff is requested to priority other urgent work. Besides, no full participation is sometimes happened in organization. Staff can not take part fully in training course because they are really busy at work so they have to take into account any time for work if the training course is not compulsory. Thus it wastes of cost for conducting the training and also impacts to the training effectiveness. Training conduction is difficult to plan and implement effectively. Training evaluation: In order to build standards for training evaluation, the organization need to analyse job analysis/description. Job analysis is information about a position to be filled that helps to identify that help to identify the major job requirements and links them to skills, education, training…. to success perform the job. The purpose of the job analysis is to identify the experience, education, training and other qualifying factors by candidates who have the potential to be the best of the job to be filled. It includes as follows + What duties does an employee carry out ? + Where is duty done ? + How does that employee do that duty ? +Why must that duty be carried out ? + What standards of level are necessary to carry out that duty ? How to write a job analysis and job description? Begin by understanding the requirement of the job being filled. What kind of experience and education are needed? Do a job analysis covering the following areas + How the job will be done ( the methods and equipment to be used) + The reason the job exists ( an explanation of job goals and how they relate to other positions in the company) + The qualification ( training, knowledge, skills) Training evaluation are two procedures: Establishing measures of success (criteria) and using evaluation research designs to determine what changes have occurred during the training and transfer process.The manager and staff member should clearly identify the objectives of the proposed training of the staff member. After six months, the manager must carry out a review with the staff member to see to what extent the training has impact on the staff member performance. We have not yet done well this stage because staff often are very busy at work after coming back from training course. This survey is designed in order to fund out about the policy, the practical management of human resource, training and development human resource in enterprise and the evaluate current human resource training and development. Based on the survey result, the human resource department will propose strategies an specific actions to improve polices and administrative methods which can help reach strategic target in near future. Staffs are invited to fill in the survey and send back to the HR department. CHAPTER III: HUMAN RESOURCES DEVELOPMENT AND TRAINING ACTIVITY IN PVFC 3.1 An Overview of PVFC The history of PVFC Petro Vietnam Finance Company - New confidence of development PVFC officially launched its operation on 1st December, 2000 according to a Business Certificate No 12/GP-NHNN dated 25th October, 2000 by State Bank of Vietnam (SBV) along with Decision No 456/2000/QD-NHNN dated 25th October, 2000 by the Governor of The State Bank of Vietnam and Business Registration License No 113108 dated 23rd August, 2000 by Hanoi Authority for Planning and Investment. Misson statement and company objective: Founded in 2000, Petro Vietnam Finance Company, a wholly owned subsidiary by Petro Vietnam, is a non-banking credit institution. Its foundation is one step toward “The steady development of Vietnam Oil and Gas Corporation” marking a new vision to the future of Vietnam petroleum energy in line with the growth of the country in the 21 st century. Since the beginning, PVFC has made great successes in integrating into the Oil and Gas community and joining the networks of domestic and international financial institutions. The tight and faithful co-operation with these institutions, domestic and foreign investors in order to maintain reliable financial sources for Vietnam Oil and Gas projects - The primary key factor to its success. “Growth vision – Solid commitment - Finance success” is PVFC’s working slogan. This idea revealed in its strategic objectives: fulfilling fund demands for developing investments and making the most effective use of every financial resource. Business activities: Based on Business Registration License No 0106000273 dated 30th October, 2006 by Hanoi Authority for Planning and Investment, the major business activities of the company includes: Fund Mobilization: Long term deposits; Issuing Promissory Notes, Bonds, Certificate of Deposits and other Valuable Notes to mobilize capital from domestic and international economic entities and individuals under the current laws; Borrowing from domestic and international financial institutions and credit institutions; Receiving Trust Fund from Government, domestic and international institutions and individuals; Lending: Short-term, medium term and long-term loans under the SBV regulations; Trust loans by the Government, domestic and international institutions and individuals under current credit law and trust contract; Consumer loans by installment payment; Documentary Discounting: Credit service to institutions and individuals through discounting and/or mortgaging bonds, commercial papers and other valuable notes; Rediscounting and/or remortgaging bonds, commercial papers and other valuable ._.