Luận văn thạc sĩ quản trị kinh doanh quốc tế MBA (7)

CONTENT PageFOREWORD CHAPTER 1FUNDAMENTAL THEORIES ON BUSINESS STRATEGY AND STRATEGIC HUMAN RESOURCES MANAGEMENT 1.3 Basic contents in strategic planning of organization 5 1.4.3.1 Power

CAPSTONE PROJECT REPORT

DEVELOPMENT HUMAN RESOURCES STRATEGY

OF NLDC IN THE PERIOD

2020 - 2025

GRIGGS UNIVERSITYGLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

CAPSTONE PROJECT REPORT

DEVELOPMENT HUMAN RESOURCES STRATEGY

OF NLDC IN THE PERIOD

2010 - 2015

Group No 2.

Student’s name:

1 Quan Duc Hai

2 Nguyen Tat Thang

3 Nguyen Xuan Son

4 Bui Thi Hong Nhung

HA NOI, 2010

CONTENT Page

FOREWORD

CHAPTER 1FUNDAMENTAL THEORIES ON BUSINESS STRATEGY AND

STRATEGIC HUMAN RESOURCES MANAGEMENT

1.3 Basic contents in strategic planning of organization 5

1.4.3.1 Power of Suppliers is shown in the following features 8

2.3.3.1 Creativity strategy and major HRM activities 142.3.3.2 Quality enhancement strategies and major HRM activities: 142.3.3.3 Cost reduction strategy and major HRM activities 14

CHAPTER 2STRATEGIC HUMAN RESOURCES DEVELOPMENT

AT NATIONAL LOAD DISPATCH CENTER

1 Establishment and Development Process of National Load Dispatch

2 Power business strategy of Vietnam Electricity in 2007 – 2015

2.2 Overview of power business strategy of Vietnam Electricity

2.3 Characteristics of human resources of power sector (EVN) 28

3.4 Status of human resources deployment in the past years 40

4 Strategic human resources development at National Load Dispatch Center 424.1 Existing operation of National power system (as of September 2009) 424.2 Current status of human resources of National Load Dispatch Center 42

4.3.2 Basic features in the restructuring pathway of EVN 494.3.3 Development Direction of National Load Dispatch Center 504.4 Strategic Human Resources Development at National Load Dispatch

STRATEGIC HUMAN RESOURCES IN 2010 – 2015 PERIOD ATNATIONAL LOAD DISPATCH CENTER

1 Development Strategies of National Load Dispatch Center

2.3 Service provision as main business on the following 77

2.6

Some measures for implementation of development strategy of

CONCLUSION

LIST OF FIGURES, GRAPHS

Figure Content Page

Figure 1.3 Decisive factors to competition within an industry 18Figure 2.1 Education background and age of management as of April 30th 2008 30

Figure 2.7 Specialization-based labor structure 48

Figure 3.2 Communication system for data exchange 73

LIST OF TABLES

Table 1.2 Evaluation of strategy implementation sequence followingGREAT matrix 21Table 2.1 Educational structure and number of EVN’s employees in 2001 – 2009 period 29

Table 2.2 Comparison of productivity index between EVN and

Table 2.6 Number of training courses and employees articipating in

Table 2.7 Salary coefficients for different positions 54Table 2.8 Average salary level of some positions in the NLDC 56

Table 2.9 Statistics of graduates from formal education of

Table 2.10 Statistics on qualification of graduates from formal education specialized in power system of

engineering universities

63

Table 2.11 Statistics on average salary of engineers and bachelor degree holders of different specializations in 2009 64

1 Necessity of the theme:

Improvement of human resources quality is one of the most important tasks of acompany in particular and a country in general Human resources qualityimprovement has become increasingly significant in the whole world in the pastdecades Most companies have to face up with the severe competition in the market,

to struggle in the economic recession and to meet increasing demands for humanresources in terms of both quantity and quality Traditional perspective which statedthat the major competitive advantage of a company or country lied in the financial,technical and technological capabilities became out of date The decisive factor tothe existence and development of each company and each country is now peoplewith high education background, well-trained skills, ethics, culture andunderstanding of effective performance Therefore, the human resources qualityimprovement has been studied, developed and applied in advanced industrialcountries The human resources quality improvement has not been properlyconcerned in Vietnam despite of its importance As a developing country, Vietnamalways has to face up with post-war consequences and its economy is now in theprocess of transition from subsidy and concentrated economy to market economy.Improvement of human resources quality in Vietnam enterprises has not beenproperly cared despite of its significance Innovation process has some basicchanges requiring the development of human resources in terms of both quantityand quality The poor quality of Vietnamese human resources is reflected inVietnam’s economic results which are far below the potential of natural resourcesand other resources Therefore, the actual situation of Vietnam economy requiresresearchers to be proactive in finding out solutions which help enterprises performwell the human resources quality improvement and thus reduce the risks, save timeand enhance the competition capability during their shift to market economy

Power industry is an important economic – technical industry in the economicdevelopment of the country It is the source of energy input for most industries andplays a key role in the economic development of Vietnam Therefore, in addition tocapital and technology, improved quality of EVN’s human resources is vital topromote the price and quality service as competitive advantages in power

transmission and especially power generation and distribution in the marketeconomy and to integrate into the regional and world economy As a global trend,power sector of Vietnam is now step-by-step being restructured to remove themonopoly state and to put power market into operation

In that context, the National Load Dispatching Center, as the power system operatordirecting and managing the operation of all power plants, power transmission andpower distribution companies, is required to develop a “well-trained” workforce toperform operating modes of national power system ensuring safety, stability andcost-effectiveness It has to meet the standards on frequency of national powersystem and voltage of national power transmission system; to comply withregulations on load dispatching of national power system in the power market andpower transmission grid and the guidelines of electricity regulatory authority andpower market management unit and not to discriminate in mobilization of poweroutput from power generation companies in the national power system Thisworkforce should comprise of employees which have proper qualifications andcompetencies and are able to meet the work requirements All of these things inspire

our group to select the topic on "Status evaluation and solutions to human

resources quality improvement in the National Load Dispatching Center" with

the desire to find out some solutions to promote the human resource qualityimprovement in the National Load Dispatching Center in the competition anddevelopment process

2 Purpose of the research:

Based on the analysis of human resources quality and social information, thecurrent quality of human resources of National Load Dispatching Center (NLDC)will be assessed so as to propose solutions to improvement of human resourcesquality and to provide information for management of NLDC in the next phase.Specific purposes are as follows:

a) To clarify the strategy on improvement of human resources quality in thecompany

b) To assess the current quality of human resources of NLDC so as to find outremaining issues and causes of weakness in human resources functions

c) To give out some specific solutions to perfect and improve the quality of humanresources in NLDC

3 Research methodology:

The research methodology used in the thesis is the statistical analysis, gathering andprocessing of available documents, description and comparison with logicalinference on the basis of a survey conducted among employees of NLDC

Methods used by the group in the research of this theme include:

Research will be done through the review of documents and books of theories onstrategy development in general and strategic human resources development inparticular

In addition, the group will conduct actual research at company and use comparativemethod to provide reasonable and effective basis for strategic human resourcesdevelopment

4 Contributions of the Capstone Project Report:

a) To systematize some argumentative issues relating to human resources qualityb) To make a comprehensive analysis of actual status of human resources of NLDC;and to develop some viewpoints as basis for improvement of human resourcesfunctions in NLDC

c) To propose some solutions to improve the quality of human resources in NLDCmeeting the human resources demand for development of NLDC so as to meet therequirements for operation of National power system and competitive andtransparent power market

5 Structure of the Capstone Project Report:

In addition to the foreword, conclusion, references and appendices, the CapstoneProject Report consists of 3 main parts:

Chapter 1: Fundamental theories on business strategy and human resources

strategy

Chapter 2: Strategic human resources development at NLDC

Chapter 3: Some proposals and recommendations for improvement of human

resources strategy of NLDC

CHAPTER 1 FUNDAMENTAL THEORIES ON BUSINESS STRATEGY AND

STRATEGIC HUMAN RESOURCES MANAGEMENT

1 Business Strategy

1.1 Concept of Business Strategy

- Strategies are ways by which long-term objectives are achieved Business strategymay include geographical expansion, product diversification, emergence, productdevelopment, market penetration, reduction or withdrawal, acquisition or jointventure

In this discussion, we will mention business strategies only.

- “Strategy is the direction and scale of an organization in the long run: strategy willbring advantages to the organization through the optimal organization of resources

in a competitive environment so as to meet the market demands and expectation ofinvestors”

In other words, strategy answers the following questions:

- Where will company strive to reach in the long run (direction)

- In which markets will the company have to compete and which activities will thecompany operate in that market (market, scale)?

- How will the company do to perform better than its competitors in that market(advantage)?

- Which resources (skills, asset, finance, relations, technical capability andequipment) will company need for competition (resources)?

- Which external elements will affect the competitiveness of company(environment)?

- Which values and expectations will powerful people inside and outside thecompany need (investors)?

According to Boston Consulting Corporation:

Business strategies are determinations for distribution of available resources with aview to changing the competitive balance and shifting the advantage to our side

According to Michael Porter, a top strategic professor of Harvard:

Business strategy in coping with competition is the combination of objectives to beachieved and means to be needed by company for achievement of objectives.

Strategy can be divided into following levels:

- Strategic vision (Vision)

- Strategic mission (Mission)

- Strategic objective (Objective/Goal)

Strategy can be divided according to time:

- Short-term strategy (2-3 years and often functional strategies)

- Medium-term strategy (5-10 years and important strategies including manyactivities and projects)

- Long-term strategy (10 years or more, strategy is now an orientation and forecastfor company in the future)

Strategy can be divided based on the function:

- Sectional strategy (Marketing strategy, human resources and sales, etc.)

- Business-based strategy (Business 1, business 2, business 3)

- General strategy (Strategy for the entire company and corporation)

1.2 Benefits of business strategy for organization

- Business strategy helps company realize the its goals and direction to be basis forall production and business activities of the company;

- Business strategy helps company grasp and take advantage of businessopportunities and at the same time take measures to actively overcome threats andrisks in the competitive market;

- Business strategy helps to improve the effective use of resources and to enhancethe competitive position of company to ensure the sustainable development ofcompany;

- Business strategy creates firm basis for formulation of business policies anddecisions in accordance with the market variations

1.3 Basic contents in strategic planning of organization

- To identify functions and tasks of organization

- To assess environment external to the organization so as to come up with asummary of opportunities which are brought by environment and should be grasped

by company and threats which are also brought by environment, can result inchallenges for the Company and should be avoided

- To assess internal environment, that is, to review and evaluate all aspects ofcompany and relation among sections; to point out strengths and weakness ofcompany, which is the perquisite for taking advantage of and promoting strengthswhile limiting and correcting existing weakness

- To analyze and select strategies for formulation of long-term objectives andcreation of alternative strategies and selection of some strategies to be pursued

1.4 Some strategic planning tools

As known, strategic planning activity includes three major stages as follows:

- Strategic planning;

- Strategy implementation;

- And strategy evaluation

In the next section, we will present our understanding of strategic planning theorywhich forms the basis for development of strategic human resources in the NationalLoad Dispatching Center, which is also topic of our Capstone Project Report

The strategic planning process may be supported by following basic tools:

1.4.1 SWOT analysis

SWOT analysis model is an effective tool for strategic planning of any organization.SWOT is the abbreviation of initial letters of English words including Strengths,Weaknesses, Opportunities and Threats

SWOT analysis is one of five steps in formulation of business strategy of a

company, including: establishment of company’s philosophy, SWOT analysis,

determination of strategic objectives, formulation of strategic objectives and plans, and identification of strategic management mechanism If a company wants to

develop and step by step create its reputation and brand name in a firm andsustainable manner, SWOT analysis is an indispensable stage in the strategicplanning process of company

Therefore, SWOT analysis is the analysis of external elements (opportunities andthreats) faced by company as well as internal elements (strength and weakness) ofcompany This is a difficult task requiring time, effect, cost and ability to effectivelygather, analyze and process information

Company identifies opportunities and threats through the analysis of data onchanges in economic, financial, political, legal and social environment andcompetition in the markets where the company is operating or planning to penetrate.Opportunities may include market development potential, market gap and access tosources of cheap materials and labors with appropriate qualifications Threats tocompany may be market retraction, increasingly severe competition, possible policychanges and development of new technologies which make company’s facilities andproduction line become out of date.

In the analysis of internal environment of company, strength of a company includesresources and ability to use facilities and background for development ofcompetitive advantages In terms of company organization, it might be skills,resources and advantages possessed by company (key result areas of company) ascompared with its competitors These areas include outstanding technology, famoustrade name, good image of company in public view and large share in key markets.Weakness of company is shown in the deficiencies, drawbacks, limited skills andresources or constraints to company’s competitiveness or no available strength Itcan also be ineffective distribution network, improper labor relation, lack ofmanagers and leaders with international working experience and out-of-dateproducts as compared with competitors, etc

SWOT analysis provides useful information for connection of company’s resourcesand capabilities to competitive environment where company is operating

1.4.2 Value chain analysis

Value chain represents total value, including value activity and margin Value

activities are typical activities in physical and technological terms of company.These are components forming the valued products for consumers Margin is thedifference between total value and group of costs for implementation of valueactivities Value activities can be divided into two major types: Main activity andsupporting activity Main activities are those of material nature and relevant to theproduct generation, selling and transfer to customers as well as post-sale support Inall companies, main activities can be divided into five general types: Input Logistic;Operation; Output Logistic; Marketing and Sales; and Services Supportingactivities will supplement main activities and they themselves support each other

through the input supply, technology, human resources and other functions in thewhole company Supporting activities include: Company’s facilities; Humanresources management; and Technology development and acquisition which can becombined with main activities as well as support the entire chain Company’sfacilities are not connected to any individual primary activity Instead, they onlysupport the entire value chain.

1.4.3 Five forces model

According to Michael Porter, the competitive intensity in the market of any business

is subject to 5 competitive forces: Suppliers, Customers, New Entrants, SubstituteProducts and Competitive Rivalry within an industry

1.4.3.1 Power of Suppliers is shown in the following features:

- Supplier concentration,

- Importance of input volume to suppliers,

- Degree of differentiation of inputs,

- Impact of inputs on costs or differential of inputs,

- Supplier switching costs,

- Presence of substitute inputs,

- Threat of enhanced mergence of suppliers,

- Supplier cost to total revenue of industry

1.4.3.2 The threat of substitute products:

- Buyer switching costs

- Buyer propensity to substitute

- Relative price performance of substitutes

1.4.3.3 The threat of the entry of new competitors:

- Absolute cost advantages,

- Learning curve advantages,

- Buyer price sensitivity,

- Uniqueness of industry products,

- Buyer concentration,

- Availability of existing substitute products,

- Buyer motives

1.4.3.5 The intensity of competitive rivalry:

- Barriers to the desire to “escape” from industry,

- Degree of concentration of industry,

- Fixed costs/added values,

- Status of growth of industry,

- Status of capacity surplus,

In addition to above basic elements, during the market research, companies shouldtake into account the globalization element which has become a macro elementaffecting the industry.

2 Strategic Human Resources

2.1 Concept of Human Resources

- According to the United Nations, human resources are professional skills,knowledge and competencies that people possess in reality or in potential for socio-economic development within a community

- The World Bank says that manpower is the total human capital including musclepower, brain power and professional skills, etc of each individual Therefore,human is here considered as a capital in addition to other material capitals such asmoney capital, technology and natural resources

- According to the International Labor Organization, labor force of a countryincludes all people in employment age and capable of participating in the work

- In a wide meaning, manpower is the source of labor supply for social productionand for development Therefore, manpower includes all population with normalgrowth

- In a narrow meaning, manpower is the working capability of the society, theresource for socio-economic development It includes groups of population inemployment age and capable of participating in the social work and production Inother words, it consists of specific individuals involving working process and issum of their muscle power and brain power to be mobilized into working process

- According to William Petty, an English economist, labor is father and land ismother of all outputs; Karl Marx believed that human is number one element ofproductive force The Vietnamese tradition identifies ''Talented people are vitalforce of country" Avill Toffler, an American futurist, emphasized the role of mentallabor He said "Money will be used up and power will be lost; only humanintelligence, when used, will not only be maintained but also be grown" (PowerShift- Avill Toffler)

- Human resources are understood as comprising of experiences, skills, education,whole-heartedness, efforts or any other features that add values and enhance thecompetitiveness for the organization of labors

- Human resources in corporate include all human potentials of an organization or

of the society (including members of management board of enterprise) Allmembers of the corporate use their knowledge, capabilities, behaviors and ethicvalues to formulate, maintain and develop the corporate

- Upon mentioning human resources, people discuss about qualification, structureand responsiveness to the requirements of labor market Quality of human resources

is reflected in the knowledge, skill and attitude of labors In the country, the laborforce is currently classified as per business and field of operation (industry,agriculture and service) However, when the country shifts to knowledge economy,the classification of labor force according to the labors’ approach to their work andprofession will be more appropriate Accordingly, there are 5 types of labor: mentallabour, managerial labour, data labour, service labour and production labor Eachtype of labor contributes differently to the generation of products The high or lowcontent of knowledge and intelligence in the labour product depends on thecontribution mainly of mental and managerial labour force and partly of datalabours In order to improve the competitiveness in the international market, therapid increase in the knowledge content in goods is essential in the coming time

2.2 Concept of human resources strategy

- Human resources strategy of a company is one of functional strategies anddecisive to the successful performance of company’s strategies

- “Human resources strategy is the process of integrating human resources functioninto strategic objectives of the organization for efficiency improvement” (JohnBratton – Strategic Human Resources Management)

- Mile & Snow (1984) thought that SHRM is “a human resources system aiming atmeeting the requirements of business strategy” Write & MacMahan (1992)considered it as “characteristics of people-related actions to facilitate companies inachieving business objectives”

- Guest (1987) and Boxall & Dawling (1990) introduced the relation between HRMand business strategy in a more comprehensive and clearer manner They believedthat SHRM is “the integration of HRM policies and activities into business strategy.This integration is shown in three aspects: (1) alignment of human resourcespolicies and strategies; (2) development of policies which supplement each other

and encourage the enthusiasm, flexibility and performance of employees; and (3)internationalization of the role of regional in charge”.

2.3 Some strategic human resources models

Human resource is always considered a decisive factor to the success of company Acompany which may have modern technology, good service quality and firminfrastructure will find it difficult to sustain in the long run and to createcompetitive advantage if it lacks human resources It is possible to say that humanresources differentiate companies However, if human resources development doesnot align with general principles and objectives of company, all the efforts topromote the performance of employees will become useless

The emphasis on importance of the integration between HRM and business strategyillustrates the specific approach towards the development of SHRM A great number

of models has been developed to represent that integration and they are divided intothree major groups: (1) general model (representing relationship between internalelements and external elements) (2) organizational model (representing therelationship among internal elements of company), and (3) specific model (showingspecific human resources policies in consistent with specific external and internalconditions of company

business strategy include equity, market share, product quality, company image,creativity, productivity, professional ethics and revenue.

The drawback of this model is that it fails to answer which human resourcesstrategy and policy match a specific business strategy or organization structure Inaddition, it has not specified the necessity of a close relationship between HRMpolicy making organization and other organizations and strategies in the company

2.3.2 Organizational model:

Representative of this model group is Schuler’s 5Ps (1992) This model gives out adetailed picture of human resources activities happened inside the company Itfocuses on internal relations between strategic demand of company and humanresources activities It is formed from five English words:

’Philosophy’, ’Policies’, ’Programs’, ’Practices’ and ’Process’; By identifying suchfive activities, this model has shown the complicated interaction of human resourcesactivities necessary for the formation and development of behaviour of individualsand group so as to meet the strategic demands of company These demands arereflected via outputs, vision and objectives of business strategy

Schuler said that efforts for successful implementation of SHRM should start withthe definition of strategic business demands and systematic analysis of impacts ofthese demands on five aforementioned HRM activities The link between HRMstrategy and activities can be consolidated by encouraging the engagement ofemployees in the identification of their roles Moreover, managers involving in theSHRM process must have analytical and systematization capabilities during thedetermination of strategic demands and design of human resources activities.SHRM process also creates opportunity for HR department to involve in thebusiness strategy planning However, Schuler’s model fails to point out when aspecific human resources policy match the general development strategy ofcompany

2.3.3 Specific relationship model:

Dowling and Schuler (1990) developed a model mentioning which type of humanresources policy is appropriate to encourage necessary behavior for achievement ofobjectives set in the competition strategies According to Dowling and Schuler,

competition strategies are classified into three types: quality enhancement strategy,cost reduction strategy and creativity strategy:

2.3.3.1 Creativity strategy and major HRM activities:

- Require active participation of employees

- Do not make an in-depth professional analysis

- Mobilize external resources

- Contain many opportunities for professional development

- Apply process and result criteria

- Apply long-term criteria

- Apply criteria for objects in the same group

- Apply some labor insurance policies

- Apply many preferential policies

- Provide equal salary

- Provide a lot of training

- Develop cooperative employer-employee relations

2.3.3.2 Quality enhancement strategies and major HRM activities:

- Require active participation of employees

- Do not make an in-depth professional analysis

- Mobilize some external resources

- Contain few opportunities for professional development

- Apply result criteria

- Apply mainly short-term criteria

- Apply criteria for objects in the same group

- Apply some recruitment criteria

- Apply some preferential policies

- Provide equal salary

- Provide a lot of training

- Develop cooperative employer-employee relations

2.3.3.3 Cost reduction strategy and major HRM activities:

- Require little participation of employees

- Provide in-depth professional analysis

- Use mainly internal resources

- Provide few opportunities for professional development

- Apply process and result criteria

- Apply short-term criteria

- Apply mainly criteria for personal use

- Limit the application of labour insurance policy

- Provide few preferential policies

- Salary based on job grade

- Provide little training

- Develop traditional employer-employee relations

The appropriateness of competition strategy is subject to the phases in the life cycle

of company This cycle is divided into three main phases: (1) Starting anddevelopment phase, (2) peak development and downturn phase, and (3) recoveryphase

In phase (1), the strategy emphasizes the creativity and new product development ofhuman resources These are people with creative thought, cooperative spirit, long-term direction, dare to accept risk and high sense of responsibility

Stepping in phase (2), the main strategic viewpoint is ’to reduce the cost of existingproducts as much as possible and to focus on production promotion and costreduction Then, the challenge of HRM is how to attract and retain real competentemployees’ (Dowling and Schuler 1990, page 146)

In recovery phase (3), the restoration of company is carried out by cost reduction,either via reduction or development of manpower and by product qualityimprovement

SHRM requires company to develop human resources objectives, strategies andpolicies in accordance with its business strategy These factors facilitate thedevelopment of necessary skills meeting the requirements set by general objective

of company In addition, they establish a framework in which demands of people in

a company are secured Most importantly, company is able to define the role ofHRM in its development strategy and thus to apply the most appropriate SHRMmodel to obtain success and commensurate position in the business market

3 Strategic Human Resources Development Process

Strategy development process can be divided into seven main steps as shown inFigure 1.1 below:

Figure 1.1: Strategic Planning Process

Strategic planning is the direction for distribution of resources in the organization.Details of steps in strategic human resources development process are as follows:

- Step 1: Based on the functions and tasks (orientation to customers: who need to besatisfied, how to satisfy customers’ needs and which technology is used to respond),company’s objectives will be identified through the determination of strategicvision (future business direction – answer to the question “where will we be?”) andstrategic mission of company (current business operation – answer to the question

“who are we and what do we do?”) Vision is the statement describing what and up

to which level the company wants to reach in the future Mission statementdescribes organization’s current capabilities which help company reach its Vision

- Step 2: Conduct SWOT analysis for human resources (analysis of externalelements to realize opportunities and threats)

Figure 1.2: External Elements

Tasks, functions & strategic objectives of

Feedback

External environment includes elements which may affect the implementation ofobjectives that company wants to achieve Analysis of external environmentincludes analysis of macro environment and business environment Analysis ofthese elements helps enterprise define its position, typical environmental featuresand the time in which it exists, figure out impacts of external environment onenterprise, its objectives and especially its human resources This will be basis tomake decisions on strategic human resources planning so as to take full advantage

of opportunities and minimize the threats

Macro environment consists of many different elements directly or indirectlyaffecting the operation and human resources of company through their impacts onelements within business environment Among those elements, there are fiveelements which are assessed by administrators as having greatest impact Theyinclude: Economy, Legal, Socio-cultural, Ecology and Technology

Business environment is the environment which closely links to operation ofcompany Elements of business environment will decide investment environment,intensity of competition and degree of profit in the business They will also defineage-based labor structure, qualifications and professional skills of company’s

Economic Elements

Internal Corporate Environmen t

Natural

Elements

Social & Cultural Elements

human resources According to Professor Michael E., Porter, the context ofoperational environment is subject to five forces from competition: threat of newentrants, competitive rivalry within an industry, power of consumers, power ofsuppliers and threat of substitute products.

Figure 1.3: Decisive factors to competition within an industry

- Step 3: Conduct SWOT analysis of human resources (analysis of internalenvironment to identify strength and weakness of company)

Company’s competency is the basic element deciding what company can do andwhether company is successful in implementation of its business strategy andfunctional strategies In order to ensure the feasibility of strategy, the development

of strategy must include analysis of current status and identification of strength andweakness This helps to realize the real competencies of company’s humanresources, including professional qualification, experience, workmanship andattitude of employees; human resources policies of company; ability to balance theuse of employees between maximum and minimum levels; and competency, level ofinterest and qualification of top management It is also necessary to analyze howother elements such as research and development, production, finance andaccounting and marketing affect company’s human resources management

Threat of New Entrants

Threat of Substitute Products

Bargaining Power

of Customers Bargaining Power

of Suppliers

- Step 4: Select human resources strategy (on the basis of searching for resources,capabilities and core competencies and developing them to get rid of threats andtake advantage of opportunities from internal and external environment)

- Step 5: Establish strategic human resources at functional division level and atcompany level

- Step 6: Develop measures for implementation of strategy

- Step 7: Check and evaluation implementation status

3.1 Strategic Human Resources Planning

Before making decision on selection of human resources strategy, SWOT analysis should be checked to ensure alignment of human resources strategy to business strategy.

Based on the table of SWOT analysis for human resources, Company will take use

of strength to optimize its business objectives; limit weakness to successfullyperform set targets; maximize opportunities towards end results; and disable thethreats so that company’s success in business is complete

Also from that, company realized different threats and weakness with certainimpacts on strategic human resources management which company is planning todevelop

Table 1.1: SWOT Matrix

2

3 Enumerate strengths4

5

1

2

3 Enumerate weakness4

STRATEGIES WO Overcome weakness by taking use of opportunities

In order to develop strategies based on SWOT analysis, companies should design amatrix of elements known as SWOT matrix, where:

- S-O strategy aims at pursuing opportunities matching company’s strengths,

- W-O strategy aims at overcoming weakness in the pursuit and grasp of

opportunities,

- S-T strategy defines challenges that company may use its strengths to minimize

damages due to external threats,

- W-T strategy aims at forming a precaution plan to prevent company’s weakness

from making it vulnerable to external threats

From the above analysis, company must choose which strategy should be appliedfirst and which one should be taken later and in which order of priority? Strategy is

a system of significant policies and measures to implement and coordinate actionplans to help organization accomplish its objectives in the most effective manner.Company must select the most optimal strategy as it is impossible to implement allstrategies at the same time or to implement each strategy in a non-calculated order,which costs a lot of time, material and human resources Therefore, selection isessential to come up with a set of most optimal strategies for development and toconsider company’s gain and loss from selected strategy.

After the set of strategies has been identified on the basis of such combinations asstrength – opportunity, strength – threat, weakness – opportunity, and weakness –threat, Great matrix will be used to make an outline for selection of key humanresources strategies to be pursued by company The assessment and prioritizationare based on the discussion between company’s management and subject matterexperts to come up with appropriate decisions and procedure

Table 1.2: Evaluation of strategy implementation sequence following GREAT

- Step 1: Realize main categories to be analyzed or criteria in column 1

- Step 2: Assess the degree of impact of elements (criteria) on general strategies; useimpact coefficients to represent degree of importance and impact of elements on

strategy (coefficient is calculated by giving score from 0 to 1 so that total weight isequal to 1).

- Step 3: Evaluate and give score to each analytical element in each strategy Score

of evaluation is from 1 to 5 corresponding to levels: Weak, average, fair average,fair, and good

- Step 4: Convert coefficients which are product of 2 columns (2nd column andcolumn of evaluation score of each strategy); then accumulate component results toget total score at the final row

Finally, select from 1 to 3 highest totals which are actually key strategies to beimplemented

3.2 Implementation of strategic human resources

For each of important issues, it is necessary to highlight measures to be taken Atthe same time, functional sections in the company should cooperate with each other

to come up with solutions and how to implement them Examples of solutions areimprovement of corporate culture, office communication, recruitment, training anddevelopment, reward and penalty system, and human resources planning, etc

Based on those important issues and solutions, plan and pathway should beprovided to implement solutions and achieve objectives

3.3 Evaluation of strategic human resources

The purpose of inspection and evaluation is to guide the activities or humanresources planning in the following areas: quantity and quality of employees;productivity; turnover rate; and employees’ satisfaction for work, etc It also aims todefine differences between plan and actual implementation, causes of thesedifferences and measures for improvement The ultimate purpose of a humanresources strategy is to ensure that such areas support and affect each other It isalso important to know how these objectives affect the implementation of otherfunctional strategies, business strategy and corporate strategy

In conclusion, the strategic human resources development, by nature, aims atmastering “people element” of an organization to help achieving short-term andlong-term objectives; to ensure using right person for right job, promotingqualifications and skills of employees, reviewing employees’ attitude and behaviour

to provide appropriate training and development direction and fair performance

appraisal, and attracting and retaining talents for implementation of company’sstrategies and objectives.

CHAPTER 2 STRATEGIC HUMAN RESOURCES DEVELOPMENT

AT NATIONAL LOAD DISPATCH CENTER

1 Establishment and Development Process of National Load Dispatch Center

History of National Load Dispatch Center

The Center has corporate capacity

NLDC which is the Dispatching unit of power system and under the management ofits parent company – Vietnam Electricity is responsible to perform the operation ofpower system – operation of power market and to conduct services in the field ofpower system operation – power market operation

NLDC has corporate capacity, seal for transaction and bank account at the StateBank and State Treasury

Head office: No.18 Tran Nguyen Han Street - Ly Thai To ward - Hoan Kiem district– Hanoi city;

Telephone: 04 22201310

Fax: 04 22201311

Web: https://mail.vietpool.com

NLDC participates in the production and business activities so as to achieve

long-term objectives of Vietnam Electricity It will attempt to develop so that “National

Load Dispatch Center is the best place where people can contribute and grow”

- NLDC is proud to be leading unit in power system operation in Vietnam Thisposition is thanks to the possession of active and creative employees who always dotheir best for the general objectives of the Center NLDC believes that people are

invaluable resources and that it is employees who bring success to the Center.Therefore, programs for development and improvement of employees’qualifications and skills are essential to us so that we can expand business, becomesuccessful in Vietnam and reach the regional performance level.

- Our employees are entitled to competitive salary and comprehensive package ofsocial welfares Our salary system is clear and strict and annually reviewed Inaddition to monthly fixed salary, our management and employees have chance toincrease their income based on their performance and contribution to Center’ssuccess

- Our employees work in a dynamic and professional environment They are oftenassigned to training courses to improve their profession and skills for the work Weset very high requirements for our employees in terms of ability to workindependently, to make their own decisions and to develop them on the basis ofactual work

- NLDC has continuously sought and recruited candidates with professional passionand willingness to cope with challenges Together, we make effort to become leader

in the revolution of research and application of high technology in the management

of power system in 21st century

There are three important milestones in the establishment and development process

of NLDC (also known as A0):

- On April 11th 1994, A0 was established according to Decision No.180

NL/TCCB-LD of Ministry of Energy and it was then managed by Ministry of Energy

- On March 4th 1995, at Decision No.118 NL/TCCB-LD of Ministry of Industry, A0was transformed to a subsidiary under Vietnam Electricity Corporation (nowVietnam Electricity Group)

- On December 31st 1998, at Decisions No.82, 83, 84/QD-BCN of Ministry ofIndustry, Northern, Central and Southern Load Dispatch Centers were merged withA0 to establish the National Load Dispatch Center with two dispatch levels ofpower transmission network – national and regional levels

2 Power business strategy of Vietnam Electricity in 2007 – 2015 period, towards 2025

2.1 General introduction about Vietnam power system

Concept of power system: Power system is the collection of such elements as Powersource, Power grid and Power consumer or Load These elements are connected toeach other to form power system.

The power system of Vietnam consists of 52 power plants (135 generating units)with total installed capacity of 15,763 MW; 3,286 km of 500 kV transmission line,7,101 km of 220 kV transmission line and 11,751 km of 110 kV transmission line;

11 500 kV substations with capacity of 7,050 MVA, and 72,220 kV substations withcapacity of 17,844 MVA Total commercial power output is 65,923 GWh, wherepower consumption for Agriculture, Forestry & Aquaculture is 653 GWh; that forIndustry & Construction is 33,026 GWh; Commerce & Hotel and restaurant with3,242 GWh; Management & domestic use with 26,650 GWh; and other activities

with 2,316 GWh (statistics of National Load Dispatch Center (known as A0) in

Factors affecting power supply-demand balance include changing load, changingsource of supply (due to failure/maintenance of generating units and fuel supplypipeline, etc.) and changing power transmission grid (failure to grid and substations,etc.)

Major requirements for operation of power system are: SAFETY, CONTINUITY –STABILITY – ENSURED QUALITY AND COST-EFFECTIVENESS

In order to meet above requirements for power system operation, a command unit isnecessary to control power generation, transmission and distribution units in

implementation of operating mode of power system Such unit is called Load

(a) EVN plays a key role in ensuring power supply for the economy It holds 100%

of state capital at such large hydropower plants responsible for flood and draughtcontrol and water regulation as Hoa Binh, Tri An and Ialy under operation and Son

La under construction and nuclear power plants to be constructed in the future so as

to ensure energy security and nuclear safety It holds at most 25% of source power

of the system in each period EVN has established joint stock companies to invest inpower plants which are building or will be building so as to mobilize social capital

to investment in development of power sources And EVN holds a maximum of51% of chartered capital of Power General Joint Stock Companies Total minimumcapacity of power plants governed by EVN accounts for up to 60% of total capacity

of power system to ensure national energy security

(b) To focus on construction of coal thermal power projects, especially those in theSouthern provinces; In 2011-2020 period, coal thermal power will play key role inthe power system; Research and development on coal thermal power center will be

in consistent with deep-water habour so as to use imported source of coal tominimize the pressure of gas price from foreign countries Coal thermal powerplants will be constructed at load centers to safely supply power for production.EVN will act as owner of large coal thermal power centers, including investment ininfrastructure and coal habour

(c) To speed up construction progress of hydropower plants under construction; toquickly finish investment procedures for construction commencement of newhydropower plants to take use of domestic construction force for continuousconstruction of plants and improve effective exploitation of energy sources; to fullyexploit possible hydropower sources on Da, Lo, Gam, Ma, Ca and Chu rivers in theNorth, Se San and Vu Gia - Thu Bon rivers, etc in the Central and Dong Nai river

in the South; to develop pump storage hydropower plants and put them intooperation on or before 2020 to help balancing the load diagram and optimizing thesource mobilization

(d) To develop gas power plants when reserves and price of gas are identified

(e) To prepare necessary conditions for starting of nuclear power plant expected toput into operation in 2020 so as to diversify energy sources and to ensure absoluteoperational safety

(f) To maintain power import from China at 220 kV voltage as per the signedcontract; to reduce the purchase of power at 110 kV voltage level after 2010 so as totake us of domestic energy sources; to cooperate the investment in construction ofhydropower plants in Laos, Cambodia and Myanmar in the form of joint stockcompanies, especially power plants at the downstream of Se San, Se Re Pok and SeKong rivers to take power to Vietnam.

2.2.2 Regarding power transmission

(a) To develop 220-500 kV transmission network to improve the reliability of powersupply and reduce the power loss in transmission network ensuring the deployment

of power sources at 2 different operating modes in the dry and rainy seasons; and todevelop 110 kV network into regional power network and directly supply power forloads

(b) Grid design in early phase should take into account transmission capacity for thenext 10 – 20 years; programs should be given to improve existing transmissionlines, especially those at the areas with many single circuits Design of power gridlayout should have high reserve and flexibility for to supply power safely and stablyand to ensure power quality (in terms of voltage and frequency) for the socio-economic development of the country

(c) To study power grid belt at 500 and 220 kV voltage levels to safely supplypower for Hanoi, Hochiminh and key economic zones

2.2.3 Orientation of power distribution area

(a) To focus on investment in improvement of distribution network; to installcompensating capacitors and take measures to reduce power loss and failure and toincrease the reliability of power supply; especially, to prioritize the improvement ofpower network at urban areas and other areas where power grid has beendowngraded

(b) To promote the plan on survey and control of power market for industrial zones;

to quickly penetrate into this market and compete with other producers to supplypower for industrial zones; to consider buying power from investors when therepower plants have excessive power or when there is shortage of power source onthe basis that buying price is not higher than price bought from power plants underEVN

(c) To apply modern equipment in power trading so as to increase productivity andreduce lost; to continue enhancing the communication on power saving and topromote the Demand Side Management (DSM) program; to support customers inusing high efficiency equipment to reduce power consumption in industrialproduction, lighting and domestic use

(d) To develop a pathway for changing of organization structure and operation ofpower companies in accordance with the process of formulation and development

of power market as per the approval of Prime Minister of the Government;According to this process, pilot power retail market will be implemented (expected

in 2022) The retail power trading function of power companies will gradually beseparated from the power distribution management and operation function At thesame time, pure retail power suppliers will gradually appear

2.3 Characteristics of human resources of power sector (EVN)

- Vietnam Electricity (EVN) was established by Prime Minister of the Government

at Decisions No.147/2006/QD-TTg and 148/2006/QD-TTg dated June 22nd 2006.The mission of EVN is “to do business in multi-sectors with many forms ofownership, to possess high level of technology, modern management andspecialization; to take electric power, public telecommunication and electric powermechanics as main businesses; to closely connect business and production toscience, technology, research and training; to act as core for power industry ofVietnam to rapidly and sustainably develop, be competitive and effectively integrate

in international economy”

- Power industry is an important economic – engineering sector in the economicdevelopment of the country In the past years, EVN has basically met the powerdemand of the economy and people’s life The growth rate of commercial poweroutput has reached approximately 15% in 2001-2008 period

- Together with the development of power sector in the past years, EVN hasdeveloped a workforce which has political, managerial, functional and languagecompetencies, becomes stronger and stronger, and performs well EVN’s tasksincluding production, trading and research

- As of December 31st 2007, EVN has a total of 86,928 employees, of which 17,807are female employees, accounting for over 19% Power distribution area accounts

for largest number of employees with 65.6 % (57,025 people), followed by powergeneration area with 10.8 % (9,514 people), power transmission area with 7.9 %(6,900 people) and other areas such as consultant, telecommunication, powerequipment production and project management, etc The education structure (Table2.1) shows that EVN’s employees are basically trained ones In the past 9 years(2001-2009), in parallel with the strong growth of power sector, the manpower hasincreased on a mean annual rate of 3% In terms of quality, the number ofemployees with university and graduate education has improved as compared withother educational levels A significant number of those employees is trainedoverseas and currently holds key managerial or technical positions of EVN.However, if university education is taken as center for comparison with othereducational levels in the order of university/ graduate/ college and high school/vocational school and other, the ratio is as follows:

1/0.047/0.69/2.06/0.17, thus the rate of employees with university and collegeeducation is still rather low

Table 2.1: Educational structure and number of EVN’s employees in 2001 – 2009 period Year Total

Education Graduate University

College&

High school Vocational Other

No % No % No % No % No %

2.3.1 Regarding training areas:

- EVN’s employees are trained in a variety of areas, of which engineering accountsfor high percentage 55% of managerial are trained in engineering

- Total number of employees holding managerial positions from Board Chairman ofEVN up to superiors at 3rd entity is 9,365 people, accounting for 10.77% of totalnumber of EVN’s employees 385 of them are now directly managed by EVN In

2007, number of managers and leaders with university education was 5,502 people,accounting for 58.59% and those with graduate education was 226 people,accounting for 2.51% (Figure 2.1) This figure is a bit low as compared with thecurrent level of technology and management.

- In the recent years, thanks to the effective human resources training anddevelopment, the qualification of employees has been improved and managerialstaffs have been assigned to short courses for knowledge upgrading andenhancement However, most of managerial staffs, especially those specialized inengineering, have not been regularly provided with update knowledge of businessmanagement, corporate management, human resources management and leadershipskills

Figure 2.1: Education background and age of management as of April 30 th 2008

2.3.2 Age-based labor force structure:

- In general, most of EVN’s employees are young ones and the distribution of labors

as per age is not much different Employees under 30 account for largest number(35 %); employees at the age from 30 - 39 account for 33.79% (Figure 2.3) Theaverage age of EVN’s employees is 31 and most of them are trained and capable ofgrasping new technology However, there are several age-related issues forconsideration, including seniority, experience, acquired knowledge, innovationcapability, mobility and adaptability to new business environment and mechanism,etc

- Features like young average age and hardworking trait, etc which weretraditionally highly appreciated by policy makers as advantages are now notadvantage anymore

Figure 2.2: Age-based labor structure

2.3.3 Productivity index of entire EVN:

- Productivity in major business has increased on a mean annual rate ofapproximately 12 - 14 % in 1995 - 2004 period Thanks to significant investment inmodern equipment and great concern over human resources development andtraining, EVN’s productivity has grown up rapidly in the recent years (20% in2007) However, as compared with other power utilities in the region and ofdeveloped countries, EVN’s productivity is only higher than that of Laos, Cambodia

and Myanmar but far below that of Korea, Taiwan, Japan and Europe (Table 2.2).

Fr 50 to 60 yr old

Fr 40 to 49 yr old 22.30 %

Under 30 yr old 35.00%

Fr 30 to 39 yr old 33.79%

8.91%

Table 2.2: Comparison of productivity index between EVN and power utilities

of some countries

(Source: JICA’s Project on Training of Trainers for Power Sector -2006 )

Laos Cambodia Myanmar VietNam Malaysia Thailand Indonesia China Taiwan Korea Japan

No of labors 2,826 1,752 16,526 80,477 25,686 66,301 44,879 1,319,647 22,751 30,002 131,099 Power output

(GWh) 767 464 3,451 58,400 63,534 100,173 87,089 1,638,628 151,193 278,451 865,428Productivity

(GWh/person) 0.27 0.26 0.21 0.872 2.47 1.51 1.94 1.24 6.65 9.28 6.61

- Low productivity is due to many reasons including management organization,

proper work organization and technological level, etc However, most of those

reasons are dependent on the quality of human resources

3 Current business situation of NLDC

Business operation of NLDC can be assessed in two aspects:

- Operation of power system;

- Other activities of Center as an enterprise

3.1 Power system operation

In terms of power system management, load dispatch system is divided into 3

levels:

Hierarchy diagram is shown in Figure 2.3 below.

Figure 2.3: HIERARCHY OF NATIONAL POWER SYSTEM

 Voltage of main nodes

 Power plants not undercontrol right

 220 kV power grid

 Switchyard of large PPs

 Line connecting PP and power system

REGIONAL LOAD

DISPATCH

 PPs graded as per separate regulation

 220-110-66 kV power transmission grid

 Reactive power of PPs

 Small PPs, diesel stations, offset stations

in the region

 110-66 kV substations and distribution lines decentralized to be controlled by power distribution grid dispatch

 Important loads in power distribution grid

POWER

DISTRIBUTION

GRID DISPATCH

 110-66 kV substations and distribution lines decentralized to be controlled by power distribution grid dispatch

 Power distribution grid

 Small power stations, diesel stations and offsetstations in power distribution grid

 Distribution substations and lines

of clients under control

HEADQUARTER OF

NLDC

NORTHERN

LOADDISPATCH

CENTER

CENTRALLOADDISPATCHCENTER

SOUTHERNLOADDISPATCHCENTER

- HOCHIMINH PC DISPATCHER, DONG NAI PC DISPATCHER

- DISPATCHERS

OF PROVINCIAL POWER BRANCH

IN THE SOUTH