G1 00134 DEVELOPMENT HUMAN RESOURCES STRATEGY OF NLDC IN THE PERIOD 2010-2015 PHÁT TRIỂN CHIẾN LƯỢC NHÂN SỰ CỦA NLDC GIAI ĐOẠN 2010-2015

G1 00134 DEVELOPMENT HUMAN RESOURCES STRATEGY OF NLDC IN THE PERIOD 2010-2015 PHÁT TRIỂN CHIẾN LƯỢC NHÂN SỰ CỦA NLDC GIAI ĐOẠN 2010-2015

_ GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

CAPSTONE PROJECT REPORT

DEVELOPMENT HUMAN RESOURCES STRATEGY

1 Quan Duc Hai

2 Nguyen Tat Thang

3 Nguyen Xuan Son

4 Bui Thi Hong Nhung

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CHAPTER 1 FUNDAMENTAL THEORIES ON BUSINESS STRATEGY AND

STRATEGIC HUMAN RESOURCES MANAGEMENT

1.4.2 Value chain analysis

1.4.3.1 | Power of Suppliers is shown in the following features

1.4.3.3 The threat of the entry of new competitors

1.4.3.4 Power of customers

1.4.3.5 The intensity of competitive rivalry

2.3.3.3 Cost reduction strategy and major HRM activities

CHAPTER 2 STRATEGIC HUMAN RESOURCES DEVELOPMENT

AT NATIONAL LOAD DISPATCH CENTER

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General introduction about Vietnam power system

Overview of power business strategy of Vietnam Electricity

in 2007- 2015 period, towards 2025

Regarding investment in power source development

Regarding power transmission

Orientation of power distribution area

Characteristics of human resources of power sector (EVN)

Regarding training areas:

Age-based labor force structure

Productivity index of entire EVN

Current business situation of NUDC

Power system operation

Other operations of Center as an enterprise

Business operation features of the Center

Power System Operator (SO) function

Market Operator (MO) function

Other business activities

Status of human resources deployment in the past years

Strategic human resources development at National Load Dispatch

Center

Existing operation of National power system (as of September 2009)

Current status of human resources of National Load Dispatch Center

Overview of Development Direction of NUDC

Basis for development direction of NLDC

Basic features in the restructuring pathway of EVN

Development Direction of National Load Dispatch Center

Strategic Human Resources Development at National Load Dispatch Center

STRATEGIC HUMAN RESOURCES IN 2010 — 2015 PERIOD AT NATIONAL LOAD DISPATCH CENTER

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Service provision as main business on the following

Main products with special and unique feature

Clients

Some measures for implementation of development strategy of

NLDC

Regarding the investment

Regarding the personnel organization

Restructuring of the Center according to following model (Figure

3.2)

Human resources development solutions

Measures for improvement of human resources quality via

recruitment

Measures for improvement of human resources quality via training

Measures for human resources improvement via evaluation system

Measures for human resources improvement via compensation

Improvement of working environment and conditions

Regarding the infrastructure

Other recommendations

For macro environment

For business environment

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LIST OF FIGURES, GRAPHS

Decisive factors to competition within an industry

Education background and age of management as of

April 30th 2008 Age-based labor structure

Hierarchy of national power system

Existing organization chart

Position-based structure Đleardnsbend structure Specialization-based labor structure

Age-based labor structure

Configuration of SCADA system Communication system for data exchange

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LIST OF TABLES

power utilities of some countries

training and development

Table 2.8 | Average salary level of some positions in the NLDC 56

Statistics of graduates from formal education of

" | degree holders of different specializations in 2009

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FOREWORD

[{mprovement of human resources quality is one of the most important tasks of a company in particular and a country in general Human resources quality improvement has become increasingly significant in the whole world in the past decades 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 human resources in terms of both quantity and quality Traditional perspective which stated that the major competitive advantage of a company or country lied in the financial, technical and technological capabilities became out of date The decisive factor to the existence and development of each company and each country is now people

understanding of effective performance Therefore, the human resources quality

improvement has been studied, developed and applied in advanced industrial countries The human resources quality improvement has not been properly concerned in Vietnam despite of its importance As a developing country, Vietnam always has to face up with post-war consequences and its economy is now in the

process of transition from subsidy and concentrated economy to market economy

Improvement of human resources quality in Vietnam enterprises has not been properly cared despite of its significance Innovation process has some basic changes requiring the development of human resources in terms of both quantity

and quality The poor quality of Vietnamese human resources is reflected in

Vietnam’s economic results which are far below the potential of natural resources and other resources Therefore, the actual situation of Vietnam economy requires researchers to be proactive in finding out solutions which help enterprises perform well the human resources quality improvement and thus reduce the risks, save time and enhance the competition capability during their shift to market economy

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

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transmission and especially power generation and distribution in the market

ecBabinY anuptc iatephateciWortiomegional and world economy As a global trend,

power sector of Vietnam is now step-by-step being restructured to remove the monopoly state and to put power market into operation

In that context, the National Load Dispatching Center, as the power system operator directing and managing the operation of all power plants, power transmission and power distribution companies, is required to develop a “well-trained” workforce to perform operating modes of national power system ensuring safety, stability and cost-effectiveness It has to meet the standards on frequency of national power system and voltage of national power transmission system; to comply with regulations on load dispatching of national power system in the power market and

power transmission grid and the guidelines of electricity regulatory authority and

power market management unit and not to discriminate in mobilization of power

output from power generation companies in the national power system This workforce should comprise of employees which have proper qualifications and

competencies 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

quality improvement in the National Load Dispatching Center in the competition and development process

2 Purpose of the research:

Based on the analysis of human resources quality and social information, the

current quality of human resources of National Load Dispatching Center (NLDC) will be assessed so as to propose solutions to improvement of human resources quality 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 the

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c) To give out some specific solutions to perfect and improve the quality of human

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3 Research methodology:

The research methodology used in the thesis is the statistical analysis, gathering and processing of available documents, description and comparison with logical

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 on strategy development in general and strategic human resources development in particular

In addition, the group will conduct actual research at company and use comparative

method to provide reasonable and effective basis for strategic human resources development

4 Contributions of the Capstone Project Report:

a) To systematize some argumentative issues relating to human resources quality

b) To make a comprehensive analysis of actual status of human resources of NLDC; and to develop some viewpoints as basis for improvement of human resources functions in NLDC

c) To propose some solutions to improve the quality of human resources in NLDC meeting the human resources demand for development of NLDC so as to meet the

requirements for operation of National power system and competitive and

transparent power market

5 Structure of the Capstone Project Report:

In addition to the foreword, conclusion, references and appendices, the Capstone

Project Report consists of 3 main parts:

Chapter 1: Fundamental theories on business strategy and human resources strategy

Chapter 2: Strategic human resources development at NUDC

Chapter 3: Some proposals and recommendations for improvement of human resources strategy of NLUDC

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CHAPTER | PDFRUNDAMENTAte M4BORIES 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 strategy may include geographical expansion, product diversification, emergence, product development, market penetration, reduction or withdrawal, acquisition or joint

venture

In this discussion, we will mention business strategies only

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

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

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 the

company 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 and

equipment) will company need for competition (resources)?

(environment)?

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

According to Boston Consulting Corporation:

Business strategies are determinations for distribution of available resources with a view to changing the competitive balance and shifting the advantage to our side According to Michael Porter, a top strategic professor of Harvard:

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Business strategy in coping with competition is the combination of objectives to be

acfiotcđ omdjmeane itd-we mdéelesidxy 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 many activities and projects)

- Long-term strategy (10 years or more, strategy is now an orientation and forecast

for 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 |, 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 for

all production and business activities of the company;

- Business strategy helps company grasp and take advantage of business opportunities and at the same time take measures to actively overcome threats and

risks in the competitive market;

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

company;

- Business strategy creates firm basis for formulation of business policies and

decisions 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 a summary of opportunities which are brought by environment and should be grasped

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by company and threats which are also brought by environment, can result in

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

- To analyze and select strategies for formulation of long-term objectives and creation 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 theory which forms the basis for development of strategic human resources in the National

Load 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 and sustainable manner, SWOT analysis is an indispensable stage in the strategic planning process of company

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

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Company identifies opportunities and threats through the analysis of data on

chkhyesCom pconanméreéndackibn political, legal and social environment and

competition in the markets where the company ts operating or planning to penetrate Opportunities may include market development potential, market gap and access to sources of cheap materials and labors with appropriate qualifications Threats to company may be market retraction, increasingly severe competition, possible policy

changes and development of new technologies which make company’s facilities and

production line become out of date

In the analysis of internal environment of company, strength of a company includes resources and ability to use facilities and background for development of competitive advantages In terms of company organization, it might be skills, resources and advantages possessed by company (key result areas of company) as compared with its competitors These areas include outstanding technology, famous trade 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 and

resources or constraints to company’s competitiveness or no available strength It can also be ineffective distribution network, improper labor relation, lack of

managers and leaders with international working experience and out-of-date

products as compared with competitors, etc

SWOT analysis provides useful information for connection of company’s resources and 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 the

difference between total value and group of costs for implementation of value activities Value activities can be divided into two major types: Main activity and supporting activity Main activities are those of material nature and relevant to the product generation, selling and transfer to customers as well as post-sale support In all companies, main activities can be divided into five general types: Input Logistic; Operation; Output Logistic; Marketing and Sales; and Services Supporting activities will supplement main activities and they themselves support each other

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through the input supply, technology, human resources and other functions in the

whuht Conmppargss Guppedcieraictivitics include: Company’s facilities; Human

resources management; and Technology development and acquisition which can be combined with main activities as well as support the entire chain Company’s facilities are not connected to any individual primary activity Instead, they only

support 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, Substitute Products 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,

- Switching costs or sunk costs,

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- 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,

PEST model studies impacts of elements in macro environment These elements

are: Political; Economics; Socio-cultural; and Technological

These four elements have direct impact on economies and are external to company and industry The subjectivity of industry to their impact is considered as an objective factor Companies, based on these impacts, will come up with appropriate business policies and activities

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In addition to above basic elements, during the market research, companies should

takeDiNt@ @uyounss the Kylebalmation element which has become a macro element

atfecting 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 muscle power, brain power and professional skills, etc of each individual Therefore, human is here considered as a capital in addition to other material capitals such as money capital, technology and natural resources

- According to the International Labor Organization, labor force of a country includes 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 production

and for development Therefore, manpower includes all population with normal

sum 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 is mother of all outputs; Karl Marx believed that human is number one element of

productive force The Vietnamese tradition identifies "Talented people are vital force of country” Avill Toffler, an American futurist, emphasized the role of mental labor He said "Money will be used up and power will be lost; only human

intelligence, when used, will not only be maintained but also be grown" (Power

Shift- Avill Toffler)

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

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

OfP LhÈ (soeigtyeeulddiae Meaesmbars of management board of enterprise) All

members of the corporate use their knowledge, capabilities, behaviors and ethic values to formulate, maintain and develop the corporate

- Upon mentioning human resources, people discuss about qualification, structure and 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 labor force 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 and profession will be more appropriate Accordingly, there are 5 types of labor: mental

labour, managerial labour, data labour, service labour and production labor Each

type of labor contributes differently to the generation of products The high or low

content of knowledge and intelligence in the labour product depends on the

contribution mainly of mental and managerial labour force and partly of data labours In order to improve the competitiveness in the international market, the

rapid 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 and

decisive to the successful performance of company’s strategies

- “Human resources strategy is the process of integrating human resources function into strategic objectives of the organization for efficiency improvement” (John Bratton — Strategic Human Resources Management)

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

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

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and encourage the enthusiasm, flexibility and performance of employees; and (3)

2.3 Some strategic human resources models

Human resource is always considered a decisive factor to the success of company

A company which may have modern technology, good service quality and firm infrastructure will find it difficult to sustain in the long run and to create competitive advantage if it lacks human resources It is possible to say that human resources differentiate companies However, if human resources development does not align with general principles and objectives of company, all the efforts to promote the performance of employees will become useless

The emphasis on importance of the integration between HRM and business strategy

illustrates the specific approach towards the development of SHRM A great

number of models has been developed to represent that integration and they are divided into three major groups: (1) general model (representing relationship between internal elements and external elements) (2) organizational model

(representing the relationship among internal elements of company), and (3) specific model (showing specific human resources policies in consistent with specific external and internal conditions of company

2.3.1 General model:

This group consists of most well-known models including Harvard model (Beer, pector, Lawrence, Mills & Walton, 1985) and Colins model (1994) Harvard model

is considered a great turning point in the process of formulating concepts of human

resources policy It gives out four policy making options: (1) impacts on human resources (2) flow of human resources rotation, (3) reward/penalty systems, and (4)

work systems Harvard model requires the involvement of all stakeholders whose interest is relevant to the performance and result of human resources policies

However, it fails to highlight the process of development and implementation of HRM policies Whereas, Colins (1994) used system framework to describe the relationship among elements decisive to SHRM This model defines some major elements which link to the establishment of internal and external integration These elements include tasks, strategy, organization structure, culture, labor characteristics and human resources policies Benefits of alignment between HRM policy and

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business strategy include equity, market share, product quality, company image,

créalhvity opngzivests vity! pre f¥ssioneal ethics and revenue

[he drawback of this model is that it fails to answer which human resources strategy and policy match a specific business strategy or organization structure In addition, it has not specified the necessity of a close relationship between HRM policy 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 a detailed picture of human resources activities happened inside the company It focuses on internal relations between strategic demand of company and human resources activities It is formed from five English words:

Philosophy’, ’Policies’, ’Programs’, ’Practices’ and ’Process’; By identifying such

five activities, this model has shown the complicated interaction of human resources

activities necessary for the formation and development of behaviour of individuals and group so as to meet the strategic demands of company These demands are reflected via outputs, vision and objectives of business strategy

Schuler said that efforts for successful implementation of SHRM should start with the definition of strategic business demands and systematic analysis of impacts of

these demands on five aforementioned HRM activities The link between HRM

Strategy and activities can be consolidated by encouraging the engagement of

employees in the identification of their roles Moreover, managers involving in the

SHRM process must have analytical and systematization capabilities during the determination of strategic demands and design of human resources activities SHRM process also creates opportunity for HR department to involve in the business strategy planning However, Schuler’s model fails to point out when a specific human resources policy match the general development strategy of

company

2.3.3 Specific relationship model:

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

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competition strategies are classified into three types: quality enhancement strategy,

cB DrbdGctinp sestep awd \entiniby 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

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- Provide few opportunities for professional development

- PAply @raoqssœwsd rcbwktecNtarsaon

- 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 and development phase, (2) peak development and downturn phase, and (3) recovery phase

In phase (1), the strategy emphasizes the creativity and new product development of human 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 existing products as much as possible and to focus on production promotion and cost reduction Then, the challenge of HRM is how to attract and retain real competent

employees’ (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 quality

improvement

SHRM requires company to develop human resources objectives, strategies and policies in accordance with its business strategy These factors facilitate the development 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 of HRM in its development strategy and thus to apply the most appropriate SHRM model to obtain success and commensurate position in the business market

3 Strategic Human Resources Development Process

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Strategy development process can be divided into seven main steps as shown in

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Figure 1.1: Strategic Planning Process

Select strategy (4)

Strategy at company level (5) Strategy of business units and functional

divisions Implement strategy (6)

Feedback

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 be satisfied, how to satisfy customers’ needs and which technology is used to respond), company’s objectives will be identified through the determination of strategic vision (future business direction — answer to the question “where will we be?’’) and strategic 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 statement describes organization’s current capabilities which help company reach its Vision

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

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Figure 1.2: External Elements

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of opportunities and minimize the threats

Macro environment consists of many different elements directly or indirectly affecting the operation and human resources of company through their impacts on

elements within business environment Among those elements, there are five

elements which are assessed by administrators as having greatest impact They include: Economy, Legal, Socio-cultural, Ecology and Technology

Business environment is the environment which closely links to operation of company Elements of business environment will decide investment environment, intensity of competition and degree of profit in the business They will also define

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age-based labor structure, qualifications and professional skills of company’s hula’ Casnupeess okdcvediiversooWrofessor Michael E., Porter, the context of operational environment is subject to five forces trom competition: threat of new entrants, competitive rivalry within an industry, power of consumers, power of suppliers 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 internal

environment to identify strength and weakness of company)

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

of strategy must include analysis of current status and identification of strength and weakness This helps to realize the real competencies of company’s human resources, including professional qualification, experience, workmanship and attitude of employees; human resources policies of company; ability to balance the use Of employees between maximum and minimum levels; and competency, level

of interest and qualification of top management It is also necessary to analyze how

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other elements such as research and development, production, finance and

acPdihting andrasarketimg a Weesdompany’s human resources management

- 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 and take advantage of opportunities from internal and external environment)

- Step 5: Establish strategic human resources at functional division level and at company 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 successfully perform set targets; maximize opportunities towards end results; and disable the

threats so that company’s success in business is complete

Also from that, company realized different threats and weakness with certain

impacts on strategic human resources management which company is planning to develop

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Table 1.1: SWOT Matrix

company can overcome its weakness to win attractive opportunities

In order to develop strategies based on SWOT analysis, companies should design a

matrix 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

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From the above analysis, company must choose which strategy should be applied

fIiSlbind whieglr œrwo shouté Merson later and in which order of priority? Strategy is

a system of significant policies and measures to implement and coordinate action plans to help organization accomplish its objectives in the most effective manner Company must select the most optimal strategy as it is impossible to implement all strategies 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 is essential to come up with a set of most optimal strategies for development and to consider company’s gain and loss from selected strategy

After the set of strategies has been identified on the basis of such combinations as

strength — opportunity, strength — threat, weakness — opportunity, and weakness — threat, Great matrix will be used to make an outline for selection of key human resources strategies to be pursued by company The assessment and prioritization are based on the discussion between company’s management and subject matter experts to come up with appropriate decisions and procedure

Table 1.2: Evaluation of strategy implementation sequence following GREAT

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

- Répl2CAnsensetiroddgree Mfeimapaat of elements (criteria) on general strategies; use impact coefficients to represent degree of importance and impact of elements on strategy (coefficient is calculated by giving score from 0 to | so that total weight is equal to 1)

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

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

- Step 4: Convert coefficients which are product of 2 columns (2™ column and

column of evaluation score of each strategy); then accumulate component results to get total score at the final row

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

3.2 Implementation of strategic human resources

For each of important issues, it is necessary to highlight measures to be taken At the 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 are

improvement of corporate culture, office communication, recruitment, training and

development, reward and penalty system, and human resources planning, etc

Based on those important issues and solutions, plan and pathway should be provided 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 human resources planning in the following areas: quantity and quality of employees; productivity; turnover rate; and employees’ satisfaction for work, etc It also aims to define differences between plan and actual implementation, causes of these differences and measures for improvement The ultimate purpose of a human resources strategy is to ensure that such areas support and affect each other It is also important to know how these objectives affect the implementation of other functional strategies, business strategy and corporate strategy

In conclusion, the strategic human resources development, by nature, aims at mastering “people element” of an organization to help achieving short-term and

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long-term objectives; to ensure using right person for right job, promoting

qubiDicdtionsparad ski BieteeWmiswars, 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’s

Strategies 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 of its parent company — Vietnam Electricity is responsible to perform the operation of power system — operation of power market and to conduct services in the field of

power system operation — power market operation

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

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

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- NLDC is proud to be leading unit in power system operation in Vietnam This pd3lÐBr( le tầpaksstortlfu'poswessaiamof active and creative employecs who always do their best tor the general objectives of the Center NLDC believes that people are invaluable resources and that it is employees who bring success to the Center

qualifications and skills are essential to us so that we can expand business, become successful in Vietnam and reach the regional performance level

- Our employees are entitled to competitive salary and comprehensive package of social welfares Our salary system is clear and strict and annually reviewed In addition to monthly fixed salary, our management and employees have chance to increase their income based on their performance and contribution to Center’s

success

- Our employees work in a dynamic and professional environment They are often

assigned to training courses to improve their profession and skills for the work We

set very high requirements for our employees in terms of ability to work

independently, to make their own decisions and to develop them on the basis of

actual work

- NLDC has continuously sought and recruited candidates with professional passion and 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 21" century

There are three important milestones in the establishment and development process

of NLDC (also known as AO):

- On April 11" 1994, AO 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 4" 1995, at Decision No.118 NL/TCCB-LD of Ministry of Industry, AO was transformed to a subsidiary under Vietnam Electricity Corporation (now Vietnam Electricity Group)

- On December 31° 1998, at Decisions No.82, 83, 84/QD-BCN of Ministry of Industry, Northern, Central and Southern Load Dispatch Centers were merged with

AO to establish the National Load Dispatch Center with two dispatch levels of power transmission network — national and regional levels

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2 Power business strategy of Vietnam Electricity in 2007 — 2015 period,

toWhrid¢ 202Hressor Free Version

2.1 General introduction about Vietnam power system

Concept of power system: Power system is the collection of such elements as Power source, Power grid and Power consumer or Load These elements are connected to each 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

with capacity of 17,844 MVA Total commercial power output is 65,923 GWh, where power consumption for Agriculture, Forestry & Aquaculture is 653 GWh;

that for Industry & Construction is 33,026 GWh; Commerce & Hotel and restaurant

with 3,242 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 2008)

Power is an invisible and non-preserving product for which the instant balance

between demand and supply must be ensured In other words, the power system has

to continuously maintain the balance of source (power generation) and demand (power consumption) Even small unbalance in a short time will cause unsafe power

supply of the whole system

Factors affecting power supply-demand balance include changing load, changing source of supply (due to failure/maintenance of generating units and fuel supply pipeline, 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 is necessary to control power generation, transmission and distribution units in implementation of operating mode of power system Such unit is called Load Dispatcher

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2.2 Overview of power business strategy of Vietnam Electricity in 2007- 2015

peHMk' @wurdv@02% Frec Version

2.2.1 Regarding investment in power source development

(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 draught control 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 in power 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 of 51% of chartered capital of Power General Joint Stock Companies Total minimum capacity 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 the

Southern provinces; In 2011-2020 period, coal thermal power will play key role in

the 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 to

minimize the pressure of gas price from foreign countries Coal thermal power plants 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 in infrastructure and coal habour

(c) To speed up construction progress of hydropower plants under construction; to quickly finish investment procedures for construction commencement of new

hydropower plants to take use of domestic construction force for continuous construction of plants and improve effective exploitation of energy sources; to fully exploit possible hydropower sources on Da, Lo, Gam, Ma, Ca and Chu rivers in the

North, 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 into operation on or before 2020 to help balancing the load diagram and optimizing the source mobilization

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

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(ce) To prepare necessary conditions for starting of nuclear power plant expected to

operational satety

(f) To maintain power import from China at 220 kV voltage as per the signed contract; to reduce the purchase of power at 110 kV voltage level after 2010 so as to take us of domestic energy sources; to cooperate the investment in construction of hydropower plants in Laos, Cambodia and Myanmar in the form of joint stock companies, especially power plants at the downstream of Se San, Se Re Pok and Se Kong 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 power supply 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 to develop 110 kV network into regional power network and directly

supply power for loads

(b) Grid design in early phase should take into account transmission capacity for the next 10 — 20 years; programs should be given to improve existing transmission lines, especially those at the areas with many single circuits Design of power grid layout should have high reserve and flexibility for to supply power safely and stably and 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 supply power 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 install

compensating capacitors and take measures to reduce power loss and failure and to increase the reliability of power supply; especially, to prioritize the improvement of power network at urban areas and other areas where power grid has been

downgraded

(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 supply power for industrial zones; to consider buying power from investors when there

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power plants have excessive power or when there is shortage of power source on

th babi Chat jbegsingr piriaxei¥Y antibigher than price bought from power plants under

EVN

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

(d) To develop a pathway for changing of organization structure and operation of power 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 be separated from the power distribution management and operation function At the same 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 22"4 2006

The mission of EVN is “to do business in multi-sectors with many forms of

ownership, to possess high level of technology, modern management and

specialization; to take electric power, public telecommunication and electric power

mechanics as main businesses; to closely connect business and production to science, technology, research and training; to act as core for power industry of Vietnam to rapidly and sustainably develop, be competitive and effectively integrate in international economy”

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

- Together with the development of power sector in the past years, EVN has developed a workforce which has political, managerial, functional and language

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competencies, becomes stronger and stronger, and performs well EVN’s tasks inking pnepuctiony tradin{ ansioesearch

- As of December 31° 2007, EVN has a total of 86,928 employees, of which 17,807 are female employees, accounting for over 19% Power distribution area accounts for largest number of employees with 65.6 % (57,025 people), followed by power generation area with 10.8 % (9,514 people), power transmission area with 7.9 % (6,900 people) and other areas such as consultant, telecommunication, power equipment production and project management, etc The education structure (Table 2.1) 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 has

increased on a mean annual rate of 3% In terms of quality, the number of

employees with university and graduate education has improved as compared with other educational levels A significant number of those employees is trained Overseas and currently holds key managerial or technical positions of EVN

However, if university education is taken as center for comparison with other

educational 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 college

education is still rather low

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

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- EVN’s erinloyees are trained in a variety of areas, of which engineering accounts

- otal number of employees holding managerial positions from Board Chairman of EVN up to superiors at 3" entity is 9,365 people, accounting for 10.77% of total number 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 the current level of technology and management

- In the recent years, thanks to the effective human resources training and development, the qualification of employees has been improved and managerial staffs have been assigned to short courses for knowledge upgrading and enhancement However, most of managerial staffs, especially those specialized in

engineering, have not been regularly provided with update knowledge of business

management, corporate management, human resources management and leadership skills

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

2 PD Aga hapeddsibv ii foee Varsionre :

- 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) The average age of EVN’s employees is 31 and most of them are trained and capable of grasping new technology However, there are several age-related issues for consideration, including seniority, experience, acquired knowledge, innovation capability, mobility and adaptability to new business environment and mechanism,

etc

- Features like young average age and hardworking trait, etc which were traditionally highly appreciated by policy makers as advantages are now not advantage anymore

Figure 2.2: Age-based labor structure

Under 30 yr old

35.00%

2.3.3 Productivity index of entire EVN:

- Productivity in major business has increased on a mean annual rate of approximately 12 - 14 % in 1995 - 2004 period Thanks to significant investment in modern equipment and great concern over human resources development and training, EVN’s productivity has grown up rapidly in the recent years (20% in 2007) However, as compared with other power utilities in the region and of developed countries, EVN’s productivity is only higher than that of Laos, Cambodia and Myanmar but far below that of Korea, Taiwan, Japan and Europe

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(Table 2.2) Table 2.2: Comparison of productivity index between EVN and

pdwek Gtilitips ofisontereeuwitrigon

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

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

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Level 1: National load dispatch level is the highest dispatching level of the whole natibalGoompresysterirdévavienalolpad dispatch level is assigned to the National Load Dispatch Center (referred as AQ) with following functions:

- To command the load dispatch of national power system ensuring the safe, continuous, stable, quality and cost-effective operation of national power system;

- To arrange modes of power source mobilization so as to meet requirements for cost-effectiveness and power quality of the entire system, including load forecasting, generating unit mobilization, reservoir regulation, assignment of daily, weekly and monthly generation diagram and preparation of quarterly and annual plan for power plants under EVN;

- To prepare and specify operating modes for the whole national power system;

- To calculate transmission regime in the power system corresponding to operating

modes;

- To manage power plants, adjust power system frequency, power trend on 500 kV transmission line and voltage of some main nodes in the power system;

- To control the operation and dealing with emergency cases of 500 kV power grid;

- To calculate and calibrate relay protection and automatically upload to 500 kV

grid; to provide limits for calculation and calibration of relay protection and automation for power transmission grid at lower levels and for power plants;

- To participate in analysis and investigation to find out causes to problems in the

power system and to work out counter measures;

- To conduct training, upgrading and examination on skills for operation of power system and SCADA/EMS for dispatchers at all levels

Level 2: Regional load dispatch level is responsible for managing the dispatching of

regional power system and directly managed by national load dispatch level this level is assigned to Regional (Northern, Central and Southern) Load Dispatch Centers (known as Al, A2 and A3) Regional Load Dispatch Centers are subsidiaries under National Load Dispatch Center and perform following tasks:

- To direct regional load dispatch for the purpose of safe, continuous and stable power supply ensuring quality and cost-effectiveness;

- To prepare daily operation mode;

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