Solutions to improve labor productivity at BIDV branches in hanoi

General evaluation of the average labor productivity of commercial banks in Vietnam and the average labor productivity of commercial banks in Hanoi City .... In this situation, with the

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-

LƯƠNG THANH MINH

SOLUTIONS TO IMPROVE LABOR PRODUCTIVITY

AT BIDV BRANCHES IN HANOI

GIẢI PHÁP NÂNG CAO NĂNG SUẤT LAO ĐỘNG TẠI CÁC CHI NHÁNH BIDV TRÊN ĐỊA BÀN HÀ NỘI

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2019

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-

LƯƠNG THANH MINH

SOLUTIONS TO IMPROVE LABOR PRODUCTIVITY

AT BIDV BRANCHES IN HANOI

GIẢI PHÁP NÂNG CAO NĂNG SUẤT LAO ĐỘNG TẠI CÁC CHI NHÁNH BIDV TRÊN ĐỊA BÀN HÀ NỘI

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS.TS PHẠM ĐỨC HIẾU

HÀ NỘI - 2019

DECLARATION

The author confirms that the research outcome in the thesis is the result of author’s independent work during study and research period and it is not yet published in other’s research and article

The other’s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if required) is given

The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration

Date………

LỜI CẢM ƠN

Em xin gửi lời cảm ơn sâu sắc đến PGS.TS Phạm Đức Hiếu đã tận tình hướng dẫn, chỉ dẫn em trong suốt quá trình nghiên cứu và hoàn thành luận văn này

Xin chân thành cảm ơn đến toàn thể Quý Thầy Cô khoa Quản trị và Kinh doanh (HSB) trường Đại học Quốc Gia Hà Nội đã tận tình giảng dạy, truyền đạt kiến thức trong suốt quá trình em theo học chương trình MBA

Kính chúc Qúy thầy cô, toàn thể anh chị em bạn bè đồng nghiệp thật nhiều sức khỏe, nhiều thành công trong công việc và trong cuộc sống

Xin chân thành cảm ơn!

Hà Nội, ngày…tháng…năm 2019

TABLE OF CONTENTS

ABBREVIATIONS i

LIST OF TABLES ii

INTRODUCTION 1

CHAPTER 1: OVERVIEW OF LABOR PRODUCTIVITY 4

1.1 Some basic concepts 4

1.2 Role of increasing labor productivity in businesses 7

1.3 Factors that affect the labor productivity 9

1.3.1 Impact of science and technology: 9

1.3.2 Impact of human resources and human management (human resources) 9

1.3.3 External factors such as macroeconomic environment, laws, policies, etc 16

CHAPTER 2: CURRENT STATUS OF LABOR PRODUCTIVITY OF BIDV BRANCHES IN HANOI CITY 17

2.1 Overview of BIDV and BIDV branches in Hanoi City 17

2.2 General evaluation of the average labor productivity of commercial banks in Vietnam and the average labor productivity of commercial banks in Hanoi City 20

2.3 Evaluation of the current status of labor productivity of BIDV branches in Hanoi City 29

2.3.1 Labor productivity by scale 29

2.3.2 Labor productivity by efficiency 33

2.3.3 Labor productivity by workload 37

2.4 Evaluation of the current status of labor productivity of BIDV in Hanoi City 43

2.4.1 Advantages 43

2.4.2 Shortcomings and causes 45

2.5 Factors affecting the labor productivity of BIDV branches in Ha Noi City 46

2.5.1 Organizational structure 46

2.5.2 Operation process 48

2.5.3 Technology 49

2.5.4 Human resources 50

CHAPTER 3: SOLUTIONS TO IMPROVE LABOR PRODUCTIVITY OF BIDV BRANCHES IN HANOI CITY 52

3.1 Orientation of BIDV’s operational objectives for the 2016-2020 period and vision to 2030 52

3.1.1 Vision to 2030 52

3.1.2 Objectives and requirements in the 2016-2020 period: 52

3.2 Solutions to improve labor productivity of BIDV branches in Hanoi City: 58

3.2.1 Solutions for organizational structure reform of BIDV: 58

3.2.2 Solutions for BIDV’s operation process reform and some specific mechanisms for branches in Hanoi City 59

3.2.3 Technology solutions 63

3.2.4 Human resources solutions 63

3.3 Implementation roadmap: 65

3.3.1 Phase 1: From 2018 to June 30, 2019 66

3.3.2 Phase 2: From July 01, 2019 to July 01, 2020 67

3.3.3 Phase 3: In Quarter 3+4/2020 67

REFERENCES 68

- Ban QLHQHD: Performance Management Board

- LNTT: Earnings before tax

- QLKHDN: Corporate customer management

- QLKH: Customer management

LIST OF TABLES

Table 2.1: Average labor productivity of the whole economy 21

Table 2.2: Average labor productivity by sector in the 2011 – 2015 period 22

Table 2.3: Total assets of commercial banks with their head offices in Hanoi City 23

Table 2.4: Labor productivity by total assets of commercial banks 25

Table 2.5: Labor productivity by capital mobilization of commercial banks 26

Table 2.6: Labor productivity by the outstanding loans of commercial banks 26

Table 2.7: Net income of commercial banks in 2016 27

Table 2.8: The average net interest income per labor of commercial banks 28

Table 2.9: The average net non-interest income per labor of commercial banks 28 Table 2.10: Labor productivity by the average earnings before tax per labor of commercial banks 29

Table 2.11: Average residual capital mobilization per capita of some branches of commercial banks 30

Table 2.12: Average credit outstanding balance/person of some branches of commercial banks 32

Table 2.13: Average earnings before tax per capita of some branches of commercial banks 34

Table 2.14: Average net service income per capita of some branches of commercial banks 36

Table 2.15: Number of transactions of BIDV by area 38

Table 2.16: Average transactions/day/teller of some branches of BIDV in Hanoi City 39

Table 2.17: Comparison of the proportion of officers in departments among BIDV branches 40

Table 2.18: Number of organization customers/ corporate customer managers 42 Table 2.19: Number of retail customers/retail customer managers 42 Table 2.20: Comparison of Qualifications of employees of BIDV with commercial banks in Vietnam 44

INTRODUCTION

1 Rationale

Labor productivity is a very important quality indicator in the national economy For businesses, labor productivity is the decisive factor to increase production, reduce the costs and timely meet customer needs It is also an indicator of competitiveness, which is an important factor in the business growth, improves the efficiency of enterprises In addition, in the context of market economy and international economic integration and the more and more severe competition nowadays, to be able to exist sustainably and operate effectively, it is essential for businesses and banks to pay more attention to in-depth development, improve the productivity, service quality, especially labor productivity

Therefore, in Joint Resolution No 5960/NQLT-BIDV dated 07/8/2015 on Orientation of Business Plan Framework for the 2016-2020 period and Vision to

2030 of Vietnam Joint Stock Commercial Bank for Industry and Trade (BIDV),

one of BIDV’s goals and requirements for the 2016-2020 period is: “Perfecting

Regulatory compliance-based banking management model, Operating according

to the Practices on the transparent, public and effective way Maintaining the goals of transforming the organizational model towards the centralized management in Head Office and operating the vertical business of a modern and advanced banking model Improving the business efficiency and labor productivity; striving to increase the labor productivity (Earnings before tax per capita increases by over 10% annually)

In this situation, with the expectation of contributing a small part to the achievement of the goal and requirements of BIDV’s Board of Directors, the research team found it is really necessary to evaluation the current status of labor productivity and propose the solutions to improve labor productivity at BIDV branches in Hanoi City Therefore, the research team has selected the

topic: “Solutions to improve labor productivity of BIDV branches in

Hanoi City”

2 Research objectives

+ Study the basic socio-economic characteristics in Hanoi City, thereby showing the specific characteristics of commercial banks in Hanoi City and assessing the potential growth of the banking products and services of BIDV branches in Hanoi City

+ Learn about the average labor productivity of Vietnamese commercial banks in general and the average labor productivity of commercial banks in Hanoi City in particular Evaluate the labor productivity of BIDV branches in Hanoi City through comparision with the labor productivity of some other branches in the same area (VCB, Viettinbank, MB, Techcombank); thereby showing the advantages and disadvantages that affect the labor productivity of BIDV branches

+ Find out the causes and factors affecting the labor productivity of BIDV branches so as to come up with solutions to improve labor productivity

of BIDV branches in Hanoi City

3 Subject and Scope of the study

+ Subject of the study: labor productivity of BIDV branches in Hanoi City

+ Scope of the study: Labor productivity of BIDV branches in Hanoi City on the basis of comparison with the average productivity of the sector and labor productivity of some other bank branches (VCB, Vietinbank, MB, Techcombank)

4 Research methods

Based on the collected data, using the methods of statistics, comparison and data aggregation over the years, analysis of specific indicators to find out the achievements and the shortcoming that affect the labor productivity of

BIDV branches in Hanoi City

Combining the theory and the practice to offer solutions to improve labor productivity of BIDV branches in Hanoi City

5 Design of the thesis

Chapter 1: Overview of labor productivity

1.1 Concept of labor productivity

1.2 Role of improving labor productivity in businesses

1.3 Factors that affect the labor productivity of a business

Chapter 2: Current status of labor productivity of BIDV branches

in Hanoi City

2.1 Overview of BIDV and BIDV branches in Hanoi City

2.2 Overall evaluation of the average labor productivity of commercial banks in Vietnam and the average labor productivity of commercial banks in

Hanoi City

2.3 Current status of labor productivity of BIDV branches in Hanoi City 2.4 Evaluation of labor productivity of BIDV Hanoi City

2.5 Factors affecting the labor productivity of BIDV branches in Hanoi City

Chapter 3: Solutions to improve labor productivity of BIDV branches in Hanoi City

3.1 Orientation of BIDV’s operational objectives for the 2016-2020

period and vision to 2030;

3.2 Solutions to improve labor productivity of BIDV branches in Hanoi City

3.3 Some recommendations

In the implementation process of the Study, despite many efforts, due

to the limited time and collected data, the research team may encounter some inevitable errors in the thesis We would like to receive valuable comments from the members of the Council to further improve the Thesis

Thank you very much!

CHAPTER 1:

OVERVIEW OF LABOR PRODUCTIVITY

1.1 Some basic concepts

Concept of productivity

Economist Adam Smith was the first author who introduced the

“Productivity” term in 1776 It was then used quite frequently when analyzing

economic issues at the macro and micro levels In simple terms, productivity

is a measure of the output generated based on the inputs The relationship between input and output is expressed by the formula:

Productivity =

According to this definition, the basic principle of productivity is to implement the methods to maximize outputs and minimize inputs Thereby, efficiency is expressed as the ratio of input and output that form the essence

of the concept of productivity

For businesses, the output is the total production - business value or value added or the volume of goods calculated in kind Inputs are calculated

by the factors involved to produce outputs such as labor, raw materials, capital, equipment, machinery, energy, management skills

In the early phase of industrial production, it is assumed that the labor is the most important factor, so productivity and labor productivity are considered synonymous Over time, other resources such as capital, energy, materials, etc are also considered, so the concept of productivity is evaluated

in a more appropriate way Under the new approach, productivity is construed

as follows:

Emphasis on reducing waste in all forms (here “reducing waste” is used rather than “reducing input”)

Productivity is working smarterly, not harder

Human resources and the human’s thinking capacity play the most important role in achieving the higher productivity and action is a result of the thinking process

Increasing productivity means constant innovation and improvement In fact, improvements are made from changes in design, production, etc These are the changes that must be made due to the influence of factors such as technology, management, production requirements ad the working methods Workers must be involved in creating and implementing those changes In this way, change is easier to be accepted and can satisfy everyone

Productivity is considered to be a manifestation of both efficiency and effectiveness in the use of resources to achieve the goal It means that besides the efficient use of inputs, productivity also manifests itself through the quality and visibility of the output Productivity is oriented towards output, so

it is important to consider the products and services that are created in a close relation to the needs and actions in the way they want and to survive and grow, the producers must meet their expectations and expectations Therefore, productivity and quality are not mutually exclusive and vice versa, they are interconnected, mutually supportive and increase in productivity is simultaneous with quality improvement

The fundamental difference between traditional productivity and mordern productivity is that productivity in the new approach pays more attention to the outputs than to the efficiency of inputs Productivity and quality are no longer the mutual compensations but generate the same efficiency together

Concept of labor productivity

In the above approach, different inputs and outputs will have different productivity evaluation indicators such as aggregate productivity, capital

productivity, etc and labor productivity is one of the most basic indicators in evaluating the effectiveness “Labor productivity is the effectiveness of the human’s useful activity in a unit of time and is expressed either by the quantity of products made in a unit of time or the cost of making one product.”

Formula:

Labor productivity =

Where:

Q: is the output produced in a unit of time unit T and can be expressed

by the number of products or value, turnover, profit, etc

T: is the amount of labor consumed to complete the output Q (unit: person, working day, working hour, etc.)

Thus, labor productivity is an economic category that represents the productivity of workers in the production process Essentially, it is the output value generated by a worker for a given period of time or the amount of time necessary to produce an output unit

Concept of labor productivity

According to Karl Marx, “Increase in labor productivity is an increase

in productivity or labor productivity, in general a change that shortens the time needed to produce more value”

Increase in labor productivity means labor cost reduction of a product

At the same time, the higher the productivity is, the higher the production value is but it does not means that the output value is higher When labor productivity increases, the time used to make a product is shorter, thus the value of such product is lower and the cost of the product is lower but the value in use of such product is not lower Karl Marx wrote “In general, the greater the productivity of labors is, the shorter the time needed to produce an

item is, the smaller the quantity of labor that is crystallized in such item is, the lower its value is On the contrary, the less the productivity of labor is, the longer the time needed to produce one item is and the greater its value is Thus, the quantity of a unit of goods is proportional to the quantity of labor expressed in that goods and is inversely proportional to the productivity of that labor

The productivity growth is a common economic law for all forms of society However, the movement and manifestation of the labor productivity growth law in different forms of society are also different due to different qualifications of production force Under slavery, the labor productivity is very low because the production is mainly based on human power, animal power and rudimentary labor tools Under feudalism, the social labor productivity increases but remains at a low level because the labor system is largely manual When machinery is used, labor productivity is several times higher Nowadays, thanks to advanced scientific and technological achievements, human beings have a modern system of labor tools that create very high social labor productivity This capability does not stop but goes further

In order to increase social productivity, two measures can be taken: increasing the working time and saving labor costs for each product In reality, the probability of increasing social working time is limited because the increase in the number of labors and working hours is limited However, the probability of saving the working time and costs per product is enormous

It is necessary to take a second approach as a basis for production development, which means that labor productivity must be increased at every enterprise

1.2 Role of increasing labor productivity in businesses

Labor productivity growth has a great significance to the development of society, which is the driving force for the socioeconomic development of every

country and an important basis for micro and macro decisions The central issue of labor productivity today is ensure the better society through the improved technology to make more efficient use of available resources and technologies For enterprises, the labor productivity growth is more important because it is one

of the indicators reflecting their business production efficiency and is a decisive factor for their existence and development, specifically:

- Labor productivity growth contributes to improving the competitiveness of enterprises in the market It can be said that competitiveness enhancement is a top priority for businesses, especially in the current market economy By improving competitiveness, businesses will be able to sell more products in the market, thereby increasing market share and profits Besides, when labor productivity increases, the product cost decreases but at the same time, the product quality is also improved thanks to the saving cost of salaries for a product Price and quality are two main factors that determine the competitiveness of enterprises in the market

- Labor productivity growth contributes to improving the production and business efficiency of enterprises When labor productivity increases, the production cost of a product decreases, so the labor productivity growth reduces the number of labors and save salary funds The salary is one of the costs of the production process, thus labor productivity growth contributes to reducing costs and improving production and business efficiency On the other hand, when the salary funds is saved, the salary for workers is higher, thereby encouraging and motivating them

- High labor productivity and drastic labor productivity growth will facilitate the expansion of production scale, increase the speed of products and Gross National Income, thereby easily dealing with accumulation and consumption problems because the labor productivity growth leads to higher output and higher gross production value, thus facilitating the increase in

profits, helping enterprises to accumulate investment in expanding production and business activities

1.3 Factors that affect the labor productivity

In fact, there are many factors that affect the labor productivity of an enterprise; howeverm it can be divided into three following basic groups:

1.3.1 Impact of science and technology:

Over the years, the drastic development of science and technology has had a positive impact on improving the labor productivity of workers as well

as reducing production costs and transaction costs Thanks to technology change, many enterprises have created higher value-added products, saved labor forces and improved general labor productivity In fact, capital accumulation only brings about the growth in the short term meanswhile technological advances are important factors for growth and productivity improvement in the long run Therefore, the breakthrough determinant of the long-run labor productivity growth in each country is technology and innovation, which will help to create new products more efficiently

For Vietnam, one of the reasons for low labor productivity is the low scientific and technological application level, a large number of manual labors and lack of scientists as well as experts, thus leading to limited labor productivity The experience of developed countries shows that the science and technology development and innovation are closely tied to the qualification development of scientists and employees; therefore, to make a breakthrough in technology, it is required to have qualified human resources

as well as the government’s reasonable support policy

1.3.2 Impact of human resources and human management (human resources)

In fact, the industrialized and developed countries in the world have a higher level of technology and labor than that in developing countries It

means that labor productivity is only high when the qualifications of labor is also high correspondingly On the other hand, through the research and in fact, the research experts believe that the human capital growth will bring sustainable growth in the long term Human capital includes many factors such as: knowledge, experience, health, personal ability and has been accumulated by education and health care, thereby increasing production efficiency So, it can be divided into two following main groups of impact:

 Factors associated with employees themselves:

- Qualification of employees: is their understanding of common natural

and social knowledge, expressed through the degree The higher qualification

is, the better the ability to absorb and apply advanced scientific and technological advances is, thereby positively impacting labor productivity

- Professional skills of employees: are expressed through knowledge

and skills to do work, manifestation of the training level at vocational training schools, universities, colleges, secondary schools, etc The broader the professional knowledge are, the higher the professional skill is, the shorter the time of producing a product is, thereby increasing labor productivity Nowaday, the science and technology is growing at a high speed, the production tools are increasingly modern, so it is required for employees to have a corresponding professional level to be able to use, control and grasp how to operate the machinery in the work If the employees lack professional knowledge, it will be difficult for them to use and control machinery and equipment, which will directly affect the labor productivity of the enterprise Thus, the professional skills and knowledge of employees is very important and greatly affects the labor productivity of an enterprise

- Labor disciplines: are the standards that regulate the individual

behavior of workers employed by the employer based on the current legal regulations and social ethics If employees work for the organization, they

must comply with the contents and conditions of labor disciplines The purpose of disciplines is to raise the awareness of the workers and help them

to work in the cooperative spirit in accordance with the general principles of the organization However, the use of disciplines to promote labor productivity in the enterprise is very important It is essential to select the appropriate disciplines based on violation seriousness to warn other workers and promote ethical behavior and encourage their creative initiative in the proper and active direction Where disciplinary action is to be taken, the disciplinary measures must bring about the desired result, enabling the employee to understand and be aware of his or her wrong actions and correct them and not repeat them in the future To achieve this goal, the manager should clearly explain the reasons for the disciplinary measure and form to the concerned employee and help his/her to understand that disciplinary action is

to help his/her to correct mistakes and work more effectively performance as well as be aware that the organization recoginzes both his/her strengths and weaknesses, thereby elicit good responses, express trust in him/her Thus, the labor discipline form and method is also a factor influencing labor productivity If the organization takes disciplinary measures in the above principles, its labor productivity will be higher

- Sense of responsibility: the sense of responsibility of workers plays

an important role in improving their individual labor productivity and at the same time helps them to achieve high work efficiency People with a high sense of responsibility are not only always careful, attentive and complete work on time in a self-conscious way but their products are also of high-quality Thus, the enterprise with many employees with a high sense of responsibility will have higher labor productivity and higher business efficiency In contrast, people with a low sense of responsibility, lack of self-consciousness and lack of responsibity may cause the negative consequences

that affect not only their own work performance but also the collective and enterprise

- The attachment to the business: Objectively, the attachment to the

business will bring about the long-term efficiency to both business and employees For enterprises, when employees are attached to enterprises, they will gain great benefits such as the lower costs for recruiting and training new employees On the other hand, employees who are attached to the enterprise have a relatively long working time in the enterprise, so they are more competent in their work as well as have more work experience, resulting in higher effeciency and higher labor productivity In addition, the employees who are attached to the enterprise will focus more on and devote to and try to

do their jobs for personal purposes such as promotion, salary increment, etc which is perfectly legitimate and contributes to increasing the labor productivity of the business

- Health conditions: The employees’ health is expressed in height,

weight, spirit, physical well-being and health status that affect their labor productivity Employees with good health will be able to finish work with higher quality In contrast, if the employee has a bad health condition, he/she could not focus on the working process, thereby affecting the accuracy of the job and reducing the efficiency and labor productivity of the enterprise

- The working attitude is reflected in the sense of responsibility in

work, high labor discipline, etc A person with good working attitude, high sense of responsibility in work, strict implementation of the labor regulations will complete his/her job and ensure labor safety and product quality, etc In contrast, a person with bad and unserious working attitude and incompliance with the labor regulations in the working process and the repeated violations

of the labor disciplines will decrease labor productivity

 Factors associated with human management:

In parallel with the technical advances, human management improvement such as the assignment and labor partnership, the rational distribution of production forces and human resources are all factors that increase labor productivity

- Labor division: According to Karl Marx, “Labor division means the

separation of labor activities or parallel labor that means the existence of different forms of labor” It can be understood that the labor division is the process of separating common labor activities into individual labor activities, which are independent on one another to attach a person or a group to an assigned job The rational labor division has a great effect in improving the production efficiency and increasing labor productivity The labor division reduces the scope of work and helps workers quickly master in the work, thereby saving the working time When employees are assigned specific jobs that are clear and suitable for their capacity, they will be able to promote their ability and do work better, thereby increasing the labor productivity of the employee and the enterprise

- Labor cooperation: According to Karl Marx “Form of labor in which

many people work side-by-side in a planned and interactive manner in a production process or in different production processes but related to one another is called labor cooperation” Labor cooperation can be understood as

a process of coordinating individual labor activities, specific functions of the individual or group of workers to ensure that collective activities are smooth, synchronized and continuous to achieve the common goal of the collective Good labor cooperation promotes the production process, ensures the smooth production process and achieves the enterprise’s goals, thereby boosting labor productivity growth process

- Create labor motivation: motivation is the employee’s desire and

willingness to increase their efforts towards achieving the goals of the organization Labor motivation is the result of many resources operating simultaneously in human beings and in their living and working environment

In an enterprise, a motivational organization is the result of a combination of factors such as corporate culture, human resource policies, etc An organization can only achieve high labor productivity when it has many employees who work actively and effectively Therefore, labor motivation is

an important factor to improve labor productivity in the organization

There are many ways to create labor motivation in an organization, for example:

Using material elements: using wages and bonuses as an economic lever to stimulate material benefits for workers Salaries and bonuses directly affect the interests of employees, so they are an important factor motivating the employees Salary is the main source of income for most workers to cover the living costs and directly affect their living standards Striving for a higher salary is the goal of most workers Salary must be fair, i.e salary must reflect the worker’s right labor productivity and contribution so that it can motivate his/her and increase labor productivity

Using the financial incentives such as bonuses, salary, salary increment, etc to increase the worker’s efforts and achievements

Using non-financial incentives to motivate and satisfy the spiritual needs of the employees such as praise, creation of a good working atmosphere

in the organization, labor emulation organization, creation of the opportunities

to develop the professional capacity of the employees, promotion opportunities and equity between their contributions and benefits in the organization

- Workplace organization and service: The workplace is a part of the

production area and space that is equipped with necessary technical and

material facilities to complete the defined production tasks

Organizing the workplace in a rational manner, ensuring the good service of the operation and working process such as: arranging distance between officers, creating a clean and spacious trading space, arranging safe machinery and equipment so that the employees feel easy, comfortable and safe to work with will help employees feel interested in work and secure about contribution to increasing labor productivity

- Behavior of leaders: In an organization, the human management

leadership plays an important role in its management and operation For good management, leaders must know how to treat employees in a way that motivates them The leaders’ behavior towards their employees is very important, it can motivate the employees to work more aggressively but it can also reduce the motivation to work and negatively impact the group mood In

an organization, there will be many types of people at the same time For different types of people, the managers need to know how to behave differently For employees in the successful group, the leaders should avoid reprimanding or rewarding the newcomers more frequently Besides, the leader’s comments on them should be accurate and well-founded For weak employees, the leaders need to choose the right solutions such as creating opportunities for them to improve by changing their position to suit their abilities, etc

- The working atmosphere in the company: is a psychological

phenomenon that shows the level of activity and harmony of the personal virtues of the employees in the group It is formed from the people’s attitude towards job, friends, colleagues and leaders A healthy psychological atmosphere is expressed in the solidarity and mutual assistance among the workers and it helps people overcome difficulties in their work The healthy psychology atmosphere in the company also helps people connect with one

another, be harmonious and consider the company as their second family, thereby motivating them to work well and increasing the labor productivity of the company

1.3.3 External factors such as macroeconomic environment, laws, policies, etc

A macroeconomic environment, legal documents, stable, sufficient and transparent policies will create motivation, help the enterprise secure to operate, reduce risks and save cost in its business operations In addition, the enterprise will focus more resources on production and its business production plan will also be more accurate and effective, thereby increasing its labor productivity

CHAPTER 2:

CURRENT STATUS OF LABOR PRODUCTIVITY OF BIDV

BRANCHES IN HANOI CITY

2.1 Overview of BIDV and BIDV branches in Hanoi City

The Joint Stock Commercial Bank for Investment and Development of Vietnam was established on April 26, 1957 under the name

of the Bank for Construction of Vietnam with the aim of contributing to war economy recovery and implementation of the first five-year plan (1957 - 1965); Performing two strategic missions of building socialism, combating sabotage warfare of the American invaders in the North, support the South, fight for reunification of the country (1965-1975); Building and developing the national economy (1975-1989) and carrying out the banking reformation

post-in service of national post-industrialization and modernization (1990 - now)

The construction and development history of Joint Stock Commercial Bank for Investment and Development of Vietnam is an arduous and challenging journey but is also worthy of being very proud BIDV’s construction and development history is attached to each phase of the national protection and construction of Vietnam

- Established on April 26, 1957 under the name of the Bank for Construction of Vietnam

- From 1981 to 1989: named Bank for Investment and Construction of Vietnam

- From 1990 to April 27, 2012: named Bank for Investment and Development of Vietnam (BIDV)

- From April 27, 2012 to now: named Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV)

Actively expanding the network and the operation scope, in this period,

under the guidance of the State Bank of Vietnam in the Circular No 21/2013/TT-NHNN on rearranging the model of transaction centers, savings funds and the transaction points with two-year route (2013-2015), BIDV strictly adheres to the restructuring of the network and, on the other hand, enhances the operation scope by establishing new transaction points on the basis of meeting all conditions as required by the State Bank of Vietnam

By the end of 2014, BIDV had 127 branches, 584 transaction offices, ranked the third in the banking system in terms of the number of traditional network points Besides, BIDV also drasticelly developed modern distribution channels such as ATM and POS As of May 25, 2015, BIDV merged into the Mekong Housing Bank (MHB) under the Project on restructuring commercial banks and developed the network with 180 branches, 798 transaction offices, 1,822 ATMs and 15,962 POSs in 63 provinces/cities nationwide

- Continue promoting the business of foreign affairs and international economic integration in a broad and comprehensive manner In this period, the global economy gradually recovered after the financial crisis in 2008, the economies had a strong attachment to one another to support, speed up the recovery and economic development In that context, Vietnam made efforts to accelerate the international integration roadmap such as the ASEAN Economic Community (AEC), the Vietnam-EU FTA and the Trans-Pacific Partnership Agreement (TPP) Continue affirming that it is the pioneer in international business By the end of 2014, BIDV established the agent relations with more than 1,700 banks and branches in 122 countries and territories in the world In addition, BIDV continued being trusted by multilateral and bilateral donors (WB, ADB, OPEC, AFD, Germany, France, Japan) that supported BIDV in more than 150 ODA projects with total committed capital of over US$ 4,000,000,000 BIDV’s international trade continued affirming its brand position and at the same time expanding its advertising and commercial investment

promotion activities in potential markets such as the Russian Federation, Europe, Northeast Asia which achieved significant progress in penetrating the Japanese market; BIDV Metlife Life Insurance Joint Venture was established on the basis of cooperation with American Metlife Life Insurance Group

By the end of 2015, BIDV has established commercial presence in six countries – teritories: Laos, Cambodia, Myanmar, the Czech Republic, the Republic of Russia and Taiwan In addition, there are non-bank networks including: Investment Securities Company (BSC), Financial Leasing Company, Non-Life Insurance Company (BIC), etc

- Enhance the research and give useful advice to the Government/State Bank of Vietnam to affirm its prestige and increase its brand value The BIDV Research Center was established in 2012 to assist the establishment and implementation of policies and solutions to operate the system, at the same time, actively participate in economic and monetary policy consultations with the Government, ministries, branches, etc Annually, the research centers made hundreds of periodical and thematic reports in a prompt and timely manner, focusing on the economic orientations and foreign affairs and development strategies of the localities; pressing issues of the domestic and international economy to advise the Party and State leaders; In-depth local socio-economic reports with diverse and reliable information, effective and highly-appreciated recommendations

One of the key successes of BIDV in this period is consolidating and develop the organizational model of the system, forming and identifying the Banks, affiliated companies, non-business units, joint ventures as the important premise for the equitization project

Continuing to implement the technical assistance project funded by the World Bank (WB) in order to transform the operational organization model in the 2007 - 2010 period, BIDV carried out a comprehensive restructuring on

all aspects of banking operations in 2008 BIDV has officially operated the new organizational model at its head office since September 2008 and has applied it at its branches since October 2008 Accordingly, the head office is divided into seven functional groups: Wholesale banking; Retail banking and Network; Capital and capital business; Risk management; Operations; Finance and Accounting and Support Divisions At the branch, the organizational structure is arranged into 5 divisions: Customer relationship; Risk management; Operation; Internal Management and Subsidiary companies A well-run organizational model is an important foundation for BIDV to become a modern retail bank

Along with the organizational restructuring process, the system management has been continuously strengthened and improved in line with the organizational model and new development requirements BIDV developed and perfected the institutional development plan, promulgated a comprehensive system of professional documents, created a synchronous legal framework for banking activities in accordance with laws, the international standards and practices

2.2 General evaluation of the average labor productivity of commercial banks in Vietnam and the average labor productivity of commercial banks

in Hanoi City

Over the past 30 years of renovation and international integration, Vietnam has made great achievements in socio-economic development The economy has maintained a relatively good growth rate From one of the poorest countries in the world, Vietnam has escaped from underdevelopment and become a middle-income country and a dynamic market economy

In line with the renovation and development of the economy, Vietnam’s labor productivity has improved significantly over the years in the direction of steady increase and the gradually narrowed relative distance in labor

productivity between Vietnam and other countries in the region Specifically, the labor productivity of the whole economy1 in 2015 at the current price is estimated at 79.3 million dong/labor (equivalent to about US$ 3,657/labor), higher 6.4% compared to that in 2014; the average growth of 9% per year in the 2006-2015 period and 3.4% per year in the 2006-2010 period and 4.3% per year in the 2011-2015 period

Table 2.1: Average labor productivity of the whole economy

Source: General Department of Statistics

1 Tính bằng GDP bình quân 1 lao động từ 15 tuổi trở lên đang làm việc

Table 2.2: Average labor productivity by sector in the 2011 – 2015 period

Source: Vietnam Productivity Report (2015)- Vietnam National Productivity Institute (VNPI)

It can be seen that the banking and insurance sector has relatively high labor productivity compared to the average labor productivity of the whole economy (564,000,000 dong/person, 7 times higher than the labor productivity of the whole economy)

In general, the banking and finance sector has seen positive changes for recent years: the interest rate has been relatively stable, credit scope, capital mobilization have been increased, asset quality and profitability of Credit Institutions generally have been improved The restructuring process with the participation of the State Bank of Vietnam has contributed to stabilizing the system of credit institutions The establishment of the Vietnam Asset Management Company (VAMC) has played a major role in reducing the bad debt ratio

In Hanoi City, the economy of the capital also has significant development in the past years The Gross regional domestic

product (GRDP) of Hanoi City is constantly increasing and higher than the average GDP growth rate of the whole country Hanoi city also attracts a large investment capital and a large number of labor force of Vietnam

The operations of commercial banks in Hanoi City are also very eventful By the end of Quarter IV/2016, in Hanoi city (full data), there are 17 joint stock commercial banks headquartered in Hanoi (01 Global Petro Sole Member Limited Commercial Bank) of which 179 branches of 17 joint stock commercial banks BIDV has the largest number of branches (34 branches), followed by Vietinbank (22 branches), MB (17 branches) and VCB (15 branches) and the smallest are Viet A Bank and National Citizen Commercial Joint Stock Bank (2 branches) The establishment of many branches in the same area will contribute to increasing the image and presence of BIDV but also put a high pressure on the management of branches and division of operation locations to limit the internal competition, avoid wasting unnecessary resources, reduce operational efficiency as well as affect the image of BIDV in general

Compared to other banks with their head office in Hanoi City, BIDV is the bank with the largest total assets of over 1,000,000 billion dong

Table 2.3: Total assets of commercial banks with their head offices in Hanoi

1 BIDV 1,006,404 23% 155,734 18%

2 Vietinbank 948,699 22% 169,216 22%

Source: Financial Statements of banks synthesized by the research team

Thus, it can be said that except for Vietinbank and Vietcombank (two state-owned commercial banks dominating the stock market with the large assets), other banks in Hanoi City have a much smaller number of assets than BIDV However, in terms of labor productivity, Vietcombank is still the 1st

bank in terms of scale and efficiency

+ Labor productivity by scale:

Vietcombank is currently the bank with the highest labor productivity

by total assets Vietcombank has the highest total assets with the average total assets/labor ratio of 50.46 billion dong/person in 2016, followed by Vietinbank with 41.33 billion dong/person and BIDV ranked the third with 40.11 billion dong/person

Table 2.4: Labor productivity by total assets of commercial banks

Source: Financial Statements of banks synthesized by the research team

In terms of labor productivity in capital mobilization, Vietcombank was the leading unit with the average capital mobilization/labor of 38.47 billion dong/labor in 2016, BIDV ranked the third with 31.80 billion dong/labor

In terms of loans: BIDV and Vietinbank’s outstanding loans were approximately equal at over 720,000 billion dong; however, Vietinbank’s productivity was higher than the average outstanding loans/labor ratio at 31.44 billion dong/labor Vietcombank ranked the second with 29.51 billion dong/labor and BIDV ranked the third with 28.85 billion dong/labor This indicator of state-owned commercial banks is much higher than that of joint stock commercial banks because the state-owned commercial banks are

0 10

usually the focal point in financing large key national projects designated by the Government

Table 2.5: Labor productivity by capital mobilization of commercial banks

Table 2.6: Labor productivity by the outstanding loans of commercial banks

Source: Financial Statements of banks synthesized by the research team + Labor productivity by effeciency:

The income of credit institutions can be divided into two groups: net interest income and net non-interest income (including net interest from operating activities, net interest from foreign exchange activities, net interest from securities purchase and sale, net interest from equity contribution and other activities) In terms of income structure, net interest income always accounts for the large proportion (over 70%) of the total income of commercial banks

BIDV had the highest net interest income in 2016 at 23,435 billion

dong However, Vietcombank had the highest labor productivity with the average net interest income per labor in 2016 at 1,186 million dong/labor meanwhile BIDV at 934 million dong/labor, ranking the fourth after VCB, Vietinbank and Techcombank

BIDV also had the highest net non-interest income in 2016 at 6,998 billion dong However, Techcombank had the higher labor productivity with

an average non-interest income of 490 million dong/labor in 2016 BIDV ranked the third after Techcombank and VCB

Table 2.7: Net income of commercial banks in 2016

Source: Financial Statements of banks synthesized by the research team

Table 2.8: The average net interest

income per labor of commercial

banks

Table 2.9: The average net interest income per labor of commercial banks

non-Source: Financial Statements of banks synthesized by the research team

Thus, it can be seen that labor productivity by the net interest income of

commercial banks did not have a large difference but the labor productivity

by net non-interest income had a large difference among the Credit

Institutions In particular, Techcombank increased its non-interest income to

nearly double compared to that of 2015 The main reason was that

Techcombank had made the outstanding growth in securities issuance

underwriting fees in 2016 (250 billion dong higher) and insurance

commission (299 billion dong higher)

Despite the large net income, BIDV’s operating costs, especially the

provision for risks were higher than that of other commercial banks, leading to

its lower pretax profit Among 5 largest commercial banks in Hanoi City,

Vietinbank hasd the most efficiency with earnings before tax of 8,569 billion

dong in 2016, 16.7% higher than that in 2015 However, Vietcombank had the

highest productivity with the average earnings before tax per labor of 546

million dong per labor in 2016

Table 2.10: Labor productivity by the average earnings before tax per

labor of commercial banks

Source: Financial Statements of banks synthesized by the research team

Therefore, it can be seen that despite the largest asset size, the largest network with 190 domestic branches and 01 branch in foreign countries, BIDV’s labor productivity in both size and efficiency was still low, especially the average earnings before tax per labor in 2016 was lower than that in previous years Meanwhile, VCB has been a leader in labor productivity for many consecutive years The commercial banks have also had a strong breakthrough for recent years, especially in 2016, the labor productivity of Techcombank increased significantly and much higher than that of BIDV

2.3 Evaluation of the current status of labor productivity of BIDV branches in Hanoi City

2.3.1 Labor productivity by scale

In Hanoi, BIDV has 34 branches with 4,434 employees, accounting for 17.7% of the total number of employees of the whole system Within the research scope of the thesis, the research team selected four branches of

BIDV in Hanoi City with a large scale and high productivity, namely Transaction Center 1, Ha Noi Branch, Ha Thanh Branch, Thanh Xuan branch to compare with other large branches of some commercial banks in Hanoi city

+ Average residual capital mobilization per capita:

Table 2.11: Average residual capital mobilization per capita of some

branches of commercial banks

Source: Data provided by Performance Management Board and synthesized by the research team

Although BIDV Transaction Center 1 is the largest branch of BIDV, its capital mobilization has decreased for recent years meanwhile other branches have grown strongly, resulting in a corresponding decrease in the average capital mobilization per labor of Transaction Center 1 The reasons are that Transaction Center 1 was heavily dependent on large clients (only 20 large clients account for more than 70% of the total capital mobilization of the branch) whose the idle capital has reduced for the last two years, resulting in a decline in the capital mobilization of Transaction Center 1 accordingly At the same time, under the

BIDV TC1 BIDV Hanoi BIDV Ha

Thanh

BIDV Thanh Xuan

VCB Operation Center