the first chapter will start with the introduction to the problem that mai dong mechanical company has been facing and also the research design and methodology of the research

Acknowledgments
The author would like to express her gratitude to all those who have helped her to
complete this case study.
The author is especially indebted to Prof. Pham Thi Bich Ngoc for her professional
guidance, constructive comments and great encouragement during her study and
preparation for this final research. The author would also be grateful to her colleagues at
Mai Dong Mechanical Company for providing valuable information during her study.
Sincere thanks are addressed to her MBM7 classmates, especially G3 for their good
teamwork spirit, excellent knowledge, sharing valuable experience and especially their
precious friendship with many unforgettable memories in study as well as in life.
The author would also like to send great thanks and appreciation to the author’s parents
and her beloved husband and little daughter who have created aspiration and sacrificed for
her to fulfill her study.

i
Abstract
In practice, a large number of companies pay a great attention to human resources, but
they do not really know what activities should be carried out. Many companies are likely
to recruit relatives of the company’s employees, which are seen as a motivation and an
encouragement for them to achieve better performance in the companies. It is clear that the
companies need a new approach to human resources, starting from recognizing ways to
tailor the human resource strategy to fit the corporate strategy. Mai Dong Mechanical
Company is not an exceptional case.
Mai Dong Mechanical Company has been facing a crisis of human resources with the
turnover rate of key employee increasing significantly in recent years. Consequently, the
current human resources have not fully met working requirements both in quality and
quantity that has influenced the working efficiency and productivity of the company
during the previous years.
Recognizing the human resource of key employee as the most important asset and the core
competency of the company which greatly contribute to the company’s success and create
a competitive advantage for the company development, this case research emphasizes an

analysis of the current human resource of key employee of the company; root causes
which influences on the effectiveness of the human resource of key employee, especially
the recruitment and retention issues. It identifies key factors needed to be considered and
improved to develop its recruitment and retention functions at Mai Dong Mechanical
Company in the future.

ii
Table of Contents
LIST OF TABLES VI
CHAPTER 1 - INTRODUCTION 1
1.1.RATIONALE OF THE RESEARCH

1
1.2.PROBLEM STATEMENT

1
1.3.OBJECTIVES OF RESEARCH

2
1.4.THEORETICAL FOUNDATION

2
1.5.RESEARCH METHODOLOGY

2
1.6.RESEARCH SCOPE

3
1.7.RESEARCH DESIGN

3
1.8.RESEARCH STRUCTURE

4
CHAPTER 2 – LITERATURE REVIEW ON RECRUITING, SELECTING & RETAINING KEY EMPLOYEES 5
2.1.DEFINITION OF KEY CONCEPT

5
2.2.RECRUITMENT AND SELECTION PROCESS

6
2.3.WHICH FACTORS CAN AFFECT RETAINING KEY EMPLOYEE?

7
2.4.MOTIVATION – AN IMPORTANT FACTOR IN RETAINING KEY EMPLOYEE

7
2.5.SUMMARY OF THEORETICAL FOUNDATION

8
CHAPTER 3 – CURRENT SITUATION OF MAI DONG MECHANICAL COMPANY 10
3.1.OVERVIEW OF THE COMPANY

10
3.2.DESCRIPTION OF CURRENT HUMAN RESOURCE MANAGEMENT ACTIVITIES OF THE COMPANY

14
3.3.HR MANAGEMENT SYSTEM

16

3.4.CHAPTER SUMMARY

17
CHAPTER 4 – MAIN FINDINGS ON RECRUITING, SELECTING AND RETAINING KEY EMPLOYEES 18
4.1 DESCRIPTION OF SAMPLE

18
4.2 DATA COLLECTION

18
4.3MAIN FINDINGS ABOUT RECRUITMENT, SELECTION AND RETENTION SITUATION OF MDC

18
4.4CHAPTER SUMMARY

27
CHAPTER 5 – RECOMMENDATION AND CONCLUSION 28
5.1.ROOT CAUSES

28
5.2.ALTERNATIVES FOR RECRUITING AND SELECTING KEY EMPLOYEE

29
5.3.ALTERNATIVES FOR RETAINING KEY EMPLOYEE

33
5.4.ALTERNATIVE EVALUATION AND RECOMMENDATION

36
5.5.ACTION PLAN FOR PROBLEM SOLVING

39
5.6.CONCLUSION

40
REFERENCES 41
APPENDIX 1 42
GANTT CHART - PLAN FOR PROBLEM SOLVING AT MAIDONG MECHANICAL COMPANY

42
APPENDIX 2 – KEY EMPLOYEE SURVEY 44
iii
List of Abbreviations
MDC Mai Dong Mechanical Company
HR Dept. Human resource department
HR Human resource
HRM Human resource management
Dept. Department
FDI Foreign Direct Investment
WTO World Trade Organization
B&C Benefit and Compensation
ISO International Organization of Standardization
ISR International Survey Research
USD United State dollar
U.S. United State
iv
List of Figures
Figure 1.1 Key employee turnovers
Figure 1.2 Research design
Figure 2.1 Selection process

Figure 2.2 Recruitment and selection process
Figure 2.3 Theoretical model
Figure 3.1 Organizational structure of MDC
Figure 3.2 Total revenue in 2006-2009
Figure 3.3 Profit ratios in 2006-2009
Figure 3.4 Product portfolio
Figure 3.5 Age structure (Y2009)
Figure 3.6 Organizational structure of HR Department
Figure 4.1 Recruitment achievement
Figure 4.2 Recruitment achievements by jobs
Figure 5.1 Root causes of recruiting and selecting key employee
problem
Figure 5.2 Root causes of retaining key employee problem
Figure 5.3 Suggested recruitment procedure
v
List of Tables
Table 4.1 Recruitment and selection practices
Table 4.2 Recruitment Summary in 2009
Table 4.3 Key employees’ perception of policies and regulations
Table 4.4 Key employees’ benefit and compensation package
Table 4.5 Benefit and compensation package for key employees
Table 4.6 Employees’ perception of working environment
Table 4.7 Internal training programs for key employee in 2009
Table 4.8 Key employees’ perception of training program
Table 4.9 Plan of HR replacement (Y2010-2012)
Table 4.10 Key employees’ perception of performance appraisal
Table 5.1 Recruitment and selection alternative evaluation
Table 5.2 Cost and benefit analysis
vi
Chapter 1 - Introduction

The first chapter will start with the introduction to the problem that Mai Dong Mechanical
Company has been facing and also the research design and methodology of the research.
1.1. Rationale of the research
Being the official member of the WTO in January 2007, Vietnam has become an attractive
destination for the foreign investors from all industries. The total foreign direct projects
invested in Vietnam were 839 projects with the register capital of 21.48 billion USD in
2009. Hence, the competition becomes tougher in all business aspects, especially in human
resource for local companies. The employer quantity is increasing quickly while the
available capable and quality human resource remains almost unchanged or changed
insignificantly.
As a consequence, the recruiting and retaining excellent key employees have become more
difficult for companies. Recruiting excellent employees is important, however, retaining
them is even more essential to ensure the success of the companies. The human resource
management (HRM), therefore, becomes more critical and important than ever.
1.2. Problem statement
Along with the fast development and integration of Vietnam economy, human resources,
the most important resource of any company, has become more competitive and also
tougher for local companies. Mai Dong Mechanical Company (MDC) is not exceptional in
this issue. Being a state owned manufacturing company established in 1960, specialized in
mechanical and metallurgical industry, MDC has suffered the increasing turnover rate in
key employees in recent years. This forces the company to make it more attractive and
competitive to recruit excellent candidates and also retain them to devote their talents to
maintain and develop the company’s business in this industry successfully.
The FDI invested into Vietnam is increasing significantly in recent years. There are more
and more companies established. This creates a tougher competition on human resources
for local companies, especially for state owned company like MDC. Another challenge for
MDC is that the inflation rate of Vietnam keeps going up higher and higher, it reached
28.30% at the end of August 2008 as statistic of General Statistic Office of Vietnam. This
trend combines with the current HR policies and regulations on salary and benefits making
the number of key employee, leaving for other companies with more favorable conditions,

become higher and higher in recent years.
Year
Total number of
key staffs
Total number of
resigned staffs
Turnover rate
2006 58 6 11%
2007 62 8 13%
2008 68 13 19%
2009 72 15 21%
Figure 1.1: Key employee Turnover
1
(Source: MDC HR department, 2009)
The above chart clearly shows key manpower numbers of the company left in recent years
dramatically at the alarm rate. The key employee turnover rate in 2008 and in 2009 are
19% and 21% respectively while the average ‘job moving’ in this industry was 12% in
2008 (as Navigos Group’s survey in 2008). This trend shows a very high turnover rate of
the company in recent years. Hence, the company lost many key persons whose positions
has still been vacant and need to be fulfilled by other excellent candidates.
In conclusion, HR problems that the company has facing seriously could be summarized in
both recruiting & selecting and retaining its key employee. This forces the top
management of the company and also HR department to find out the best way to recruit as
well as retain its key employee that are loyalty and mostly devote to the successful
development of the company in the coming time.
1.3. Objectives of research
The main objectives of the research are to identify current HR situation of MDC and find
out the root causes of the recruitment, selection and retention problems; set out some
recommendations to improve the current HR policies and procedures to attract and retain
its key employees.

1.4. Theoretical foundation
The research is studied basing on theory of recruiting, selecting and retaining key employee. It
includes definition of key employee, recruitment, selection and retention. It also covers
recruitment and selection process and some factors affecting retaining employee like benefit
and compensation (B&C) policy and training and development.
1.5. Research methodology
In terms of data source, this research is studied basing on primary and secondary source.
In terms of data collection, primary data are collected by the internal questionnaire of the
key employee’s satisfaction and expectation and the analysis of questionnaire results. The
total number of responded key employees is 65 persons. The internal questionnaire is
carried out in December of 2009. Secondary data comes from annual reports of the
company, internet, websites, newspapers, magazines and external surveys (questionnaires
and interviews).
2
In terms of data analysis technique, this research uses statistical technique and qualitative
technique.
1.6. Research scope
There are both internal and external factors influencing recruiting, selecting and retaining key
employees. However, this research only focuses on analyzing internal factors. Data and
information of the research is from the company background and performance during the
previous years. Besides, the data also is collected by internal and external survey in terms
of the human resource issues in combination with the theories study to find out the key
factors for successful recruitment and retention and solutions to address the remaining
inside HR problems. This will help contribute to the successful development of the
company in the next period.
1.7. Research design
The research is conceptualized in the figure 1.1.
Figure 1.2 – Research Design
Rationale of study
Problem statement

Literature review
Overview of company
and its current situation
Research objectives,
methodology, scope,
design and structure
Conclusion &
Recommendations
Main findings
3
1.8. Research structure
Chapter 1 - Introduction
This chapter gives the general introduction to the problem that Mai Dong Mechanical
Company has been facing and also the research theoretical foundation, methodology,
scope and conceptual design.
Chapter 2 - Literature Review on Recruiting and Retaining key employee
This chapter mentions about the concepts and theories which are used as the background
for this research. The concepts and theories are about key employees, recruitment,
recruitment process and factor affecting recruiting and retaining human resource
management and motivation.
Chapter 3 - Current situation of Mai Dong Mechanical Company
This chapter gives general background and key performance results of MDC in the
previous years. It specifically identifies the problem HR and HRM in the company along
with analysis.
Chapter 4 - Problem findings on recruitment and retention at MDC
This chapter states the problem findings, problem analysis and also problem definition of
recruitment and retention at MDC.
Chapter 5 – Recommendations and Conclusion
This chapter aims to set out some possible solutions and evaluation of these possibilities to
deal with the current HR problems at MDC

4
Chapter 2 – Literature Review on recruiting, selecting & retaining key employees
In this chapter, a summary of relevant theories is presented to emphasize the roles of
HRM in term of recruiting and retaining key employees for the organizations. In short
words, this chapter looks at mostly the theoretical practices of human resource
management, recruitment process, motivation and key employee retention.
2.1. Definition of key concept
2.1.1. Recruitment and Selection
Recruitment and Selection is not only considered as a process to fill the immediate
employment needs but also viewed as a part of an overall organization strategy for
resourcing and recruiting personnel. It refers to the process of attracting, screening
qualified people and motivate them to apply for a job at an organization.
2.1.2. Key employee
In general, key employees are employees with a major ownership and/or decision-making
role in the business. They are in the position of management as vice director, head of
departments, deputy head of departments, supervisors at factories, team leaders, chief
accountant and project manager. Key employees are usually highly compensated. Then,
they are considered as important elements in the company who contribute to the success of
a company.
2.1.3. Key employee retention
According to Sue Browell, 2003, employee retention is about keeping those members of
employees who are valuable to the organization. Employee retention involves taking
measures to encourage employees to remain in the organization for the maximum period
of time. Corporate is facing a lot of problems in employee retention these days. However,
while trying to keep those employees, the organization has also to accept that some others
will leave. The concept of keeping all employees regardless of their quality or potential is
no long exists. The organizations are now trying to make their best effort to keep their key
employees but when they cannot make the key employees to stay, it would be important to
create the chance so that the employee can return if necessary and if not, at least when they
leave, they will have a positive point of view of the organization. Being aware of the

importance of key employee to the organizations’ success, organization now cannot keep
paying more and more simply to attract and retain key employees.
Why is key employee retention so important? It is because key employee plays a key role
in bringing success to company. They are backbone of the company and not easily
recruited. Besides, key employee retention helps the organizations to reduce costs of
recruitment and training; maintain the sustaining and improve performance; improve
customer loyalty and satisfaction; increase sales and aid competitiveness; and be less
costly than replacing employees.
So when do the organization need to start retaining key employee? It should be right after
the key employees join the organisation. The image and attractiveness of the organisation
is also very important to attract the potential employees is crucial. It is also very important
for the organization to identify whether or not it has the key employee retention problems
so the appropriate solutions can be found and applied in time. The organization can
identify the existence of its key employee retention problems by answering the question
why the key employees do not want to continue working for it or the successful candidates
reject job offers. Using a variety of assessments and measurements, for example, internal
5
employee surveys, external surveys about the market trends, discussion, focus groups, exit
interviews and questionnaires, turnover rates can help realize and understand its employees
and their needs before it can cause any resignation. In order to successfully retain
employees, the organization should develop both short and long term strategies which can
in general be applied appropriately and fairly. A strategy which allows the employee to
have their life more balance between work life and personal life, can work very effectively
in term of employee satisfaction and retention. It can be the balance between doing the job
well and taking good family responsibilities especially for married employees and/or
enjoying the hobbies and other interests for single employees. It means the organization
may need to develop some different specific strategies for different employee groups
including key employee.
2.2. Recruitment and selection process
Recruitment is the process of identifying that the organization needs to employ someone

up to the point at which application forms for the post have arrived at the organization.
The basic purpose of recruitments is to create a talent pool of candidates to enable the
selection of best candidates for the organization, by attracting more and more employees to
apply in the organization. According to Gary Dessler in Human Resource Management:
An Asian Perspective, a general recruitment process consists of 2 steps:
1. Decide what positions you’ll have to fill through personnel planning and
forecasting.
2. Build a pool of candidates for these jobs by recruiting internal or external
candidates. Recruiting within company can be implemented through the following
methods: job posting onsite, employee referrals and HR inventory search. While,
recruiting outside company is taken by advertising, job centre, educational
institution placement, employee referrals, walks-in, labor contractor and internet
Selection then consists of the processes involved in choosing from applicants a suitable
candidate to fill a post. There are 3 following main steps of this process (Gary Dessler
2009)
1. Have candidates complete application forms and perhaps undergo an initial
screening interview.
2. Use selection techniques like tests, background investigations, and physical exams
to identify viable candidates.
3. Decide who to make an offer to, by having the supervisor and perhaps others on the
team interview the candidates.
Figure 2.1 – Selection process
6
Figure 2.2 – Recruitment and Selection process
2.3. Which factors can affect retaining key employee?
The most urgent issue to be solved in the today organizations is how to appraise firm’s
ability to retain key employees objectively and scientifically. The influencing factors,
including the organizational and external factors, should be analyzed also. The external
factors include business context, social and natural environment. While, the organizational
context can be HRM including benefit & compensation policy, job satisfaction and

motivation, ect.
Especially, in the context of fast developing business and technology today, the
information about available jobs is easier accessible to key employees and that cause the
key employees’ flow becomes more frequent than ever before. As key employee now
become more and more ambitious and mobilize, they do not want to stick with one
organization only in their whole career life as changing the job will provide them with new
challenges and improvement. While working in organizations, key employees have the
main objective of developing their career and growth. The organization and its managers
are, therefore, required to be able to realize the key employees’ career desire and provide
them the right chance for the right job which is appropriate with them. Otherwise, the
current job scope and organization will quickly become “too small” for them and they may
desire for “larger room” in their employment with other organizations.
2.4. Motivation – an important factor in retaining key employee
Motivation plays very critical roles in key employee retention. Keeping key employees
motivated is one of the key ways to make them want to stay with the company and
contribute their best efforts. Otherwise, if they are unmotivated, the organization will lose
them sooner or later. However, each person has their own needs which may require
different ways of motivation. So how to understand people needs and motivate them in the
appropriate way is also a question to the organization.
In summary, the motivation-hygiene theory indicates that in order to effectively motivate
and retain employees, the organization not only must provide hygiene factors to avoid
7
employee dissatisfaction, but also must provide motivators factors to ensure employees to
be satisfied with their jobs. When the employees are satisfied, the organization can be
relaxed in the employee retention issue.
2.5. Summary of theoretical foundation
There are two kinds of factors affecting recruiting and retaining key employee. They are
organizational and external factors. However, in this research, we only do study on
organizational factors which are considered as main cause of the problem. This chart
below represents some factors.

Figure 2.3 – Theoretical model
According to the Figure 2.1, there are 2 factors influencing the effectiveness of key
employee recruitment and selection. They are effective usage of selection techniques and
diversified recruitment sources. While, there exists 5 factors, having influence on the
8
effectivenenss of retaining key employee: good operating policy and regulations, attractive
benefit & compensation policy, safe working condition, good performance appraisal
system and effective training and career development.
Besides, the effectiveness of employee recruitment, selection and retention is measured by
low % of employee turnover rate, low % of unqualified human resources and high %
achievement of recruitment demand
9
Chapter 3 – Current situation of Mai Dong Mechanical Company
This chapter presents the company’s history, organizational structure as well as its
performance in recent years and analysis of its current HR situation and HRM activities of
the company.
3.1. Overview of the company
3.1.1 History of the company
Mai Dong Mechanical Company (MDC) was established in 1960 as a state-owned
company. Its head-quarter is located at #310 Minh Khai Street, Hai Ba Trung District,
Hanoi City.
At first it was established on 30
th
June 1960, MDC was named Mai Dong Mechanical
Factory under the control of Hanoi Industrial Department. Since 1998 the name changed
into Mai Dong Company according to the Decision No. 2424/QD-UB of Hanoi People's
Committee dated 18
th
June 1998.
After mergence with several enterprises in Hanoi and pursuant to the Decision No.

175/2003/QD-UB of Hanoi People's Committee on 17 December 2003, Mai Dong
Company has been transformed into Mai Dong Mechanical Company under the control of
Hanoi People’s Committee.
The major manufacturing and business fields of MDC are mechanics, foundry and
metallurgy. Main products of the company are mechanical machineries and tools,
mechanical processing, cast iron pipes and spare-parts used for water supply and sewerage
and also other casting products.
The products of MDC have been supplied for big customers as construction companies,
water supply and sewerage companies and other mechanical companies. They have also
been consumed not only in all over provinces of Vietnam but also exported to neighbor
countries like Laos and Cambodia.
MDC now has seven functional departments, one board of project management, five
production factories. Total employees as of March 2010 are 386 persons with different
background and qualifications.
3.1.2 Vision of the company
MDC becomes a strong economic group which is efficient, active, profitable and can
relied on by customers, partnership, shareholders, owner, community and employees.
3.1.3 Mission statement
Being one of the leading mechanical companies of Hanoi city, missions of MDC are stated
as the followings:
o MDC is doing the company with the commitment to grow up continuously and
naturally by recovering, contributing and pushing the development of the
mechanical and metallurgical sector of Hanoi as well as the national mechanical
sector, considering employees as the asset of the company which can develop the
ability of everything those are relating to the business operation of the company.
o Continuously develop manufacture-trade-services activities to maximize its profit;
upgrade its abilities; improve spiritual life, working conditions and incomes for
employees; and fulfill its duties to the national budget to contribute to the
development of national economy.
10

o MDC is a company that manufactures and provides high quality mechanical and
metallurgical products and also provides customers with good consultancy services
on water supply and sewerage treatment which can be relied on by customers,
partnership and for those who use products of other companies or imported
products in Vietnam as well as in other countries.
3.1.4 Structure of the company
The top management team of MDC consists of a general director, three vice general
directors and eight heads of functional departments as follows:
An organizational structure of the company is described in Figure 3.1.
Figure 3.1 – Organizational Structure of MDC
(Source: HR Dept at MDC, July 2009)
The general director has a master degree of mechanical engineering. Most of top
management managers have got bachelor degrees and professional backgrounds and have
more than 10 years of experience in mechanical and metallurgical industry in Vietnam.
They have proactively been contributing to the company in term of knowledge, skills and
connections. They have also been proactively building and supervising the implementation
of the vision, missions, strategies and action plans of MDC. They again visualized the
11
vision and missions in any where applicable to help staff, agencies and communities to
understand and gradually become the company culture.
They maintain high standards of ethics; make decisions ethically and in a socially
responsible manner. Thanks to their qualifications and professional backgrounds, they are
likely to cope with any present and likely future challenges.
3.1.5 Company performance
With nearly fifty years doing business in the mechanical and metallurgical fields, MDC
has obtained considerable achievements which greatly contribute to the industry
development of Hanoi as well as of Vietnam. However, the company’s performance
results decreased dramatically in the last three years.
.
Figure 3.2: Total Revenue in 2006-2009

(Source: Finance & Accounting Dept at MDC, 2006-2009)
The critical trend of revenue from the year 2006 to 2009 is shown clearly in the Figure 3.2.
The business operation results went down dramatically from the year 2008 to 2009,
decreased by 9.5% in 2008 and 8.1% in 2009 in terms of total revenue.
In 2007, with the same difficulties like the year 2006, MDC had mobilized the working
capital from internal force of the company to partially meet the demand on working capital
in its manufacturing and business operation. The production of the company grew better so
the gross sales of the year 2007 increased by 3.9% in comparison with the year 2006.
The revenue decreased significantly in 2008 and 2009. This reflects that the company has
been facing a lot of difficulties as well as challenges in the production and business. It
requires the top management to identify root causes of this bad situation to improve and
enhance the company performance in the time being.
12
Figure 3.3: Profit ratio in 2006-2009
(Source: Finance & Accounting Dept at MDC, 2006-2009)
Figure 3.3 shows the fluctuation of return on sales of the last four years. One of the
important reasons was that the prices of input materials was going up continuously, which
led to the expenditures of manufacturing increased and the price of the products also went
up so the products of the company could not compete with the lower price products
imported from foreign countries. As the result, the return of sales slightly went up in 2007
and dramatically decreased in 2008 and 2009.
The product portfolio of the company and its revenue percentages in 2009 is indicated in
the figure 3.4.
(Source: Finance & Accounting Dept at MDC, 2009)
Figure 3.4 - Product portfolio
Ductile Iron
Pipes and
Fittings, 38%
Cast Iron
Pipes and

Fittings, 24%
Machineries,
21%
Valves, 9%
Fire Hydrants,
8%
Ductile Iron Pipes and Fittings
Cast Iron Pipes and Fittings
Machineries
Fire Hydrants
Valves
13
It is obviously that ductile iron pipes & fittings are important products of MDC. They
accounted for 38% of total revenue of the company in 2009. Besides, the cast iron pipes
and also machineries are also potential products of the company. The company needs to
concentrate on producing and developing these products and make them be key products
of the company to enhance competitive advantages in the industry.
3.1.6 Human resource features of the company
The total number of staff in 2007, 2008 and 2009 is 652, 549 and 493 respectively. In
which, 7% are technical managerial and supervisor staffs and 3% are top managerial staffs.
The general director has a master degree of mechanical engineering. Most of top
management managers have got bachelor degrees and professional backgrounds and have
more than 10 years of experience in mechanical and metallurgical industry in Vietnam.
In addition to, most of the employees are young but less commitment. The figure below
represents a young labor force of the company. In which, 18-35 years old labors covers
52% total employees of the company. However, they are less practical experience and also
have fluctuation working spirit with less commitment with to the company.
(Source: MDC HR department – 2010)
3.2. Description of current Human Resource Management Activities of the company
This part introduces HR Department and situation of current HRM activities done by the

company.
3.2.1 Objectives of HR department
Objectives of the department in the period of 2008-2010 are specified as the followings:
o Recruiting and developing additional workforce of 300 employees until the end of
2010.
o Recruiting qualified technicians to meet the requirement of new machine-tool
design for mechanical manufacture.
o Building an effective technical managerial team graduated from technology
universities to meet the requirement of technology management and quality
management of the company.
Figure 3.5 - Age structure (Y2009)
14
o Building excellent managerial staff graduated from economic and financial
accounting universities to meet their appointed positions and responsibilities
successfully.
o Training and re-training technicians and managerial key staff all base knowledge
and other soft skills related to their current works.
3.2.2 Organizational structure of HR department
Similar to other functional department in the company, the HR Dept has its own
organizational structure stipulated in the following chart.
Figure 3.6- Organizational Structure of HR Department
(Source: MDC’s HR Department, July 2009)
HR Manager is a head of HR department. The department is divided into four functional
groups (see Figure 4.1). They are Personnel Management, Training & Development,
Insurance & Welfare and Safety at work.
These four functional groups have clearly specified duties, tasks and responsibilities of
each group or each person in charge. This has ensured the professionalization and no
overlap job between positions. Besides, they are all graduated from universities and
colleges and have been working for the company for 5 – 10 years. These can be considered
as strengths of the department which contribute to the development of the company during

previous years.
However, this structure has also represented its weakness in working performances. This is
limited professional knowledge of person in charge. They have not been officially trained
and developed their professional working skills and knowledge in HR field regularly and
continuously. They have performed their works by their experiences. As a consequence,
this has made staff not be able to solve arising difficulties by themselves. It means that
they could not fully meet the requirements and productivities of their jobs. The
performance results of the department as well as the business and manufacturing operation
results of the company has also been negatively affected.
15
3.2.3 HR policies and procedures
One of functional missions of HR department is to create and develop HR policies and
procedures to keep HR activities of the company in alignment with corporate development
strategy and also in compliance with state laws and regulations. The HR department
expects to provide employees with clearly written policies and procedures which help the
company be more competitive in the labor market. They also ensure to a consistency of
application, enhance communications with employees as well as retain their loyalty. These
are important factors in minimizing legal risk and creating a good working culture and
environment for the company.
HR policies and procedures of the company are including:
o Employee management
- HR regulations and direction
- Recruitment and labor contracts
- Training and development supports
- Employee using management
- Medical health and social insurance
- Retirement scheme and compensation
o Payroll management
- Salary & wage scales
- Salary & wage review and adjustment

- Incentives and bonus
o Awards, discipline and compensation for damage
Beside the strengths of the policies and procedures of ensuring employees to implement
the company regulations and state laws well, the policies and procedures also have shown
its weakness in implementation. It is not really well-developed to cover all related issues
of HR management of the company. The policies have established and developed but not
clearly procedures in details to apply and implement these policies. This has created
difficulties and confusion for applying them for a long time, especially recruitment and
selection procedures.
3.3. HR Management System
Like many other state-owned companies, MDC has managed its employees’ attendance
and punctuality by daily/timely records of its guards. This method has been established
and maintained long time ago. It is not a modern and professional personnel management
system, however, it has ensured objective and fair conditions of the management and also
shown its effectiveness in managing staff’s working time.
The department also has not applied any information technology system in HR
management. All HR related works has been done by Microsoft Excel or Microsoft Word
which are designed on managing purposes of users. This sometimes makes the department
face difficulties in managing the company’s manpower, their performance and their
benefits and compensation as well.
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In terms of recruitment process, MDC has not applied any professional recruitment
process during the past time. Most of employee, even key employees, is recruited through
their business relationships and employees’ relatives without interview for selection.
Besides, MDC has not applied any incentive policy or other financial supports for its sales
forces as well as excellent performed persons, especially key employees. Pay roll is processed
through bank transfer. Average salary of key employees is less than other company in the
same industry.
In terms of training course, MDC has conducted only in-house training. This way is not
really helpful and effective to train and re-train the managerial staff level because they

need to be updated and well-equipped a lot of professional working skills as well as soft
skills to manage their jobs successfully.
Moreover, MDC has no appraisal system. This makes staffs, especially key employees less
encouraged in working.
3.4. Chapter summary
MDC is developing towards combining products units at present. Its business scope and
products are diversified. Besides manufacturing traditional products, the company is
developing new products and service such as plastic reinforced pipes, building
constructions, ect. To meet the further requirements of expanding its business scope and to
cope with difficulties and challenges ahead, human resource management is one of
important functions that need critical improvement. While, there exists a lot of problems in
HR and HRM of MDC. It is therefore necessary to identify the specific problems inside for
better solutions.

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Chapter 4 – Main findings on recruiting, selecting and retaining key employees
This chapter provides details analysis of problem findings which need to be solved
4.1 Description of sample
We carried out questionnaire in December of 2009. The total number of people receiving
questionnaire form is 72 persons. However, approximately 91% (65 persons) of the total
completed the questionnaire form. We developed one questionnaire form to distribute to
key employees at managerial level of the company. No gender discrimination remained in
sample.
Besides, we conducted interview HR officers at 2 other state owned companies in the same
industry in Hanoi
4.2 Data collection
In terms of data collection, primary data are collected by the internal interview of the
employee satisfaction and expectation and the analysis of survey results. Secondary data
comes from annual reports of the company, internet, websites, newspapers, magazines and
external surveys (questionnaires and interviews).

To exactly analyze HR situation as well as identify root causes of the above-mentioned HR
problems, questionnaire forms of human resource issues have been conducted internally
and interview is carried out externally in December 2009. Questionnaire forms were
distributed to key employees of MDC in hand-out. The total number of responses is 65
persons.
The purpose of the internal questionnaire is to well-understand about the current HR
situation of the company; key employees’ expectations and satisfactions of their current
works at MDC as well as HR management efficiency of the top management. The
questionnaire form consists of 30 closed questions and 1 open question. It covers 8 main
issues, including policies and procedures, management, working environment and
conditions, relationship and culture, performance recognition, benefit and compensation,
professional works and training and development. The open question helps us to define the
main cause which needs to be solved timely. (See Appendix 1)
The purpose of external interview is to understand more about its benchmarks and
competitiveness in HR market in the industry. Questions have been prepared and
distributed to HR officers of two state owned companies in the same industry in Hanoi like
Hanoi Mechanical Company and Dong Anh Mechanical Company. The content of
question is about recruitment and selection practices and benefit and compensation
package.
Analyze these survey results will help the company deeply see the following critical fact
findings of these problems.
4.3 Main findings about Recruitment, Selection and Retention situation of MDC
4.3.1 Factors influencing key employee recruitment and selection
4.3.1.1 Ineffective usage of selection technique
There are many kinds of selection techniques in use as interview, test or background
investigation. However, the company rarely applies all kinds of above-mentioned
techniques. Basing on job analysis, the recruiters choose the most effective selection
technique for each position. In the case of MDC, the company does not apply any kind of
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selection technique to select best qualified candidates. The recruiter only makes use of

relationship to select the candidate. The following results will show the weakness of
MDC’s recruitment and selection process by comparing with the two competitors’
processes.
Table 4.1 – Recruitment and selection practices
Criteria Hanoi
Mechanical Co.
Dong Anh
Mechanical Co.
MDC
Recruitment policy Yes Yes Yes
Recruitment announcement
- Managers No No No
- Supervisors Yes Yes No
Recruitment interview/exam
- Managers No No No
- Supervisors Yes Yes No
Orientation and/or On-the-job training
- Managers No No No
- Supervisors
Yes Yes Yes
(Source: External & internal survey in HRM, 2010)
Being different with other two competitors, MDC has not organized any recruitment and
selection committee to interview candidates officially to evaluate their qualifications and
backgrounds and select excellent ones. Besides, the company has few qualified staff
recruited while the number of leaving staff has increased even higher than the average
leaving statistic of companies in Vietnam. This has made MDC inefficient to select the
right person for the right position at the right time. This also caused so much job rotations
between positions to suit a person to a suitable post during the previous time. However,
their working skills and experiences have still not fully met requirements of their jobs. The
above-mentioned results show that the three companies have its own recruitment policy.

However, the recruitment and selection process of each company is drawn up and
implemented differently.
4.3.1.2 Limited recruitment source
MDC actually has not applied any professional recruitment process during the past time.
Most key employees are recruited through their business relationships and employees’
relatives. No vacancy announcement has been publicly advertised for recruiting key staff.
This way of recruitment has limited applicants to approach vacancy positions and take
actions. Then the company gets few competitive applied profiles to choose as well as to
interview candidates. As the result, the practical recruitment status is shown in the
following table and chart.
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