The policy on hiring general directors for State-owned corporations was considered a breakthrough idea in business governance. In 2005, the government assigned five major corporations to hire general directors on a trial basis.
The five corporations submitted their general director hiring plans to the government and two of them implemented the plan. They were the Vietnam Motor Industry Corporation (Vinamotor) and the Electric Technology Corporation.
But only after a short period of time, both corporations returned to the appointment mechanism, said Deputy Minister of Labor, War Valid and Social Affairs.
Huan said that this policy failed because the current regulations on public servants, the power of hired general directors, etc. hinder corporations from hiring excellent managers.
A representative from the Ministry of Transport added that the Vinamotor and two smaller companies experimented with this policy but after only nine months, hired general directors ended their contracts.
This official said that the failure of this model is mainly caused by the inconsistence in selection and using staff at State-owned corporations. The general director is hired by the management board while deputy general directors and the chief accountant are appointed by the management board. This mechanism restricted the power of hired general directors.
In addition, the hired general director is not a member of the management board while his inferiors – deputy general directors and the chief accountant are members of the board.
The wages and bonus policy also exposes big problems. The hired general director is paid highly, based on the employment contract while other leaders in corporations are paid under the State salary policy. The gap of wages between the hired general director and these officials is very broad.
The relations between the hired general director’s management and the leadership of the corporation’s Party cell, and the involvement of the trade union is not clear.
“Actually, the hired general director has to obey regulations and standards like an appointed general director,” the official from the Ministry of Transport concluded.
Under the CEO hiring policy, the monthly salary for a local hire is VND30-40 million ($1,870-2,500) and VND50-60 million ($3,120-3,750) for an international.
The appointee must have at least three years experience in monitoring a company operating in the mechanical engineering or automotive industry, with annual turnover of more than VND1 trillion ($62.5mi).
A local hire must be fluent in a commonly used foreign language, while a foreign general director must be able to speak Vietnamese.
Candidates for the post must outline general business initiatives before a selection panel.
A foreign general director must make a deposit VND5 billion ($312,000) while a Vietnamese VND1 billion ($62,000) for assuming the post.
Le Nhung
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