Vietnam EXIM BANK Management Report

8/11/2019 Vietnam EXIM BANK Management Report

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VIETNAM EPORT IMPORT BAN!

E.e'#ti"e S#mmar%

As Vietnams banking sector is expected to grow remarkably during thenext few years following the changing landscape of its economy, it istimely for Vietnam Eximbank (Eximbank) to examine itself and strategizes

to take adantage of the opportunities that the market has to o!er inorder to keep its position at the leading edge of the competition with otherbanks"

#his report will ealuate Eximbank present business strategy,organisational structure, culture and leadership practices" $here possible,some recommendations for alignment and improement are presented forthe management to consider"

%n completing this report, data were gathered mainly from publiclyaailable sources i"e" through the banks annual reports, prospectus ando&cial website" A reiew and synthesis of releant literatures were also

done to come up with a credible analysis"

Key fndings:

'airly clear oerall Vision that links well with its business goals

Appropriate organizational structure that supports its corporate

strategy

Eidence of rocess ulture, and *ole culture that appreciates

the young and educated employees

romotion of $ork hard+ play hard culture through nono&cial

work actiities

-uitable leadership traits and practices by the top management

Recommendations:

onsider enhancing further the banks corporate strategy

%ncrease .$ork hard+ play hard culture/ while maintaining role

culture and process culture

ut in place succession planning and opportunities for the young

and talented to make greater contribution towards organizationssuccess"

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Table of Contents

E.e'#ti"e S#mmar%//////////////////////////////////////////////////////////////////////////////////////////////////////////////// 1

0ist o$ ig#res///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// +

Appendi'es///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// +

1/- Introd#'tion/////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// 31/1 Terms o$ re$eren'e//////////////////////////////////////////////////////////////////////////////////////////////////////// 31/+ O"er"ie2 o$ OB///////////////////////////////////////////////////////////////////////////////////////////////////////////// 31/3 Ba'gro#nd/////////////////////////////////////////////////////////////////////////////////////////////////////////////////// 4

+/- Met(ods///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// +/1 ,ata 'olle'tion met(ods////////////////////////////////////////////////////////////////////////////////////////////// +/+ Iss#es and '(allenges////////////////////////////////////////////////////////////////////////////////////////////////// +/3 Anal%sis/////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

3/- Res#lts/////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// 53/1 O"er"ie2 o$ 'orporate strateg% and )#siness goals///////////////////////////////////////////////// 53/+ E.planation o$ organi6ational str#'t#re///////////////////////////////////////////////////////////////////// 8

3/3 Anal%sis o$ organi6ational '#lt#re////////////////////////////////////////////////////////////////////////////// 83/4 7riti'al e"al#ation o$ 0eaders(ip pra'ti'es////////////////////////////////////////////////////////////// 1-

4/- 7on'l#sions Re'ommendations////////////////////////////////////////////////////////////////////////////////1+4/1 7on'l#sions//////////////////////////////////////////////////////////////////////////////////////////////////////////////// 1+4/+ Re'ommendations////////////////////////////////////////////////////////////////////////////////////////////////////// 1+

Re$eren'es//////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// 13

0ist o$ ig#res

ig#re 19 Relations(ip )et2een Organi6ation Settings& Emplo%ee:s Be(a"io#r Organi6ational Per$orman'e//////////////////////////////////////////////////////////////////////////////////////////////////3

ig#re +9 B#ilding )lo's o$ Organi6ation Setting///////////////////////////////////////////////////////////////4

ig#re 39 T(e Strateg% ,e"elopment Pro'ess Model//////////////////////////////////////////////////////////5

ig#re 49 Personnel str#'t#re in terms o$ age////////////////////////////////////////////////////////////////////// ;

ig#re 9 Personnel str#'t#re in terms o$ ed#'ation//////////////////////////////////////////////////////////;

Appendi'es

Appendi. A Vietnam E.im)an Organi6ation Str#'t#re/////////////////////////////////////////////////1

Appendi. B < Vietnam E.im)an inan'ial =ig(lig(ts E.im)an:s 7(airman///////// ///15

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1/- Introd#'tion

As Vietnams banking sector is expected to grow remarkably during the next few years (Hoand Baxter, 2!!", it is timely for Vietnam #ximbank (#ximbank" to examine itself andstrategi$es to take ad%antage of the opportunities that the market has to offer in order to keepits position at the leading edge of the competition with other banks&

1.1 Terms of reference

'his report aims to) pro%ide an o%er%iew of #ximbanks *orporate +trategy and Business oals) explain the #ximbanks o%erall structure) analyse the #ximbank culture(s") e%aluate its leadership) make recommendations for impro%ement

'he study is limited to corporate aspect related to the organi$ation of people in #ximbank andbased on publicly a%ailable data gathered about the bank& -ther non.people oriented

organi$ation strategy or structure are beyond this scope of study&

i%en the time, data a%ailability and words count constraints, the report will at best analysethe basic components of the bank without getting further into the nitty.gritty details andinternally exclusi%e information which may result different findings and outcomes&

1.2 Overview of OB

'he main moti%ation for studying -rgani$ational Beha%iour (-B" is centred on the theory thatorgani$ation may impro%e its performance and effecti%eness by understanding how peopleespecially employees beha%e in an /organi$ation setting and then respond to it accordingly& 0t

is argued that people beha%e differently according to the en%ironment they are in and aspeople are the main resource of organi$ation, understanding and application of -B is crucialfor effecti%e human resource management which would lead to better organi$ationalperformance&

Figure 1: Relationship between Organization Settings, EmployeesBehaviour & Organizational er!orman"e

So#r'e9+uggestion by authors based on literature re%iews

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1ithin the abo%e context, it is generally accepted that /organi$ation setting is typicallycharacteri$ed by its corporate strategy, organi$ational structure, culture and leadership&

Figure #: Buil$ing blo"%s o! Organization Setting

So#r'e9+uggestion by authors based on literature re%iews

'herefore, this study will e%aluate the abo%e building blocks of #ximbank /organi$ation settingfor their appropriateness in shaping its people towards achie%ing better organi$ationalperformance based on the -B literatures&

1.3 Background

#ximbank is founded on ay 23, !454 under the name V0#'6A #78-9' 08-9' BA6:and one of the first ;oint.stock commercial banks in Vietnam& At present, #ximbank has thecharter capital of V6< !,=> billion and the owners e?uity of V6< !@,>2 billion, making itone of the largest banks in terms of owners e?uity& As of 2!, #ximbank has de%eloped anationwide network with its Head -ffice located in Ho *hi inh *ity and !5@ branches andtransaction offices throughout Vietnam and has set up correspondent banking relationshipwith o%er 5=2 banks and their branches in more than 5 countries in the world (#ximbank,2!2"&

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+/- Met(ods

2.1 Data collection methods


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3/- Res#lts

3.1 Overview of cororate strategy and !usiness goals

'he first building block under study is #ximbank corporate strategy& ormulating corporate

strategy is fundamental starting point because it sets the organi$ations o%erall direction,goals and ob;ecti%es& 0t also helps the management to identify acti%ities to be carried out inorder to achie%e its purpose of existence&

ullins (2!@, p& =" defines corporate strategy as Cthe generic term used with regards tothe core purpose of the organi$ation and its linkages with its structure, management processas well as applications of organi$ational beha%iorD& -n the same sub;ect, :aplan E 6orton(25" found that most successful organi$ations followed 'he +trategy


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Analysing #ximbanks Vision, we found that it is a hybrid of both ission and Vision& 'his isbecause it stated its fundamental purpose, the o%erall picture of what the organisation wouldlike to be and how they are going to achie%e it& But, it is too long to fit :aplan E 6ortonsdefinition of Missionand without timeframe to fit in the definition of Vision&

Fet, in line with ullins (2!@, p& >>=" obser%ation that the distinction of Missionand Visionis

often unclear and management authors often use them interchangeably, we belie%e#ximbanks hybrid Vision is still sufficient& 0n addition to becoming a modern commercial bank,it also encompasses o%er.arching noble goal of contributing to the community and society&0ncorporation of this noble goal is a strong point and brilliant corporate strategy as it wouldlead to the banks greater acceptance by the community who are also existing and potentialcustomers of the bank&

Howe%er, we found a few weaknesses& As much as it is understandable that the managementwants it to be as clear as possible, there is a great probability that the intended meaning be/lost in translation due to its too wordy form& 0t is therefore recommended for the organisationto use more concise and catchy words to make it easier to digest&

Another weakness is the fact that one important stakeholder of the organi$ation is being left

out i&e& the employees& 0t is argued that the main dri%er for success of organi$ation is itspeople& 'hey are the one who make things happen& 'hus, we belie%e it would be best for thedesired state of its employees also be embedded in the Vision& 0t will be the starting point forparticipati%e approach of Cmanagement by ob;ecti%esD (B-" which was first introduced by


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consider splitting the present Chybrid VisionD into ission and Vision and ha%e its own ValueStatement (based on the desired corporate culture which will be discussed in section @&@"&

3.2 "#lanation of organi$ational structure

As a public listed company, #ximbank must ha%e a formal organisational structure& A formalorgani$ation structure pro%ides confidence in its in%estors as well as Ca framework forintegrating the organi$ations strategic plans for the allocation of its resourcesD (+chaffer,!453"& 0t also pro%ides an o%er%iew on Cthe means through which organi$ational resources areemployed to meet organi$ational ob;ecti%es and the accomplishment of organi$ationalspurposeD (*handler, !4>2"&

'heoretically, business strategy must be linked up to the organi$ation structure& A lot ofdebate is going on whether the organi$ation structure should follow business strategy or the%ice %ersa& Howe%er, Gynch (2!2", cited in ullins (2!@, p& =5" suggests that what is moreimportant is Cto ensure that they are consistent with each otherD&

'hus, this section will identify and explain the organi$ational structure of #ximbank and

assess its consistency with its corporate strategy&

0n designing organi$ation structure, 1oodward (!45" suggests that it is essential todifferentiate the /'ask and /#lement functions& 'his will help to a%oid confusion in Ctheplanning structure and in the relationship between members of the organisationsD (ullins,2!@, p& =!3"& rom Appendix A, we found that the separation of the #ximbank dimensionbetween task!and element2is not straight forward& -ne can look at it from 2 different angles&'he first angle is at unitdi%isional le%el e&g& at the Head -ffice whereby the Human 9esource,-ffice anagement and 0'


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Clanguage, symbols, dress, and beha%iourD, the in%isible artefacts of culture in%ol%e C%alues,beliefs, and shared understandingD (Brinkman, et al, 2!, p& !=!"&

Geslie de *hernatony said organi$ational culture could be considered as CglueD, which canmoti%ate staffs beha%iour and make them be closer with organi$ations de%elopment (


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Building an organi$ational along with young, educated, energetic and creati%e pool of peopleis a brilliant strategy& 0t has pro%en to be strategic for #ximbank as young employees are withenthusiasm, learn ?uickly and able to cope with new things, new system and new marketopportunities that surface from the Vietnams emergent economics de%elopment& Howe%er,they (the young, educated, energetic and creati%e" may find the C8rocessD and C9oleD culturethat come with the ;ob mundane and boring& 'hese may lead to lower moti%ation and

subse?uently higher turno%er&

Inderstanding this well, #ximbank has to promote Cwork hard play hardD culture& Apart fromoffering competiti%e salary package and taking care of their welfare, the managementencourages program and acti%ities that could enable the employees to get together and ha%efun& 'his is done through annually set up team building acti%ities, sports e%ents, music shows,art or cook competitions, and summer holidays for @.3 days in order to create excitement andretain loyalties of its young and energetic employees& 'hey also gi%e tickets for staff to gohome in 'et festi%al, a traditional Vietnamese festi%al (#ximbank, 2!2, p&@@"& Besides ha%ingfun, those e%ents also create channels for employees to close the hierarchical gap betweenthem and subse?uently reduce conflicts in the organi$ation&

#ximbank also encourages its employees to participate in organi$ing social community

programs& +uch acti%ities include Craising fund for the poor in Ho *hi inh *ity, constructingschools, kindergartens, bridges, roads, medical clinics, erasing temporary and damagedhomes, constructing houses of compassion for the poor and families under preferentialtreatment policyD (#ximbank, 2!2, p&@@" and many more& 'hose programs not only couldbuild up #ximbanks image in the community by helping addressing the social issues butcould also inculcate customers focus mentality amongst its employees&

'hus, in terms of culture, it can be concluded that #ximbank is ha%ing C8rocessD and C9olesDculture in line with the nature of its business but at the same time the management ispromoting the Cwork hard play hardD culture through non.official ;ob related acti%ities to keepits youthful, educated, energetic and creati%e employees moti%ated and ha%e a sense ofbelonging to the organi$ation& 0t is recommended for the management to continue promoting

.$ork hard+ play hard culture/ while maintaining .*ole/ culture and

.rocess/ culture

3.% &ritical evaluation of 'eadershi ractices

Geaders are crucial in any organi$ation& 'hey are the one who make decisions, determine thedirection and shape the organi$ation& 0n a nutshell, they pro%ide leadership&

Geadership can be defined as Ca relationship through which one person influence thebeha%iour or action of other peopleD (ullins, 2!@, p& @>4" and in this case, influencing theacti%ities of an organi$ed group in its efforts toward goal setting and goal accomplishment&

Gocke (!44!" describes leadership as Cthe process of inducing others to take action towards acommon goalD& 0t is therefore always argued that leadership is relationalJ which in%ol%es theprocess of leaders influencing the followers to act&


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r& Ge Hung E.ploitati"e a#to'rati' 'he leader has no confidence and trust in subordinates,

enforces decisions, ne%er delegates, moti%ates by threat and there is %ery littlecommunication and no teamwork&

Bene"olent a#t(oritati"e 'he leader has condescending trust in subordinates,

enforces decisions, ne%er delegates, moti%ates by rewards and sometimes in%ol%essubordinates in sol%ing problems&

Parti'ipati"e 'he leader has an incomplete confidence in subordinates, listens to

subordinates but controls decision.making, moti%ates by reward and somein%ol%ement, uses ideas and opinions of subordinates constructi%ely

,emo'rati' 'he leader has a complete confidence in subordinates, moti%ates by

reward for achie%ing goals set by participation and shares ideas and opinions& D


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4/- 7on'l#sions Re'ommendations

%.1 &onclusions

0n conclusion, #ximbank is currently ha%ing ade?uate and appropriate set of corporate

strategy, strategic goals, organi$ational structure, corporate culture and leadership practices&'hose interrelated building blocks ha%e thus far enabled the bank to continue making profitand grow its assets (refer to Appendix B"& 0t also has been awarded CBest


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Re$eren'es

Adair, L& (!4@" Action *entered Geadership 6ew Fork *9A1 H0GG

Bertocci, th

6o%ember 2!@&

>&

#ximbank& (2!!"& $eport on the business per!ormance in %&'' and business plan and

directions in %&'%.Hanoi #ximbank&

#ximbank& (2!!"& $eport on the operation o! the Board o! Directors. Hanoi #ximbank&

#ximbank& (2!@"&uthori)ation !or attendance at %&'*+s nnual "eneral Meeting o!

Shareholders.Hanoi #ximbank&

#ximbank& (2!2"&nnual $eport o! Eximban, %&'%.#ximbank website& M-nlineN& A%ailable

at httpwww&eximbank&com&%nendownload#70.A6I.3=.#6G0+H.A.8!&pdf&

Accessed >

th

6o%ember 2!@&

Ho, A& and Baxter, 9& A& (2!!" Ban,ing $e!orm in Vietnam Asia ocus (Lune"

Handy, *&B& (!44@" Inderstanding -rgani$ation, 3th #d& Harmondsworth 8#6I06

Ludge, '&A& and 8iccolo, 9&& (23", C'ransformational and transactional leadershipa meta.analytic test of their relati%e %alidityD, Lournal of Applied 8sychology, Vol& 54,pp& ==.>5&

:aplan, 9obert +& and 6orton,


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APPEN,I A

Appendix A R Vietnam #ximbank -rgani$ation +tructure

So#r'e9Vietnam #ximbank Annual 9eport 2!2

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APPEN,I B

Appendix B . Vietnam #ximbank inancial Highlights E #ximbanks *hairman

So#r'e9Vietnam #ximbank Annual 9eport 2!2

r Ge Hung

Documents

Vietnam EXIM BANK Management Report