Dave Hajdu’s first job was at age fourteen, mowing lawns in his hometown in the U.S. He made flyers on his Commodore 64 and dot-matrix printer, negotiated with clients, wheeled out the lawn mower, and got his friends to do the mowing! His second job was at McDonald’s, and he learned right away that working for someone else “sucked.” So, at an early age, Dave knew that working for himself would always be the way to go.
Many years later, Dave went to Vietnam to help a friend with a software development project. He became enamored with the opportunities that Vietnam offered, especially as a potential software outsourcing base. At the same time, Dave’s good friend, Benjamin “Ahn Ahn” Liu was doing software consulting in the U.S., and one of Benjamin’s clients needed to outsource some development. They decided to combine forces and started Vinasource in January 2007.
Today Vinasource employs forty-two people and is a full-service, boutique software design and development outsourcing company. Vinasource focuses on four technologies: PHP, .NET, Android, and IOS. Surprisingly, Vinasource has conducted zero sales and marketing: their client base comes strictly from referrals. Obviously, this speaks volumes about the good work they do. In addition to having great coders, Vinasource managers have solid English skills and communicate effectively both externally and internally. Dave has invested heavily in training and mentoring these managers along with the entire company.
In a company that revolves around placing people to work on client projects, Dave acknowledges how important his staff and managers are, but what really makes Vinasource hum are its human resource processes. People come and go, especially in the outsourcing business. Vietnam has a high turnover rate relative to the rest of Asia. However, during the last five years, Vinasource has improved HR practices to mitigate high turnover and continue to grow. This includes better interviewing, onboarding, training, and reviews.
As an American building Vinasource in Saigon from the ground up, Dave has experienced missteps along with successes. He shares the following experiences and guidance for other entrepreneurs around the globe who need to mitigate HR “pain” with helpful procedures.
Hire HR Person Earlier
Dave hired his first HR person when Vinasource grew to thirty-five employees. In hindsight, he would have hired someone when the company was around ten or fifteen employees because their current HR person’s responsibilities include much more than a traditional HR role. For example, in Vietnam, employees are really into events such as team lunches, parties, and outings. These have a very positive effect on company culture, cohesion, and retention. The Vinasource HR person helps Dave to coordinate events in addition to the more traditional HR tasks.
Hiring earlier and implementing more of these corporate events would definitely have helped build the company culture and improved retention when Vinasource was building out its staff. Having this key personnel member has helped to improve processes so much that the quick rate of improvement in a short time has helped make up for the missteps of the past.
Integrate New Hires in a Welcoming Way
Dave realized that if a new employee worked past their one-month anniversary, they would most likely stick around. He designated the first month as the “danger zone” since many new hires were coming onboard and then quitting abruptly. He knew that he had to redesign the entire new-hire process.
Now, when a candidate interviews, each one immediately receives a packet with a Vinasource pen and folder that includes the company’s vision, mission, and cultural values. If Vinasource makes an offer to a candidate, now someone from the company will always schedule an in-person meeting over coffee to review the offer. Previously, they may have done this over Skype or email.
On an employee’s first day, Vinasource has a very specific agenda. The HR staff ensure that the new employee meets with every member of the team they will be working with and that the team goes out to lunch together. The new hire reviews the company’s vision and culture and then dives into the software tools used by Vinasource. They also receive a company T-shirt. By redesigning the new-hire integration process, onboarding is smoother and retention has dramatically increased.
I can learn from Dave in this area. I’ve been guilty of investing so much time to find and hire the right candidate. But when they would start, I didn’t invest nearly enough time to make their first days and weeks memorable. Moving forward, I’m not going to overlook this vital first impression because I think this has been a weak link for me.
— David Niu
Leverage Surveys
Vinasource conducts internal surveys at least once each quarter, with ten to fifteen questions per survey. According to Dave, Vietnamese employees are more reticent about providing frank feedback, so he uses these surveys to extract their thoughts. Finally, he also surveys his customers after every project. He wants to make sure that Vinasource is delivering happiness to them and that they are more than satisfied.
Localized Learnings
As a foreigner running a business in Vietnam, Dave has experienced his share of highs and lows. Throughout the process, he’s learned a tremendous amount and adapted his Western-leaning management and leadership style to Vietnam. He shared the following insights:
Perception Matters—Dave was used to working in spartan startup environments in the U.S. and carried that frugal mentality to Vietnam. In fact, his first office in Saigon also doubled as his residence and company cafeteria, too. Today, they’ve moved into a fabulous new building with a much better “address.” He discovered that not only do his employees enjoy the extra “face” they receive when handing out their business cards, but even his employees’ families are more boastful and happy.
Individual to Collective Bonus—After Vinasource hit a goal, Dave gave everyone in the office a working day off. He thought that people would relax at home or run errands. Instead, when he logged onto Facebook the next day, he discovered that they’d all hung out together that day. So now, instead of an extra day off, Vinasource schedules a company outing instead.
Title Structure—In the U.S., there’s a lot of title inflation that Dave didn’t love. He just cared that people got their work done on time. In Vietnam, workers are much more sensitive and attuned to their title, Dave learned. So he outlined everyone’s title formally and introduced clear promotion paths.
Free Food and Drinks—Most startups and technology companies in the U.S. offer free sodas and food to encourage people to stay and work longer. Dave has incorporated this into Vinasource. They offer free sodas, beers, and lunch on Friday. These perks are just as effective in Vietnam as anywhere.
Delivering Happiness
When Dave first read Delivering Happiness by Zappos’ Tony Hsieh, he was so inspired that he had his management team read it, too. After they all read the book, they collectively changed Vinasource’s mission to “Deliver happiness to clients and the team.” Consequently, they try to relax and have more fun at work, which Dave notes creates a different ambience than the standard, rigid Vietnamese company vibe. He’s introduced a popular foosball table recently, too.
To ensure that they are delivering happiness to clients, Dave leverages the aforementioned customer surveys to gauge how well they are doing, which measures the project team’s accountability to their stated company mission.
Balance Fun with Accountability
Dave balances fun with a higher level of accountability for each staff member. To illustrate, Vinasource provides free English lessons to the staff, and the team even plays Pictionary as a fun way to learn English vocabulary. Yet the company also administers tests to see if the employee’s English is actually improving, which holds them accountable.
Avoid “Hit and Run” Initiative Overload
Many entrepreneurs go through this drill: they read an amazing management book, go to a conference and get totally fired up, or in some other way get super-inspired and then unleash a flood of initiatives to improve their business. Dave used to do this at Vinasource. He calls it a “hit and run” management style.
Today, Dave’s mind still brims with ideas and initiatives, but he now limits initiatives to a maximum of two at a time—one that can be spearheaded by him, and one that can be spearheaded by his co-founder. This has resulted in increased company buy-in, change, and results. Dave’s experience reminds us entrepreneurs to let off on the gas sometimes and tap the brakes instead.
Evolve Your Review Format to Get More Out of It
Dave has created the most comprehensive and dynamic review process that I’ve come across so far. It’s quite detailed, so I’m breaking it down to the three main components below.
a) Monthly Reviews—Each team member who is working on a client project receives a monthly review that has a bonus attached to it. First, the entire project team receives a rating. Second, the individual will also receive a personal rating. Third, the manager will assign an overall project/progress rating. Fourth, they incorporate client feedback into the review. Everything is graded on a 1 to 5 scale. In order to receive a bonus, the overall grade for the individual must average 4 or higher.
Dave implemented monthly reviews because he realized that his team needed immediate feedback in order to improve. He tried many review formats before evolving into the system that Vinasource uses today. This format satisfies the need for timely feedback plus it ties in a bonus that can be up to 20 percent of an employee’s salary, which is very meaningful. Because the bonus is so significant, his staff has become very focused on improving their ratings and pro-actively seeking feedback when they fall short. Dave welcomes and enjoys these conversations because he can now share his perspective and help employees understand how and where they need to improve.
b) Semi-Annual Review—These reviews affect bonuses and in rare cases are also an opportunity for promotions. This review is less project-focused and more development-focused.
c) Annual Review—These yearly reviews affect salary raises and promotions. Like the semi-annual reviews, these are also more focused on accomplishing individual milestones. Since much of the heavy lifting is done at the monthly project-based level, this meeting can be relatively easy, since the monthly reviews just roll into the big one at the year-end.
Conclusion
As our interview concluded, I leaned over and asked Dave Hajdu, in hindsight, if he should have teamed up with a local Vietnamese entrepreneur when starting Vinasource to avoid growing pains. Dave paused for a second, and then stated that he felt like he needed to make his own mistakes, because a local partner would have focused on micromanaging the staff instead of producing the great blend of East–West culture that they’ve created to date.
As I sat back, I was reminded of Dave’s early revelation that working for someone else “sucked.” From these experiences, I believe that Dave has created an environment at Vinasource that doesn’t “suck” for his workers, but is actually empowering, fun, and meaningful to him, his staff, and his clients.