HÀ NỘI — Nearly 80 per cent of Vietnamese companies have implemented performance management systems, but inconsistent application across organisational levels is undermining their impact. In response, business leaders are increasingly rethinking how performance is defined, shifting toward a model that emphasises shared accountability between executives and employees.

Balancing productivity and profit

Say in a bid to drive performance, a company's CEO set a clear Key Performance Indicator (KPI) for two sales directors. Each was tasked with selling the firm’s new product to 10 accounts. Director A met the target, closing deals with all 10 accounts, but only after offering discounts of up to 30 per cent and extending payment terms to two months. In contrast, Director B secured just seven clients but upheld stricter conditions, limiting discounts to 15 per cent and requiring payment within one month.

At a recent conference in HCM City, Dr Trần Hữu Đức from BETTER LIVING Life Coaching and Training Centre used this example, saying business leaders must look beyond surface-level metrics when assessing how resources are used to drive sales, boost revenue and ensure both profit and cash flow.

Đức pointed out that while Director A met the CEO’s KPI, the aggressive discounts and extended payment terms meant the company barely broke even, or could have even suffered a loss. On the other hand, Director B fell short of the sales target but closed more profitable deals and provided a quicker cash flow.

“So who is truly more efficient if we consider final results and profitability?” he asked. “Should we continue to reward those who simply hit KPIs, regardless of their impact on the company’s bottom line?”

According to General Director of KAFI Securities Corp Trịnh Thành Cần, performance and efficiency are far from straightforward concepts and often spark debate. He said that in the case of the two sales directors, the CEO’s KPIs were lacking transparency.

If a company only praises those who meet 100 per cent of their targets, it risks sacrificing profits, Cần said, adding that that is not a sustainable development path, because there’s no way to predict when – if ever – that sacrifice will lead to actual gains.

Nguyễn Ngọc Trâm, CEO of US-based IPGEEKLAB and senior advisor to the intellectual property expert committee at the American Intellectual Property Law Association, offered a contrasting perspective based on the American business environment.

Trâm explained that in the US, achieving 100 per cent of assigned targets is considered merely fulfilling an obligation. In such cases, employees typically receive only their salary and commission.

She added that from the 11th client onward, high-performing staff are often invited by company leaders to exclusive events with business partners and are introduced to high-value relationships. 

Leader performance

At the conference, Trâm noted that major Western enterprises often place less emphasis on KPIs, viewing performance as a natural outcome of a well-designed organisational system. 

In contrast, many Vietnamese business leaders still focus heavily on KPI benchmarks, frequently holding employees accountable when targets aren't met, rather than overlooking deeper systemic issues.

Performance depends on many factors. It’s tied to processes, structure and how well the system is optimised, Trâm said.

“It’s time we shift attention to the responsibility of the system designer. In other words, we must assess the performance of the leader,” she noted. 

According to Trâm, a truly efficient, profitable enterprise requires both high-performing leaders and employees. "And that’s why KPIs are often applied top-down, starting with management,” she added.

For small and medium-sized Vietnamese enterprises, it may not be necessary for leaders to implement the full six-layer structure of strategy, corporate structure, workflow, culture, data and people, Trâm said. 

Instead, leaders should focus on identifying and addressing specific bottlenecks within each layer. Once these are resolved thoroughly and effectively, everything will begin to flow again and performance will naturally improve, she noted. 

She emphasised that performance cannot be imposed through orders or numerical targets alone, nor can it be transformed overnight.

“Performance is the outcome of a well-functioning organisational ecosystem,” Trâm said. “It happens when people are placed in the right roles, are led effectively, empowered appropriately and supported by a sound operating system.”

Meanwhile, Cần warned that KPIs can be a double-edged sword. When designed properly from the outset, KPIs provide clear direction for both teams and individuals, allowing high performers to be recognised and rewarded, while giving others the opportunity to learn and improve.

However, poorly designed KPIs can lead to what is commonly known as 'quiet quitting', where employees continue to show up but are mentally disengaged. Cần emphasised that transparency and clarity in how KPIs are set by leadership play a crucial role. 

Chairman of the Board of Directors at TTT Corporation Trần Minh Tâm said that his company’s 30-year journey of maintaining performance and retaining talent is rooted in a simple philosophy.

Tâm said his firm does not rely on so-called 'supermen' – individual stars with exceptional talent – but instead focuses on building standardised processes, breaking down work into manageable stages, and harnessing the collective strength of teamwork. — VNS