Bonus beyond plan: The missing motivation for leading businesses
(Dan Tri) - In the list of tasks that Resolution No. 79 of the Politburo assigned to ministries and branches, there is a difficult problem of building a proportional bonus mechanism for profits exceeding the plan.
At the seminar "What can state-owned enterprises really lead growth?" held at the end of July in Hanoi, Ms. Nguyen Thu Thuy, Deputy Director of the Department of State Enterprise Development (Ministry of Finance), said the roadmap is expected to be initially evaluated at the end of 2026, proposed in 2027.
Three years is the gap from the time of proposal to the 2030 mark, when Resolution 79 expects Vietnam to have from 1 to 3 state-owned enterprises in the group of 500 largest enterprises in the world. The question is not whether the route is fast or slow, but if this link is missing, are the remaining links enough to create movement?
It is necessary to clarify that a bonus exceeding the plan is not an incentive. It is a tool that aligns the interests of value creators with the value they create. This is the basic principle of modern corporate governance.
The OECD Guidelines on State Enterprise Governance, revised in 2024, consider performance-linked remuneration as good practice.
At the same time, it also warns of two extremes to avoid: a remuneration level lower than the market will hinder the recruitment of qualified personnel, while a level that is too high can easily create controversy and create incentives that deviate from the long-term interests of the business. The key lies in finding balance, not avoiding the problem.
Bonus for exceeding the plan is not an incentive, but a tool to attach the benefits of value creators to the value they create (Photo: Viettel).
This is the set of principles that Resolution 79 aims for when setting the goal of 100% of economic groups and state-owned corporations applying governance according to OECD standards by 2030. If only the governance framework is applied but ignores the remuneration mechanism associated with efficiency, then that is only half a set of standards.
Why is motivational design in state-owned enterprises more complicated? Dr. Nguyen Tu Anh, Director of Policy Research at VinUni University, analyzed at the seminar that this is the owner-agent problem that economics has long identified, and is a common problem for all economies with a state-owned enterprise sector, not just Vietnam.
In private enterprises, the connection between business results and the interests of the operator is often established directly through ownership. In state-owned enterprises, that relationship must be established by institution. As long as the institution is not complete, the void will remain. This is a technical problem about mechanism design, not a story of personal qualities.
The most obvious consequence of an incomplete mechanism is the asymmetry between risk and reward. According to his analysis, entering a breakthrough means entering an unclear path; While positive results are not associated with adequate compensation, adverse results are accompanied by clear responsibilities. With such a structure, the conservative choice becomes the rational choice.
He cited an example that is more than ten years old but still holds weight. A domestic airline then predicted an increase in fuel prices, so it participated in a price risk hedging tool, buying in advance at a low level to protect state assets. The market then reversed, causing losses, and those who did so were punished.
That is market risk, not malfeasance. But the consequences last until today. Other businesses look at it and give up on that tool, returning to the safe way of buying as much as you can. A market tool gets pushed off the desk, not because it's wrong, but because no one wants to be next.
It should be noted that the new legal system on management and investment of state capital at enterprises, effective from August 2025, has created significant changes in this right direction.
According to information from the State Enterprise Development Department, capital preservation and development requirements are now considered on the basis of the overall investment portfolio, not each individual project. This is an important change, because the nature of investment activities is that there are winning projects and losing projects, and evaluating each project individually is the surest way to destroy the spirit of experimentation.
In addition, investment costs for science and technology, innovation and costs for performing political tasks assigned by the State are separated for evaluation and are not included in normal production and business efficiency.
The new legal system on management and investment of state capital at enterprises has created significant changes (Photo: Viettel).
But those changes fall into the category of removing barriers, making risk-taking less dangerous. They have not created thrust yet. The gap between "no penalty for failure" and "benefit for success" remains intact.
A profit sharing mechanism exceeding the target is being considered. China has operated a similar mechanism for the state-owned enterprise sector, with a set of operational instructions issued by the State Asset Supervision and Management Commission since early 2021.
The business and the ownership agency agree on a target profit level for the fiscal year. The portion of realized profit that exceeds that target level is determined as excess profit. From this excess, the business deducts a pre-agreed proportion to distribute to those who directly create the results.
The target profit level is not set by the business itself. The guidelines require that targets must be built on the basis of strategy, assessment targets, previous years' business data and the industry's average profit level, and must not be lower than the industry reference threshold. This eliminates the possibility of setting low plans to easily overtake.
Additionally, the distribution is spread out over three years, with the first year's payout rate limited. This method forces managers to pay attention to the results of the following years, instead of focusing their efforts on one year.
Notably for technology businesses, China's guidelines also allow research and development costs to be added back to profits when determining the excess, and giving priority to distribution to technical and research teams. In other words, businesses that invest heavily in research do not suffer losses when calculating achievements, a way to directly handle the conflict between long-term investment and short-term profit targets.
There is a case that both experts at the discussion mentioned, and it shows the problem in an indirect but clear way.
Dr. Nguyen Dinh Cung, former Director of the Central Institute for Economic Management Research, cited Viettel as an example of its pioneering role: from a construction unit to a telecommunications service enterprise, then to a high-tech industrial enterprise.
What he cares about is not the scale but the internal mechanism. This business has been able to tie its mission to the national mission, build a culture and spirit of dedication, thereby partly overcoming the ownership problem. Dr. Nguyen Tu Anh added the second factor is military discipline, noting that this is something other state-owned enterprises do not have.
Viettel's 2025 business results show that the model operates effectively: consolidated revenue of more than 223,000 billion VND, an increase of 15.2%; pre-tax profit of VND 57,688 billion; budget contribution of 42,290 billion VND; Revenue in foreign markets alone increased by 23.9%, the highest level in nine years.
Viettel is mentioned as a typical example of its pioneering role (Photo: Viettel).
But this is the point to think about. An operating model based on non-material motivation - mission, culture, discipline - is a valuable asset, but difficult to replicate through policy. It is not possible to issue a decree to create military discipline in a civilian corporation. Meanwhile, the over-plan bonus mechanism is something that can be designed, can be applied simultaneously, and can be measured.
And even where intrinsic motivation is already present, physical mechanisms are still needed. Dr. Nguyen Dinh Cung noted that even in successful cases there are still projects that could have gone further if there were no barriers, and he suggested studying those cases themselves to draw conditions, instead of continuing to discuss in general terms. "There always has to be evidence to be convincing," he said.
One specific barrier can be raised. The Law on Science, Technology and Innovation allows a significant proportion of profits from research results to be deducted to reward authors, but this mechanism is tied to commercialized results.
With research tasks serving national defense and security, which do not generate commercial profits in the usual sense but require no less qualifications and effort, the way to recognize contributions is still open.
The goals of Resolution 79 are specific and time-bound. According to data stated at a forum earlier this year, the revenue threshold to enter the group of 500 largest businesses in the world is currently about 32 billion USD. That's a number no Vietnamese business has ever touched, and getting close in four years will require continued double-digit growth, which doesn't come from relaxing a few more procedures.
The proposed roadmap for 2027 is technically reasonable, because it takes time to summarize the practical implementation of the new law. But during that preparation process, there are questions that deserve to be answered soon. How much bonus rate is enough to create real motivation, and should it be tied to the capital cost threshold as international practice instead of just compared to the assigned plan?