MNCs and large Vietnamese companies had almost identical salary increases this year, the latest TRS survey shows. We need a byline here
The Total Remuneration Survey (TRS) 2014, conducted by Mercer, the leading global provider of human resources services, and its associate, Talentnet Corporation, involved 473 multinational corporations (MNCs) and large local companies this year from various industries, primarily Hi-tech, Consumer Goods, Chemicals, Manufacturing, and Pharmaceuticals. The survey collected data from more than 164,794 employees throughout Vietnam and has been the largest and most comprehensive salary report in the country for the last 15 years.
Ms Hoa Nguyen, leader of Mercer Remuneration Surveys & HR Consulting at Talentnet, said: “With not much change in business conditions and a lower inflation rate forecast, salary increases for 2014 are slightly lower than last year and we expect next year to be similar.”
Looking into salary increases across industries, Pharmaceuticals, Consumer Goods and Chemicals are in the Top 3, having provided the highest increase, at around 11 per cent, since their businesses are better than others. Meanwhile, Financial Services, which include Real Estate and Banking, had the lowest salary increases, at 8.4 per cent and 8.9 per cent, respectively, due to falling market demand amid difficult business conditions.
Regarding pay differences, Engineering enjoyed higher pay than other functions, followed by Finance & Accounting and Corporate Affairs. Contact Centres and Manufacturing had the lowest salary increases, joined by Information Technology, which is opposite to its status last year.
Taking a look at the pay difference between local companies and MNCs, the gap is still high between both sides, by 30 per cent. Moreover, the pay difference gradually widens from the professional level to the executive level. Local companies often provide higher bonuses than MNCs. In order to attract talent from MNCs, local companies are often willing to pay out of their salary range for talent in high level positions. “However, it will take a number of years before large local companies’ pay catches up with MNCs’ pay,” said Ms Hoa. “For now, in order to attract, motivate, and retain key employees, local companies often use long-term incentive tools such as stock grants or stock options.”
Taking a closer look at the variable bonuses, banking and oil & mining provided the highest (22.7 per cent and 17.7 per cent, respectively), in which large local companies paid higher variable bonuses than MNCs. Trading and Hi-tech offered the lowest variable bonuses, while Executive and Management Sales enjoyed the highest variable bonuses, which is not too different to last year.
According to the TRS survey, the benefits offered to employees are relatively aligned compared to last year. While AD&D insurance and private health insurance is prevalent, life insurance and car benefits are used to attract and retain talent at the management level.
Overall, the turnover rate in 2013 among industries fell 2 - 3 per cent compared to 2012. Average voluntary staff turnover in 2013 was at its lowest point for the last five years. The highest turnover rate was seen in Pharmaceuticals, Consumer Goods and Insurance, due to their greater employment opportunities compared to other industries. The turnover rate at MNCs was lower than that at local companies (12.2 per cent vs. 17.1 per cent).
Sales Manager, Sales Executive and Marketing Manager positions remain “hot” jobs. They have remained on the list of the Top 3 hot jobs companies have difficulty in recruiting and retaining for many years. Amid tough market conditions, Sales Manager positions are more important to businesses than Marketing positions since they bring revenue directly to companies.
The increase in the number of Vietnamese companies joining the salary survey this year indicates that large local companies now have a more serious point of view regarding their remuneration systems. They wish to improve and manage their salary and bonus budget more effectively. To know exactly how competitive their salary, allowances, and bonuses are compared to the market, companies are willing to join the salary survey and invest in remuneration survey reports, which will help them to make informed decisions. Participating in the survey also helps them to manage and allocate their salary budget much more effectively, in order to motivate employees. It also provides them with a trustworthy source of information when they need to provide flexible planning in recruiting and retaining talent.
Ms Hoa Nguyen
Director, Mercer Remuneration Surveys & HR Consulting