The latest Total Remuneration Survey shows that increases in salary levels in 2014 remained the same as in 2013.
The Total Remuneration Survey (TRS) 2015 involved 520 multinational corporations (MNCs) and large local companies from various industries. Most respondents were from the Hi-tech, Consumer Goods, Chemicals, Manufacturing, and Life Sciences industries. The survey collected data from more than 211,816 employees across Vietnam. The TRS has been the largest and most comprehensive salary report in Vietnam for the last 16 years.
Ms. Hoa Nguyen, the leader of Mercer Remuneration Surveys & HR Consulting from Talentnet said: “With not much change in business conditions and a lower inflation rate forecast, salary increases in 2015 were nearly the same as in 2014 and this is also forecasted for next year, which are higher than GDP growth and the inflation rate.”
Looking into salary increases across industries, Chemicals, Life Sciences, and Manufacturing are the Top 3, with increases equal to 10 per cent, since these were the leading industries investing in Vietnam in 2014. On the other hand, Non-Banking and Hospitality saw the lowest salary increases, at 7.9 per cent and 6.7 per cent, respectively, due to lower market demand and difficult business conditions.
Taking a look at the pay difference between local companies and MNCs, the gap is still high, at 40 per cent compared with 30 per cent in 2014. Moreover, the pay difference gradually widens from the Professional level (40 per cent) to the Executive level (62 per cent), as MNCs have clear strategies to retain key personnel, who are usually at the high level. On the other hand, local companies often provide higher bonuses than MNCs to recruit their talent, resulting in a willingness to pay out of the salary range for high level positions. “For now, in order to attract, motivate, and retain the best employees and those with the most potential, local companies often use long-term incentive tools such as stock grants, stock options, or long-term cash loans,”, Ms. Hoa said.
Banking, Oil & Mining, and Non-Banking provide a higher Variable Bonus compared with others, of 22.1 per cent, 17.7 per cent, and 17.2 per cent, respectively, whereas Transportation & Logistics, Retail, and Hospitality still do not consider a Variable Bonus as a tool in talent retention.
Overall, the turnover rate in 2014 among industries was a little bit higher than in 2013 thanks to the gradual economic recovery. Local companies becoming aware of the importance of HR functions led to many changes in their HR structure, so their average turnover rate was higher than MNCs (20 per cent against 16.2 per cent). The highest turnover rate was in Retail (42.1 per cent), Hospitality, and Life Sciences, whereas the lowest turnover was in Banking, Trading, and Oil & Mining (6 per cent in the latter).
Sales Manager, Senior Sales Executive, and Marketing Manager positions were still the hot jobs. They have been on the list of the four hottest jobs where companies have had difficulties in recruitment and retention for many years. However, the most difficult positions in regard to retention are Senior Sales Executive, Sales Manager, and Senior Marketing Executive.
The increase in the number of Vietnamese companies joining the salary survey this year indicates that large local companies now have a more serious view of their remuneration system, wanting to improve and manage their salary and bonus budget more effectively. To know exactly how competitive their salaries, allowances, and bonuses are compared to the market, companies are willing to join the salary survey and invest in remuneration survey reports that help them make informative decisions. Participating in the survey also helps them 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 plans when recruiting and retaining talent.
To cope with AEC integration removing borders in talent exchange, both MNCs and large Vietnamese companies should consider remuneration packages as one of the key factors in talent retention. However, the decision to leverage which factor in the remuneration package, including base salary or variable bonus/allowances, together with other intangible benefits, depends on the context and status of each business. Moreover, remuneration strategies should complement an organization’s people strategy, to ensure the utmost business efficiency.