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Money talks

Released at: 22:27, 10/10/2014 HR CONSULT

Money talks

According to the "Employees Perception towards Employer of Choice" survey conducted on 664 employees by Talentnet in 2013, "Salary" is always in the Top 3 factors attracting candidates to a particular organisation.

There can be no doubt that salary is a major concern of all employees and there is competition over remuneration packages among companies to see which pays the higher salary to attract talent amid a tough market  for some positions. For new arrivals, defining an appropriate and competitive salary is even more difficult due to a lack of information about pay practices in the local market.

Each company has their own salary policy and structure to meet different objectives. However, it is strongly believed that a competitive remuneration package, while still ensuring internal fairness, is the ultimate objective of any organisation. Whether the salary should be high for all positions and suitable to the market of the country remains a major concern of new market entrants. According to Mercer methodology, one of the leading global HR consulting firms, salary structure should be built based on 3P: “Position”, “Person” and “Performance”.

For Position, the organisation needs to focus on the Position, not the job holder. A job evaluation should be conducted, clearly defining the scope of the work and management as well as the work impact of each position, to differentiate the level of importance of all positions. It will vary based on the company strategy, as for some companies sales may be the front line while others may pay greater attention to the production.

For Person, the organisation must take into account the ability to meet the job requirements of the job holder as well as the market demand in that Position. 
For Performance, which should be evaluated yearly based on Key Performance Indicators at the early of the year and the performance management of the year end for the salary and bonus increment.

Last but not least, local practice should be considered seriously, as for emerging countries like Vietnam the “market competitiveness” is the key factor impacting on salary adjustments. 
Building an effective salary structure involves a scientific approach. Rather than high salaries for all functions, nowadays companies will focus on how to maximise their remuneration package in an efficient way, with good salary structure being a vital foundation. A good salary structure should be based on a  good job evaluation system that is used commonly by the majority of the company, quality data for market benchmarking provided by trustworthy survey providers, and links between salary structure and business strategy. Organisations will prefer to allocate the right salary package to the right people while still meeting company requirements. Furthermore, a good salary structure is not only for attracting talent but also for motivating existing employees. 

(*) This column was prepared in co-operation with Talentnet Corporation. To obtain more advice on Vietnam’s labour market, email nguyen.t.an.ha@talentnet.vn.

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