News & Column
Part 2: Is your Salary Table outdated?
Part 2 of the Executive Series: “Compensation Strategy in Vietnam: Essential Insights for Business Leaders”
Many companies in Vietnam created their salary tables and raised the rules when their local entities were first established.
But have these systems been reviewed or updated since then?
Without regular revisions aligned with inflation and evolving market conditions, the gap between your internal pay structure and external realities may be quietly widening.
The risks of an outdated salary table?
1. Talent acquisition becomes a struggle
When salary ranges fall below market benchmarks, recruitment suffers. Hiring managers are often forced to choose between sticking to outdated pay bands or losing strong candidates.
“We followed our internal policy — but no qualified candidate accepted the offer.”
2. Pay decisions become inconsistent
Inflexible compensation systems often lead to case-by-case exceptions, driven by individual manager discretion. Raises are justified based on vague reasoning like “good performance” or “same as last year,” weakening transparency and internal equity.
3. Employee trust and retention decline
When compensation appears disconnected from contribution or external standards, engagement drops — especially among high performers. Over time, this erodes confidence in leadership and increases voluntary turnover.
The fix: Regularly audit and realign your compensation structure
The good news: Rebuilding alignment doesn’t require a full system overhaul. But it does require structure, reliable data, and deliberate action.
✅ Conduct an annual compensation review
Ask critical diagnostic questions:
- Are our current salary bands still competitive by job function, level, and market tier?
- Are line managers actively using the compensation system to guide decisions?
- Do employees understand how their pay is structured and adjusted?
Listen for early warning signs of misalignment:
- “Competitors are offering much more attractive compensation packages.”
- “We’re receiving more questions about how raises are calculated these days.”
- “Our job posts aren’t bringing in qualified applicants anymore.”
These indicators often signal that your compensation structure is drifting away from market expectations.
Already behind? Take action in three strategic steps
If you’ve identified (or suspect) a misalignment between your compensation structure and current market dynamics, follow these corrective steps to address it effectively:
Step 1: Analyze the gap between your pay levels and the market
Begin by gathering accurate and reliable market salary data, then compare it against your internal pay levels.
Identify which roles or job levels have the biggest gaps — and by how much.
Without this clarity, you risk misdirecting your budget or failing to fix what really matters.
Don’t rely on gut feeling or individual cases — objective data makes all the difference.
Step 2: Estimate the cost and timeline for closing the gap
Once you’ve identified where pay gaps exist, calculate how much it would cost to fully correct them.
Then, figure out how much of that cost can realistically be covered this year.
Your approach — whether to fix things gradually or quickly — will depend on how you prioritize budget vs. speed.
Step 3: Prioritize adjustments strategically
If full alignment isn’t immediately feasible, adopt a phased approach:
- Prioritize high-impact roles or departments
- Focus on key performers with critical pay gaps against labor market
- Apply structured caps (e.g., VND 1 million/employee/year at maximum) to manage rollout sustainably
Transparency and consistency are more important than speed — even gradual correction sends a strong message of fairness and market awareness.
Start with reliable market insights
Participating in the 2025 Vietnam Salary Survey provides access to a complimentary Executive Summary outlining key salary benchmarks across the current Vietnam labor market.
This data will support your leadership team in:
- Assessing the competitiveness of your existing compensation levels
- Identifying areas of misalignment and potential talent risk
- Making informed and strategic compensation decisions for 2025
📍Coming Up Next (Part 3):
Can your compensation system protect you when It matters?
Designing compensation frameworks that align with Vietnamese labor laws — while protecting your business during key moments like audits, exits, and restructures.
Stay informed. Stay competitive.