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Part 7 | Defining your compensation positioning: What is the “right” salary level for your organization?
Part 7 of the Executive Series: Compensation strategy in Vietnam — Essential insights for business leaders
One of the most critical — and complex — responsibilities in compensation management is determining where to position your organization within the talent market.
Should you align with the median? Compete aggressively at the upper quartile? Or optimize cost by positioning below market?
In this edition of our Executive Series, we move beyond understanding benchmark data and into the discipline of strategic pay positioning — exploring how to use compensation architecture to align salary levels with talent segmentation, workforce priorities, and broader business objectives.
If you missed Part 6 — “How to use salary benchmark reports effectively” — Explore here!
Compensation: One Pillar of a Unified Total Rewards Strategy
Strategic salary design cannot exist in isolation. It must reflect the broader strength and structure of your Total Rewards offering — an integrated framework that attracts, engages, and retains top talent.
Total Rewards encompasses four core pillars:
- Pay: Base salary, bonuses, incentives, and fixed allowances
- Benefits: Insurance, wellness programs, paid leave, and other employer-provided welfare
- Career: Development pathways, succession planning, and transparent performance management
- Work-Life: Flexibility, culture, belonging, and work-life balance support
If your benefits and development investments are strong, you may remain competitive at or near the market median (P50). Conversely, companies with fewer non-financial rewards often need to lead with higher salary positioning to attract key talent.
The right salary level is not universal — it’s contextual. Compensation must complement the broader employee value proposition, not replace it.
P25 / P50 / P75: What benchmark percentiles actually indicate
When structuring compensation, HR and C&B leaders often rely on three key market reference points:
- P25: The 25th percentile — conservative positioning, applicable for entry-level or cost-sensitive roles
- P50: The 50th percentile — market median, standard reference for competitive yet balanced positioning
- P75: The 75th percentile — premium positioning to target top-tier or hard-to-hire talent
Used strategically, these benchmarks allow you to align salary bands to role criticality, talent availability, and your organization’s pay philosophy.
| Percentile | Market Position | Talent Access | Time to Hire | Use Case |
| P75 | Premium | In-demand, high-performing talent | Faster | Leadership, strategic, or niche roles |
| P50 | Competitive | General market talent | Average | Organization-wide market alignment |
| P25 | Conservative | Entry-level or volume hires | Slower | Operational or cost-sensitive positions |
Benchmarks are not rules — they’re reference points. Strategic pay design begins with how you interpret and apply them.
Strategic deviation: The value of moving beyond the Median
While P50 is often seen as the safe choice, market leaders know that effective compensation strategy requires intentional deviation.
For examples:
- P50–P75: For high-scarcity or high-attrition roles, to strengthen attraction and retention
- P25–P50: For high-volume or non-core functions where labor cost control is critical
- Above P75: For mission-critical roles requiring top-tier talent and organizational commitment
These decisions are not guesses. They’re rooted in workforce segmentation, role impact, and talent strategy. The key is clarity of purpose: Every pay decision should align with clearly defined business outcomes — whether that’s speeding up hiring, tightening retention, or fueling organizational performance.
Deviating from the market is not a risk — it’s a strategy.
Design with intent: Aligning pay to strategic objectives
All compensation decisions should be anchored in purpose. Before determining salary levels, organizations must ask: What are we trying to achieve?
Whether the goal is to:
- Reduce turnover in mid-level roles
- Retain and motivate future leaders
- Accelerate junior talent acquisition
To operationalize this, apply a two-step approach:
Step 1: Segment roles using a job function × job level matrix
Step 2: Define the compensation objective for each segment
These objectives typically fall into three strategic categories:
1. Talent Acquisition (externally focused):
→ Design ranges with a competitive entry point
2. Talent Retention (balanced internal-external focus):
→ Calibrate toward the upper range for key or at-risk roles
3. Motivation & Career Progression (internally driven):
→ Include progression and differentiation across levels to foster growth and engagement
With clear objectives, compensation transforms from reactive spending to strategic investment.
Practical insight: Define the market, then define your position
Think of P25–P75 not as fixed targets, but as strategic levers. The central question isn’t “What does the market pay?” — it’s “Where should we choose to stand, and why?”
Effective pay design requires three intersecting insights:
- Clarity of purpose: What’s the intended outcome of this salary level?
- Market intelligence: What does reliable data tell us about our talent competitors?
- Compensation philosophy: Are we competing on pay, purpose, flexibility, or growth?
When these three are aligned, you build a compensation strategy that enables rather than limits your ability to attract and retain talent.
Don’t let benchmarks set your strategy — let your strategy define your benchmarks.
Gain Critical Market Insight — Participate in the Vietnam Salary Survey 2025
Over 600 companies have already joined the 2025 Vietnam Salary Survey.
Participating organizations receive a complimentary summary report consolidating key salary benchmarks in the Vietnamese labor market.
From framework to execution: Case studies in pay level design
In Part 8 of the Executive Series, , we’ll showcase how leading companies approach pay level decisions through real-life case studies. See how compensation strategy is applied in practice — from setting salary bands to aligning with talent goals, cost considerations, and market competitiveness.
