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Part 9 | Maintaining pay structures: Short and long-term review strategies
Part 9 of the Executive Series: Compensation strategy in Vietnam — Essential insights for business leaders
Welcome back to our Executive Series on compensation strategy in Vietnam. In Part 8, we explored real-world case studies that illustrated how companies bring pay design strategies to life — aligning compensation philosophy with talent and business priorities.
If you missed it, revisit Part 8 — “From framework to execution: Case studies in pay level design” — here.
Having addressed the art of compensation design, we now confront a critical next step:
How do you keep your pay structures aligned—not just today, but sustainably into the future?
In this installment, we address that crucial challenge. Effective compensation management doesn’t stop at design—it demands continual maintenance.
Maintaining alignment: A dual approach
A common pitfall is treating compensation design as a one-off project. In reality, salary structures must evolve dynamically in response to market shifts, talent demands, and strategic adjustments. Successful organizations consistently apply two complementary review approaches to maintain an effective compensation system:
- Short-term: Annual market-based salary reviews and validations
- Mid-to-long-term: Structural recalibrations driven by strategic shifts in talent or business direction
Let’s examine each in detail.
1. Short-term: Annual Pay Range Validation via Market Data
At its core, maintaining effective pay structures means integrating regular market validation into your organizational routine.
An annual market review does not necessarily mean annual pay adjustments. Rather, it ensures that pay ranges are systematically checked against the external market, ensuring decisions are data-driven, not assumption-based.
If market conditions remain stable, maintaining existing salary bands can be entirely appropriate—provided the decision is clearly documented and strategically justified.
Budget-conscious organizations often manage costs by:
- Purchasing comprehensive benchmark surveys every 2–3 years.
- Leveraging off-year data through free participation summaries, publicly accessible reports, or alternative HR intelligence.
Key takeaway: Annual reviews are not solely about making changes—they are about confirming competitive alignment and clearly documenting rationale, even when pay ranges remain unchanged.
2. Mid-to-long-term: Strategic Realignment to Support Business Evolution
While short-term assessments maintain external competitiveness, periodic deeper reviews ensure your pay structures remain internally aligned with evolving business strategies, talent demands, and growth plans.
Consider these four critical scenarios prompting strategic adjustments:
A. Your Vietnam operation undergoes a strategic shift in its role
As your local entity transitions—perhaps evolving from a basic operational hub to a center of strategic R&D or regional innovation—talent profiles and expectations will dramatically change.
Organizations facing these transitions must critically evaluate:
- Do our current pay levels effectively attract the required strategic talent?
- Is our performance management system effectively incentivizing desired behaviors and outcomes?
- Is our pay-for-performance model credible and motivating for pivotal roles?
If the answer to any of these is unclear, a strategic recalibration of pay and performance frameworks is essential.
B. Integrating new roles or specialized skill sets
Rapid growth or shifts toward regional leadership in Vietnam often introduce new skill requirements—such as senior engineers, compliance experts, or digital strategists—necessitating adjustments to existing grade structures.
In such cases, leading companies may:
- Develop additional specialized job grades or pathways.
- Introduce dual career ladders (management and expert tracks).
- Create targeted salary ranges reflecting market premiums for niche skill sets.
C. Achieving labor-cost efficiency through structural refinement
Over time, compensation structures can become misaligned—particularly if longevity-driven salary increases surpass actual contribution levels, leading to inflated payroll without proportional value.
To restore balance, organizations must:
- Realign salary bands based on current performance expectations.
- Implement clear policies for managing employees who exceed pay range ceilings.
- Adjust performance evaluation criteria to emphasize tangible business outcomes.
- Shift toward a higher proportion of variable pay to reinforce a performance-driven culture.
This type of adjustment often coincides strategically with leadership changes, such as the appointment of a new Country Manager or CEO.
D. Supporting local leadership development with executive-level pay structures
Increasingly, multinational corporations in Vietnam appoint local talent to senior leadership roles. However, legacy pay structures often lack defined executive-level tiers, creating ambiguity and perceived inequity.
To effectively support localization of leadership, progressive organizations:
- Expand grade structures to clearly define executive-level roles.
- Redesign compensation packages appropriate for senior leadership positions.
- Establish transparent career paths to executive roles, including explicit leadership competencies and measurable milestones.
This approach signals trust, transparency, and long-term commitment to local leadership talent.
The discipline of consistent maintenance
Initial design of your compensation system is foundational, but ongoing alignment ensures its strategic effectiveness. Two practices distinguish market leaders:
- Annual validation: Regularly assess pay ranges against current market conditions, documenting and communicating rationale transparently.
- Strategic reviews: Periodically recalibrate compensation structures in response to strategic shifts, evolving talent needs, and long-term business growth plans.
Remember, addressing drift early prevents costly realignment later. Successful executives embed these reviews into their organizational governance practices.
Ask yourself:
“Does our current compensation structure align strategically with who we are becoming as an organization?” If the answer is unclear, it's time for a deeper strategic review.
👉 First step: Achieve market clarity through the Vietnam Salary Survey 2025
Participate in our 2025 Vietnam Salary Survey to receive a complimentary executive summary providing critical insights into compensation trends & participate in a Webinar on Compensation strategy.
The survey closes on July 31—participate early to guide your 2025 compensation planning.
📍 Up next in the final part of our series:
Action Guide → Your roadmap to practical compensation management in Vietnam
In Part 10, we summarize key insights from this executive series into a concise, actionable checklist, empowering business and HR leaders to strengthen their compensation strategies immediately.
