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On the up

Released at: 14:43, 26/10/2018

On the up

Talentnet – Mercer Total Remuneration Report Seminar attracted more than 600 companies attended in both HCMC & HN.Photo: Talentnet

The 2018 Talentnet - Mercer Total Remuneration Survey provides practical information on salaries and benefits across different industries.

by An Ha

Talentnet released the 2018 Talentnet - Mercer Total Remuneration Survey in mid-October, which saw the participation of 602 businesses from 16 different industries, including Information Technology, Consumer Goods, Life Sciences, Chemicals, and others. As the largest and most detailed salary and remuneration report in Vietnam for the last ten years, the 2018 Talentnet - Mercer Total Remuneration Survey has provided practical information for businesses in the process of planning and managing staff compensation, salary, benefits and rewards, in order to ensure internal equity and external competitiveness.

The survey involved 602 organizations submitting data on more than 314,000 employees’ compensation and benefit data points. Among these organizations were 531 multinational corporations (MNCs) and 71 Vietnamese companies. Nearly 40 per cent of participating businesses were new to the Total Remuneration Survey this year, demonstrating the determination and desire of local businesses to build a more professional salary structure to support talent attraction and retention. Local companies in Vietnam can now compete for talent with MNCs and don’t hesitate to pay higher as long as they see a good return on their investment. Vietnam is the only country in the Asia-Pacific region with two separated sets of market data in the report - one from MNCs and one from local companies - due to the major differences between the two groups in terms of compensation at the management level.

Salary increases

According to the survey, the salary increase rate in 2018 is 8.6 per cent at MNCs and 9.0 per cent at local businesses; no significant difference compared to last year. The latest data shows that, indeed, Vietnamese companies are raising their salary increase rate higher than MNCs. Moreover, their promotion budget is also slightly higher than MNCs, especially for senior positions. In addition, with an optimistic business outcome in 2018, the High Tech, Life Sciences, and Chemical sectors have the highest rates of salary increases, at 9.7 per cent, 9.1 per cent, and 9.0 per cent, respectively. On the other hand, due to the economic downturn, the Oil & Mining sector has the lowest salary increase rate, at 5.8 per cent. However, since this industry requires special technical skills and is in a dangerous working environment, it still pays the highest in Vietnam.

Difference in pay

Overall, MNCs provide a higher salary than local companies, by an average of 25 per cent. The gap is much wider at the management level (34 per cent), as MNCs have been focusing on offering higher salaries in management positions to fairly compensate managers for their greater contribution and broader scope of work.

Variable bonuses

The trends confirm that both MNCs and Vietnamese companies increased their variable bonuses as a key tool to motivate employees in 2017 and also plan to do so in 2018. However, local companies have been paying a variable bonus that is a little bit higher than MNCs, at 20.9 per cent and 16.2 per cent, respectively.

Due to the nature of the business, companies belonging to Financial Services, including Non-Banking (consisting of consumer finance and investment firms), Banking, and Insurance, have the highest bonus rates, at 21-25.2 per cent. Meanwhile, Retail, Logistics, and Education have the lowest, at 13.6 per cent, 13.2 per cent, and 9.0 per cent, respectively.

Voluntary staff turnover

Interestingly, even though salary trends and bonuses are both increasing at local companies, 2018 has been marked by record levels of voluntary staff turnover at these companies. Talentnet’s data forecasts that full year 2018 will see a 20.2 per cent turnover rate at Vietnamese high-growth companies versus only 15.6 per cent at MNCs.

However, this also varies from one industry to another. At MNCs in Retail, due to its characteristics, voluntary turnover was 37.6 per cent; more than double the average of 15.6 per cent at MNCs. The top three industries with the highest turnover are Retail, Banking and Retail, while the bottom three are Trading, Chemicals and Oil & Mining, due to their competitive compensation and benefit packages as well as their industry characteristics.

According to the survey, at MNCs, the three most difficult positions to attract and retain talent are Sales (at both the Manager and Professional levels), and Engineering (at the Professional level). The consistent presence of Engineering over the past couple years demonstrates Vietnam’s increased investments into technical and specialized fields. Within the High Tech sector, Engineering positions, especially Software Engineers, are in great demand and businesses must always compete for talent.

A comprehensive people strategy is not a winning one if it does not include a proven retention strategy for holding on to the employees you’ve worked hard to recruit. Vietnam currently possesses a “prime age” workforce with a lot of competitive advantages: low cost, young and dynamic, hard-working, and eager to learn. Both local companies and MNCs are investing heavily in aggressive talent acquisition, talent development, and talent retention programs.

The increasing number of Vietnamese companies participating in the Talentnet - Mercer Survey is strong evidence of “must win” strategies adopted in talent attraction and retention. In addition, these kinds of strategies are now being built upon the proven track record provided by data, scientific research and better business intelligence, rather than on assumptions. In the era of Industry 4.0, reliable compensation and benefit data is now considered one of the most vital resources of every organization in Vietnam for a winning talent strategy.

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