Winning in vietnam hay group connie ma 2009

Winning in Vietnam 27th February 2009,

AmCham, Sheraton SingaporeConnie Ma

2© 2009 Hay Group. All Rights Reserved

Vietnamese Economy and Inflation one of the highest in Asia ( 2008 )


Rising Salary Increase triggered by Rising Inflation in 2008/09

Source: EIU & PayNet 2008

2009 Inflation forecast average is

about 10%


Salary Movements - Sector

Compensation Challenges


Pay Differentials (Vietnam=1)

Source: Hay Group PayNet, 2008

1.5 1.6

2.0

5.35.5

1.3 1.21.5

3.8

4.3

1.31.1 1.2

2.3

3.2

1.41.1 1.0

1.8

3.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

China India Malaysia Singapore Hong Kong

Clerical/Production

Junior Management

Middle Management

Senior Management

Ratio of Guaranteed Cash


Lower job

Higher job

1 Step : „Career Ladder‟ Promotion

“The logical next step”

Lower job

Higher job

2 Steps : Normal/Solid Promotion

16

15

14

13

12

Hay

Group

Level

Lower job

3 Steps : Risky Promotion

Higher job

Why job “steps” matter?

Hay Group Salary Survey 2008 shows that Pay progression from one job to the next inmiddle management is 44% for Vietnam


Pay progression comparison (1 Step Pay Difference)


11%

19%

22%

30%

18%

31%

23%

35%

17%15%

24%

30%

33%

40%

44%

28%

20%

12%

22%

27%28%

36%

28%

31%

-10%

0%

10%

20%

30%

40%

50%

60%

Australia Japan Singapore Hong Kong Malaysia China Vietnam India

Pay P

rog

ressio

n a

cro

ss e

ach

man

ag

em

en

t le

vel

Comparison - Base Salary

Junior Management Middle Management Senior Management


1 step difference – middle management-by Job Families


44%

94%

80%

64%

57% 56%53% 52% 52%

42%

29%25% 25%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

All Orgs Legal Corp. Affairs

IT Eng H & E Admin Mkt Sales Prod Logistic HR F&A

All Orgs Legal Corp. Affairs IT Eng H & E Admin Mkt Sales Prod Logistic HR F&A

Average Base Salary


2 steps difference

China

Internal Pay Grade Structure - Median of Market w ith +/- 25% spread

Base Salary Policy

Benchmarked against China 1st Tiers WOFEs-

Data from 212 companies

November 2007

P90

P75

P25

P10

MD

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

200 300 400 500 600 700 800 900 1000

Hay Point

CNY

Average 2 Steps Pay

Progression is 83%

HRL16

HRL 15

HRL 17


2 steps difference – middle management-by Job Families


83%

117%113%

99%94%

83%79%

69% 68% 68% 66% 65%

42%38% 36%

0%

20%

40%

60%

80%

100%

120%

140%

All Orgs Sales H & E Cust Svcs

Logistic IT Eng QA HR F&A Prod Mkt Project Mgt

Corp. Affairs

Admin

All Orgs Sales H & E Cust Svcs Logistic IT Eng QA HR F&A Prod Mkt Project Mgt Corp. Affairs Admin


Average age of employees working for MNCs in Vietnam

On average, senior

managers in Vietnam

are 5 years younger

than their Asian

counterparts


Average age of employees working for MNCs – Junior to middle management


Average age of employees working for MNCs – Middle to Senior Management

How are companies coping with Vietnam’s business environment?


Successful companies managed their compensation practices better

Top 3 differences between high & low performing companies

Source: Hay Group‟s Winning in Vietnam report, 2008

25%

13%

38%

59%

70%

70%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Establish a clear link between individuals‟ compensation and

performance

Develop an effective incentive plan for Managers

Implement the right combination of variable and fixed remuneration

High Performer Low Performer

Largest Gap


Six Challenges faced in Vietnam

Source: Winning in Vietnam, 2008

49%

84%

72%

79%

73%

71%

54%

46%

44%

65%

55%

54%

0% 90%How well is your firm coping with this issue?

How significant is this to your firm's operation?

Differences in Culture

Shortage of local

management talent

Shortage of skilled

Vietnamese workers

Fierce competition in

Vietnamese market

Protection of Intellectual

Property

Establishment of

government relationships

The biggest challenge is people

management


Strategies for people management in High Performing companies

63%

70%

57%

13%

13%

13%

0% 20% 40% 60% 80%

Improve skills and competencies of managers

Develop an effective incentive compensation plan for

executives and managers

Match employees to jobs based on required competencies

Low Performing

High Performing

Source: Winning in Vietnam, 2008


Organizations’ biggest concerns:

The New PIT implemented in January 2009

1. Retaining Top Talent / Critical Skills

2. Maintaining / Affording Competitive Pay

3. Maintaining Employee Engagement / Motivation

4. Career Development / Training

5. Recruiting Top Talent / Critical Skills


In Closing

Pay attention to your high

performers. These are the

people who build your

business. Your competitors

are eyeing them.

Thank youCảm on

[email protected]

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Winning in vietnam hay group connie ma 2009