One of these patterns are many organizations around the world to apply the main success is the salary 3P – pay method based on job location, personal power and results of implementation.
Different way to pay the traditional capital easily lead to so epidermis, lack of fair wages 3P brings clarity mounts directly between the contributions of employees with income they receive. This is also the solution to help businesses optimize personnel costs, retain talent, and improve operational efficiency.
In this article Lac Viet Computing will help the brother/sister personnel to better understand the concept of wage 3P, calculation, benefits and examples illustrate the fact to the business are finding out can easily apply.
1. Salary 3P what is?
Salary 3P is a pay method, where the income of staff is composed of three main elements:
- P1 – Position (job location): wage associated with values, responsibilities of the position, regardless of who take. For example, a position of Head of Marketing always has the frame higher wages Marketing Staff as the value of different jobs.
- P2 – Person (individual capacity): Reflection of skill, experience, level of expertise of each employee. The two people at the same location but different capacity will have different pay rates.
- P3 – Performance (results of work): The salary based on the results of complete KPI or OKR. Here are the factors that encourage employees to improve performance, motivation sticking.
This model appearance and is widely applied since the 1990s at the multi-national corporations, then spread to the region, including Vietnam. Today, many businesses in the country, especially as the organization is growing fast, choose the recipe payroll 3P to solve the inadequacies of pay method tradition.
Compared with the pay usually based on seniority or the negotiated wage 3P transparent, more scientific because the directly attached income with value work capacity, real and effective contribution. This is not only limited employee status than packaging but also help managers better control the wage bill, orientation under long-term strategy.
2. The composition salary 3P
The wage system 3P is built based on three core elements, creating a wage mechanism moderately fair, medium, boost work performance. Understanding each component not only help business building systems salary 3P transparent, but also help employees clearly see the relationship between capacity, the results of work and his income.
2.1. Salary according to the job position (Pay for Position)
Salary according to the position is part of the basic salary, reflecting the value of the work that employees take on, regardless of who is in that position. Businesses often use the method of valuing the job (Job Evaluation) to analyze the level of complexity, responsibility, influence of each location.
For example: In a manufacturing company, location Manager workshops usually have higher wages Staff operate the machine because the responsibility for the management and coordination responsible for the quality of higher production.
Enterprise value received:
- The internal staff no longer wonder why the same company that this position higher position there.
- Create platforms for business plan pension fund sensible to avoid paying excess financial capacity.
2.2. Salary according to individual capacity (Pay-for Person)
The salary reflects differences in skills, experience, qualification of each employee. Though the same position, who have superior capabilities still enjoy higher wages.
For example, Two employees are in the position hr Professionals, but a person with a certificate HRBP and 7 years of experience, while the other new in the industry for 2 years, then the wage paid for them will be different.
Enterprise value received:
- Motivate employees to learn, develop skills.
- Contribute to retaining staff at the limit state of “brain drain”.
- Help managers distinguish clearly between the “do better” and “doing enough”.
2.3. Salary based on work performance (Pay for Performance)
This is the salary associated with the job results (KPI, OKR) that employees achieve. Other than the basic salary or capacity, this section fluctuations in performance, often accounts for a large proportion of the total income, particularly in the location business.
For example, A business may receive an additional 20% – 40% of monthly salary if exceed sales targets. This makes the difference between people who complete 80% of the KPI and the exceeds 120% KPI.
3. Process building systems salary 3P
To apply salary 3P effectively, businesses can't just stop in concept or formula for calculating the salary 3P that need to build a full system, there are clear process. This process not only helps to ensure transparency, but also create consensus between workers and leaders.
3.1. Analysis and evaluation of work
The first step is to clearly define the value of each position in the organization. Business needs analysis work to understand: the work that do, bring value, what skill requirements, responsibilities are. From there, set the ladder rank value for each location.
For example, In a service company, the position of Chief customer care team will have a higher value than Employees of customer care because responsibility for the management, training, complaint handling complex.
Benefits for business: remove status pay sentiment, at the same time make it clear why, working together in an organization, but this position receive a salary higher than other positions.
3.2. Frame construction capacity for each location
After determining the value of work, enterprises need to build a frame capacity (Competency Framework) – i.e., the criterion of knowledge, skills, behaviors that employees need to carry out good work.
For example, With location Staff accounting competency framework can include skills data analysis, understanding tax laws, the ability to use accounting software.
Benefits for business: assessment paid based on actual capacity, rather than just based on qualifications or seniority.
3.3. Define KPI/OKR and criteria for evaluating the effectiveness
Salary 3P indispensable factor Performance (job performance). Businesses need to set KPI (metric measurement) or OKR (objective key) clear for each location, ensuring measurable work efficiency.
For example: employee business KPI is achieved sales of 1 billion/month; Marketing Staff have KPI is to create 200 customers, potential quality in the quarter.
Benefits for business: employees clearly see their efforts paid deserves, while organizational control is effectively investing in human resources.
3.4. Design pay scale 3P suit
After obtaining data from three elements (Position – Person – Performance), the business will build the salary scale 3P. Payroll is required to ensure internal and competitive with the labor market.
Small businesses can start with a template, payroll 3P excel to easily manage, then when the enlarged scale, can apply software management personnel dedicated to automation.
3.5. Illustrative example deployment
- Business SME: A company 100 personnel can start by analyzing a 10-position, core set KPI simply use Excel to manage payroll. The goal is to build the foundation fair before, then tweak from time to time.
- Large corporations: With thousands of employees, businesses need to invest in software systems HRM to manage data capacity, KPI and payroll 3P. Deployment process can last 6 – 12 months, but the results yield a wage mechanism transparent, consistent throughout the system.
As such, building systems salary 3P don't just apply the formula for calculating the salary 3P mere, which is a process from the job analysis, construction, competency framework, to design the salary transparency. When deployed properly, this system will become the leverage strategy to help businesses attract retain talent, at the same time, optimal cost-effective staffing.
4. Formula for calculating the salary 3P
In principle, the formula for calculating the salary 3P is expressed as follows:
Salary 3P = Wages by location (P1) + competitive Salary and benefits package (P2) + Salary according to performance (P3)
- P1 – Wages by location (Position): reflects the value of work, built based on the level of responsibility and complexity, the importance of location in business.
- P2 – Salary according to individual capacity (Person): could show the difference in skills, experience, qualifications, abilities and contributions of each employee.
- P3 – Salary according to work performance (Performance): the wage variation based on work results, in association with KPI or OKR has been agreed.
Illustrative example
Suppose a Marketing executive in business A wage is calculated as follows:
- P1 (location): 12.000.000 VNĐ (according to salary bracket was set for the position Marketing Staff).
- P2 (personal capacity): 3.000.000 VND (due to staff certified Google Ads and 5 years experience).
- P3 (performance): 5,000,000 VND (based on KPI created 200 lead quality/month, reaching 110% of the target).
=> Salary 3P this month = 12.000.000 + 3.000.000 + 5.000.000 = 20.000.000 VNĐ
As such, employees not only receive the basic salary according to the position, but also be rewarded for competence and actual results.
5. Sample payroll 3P Excel
To easily visualize, business can refer to the sample payroll 3P Excel with the structure consists of the basic columns following:
- Name
- Job position (P1)
- Personal power (P2)
- Job performance (P3)
- The total salary 3P
Sample payroll 3P Excel
| Name | Position (P1) | Power (P2) | Performance (P3) | The total salary 3P |
| Nguyen Van A | 12.000.000 | 3.000.000 | 5.000.000 | 20.000.000 |
| Tran Thi B | 12.000.000 | 2.000.000 | 3.500.000 | 17.500.000 |
| Le Van C | 10.000.000 | 1.500.000 | 2.000.000 | 13.500.000 |
Advantages when using Excel
- Fits small and medium enterprises, less personnel.
- Easily customize according to own needs.
- No cost software deployment.
Limitations of Excel
- Hard to manage when businesses have more staffing, big data.
- Easy-to-happen errors when entering data or update formula.
- Lack of confidentiality, is not authorized to be detailed.
Therefore, with the organizations and enterprises can scale from a few hundred personnel, the management, payroll 3P in Excel would be less effective. At this time, businesses should consider investing software personnel management features integrated payroll 3P to ensure accuracy, transparency, saving operating time.
6. The optimal solution manager salary 3P by hr software
In fact, many businesses start applying building systems salary 3P often choose Excel do tool payroll. However, when the number of personnel increased a few hundred to a few thousand people, Excel, revealed many limitations: difficult to ensure accuracy, time-consuming synthetic data, easy to occur leakage of sensitive information, in particular the lack of transparency in the performance measurement. This is the reason the organizations and enterprises are to find out information about salary 3P need a solution software salary more professional.
SureHCS HRM – software hr management of Lac Viet is designed to optimize the entire process manager salary 3P. Instead of handling, the system helps:
- Automatic payroll 3P: integrated software available formula for calculating the salary 3P, remove errors while typing shortened to 70% of the time compared with the traditional
- Management KPI/OKR capacity assessment: Data on performance, capacity is updated directly from the rating system, ensure that the wage P2 and P3 reflect individual capacity, work results.
- Increase transparency fairness: Employees can track clearly the factors that affect your earnings, from which minimize the comparison, the complaint should not be.
- Data security hr: Data is stored centralized, decentralized details, avoid losses, or reveal important information.
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The application hr software SureHCS HRM not only solve the math calculate salary 3P complex but also help business build a culture of transparency, encourage performance and retain talent long-term.
