Every business has a question: How to pay employees most accurately?

There are many ways to calculate employee salaries in the world, in which, the 3P salary system is the most complete and widely applied that you should apply to your business.

Watching: What is 3p salary

The goal of 3P salary is towards fairness in pay, thereby ensuring the ability to attract, retain and motivate employees.

First of all, the 3P salary must ensure fairness for both parties: employees receive the money they deserve for their contributions to the company, the company retains talented people and does not have to waste money on incompetent people. .

This article will guide you on how to implement the most accurate and effective 3P salary system.


What is 3P salary system

?3P salary system is a method of calculating salary based on 3 basic factors:

P1 (Pay for Position): Pay for the job position.P2 (Pay for Person): Pay for the capacity of the person holding the job position.P3 (Pay for Performance): Pay for the results achieved by the employee. job holder.

The combination of these three factors at the same time is aimed at the purpose of businesses paying employees according to their abilities and values, not one-sided and somewhat bureaucratic like the traditional salary calculation method in many agencies, The organization is too focused on qualifications or seniority.

How effective is the 3P salary system

?The 3P salary system overcomes the disadvantages of the traditional salary method such as focusing too much on qualifications, by default the management level will are paid a lot and employees have low salaries, new employees do not receive good benefits…

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The 3P salary system is like a win-win solution, bringing benefits to both businesses and employees.

3P salary system: The most accurate way to calculate salary for employees

How are the 3 elements in the 3P salary system implemented

?1. Pay for Position

Paying for the job position, which means that the business spends a monthly amount to pay for that title, regardless of who the person in charge is and how capable.

This salary structure is fully applied by many businesses without combining with other factors, because it reduces a lot of work for HR and accounting departments.

Pay for Position in recruitment usually has a certain salary range. When there are new employees, the specific number will be determined based on education level (intermediate, university, master …), professional qualifications and seniority in the industry.

2. Pay for Person

Pay for Person (also known as person-based pay) – Paying for the capacity of the person holding the job position is the use of the results of the human capacity assessment to determine an amount commensurate with that capacity. Talented people will receive a good deal, while employees with limited ability, of course, need to try to improve to be paid a higher salary by the business.

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Because the amount received depends on their own ability, with this salary calculation, the enterprise has created the motivation for employees to improve themselves and learn more to get the best capacity foundation.

There are two ways to pay salary based on performance. One is to consider the salary based on all the capabilities that the employee has, regardless of whether that knowledge/skill/attitude directly serves the job at the enterprise.

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The second method is more complicated in the control process, but it is more effective, and easy to apply to many employees at the same time. You should apply this method to have the most accurate pay for person results.

3. Pay for Performance

Pay for Performance (also known as performance-based pay or performance related pay): Paying for the results achieved by job holders is a way businesses financially reward employees when their work performance at a good level, meeting the set targets and bringing benefits to the business.

Payment methods include:

Individual: bonus, commission discount, product-based salary, salary increase.Organization (group, department): bonus for group achievements, division or sharing of benefits achieved. Entire enterprise: bonus shares shares, stock options, or corporate profits.

Depending on the needs and actual operation at each business, we apply different salary payment mechanisms.

Pay for Performance 3P – Pay for Performance

Note when paying salary according to 3P method

Not all businesses apply the 3P salary system favorably. Once applying 3P salary, enterprises will have to re-evaluate employee capacity to arrange salary accordingly.

However, no matter how carefully the 3P salary is followed, this capacity assessment may also be influenced by emotional factors, not to mention the arguments between departments about lack of objectivity and unfairness. in evaluation. In this case, 3P wages can cause internal disunity, deep division.

Some other cases of failure are because when applying the 3P salary system, Some companies still maintain allowances such as seniority allowance, relationship allowance, which breaks the goal of ensuring fairness, making 3P a confusing system for businesses.

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Paying salaries to both satisfy employees’ expectations but not increase costs and promote development is not a simple problem.

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Therefore, the 3P pay system must be applied in the right place, at the right time and in the right context. The 3P salary system is designed to harmonize the interests of employees and the interests of the business.

Synthesized from the Internet

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