3p salary and KPI are two topics of special interest to HR, because it provides a foundation, practical and scientific basis to bring about a fair, transparent and effective payroll. So what is 3P salary? And what are KPIs? How are they related in building a standard salary system for businesses? Let us learn more about this issue with the article below.

To clarify the correlation between KPI and 3P salary, let's first clarify the two concepts of KPI and 3P salary:

1) What are KPIs?
KPI (Key Performance indicators) is an indicator that measures the performance, efficiency and quality of each individual, department or the whole enterprise. In other words, KPI is an indicator of performance evaluation based on a defined common goal.

2) What is 3P salary?
3P salary system is a method of calculating salary based on 3 basic factors: P1 (Pay for Position): Paying salary based on job position. P2 (Pay for Person): Pay based on the capacity of the person holding the job position. P3 (Pay for Performance): Pay based on the results achieved by the person holding the job position.

Paying under this method is conducted as follows:

• Salary based on job position – Position (P1)
  Salary by job position is done by building a clear and reasonable system of job positions, then balancing and comparing the salary of the enterprise with the salary level for the industry. The corresponding position in the market. The job-based salary system is built by assessing the job value and then adjusting with the salaries for the corresponding jobs in the market and the ability of the employees to pay. enterprise.

Thus, pay by job (P1), each position will have a salary corresponding to the value of the job, creating a salary correlation between different jobs in the enterprise. Complex job positions, requiring many skills, have higher salaries and vice versa. Therefore, pay by job position ensures the fairness of wages between employees doing different jobs in the enterprise. However, in order for this method of salary calculation to be effective, it is necessary to properly assess the value and importance of each job.

• Pay according to ability (P2: Person)

The method of individual pay, also known as skill pay, or workers' ability, is to pay wages according to the knowledge or skills they possess, the jobs that employees can undertake or according to the talents they have so that they can serve the common work goals that the business needs or may need. Accordingly, the personality of the individual is the key to the salary.

In order for the payment of wages to individuals (P2) to be effective and accurate, the enterprise needs to build a competency framework for the titles and at the same time evaluate the employee's capacity, the level of capacity response according to the criteria. their requirements clearly.

• Pay according to work performance or achievement (P3: Performance)

Performance-based pay means paying salary according to each employee's job completion level and production and business efficiency of the enterprise. Under this method, enterprises can choose the following payment methods:

• Paying completely according to the job completion coefficient (work efficiency) is also known as productivity-based salary (according to A, B, C ratings). Paying this way has the advantage of encouraging employees to strive to complete the job well.
• Paying a combination of hard pay and soft pay (paying according to each person's work performance or paying according to productivity): This is a combination of paying salary according to the graded salary coefficient or salary sign labor contract and pay salary according to work performance. This method of payment has the advantage of both ensuring that employees have a solid monthly salary to work with peace of mind, while also encouraging employees to strive to complete the job well.

This method of salary payment, in order to achieve high efficiency, requires building an accurate performance evaluation system that accurately reflects each person's contribution to the common goal of the enterprise or organization. . This is a job that requires a high level of expertise and requires close coordination between the assessment team and relevant departments. If evaluating work efficiency without a clear, specific and quantifiable system of evaluation criteria, it will be difficult to pay wages according to this method to ensure fairness and accuracy. Performance evaluation has many methods such as comparison method, ranking method, graphic evaluation scale method, quantitative analysis method according to points, evaluation according to KPIs...

3) What role does KPI play in building a 3P salary system?

Based on the concept of KPI and 3P salary, we can clearly see the deep correlation of KPI with 3P salary, accordingly, 3P salary is a salary calculation system for employees based on those 3 basic factors. is position - Position(P1), people - Person(P2) and work efficiency - Performance(P3), while KPI is a tool to measure the performance of employees, departments or the whole company. Company also known as Performance, this is also the 3rd element - Performance, also known as P3 in the 3P salary system.

From here we can see, building a KPI evaluation system is one of the important stages to build a 3P salary system, in other words, KPI is one of the 3 factors that make up the 3P salary system.

A scientific salary system with fairness and high transparency helps employees always feel that their efforts and dedication to the business are properly recognized and paid is one of the most important factors. It is important to retain and connect talents with businesses. Helping businesses preserve and develop human resources in a sustainable and quality way. Therefore, building a 3P salary system is necessary. Hopefully, the above article will contribute positively to the process of building a 3P salary system for businesses. Please leave your comments to help us contribute to bettering the data treasure for the community.