The 3P compensation system is attracting attention from many businesses as a solution to link income to work performance and increase internal fairness. However, not all businesses are ready to implement it immediately. In fact, many cases of applying the 3P compensation system have failed to achieve effectiveness due to a lack of the necessary management foundation.
Before implementation, businesses should conduct a readiness assessment to determine the appropriate roadmap. Below is a checklist to help businesses quickly review key factors.
Checklist of 07 evaluation criteria
1. The organizational structure is clear.
Businesses need a clear organizational chart and a specific management hierarchy to determine the value of each position.
2. A job description (JD) is available.
The job description serves as the foundation for defining the P1 job value and building a performance evaluation system.
3. There is a system for evaluating job performance.
P3 requires businesses to have clear KPIs or measurable criteria.
4. There is a competency framework for each position.
P2 is based on individual capabilities and positional standards.
5. The current salary structure is relatively transparent.
Businesses need to have a thorough understanding of their current compensation system before transitioning to the 3P model.
6. The leadership team is willing to change.
The 3P compensation model is about changing the management approach, not just changing the salary scale.
7. Have an internal communication plan.
This is a crucial factor in avoiding negative reactions when changing salaries.
Assess readiness level
🔴 0 – 3 criteria: The company is not yet ready to implement the 3P compensation system.
🟠 4-5 criteria: Can be implemented step by step.
🟢 6 – 7 criteria: The 3P compensation system can be implemented.
Where should a business begin?
Not every business needs to implement the full 3P compensation system right from the start. Many can begin by:
- Review the current salary structure;
- Establish a salary band;
- Standardize job descriptions;
- Pilot KPI implementation in certain departments.
Once the foundation is established, businesses can gradually implement the full 3P compensation model.
In fact, many businesses choose to review their current salary structure to assess readiness before developing a suitable implementation plan. This approach helps mitigate risks, avoid internal disruption, and ensure the salary system operates effectively.
With support from experienced consultants, businesses can quickly identify areas for improvement, build a roadmap tailored to their scale, and effectively control personnel costs during the transition to the 3P compensation model.
Contact Expertis now! To conduct an assessment of the salary system structure and legal compliance, and subsequently develop a roadmap for adjustments that align with the company's operational realities.