Fast Growth and the HR Gaps Companies Often Overlook

Key Takeaways

• Most local companies invest in HR only once a problem has become a crisis, and that is usually the point where the cost of fixing it far exceeds the cost of building early.
• The HR challenges of scaling cluster into four areas: talent shortages, turnover and replacement cost, pay fragmentation, and culture erosion.
• The HR maturity gap between local companies and multinationals is structural: one side inherits a ready-made governance framework, the other grows mostly on founder instinct.
• Competitive advantage comes from building HR capability before scaling; most organizations are ready to invest in leadership, but the timing has to be proactive rather than reactive.

Vietnam is in a strong growth phase: in 2025 the number of newly registered and re-entering businesses rose more than 27% year on year, with small and medium enterprises making up nearly 98%. Many companies are still adding headcount and plan to keep hiring in the period ahead. But this pace is exposing a common weakness: most local companies lack the HR infrastructure, leadership pipeline, and pay governance needed to scale sustainably. This article examines the specific HR challenges of fast growth, why local companies struggle more, and how to build an HR foundation before it is too late.

Most companies invest in HR too late

A trait shared by many local companies is that they only invest seriously in HR once the problem has already become a crisis. By that point, waves of resignations, a fractured culture, and leadership gaps have become real operating costs, far higher than what it would have cost to build the foundation early.

The growth context makes this clearer. In 2025, Vietnam recorded nearly 297,400 newly established and re-entering businesses, up 27.4% year on year. Small and medium enterprises account for nearly 98% of all businesses and employ around 5.5 million workers. But a larger base does not mean mass hiring. According to the Talentnet–Mercer 2025 salary report, only 35% of companies plan to add headcount in 2026, while 47.7% intend to hold their size steady to strengthen internal capability. The pressure therefore shifts from hiring enough people to building capability and retaining talent, and when the HR foundation is not ready, people costs still rise even before factoring in attrition and replacement.

In practice, many Vietnamese firms hit a wall after a period of fast growth because they lack people with the skills and mindset the new stage demands, and by the time they consider investing in talent it is often too late.

New data reinforces the opposite approach. The Vietnam Enterprise Workforce Capability Readiness Report 2026, released at the launch of Talentnet Academy with a survey of nearly 200 leaders and HR directors, recorded an average market capability readiness score of 65.8 out of 100, with 75.8% of organizations saying they are ready to invest in leadership and management capability. The signal is that capability built proactively before reaching large scale is the advantage, while building it reactively after expansion is far harder.

The HR challenges of fast growth fall into four areas, and the most visible is people and the cost that comes with them.

People and cost challenges

The most visible challenge area when scaling fast sits in people and the costs attached to them: hiring enough people, keeping them, and paying them consistently. These three pressures tend to appear almost simultaneously and amplify one another.

Talent shortage and hiring difficulty

The skills base of the workforce is the first bottleneck. According to the General Statistics Office, as of the first quarter of 2024 only about 27.8% of Vietnamese workers had formal training with a qualification or certificate, meaning nearly 72% had no formal training. On the demand side, the World Economic Forum found that 64% of businesses in East Asia and the Pacific view attracting talent as a major barrier to transformation, a sign that demand for high-skilled talent is outpacing supply.

The gap is especially acute in technology. The national labour force reached about 53.5 million in 2025, but according to industry sources the information technology sector alone is still short of roughly 200,000 people. For a growing company, the direct consequence is longer hiring timelines and sharper wage competition.

Turnover and replacement cost

Retention in Vietnam is under heavy pressure, with some surveys recording around 15 to 20% of employees leaving within the first year. A Cốc Cốc survey found that 48.7% of workers are considering a job change and 28.1% are ready to move when the right opportunity arises. Data from the Talentnet 2024 salary survey shows the voluntary turnover rate in the multinational sector was 6.5% in the first half of 2024, with fast-growing industries typically recording markedly higher rates.

Each departure is a far larger cost than it appears, and most of those exits are preventable.

Level leaving	Replacement cost	Source
Employees in general	About 150% of annual salary	SHRM
Senior staff and leaders	About 200% of annual salary	Gallup
Share of exits that are preventable	76.30%	Work Institute

With nearly half of workers considering a move and turnover in fast-growing industries running high, fast-growing companies face a compounding cost problem. The issue is not the market, but the absence of intentional retention infrastructure.

Pay fragmentation when scaling

As a company grows through organic expansion, acquisitions, or a multi-entity structure, pay becomes hard to govern. Salaries are set case by case, job grades are inconsistent across units, and there is no unified data to benchmark or audit. This pressure is amplified by market competition: total compensation at local companies is about 25% lower than at multinationals, and the largest gap is at the management level, reaching 41%. Without a clear salary architecture, local companies lose people to multinationals systematically, not only because of higher pay but also because of clearer career paths.

The case of a 30,000-employee multi-industry conglomerate that Talentnet worked with is the clearest illustration. After decades of expansion and acquisitions, each subsidiary had built its own pay structure. Viewed from the group level, the problem was not a lack of structure, but the existence of too many structures that could not be compared with one another.

People and cost are the visible part. The hidden part, and often the more expensive over time, lies in culture, succession, and systems.

Culture, succession, and systems challenges

If people and cost are the visible part, then culture, succession, and systems are the hidden part, rarely noticed until they have already become problems. These three challenges build up quietly throughout the expansion.

Culture erosion at scale

Culture is the quietest HR casualty when scaling. When an organization goes from 50 to 200 to 1,000 people in a short span, new hires outnumber the carriers of the original culture, managers are promoted quickly without people-management capability, and the founder’s implicit norms can no longer hold the organization together.

Gallup’s 2026 global data shows the depth of the issue: global employee engagement fell to 20%, while manager engagement slipped to just 22%. In a fast-growing company, where managers are often elevated from individual-contributor roles without leadership training, this dynamic is especially worrying. Onboarding reflects the same pattern: 70% of employees decide whether a job is the right fit within the first month, but only 12% say their organization onboards well.

The succession void

In a fast-growing company, the number of leadership positions to fill grows faster than the pace at which people are developed to take them. The result is usually one of two risky paths: hiring externally and diluting the culture, or promoting internally someone who is not ready at exactly the moment the organization needs strong leadership most. Talentnet’s CEO survey found that 69% of multinationals already had a direction for building a succession pipeline, while many local companies had barely made it a priority.

HR still manual and data fragmented

Most small and medium enterprises in Vietnam still manage HR with Excel and manual reporting, leading to payroll errors, compliance blind spots, and an inability to make people decisions based on data. The biggest barrier is usually the cost of technology investment, but the longer it is deferred, the wider the gap in data-driven decision-making grows against competitors that have already digitized.

As scale grows, manual systems are not only inefficient but also a compliance risk. Labour, tax, and social insurance regulations change frequently, so as headcount multiplies, a small error in payroll or filing can spread easily and become hard to catch in time. At the same time, HR teams in many places are overstretched, so expecting an HR function to carry manual operations and elevate strategy at once is unrealistic.

These challenges are not evenly distributed. They weigh far more heavily on local companies than on multinationals, and the reason is structural.

Why local companies struggle more than multinationals

Multinationals enter Vietnam with a ready-made HR framework, a regional HR talent pool, and scalable HR technology. Local companies grow mostly on founder instinct and relationship-based management. When the need for a strategic HR direction arrives, the capability and bandwidth of the HR team often cannot keep up.

The Workforce Capability Readiness Report 2026 quantifies this gap: multinationals score 71.1 out of 100 while local companies sit at 62.3, against a market average of 65.8. The gap stems largely from many local companies lacking a clear talent strategy suited to their growth stage.

Dimension	Local companies	Multinationals
Foundation when scaling	Founder instinct, relationship-based management	Ready-made HR framework, regional HR talent pool
Capability readiness 2026 (out of 100)	62.3	71.1
Succession strategy	Many have not made it a priority	69% already have a direction
Total compensation at management level	About 41% lower	100% (baseline)

The consequence is that without a clear pay architecture and career path, local companies struggle to retain strong people against employers offering more transparent compensation and development opportunities. But this gap is not fixed. It can be closed by building the HR foundation deliberately.

Build HR strategy before you need it

The core principle is simple: invest early rather than react when it is already late. One useful approach is to tie compensation strategy to each growth stage, rather than standardizing too early or copying a multinational framework wholesale.

Job architecture and salary grading as a foundation

The foundational step is to replace case-by-case pay decisions with a pay architecture anchored to the market and internally equitable. A five-step process, from review, position evaluation, analysis and benchmarking, building the salary structure, to a salary increase matrix, on the internationally recognized IPE standard, gives a company a clear path. The 30,000-employee conglomerate case shows this is achievable even at very large scale, with one group-level structure plus five structures tailored by industry cluster.

Proactive succession with the 4Bs model

Rather than waiting until a position is vacant to look for someone, the 4Bs model helps a company prepare in advance.

Approach	What it means
Build	Develop successors internally
Buy	Recruit externally for critical gaps
Borrow	Use secondment or advisory talent
Bot	Use AI and automation to handle repetitive, rules-based work, freeing people for strategic work

The most important discipline is to identify succession-critical roles before they fall vacant, and to align development timelines with the company’s strategic milestones.

Culture through systems, not campaigns

At scale, company culture is preserved through systems rather than sentiment. Four high-leverage interventions stand out: values-based hiring with behavioral assessment rather than skills alone; structured onboarding, an important early-retention lever while only 12% of companies do it well today; capability development for newly promoted managers, the highest cultural leverage given that manager engagement is at a low; and regular internal storytelling that connects daily work to values and long-term purpose.

Systems and capability development at scale

HR technology helps ensure compliance and data-driven decisions, while HR outsourcing lets companies without in-house HR capability access professional-grade operations without building a whole function from scratch. In learning and organizational development, the case of a 1,000-employee services company that Talentnet supported shows how to activate learning and culture at scale through gamified microlearning, train-the-trainer programs, and measurement, without overloading the internal HR team.

This is also the spirit behind the leadership mindset Talentnet’s CEO often emphasizes, in which building from within is one of the priorities for sustainable growth. Talentnet’s HR Strategy and Org Dev service, covering salary structure consulting, benefits design, performance management systems, organizational restructuring, engagement surveys, and talent assessment tools, is designed to accompany companies from the stage before scaling pressure turns into a crisis.

Conclusion

Fast growth does not create an HR crisis on its own; a missing HR foundation does. The path for business leaders is to treat HR as a strategic investment to build before scaling, starting with pay architecture, proactive succession, culture through systems, and HR technology. This is the moment to move HR from a reactive role to a builder’s role, and Talentnet partners with companies to build that foundation stage by stage of their growth.