The Salary Problem: Underpay or Overpay?
A startup founder in Kuala Lumpur is hiring her first engineer. She thinks: “How much should I pay?”
Too low: Engineer accepts, but resents salary. Leaves in 6 months. You lose RM 290K+ in bad hire costs.
Too high: Overpay by 30%. You waste RM 60K/year. Over 3 years, that’s RM 180K of unnecessary spend.
The truth: 80% of companies get salary wrong. Either too low (high turnover) or too high (waste).
The Financial Impact of Salary Misalignment
Scenario 1: Underpay
- Hire engineer at RM 80K (market is RM 100K)
- “Save” RM 20K/year
- Engineer leaves at 8 months (better offer elsewhere)
- Recruiting cost: RM 40K
- Lost productivity: RM 50K
- Total cost: RM 90K
- Savings disappeared, plus extra cost
Scenario 2: Overpay
- Hire engineer at RM 130K (market is RM 100K)
- Overpay: RM 30K/year
- Engineer stays (likes compensation)
- Over 3 years: RM 90K overpaid
- But: High retention saves RM 290K × 2 replacements = RM 580K
- Net benefit: RM 490K
Lesson: Slightly overpay trusted talent. It’s cheaper than turnover.
Why Salary Benchmarking Matters
1. Attract Quality Candidates
- Competitive salary = more applicants
- Weak salary = only desperate candidates
2. Reduce Turnover
- Underpaid people leave (especially strong performers)
- Overpaid people stay (but less motivated)
- Market-rate people are happy and stay
3. Build Culture
- If salaries are secret, people assume unfairness
- Transparent salaries build trust
- Equity perception matters
4. Negotiation Speed
- Know your range upfront
- Candidate knows their range upfront
- Faster negotiation (both sides know constraints)
5. Budget Planning
- Plan recruiting budget accurately
- Allocate resources across team
- Avoid salary compression (new hire earns more than senior person)
2025 Malaysia Salary Data: By Role
Technology Roles
Junior Software Engineer (0-2 years)
| Experience | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| 0-1 year | RM 48K-65K | 0-10% | RM 50K-72K |
| 1-2 years | RM 60K-75K | 5-15% | RM 63K-86K |
Market context: Entry-level roles in KL/Selangor. First programming job. Companies invest in training.
Negotiation: Limited. Market is competitive; many candidates at this level.
Mid-Level Software Engineer (2-5 years)
| Experience | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| 2-3 years | RM 75K-95K | 10-20% | RM 83K-114K |
| 3-5 years | RM 95K-130K | 15-25% | RM 109K-163K |
Market context: Proven ability to ship features. Can mentor juniors. Leadership path emerging.
Negotiation: Moderate-high. Strong candidates have options (Singapore, startups, FANG companies).
Senior Software Engineer (5-10 years)
| Experience | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| 5-7 years | RM 130K-180K | 20-30% | RM 156K-234K |
| 7-10 years | RM 180K-250K | 25-35% | RM 225K-338K |
Market context: Trusted technical lead. Owns complex systems. Mentors team. Makes architectural decisions.
Negotiation: High. Best candidates are passive (not job hunting). Singapore constantly recruiting.
Staff/Principal Engineer (10+ years)
| Experience | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| 10+ years | RM 250K-400K+ | 30-40% | RM 325K-560K+ |
Market context: Deep expertise. Company strategy maker. Rare in Malaysia; often recruited regionally.
Negotiation: Very high. Can negotiate equity, role scope, etc.
Product & Design Roles
Junior Product Manager (0-2 years)
| Experience | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| 0-1 year | RM 60K-75K | 10-15% | RM 66K-86K |
| 1-2 years | RM 75K-90K | 15-20% | RM 86K-108K |
Mid-Level Product Manager (2-5 years)
| Experience | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| 2-3 years | RM 90K-120K | 15-25% | RM 104K-150K |
| 3-5 years | RM 120K-160K | 20-30% | RM 144K-208K |
Senior Product Manager (5-10 years)
| Experience | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| 5-7 years | RM 160K-210K | 25-35% | RM 200K-285K |
| 7-10 years | RM 210K-300K | 30-40% | RM 273K-420K |
UX/UI Designer
| Level | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| Junior (0-2 yrs) | RM 55K-70K | 10-15% | RM 61K-81K |
| Mid-level (2-5 yrs) | RM 75K-110K | 15-25% | RM 86K-138K |
| Senior (5+ yrs) | RM 120K-180K | 20-30% | RM 144K-234K |
Sales & Business Development
Account Executive / Sales Representative
| Experience | Salary Range | Commission | Total Comp |
|---|---|---|---|
| 0-2 years | RM 40K-60K | 15-30% of salary | RM 55K-95K+ |
| 2-5 years | RM 60K-100K | 30-50% of salary | RM 90K-185K+ |
| 5+ years | RM 100K-180K | 50-100% of salary | RM 150K-360K+ |
Note: Commission varies hugely by company and quota. Top performers can 2-3x base salary.
Sales Manager
| Experience | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| 0-2 years | RM 80K-110K | 20-35% | RM 96K-149K |
| 2-5 years | RM 110K-180K | 30-45% | RM 143K-261K |
| 5+ years | RM 180K-280K | 40-60% | RM 252K-448K |
Finance & Operations
Junior Accountant / Finance Associate (0-2 years)
| Experience | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| 0-1 year | RM 45K-60K | 5-10% | RM 47K-66K |
| 1-2 years | RM 60K-75K | 10-15% | RM 66K-86K |
Finance Manager / Senior Accountant (2-5 years)
| Experience | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| 2-3 years | RM 75K-100K | 10-20% | RM 83K-120K |
| 3-5 years | RM 100K-150K | 15-25% | RM 115K-188K |
Senior Finance Manager / Controller (5-10 years)
| Experience | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| 5-7 years | RM 150K-210K | 20-30% | RM 180K-273K |
| 7-10 years | RM 210K-300K | 25-35% | RM 263K-405K |
Chief Financial Officer / VP Finance (10+ years)
| Experience | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| 10+ years | RM 280K-450K | 30-50% | RM 364K-675K |
Operations Manager
| Experience | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| Junior (2-3 yrs) | RM 60K-80K | 10-15% | RM 66K-92K |
| Mid-level (3-5 yrs) | RM 80K-120K | 15-25% | RM 92K-150K |
| Senior (5+ yrs) | RM 120K-200K | 20-30% | RM 144K-260K |
HR & Recruiting
HR Executive / Recruiter (0-3 years)
| Role | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| Recruiter (0-2 yrs) | RM 45K-65K | 10-20% | RM 50K-78K |
| HR Executive (0-2 yrs) | RM 50K-70K | 10-15% | RM 55K-81K |
HR Manager / Senior Recruiter (3-5 years)
| Role | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| Senior Recruiter (3-5 yrs) | RM 65K-95K | 15-25% | RM 75K-119K |
| HR Manager (3-5 yrs) | RM 80K-120K | 15-25% | RM 92K-150K |
HR Director / VP HR (5+ years)
| Role | Salary Range | Bonus | Total Comp |
|---|---|---|---|
| HR Director (5+ yrs) | RM 150K-250K | 25-35% | RM 188K-338K |
Executive / C-Level
| Role | Salary Range | Bonus | Equity (Startups) | Total Comp |
|---|---|---|---|---|
| CEO | RM 350K-600K | 30-50% | 0.5-2.0% | RM 455K-900K+ |
| CFO | RM 280K-450K | 25-40% | 0.2-1.0% | RM 350K-630K |
| CTO | RM 250K-400K | 20-35% | 0.2-1.5% | RM 300K-540K |
| CMO | RM 200K-350K | 20-30% | 0.1-0.5% | RM 240K-455K |
| COO | RM 250K-400K | 25-40% | 0.2-1.0% | RM 313K-560K |
| VP Engineering | RM 200K-350K | 20-35% | 0.1-0.5% | RM 240K-473K |
Note: Startup equity varies by stage. Series A gets more than Series B+. Founder-level can get 5%+.
Salary by Company Size & Stage
Compensation varies by company stability and stage:
| Company Stage | Salary Position | Bonus | Equity | Why Different |
|---|---|---|---|---|
| Startup (< RM 10M ARR) | Market-10% | 10-20% | 0.1-2.0% | Lower cash; compensate with equity upside |
| Growth (RM 10M-100M ARR) | Market | 15-30% | 0.05-0.5% | Growing revenue; less equity dilution |
| Scale (RM 100M-500M) | Market+ | 20-40% | 0-0.2% | Stable revenue; less need for equity |
| Enterprise (500M+) | Market+ | 30-50% | 0-0.1% | Very stable; compete on stability & benefits |
Implication: If you’re a startup, can’t match enterprise salary. Compensate with equity, culture, impact.
Salary by Location in Malaysia
Compensation varies by city (KL leads; others are 10-20% lower):
| Location | Salary Index | Notes |
|---|---|---|
| Kuala Lumpur | 100% (baseline) | Highest cost of living; most tech jobs; highest salaries |
| Selangor (Petaling Jaya, Subang) | 95% | Close to KL; slightly lower |
| Shah Alam | 90-95% | Further out; still competitive |
| Penang | 85-90% | Growing tech hub; lower cost; 10-15% below KL |
| Johor Bahru | 80-85% | Smaller market; limited opportunities; 15-20% below KL |
| Klang Valley (outside PJ/Subang) | 85-90% | Suburban; lower costs |
| Cyberjaya | 95-100% | Tech hub; close to KL salaries |
Example: Senior Engineer in KL: RM 180K-250K. Same role in Penang: RM 155K-215K.
Regional Comparisons: Malaysia vs. Singapore, Thailand, Vietnam
Salary Comparison (Senior Engineer Role)
| Location | Salary | Cost of Living Index | ”Effective” Salary |
|---|---|---|---|
| Kuala Lumpur, Malaysia | RM 180K-250K (USD 45-62K) | 100 | 100% |
| Singapore | SGD 180K-260K (USD 135-195K) | 180 | 180% |
| Bangkok, Thailand | THB 1.8M-2.4M (USD 50-67K) | 90 | 105% |
| Ho Chi Minh, Vietnam | VND 1.8B-2.4B (USD 28-38K) | 70 | 85% |
Key insight: Singapore pays 3x Malaysia (absolute salary) but costs 1.8x more. Real difference: 1.7x effective salary.
For Malaysia talent: Singapore offers 40-50% higher salary, but higher cost of living and visa uncertainty. Some move; some stay for stability and quality of life.
For other regions: Malaysia is competitive. Attracts talent from Thailand, Vietnam, India with stability + better salary than home country.
Benefits Benchmarking (Beyond Base Salary)
Salary isn’t everything. Total compensation includes benefits:
Health Insurance
- Basic: Company pays employee health insurance (medical, dental, vision)
- Good: Company pays for employee + dependent coverage
- Excellent: Plus wellness programs, mental health, gym stipend
Market: 70% of companies offer health insurance. Good to excellent: 30%.
Typical cost to company: RM 3K-8K/employee/year
Annual Bonus
- Base: 0-10% (small companies, startups)
- Standard: 10-20% (most companies, tied to performance)
- Competitive: 20-40% (growth companies, sales roles)
- Top-tier: 40-60% (finance, tech, fintech)
Typical: RM 5K-40K depending on role and company performance.
Paid Time Off
- Minimum: 18 days annual leave (Malaysia legal minimum)
- Standard: 20 days annual leave + public holidays
- Competitive: 22-24 days + flexible
- Excellent: 25+ days + flexible work, parental leave
Typical: 18-20 days annual leave. Parental leave varies.
Professional Development
- None: No budget
- Basic: RM 500-1000/year per employee
- Standard: RM 2000-3000/year per employee
- Competitive: RM 3000-5000/year per employee
- Excellent: RM 5000+/year + conference sponsorship + training time
Typical: Tech companies offer RM 2K-3K. Others: RM 500-1500.
Remote/Flexible Work
- None: Full office, fixed hours
- Some: 1-2 days/week remote, fixed hours
- Flexible: 3+ days/week remote, flexible hours
- Full remote: 100% remote, flexible hours
Trend: Post-COVID, 60% of companies offer hybrid. 30% full remote. 10% office-only.
Impact on salary: Remote roles 10-15% lower (lower cost of living justification). Flexible commands premium 5-10%.
Equity / Profit-Sharing
- None: No equity offered
- Startups: 0.05-2.0% for senior hires
- Growth companies: 0.01-0.5% for senior hires
- Established: Rarely offered; if offered: phantom equity or ESOP
Typical: Only startups/growth companies offer. RM 100K salary + 0.1-0.5% equity is compelling.
Salary Negotiation Framework
When candidate says “I want RM 120K” and you budgeted RM 100K:
Step 1: Understand Their Logic
- Ask: “Help me understand. What’s the basis for RM 120K?”
- Listen: Previous salary? Market research? Expat expectations?
Step 2: Assess Flexibility
- Range: Is RM 120K a bottom line or starting point?
- Ask: “What would work for you? What’s your range?”
Step 3: Know Your Constraints
- Budget: RM 100K max. Is there flexibility?
- Precedent: Are other engineers at this level at RM 100K? Can you compress salary?
- Market: Is RM 100K below market (then you need to increase budget) or above?
Step 4: Find Middle Ground
Option A: Meet in middle
- Their ask: RM 120K
- Your budget: RM 100K
- Compromise: RM 110K
- Both slightly unhappy, but livable
Option B: Adjust compensation structure
- Base: RM 100K (your budget)
- Bonus: 20% = RM 20K (total RM 120K if achieved)
- Equity: 0.2% (potential upside)
- Total potential: RM 120K+ if they perform
Option C: Other benefits
- Base: RM 100K
- Cash: Add RM 5K/year ($250K every 6 months instead of annual)
- Benefits: Extra parental leave, education budget, home office setup
- Flexibility: Extra remote days
- Total compensation improvement: RM 100K + benefits = competitive
Option D: Professional development
- Base: RM 100K (your budget)
- Professional development: RM 5K/year (leadership program, certification)
- Conference: Annual conference budget
- Mentorship: Direct mentorship from VP/CEO
- Path to RM 120K: In year 2 after demonstrating value
Step 5: Set Clear Expectations
- If they accept RM 100K: “We believe you’re worth more. Let’s revisit in 6 months after you’ve proven impact.”
- Communicate: Performance milestones that unlock raises
- Be honest: “We can’t go to RM 120K right now, but here’s what we can do…”
Step 6: Close
Best case: They accept your offer (RM 110K or RM 100K + benefits).
Okay case: They ask for time to think. Give 24-48 hours.
Worst case: They decline and take other offer. Don’t get into bidding war. Let them go professionally.
Salary Compression Problem: How to Avoid It
Scenario: You hire new engineer at RM 110K. Your existing senior engineer at same level is at RM 100K (hired 2 years ago).
New hire makes more. Senior person finds out. Team resentment builds.
How to Avoid:
Option 1: Adjust existing salary
- Raise senior engineer to RM 110K
- Costs: RM 10K
- Benefit: Team trust maintained
- Worth it
Option 2: Explain logic
- “Market rates increased. New hire is at market rate.”
- “Senior engineer has skills beyond market (internal knowledge)”
- Doesn’t work. People resent it anyway.
Option 3: Create structured pay bands
- Define salary band for each level (e.g., Senior Engineer: RM 95K-130K)
- New hires go in at lower band (RM 95K-110K)
- Existing employee stays where they are (within band)
- Raises based on performance, not new hire comparison
Best practice: Build pay bands upfront. Avoid compression issues.
Salary Transparency: To Post or Not?
Question: Should you post salary ranges in job postings?
Answer: Yes, increasingly. Here’s why:
Benefits of Salary Transparency
For candidates:
- Self-selection (don’t apply if range below expectations)
- Faster negotiation (both sides know constraints)
- Reduced bias (women, minorities apply more when salary posted)
For companies:
- 50% more applications (when salary posted)
- 40% faster hiring (less negotiation back-and-forth)
- Attracts confident candidates (weaker candidates self-select out)
- Builds trust (transparency shows confidence)
How to Post Salary Ranges
Format:
“Salary: RM 180K-250K based on experience”
or
“Compensation: RM 200K base + 20% bonus + 0.1-0.2% equity (for startup)”
Best practice:
- Post ranges (not single number)
- Show bonus/equity if relevant
- Note: “Based on experience and qualifications”
- Update annually (market changes)
2025 Salary Trends in Malaysia
Trend 1: Tech Salaries Rising Faster
- Tech roles: +8-12% annually
- Non-tech: +3-5% annually
- Reason: Talent shortage, competition from Singapore/India
Trend 2: Bonus Becoming Standard
- Pre-2020: Bonus was perk (20-30% of companies)
- 2025: Bonus is standard (70%+ of companies)
- Typical: 15-20% for non-sales roles
Trend 3: Equity Expectations Increasing
- Startups: Equity expected; candidates demand it
- Growth companies: Equity becoming expected (ESOP programs)
- Trend: Equity as retention tool; moving beyond startups
Trend 4: Benefits Differentiation
- Salary convergence (hard to differentiate on salary)
- Companies differentiating on benefits (remote, flexibility, wellness)
- Winning: RM 100K + flexibility + learning budget > RM 120K office-only
Trend 5: Singapore Talent Returning
- Singapore salaries plateauing; cost of living rising
- Malaysia (Kuala Lumpur) becoming attractive alternative
- Impact: More supply of quality talent; less competitive salary pressure
Trend 6: Skill-Based Pay Emerging
- Pay for skills/certification (cloud certifications, data science)
- Less based on years of experience
- Future: “Senior” title less relevant than skills
Salary Benchmarking Checklist
Before you make a hiring offer:
- Market research: Checked Glassdoor, LinkedIn Salary, PayScale for role?
- Company stage: Adjusted for startup vs. growth vs. enterprise?
- Location: Adjusted for KL vs. other cities?
- Experience level: Matched candidate experience to right salary band?
- Bonus structure: Defined bonus % and criteria?
- Equity: Determined if offering equity (startup)? Amount?
- Benefits package: Quantified health insurance, leave, professional development?
- Salary compression: Checked existing team salaries (don’t compress)?
- Negotiation room: Decided bottom line vs. negotiable?
- Transparency: Decided if posting range or disclosing if asked?
Key Takeaways
-
Market rates matter. Underpay = turnover. Overpay = waste. Market-rate = stable.
-
Slight overpay is better. RM 5K-10K overpay saves RM 290K+ in turnover costs.
-
Total compensation matters. Salary + bonus + equity + benefits = total package.
-
Transparency builds trust. Post salary ranges. Be honest in negotiations.
-
Location matters. KL salaries highest; other cities 10-20% lower.
-
Stage matters. Startups: equity compensates for lower salary. Enterprise: stability compensates.
-
Negotiation is normal. Have bottom-line, but be flexible (bonus, equity, benefits).
-
Avoid salary compression. New hire earning more than senior person = resentment.
-
Benefits are part of comp. RM 100K + flexibility + learning > RM 120K office-only.
-
Update annually. Market changes. Review salaries every year.
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