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Monday, April 10, 2017, 16:07

Keeping the best and brightest

By Karl Wilson

As salary budgets shrink and workers seek better pay, Asia’s employers place more emphasis on rewarding high performers

Keeping the best and brightest
Office workers taking a lunch break at Singapore’s financial district. Companies in the city-state are expected to offer pay increases of between 3 and 6 percent this year.  (AFP)

Amoderate easing of economic growth in Asia has not stopped workers demanding better pay and conditions as companies struggle to retain skilled workers.

International recruitment agencies say those employed in this region will be seeking pay increases far greater than their counterparts elsewhere in the world.

Recruitment consultants Korn Ferry Hay Group said the highest “real wage growth” globally this year will be in Asia, where salaries are forecast to increase by 6.1 percent and real wages by 4.3 percent. A salaried person is paid a fixed amount per pay period while a wage earner is paid by the hour.

The biggest real wage increases are expected to be in Vietnam (7.2 percent), Thailand (5.6 percent), Indonesia (4.9 percent) and India (4.8 percent).

China, however, is expected to see real wages increase by only about 4 percent this year, after 6.3 percent in 2016. This is a reflection of lower growth forecasts for 2017, according to the US-based consultancy in its latest survey on global wage growth.

“Asia continues to drive growth in wages globally as companies look set to increase pay across the board,” Benjamin Frost, global manager with Korn Ferry Hay Group, said in a statement.

“However, the global labor market is in flux as slower economic growth in mature economies keeps a check on pay rises,” he said.

“In emerging economies, upskilling workers is crucial for companies to maintain a competitive advantage — and those skilled employees can expect to see wages rise as talent shortages in certain regions drive salaries up.”

The Korn Ferry Hay Group survey is based on data collected from more than 20 million workers in 25,000 companies around the world.

Sambhav Rakyan, data services practice leader, Asia Pacific, at consultancy Willis Towers Watson, said: “We are seeing lower salary increase budgets across much of the region.

“Back around 2012 and 2013, companies in Asia pumped a lot of money into their salary budgets and drove salaries up, but they didn’t see the revenues rise in tandem, so it made such increases unsustainable.

“Now these companies are being much more prudent.”

Rakyan said as salary budgets shrink, companies need to be “smarter” about how they use and retain their talent.

“It’s important to prioritize the best performers and also to review how employees are rewarded with other incentives, such as more attractive benefits,” he said.

Greater emphasis is now being placed on rewarding high performers rather than across-the-board increases.

“Without such differentiation, companies will face pressure in attracting and retaining talent, especially for in-demand areas, such as sales and digital roles,” Rakyan said.

“Employers have to think beyond inflation-linking and look at more nuanced factors such as affordability, growth expectations, both employee and company performance, and specific talent and skills needs.”

Keeping the best and brightest

This is a key challenge facing Chinese companies trying to retain talented workers, especially in sectors such as IT, robotics and financial technology, or fintech.

Another factor in labor costs in China is the rise in living standards.

“By moving the lower-level end of production roles to second- or third-tier cities in China, or simply relocating them in other countries where labor is cheaper, it frees up budget and keeps the senior level roles in China,” said a spokesperson for global recruitment consultancy Morgan McKinley, adding that “this is a healthy development”.

United Kingdom-based global recruitment agency Hays, in its salary and wages review for 2017, said 45 percent of China’s employers expect to make salary increases of between 6 and 10 percent this year.

The annual guide examines salary and recruiting trends in the Chinese mainland, Hong Kong, Japan, Malaysia and Singapore and is based on research from more than 3,000 employers representing 6 million employees.

In terms of salary increases across the region, companies surveyed by Hays in Hong Kong, Malaysia and Singapore expect to offer pay increases of between 3 and 6 percent, while in Japan, increases will be no higher than 3 percent.

While companies are juggling staff salaries, they are also looking at increasing or offering extra benefits.

According to the Hays survey, 75 percent of employers in China offer staff benefits in addition to their salary and bonuses.

Across all countries surveyed by Hays, 85 percent of employers provide benefits.

Health and medical remains the most commonly offered benefit in the region (79 percent of employers). It is followed by life assurance (40 percent), a car or car allowance (34 percent), pension (31 percent), housing (26 percent), club or gym membership (16 percent), hardship allowance (10 percent), children’s education (8 percent), tax equalization (6 percent) and private expenses (5 percent).

For companies in Asia, the hiring, retaining and engaging of talent will continue to be a top priority.

“In a talent-led economy, the employee experience has never been more critical to attracting the best and brightest,” said Jackson Kam, regional practice leader for global consultancy Mercer’s career business in Asia, the Middle East and Africa.

“Getting it right is even more challenging now, in a more diverse workplace that must embrace five generations with different norms and expectations,” he told China Daily Asia Weekly.

Kam said if the “employee value proposition” (EVP) is not authentic to the company’s DNA — in other words “how we do things around here” — then this passion of attraction will not be translated into passion for the job.

“Business executives, human resources (HR) leaders and employees have differing perspectives on what makes their company’s EVP unique and compelling,” he said.

“HR and employees agree that compensation and benefits — the contractual aspects of the ‘deal’ — are a core component. Leading on responsible rewards and pay equity can help, as can focusing on health and flexible work options.”

With the contractual aspects of the ‘deal’ sharply in focus, it has never been more critical to effectively communicate the total reward package, Kam said.

“Part of this equation is employees’ desire for more flexibility. Organizations are now evaluating the type and degree of flexibility inherent in each role and intentionally modeling flexibility into job design.”

As for retaining staff, “personalization is now becoming the differentiator” more than a list of “cool benefits and perks”, Kam said, adding that one way to achieve this is through flexible work options.

According to Mercer’s 2017 Global Talent Trends Study, the majority of employees want more flexibility. Some, however, expressed reservations, saying that working part-time or remotely would have a negative impact on their promotion opportunities.

“Certainly there is more work to be done to create a culture where flexibility is not seen as a benefit, but as an opportunity for workforce optimization and personalization,” Kam said.

“Flexibility comes down to finding a way to integrate one’s work and personal life.”

When asked what would make employees choose one company over another, time off was a clear winner, Kam said. “Either more of it, or at least the flexibility to spread it out or even work fewer hours for less pay.

“Perks such as fitness and recreation facilities, well-being services and financial advice were all present, but ranked lower down the list.”

karlwilson@chinadailyapac.com

 
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