Regional Compensation & Benefits Leaders Meet in Singapore to Discuss the Implications of Market Movements on Compensation & Benefits Strategy

India and China’s Compensation Bubble

The emergence of economic growth in India and China has spurned a compensation-bubble, exponentially increasing the compensation levels of mid-management to those of Singapore or Hong Kong. It was noted that while the cost of the general labour market in India and China is still far below the equivalent level in Singapore or Hong Kong, this management-level compensation-bubble will continue to influence the placement of regional headquarters in Singapore and Hong Kong as opposed to India and China.

Deferred Compensation Plans

While stock options have a reduced visibility for the general employee, it was noted that deferred compensation is still an important part of compensating senior executives, providing incentives, retention (“golden handcuffs”), and reducing their cash cost to the business.

Employee Attraction and Retention

As the Asia market rebounded toward the end of last year and now, after bonus payouts have been completed, companies are having to manage how to retain employees and attract new ones to fill in both the typical attrition and the increased human capital needs of Asia’s continued economic growth. Widely recognised was the impact of employee expectations of “fairness” relative to peer compensation in the market, accentuated by the increased communication among them and the already fluid labour market.

To that point, in one financial services organisation, an increased level of attrition in the last few months has prompted consideration of an increase to employees’ base compensation with a reduction to the variable components to increase retention and competitiveness.

Conversely, many employees and employers are recognizing the value of strong management and fair practices and developing a sense of loyalty which may counter some of the lure of the “greener grass” elsewhere. As well, improvements in training and resulting improvements in reputation have taken hold as new strategies to retain and attract talent across the region.

Communication by the C&B Teams

An area that found agreement across all industries was the need for the C&B teams to properly communicate and manage the corporate message regarding increments and bonus rewards to employees. This included understanding how to resolve employees’ perception of “fairness” in comparison to peers, as well as transitions into new compensation structures company-wide. One technology company emphasized a ‘transparency’ concept in which C&B staff were formally trained on how to effectively and clearly communicate across all aspects of compensation to employees and actively sought feedback from employees on their satisfaction with the HR function.

Recruiting C&B Talent in a Tight Asia Market

As the market continues its movement onward and upward, and companies expand their footprints in Asia, the need to manage C&B programs has become especially critical. The resulting increase in demand for talented C&B professionals, has forced some companies to consider internal transfers from other lines of business or even other HR functions. However, it was noted that much of this movement depended on commonalities between the lines, structure of the firm and a flexible corporate culture.

In summary, the discussion highlighted various C&B challenges and resulting strategies that companies are employing to navigate the promising yet unpredictable economic waters of the Asia region.