The Compensation & Benefits Balancing Act in Asia: Employing the Best Talent at the Lowest Cost

Localisation of Expats

With the economic downturn of 2009, extra focus had been put on the cost attached to employees on expat packages, and wherever possible these safeguards have remained in place. In many casescompanies have attempted, with varying degrees of success, to localise employees. ‘Local plus’packages (base salary plus travel allowance or housing allowance) is often used to bridge the gap,however cost benefits can sometimes be negligible. For organisations who want their employees to have international experience in order to benefit the business in the longer term, there is little choice to offering expat packages to ensure the best talent is mobile. When employees can be based anywhere and still work online or over the phone, a ‘global salary’ needs to be used and benchmarked outside of Asia. In these cases often the Middle East is the location of choice due to the zero tax benefit.

There is no formula to localising expats, however a gradual approach with aspects being taken over time from 1-5 years in some cases, will make the whole process less challenging as future planning for cost is possible. In extreme cases setting a precedent by removing an expat from the business altogether, because a middle point could not be met, can send a message to the other employees that compromise is the best solution.

Expat packages are not going to disappear while there are still talent shortages in certain locations. And it makes best sense to find talent (with experience of the business being the added advantage) elsewhere. However pressure should be put on the Talent Acquisition process to make sure that expat assignments are used as a last resort where; a) no-one else can do the role, b) it’s beneficial for knowledge transfer, or c) it's necessary for an individual’s long-term career enhancement.

The C&B Talent Pool in Singapore

There is a shortage of C&B talent in the Singapore market, and this is true of most markets across the region. In many cases talent that is available have salary expectations that don’t match the depth ofexperience leaders are expecting for the price tag. Companies are successfully looking internally to develop business or HR talent instead. High intelligence coupled with the ability to learn is fundamental to make the transition, however as with any aspiring talent the challenge is retaining them within the division or business after 2-3 years when other opportunities can open up. Employers are also looking outside their industry to find new talent and identifying the competencies (such as problem solving, analytical ability and numeracy) rather than business knowledge.

Summary

C&B teams are under pressure from a number of angles. On one hand, they are being asked to come up with growth tools in rewards and sales incentives. On the other hand, they are being asked to come up with ever more creative cost reduction solutions, especially when localising expats or advising on the cost to hire for a location. With lean teams and expanding roles, something has to give, and one answer may be with the greater implementation of shared services/service centres to reduce the transactional volume where possible. Hopefully these kinds of structural changes will continue to enable C&B Leaders to advise the business and look to the future.