|
Sri Lanka tops Asia in salary hikes in regional survey
by Hewitt Associates
According
to the 8th annual Asia-Pacific Salary Increase Survey conducted
by Hewitt Associates, a global human resources services company,
external inequity of pay was cited as the top reason for employees
leaving jobs.
The Asia Pacific region witnessed the highest salary increase in
the world with Sri Lanka reporting the highest release within the
region. Asia was followed by Latin America with Venezuela leading
with 18.8 percent. Europe reported the third highest salary increase
globally with Hungary leading the region with an increase of 7.5
percent.
Nishchae Suri, head of Hewitt’s Talent and Organization Consulting
Analytics practice in Asia, says: “The pull is on the side
of the people today. With more opportunities and avenues, organizations
are increasingly at the mercy of employees making a choice. A salary
increase is the most perceptible way of enhancing the employment
deal but, of course, not the complete deal itself.”
Organizations are becoming dealers in talent, using pay and benefits
as a strategic lever to attract, motivate and retain talent. More
and more organizations are showcasing themselves as dealers in talent,
with aggressive pay positioning and increased benefits, hence having
a heavy skew towards being transactional.
Suri adds: “Despite all the high salary hikes in Asia, compensation
doesn’t seem to be having the desired impact. The overall employee
satisfaction with current compensation stands at 46 percent. This
means that, apart from the absolute, there are aspects which need
serious attention. Focus needs to be on making pay more transparent
by making it competitive and aligning it to performance.”
Hewitt’s study indicates that variable pay continues to be
an important means of attracting and retaining talent, with 91.8
percent of responding organizations using this practice. Within
variable pay choices, individual performance awards continue to
be the most popular, with nearly 68 percent of responding organizations
saying that this is their preferred type of variable pay plan, followed
by special recognition awards and business incentives.
The study reveals trends in across the region. In the 2007 study,
Sri Lanka ousted India from the top spot by reporting the highest
average salary increase at 15.3 percent. This was largely due to
continued growth despite high energy prices, civil conflict and
high inflationary pressures in Sri Lanka.
India reported an increase of 14.8 percent, up marginally from 14.4
percent in 2006. Vietnam’s booming economy reported an unprecedented
increase of 10.3 percent, ousting China from its traditional spot
as the second highest salary increase provider in the region. Salaries
in China rose by 8.6 percent, up from 8.3 percent last year. For
the third year in a row, the Philippines recorded an average overall
salary increase of 8.2 percent.
As Singapore’s economy continued to strengthen, employees experienced
average salary increases of 4.7 percent, up from 4.6 percent in
2006. Meanwhile, Thailand and Malaysia saw raises of 6.3 percent
and 6.5 percent respectively. Salaries also rose in Hong Kong, Japan
and Taiwan.
Maintaining the competitive edge in the market
An increasing number of organizations are ensuring their pay is
competitive by closely monitoring market movements. Over 78.2 percent
of participating organizations review their markets annually, using
multiple sources of information to benchmark compensation, such
as industry surveys and information through personal contacts. 80.5
percent of participating organizations continues to practice industry
benchmarking, a record 28.2 percent are now benchmarking across
multiple industries.
Rising Variable Payouts
Ever increasing pay hikes are posing a clear problem to most organizations.
In an environment of strict competition, increase in employee cost
can lead to fast erosion of margins “Pay –for- Performance
is clearly the next generation mantra for companies in Asia. Increasingly,
more companies are trying to further reinforce the pay and performance
relationship through variable pay plans. Variable pay focuses on
key messages/imperatives, drives desired behaviors and helps better
manage expenses. They also translate into increased earning potential
for employees that give them greater control over total compensation,”
says Suri.
According to the study, companies reported variable payouts of 14.5
percent of their payroll in 2007. This year, actual variable payout
was highest for top executive at 22.1 percent, and is expected to
rise to 23 percent in 2008.
Hewitt’s study also highlights that the prime challenge faced
by organizations in Asia in implementing variable pay plans is poor
communication of their objectives and measures to employees.
Hewitt surveyed nearly than 1,800 foreign, locally owned, and joint-venture
companies this year, making this the most comprehensive salary study
in Asia Pacific to date.
The
survey covered 14 markets including Australia, China, Hong Kong,
India, Japan, Korea, Macau,
Malaysia, the Philippines, Singapore, Sri Lanka, Taiwan, Thailand
and Vietnam. It measured actual and projected salary increases,
and compensation practices for six specific job categories, namely
top executive, senior management, middle management, junior manager/supervisor/professional/,
general staff, and manual workforce.
With more than 65 years of experience, Hewitt Associates is the
world’s foremost provider of human resources consulting and
outsourcing services.
The
company consults with more than 2,400 organizations and administers
human resources, health care, payroll and retirement programs on
behalf of more than 350 companies to millions of employees and retirees
worldwide. Located in 35 countries, Hewitt employs approximately
22,000 associates.
|
