The Average Overall Salary Increase Budget in CHINA Ranged from 7.5% to 8.4%
in 2006. Few Companies Reported a Salary Freeze This Year.
SHANGHAI, China, Dec. 4 /Xinhua-PRNewswire/ -- Asia's markets have
maintained steady growth in the last year, which has led to a stabilization
of salary increases in most markets during 2006. Though employers are
reporting pay increases, the hikes are modest in comparison to previous
years, and this trend looks set to continue in 2007, according to the 7th
annual Asia-Pacific Salary Increase Survey conducted by Hewitt Associates, a
global human resources services company.
This year, India once again reported the highest average salary increase
at 13.8%, compared with 14.1% in 2005. For the second year in a row, The
Philippines recorded an average overall salary increase of 8.2%, while
salaries in China rose by 8%, down from 8.3% last year. As Singapore's
economy continued to strengthen, employees experienced average salary
increases of 4.6%, up from 3.9% in 2005 and demonstrating one of the largest
year-on-year hikes. Meanwhile, Thailand and Malaysia saw raises of 6.5% and
6.2% respectively, marking an increase from 6.3% and 5.6% in 2005. Salaries
also rose in Australia, Korea and Hong Kong.
"While organizations are being driven to increase their spend on
compensation as a result of the ongoing attraction and retention challenges
we are facing in Asia, many companies are reassessing their human resources
strategies and broader business goals to ensure they are getting the most out
of their talent and increasing productivity," said Nishchae Suri, head of
Hewitt's Talent and Organization Consulting Analytics practice in Asia.
Increasing Market Orientation
With the pressure to retain key talent growing, an increasing number of
organizations are ensuring their pay is competitive by closely monitoring
market movements. Over 80% of participating organizations review their
markets annually, using multiple sources of information to benchmark
compensation, such as industry surveys and information through personal
contacts. While 81.6% of participating organizations continue to practice
industry benchmarking, a record 20.2% are now benchmarking against best-in-
class companies.
Rising Variable Payouts
Hewitt's study indicates that variable pay continues to be an important
means of attracting and retaining talent, with 78% of responding
organizations using them.
Individual performance awards continue to be the most popular, with 56.2%
of responding organizations saying they are their preferred type of variable
pay plan. They also indicated individual performance awards have the highest
impact on business results, followed by business incentive plans and team
awards.
According to the study, companies increased variable payout in 2006 to
14.9% of their payroll, up from 14.5% in 2005. This year, target variable
payout was highest for senior/top management at 21.8%, and is expected to
rise to 22.3% in 2007.
Hewitt's study also highlights that the prime challenge faced by
organizations in implementing variable pay plans is poor communication of
their objectives and measures to employees.
Jean Lin, head of Hewitt's Talent and Organization Consulting Analytics
practice in China, commented, "Rewards are an emotive issue with employees
and it is of paramount importance that companies not only house a fair,
transparent reward system, but also properly communicate guidelines to
employees. Despite this, an alarming number of organizations still fall
short when it comes to communicating pay decisions to employees. There is
clearly a huge gap between what employees want to know and what organizations
are sharing."
Achieving Business Objectives Through Rewards
Though organizations have the right intent when it comes to fostering a
healthy performance and reward culture, most said they are only partially
achieving their objectives of attracting, engaging and retaining talent, as
well as achieving business results. At 60.1%, more than half of
participating organizations said their reward programs do not achieve the
desired outcome because of budgetary constraints, while 33.3% cited lack of
communication as the primary reason.
About Hewitt's Salary Increase Survey
Hewitt surveyed more than 1,400 foreign, locally-owned, and joint-venture
companies this year, making this the most comprehensive salary study in Asia
Pacific to date. The survey covered 11 markets including Australia, China,
Hong Kong, India, Japan, Korea, Macau, Malaysia, the Philippines, Singapore,
Taiwan, and Thailand. It measured actual and projected salary increases, and
compensation practices for five specific job categories, namely senior/top
management, manager, professional/supervisor/technical, clerical/support, and
manual workers.
To obtain a copy of the individual market reports, please email
apac_sis@hewitt.com .
About Hewitt Associates
With more than 60 years of experience, Hewitt Associates (NYSE: HEW) 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. For more information, please visit http://www.hewittasia.com .
Asia-Pacific Salary Increase Survey 2006-2007 Market Highlights
China
-- Information was collected from 365 organizations.
-- 3% of survey respondents reported a salary freeze for 2006, while
less than 2% expect a salary freeze in 2007.
-- The average overall salary increase budget ranged from 7.5% to 8.4%
for the five employee groups surveyed in 2006, and from 7.1 % to
8.5% for 2007. Middle management received the highest increase at
8.4% in 2006.
-- 69% of participants reported having a variable pay plan, with gain
sharing/productivity awards and team awards remaining popular.
Generally, the percentage of cash compensation devoted to variable
pay increases with the level of seniority.
-- At 22%, senior/top management received the highest percentage of
variable pay in total cash compensation.
-- 48.7% of participating companies position their salary by comparing
base salary with the market, while only 19% benchmark total
guaranteed pay with the market.
-- 65% of participating companies offered fixed bonuses to their
employees in 2006.
-- 38% of participating companies offer long-term incentives, typically
stock options.
