Companies Revise Their Pay Forecasts in Response to the Economic Downturn, but Top Performers Continue to be Treasured
HONG KONG, Nov. 26 /PRNewswire-Asia/ -- The global economic crisis has organizations in the Hong Kong market rethinking their approaches to compensation, hiring, and rewards, according to two new surveys conducted by Hewitt Associates, a global human resources consulting and outsourcing company.
Hewitt undertakes an Asia-Pacific Salary Increase survey with data collected from June to September annually. This year, however, with the escalation of the economic crisis on a global scale, a special Economic Climate survey was also conducted in October as a follow up action to identify how the economic crisis was affecting company planning and HR programs.
Michael Yeung, Talent and Organization practice leader for Hong Kong, said: "High quality talent continues to be a scarce and valued resource in this market. Smart organizations are using this time of turbulence to selectively recruit some of the very best talent. Nearly half (48% percent) of survey participants in Hong Kong reported that they still have strategic hiring practices in place, even under current conditions."
According to study findings, organizations are counting on their highly rated talent to help pull the organization through the difficult times ahead.
Yeung added: "Top performers require top rewards. Despite more conservative salary forecasts by companies in the past few months, organizations say that they continue to invest in top performers, and take greater measures to retain their best people."
According to study findings, top performers will get one percent more on average from the original budgeted increase for 2009. This is despite the majority of companies cutting salary planning budgets and variable compensation payouts as concerns about the uncertain broader economy (about 88%) put pressure on cost reductions. For the 'rest', companies are reducing their average salary increase budget by 1.2 percent for average performers and two percent for low performers.
On top of differentiated cash rewards, other retention approaches for top performers include companies providing additional learning and development opportunities (cited as the most prevalent with 63 percent of surveyed companies offering this). The second most cited practice is reserving a portion of salary increase budget (cited by 58 percent of respondents) for top performer rewards.
A majority of 63% surveyed companies said they will not reduce their promotions.
Stella Hou, Hewitt regional practice leader for Broad-Based Compensation in Asia Pacific, said: "We are on the threshold of what could be the beginning of a longer-term rebalancing of salaries following rapid increases year after year in many fast-growing developing markets.
"There is a large amount of uncertainty and rapidly changing circumstances that continue to impact decision-making on a daily basis. We still see companies taking the position of 'wait and see', given this uncertainty. However, some leading companies plan to or already are taking actions now to prepare their organizations to weather the potential storm. No one knows at this stage how long, how deep, and even what markets or industries will be most affected."
Companies say they will continue to invest in Asia, and further expect relatively faster growth from this region, though growth is anticipated at a much slower pace.
Hou added: "Organizations will still need to keep their workforce at a reasonable size and continue to prepare for the turnaround. Many see this as an opportunity to consider acquisitions, to make their organizations leaner, and to re-skill workforces as companies focus on core business. Pay freezes and pay cuts are not being considered at this time by and large in Asia."
However, Hong Kong's pay freezes are reported almost double (16 percent) compared with the counterparts in Asia (8 percent). With the uncertainty around the possible impact of the economic crisis, many organizations, especially those in Hong Kong, are still waiting to see what strategic decisions business leaders will yet take.
Overall, a far more conservative approach is being taken in the past two months towards pay forecasts: 87 percent are implementing changes company-wide in Asia while almost 93 percent are making changes in Hong Kong.
There has been an average one to two percent deduction from original pay forecasts in Asia markets (Hong Kong adjusted down by 1.9 percent, China adjusted down by 2.1 percent).
Looking ahead, in Asia, 64 percent of companies indicated that their bonus payouts will be impacted, while four out of five companies (25 percent) in Hong Kong said that their bonuses will be slightly increased for 2008 (less than 10 percent on payout) compared with only 14 percent of responding companies in Asia. Recognition for staff performance is still treasured in Hong Kong's company culture.
Other economic impacts:
-- 67 percent reported cutting back on travel
-- 58 percent reported cutting back on training
-- 55 percent reported cutting back on employee recreation
-- 19 percent said they will consider layoffs or a reduction in staff
-- 68 percent of the respondents said that they are placing extra
emphasis on employee and internal communications.
Hou said: "Companies that take care of their workforces over time, take extra efforts to reward and keep top performers, and substantially increase the productivity of the 'rest' stand an even better chance of mitigating the downside while positioning for the upside. It also appears that employees are willing, generally, to stay with companies providing clear growth opportunities and a visible career path."
About Hewitt's Salary Increase Survey
Hewitt surveyed 2,200 foreign, locally-owned, and joint-venture companies in this 9th annual Asia-Pacific Salary Increase survey, making this the most comprehensive salary study in the region to date. The survey was conducted between June and September 2008, and covered 18 markets including Australia, Bahrain, China, Hong Kong, India, Japan, Korea, Kuwait, Macau, Malaysia, New Zealand, the Philippines, Qatar, Singapore, Sri Lanka, Taiwan, Thailand, and the United Arab Emirates.
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.
About Hewitt's Asia-Pacific Economic Survey
A special survey was conducted as a follow-up to the Asia-Pacific Salary Increase Survey this year as a result of the escalation of the economic crisis on a global scale. Over 700 responses identifying how the economic crisis was affecting company planning and HR programs were received in October.
Asia-Pacific Economic Survey results were obtained from 12 markets including Australia, China, Hong Kong, India, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Taiwan, and Thailand.
ABOUT HEWITT ASSOCIATES
For more than 65 years, Hewitt Associates (NYSE: HEW) has provided clients with best-in-class human resources consulting and outsourcing services. Hewitt consults with more than 3,000 large and mid-size companies around the globe to develop and implement HR business strategies covering retirement, financial and health management; compensation and total rewards; and performance, talent, and change management. As a market leader in benefits administration, Hewitt delivers health care and retirement programs to millions of participants and retirees, on behalf of more than 300 organizations worldwide. In addition, more than 30 clients rely on Hewitt to provide a broader range of human resources business process outsourcing services to nearly a million client employees. Located in 33 countries, Hewitt employs approximately 23,000 associates. For more information, please visit http://www.hewitt.com .
