omniture

Hewitt Associates Report Reveals Organizations in Asia Pacific are Gearing up to Manage Employee Performance and Rewards

Hewitt Associates
2007-08-07 11:46 3406

HONG KONG, Aug. 7 /Xinhua-PRNewswire/ -- Organizations in Asia are progressively realizing that their critical assets are fast evolving into their most expensive assets and are evincing a greater interest in developing clear metrics that measure returns on compensation, according to the Managing Compensation in Asia 2007 report released by Hewitt Associates, a global human resources services company. Although such metrics are yet to be universally established and adopted, organizations are clearly focusing on increased use of market input to determine the ‘right’ levels of pay and developing an accurate judgment of employee performance and potential.

Where this approach was earlier evinced by markets such as Singapore, Hong Kong and China, emerging markets such as Vietnam and Indonesia are fast taking the same route. This newly launched report also reveals that though organizations are spending time and effort in understanding market data, measuring employee performance and linking the two to compensation decisions, they are however failing to achieve the desired objectivity. This gives rise to key highlights to managing compensation in Asia.

Competitive benchmarking on the rise

The growing pressures on retaining talent has steered an increasing number of organizations to study competitive practices by keeping a closer eye on market movements. Hewitt’s Managing Compensation in Asia 2007 reports that over 80% of organizations use market information to determine pay decisions. While 81.1% of organizations use ‘Line of Business’ or direct competitors as a parameter for comparison, ‘Geographical location’ and ‘Talent pool’ are also commonly used. Majority of the organizations use multiple parameters when it comes to deciding the comparator group. 32.7% of organizations use three parameters for choosing a comparator group, while 28.6% use two parameters. A mere 18.6% of organizations use a single parameter.

Nishchae Suri, head of Hewitt’s Talent and Organization Consulting Analytics practice in Asia said, “Organizations in Asia are slowly making the transition from being ‘market aware’ to being ‘market driven’. There is a clear indication that more and more organizations are benchmarking and are willing to share compensation data in order to attract and retain talent as well as manage costs. In a region that is plagued with new talent challenges, higher market orientation and increased performance consciousness ensures that broader business goals are achieved.”

Focus on Performance Increases

“Organizations also need to ensure fair distribution of compensation, in order to increase healthy competitiveness. Compensation must be commensurate with employee capabilities and should accurately reflect their level of contribution and differentiate them accordingly from average performers”, adds Suri.

In a region where performance is the strongest factor in determining pay decisions, organizations are trying to forge a stronger buy-in of the plans by directly correlating an employee’s performance to rewards. 98.5% of organizations use performance as a criterion to drive pay levels. According to the report, an ‘Outstanding’ performer gets two times the increase than that of an ‘Average’ performer, reflecting the performance consciousness in the region.

Transparency in Pay Communication Lacking in Asia

Pay communication continues to be an imposing issue in Asia. Suri elaborates, “Despite the best intentions, the key challenge that organizations face in implementing market-driven and performance based pay programs is the lack of transparent communication and poor understanding of the schemes. In fact, more than half of HR professionals in Asia are not satisfied with the way their organization deals with pay-related communication. There is clearly a huge gap between what employees want to know and what organizations are currently sharing.”

The largest gap between current practice and HR expectation is seen in the areas of communicating benchmark positioning, explaining total benefits package and disclosing total number of bands or levels within the organization. Significant gaps are also evident between HR’s desire and employee expectations in the areas of communicating salary range. There is a half and half split between employers who are comfortable with the level of transparency that currently exists, and those who are not; and approximately 75 percent agree there is room for improvements in this area. Factors that inhibit more transparent communication include lack of maturity on the part of employees, their lack of understanding, and a lack of understanding among managers, which inevitably leads to an inability to help employees understand the ‘total package’ and difficulty in communicating career progression and movement to employees.

About Hewitt’s Managing Compensation in Asia 2007 Report

Founded in Hewitt’s groundbreaking research and backed by world-class data, Hewitt’s Managing Compensation in Asia 2007 report provides invaluable insights on the emerging trends and best practices in compensation across 11 markets in Asia. It helps HR and Compensation and Benefits professionals gain a thorough understanding of performance and rewards around the region by providing accurate and up-to-date information to aid future decision-making. The report features in-depth analysis of compensation across several

pre-defined job levels in each market in Asia, highlighting absolute pay scales, mix of compensation, and prevalence of benefits, perquisites, and variable pay including long-term incentives. The report also provides insights into performance and rewards not only at a market and regional level, but also across the five prime industry groups in Asia Pacific, namely IT/High Tech, Pharmaceuticals/Medical, Consumer Products, Hotels and Banking and Financial Services.

For more details contact samir.bedi@hewitt.com.

About Hewitt Associates

With more than 65 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 2,300 organizations and administers human resources, health care, payroll and retirement programs on behalf of more than 340 companies to millions of employees and retirees worldwide. Located in 35 countries, Hewitt employs approximately 24,000 associates. For more information, please visit http://www.hewittasia.com .

Contact:

Chaiti Sen

Tel: +91-989-970-0840

Email: chaiti.sen@hewitt.com

Merlissa Elvin

Tel: +65-6872-7559

Email: merlissa.elvin@hewitt.com

Source: Hewitt Associates
collection