Post on 26-Mar-2015
www.mercer.com.hk
Pay Trend & Compensation Overview in Hong Kong
28 February 2011
Connie Leung, Mercer Hong Kong
2Mercer
What do we hear from our clients as an employer?
How to balance between market competitiveness and
maintaining cost?
How to attract/retain the employees?
How can benefits motivate and engage employees?
What should we do to response to employees’
request other than increasing salary?
3Mercer
Three key perspectives considered in a structured decision making process
External Market
Compliance to the government regulations and requirements
Consider labor and related rewards environments where you compete for talent
Determine how the environments influence or constrain rewards practices that you may wish to adopt
Employer
Determine workforce needs in terms of structure, behavior, capabilities and performance
Design and deliver rewards programs to secure workforce outcomes
Provide rewards programs to support the desired strategy at an affordable sustainable cost
Employee
Create a compelling place to work and differentiate the organization from its competitors
Understand the value employees place on the current package as well as potential future total rewards
4Mercer
This presentation covers
What is happening in the market?– Pay Increase trend – Staff turnover– Hiring intention and hot jobs– Annual base salary & annual total cash trend line– Year over year comparison on typical positions and starting salaries of graduates– Benefits practices and prevalence
What do you think your employees pursue? – Attraction & retention – Different generations and life stages, different needs
What do you think about yourself as an employer?
Conclusions– Mercer’s Total rewards Approach– Key Takeaways
Q & A
About Mercer
www.mercer.com.hk
An Overview of the Market
6Mercer
Mercer’s Total Remuneration Survey DatabaseAbout 350 companies in 2010
Industry Sector
8%
31%
8%10%
27%
4%
12%
Chemical Consumer Goods Engineering Healthcare Hi-Tech Logistics Others
Net Sales Revenue
33%
15%14%
13%
9%
6%6% 4%
Less Than $25 Million $25 Million < $50 Million $50 Million < $100 Million $100 Million < $250 Million
$250 Million < $500 Million $500 Million < $1 Billion $1 Billion < $3 Billion $3 Billion or More
Headcount
40%
21%
18%
8%
5%4% 1% 1% 2%
Less Than 50 50 < 100 100 < 250 250 < 500 500 < 1,000 1,000 < 3,000
3,000 < 5,000 5,000 < 10,000 10,000 or More
7Mercer
Source: IMA Asia, January 2011 2008-2010 Hong Kong TRS All Industries & 2010 Q4 Hong Kong Market Flash
Overview of Hong Kong Pay Trend
Average salary increase for All Industries
( 3.4 if excluding salary freeze)
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0 (%)
GDP 6.4 2.2 -2.8 6.7 5.6
CPI 2.0 4.3 0.6 2.5 4.5
Salary Increase (Including SalaryFreeze)
4.2 4.4 2.1 3.2 3.8
2007 2008 2009 2010 2011
8Mercer
Source: IMA Asia Forecast, Q3 2010 2008 – 2010 TRS All Industries 2010 Q4 HK Market Flash
Overview of Hong Kong Labour Market
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0%
Unemployment Rate 4.1 3.4 5.2 4.5 4.0
All Industries Staff Turnover 15.1 13.9 8.6 12.8 N/A
All Industries Retrenchment 3.1 3.8 4.1 1.9 N/A
2007 2008 20092010
(Estimated)2011
(Forecast)
Note: 2010 staff turnover rate & retrenchment rate for All Industries are estimated based on the January to September figures of 2010
9Mercer
Hiring Intention & Hot Jobs
Source: 2010 Q4 Hong Kong Market Flash & 2010 TRS All Industries
Most Difficult in Recruiting
1. Sales – Professional Level
2. Sale – Managerial Level
3. Engineering – Professional Level
Most Difficult in Retaining
1. Sales – Professional Level
2. Marketing – Professional Level
3. Marketing – Managerial Level
Headcount Planning in the Next 12 Months
53% 50%56%
46% 36% 50% 50%
38%44%
67%
57%57%
1%7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
All Industries Chemical ConsumerGoods
High-Tech Pharmaceuticals& Healthcare
Others
No Change Increase Headcount Reduce Headcount
10Mercer
Comparison of Annual Base Salary (2008 – 2010)
Source: 2008-2010 TRS All Industries
Annual Base Salary Staff Professional Management Executive2010 vs 2009 0.2% 2.5% 4.3% 5.9%
2010 vs 2008 0.8% 1.4% 1.9% 2.3%
Annual Base Salary
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63
Posi tion Class
2008 2009 2010
Staff
Professional
Management
Executive
11Mercer
Comparison of Annual Total Cash (2008 – 2010)
Annual Total Cash
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63
Posi tion Class
2008 2009 2010
Staff
Professional
Management
Executive
Annual Total Cash Staff Professional Management Executive2010 vs 2009 6.0% 4.1% 2.6% 1.3%
2010 vs 2008 5.0% 3.2% 1.8% 0.6%
Source: 2008-2010 TRS All Industries
12Mercer
Compensation Mix (2008 – 2010)
0%
20%
40%
60%
80%
100%
Variable Cash 19% 16% 24% 12% 11% 21% 15% 25% 12% 11% 22% 14% 23% 11% 10%
Guaranteed Cash 81% 84% 76% 88% 89% 79% 85% 75% 88% 89% 78% 86% 77% 89% 90%
M -Sales
M - Non
Sales
Pro - Sales
Pro - Non
Sales
Para Pro - White
M -Sales
M - Non
Sales
Pro - Sales
Pro - Non
Sales
Para Pro - White
M -Sales
M - Non
Sales
Pro - Sales
Pro - Non
Sales
Para Pro - White
2008 2009 2010
Source: 2008-2010 TRS All Industries
13Mercer
Average Variable Pay (as a % of Annual Base Salary)Based on 2009, 2010 and 2011 performance
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
2009 32.8% 25.8% 24.1% 16.3% 25.9% 12.2% 11.9%
2010 31.9% 25.0% 24.3% 17.3% 25.4% 13.3% 13.0%
2011 32.6% 25.3% 24.1% 16.8% 25.9% 13.8% 13.1%
Head of Organization
ExecutivesManagement -
SalesManagement -
Non SalesProfessional -
SalesProfessional -
Non Sales
Para-Professional - White Collar
Source: 2008-2010 TRS All Industries
14Mercer
Year over Year Comparison for Annual Base Salary (2008 – 2010) Selected positions in typical job functions
Source: 2009-2010 TRS All Industries
Job Function Position2010
Annual Base Salary(HK$)
2010 vs 2009 Deviation
2009 vs 2008 Deviation
AdministrationOffice Administration Manager 483,000 3% 1%
Office Administration officer 232,000 4% 0%
FinanceFinance Manager 616,000 0% 2%
Finance Officer 240,000 3% 3%
Human ResourcesHuman Resources Manager 583,000 4% 4%
Human Resources Officer 267,000 2% 2%
Information TechnologyIT Support Manager 586,000 0% 1%
IT Support Analyst 241,000 3% 4%
MarketingMarketing Manager 643,000 7% 3%
Marketing Executive 234,000 4% 0%
SalesSales Manager 510,000 -1% 4%
Sales Representative 202,000 2% 1%
15Mercer
Year over Year Comparison for Annual Base Salary (2008 – 2010)Starting salaries for new graduates
2010 Annual Base Salary(HK$)
2010 vs 2009 Deviation
2009 vs 2008 Deviation
PhD 195,000 -25% +3%
Master (Business Admin.) 192,000 -2% -6%
Master (Science) 163,800 -15% -2%
Bachelor (Social Science) 150,000 -4% +8%
Bachelor (Business Admin.) 144,000 -8% +4%
Bachelor (Computer Science) 144,000 -8% -
Management Trainee (PhD) 229,500 -8% +4%
Management Trainee (Master) 199,000 -4% -
Management Trainee (Bachelor) 156,000 - -1%
Source: 2009-2010 TRS All Industries
16Mercer
Retirement Benefit in HK
HK Statutory Requirement– Mandatory Provident Fund (DC)
5% of MPF Relevant Income and monthly contribution capped at HK$1,000 for both employer and employee contribution
Immediate 100% vesting to employee on both employer and employee contribution
Withdrawal of benefits upon retirement age at 65 (early retirement at 60)
Upon resignation, employee need to transfer their benefits in a preserved account of a MPF service provider
Typical Market Practice– ORSO (DC)– MPF Top Up (DC)
Typically, no cap on contribution amount
Employee contribution is not necessary required
Vesting scale is usually made according to years of services and normally be fully vested since 10 years of services
Withdrawal of benefits is allowed for those benefits above the Minimum MPF Benefits (MMB) upon resignation
MMB should be transferred to a preserved MPF account and be withdrawn upon retirement
Source: 2009/2010 HK Benefits Survey
17Mercer
Disability and Death Benefit in HK
HK Statutory Requirement
Disability Benefits– Injury at work– Occupational Disease
Death
– 36 – 84 times of monthly earnings according to age of employee
Permanent Total / Partial Incapacity
– 48 – 96 times of monthly earnings according to age of employee
# monthly earnings are subject to a maximum of HK$21,000 for calculation of compensation
Typical Market Practice
• Disability Benefits– Group Term Life Insurance– Group Personal Accident Insurance
The coverage is typically made at 36 months’ base salary (without capped at HK$21,000)
Source: 2009/2010 HK Benefits Survey
18Mercer
Holiday and Vacation Benefit in HK
HK Statutory Requirement
12 statutory holidays
Progressive annual leave entitlement from 7 days to a maximum of 14 days according to years of services
4/5 paid sick leave accumulated up to 120 days according to years of services
4/5 paid maternity leave for 10 weeks
Typical Market Practice
12 statutory holidays plus 5 days public holidays
Progressive annual leave entitlement from 12 days to 24 days (varies by employee category)
Full paid sick leave
Full paid maternity leave
2 days paternity leave
3 days marriage leave
3 days compassionate leave
Source: 2009/2010 HK Benefits Survey
19Mercer
Benefit Prevalence in HK-Insurance and medical benefits
High(above 75%)
Moderate (25% - 75%)
Low(below 25%)
Group Life Insurance
Group Personal Accident Insurance
Hospitalization Insurance + Major Medical Benefits
Out Patient Clinical Expenses
Check-up and wellness
Maternity Benefits
Dental Care
Vision Care
Critical Illness / Long-term disability Insurance
Source: 2009/2010 HK Benefits Survey
20Mercer
Benefit Prevalence in HK -LTI, perquisites and housing
High(above 75%)
Moderate (25% - 75%)
Low(below 25%)
Long Term Incentive (typical: Stock Purchase Plan)
Training Sponsorship
Overtime Compensation
Congratulations and condolences
Long Service Award
Vehicle (Sales/Non-sales)
Loans
Allowance (Shift/Standby/Transportation/Meal/ Position/Laundry/mobile phone)
Housing
Club Membership
Source: 2009/2010 HK Benefits Survey
www.mercer.com.hk
About the Employees
22Mercer
Employee groups with the highest turnoverBy job function
Among the 12 job functions listed, sales function was mostly ranked (68%) as one of the top 3 functions with the highest turnover rate in the past two years
Human resources function was relatively stable with only 11% of respondents reported it as one of the top 3 functions with the highest turnover rate
11%
16%
18%
27%
27%
33%
36%
39%
43%
45%
57%
68%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Human Resources
Administrative
IT
Quality Management
Engineering
Research & Development
Customer Service / Support
Accounting/Finance
Manufacturing
Supply & Logistics
Marketing
Sales
Source:2010 Q2 Hong Kong Market Flash
23Mercer
Employee groups with the highest turnoverBy years of service, age group and employee category
Our survey participants indicated that the following employee groups had the highest turnover in the past two years:
– Employees who have joined their company for 1 to 2 years
– Employees aged between 26 and 35 – Individual professional employees
By Age Group
3%
75%
19%
3%
25 or below Between 26 - 35 Between 36 - 45 Between 46 - 55
By Years of Service
13%
6%
33%17%
16%
8%8%
Working for less than 6 months Working for 6 months to 1 year Working for 1 year to 2 years
Working for 2 years to 3 years Working for 3 years to 5 years Working for 5 years to 10 years
Working more than 10 years
By Employee Category
11%
48%
41%
Management Professional Para-professional
Source:2010 Q2 Hong Kong Market Flash
24Mercer
Attraction of Professional Staff Top 10 commonly used methods & top 10 most effective methods
Competitive pay (94%), performance-based pay (89%), training and development program (87%) as well as promotion opportunity (87%) are the most prevalent methods used to attract professional staff
Prevalence
73%
73%
76%
79%
79%
83%
87%
87%
89%
94%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Effective leadership
Harmonized work culture
Sound performance management system
Health & life benefits
Meaningful and challenging work
Corporate branding
Promotion opportunity
Training & development program
Performance-based pay
Competitive pay
Promotion opportunity (51%), harmonized work culture (46%) and effective leadership (43%) were ranked as the top 3 most effective methods to attract professional staff
Effectiveness
3%
13%
4%
9%
6%
2%
7%
4%
68%
58%
68%
63%
56%
58%
58%
50%
50%
49%
30%
30%
32%
33%
35%
35%
40%
43%
46%
51%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Individualized career plans
Team-building activities
Competitive pay
Corporate branding
Overseas assignment
Sound performance management system
Meaningful and challenging work
Effective leadership
Harmonized work culture
Promotion opportunity
Not Effective Mpoderately Effective Very Effective
Source:2010 Q2 Hong Kong Market Flash
25Mercer
Retention of Professional Staff Top 10 commonly used methods & top 10 most effective methods
Performance-based pay (90%), training and development program (82%) as well as effective leadership (77%) are the top 3 most prevalent methods used to retain professional staff
Harmonized work culture (57%) and promotion opportunity (53%) were ranked as the top 2 most effective methods to retain professional staff
Prevalence
65%
69%
69%
73%
73%
74%
76%
77%
82%
90%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Non-monetary rewards & recognition for performance
Sound competency management system
Team-building activities
Meaningful and challenging work
Sound performance management system
Harmonized work culture
Promotion opportunity
Effective leadership
Training & development program
Performance-based pay
Effectiveness
11%
4%
5%
13%
7%
4%
2%
6%
6%
2%
50%
57%
56%
47%
53%
55%
54%
50%
54%
40%
41%
39%
39%
40%
40%
40%
41%
44%
44%
46%
53%
57%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Mentorship program
Training & development program
Team-building activities
Stock option/Stock purchase plan
Meaningful and challenging work
Performance-based pay
Effective leadership
Individualized career plans
Competitive pay
Promotion opportunity
Harmonized work culture
Note Effective Moderately Effective Very Effective
Source:2010 Q2 Hong Kong Market Flash
26Mercer
Traditionalist
Conformity Stability Upward mobility Security Economic success
Boomer
Personal and social expression
Idealism Health and wellness Youth
Generation X
Free agency and independence
Street-smarts Friendship Cynicism
Generation Y
Hope about future Collaboration Social activism Tolerance for
diversity Family centricity
Born 1928–1945 Born 1946–1964 Born 1965–1980 Born 1980–2000
Different Generations, Different Needs
Source: International Labor Organization 2009 Mercer is not responsible for any opinion or statement made by third parties
27Mercer
= Enter
Workforce
Marriage(dual coverage)
Parenthood
Children leave home
Retirement
Start Family
20 25 30 35 40 45 50 55 60
• Cash• Vacation• Car• Career - Training
• Life & Medical• House• Career Progression• Work/Life Balance
• Pension• Medical• Work/Life Balance• Children’s College
Different Life Stages, Different Needs
www.mercer.com.hk
About the Employers
29Mercer
Understand Yourself as an Employer
Understand yourself– Your vision, mission, values, strategies and plans– Your workforce and talent strategies and plans– Your affordability and constraints…..
As a SME, there could be some features:– Relatively small organization size
Easy to change and adapt to new approaches Innovative ideas can be easier to promote But, limited resources…..
– Relatively simple structure Efficient decision making process to get things done More direct communication with employees Employees can obtain broad knowledge and skills as they may have
multiple roles and responsibilities But, career path is not likely to be defined, and Policy and procedures is likely to be non-standard…..
www.mercer.com.hk
Conclusions
31Mercer
Integrated Approach - Total Rewards
32Mercer
Key Takeaways
Quick economic recovery and business expansion increase the competition for talent
Pressure on C&B costs in 2011– Regular salary increase– Market catch up and special adjustment– Higher expectation of salary due to turnover– Accelerating benefit cost
Cost constraints – Your reward strategies will need to be specific to your talent market– You need to get more information and do more analysis before making the right
decision
Adopt integrated approach to attract and retain your talents– Cash Compensation– Benefits– Career and Development– Work Lifestyle
Q & A
About Mercer
35Mercer
Mercer – a Member of Marsh & McLennan Companies
OLIVER WYMANManagement Consulting and Advisory Services
MARSHRisk and Insurance Services
GUY CARPENTERReinsurance Services
MERCERConsulting, Outsourcing and Investments
36Mercer
Mercer – Our global network
Mercer is a leading global provider of consulting, outsourcing and investment services, with more than 25,000 clients worldwide. Mercer consultants help clients design and manage health, retirement and other benefits and optimize human capital. The firm also provides customized administration, technology and total benefit outsourcing solutions. Mercer’s investment services include global leadership in investment consulting and multi-manager investment management.
Mercer’s global network of more than 19,000 employees, based in over 40 countries, ensures integrated, worldwide solutions. Our consultants work with clients to develop solutions that address global and country-specific challenges and opportunities. Mercer is experienced in assisting both major and growing, mid-size companies.
The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges.
37Mercer
Our Core Capabilities
Retirement
Health and benefits
Human capital
Surveys and products
Communication
Investment consulting
Investment management
Outsourcing
Mergers and acquisitions
38Mercer
About IPS- our strength
Information Product Solutions (IPS) brings together Mercer's worldwide human resource information capabilities, providing clients with data products, services, and technology tools to support benchmarking and decision-making
IPS produces a wide range of surveys and reports which provide data and intelligence on compensation, benefits, employee mobility, and other HR policies, practices and business issues
It also provides proprietary and customized software solutions for data delivery and data manipulation, including job evaluation, salary analysis, and pay structure design
For more information about IPS products and services, visit www.imercer.com/asia
39Mercer
Surveys Benefits Tools Global Mobility Services Software
Compensation
Planning US
Custom Surveys
Industry Surveys
Mercer
Benchmark
Database (MBD)
Policies and
Practices
Surveys Around
the World
Total
Remuneration
Surveys (TRS)
US LTI & Equity
Survey
Benefits Reports
Benefits Valuation
Surveys
Executive
Remuneration
International Car
Policy Reports
Mercer
BenefitsMonitor
Regional Product
Information (for
example, Spotlight
on Benefits)
Worldwide
Benefits &
Employee
Guidelines
(WBEG)
Calculators*
Comparators
(Employment
Conditions, Statutory
Benefits)
Geographic Salary
Differential
Mercer MarketPricer
IPE / eIPE
Cost of Living
Employee Mobility
& Mercer Passport
ExpatMonitor
Expatriate Housing
Global HRMonitor
Quality of Living
Spendable Income
Surveys
Tax
Compensation
Management co-
Sourcing (CMC)
Exec Rem Center of
Expertise (COE)
Implementation
Center of Expertise
(Global Survey
Tool,
SurveyPublisher,
PayMonitor)
US Social Security
Mercer Benefits
Data Services (or
RVS in the US)
ePRISM MAX
ePRISM PRO
ExpatMonitor
Global HRMonitor
Mercer
BenefitsMonitor
MercerGOLD
MercerPRISM
Mercer Passport
PayMonitor
Survey Publisher
About IPS- our offering
* Calculators include Cost-of-living Allowance, Cost-of-living Index, Exchange Rates & Inflation, Expat Comp, Expat Accommodation, Intl
Spendable Income, Quality of Living, Short Term Assignment Allowance, Spendable Income, Tax
www.mercer.com.hk