Asia Total Rewards Roundup
At ChapmanCG we know that it is critical to stay abreast of the key topics and trends in the HR industry, and with Compensation & Benefits/ Total Rewards remaining at the top of the agenda for many wanting to attract, engage and retain the right talent, I thought an overview would prove useful. Through our experience advising and supporting the HR community, and more specifically the C&B community, we have a singular view of what is happening in the market. The summary that follows is based on this practical knowledge, as well as insight and feedback from a few close industry leaders about the issues they are currently facing in this space, and how they see things progressing into 2016.
Engagement & Reward
It is now widely accepted that engaging and rewarding an Asian workforce goes way beyond monetary compensation, and it is a big mistake to try to force-fit a standard global model and western thinking in Asia. It is critical to understand and respect local cultural and demographic dynamics (such as generational), and their impact on leadership and management in terms of Employee Engagement. Once this is established, the appropriate middle point of balance between global and local rewards practices can be determined. Recognising the varying stages of economic development and talent pool availability are also key to developing reward programmes that fit the needs and motivations of all employees.
Asia is a diverse market with a growing middle class, which means significant business opportunities against an ongoing war for talent. Unlike more developed markets, compensation remains the top driver in many respects, but often workers are now seeking out flexibility and balance, which is not necessarily in line with the traditional view of the Asian workforce. Some employers are still reluctant to differentiate pay based on performance, which does impact the levers that can be used to reward.
C&B and Talent: A Winning Combination
The C&B and Talent functions are now working more closely together, and the prevailing view is that it’s critical that they do. As Patsy Ng, C&B Director Asia, Edgewell Personal Care, puts it: “The highly competitive business environment has put tremendous pressures on companies to reduce internal cost structures, including Compensation and Benefits investments. This has led to a strategic shift towards non-monetary engagement/retention levers in the OD/Talent areas, which make up an employee’s total rewards experience. Companies that used to invest heavily in Compensation and Benefits as a differentiator in engagement/attraction/retention are facing challenges in long-term cost containment, and many have been compelled to change benefits structures to contain cost. I’m experiencing and seeing stronger collaboration with the OD/Talent functions to strengthen the linkage between rewards and talent development/cultural change. The key goal is to strengthen/re-define and communicate/embed ‘Total Rewards’ which de-emphasises monetary returns and emphasises total employment experience and rewards. There is also increasing collaboration and stronger linkage between rewards and talent segmentation.”
According to Dan Randall, Regional C&B, Fonterra, “To be successful, you really need a laser focus on what constitutes key talent (i.e. not everyone is key talent and that’s ok). As C&B professionals we also need to be talking about talent and what are their next moves, what is their career path and how do we factor that into the decisions we make, be that in Global Mobility, a pay progression plan, career pathing, etc. An example of this is C&B sitting in on the talent discussion and calibration sessions. The positive benefit we are seeing from this is keeping the critical key talent engaged and focussed in the business. These are our future GMs, MDs and CEOs.“
In the view of Bitasta Mehta, C&B Director, Nielsen, “The greater need is to align C&B with external business and internal business performance and outlook. The talent landscape is pretty standard for all organisations — what will be the game changer is to evaluate the C&B strategy and closely align it with your particular business scenario. That’s the competitive advantage.“
Global Strategy — Local Agenda
It is key to ensure that an appropriate and balanced local adaptation is part of any global HR/Rewards strategy. For example, the Global Mobility policy could encompass guidelines on ‘local plus’ practices/packages to support talent mobility within different geographies/regions. Global employee communication strategies also need to incorporate culture-driven considerations and action plans that cater to employee segments that might require a more high-touch approach, versus full self-service/remote communication.
Dan Randall, Fonterra continues, “It must be all about being consistent with high-level HR strategy, but still flexible enough to adapt at the local level. Although sometimes it is challenging to find local talent at certain levels and in certain markets, this should always be the starting position. I’m very passionate about talent moving within Asia, as well as getting it flowing the other way back to Group. Part of that is breaking down barriers, cost being a big one, and coming up with flexible solutions that can be applied consistently. For instance not every person will need international schooling if there is a viable local option. We also have local plus programmes that provide some initial extra support, but allow employees to transition to a full local package over three or four years.”
As Bitasta Mehta, Nielsen commented, “The need for insourcing talent outside of Asia, for the knowledge/capability perspective, is no longer as valid as it once was. What we are observing is an influx of talent because of Asian opportunities. More opportunities and ideas from the East are shaping the western strategy, as the “growth opportunities” are in Asia and other emerging markets. For us, there is no need for an over-arching local plus strategy. Instead, we address case by case compensation decisions that are aligned with a principle of a local plus approach — but more importantly they are aligned with business performance, strategy and outlook.”
Key Changes and Trends
There are some common and notable trends and changes currently being seen across the C&B function that are affecting strategy and are worth noting. These have been highlighted by Patsy Ng, Edgewell Personal Care:
- Cost containment and external talent competition are forcing companies to re-look at how to operate the Rewards function with the lowest cost structure, while optimising engagement and the returns on C&B. This is a challenging paradox to manage and balance.
- In Asia where rewards practices tend to be more high-touch and resource-intensive, there needs to be a conscious cultural change in the way we manage rewards and recognition, which includes educating managers and colleagues on new ways of reaching rewards decisions, and communication that leverages more technology and self-service.
- Greater emphasis on talent and rewards segmentation – investing only in business-driven talent segments vs. rewards based on role ‘entitlement’.
- Shift towards minimising rewards that increase fixed costs, and focusing on investing in variable reward structures for critical talent segments.
Another regional head of C&B highlighted, “We do observe an increased interest in Total Rewards. In view of the existing economic outlook, cost containment initiatives of firms, tighter regulatory environments in reward – especially those companies with European parentage and in the financial services industry – companies need to review their employee proposition. As pay is limited, we must consider initiatives beyond pay and maximising the dollar is importan
t. Big data analytics is also a hot topic in many organisations — the ability to drive analysis to make business decisions is key, as HR plays an increasingly key role at the management table.”
This slowdown across Asia and the desire for cost control was echoed by others, but there is always a fine balance in the battle for talent and retention. Spending time making sure that the salary and incentive framework is sound means there can be confidence in decision-making.
Healthcare & Wellness
Wellness is an evolving concept across Asia and one that is getting increased attention. It is often argued that organisations must take increased responsibility for their employees’ wellbeing in performance-driven environments. Initiatives include developing workforce strategies with more flexible working options, as well as providing ongoing programs to keep busy employees aware of the risks and provide the required knowledge. This is a critical investment, but the opinion is that some leaders are still not coming around to the short-term cash outlay vs. long-term benefits, due to shareholders’ expectations of immediate profit returns. Data analytics on employee profiles with the biggest healthcare utilisation can help influence this, so well thought out programmes to keep a workforce healthy are now becoming a necessity, rather than a ‘nice to have’.
Non-cash Rewards & Recognition
The view is that non-cash rewards and recognition can be one of the most underestimated aspects of salary packages, but they can be as important as base pay. What is in place varies from organisation to organisation, depending on the culture and values. According to Patsy Ng, Edgewell Personal Care, these can deliver a significant return on investment. She states, “Recognition tools and practices are great levers to drive engagement and reward experiences — e.g. lower merit budgets can be offset by having a variable recognition budget. Making recognition awards relevant to different employee generations and cultures, in terms of what to award and how to award it, is key to optimising the reward dollars. Leveraging Technology/social media needs to be part of the equation.”
Progress and improvements around data and analytics continue to be a key topic for all, and as expected some are much further ahead than others. Those who are doing things well, and have been focused on C&B analytics aligning with business analytics, have found that they have been able to understand compensation spend much better, and therefore are better able to manage it. Much work is being done around ensuring only business-relevant and impactful metrics and analytics are shared with business leaders.
The focus remains on delivering value-add rewards solutions and services to achieve the goals of reducing short-term and long-term costs, whilst optimising ROI on rewards investments, external talent competition and Employee Engagement. Achieving consistency with salary structures across the region is an ongoing issue for many, with the need to get buy-in from the local business units adding to the challenge. With a tougher economic climate in some sectors impacting company performance, some forward-thinking C&B leaders are starting to consider the knock-on effect of lower variable pay performance in a region that has traditionally had strong performance. These leaders are also trying to find the best way to mitigate any resulting impact through tools which enable targeted retention and/or recognition. Other current focus areas include building analytics into the function as a discipline, and the digitisation of benefits administration.
Total Rewards & Flexible Benefits into 2016
Most companies are continuously developing their Total Rewards packages, and specifically flexible benefits. There is a lot of talk around this area, and understandably so, with such diverse demographics across the workforce. Patsy Ng sums it up, “A new emphasis going into 2016 is building a recognition and rewards communication strategy and structure that meets the needs of overlapping employee generations within the same company, in order to optimise ROI on rewards dollars and minimise the cost of providing rewards services.” It sounds like a tall order, but Rewards professionals are making significant strides to make this a reality.
Graham Tollit is a Director based in Singapore where he leads the Global C&B practice for ChapmanCG.
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