Regional Compensation Leaders Express Increased Caution on the Global Economy, and Increased Confusion on China Compensation & Benefits Best Practices

​The Chapman Consulting Group hosted its quarterly Compensation & Benefits Asia Pacific Leaders update today. This was our fourth session for 2011 and brings the year of C&B Leaders meetings to a close. Our host Bruce Cameron, the Regional Head of Compensation & Benefits of Dell, welcomed us all to an afternoon tea at his office. It was a great two hours and it was terrific to spend time with Compensation & Benefits Leaders from companies such as Apple, Johnson & Johnson, Unilever, Accenture, ING, Aviva, Standard Chartered Bank, AstraZeneca, Covidien, Hitachi Data Systems and many more.

The sentiments from the group were fairly cautious, reflecting the darkening mood in global C&B, HR and business circles following the current economic problems of Europe. Here’s a quick digest:

1. Salary and bonus budgets are being cut for 2012. Leaders are being asked to ‘do more with less’. Asia is still getting special attention, and the ‘smarter’ companies have learnt from experiences in 2008 on how to balance salary pressures in growth markets versus salary constraints in declining markets.
2. Most of the group commented that it is still ‘business as usual’ in Asia, despite some storm cloud hovering over the region. Everyone remains cautiously optimistic but it’s easy to see that 2012 will be tighter than 2011 for most.
3. Compensation & Benefits Leaders talked about the talent shortage in their specialisation in Asia. This is not a new story, but it appears to be getting worse. Some leaders commented on creative solutions to this, like shifting country talent between countries, or shifting them into regional roles. Most leaders agreed that it’s a talent merry-go-round of movement in the market, and it’s not always worth paying the 30 percent plus increment that most external C&B talent seem to want to join a new company.
4. There was a lot of discussion on long term incentive (LTI) programmes and whether they remain relevant to Asia. The consensus was that most staff, in both developed and developing economies in the region, prefer as robust base salaries as possible. Some companies have disbanded LTI programmes altogether and have reallocated the value of these wholly or partly into base salaries. One company talked about LTIs being most effective if a short vesting period is used.
5. As in the last session, discussion shifted to the importance of employees understanding Total Rewards (TR). More and more leaders are thinking about how they invest in the IT software to produce meaningful real-time calculations for employees. Rampant salary inflation in some markets is leading to the demand for greater transparency, for both new and existing employees, on how they will be paid.
6. China was again a hot topic. Compensation & Benefits Leaders covering China (which was almost everyone in the room) talked about the challenges of navigating ever-changing local rules on remitting taxes and social security. There’s still a great deal of haziness about what’s permitted, and there were instances of one multinational company being advised to do something which another was advised to be illegal! So with China C&B, there are still elements of ‘the blind leading the blind’ in setting best practices, and it seems that this is only getting worse.
7. One thing was made very clear in the meeting: the growing competitiveness of local Chinese and Indian companies is causing greater headaches for multinationals operating in these locations. The local companies are out-manoeuvring the multinationals in smart and relevant local package configuration. This is becoming a headache both when hiring talent from these companies and also in losing talent to these companies.

It was an enjoyable discussion and The Chapman Consulting Group looks forward to reconvening with our Asia Compensation & Benefits Leader friends in March 2012.