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28 February 2011. Pay Trend & Compensation Overview in Hong Kong. Connie Leung, Mercer Hong Kong. What do we hear from our clients as an employer?. How to attract/retain the employees?. How to balance between market competitiveness and maintaining cost?.

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28 february 2011

28 February 2011

Pay Trend & Compensation Overview in Hong Kong

Connie Leung, Mercer Hong Kong


What do we hear from our clients as an employer

What do we hear from our clients as an employer?

How to attract/retain the employees?

How to balance between market competitiveness and maintaining cost?

What should we do to response to employees’ request other than increasing salary?

How can benefits motivate and engage employees?


Three key perspectives considered in a structured decision making process

Three key perspectives considered in a structured decision making process


This presentation covers

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


An overview of the market

An Overview of the Market


Mercer s total remuneration survey database about 350 companies in 2010

Mercer’s Total Remuneration Survey DatabaseAbout 350 companies in 2010


Overview of hong kong pay trend

Overview of Hong Kong Pay Trend

( 3.4 if excluding salary freeze)

Average salary increase for All Industries

Source: IMA Asia, January 2011

2008-2010 Hong Kong TRS All Industries & 2010 Q4 Hong Kong Market Flash


Overview of hong kong labour market

Overview of Hong Kong Labour Market

Note: 2010 staff turnover rate & retrenchment rate for All Industries are estimated based on the January to September figures of 2010

Source: IMA Asia Forecast, Q3 2010

2008 – 2010 TRS All Industries

2010 Q4 HK Market Flash


Hiring intention hot jobs

Most Difficult in Recruiting

Sales – Professional Level

Sale – Managerial Level

Engineering – Professional Level

Most Difficult in Retaining

Sales – Professional Level

Marketing – Professional Level

Marketing – Managerial Level

Hiring Intention & Hot Jobs

Headcount Planning in the Next 12 Months

Source: 2010 Q4 Hong Kong Market Flash & 2010 TRS All Industries


Comparison of annual base salary 2008 2010

Comparison of Annual Base Salary (2008 – 2010)

Source: 2008-2010 TRS All Industries


Comparison of annual total cash 2008 2010

Comparison of Annual Total Cash (2008 – 2010)

Source: 2008-2010 TRS All Industries


Compensation mix 2008 2010

2010

2008

2009

Compensation Mix (2008 – 2010)

Source: 2008-2010 TRS All Industries


Average variable pay as a of annual base salary based on 2009 2010 and 2011 performance

Average Variable Pay (as a % of Annual Base Salary)Based on 2009, 2010 and 2011 performance

Source: 2008-2010 TRS All Industries


Pay trend compensation overview in hong kong

Year over Year Comparison for Annual Base Salary (2008 – 2010) Selected positions in typical job functions

Source: 2009-2010 TRS All Industries


Year over year comparison for annual base salary 2008 2010 starting salaries for new graduates

Year over Year Comparison for Annual Base Salary (2008 – 2010)Starting salaries for new graduates

Source: 2009-2010 TRS All Industries


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

Retirement Benefit in HK

Source: 2009/2010 HK Benefits Survey


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)

Disability and Death Benefit in HK

Source: 2009/2010 HK Benefits Survey


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

Holiday and Vacation Benefit in HK

Source: 2009/2010 HK Benefits Survey


Benefit prevalence in hk insurance and medical benefits

Benefit Prevalence in HK-Insurance and medical benefits

Source: 2009/2010 HK Benefits Survey


Benefit prevalence in hk lti perquisites and housing

Benefit Prevalence in HK -LTI, perquisites and housing

Source: 2009/2010 HK Benefits Survey


About the employees

About the Employees


Employee groups with the highest turnover by job function

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

Source:2010 Q2 Hong Kong Market Flash


Employee groups with the highest turnover by years of service age group and employee category

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

Source:2010 Q2 Hong Kong Market Flash


Attraction of professional staff top 10 commonly used methods top 10 most effective methods

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

  • Promotion opportunity (51%), harmonized work culture (46%) and effective leadership (43%) were ranked as the top 3 most effective methods to attract professional staff

Source:2010 Q2 Hong Kong Market Flash


Retention of professional staff top 10 commonly used methods top 10 most effective methods

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

Source:2010 Q2 Hong Kong Market Flash


Different generations different needs

Different Generations, Different Needs

Traditionalist

Boomer

Generation X

Generation Y

  • Hope about future

  • Collaboration

  • Social activism

  • Tolerance for diversity

  • Family centricity

  • Conformity

  • Stability

  • Upward mobility

  • Security

  • Economic success

  • Free agency and independence

  • Street-smarts

  • Friendship

  • Cynicism

  • Personal and social expression

  • Idealism

  • Health and wellness

  • Youth

Born 1928–1945

Born 1946–1964

Born 1965–1980

Born 1980–2000

Mercer is not responsible for any opinion or statement made by third parties

Source: International Labor Organization 2009


Different life stages different needs

Different Life Stages, Different Needs

Retirement

Enter Workforce

Children leave home

Marriage(dual coverage)

Parenthood

Start Family

20 25 30 35 4045 505560

  • Cash

  • Vacation

  • Car

  • Career - Training

  • Life & Medical

  • House

  • Career Progression

  • Work/Life Balance

  • Pension

  • Medical

  • Work/Life Balance

  • Children’s College


About the employers

About the Employers


Understand yourself as an employer

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…..


Conclusions

Conclusions


Integrated approach total rewards

Integrated Approach - Total Rewards


Key takeaways

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


Pay trend compensation overview in hong kong

Q & A


Pay trend compensation overview in hong kong

About Mercer


Mercer a member of marsh mclennan companies

Mercer – a Member of Marsh & McLennan Companies

MARSH

Risk and Insurance Services

MERCERConsulting, Outsourcing and Investments

GUY CARPENTER

Reinsurance Services

OLIVER WYMAN

Management Consulting and Advisory Services


Mercer our global network

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.


Our core capabilities

Retirement

Health and benefits

Human capital

Surveys and products

Communication

Investment consulting

Investment management

Outsourcing

Mergers and acquisitions

Our Core Capabilities


About ips our strength

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


About ips our offering

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


Pay trend compensation overview in hong kong

www.mercer.com.hk


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