www.mercer.com.hk pay trend & compensation overview in hong kong 28 february 2011 connie leung,...

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%


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


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


14Mercer

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


Job Function Position2010

Annual Base Salary(HK$)

2010 vs 2009 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$)



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%


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)


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


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


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


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


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






Not Effective Mpoderately Effective Very Effective


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









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



Stock option/Stock purchase plan




Individualized career plans

Competitive pay



Note Effective Moderately Effective Very Effective


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

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

http://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

www.mercer.com.hk pay trend & compensation overview in hong kong 28 february 2011 connie leung,...

Documents

mercer slide

mercer source

market slide

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hong kong trs

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