Compensation & Benefits
Sumathi V Selvaretnam
29 Mar 2016
The new year is off to a cautious start, with salary budgets expected to increase on a more modest note than in recent years.
Salary data published by recruitment firm Hays suggests that most Singapore employers (46%) will increase salaries by between three and six per cent this year.
Randstad’s 2016 market outlook revealed that employees in the accounting as well as marketing and communications industries could potentially see salary increases of up to eight percent. “In addition, very technical niche industries with limited talent pools, including life sciences, aerospace and risk and compliance, will be looking at salary increases in an effort to retain skilled employees,” says Jaya Dass, Country Director, Randstad Singapore.
According to Mike Tang, Director, Executive Search and HR Consulting, Recruit Inc, high growth sectors such as pharmaceuticals and biotechnology, info-communications and information technology, as well as high-end electronics manufacturing will also see higher increases due to talent shortages and business growth.
Recent market research seems to suggest a sizeable disconnect between employer and employee expectations when it comes to salary increases.
According to the 2016 Hays Asia Salary Guide, just 18% of employers in Singapore plan to offer a wage increase of at least six percent. However, over 46% of employees are expecting just that to happen. That gap could cause retention issues this year.
“With employers cautious about salary increases, retention strategies should come into focus over the next year, particularly in light of our research showing a high level of candidates either actively or passively looking for a new job,” says Hays.
Health is wealth
Non-monetary rewards are just as important as financial motivators when it comes to the long-term retention of employees.
The Randstad survey showed that in Singapore, work-life balance is ranked as the second most important driver of, just behind compensation and benefits. It has been increasing steadily in importance over the past few years. “Candidates are no longer just looking at salary but looking for additional leave, medical and dental benefits, flexible leave systems as well as work-from-home flexibility,” Dass says.
According to the Towers Watson 2015 Asia Pacific Benefit Trends Survey, health benefits are among the most valued non-financial benefits. Over 50% of employees in Asia-Pacific said that these were an important reason to stay with their current employer.
Health also makes up a large proportion of a company’s benefit spend. The survey found that 41% of the firms participating spend more than 20% of payroll on benefits. Two in five spend more than 25% of that share on health benefits specifically.
Stress has been identified as a top lifestyle risk faced by Asia-Pacific employees. In response, one in four employers plan to offer interventional benefits on this issue, according to the survey by Towers Watson.
Randstad for example, has taken mental wellbeing into consideration and offers employees professional and confidential counselling through its Employee Assistance Program, shares Dass.
Corporate health and wellness offerings are important because they help to foster a culture whereby employees can opt to live a healthier lifestyle, rather than being forced to do so,” says Finian Toh, Associate Director- HR Practice, Kerry Consulting. “Such programmes improve employee health and also help to support office camaraderie.”
Some unique offerings include companies organising classes on topics ranging from public speaking to kickboxing and parenting, shares Toh. “In particular, one employer organised a 10-week weight loss challenge where teams competed to win weekly prizes and, at the end of the competition, a grand prize.”
Variable pay for top performers?
In the US, employers are looking at prioritising variable pay to reward their top performers.
“The work climate or landscape in the US tends to promote remote working, as well as a more individualist mindset to producing outcomes. In such a work environment, variable pay is well-received and understood as a direct driver of performance,” says Dass.
Asian employers are taking a more cautious approach. In Asian cultures, the approach to work is more based on the function and a collective view of driving outcomes, says Dass. Hence the concept of variable pay as a priority is less well-received. Also, in Singapore, there are expectations of job security and stability, and salary is a larger drive of that,” she explains.
“Variable pay components often gives rise to the perception that job security and earnings can be compromised. There is a general avoidance of low-based, high-variable salary component jobs unless the nature of work is more flexible or short-term such as in retail or freelance sales.”
However, this view is gradually changing. “Employers have been increasing the use of variable monetary components by tying a larger share of compensation to performance-based incentives,” says Toh from Kerry Consulting. “Many of these programmes are now being adjusted to individual performance indicators to better reflect each employee’s direct contributions.”
The case for flexible benefits
It is often difficult to create a one-size-fits-all benefits package for a multigenerational workforce. This is where the provision of flexible benefits can make the difference.
“Different age groups at different life stages value different needs, such as health and fitness, medical insurance and family care,” says Tang.
Offering flexible benefits not only caters better to these individual needs, but it also optimises the benefits budget and helps develop a stronger level of engagement in the workforce.
Smaller setups such as small and medium enterprises (SMEs) have more flexibility to enhance their benefits programme, and are able to build a more customised structure, says Tang. “Flexible benefits can also be used to retain talents in niche and demanding industry sectors such as business start-ups and fast moving industries.
“More multinationals are adopting flexible benefits in response to the needs and expectations of their multigeneration workforce, offering partial flexible benefits to all or specific groups of employees. The changes may be slower for multinationals given the financial impact and profile of their existing workforces,” he adds.
The administration of such benefits is becoming increasingly outsourced to either HR shared services teams or external vendors.
What if you can’t raise salaries?
How can you raise motivation levels at the workplace if a salary raise is not on the cards this year?
Flat pay is a key driver for staff attrition and this is no surprise as the annual Randstad Award survey has shown that salary is consistently the number one concern for Singapore employees, says Dass.
“Flat pay gives employees the perception that their work is not being recognised and is a major demotivator,” says Dass. “Organisations looking to retain staff that have flat pay must look to increase incentives in other areas. For example, sales roles may receive a better commission structure whilst back-office roles could receive additional benefits, such as leave.”
According to Robert Walters, the hiring landscape in 2016 will be candidate-driven as organisations vie for the best Singaporeans professionals. “To gain an edge in talent attraction and retention, companies need to look beyond offering attractive salary packages. It is essential to constantly assess interview processes, as well as training and development programmes for stronger employer branding.”
Creative perks
Many organisations across the world are putting their own spin on employee benefits and coming up with unique offerings to attract and retain the best talent. Here are a few:
Generous parental leave
Full-time employees at Facebook receive four months of paid parental leave regardless of gender or location.
No official work hours
Employees can go on leave whenever they want and for as long as they want. Naturally, employees must be able to complete the work that is required of them.
Death benefits
Spouses of deceased employees receive 50% of the employee’s salary every year for 10 years. Children also receive a $1,000 monthly payment until they reach 19.
Eat all you can
Some employers stock up a pantry full of healthy and delicious foods, drinks and snacks from around the world, free for employees to enjoy.
Ultimate Flexi Benefits
Every employee has unique needs and wants. Some companies offer a fixed dollar amount for an employee to enjoy in whatever way they deem fit, whether it be a day at a spa, a gourmet meal, or a new electronic gadget.
Compensation and Benefits
Article Summary:
For many employees, the start of a new year brings along new goals and ambitions. Rewarding them through both monetary and non-monetary means is essential for maintaining retention in a competitive talent market.
Sub Category:
Employee Benefits