0 mercer. 1 2 3 your biggest concerns… top 5 : how best to retain talent for 2010/ total rewards...

1Mercer

2Mercer

3Mercer

4Mercer

Your Biggest Concerns…

TOP 5:

• How best to retain talent for 2010/ Total rewards mix

• Salary increase in unstable economy

• Innovative Benefits - motivation and engagement

• Applying data to 2010/Data interpretation

• Talent Management and communication

5Mercer

6Mercer

7Mercer

8Mercer

9Mercer

10Mercer

Uncertainty and risk management are key themes for 2010…

Source: IMF 10/2009Source: IMF 10/2008

11Mercer

In 2009 the focus for C&B has been to ensure the basics right

Source: Mercer Global 03/2009

Q. What are your priorities for 2009?

Number of Responses

Review merit increase budgets

Review STI Plans

Restructure HR/C&B

Pension funding

Health and Wellness

Review LTI Plans

Employee communication

Benefit plans

Global levelling

ROI of reward

C&B Priorities

0 2 4 6 8 10

ROI of reward

Global levelling


Pension funding

Health and Wellness

Restructure HR/C&B

Benefit plans

Review LTI Plan

Review STI Plan

Review merit increasebudgets and practices

C&B Priorities

Number of Responses

Review merit increase budgets

Review STI Plans

Restructure HR/C&B

Pension funding

Health and Wellness

Review LTI Plans


Benefit plans

Global levelling

ROI of reward

C&B Priorities

0 2 4 6 8 10

ROI of reward

Global levelling


Pension funding

Health and Wellness

Restructure HR/C&B

Benefit plans

Review LTI Plan

Review STI Plan

Review merit increasebudgets and practices

C&B Priorities

12Mercer

For 2010, getting the basics right is easier said than done

In uncertain times:

– being an early mover means being a risk taker

– more information gives more confidence

– there is comfort in being consistent with peers

13Mercer

Base salary movement tracking complicated by zero’s and non-zero’sThis increased volatility

All Industry Data 2008 2009 2009 2010 2010

Country (incl. zero’s)

(excl. zero’s)

(incl. zero’s)

(excl. zero’s)

(incl. zero’s)

US 3.8% 3.2% 2.1% 2.9% 2.6%

Brazil 9.2% 7.6% 7.6% 7.7% 7.7%

Germany 4.0% 2.8% 1.7% 2.5% 2.2%

Spain 4.9% 3.0% 2.2% 2.4% 2.3%

UK 4.0% 2.8% 1.5% 2.7% 2.5%

Poland 7.4% 5.1% 3.9% 4.3% 4.0%

Russia 12.8% 8.6% 5.7% 10.0% 9.6%

China 8.9% 7.0% 5.3% 7.4% 7.4%

Singapore 4.6% 3.5% 1.9% 3.4% 3.0%

India 12.5% 11.7% 8.0% 11.7% 10.9%

14Mercer

Greater volatility = a broader range of pay……which increases the chance of making compensation ‘mistakes’

Market Mean

2008 Distribution

2009 Distribution

2010 Distribution

15Mercer

Merit Increase Distributions Example: UK

2008 2009 2010

% C

om

panie

s

0%

10%

20%

30%

40%

50%

0-1

1-2

2-3

3-4

4-5

5-6

>6

0%

10%

20%

30%

40%

50%

0-1

1-2

2-3

3-4

4-5

5-6

>6

0%

10%

20%

30%

40%

50%

0-1

1-2

2-3

3-4

4-5

5-6

>6

16Mercer

Other factors to consider in 2010 merit budget planningJobs are still being lost and excess capacity remains

Unemployment Labour Hoarding

-8

-6

-4

-2

0

2

4

6

-10 -6 -2 2 6 10

Out

put

per

Em

ploy

ee

Source: IMF 10/2009

2

4

6

8

10

12

14

2007 08 09 10 11 12 13 14

% U

nem

ploy

me

nt

Japan

UnitedStates

Euro Area

Current

Previous

People impact on performance at the beginning of the upswing

18Mercer

Engagement and productivity:Acknowledging and dealing with the decisions taken during the decline

More than ever before, employers have tried to preserve jobs…

… but the downturn has been longer and deeper than most could have imagined.

Source: Business Week

19Mercer

The paradox

At a time when you need people to do more with less,

to be more engaged….

Discretionary efforts may decrease – people

become less engaged

20Mercer

Decisions during times of crisisHave a very real and lasting psychological impact

21Mercer

The paradox at play last time we had a down-turn in Asia

% companies reporting that significant staff cost reduction programs…

Source: Mercer Asia 2003

Helped36%

Hurt25%

No change39%

Compensation to enhance employee engagement and drive performance

23Mercer

Differentiate and Allocate to value contributorsBecause cost is still an important issue

Performance driversemployees who

create value for the organization

Performance enablersemployees who support

value creation

Legacy driversemployees who

historically created value for the organization,

but no longer do

Attract, engage, retain

Sustain engagement,manage cost

Retain institutional knowledge

Challenge:

24Mercer

Increasing emphasis on performance differentiation

Source: Mercer’s US Compensation Planning Surveys

0%

10%

20%

30%

40%

50%

60%

Lowest Low Middle Next highest Highest

Performance Rating

% W

ork

forc

e

2007 2008 2009

25Mercer

Segment based on geography and business unit

Segment 1 Segment 2 Segment 3

Life cycle/market Emerging market Moderate growth Decline/harvest

Criticality Performance drivers Performance enablers

Legacy performance drivers

Comparator group

Future business competitors

Current labour competitors

Current business competitors

Competitive positioning (including mix)

Target P90+ P50 P25

Base pay P50 P50 P25

STI P75 P50 P75

LTI P90+ P50 P25

Performance orientation

Differentiation Less Standard More

Time horizon Long term Balanced Short term

Measurement unit GroupIndividual and enterprise

Individual

26Mercer

Allocation variable pay and ensuring performance alignment

Pay aligned with results

Pay mix

Risk management

Sustainable results

Shareholder engagement

27Mercer

Short term incentives

10

10

16

16

17

29

7

11

10

13

14

20

0 10 20 30 40 50 60

Decrease maximum payout opportunity/leverage

Use of more relative performance measures

Allow for increased discretion related to payouts

Change/introduce new non-financial performancemeasures

Increase the range of performance for correspondingpayouts

Change or introduce new financial performance measures

% Respondents


Increase the range of performance for corresponding payouts

Change/introduce new non-financial performance measures

Allow for increase discretion related to payouts



0 10 20 30 40 50 60







Implemented in 2009 Considering for 2010

Source: Mercer, Weathering the Storm, July 09

28Mercer

Long term incentives

8

8

9

6

8

25

7

8

8

13

12

25

0 10 20 30 40 50 60

Change/introduce non-financial performance measures

Use 1-year reseting performance measures



Increase range of performance for corresponding payouts


% Respondents


Increase the range of performance for corresponding payouts



Use 1-year resetting performance measures

Change/introduce new non-financial performance measures

0 10 20 30 40 50 60







Implemented in 2009 Considering for 2010

Source: Mercer, Weathering the Storm, July 09

Compensation when consistent growth resumes

30Mercer

The laws of supply and demand remain…and we will again be a hostage to the talent gap

IndiaChart Title

0.0

5.0

10.0

15.0

20.0

25.0

30.0

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

% S

alar

y In

crea

se

31Mercer

Summary

Uncertainty for 2010 means cost management remains important

Temptation will be to play catch-up in compensation for 2009 cost management decisions

Compensation focus should shift to supporting engagement

The lessons from 2009 will be an invaluable advantage when sustainable growth returns

32Mercer

33Mercer

34Mercer

SU YEN’S SLIDES IF ANY

35Mercer

Employer

Determine workforce needs in termsof structure, behavior, capabilities, and performance

Design and deliver rewards programs

to secure workforce outcomes

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 elements

External

Consider labor and related rewards environments where you compete for talent

Determine how these environments influence or constrain rewards practices that you may wish to adopt

Cost

Provide rewards programs to support the desired strategy at an affordable, sustainable cost

Assess costs within context of employee preferences and desired rewards strategy

Employee

Adopting a structured decision making process involves……..Understanding and integrating four perspectives

This is driving the agenda

Employer perspectiveChanging requirements

37Mercer

As businesses changeSo too do the people requirements

Quality and quantity issues in emerging markets

Different skills required now in some businesses

Different behaviours required…team orientated, etc.

Greater and greater competition for key talent

Implications for rewards– Compensation in some markets driven by individual rather than any

system – Greater differences across industry sectors so segmentation

required– Retention of talent through higher compensation is an expensive

strategy and proven not to work – broader approach to engagement and motivation required

– The role and cost of expatriates coming under scrutiny

Employee perspectiveFeedback from snapshot surveys and other data

39Mercer

Motivating and engaging employeesMotivational factors are changing

Many employees have had a tough 18 months– Continuous uncertainly over their jobs– Seeing their colleagues leave– Reduced salary increases/bonuses– More pressure/extra responsibilities– Personal wealth reduced

Huge impact on motivation and engagement

When upturn comes– Expectations of salary increases– Some will want a change (Staff turnover expected)

Leadership and communication critical influences, but compensation will be perceived by line managers as key issue– How do you manage expectations?

External perspectiveEconomic outlook

41Mercer

Global and Regional GDP

Source: IMA Brief, October 2009

GDP - Global and Regional

-6

-4

-2

0

2

4

6

8

2006 2007 2008 2009 2010

World US Europe Area Asia Pacific

42Mercer

So a mixed economic situation across the regionWhich requires different HR and rewards solutions

Regional: GDP Forecasts, % real growth, 2008-2010

-6

-4

-2

0

2

4

6

8

10

CN IN VN ID PH AU NZ SK HK SG MY TW TH JP

2008 2009 2010

Source: IMA Brief, October 2009Ministry of Trade & Industry Singapore

43Mercer

But at least inflation is reducingPotentially lowering compensation increases

Regional Inflation Forecasts, % CPI

-5

0

5

10

15

20

25

VN ID PH IN SG CN TH MY SK AU HK NZ US TW JP

2008 2009 2010

Source: IMA Brief, October 2009

44Mercer

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

perc

enta

ge

2007 Actual 4.4 4.0 4.1 12.5 7.8 3.9 3.3 3.6 7.3 2.1 3.2 1.4 3.9 4.6 4.6

2008 Actual 4.2 4.2 3.5 8.4 7.2 4.0 3.3 4.2 7.5 2.2 3.2 1.4 4.1 5.8 4.7

2009 Estimates 6.0 4.6 6.0 9.5 6.4 5.4 4.5 5.9 8.5 3.4 3.8 1.9 6.1 9.3 4.0

AU CN HK ID IN J P MY NZ PH SG SK TH TW US VN

With unemployment a big issue in USPotentially reducing overseas investments

Source: Mercer GCPR, January 2009Mercer GCPR, October 2009

External perspectiveHR responses to downturn and expected changes

46Mercer

Hiring IntentionsAsia Pacific 2009

Source: 2009 Total Remuneration Survey – All Industries

Hiring Intentions - Next 12 Months

0

10

20

30

40

50

60

70

80

90

IN VN CH ID SK TH MY PH SG JP TW HK AU NZ

% o

f C

om

pa

nie

s

Recruiting to Add Headcount Maintain same Headcount as last year Reducing Headcount

Cost perspectiveCompensation trends in Asia Pacific

48Mercer

49Mercer

Salary increases across the worldCareer streams

Source: Mercer GCPR, October 2009 2009 Total Remuneration Surveys

US EMEA Asia

Executive 3.5% 5.5% 6.6%

Management 3.2% 5.2% 6.6%

Professional 3.2% 5.0% 6.5%

Para Professional 3.1% 4.8% 6.4%

Base Salary Increase - 2009

50Mercer

2009 Salary Freeze %

of

Co

mp

an

ies

Source: 2009 Total Remuneration Survey – All IndustriesIndia figure: Industry Wise Dipstick Study Feb-May 2009

29.225.0

32.2

9.611.5

34.5

10.8

46.0

23.5

35.437.3

16.7

39.8

14.1

0

10

20

30

40

50

60

AU CN HK IN ID JP MY NZ PH SG SK TH TW VN

51Mercer

2009 Salary IncreasesAll Industries

Excluding Salary Freezes vs. Including Salary Freezes

Source: 2009 Total Remuneration Surveys

% o

f A

nn

ua

l Ba

se S

ala

ry

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

AU CN HK IN ID JP SK MY NZ PH SG TH TW VN

Exclude Freeze Include Freeze

52Mercer

2010 Salary Increase ProjectionsAll Industries

Salary Increase for Asia Pacific (exclude wage freeze)

Sources: 2009 Total Remuneration Surveys

% o

f A

nn

ua

l Ba

se S

ala

ry

0

2

4

6

8

10

12

14

16

18


2008 2010

53Mercer

Average Variable Pay 2008, 2009 and 2010- All Industries


% o

f A

nn

ua

l Ba

se S

ala

ry

0

5

10

15

20

25

30

2008 21.2 20.1 16.6 19.8 22.3 15.7 15.7 19.4 21.5 17.1 18.3 26.2 17.0 18.2

2009 22.4 20.7 17.4 18.1 23.4 15.8 16.3 20.7 19.9 17.7 17.1 24.5 17.5 18.1

2010 21.1 20.8 17.9 18.3 25.1 16.0 16.6 19.7 19.8 17.5 17.7 24.2 17.4 19.6


54Mercer

Pay Parity – Asia PacificAnnual Guaranteed Cash (Median)


Exec vs Mgmt = 141%

Mgmt vs Prof = 66%

Prof vs Para-prof= 63%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Executive Management Professional Para-Professional

An

nu

al G

uar

ante

ed C

ash

(M

edia

n)

in U

SD

ID IN PH VN TH MY KR TW NZ CN AU SG HK JP

55Mercer

Pay Parity – Asia PacificAnnual Total Cash (Median)


Exec vs Mgmt = 150%

Mgmt vs Prof = 70%

Prof vs Para-prof= 68%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Executive Management Professional Para-Professional

An

nu

al T

ota

l C

ash

(M

edia

n)

in U

SD

ID IN PH VN TH MY NZ KR TW CN AU SG HK JP

56Mercer

Summary….

Asia is a mixture of very different markets– Needs different HR and rewards approaches

China and India sustaining growth and recovery expected to be strongest there– But do you have exposure to that growth?

Rapid changes in technology and markets

– Employee segments driving performance may have changed

Communication and Leadership Critical

– How do you manage expectations

Emphasis historically on compensation elements of total rewards– Can organisations move to a more balanced approach?

Singapore Survey findings

58Mercer

Economic and business contextGDP & Unemployment Trends

Source: Singapore Department of Statistics; Ministry of Manpower; Monetary Authority of Singapore

*Seasonally adjusted unemployment rate (September 2009)

2010 unemployment forecast: IMF World Economic Outlook, October 2009

2009/2010 Inflation: IMA Brief, October 2009

4.2

3.1

8.8

6.6

7.9 7.7

1.1

-2.3

4.0

3.73.6

4.03.4 3.1

2.72.1 2.2

3.4*

0.40.2

6.5

2.11.00.5

1.7

0.5

-0.4

-4

-2

0

2

4

6

8

10

2002 2003 2004 2005 2006 2007 2008 2009(Forecast)

2010(Forecast)

GDP Unemployment Inflation

% increase / (decrease)

59Mercer

Survey participantsGrowth

Source: 2007 - 2009 July Total Remuneration Survey

577639

601

0

100

200

300

400

500

600

700

July 2007 July 2008 July 2009

No.

of C

ompa

nies

577639

601

0

100

200

300

400

500

600

700

July 2007 July 2008 July 2009

No.

of C

ompa

nies

(134,588 data points)(152,902 data points) (165,863 data points)

60Mercer

Participants’ profile and demographics

Number of Participants: 601Source: 2009 July Total Remuneration Surveys* Excludes Banking and Finance Industry (28 participants)

Pharmaceuticals & Healthcare

11%

Others22%

Life Insurance1%

Consumer Goods11%

Aerospace3%

Logistics3%

Biomedical5%

Property3%Broadcasting

1%

Chemical 11%

Electronics Manufacturing

4%

High - Tech25%

61Mercer

Salary review period

Number of respondents is 296

Source: October 2009 Market Pulse Survey

No.

of

com

pani

es

* Some organizations indicated more than one time of review, therefore, total respondents exceeds no. of organizations.

78

12

24

78

5

13

40

62

14

5 5

14

0

10

20

30

40

50

60

70

80

90

January February March April May June July August September October November December Anniversary

62Mercer

Impose Salary Freeze (for Certain employee groups

only), 18 Cos (7%)

Impose Salary freeze across the board

20 Cos (8%)

Impose salary cut for certain employee groups

only3 Cos (1%)

Continue giving salary increase

221 Cos (84%)

Salary reviews in 2010


63Mercer

64Mercer

Average salary increases All industries

Note: Overall* is computed based on companies that provide their input in this category

% of Annual Base Salary

Source: 2009 July Total Remuneration Survey – All Industries

October 2009 Market Pulse Survey (262 participants)

2009(Actual/Estimate)

2010 (Forecast)

2009 - Market Pulse

2009(Actual/Estimate)

2010 (Forecast)

2009 - Market Pulse

Overall* 494 2.4% 3.2% 1.9% 319 3.7% 3.6% 3.3%

Head of Org 252 2.0% 3.1% 1.6% 135 3.8% 3.6% 3.7%

Executive 352 2.2% 3.1% 1.6% 210 3.6% 3.6% 3.3%

Management 437 2.3% 3.2% 1.8% 266 3.9% 3.7% 3.4%

Professional (Sales) 307 2.2% 3.1% 1.7% 173 3.9% 3.5% 3.4%

Professional(Non Sales)

422 2.4% 3.2% 2.0% 260 3.8% 3.6% 3.3%

Para-Professional (white-collar)

384 2.3% 3.2% 1.9% 240 3.7% 3.6% 3.2%

Para-Professional (blue-collar)

229 2.0% 2.9% 2.0% 129 3.4% 3.4% 3.3%

Excluding salary freezeNo of

Companies

Including salary freezeNo of

Companies

65Mercer

2009 salary increases: Industry comparison

Source: 2009 July Total Remuneration SurveysNote: No companies reported salary freeze for Biomedical Industry

Av

era

ge

Ba

se

Sa

lary

In

cre

as

es

%

4.6%

4.2%4.0% 3.9% 3.9%

3.7% 3.7%

3.4%

2.7% 2.6% 2.5%

2.2% 2.1%2.2%

1.0%

0.6%

1.5%

1.9%

1.1%

2.8%

2.5%2.4%

1.9%

3.4%

4.1%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

Pharm

aceu

tical

s & H

ealth

care

Biom

edic

al

Consum

er G

oods

Chemic

al

High -

Tech

All In

dustrie

s

Broad

cast

ing

Aerosp

ace

Elect

ronic

s M

anufa

cturin

g

Life In

sura

nce

Banki

ng

Logistic

s

Proper

ty

Exclude Salary Freeze Include Salary Freeze

66Mercer

Compensation trends 2010:Prediction on 2010 salary increase practices

Source: 2009 July Total Remuneration Survey-All Industries

Prediction on 2010 salary increase vs 2009

14

45

1511

16

0

10

20

30

40

50

60

70

>-1% -1% to 0% No Change 0% to +1% >+1%

% o

f C

ompa

nies

67Mercer

Salary reductions

Note: Overall* is computed based on companies that provide their input in this category



Average Median Average Median

Overall* 5.2% 4.7% 3.5% 2.3%

Head of Organization 6.0% 2.8% 5.2% 3.5%

Executives 5.2% 3.0% 3.4% 3.5%

Management 5.6% 5.0% 5.3% 2.8%

Professional - Sales 4.8% 5.0% 2.5% 3.3%

Professional - Non Sales 4.5% 4.9% 3.4% 3.3%

Para-Professional (White Collar) 3.5% 3.0% 3.6% 3.5%

Para-Professional (Blue Collar) 3.3% 2.5% 3.8% 3.0%

2009 salary cut situation2010 salary projected cut

situation

68Mercer

Hiring intentionsFor 12 months from October 2009

Number of respondents is 262


Maintain same headcount as last

year 135 Cos (52%)

No replacement of resignees 17 Cos (6%)

Recruit to add headcount

105 Cos (40%)

Retrenchment 5 Cos (2%)

69Mercer

70Mercer


Hiring intentionsFor 12 months from October 2009 – Industry

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Overall

Aerospace

Banking & Finance

Chemical

Consumer Goods

High-Tech

Pharmaceuticals

Property

Recruit to add headcount Maintain same headcount as last year No replacement of resignees Retrenchment

Note: Overall* is computed including other industries which is not presented here

71Mercer

Staff Turnover – Actual / Estimate 2009 (annualised)Comparisons across industry

8.6

1.2

13.5

2.1

5.7

0.2

13.8

4.2

2 2.2

12.4

6.2

14.8

2.7

7.7

2.2

8.1

0.8

7.1

0.9

12.3

6.4

0

2

4

6

8

10

12

14

16

% Voluntary % Retrenched

Sta

ff T

urn

ove

r, a

nn

ual

%

Aerospace BankingBiomedical BroadcastingChemical Consumer GoodsElectronics Manufacturing High-TechLogistics Life InsurancePharmaceutical & Medicine PropertyAll Industries


72Mercer

Visualising the DataWhat did the ‘range progression’ look like?

Annual Guaranteed Cash (SGD)

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 550,000

40

41

42

4344

45

46

4748

49

50

5152

53

54

5556

57

58

5960

61

62

6364

65

66

67

Po

siti

on

Cla

ss

Inter-Quartile Ranges

Sta

ff

40

-46

Pro

fes

sio

na

l4

7-5

3M

gm

t5

4-5

7T

op

Mg

mt

58

an

d a

bo

ve


73Mercer

Average Variable Pay Career Streams

Source: 2009 July Total Remuneration Survey – All Industries October 2009 Market Pulse Survey

31.1

24.8

18.4

23.4

15.114.4 14.1

18.3

28.2

17.0

23.5 23.5

14.313.3 12.9

17.1

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Head ofOrganization

Executives Management(Non Sales)

Professional(Sales)

Professional(Non Sales)

ParaProfessional

(White Collar)

ParaProfessional(Blue Collar)

Overall

2008 Performance

2009 Performance

2009 Performance (Market Pulse Survey)

74Mercer

17.1%

22.7%

19.9%

16.6%

14.6% 14.5%

17.9%

12.6%

17.2%

23.0%

15.0%

16.8%

20.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

All In

dustrie

s

Aerosp

ace

Bankin

g

Biom

edic

al

Broad

castin

g

Chemic

al

Consumer

Goods

Elect

ronic

s M

anufa

cturin

g

High -

Tech

Life In

surance

Logistic

s

Pharmac

euticals

& H

ealth

care

Property

Average Variable Pay – % of Annual Base Salary (excluding bonus freeze)


2009 Variable Pay Analysis Industry

75Mercer

Industry Relativities Management Category

Annual Total Cash – Actual (Median)Annual Base Salary (Median)

Average Deviation (%) from All Industries


1.7

10.6

14.1

16.4

20.3

2.0

-18.4

-9.7

-4.1

-3.5

-2.1

-0.5

Electronics Mfg

Logistics

High-Tech

Life Insurance

Property

Broadcasting

Consumer Goods

Aerospace

Biomedical

Banking

Pharmaceutical

Chemical

0.7

21.2

-16.3

-10.9

-9.5

-4.8

-1.3

-0.3

Electronics Mfg

Property

Logistics

Banking

Aerospace

High-Tech

Chemical

11.9

13.3

Broadcasting

Life Insurance

Consumer Goods

Biomedical

Pharmaceutical

1.6

4.6

76Mercer

Industry Relativities Professional Category

Annual Total Cash - Actual (Median)Annual Base Salary (Median)



1.2

1.4

1.6

2.5

9.4

11.4

18.7

-11.8

-10.4

-7.4

-5.8

-0.9

Electronics Mfg

Logistics

Property

Banking

Consumer Goods

Life Insurance

Broadcasting

Aerospace

High-Tech

Pharmaceutical

Biomedical

Chemical

6.2

7.9

10.3

15.2

22.4

-17.7

-14.2

-6.1

-3.9

-2.7

-2.0

-1.2

Electronics Mfg

Logistics

Life Insurance

Property

Consumer Goods

Broadcasting

High-Tech

Banking

Aerospace

Biomedical

Pharmaceutical

Chemical

77Mercer

Industry Relativities Staff Category

0.9

2.2

4.7

5.5

5.7

10.9

16.3

-11.2

-7.1

-6.8

-6.1

-3.9

Logistics

Electronics Mfg

Banking

Consumer Goods

Property

Life Insurance

Broadcasting

Aerospace

High-Tech

Pharmaceutical

Biomedical

Chemical

1.8

10.0

14.0

14.2

24.4

-18.5

-17.0

-8.6

-6.9

-5.7

-1.3

-3.4

Logistics

Electronics Mfg

Life Insurance

Consumer Goods

Property

Broadcasting

Banking

High-Tech

Biomedical

Pharmaceutical

Aerospace

Chemical

Annual Total Cash -Actual (Median)Annual Base Salary (Median)



78Mercer

Functional premiumsAnnual base salary

Project Management

Administration

Information Technology

Finance & Accounting

Project Management

Administration



Manufacturing

Corporate Affairs

Marketing


Manufacturing

Marketing

Sales

Supply & Logistics

R & D

Contact Centre


Supply & Logistics

Contact Centre

Sales

Supply & Logistics

R & D

Highest

Lowest


79Mercer

Market movementsAnnual base salary 2007 to 2009

Staff Category

Jul 08 vs. Jul 07 = 4.4%

Jul 09 vs. Jul 08 = 2.3%

Professional Category

Jul 08 vs. Jul 07 = 4.0%

Jul 09 vs. Jul 08 = 1.3%

Management Category

Jul 08 vs. Jul 07 = 3.7%

Jul 09 vs. Jul 08 = 0.5%

Top Management Category

Jul 08 vs. Jul 07 = 3.4%

Jul 09 vs. Jul 08 = -0.3%

Source: 2007 - 2009 July Total Remuneration Survey – All Industries

2009 Staff vs Professional Pay Increase = 134%

2009 Professional vs Management Pay Increase = 91%

2009 Management vs Top Management Pay Increase = 86%

Annual Base Salary (Median)

0

50,000

100,000

150,000

200,000

250,000

300,000

40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63

Mercer IPE Position Class

An

nu

al B

ase

Sal

ary

(SG

D)

Jul 2007 Jul 2008 Jul 2009

80Mercer

Market movementAnnual total cash (Actual) 2007 to 2009

Staff Category

Jul 08 vs Jul 07 = 4.3%

Jul 09 vs Jul 08 = 2.6%

Professional Category

Jul 08 vs Jul 07 = 4.8%

Jul 09 vs Jul 08 = 0.4%

Management Category

Jul 08 vs Jul 07 = 5.3%

Jul 09 vs Jul 08 = -1.4%

Top Management Category

Jul 08 vs Jul 07 = 5.7%

Jul 09 vs Jul 08 = -3.0%


2009 Staff vs Professional Pay Increase = 138%

2009 Professional vs Management Pay Increase = 93%

2009 Management vs Top Management Pay Increase = 88%

Annual Total Cash - Actual (Median)

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63

Mercer IPE Position Class

An

nu

al A

ctu

al T

ota

l Cas

h (

SG

D)

Jul 2007 Jul 2008 Jul 2009

81Mercer

Singapore Dollars

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2007 All Industries 38,000 35,100 36,400

2008 All Industries 39,000 36,400 37,700

2009 All Industries 39,400 36,400 36,400

PHD Masters in Business Admin Masters in Sciences

Starting salary trend : Annual base salaryPhD and Masters (median) without national service


82Mercer

15,000

20,000

25,000

30,000

35,000

40,000

2007 All Industries 32,500 29,900 31,200 29,500 28,600 28,600

2008 All Industries 33,700 32,500 33,600 32,500 31,200 31,100

2009 All Industries 33,800 32,500 33,800 32,500 31,200 31,200

Engineering AccountancyComputer Science

ScienceBusiness

AdminArts/Social Sciences

Singapore Dollars

Starting salary trend : Annual base salaryDegree (median) without national service

Source: 2007-2009 Total Remuneration Surveys – All Industries

83Mercer

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

2007 All Industries 20,800 20,800 20,300 20,300 20,800

2008 All Industries 22,100 22,100 21,500 21,500 21,500

2009 All Industries 22,100 22,100 21,600 21,600 21,600

EngineeringComputer Science

Accountancy Business StudiesMass

Communication

Singapore Dollars

Starting salary trend : Annual base salaryDiploma (median) without national service

Source: 2007-2009 Total Remuneration Surveys – All Industries

84Mercer

Industry Recruit Retain

Engineering Professional Engineering Professional

Aerospace Quality Para-Professional Finance - Professional

Finance - Professional Repair & Maintenance Para-Professional

Pharmaceutical & Medicine - Professional Pharmaceutical & Medicine - Professional

Biomedical R&D - Professional Sales - Professional

Sales - Management R&D - Para-Professional

Broadcasting Professional Broadcasting Professional

Broadcasting Finance Professional Finance Professional

Information Technology Professional Sales Professional

Manufacturing Para-Professional Manufacturing Para-Professional

Chemical Engineering Professional Manufacturing Professional

R&D ProfessionalEngineering, Pharmaceutical & Medicine, R&D, Sales & Marketing Professional

Marketing - Management Marketing - Professional

Consumer Goods Finance - Professional Sales - Professional

Sales - Management & Professional Finance - Professional

Finance Professional Manufacturing Para-Professional

Manufacturing Para-Professional Finance Professional

R&D Professional, Management R&D Professional

Sales I3 Sales I2,I3

High-Tech Finance & Accounting I3 Finance & Accounting I2

Post Sales (Customer) Support I3,I4 Post Sales (Customer) Support I3

Supply & Logistics - Para-Professional Finance - ManagementSales - Professional Supply & Logistics - Para-ProfessionalSupply & Logistics - Professional Supply & Logistics - ProfessionalPharmaceutical & Medicine Professional Sales Professional

Pharmaceutical & Medicine Management Pharmaceutical & Medicine Professional

R&D Professional Manufacturing Para-ProfessionalProperty/Real Estate Mgmt Para-Professional

Property/Real Estate Mgmt Management

Property/Real Estate Mgmt Para-Management

Electronics Manufacturing

Pharmaceuticals & Medicine

Property

Logistics

Hot jobs Across industries

Source: 2009 July Total Remuneration Surveys

Sales Professional and Finance Professional were the hardest to retain….

Finance Professionals and R&D Professionals

were the 2 most difficult to recruit jobs across the Industries.

85Mercer

Annual base salary and annual total cashHeads of function (median)

Source: 2009 July Executive Remuneration Survey (ERS)

27.7%18.5%

29.6% 24.7%

11.5%

39.9%

21.8% 22.8%18.6%

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Top Finance &AccountingExecutive

Top SalesExecutive

Top HumanResourcesExecutive

Head of Supply& Logistics/ Top

Executive

Top InformationTechnologyExecutive

Top MarketingExecutive

Top Research &Development

Executive

Top EngineeringExecutive

Head ofProduction

Comp1 Comp3 Actual Comp3 Target

86Mercer

Variable Bonus (Actual): Heads of Function % of Annual Base Salary : Inter-Quartile Ranges

Source: July 2009 Executive Remuneration Survey (ERS)

19.2

15.5

16.1

10.4

15.4

16.2

13.1

14.5

13.1

0 5 10 15 20 25 30 35 40 45

Top Engineering Executive

Head of Production

Top Information Technology Executive

Top Research & Development Executive

Top Human Resources Executive

Top Finance & Accounting Executive

Head of Supply & Logistics/ Top Executive

Top Marketing Executive

Top Sales Executive


Percentage figures: Variance % (75P – 25P)

32.4

36.1

38.3

36.5

30.9

35.0

34.3

36.7

147.0%

175.6%

136.4%

137.0%

160.3%

197.1%

117.4%

121.3%

91.1%

120.0% 31.9

87Mercer

Annual base salaryHeads of function– country vs. region

Median Annual Base Salary

Source: 2009 July Executive Remuneration Survey (ERS)

Singapore Dollar ($)

0 50,000 100,000 150,000 200,000 250,000 300,000 350,000

Head of Production

Top Information Technology Executive

Top Sales And Marketing Executive

Top Research & Development Executive

Top Human Resources Executive

Top Finance & Accounting Executive

Head of Supply & Logistics/ Top Executive

Top Engineering Executive

Region

Country

Conclusion

89Mercer

Economic Impact on Performance

Bend, but don’t break Hardest hit

Example Players−Consumer staples−Pharmaceutical

Workforce Actions Taken −Make performance-based

staff reductions− Implement one-time

health care program savings

−Freeze salaries for some categories of employees

−Reduce bonus payouts (tighten goal and target setting)

−Rescind outstanding offers; delay hire of non-essential talent

Example Players−Financial services−US auto industry−Airlines−Hi-tech

Workforce Actions Taken −Significant layoffs and

limits on all hiring −Freeze salaries for all

employees−Eliminate bonuses−Focus on retention for

select key leaders

Different sectors had to react more severely than othersLeaving them vulnerable to predator behaviour from others

So far, so steady

Example Players−Low cost retailers−Selected global companies−Selected energy companies−For-profit education

Workforce Actions Taken −Prune low performers−Ensure top performers are

aligned with top opportunities−Opportunistically scout talent− Invest in workforce planning−Limit salary increases− Increase use of variable

reward elements−Shift jobs to low cost locations−Reduce training costs−Shift costs/risks to employees

90Mercer

Summary….

Higher salary increases estimated in 2010 as compared to 2009 however still below the 2008 actuals

Only one in ten companies looking at freezing salaries for 2010

Greater variance across sectors as a result of downturn impacting differently on businesses and/or business units

Four in every 10 companies looking to add headcount in the next 12 months

Moderate attrition rates currently– Still to be seen what happens when people get the confidence to

start moving again?

Tough choices over coming months– Where to allocate limited resources

To achieve competitive advantage– You cannot follow “average” rewards strategy

91Mercer

92Mercer

SU YEN’S SLIDES IF ANY

93Mercer

PLEASE BE BACK BY 16:00

94Mercer

95Mercer

96Mercer

97Mercer

Your Biggest Concerns…

TOP 5:

• How best to retain talent for 2010/ Total rewards mix

• Salary increase in unstable economy

• Innovative Benefits - motivation and engagement

• Applying data to 2010/Data interpretation

• Talent Management and communication

98Mercer

Poll Question 1Are you planning to restore pay cuts/freezes in 2010?

Not sure22%

Yes, selectively34%

Yes, across the board22%

NA11%

No11%

99Mercer

Poll Question 2Did you make changes to your benefits program in 2009?AND if yes, did the changes have the desired outcome?

Did not achieve22%

Did not make changes

22%

Influenced some outcomes

34%

Influenced MOST outcomes

11%

Have not measured

11%

100Mercer

101Mercer

102Mercer

103Mercer

ben·e·fit (bĕn’Ə-fĭt)

n.

1. Something that promotes or enhanceswell-being; an advantage

104Mercer

What are companies asking?

What are innovative ways to manage increasing

benefits cost?

How to balance between maintaining low cost versus enhancing our benefits policy to retain talent?

With the financial crisis, have companies reviewed

their benefits and realigned them?

How to tailor the benefits package to attract/retain the Gen Y employees? How can benefits

motivate and engage employees?

105Mercer

What are companies doing?Our survey results show…..

Companies follow the market

The market follows statutory where possible (with exception of health and annual leave)

Less cars, less allowances, less travel benefits

No shift of healthcare cost and responsibility to employees

Work life benefits are on the rise

Flexible benefits meet needs of employees and employers

More regional programs

106Mercer

How can you be successful?

A benefits program can only be a success if it caters to employees’ needs, contributes to value of the organisation and is sustainable in the long run

It is time to bite the bullet and make some structural changes– What are your employees needs?– What are your company objectives? – How do you manage cost?

How will you use benefits to attract, retainand engage employees while managing cost?

107Mercer

Maximizing the value of benefitsDo you know……..

Attraction: benefits can increase the value of your employer brand– Do you know which benefits attract future workforce?

Retention: benefits are valued by employees– Do you know which benefits are considered important and by who?

Engagement: benefits can make your employees feel they are valued– Do you know how to communicate benefits value?

Do more with less: the perceived value of benefits can be greater than cost, unlike cash– Do you know how to make use of your buying power?

108Mercer

Cost of benefits Why not do more with the investment in benefits?

Typical employer sponsored benefits (including mandatory benefits) as a % of base pay

0

20

40

60

80

100

120

140

160

180

200

109Mercer

Moving forward to 2010How can you maximize your budget?

Don’t move?

Cut?

Expand?

110Mercer

How can you maximize your budget?Invest in programs that offer flexibility / choice

In the broader sense of the word– Working arrangements– Leave– Level of benefits– Work / Life programs– Voluntary benefits

I can use benefits to increase

productivity and boost staff

morale

My benefits serve my needs, now and in the

future

We can offer an affordable package

in the long run

111Mercer

How can you maximize your budget?Invest in programs that differentiate you from others

Unique / creative benefits– Low cost– Buying power– The personal touch We build an

employee brand that helps us to

attract and retain I am unique

and valued by employer

Creativity doesn’t have to cost much

112Mercer

Show ‘m the money!

A better communicated plan is worth more than a better benefits plan

Focus on value to employee, not cost to company

Work on correlation between employee concerns and benefits offerings

Keep it simple and interesting

Ongoing communication

113Mercer

Points to remember….

A benefits strategy needs to evolve with economic factors and demographics change

No one-size fits all answer– A mix of decreasing and expanding

A benefits program is a success if:– Each benefit is driven by real need/sense of value for both

employer and employee– Each benefits does not cost the employer too much, now and in the

future

Communication, communication, communication…..

114Mercer

115Mercer

116Mercer

117Mercer

Preparing for takeoff in 2010

Recognise uncertainty

The “business cycle has not been tamed”

Your role as a risk manager: provide perspectives – no rocky landing

118Mercer

Key drivers of attraction and retention

What are the top 5 methods for attracting and retaining?

1. Attractive salary and compensation/benefits package

2. Opportunities for career advancement and development

3. Meaningful and creative work

4. Unique organisation culture

5. Company location

Source: Mercer Employee attraction and Retention Survey, 2008

119Mercer

Key drivers of employee turnover

What are the top 5 root causes of losing employees?

1. Supervisor’s practices and conduct

2. Lack of trust in company and not being able to see career grow

3. Job dissatisfaction

4. Relatively unfair rewards

5. Cultural conflict

Source: Mercer Employee attraction and Retention Survey, 2008

120Mercer

Your flight plan

1. Clarify business and talent imperatives

Understand and then align reward decisions

2. Right facts Ensure you have the right information and interpretations to take a balanced view

3. Focus efforts Understand what will have the most impact and drive for results

4. Pay calibration Examine pay vs. performance and determine the appropriate linkages

121Mercer

Your flight plan

5. Holistic approach Understand employees’ perceptions and expectations to articulate and maximise your EVP

6. Ready, set, communicate

Ensure the reward team is prepared and work with internal communications

7. Pulse check Check how the year evolves and be prepared for adjustments

122Mercer

Step 1 – Clarify business and talent imperatives

UNDERSTAND BUSINESS and

TALENT IMPERATIVES

CREATE WORKFORCE

(Talent and Rewards)

STRATEGY

DESIGN REWARDS

MANAGEMENT SOLUTIONS

RESULTS

Has your company experienced a change?When was last review of the reward strategy?Economic impact – may be different by industry?Who needs to approve changes to rewards – time needed?

Measure, monitor, adapt

1. Clarify

business

123Mercer

Company facts

Review the basics - organisation size and matching

Drivers of organisation performance

Promotions last year and expected in 2010

Make up of your population – generational perspectives and what employees value

Staff turnover and reasons

Rate of progression and will it vary across employee groups?

Project your talent gaps by business and location

Managers will fall back on compensation as the reason for any unexpected turnover – how will HR manage this?

To what extent has engagement been damaged – MBWA

Internal equity

2. Right

Facts

124Mercer

External facts

Changes in corporate approach to incentives

– Risk assessments

– Clawback features for executives?

Regional premium or job size?

Review confidence levels of data, e.g. interpret COMP3

Significant differences in timing of the recovery by geography, sector and company

Assess affordability – scenarios

2. Right

Facts

125Mercer

What may be your priorities?

Given expected Asian growth and uncertainty Sales will be critical

Will expats continue to have a “home”? Local+

Is it the right time to review retention or long term incentives?

Integrate processes for managing high potentials and critical talent

– performance management

– talent assessment

– Reward, etc

Argument for differentiated approach for leaders – next slide

3. Focus

efforts

126Mercer

Fewer “A” players attracted to join

“C” players as Leaders

High performers leave the company

People notdeveloped

Blocked development and advancement opportunities

Productivity and morale decline

Low job performance

High cost of underperforming leaders 3. Focus

efforts

127Mercer

Complexity and independent components

Independent management of different aspects of compensation– General adjustment– Increments– Market adjustments– Promotion increases– Personal grades– Retention payments– Allowances

Can lead to increased costs, complexity and insufficient focus on performance

4. Pay

calibration

128Mercer

Managing tight budgets

Simplified Scenario

Assume each person represents a group of employees

2 excellent performers – paid below reference salary (RF)

4 competent performers – paid around RF

1 marginal performer - paid below RF

Base Salary budget of 3%

Actual increases for 2009 were 3% or less

What do you recommend to your management and why?

Who should own the decision and how do you make this happen?

4. Pay

calibration

129Mercer

Decision framework Salary budget relative to employee groups and recovery

Well above market Slightly above market

Close to market

Slightly above market

Close to market Below market

Sp

eed

of s

ect

or

reco

very

Faster

Slower

Role of employee in achieving corporate results

Key driver Functional Support for industry

4. Pay

calibration

130Mercer

Other factors

Base Salary

Restoring pay freeze/cuts?

Recognise uncertainty – possible upside or rocky landing– mid-year review

Bonus plan

Review plan objective – now and the future

Balance multiple perspectives - employee and employee

Are you paying more than intended for retention

How does market volatility affecting target setting

Consider starting with COMP3 to allocate Base and Bonus

Consider bonus frequency

4. Pay

calibration

131Mercer

Step 5 - Holistic approach – reduce

Key to retaining if staff are proud of brand

Link to brand and ensure you are rewarding the right things

Retention - LTI plans

Do you pay for position or person?

Possible perception that one has to leave to progress?

Is there a pent-up desire for change?

5. Holistic

approach

132Mercer

Talent is typically attracted to the following opportunities

Undertaking new and challenging assignments

Being recognized as persons who create value for the organization

Proposing new ideas that are widely accepted within organization

Getting feedback from supervisor to leverage work quality as well as to develop themselves

Getting information that help them to align their goals with organization goals

Being rewarded with clear line-of-sight between rewards and expected performance

Being rewarded competitively and fairly (senses of internal equity)

Proud of the brand

5. Holistic

approach

133Mercer

Preparation for HR and managers

En

gag

ing

th

e b

usi

nes

s

Can your Reward function effectively respond to change?

Reward Management Model

Delivery Objectives &

Scope

Remuneration Function Design &

Governance

Program Processes

Talent & Knowledge

Management

Structure & Roles

Comms & Education

Technology & Tools

Culture & Engagement

6. Ready…

communicate

Can your managers communicate compensation decisions and career progression?

134Mercer

Manage perceptions and expectations

Explain what’s changing, why and what may happen

Understand and explain the business rationale

UnderstandI see the

problems and the opportunities

Keep communicating with managers and supervisors and equip them to answer questions

Get employees to ask questions, contribute ideas and be advocates for the changes

SupportI believe we

need to respond in this way

Clarify and model the behaviours and actions needed Adopt new processes – stay focused on supporting

employees before, during and beyond the current changes

EngageI will do my part

to help going forward

To help employees

Leaders and HR should:

6. Ready…

communicate

135Mercer

Step 7 – Pulse check

Monitor how the changes in your reward programs are impacting cost (e.g. analyse quarterly reports)

Monitor how the changes in your reward programs are impacting employee engagement (e.g. run pulse check surveys with a limited number of key questions)

Adjust strategy accordingly and review on an ongoing basis

Measure the impact of interventions and adjust strategies

7. Pulse

check

136Mercer

In summary

Know your key talent segments and priorities

Find out what they value

Give attention to pay basics

Tailor plan designs because one size won’t fit most

Pay special attention to career paths and learning opportunities

Communicate with openness and transparency

Prepare and leverage leaders

Connect cost, performance and employee engagement

Financial restructuring and cost reductions have meant that the deal has been broken and the safety net is gone

Employers have a daunting task ahead of how to focus limited resources on re-engaging key talent and driving results

Designing and delivering value propositions (i.e., “the deal”) that balances cost, value to the employee and return to the business

137Mercer

138Mercer

139Mercer

140Mercer

FERMIN’S SLIDES

141Mercer

142Mercer

0 mercer. 1 2 3 your biggest concerns… top 5 : how best to retain talent for 2010/ total rewards...

Documents