STI trends indicate declining business confidence in Asia Pacific, Latin America and North
America, although there is cautious optimism in EEMEA, Australia, New Zealand.
Pay data just released by Mercer on the use of Short-Term Incentives (STIs) has highlighted surprising indications of nascent business confidence in Western and Eastern Europe, Australia, New Zealand and the Middle East. The data, taken from 21,000 companies in 62 countries also indicates a weakening in confidence for companies in Asia Pacific, Latin America and North America. The data from the report: Short-Term Incentives around the World draws on annual incentive information from over 7.6 million employees across the globe.
Hans Kothuis, Asia Pacific Rewards Leader, Mercer explained, “A key criterion for the funding of bonus awards is successful company performance. So, if a company is predicting that it will pay out less to executives in 2012 than it did in 2011—as our data shows is happening in certain regions—it indicates that companies expect their financial performance to be worse in 2012 than in 2011. The reverse is also true.”
He added, “STI predictions for 2012 are a good reflection of business confidence…Based on our data, there is better confidence in Western and Eastern Europe but evidence of a weakening in confidence in the Americas and Asia Pacific. Business sentiment and economic conditions can change rapidly so we’d anticipate seeing some difference in the actual amounts distributed.”
The percentage of executives receiving STIs is increasing in New Zealand and Australia from 56% of executives in 2009 to 67% in 2011. The longer, three-year trend from 2009 to 2012 on STIs as a percentage of base salary across APAC and Australia/New Zealand is moving upwards, with awards increasing by 2.3% and 2.6% respectively.
However, the data suggests that in the short-term confidence is dipping. In 2010, companies in APAC predicted STI payouts for 2011 to be 22.2%, yet actual payments were higher
at 23.3%, reflecting the economic confidence of the region. In contrast, payouts in 2012 are expected to be 22.1% suggesting a more cautious outlook. Employers in New Zealand and Australia are an exception here, anticipating a marginal increase in 2012—from 21.6% paid out in 2011 to 21.9% expected this year.
Paul Arkwright
Publisher
