HR Magazine recently conducted an interview with Andrew Morris, Managing Director, Greater China, Robert Half International, about both global and regional salary related trends in the Finance and Accounting, Banking and Financial, and Technology Sectors.
2010-2011 Overview
In 2010, Robert Half International released the Finance and Accounting Salary Guide, and the Financial Services Salary Guide, presenting an overview of salaries in the two industries, in the APAC region. The guides revealed that average salaries across both sectors remained resilient during the recent financial crisis. Indeed, a significant percentage of employees saw an increase in salaries in the past year: 20% of employees in the Finance and Accounting Sector and 54% in the Financial Services Sector seeing an increase in salaries.
Despite this, a large proportion of employees, 35% in Finance and Accounting and 50% in Financial Services, still thought their salary package was not in line with market rates.
In 2010, Morris commented that, “Despite Hong Kong employees’ dissatisfaction with their current salaries, an alarming portion of them have never negotiated their salary, Finance and Accounting, 28%; Financial Services, 32%. Instead, a majority of Hong Kong employees believe that it is necessary to switch jobs to gain better pay Finance and Accounting, 65%; Financial Services, 82%. General salary dissatisfaction among Hong Kong employees combined with their reluctance to communicate their opinion makes for a volatile employee market.”
The guides also revealed that there is a large skills shortage in both sectors, which shows that jobseekers with in-demand skills can demand higher wages. With the market becoming more fluid, 72% of employers in the Finance and Accounting sector in Hong Kong were concerned about loosing top performers to other job opportunities. On the other side of the coin, the guides showed that 84% of employers in the Finance and Accounting sector were looking to hire across all roles in 2010.
As we progress into 2011, HR Magazine caught up with Morris to see how the different sectors are doing, and what major trends we can expect in the year ahead.
Finance & Accounting vs Banking & Financial
Morris began by clarifying the difference between the Finance and Accounting Sector and the Banking and Financial Sector.
- The Banking and Financial Sector consists of anything related to banks and banking services, including hedge funds, investment firms and retail banks.
- The Finance and Accounting Sectors consists of commerce and industry, including FMCG, manufacturing and retail.
Morris quipped, “With financial services [Banking and Financial Sector], think of it as anything to do with Banking, and with Accounting [Finance and Accounting Sector], think of it as anything out of banking. This is probably the simplest way to describe it.”
Finance & Accounting
Concerning salary trends in the Finance and Accounting Sector, Morris noted, “Basically we have seen anywhere between 5% to 10% increments coming into 2011.” He also pointed out that, for the first time over the past six months, there are sectors that are starting to see salary increases including the Manufacturing Sector.
The biggest increases, in terms of specific roles, have been seen in: Financial Controllers, Financial Reporters and those in managerial reporting. Morris noted, “Basically the middle management level has been the busiest sector over the last six months with an increase of salaries between 5% and 10%.”
Within Hong Kong, Morris shared that salaries in retail, especially high-end retail have been moving the most in this sector. He explained, “As the Chinese economy picks up; they tend to have more money, and are starting to buy the luxury goods again.”
Banking & Financial
With the Banking sector, Morris explained, “The sector did slow down between Christmas and Chinese New Year, but we are now starting to see some bullish headcounts coming out of the sector.”
So far this year there has been an average increase in salaries of about 10% to 15%; compared to 2010, which saw an average 20% increase. Morris was quick to point out, “As demand rises for people, I am sure the increments will return to 20% very shortly.” He elaborated, “Increments, of people who have stayed in the same firm, meaning people who have received a pay rise in their current company, has been very small; probably around the 5% mark. The people who have moved to other organisations have received more.”
Bonus disappointment
Bonuses heavily influence employee expectations and morale in these sectors, and Morris was quick to warn that bonus payouts have been below expectations this year. Most employees had expected between five and six months bonus, but actually only received three months bonus or less, and in some cases none at all. Morris said, “There is probably a large amount of disappointment of staff surrounding this issue. The organisations that have set expectations from last year have probably done better in managing disappointment. Those companies that did not have a talk with their employees will find that many are looking for new jobs…Expectation management has become critical for HR managers in the first quarter.”
Roles that have seen the biggest increase in salaries include employees in: Management reporting, Risk, Audit, Compliance, Process Improvement, Settlements, Trade Support and Efficiency. Morris said, “Employees with specific expertise and required skills including product knowledge have also seen an increase.”
Morris was keen to point out another trend among the larger financial institutions in the industry, “They are hiring aggressively, but will then put a freeze on the headcount and take count, and move forward again. They are trying to hire people, but in a more responsible manner, and to make sure they are not hiring too aggressively in this market.” He went on to comment, “This is the first time I have ever seen this, looking back at the last couple of downturns.”
Technology
The Technology Sector saw some very aggressive salary growth in late 2010 and early 2011, with growth between 20% and 40%. Morris pointed out that the growth did slow down a little bit during the period between Christmas and Chinese New Year, however, said the growth was likely to explode again in the coming months as a lot of companies are still behind in building their platforms. In the light of this, networkers, developers, programmers and people with specific skills like C++ and Java are currently much sought after. Morris pointed out, “Finding these people has become very difficult, and they are demanding larger packages to move…If you are a person with some tech background and possess a specific ability, it’s the place to be right now.”
Global trends
In relation to global trends for salaries, Morris pointed out, “I think the most pressure globally is certainly in the APAC region, because the economies are more bullish in relation to expected growth over the next 12 months, so you need the headcount to meet and sustain growth. This means there is a lot of upward pressure on salaries in Asia, especially when compared to the UK and the US.”
In relation to Hong Kong, there is more optimism in the markets when compared to the west. Morris divulged, “As companies grow, no matter whether they are small, medium or large, it is going to become difficult for companies to retain people if they have not been given a salary increment, or been offered other benefits such as training and career development.” He stressed, “If employers are not investing in employees, then they [employees] will move to companies who will invest in their career.”
Morris said, “Hopefully, if the economy remains the way it is, there will be inflationary pressure on salaries as we move through 2011 and into 2012. And that will certainly become more of a factor in the UK and the US. This pressure will globally build as we see more movement of employees.” He also noted that there will be an increased amount of movement of employees from one country to another, however, most of the movement thus far has been internal, as companies are still not ready to pay to hire expatriate employees. He explained, “If a financial bank has an employee with an expertise in New York, which is needed here, they will pay to bring the employee over, however, they will not hire an employee into Hong Kong who works for a competitor.”
Another trend Morris talked about was the fact that many banks and financial institutions had hired aggressively, then put a freeze on hiring, regrouped, and then started recruiting again. He noted that he had not seen employers adopt this type of hiring in the last few downturns and praised HR managers who had adopted this approach—as it demonstrated they were thinking ahead about growth. He commented, “In the back of most senior managers minds, they don’t want to get carried away and grow too aggressively, and be in a position where if the economy does bubble and burst, they have to go back the other way and make positions redundant. Obviously this is bad for morale and the future of the business.”
What should HR managers in these sectors do? It would seem an aggressive growth strategy is needed to keep up with demand for employees. This should, however, be flexible and restrained—keeping a close eye on the market. HR managers should also talk with their employees about salary and compensation expectations, so as to avoid disappointing them and potentially losing them to competitors.
Paul Arkwright
Publisher
