trends - iaop
TRANSCRIPT
0Mercer
Trends
Economy and talentOutsourcing industry challenges
June 2011
1Mercer
Talent insights
Talent shortage in the northern hemisphere– Baby boomers retiring
Employability issue in the southern hemisphere– Only 25% of India is considered employable by MNCs
Forecasting of jobs in demand– Today’s high paying skill gets commoditized– Which skills will be in shortage ; e.g. R&D, web design– Highest talent shortage in BRIC countries: Mining, transportation,
manufacturing– Highest talent shortage in developed countries: Education, and healthcare
2Mercer
Global Forces Changing
2010 Managing Compensation and Benefits across Borders
3Mercer
General Demographic Trends
Falling birth rates
Increasing life expectancy
2010 Managing Compensation and Benefits across Borders
4Mercer
General Demographic Trends
Addition to the working age population by 2018 (Millions)
2010 Economic Trends - IBEF
Increasing Middle Class
5Mercer
Share of Population age 65 and olderExpected to double by 2050
2010 Managing Compensation and Benefits across Borders
Talent trends
7Mercer Source: Manpower 2010 Talent shortage survey
41% had difficulty filling vacancies
16
31
40
41
44
45
53
76
0 10 20 30 40 50 60 70 80
India
Global average
China
Asia Pacific
Taiwan
Hong Kong
Australia
Singapore
Japan
Talent shortages in AsiaDifficulty filling jobs by country
8Mercer
0%JP ID TW SG PH HK SK IN VN NZ CN TH AU MY
Turnover rates
Source: 2010 Global Compensation Planning Report
ID: Indonesia IN: India
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
5.4% 5.5% 5.8%6.4% 6.7%
7.3%
8.6% 8.6%9.2%
9.9% 10.2% 10.3%
13.1%
18.7%
9Mercer
The statistics are already impacting on recruitmentRecruitment has started… but not everywhere
10Mercer
Jobs – Tough to recruit and retain
Country Recruit Retain
Marketing Professional Sales Para ProfessionalAU Sales Professional Sales Professional
Marketing Management Marketing Professional
Sales Management Sales ProfessionalCN Marketing Management Marketing Management
Finance Management Finance Management
Sales Professional Sales ProfessionalHK Marketing Professional Marketing Professional
Sales Management Retail Para Professional
Sales - Management / Professional Sales Professional
Marketing - Management / Professional Marketing Management
- Finance Professional
Finance Management Marketing ManagementID Marketing Management Sales Management
Sales Management Sales Professional
Marketing Management Marketing Management
Finance Management Marketing Professional
Marketing Professional Sales Professional
Marketing Professional Sales Professional
Marketing Management Marketing Professional
Sales - Management / Professional Marketing Management
IN
JP
MY
Sales Management (10) and Marketing
Management (11) were the 2 most difficult to recruit jobs across
countries!!
Sales Management (10) and Marketing
Management (11) were the 2 most difficult to recruit jobs across
countries!!
Sales Professional (12) and Marketing
Professional (8) were the hardest to retain….
Sales Professional (12) and Marketing
Professional (8) were the hardest to retain….
Source: Mercer Total Remuneration Surveys, 2009
11Mercer Source: Mercer Total Remuneration Surveys, 2009
Country Premiums Below Market
Administration (-35.6%)AU Contact Centre (-29.4%)
Sales (-15.4%)
Corporate Affairs (9.4%) Administration (-26.6%)CN Finance & Accounting (6.6%) Contact Centre (-20.6%)
Marketing (5.9%) Quality (-12.2%)
Administration (11.6%) Sales (-9.3%)HK Finance & Accounting (3.3%) Supply & Logistics (-3.3%)
Human Resources (0.6%) Marketing (-3.1%)
Corporate Affairs (15.1%) Manufacturing (-14.8%)
Research & Development (10.1%) Sales (-13.3%)Finance & Accounting (9%) Administration (-5.9%)
Corporate Affairs (20%) Manufacturing (-6.6%)ID Finance & Accounting (10.7%) Administration (-3.9%)
Marketing (4.2%) Sales (-1.2%)
Corporate Affairs (10.9%) Marketing (-8.1%)
Quality (9.8%) Manufacturing (-4.1%)Human Resources (3.6%) Information Technology(-3.1%)
Corporate Affairs (4.3%) Sales (-5.9%)
Supply & Logistics (1.9%) Marketing (-5.8%)- Quality (-5.6%)
IN
JP
MY
Finance & Accounting (2.1%)
Finance and Accounting is one
of the most common functions
commanding a premium across
12 locations.
Finance and Accounting is one
of the most common functions
commanding a premium across
12 locations.
Sales was one of the functions to
be placed below market
across 10 countries!
Sales was one of the functions to
be placed below market
across 10 countries!
Only four markets indicated
Human Resources to be
enjoying a functional premium.
Only four markets indicated
Human Resources to be
enjoying a functional premium.
This was closely followed by
Marketing and Administration
across most countries..
This was closely followed by
Marketing and Administration
across most countries..
Functional premiums – Management staff categoryAnnual guaranteed cash
12Mercer
Ranking
Cost of living – Asia Pacific cities
118
100989696948986
797877777670686767
0
20
40
60
80
100
120
140M
umba
i
Man
ila
Dha
ka
Kua
la L
umpu
r
Ban
gkok
Wel
lingt
on
Col
ombo
Han
oi
Jaka
rta
Taip
ei
Seou
l
Hon
g K
ong
Sydn
ey
Shan
ghai
Bei
jing
Bas
e C
ity :
Sing
apor
e
Toky
o
Source: Mercer Cost of Living Calculator, Mar 2010
13Mercer
Quality of living – Asia Pacific cities
Source: Mercer Quality of Living Calculator, Mar 2010
50
60
62
6263
68
72
72
7984
85
87
9298
100
102
103
0 20 40 60 80 100 120
Islamabad
Hanoi
Mumbai
Colombo
Jakarta
Manila
Beijing
Bangkok
Shanghai
Taipei
Seoul
Kuala Lumpur
Hong Kong
Tokyo
Base City : Singapore
Wellington
Sydney
India trends
15Mercer
What do we hear in the market?
What are innovative ways to manage increasing benefits
cost?
What are innovative ways to manage increasing benefits
cost?
How to balance between market competitiveness and maintaining cost?
How to balance between market competitiveness and maintaining cost?
With all the different local practices, how can we implement our global
strategy?
With all the different local practices, how can we implement our global
strategy?
How to control costs in a challenging year?
How to control costs in a challenging year?
How can benefits motivate and engage employees?
How can benefits motivate and engage employees?
16Mercer
16%
24%
38%
64%
66%
66%
0% 10% 20% 30% 40% 50% 60% 70%
% of respondents
Encourage more work-at-home
opportunities
Restrict travel
Convert more training to
online training
Increase use of alternate
meeting methods
Review PMS to differentiate
performers
Review rew ards and
recognition programs
Actions taken during 2010 to control the rising costs
Source: Mercer India Monitor 2010
17Mercer
3.2% 2.7% 2.9%2.5% 2.5% 2.7%
7.0% 7.2% 7.0%
9.0%10.0%
12.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
Sala
ry in
crea
se p
erce
ntag
e
US Western Europe Asia Pacific India
2009 2010 2011
Salary increases across the globeOn Annual Guaranteed Cash
Source: 2010 July Mercer GCPR
18Mercer
Factors affecting salary increase
16%
39%
45%
46%
64%
78%
98%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentage of respondents
Length of Service
Market Competitiveness
Inflation
Job Level
Position in Salary Range
Company Performance
Individual Performance
Source: IN TRS All Industries (Dec 2010)
19Mercer
Hiring IntentionsNext 3-12 months look positive
69.00%
55.00%
75.00%
85.00%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Recruiting in next 3 months Recruiting in next 12 months
2009 2010
Source: IN TRS All Industries (Dec 2009 & 2010)
20Mercer
Attrition TrendsReduced trends in 2010
BATB
5.7%
2.7%
4.5%
9.5%
7.3%
5.9%
14.8%13.5%
12.2%
14.9%
10.1%
8.4%
12.7%
8.1% 8.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Volu
ntar
y at
tritio
n pe
rcen
tage
Executives Management Professional –Sales
Professional –Non Sales
ParaProfessional –
White Collar
2008 2009 2010
20Mercer Source: IN TRS All Industries (Dec 2008,2009 & 2010)
21Mercer
Attrition TrendsIndustry wise
BATB
21Mercer
12.0% 11.9%10.9%
8.0%
15.2% 14.0%
8.0%
21.6%
7.9%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
22.0%
24.0%
26.0%
Vol
unta
ry A
ttriti
on p
erce
ntag
e
All Industry Consumer Asset Mgmt Chemical Pharma Auto Mfc ITeS Hitech
Source: Industry TRS 2010 & MIM 2010
Today’s Landscape for HR: Challenges and Opportunities
23Mercer
Workforce contradictions aboundSay good-bye to either/or choices
“We have talent surpluses in some areas … and talent shortages in other”
“We need to retain top talent … and have limited rewards”
“We want less hierarchy … and need more leadership opportunities”
“We seek diversity … and want the benefits of a unifying culture”
“We need to invest … and need to reduce costs”
“We want greater performance … and have fewer resources to drive it”
24Mercer
Global market research What are we hearing?
Talent management
will continue to grow as a top
priority
80% of respondents say “high priority”in next three to five years; up from 50% today
Leadership issues are top three talent priorities
75% of respondents say talent changes are imminent in the areas of succession, development, performance management, careers and employee engagement
And, respondents admit lack of confidence to effect change
Source: Mercer “Future of Talent Management Survey,” May 2010,
25Mercer
How the journey has been in India Outsourcing
2000 - 2005 2005 - 2008 2009 – 2011+
Scalability1. Understanding their talent
landscape, optimising available workforce capabilities, managing talent risks and avoiding skill shortages and leadership gaps
2. Sophisticated hiring engines created and sustained
Retention1. Double digit salary inflation,
and LTI plans
2. Faster career movements, onsite (USA) opportunities, better lifestyles
The industry has gone through 3 distinct themes in the last decade
Differentiation1. Adopting integrated, strategic
talent management approaches to scale up
2. Rationalizing Organization Structures, more detailed career paths
3. Differentiated compensation plans
26Mercer
Talent Management Themes
Scalability – Understanding their talent landscape, optimising available workforce capabilities,
managing talent risks and avoiding skill shortages and leadership gaps– Sophisticated hiring engines created and sustained– Setup complex systems and processes to drive and support scale
Retention– Double digit salary inflation, and LTI plans– Faster career movements, onsite (USA) opportunities, better lifestyles
Differentiation– Rationalizing organization structures, more detailed career paths, job levelling– Newer talent pools and alternate sources of talent– Differentiated compensation plans
Conclusions
28Mercer
Discussion
Managing costs – is this an imperative for HR managers or the Finance team?
Is pay for performance losing its sheen?
Internal vs external equity – is this still a recruitment battle or has it become a full fledged war in the boardroom?
Benefits of benefits – does the Gen y see this?
Employability – does this need to be corporate agenda, and how?
How will globalization affect your reward strategy?
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