Trends. Economy and talent Outsourcing industry challenges. June Mercer

Transcription

1 Trends Economy and talent Outsourcing industry challenges June

2 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 1

3 Global Forces Changing 2010 Managing Compensation and Benefits across Borders 2

4 General Demographic Trends Falling birth rates Increasing life expectancy 2010 Managing Compensation and Benefits across Borders 3

5 General Demographic Trends Increasing Middle Class Addition to the working age population by 2018 (Millions) 2010 Economic Trends - IBEF 4

6 Share of Population age 65 and older Expected to double by Managing Compensation and Benefits across Borders 5

7 Talent trends

8 Talent shortages in Asia Difficulty filling jobs by country Japan 76 Singapore 53 Australia Hong Kong Taiwan 41 Asia Pacific China 41% had difficulty filling vacancies 40 Global average 31 India Source: Manpower 2010 Talent shortage survey 7

9 Turnover rates 20% 18.7% 18% 16% 14% 13.1% 12% 10% 8.6% 8.6% 9.2% 9.9% 10.2% 10.3% 8% 6% 5.4% 5.5% 5.8% 6.4% 6.7% 7.3% 4% 2% 0% JP ID TW SG PH HK SK IN VN NZ CN TH AU MY ID: Indonesia IN: India Source: 2010 Global Compensation Planning Report 8

10 The statistics are already impacting on recruitment Recruitment has started but not everywhere 9

11 Jobs Tough to recruit and retain Country Recruit Retain Marketing Professional Sales Para Professional AU Sales Professional Sales Professional Marketing Management Marketing Professional Sales Management Sales Professional CN Marketing Management Marketing Management Finance Management Finance Management Sales Sales Management Professional (10) Sales Professional HK and Marketing Marketing Professional Marketing Professional Management (11) were Sales the 2 most Management difficult to Retail Para Professional Sales Professional (12) Sales recruit - Management jobs across and Marketing / Professional Sales Professional IN countries!! Professional (8) were Marketing - Management / Professional Marketing Management the hardest to retain. - Finance Professional Finance Management Marketing Management ID Marketing Management Sales Management Sales Management Sales Professional Marketing Management Marketing Management JP Finance Management Marketing Professional Marketing Professional Sales Professional Marketing Professional Sales Professional MY Marketing Management Marketing Professional Sales - Management / Professional Marketing Management Source: Total Remuneration Surveys,

12 Functional premiums Management staff category Annual guaranteed cash Country Premiums Below Market Administration (-35.6%) AU Finance & Accounting (2.1%) Contact Centre (-29.4%) Sales (-15.4%) Finance and Accounting Corporate is one Only four markets indicated Affairs (9.4%) Administration (-26.6%) of the most CN common functions Human Resources to be Finance & Accounting (6.6%) Contact Centre (-20.6%) commanding a premium Marketing across (5.9%) Quality enjoying (-12.2%) a functional premium. 12 locations. Administration (11.6%) Sales (-9.3%) HK Finance & Accounting (3.3%) Supply & Logistics (-3.3%) IN 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%) Sales was one of the functions Corporate toaffairs (10.9%) Marketing This (-8.1%) was closely followed by JP be placed below market Quality (9.8%) Manufacturing Marketing (-4.1%) and Administration Human Resources (3.6%) Information Technology(-3.1%) across 10 countries! across most countries.. Corporate Affairs (4.3%) Sales (-5.9%) MY Supply & Logistics (1.9%) Marketing (-5.8%) - Quality (-5.6%) Source: Total Remuneration Surveys,

13 Cost of living Asia Pacific cities Ranking Mumbai Manila Dhaka Kuala Lumpur Bangkok Wellington Colombo Hanoi Jakarta Taipei Seoul Hong Kong Sydney Shanghai Beijing Base City : Singapore Tokyo Source: Cost of Living Calculator, Mar

14 Quality of living Asia Pacific cities Sydney Wellington Base City : Singapore Tokyo Hong Kong Kuala Lumpur Seoul Taipei Shanghai Bangkok Beijing Manila Jakarta Colombo Mumbai Hanoi Islamabad Source: Quality of Living Calculator, Mar

15 India trends

16 What do we hear in the market? How to balance between market competitiveness and maintaining cost? What are innovative ways to manage increasing benefits cost? With all the different local practices, how can we implement our global strategy? How to control costs in a challenging year? How can benefits motivate and engage employees? 15

17 Actions taken during 2010 to control the rising costs Review rew ards and recognition programs 66% Review PMS to differentiate performers Increase use of alternate meeting methods 66% 64% Convert more training to online training 38% Restrict travel 24% Encourage more work-at-home opportunities 16% 0% 10% 20% 30% 40% 50% 60% 70% % of respondents Source: India Monitor

18 Salary increases across the globe On Annual Guaranteed Cash 16.0% 14.0% Salary increase percentage 12.0% 10.0% 8.0% 6.0% 4.0% 3.2% 2.7% 2.9% 2.5% 2.5% 2.7% 7.0% 7.2% 7.0% 9.0% 10.0% 12.0% 2.0% 0.0% US Western Europe Asia Pacific India Source: 2010 July GCPR 17

19 Factors affecting salary increase Individual Performance 98% Company Performance 78% Position in Salary Range 64% Job Level 46% Inflation 45% Market Competitiveness 39% Length of Service 16% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percentage of respondents Source: IN TRS All Industries (Dec 2010) 18

20 Hiring Intentions Next 3-12 months look positive 100.0% 90.0% % 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 55.00% 75.00% 69.00% 0.0% Recruiting in next 3 months Recruiting in next 12 months Source: IN TRS All Industries (Dec 2009 & 2010) 19

21 Attrition Trends Reduced trends in % 18.0% BATB Voluntary attrition percentage 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 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% 2.0% 0.0% Executives Management Professional Sales Professional Non Sales Para Professional White Collar Source: IN TRS All Industries (Dec 2008,2009 & 2010) 20

22 Attrition Trends Industry wise 26.0% 24.0% 22.0% BATB 21.6% Voluntary Attrition percentage 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 12.0% 11.9% 10.9% 8.0% 15.2% 14.0% 8.0% 7.9% 4.0% 2.0% 0.0% All Industry Consumer Asset Mgmt Chemical Pharma Auto Mfc ITeS Hitech Source: Industry TRS 2010 & MIM

23 Today s Landscape for HR: Challenges and Opportunities

24 Workforce contradictions abound Say 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 23

25 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: Future of Talent Management Survey, May 2010, 24

26 How the journey has been in India Outsourcing The industry has gone through 3 distinct themes in the last decade Scalability 1. 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 Retention 1. Double digit salary inflation, and LTI plans 2. Faster career movements, onsite (USA) opportunities, better lifestyles Differentiation 1. Adopting integrated, strategic talent management approaches to scale up 2. Rationalizing Organization Structures, more detailed career paths 3. Differentiated compensation plans 25

27 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 26

28 Conclusions

29 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? 28

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