© MERCER 2019 0

Shanghai HR

Conference T H E L E N S O F T H E F U T U R E :

R E W A R D S T R E N D S

M E R C E R G L O B A L H R C O N F E R E N C E S

1 9 S E P T E M B E R

Godelieve Van Doreen,

Partner, Asia Career Products Leader, Mercer

© MERCER 2019 1

A W E A K E N I N G G L O B A L E X P A N S I O N

OUTLOOK FOR ASIA REMAINS FAVORABLE

GDP

Unemployment

Source: IMA Asia – July 2019; IMF – World Economic Outlook, April 2019

ILO Modelled Estimates, ILOSTAT Database

ASIA has:

Highest GDP

Lowest

unemployment

Note: Figures for 2019 and 2020 indicate forecasted values

Glob

al

3.6%

5.1%

2 0 1 4 - 18 2019 f 2 0 2 0 f

3.3

%

4.9

%

3.6% ▲

4.9% =

1.9%

9.2% Euro

pe

US 2.4%

4.9%

Afric

a

3.3%

6.9%

Asia 4.8%

3.7%

ME 2.2%

7.2%

2.2%

3.9%

1.3%

7.3%

4.5%

3.6%

3.6%

6.8%

0.3%

7.3%

2 0 1 4 - 18 2019 f 2 0 2 0 f

1.9% ▼

4.0% ▲

1.5% ▲

7.1% ▼

4.5% =

3.6% =

3.8% ▲

6.8% =

2.9% ▲

7.3% =

© MERCER 2019 2

P O L L Q U E S T I O N 1 : W H AT ’ S H A P P E N I N G ?

Seen the recent economic and political developments, what course of action is your organization taking:

a) Move certain operations/people from high risk locations to lower risk locations

b) Slow down investments/hiring in high risk locations

c) Increase investment/hiring in lower risk locations

d) Nothing! This is Asia and we are just fine!

© MERCER 2019 3

T A L E N T C H A L L E N G E S I N A S I A R E M A I N T H E S A M E …

W O RKFO RCE

S UP P LY

•Imbalance between

labor supply and

demand

•Declining working-

age population and

aging population

•Workforce

participation of

other talent pools is

not increasing

CHANGING CAREER

EXPECTATIONS

•From EVP to IVP –

“What is in it for

me?”

•Creating global

opportunities in a

“cost effective”

manner

•Only vertical, never

horizontal

WEAK LEADERSHIP

BENCH STRENGTH

•Skills gaps in

crucial leadership

competencies

•Managers getting

their driving license

too soon

•Lack of leaders with

new capabilities

and management

styles.

CO MP E TI T I O N

FO R TALE NT

•Pressure on

budgets – supply

and demand

•Pay equity issues

•Talent competition

moves across

industries and

employment types

© MERCER 2019 4

… A N D T H E L E G I S L AT I V E C H A N G E S P L E N T Y

DIVERSITY & INCLUSION

Promoting equality and

prohibiting discrimination

based on gender, sexual

orientation, race, disability or

illness Australia, China, Hong Kong, India,

Philippines, Singapore, Taiwan

Expanded protection against

workplace bullying and

harassment India, South Korea

AGEING POPULATION

More support for employers to hire older

workers Singapore

Enhancements to provident fund contributions Australia, Hong Kong, India, Philippines

WORK-LIFE BALANCE

Promoting flexible work

arrangements Australia, Japan, Singapore,

Philippines

Enhanced benefits for parents Hong Kong, India, New Zealand,

Philippines, Thailand

Revamps in leave entitlements Australia, New Zealand

Changes to working hours Japan, South Korea

HEALTH & SAFETY

Modified employee health insurance

schemes and benefits China, Hong Kong, India, Japan, Philippines,

Thailand

Domestic violence leave Australia, New Zealand

Increase in mental health programs Philippines, India

Mercer Global Benefits Legislative Updates

© MERCER 2019 5

12%

14% 15%

10%

9%

7%

13%

11% 11% 11% 10%

12%

14% 14% 13%

14%

16%

12%

9% 7%

16%

14% 13%

13% 11%

11%

12% 13%

4% 4%

5%

4%

4%

2% 4%

3% 4% 4%

3% 4% 4%

6% 4% 5%

5%

6%

3% 2%

5%

6% 6%

5%

3% 3% 4%

5%

AU CN HK IN ID JP MY NZ PH SG KR TW TH VN 2017 2018

E M P L O Y E E R E T E N T I O N I S A C H A L L E N G E

O U R M E R I T I N C R E A S E S W O N ’ T C H A N G E T H AT

Source: Mercer Asia Market Pulse

Survey 2018/2019

CN data is from 2019 Mercer TRS

2020 FORECASTED SALARY INCREASE RATE:

3.0% 5.6% 4.0%

10.0% 8.0%

2.0% 5.0% 3.0%

6.0% 4.0% 4.5% 3.8% 5.0% 9.0%

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

2017 – 2019 (Q1) VOLUNTARY ATTRITION RATES:

T

W

© MERCER 2019 6

P R O M O T I O N A L S A L A R Y I N C R E A S E S A R E H A R D L Y

K E E P I N G U P

Source: 2018 Mercer Total

Remuneration Surveys

Data for China is from Shanghai TRS

5.9

%

9.8

%

7.6

% 10.6

%

6.7

%

19.1

%

11.4

%

13.7

%

11.9

%

8.6

%

9.0

%

10

.2%

15.8

%

14.7

%

6.6

% 1

0.3

%

7.8

% 10.7

%

6.7

%

19.1

%

11.3

%

13.6

%

11.6

%

8.3

%

8.6

%

9.7

%

15.1

%

13.9

%

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

2018 Actual2019 Forecast

Decreased since 2018 Increased since 2018 No

change

since

2018

© MERCER 2019 7

R E S U L T I N G I N T H I S A N N U A L P AY R A I S E E X P E R I E N C E

T H E H I G H S A N D L O W S O F T H E E M P L O Y E E

EV

EN

T

FE

EL

ING

S

& N

EE

DS

Record financial

performance!

Excited

Anticipation

Coworker resigned

– and got an offer

with a 20%

increase!

Under resourced–

pulling late nights

trying to keep up!

Performance

review – I’ve had a

great year!

Merit Award –

3%

Stressed

Frustrated

Disappointed

Curious

Disappointed

Confused

#@$!#!!!

Accomplished

Hopeful

© MERCER 2019 8

T H E H I G H S A N D L O W S O F T H E M A N A G E R E

VE

NT

F

EE

LIN

GS

& N

EE

DS

Record financial

performance! Good

news for budgets!

Excited

Anticipation

My team is poached

- for 20% more pay Compensation budget

- same as last year?!

Allocating awards -

So much time and

energy...

Employee

conversations –

disappointment, blame

the budget! OR HR!

Surprised

Confused

Disappointed

Stressed

Relieved

Anxious

Exhausted

Dread

© MERCER 2019 9

P O L L Q U E S T I O N 2 : C O M P E N S AT I O N I S … … W H AT ?

• What’s the ONE word that comes to mind when you think about compensation (go on, you can wear your employee hat!)

© MERCER 2019 10

C O M P E N S AT I O N I S … …

A M O T I VAT I O N AL T O O L T H AT

I N S P I R E S G R E AT

P E R F O R M AN C E

“YOUR PERFORMANCE

WAS EXCEPTIONAL THIS

YEAR”

“WE CONTINUE TO DO

MORE WITH LESS”

© MERCER 2019 11

B A U A N D F U T U R E F O R W A R D R E W A R D S A R E A B A L A N C I N G A C T

Agile

Empowered

Fair

Transparent

Personalized Equitable

© MERCER 2019 12

A R E W E T R Y I N G T O A D D R E S S T O O M A N Y T H I N G S

W I T H O U R M E R I T I N C R E A S E ?

MARKET

COMPETITIVENESS

PAY EQUITY

PAY FOR

PERFORMANCE

4%

© MERCER 2019 13

VOLATILITY

UNCERTAINTY

COMPLEXITY

AMBIGUITY

D I S R U P T I O N M A K E S I N V E S T M E N T I N F I X E D

C O M P E N S A T I O N D I F F I C U L T

40% of today's Fortune 500

companies on the S&P 500 will

no longer exist in 10 years,

according to researchers at the

John M. Olin School of Business

at Washington University

© MERCER 2019 14

H O W C A N Y O U I M P R O V E T H E E X P E R I E N C E G I V E N

T H E C U R R E N T E N V I R O N M E N T ?

Proactively

manage

competitive

ness and

equity

Rethink

pay for

performanc

e

Strategicall

y budget

salary

increases

Increase

Pay

Transparen

cy

© MERCER 2019 15

W H AT ’ S

H A P P E N I N G

T O D AY

Setting budgets based on

what others are doing

W H AT

S H O U L D B E

H A P P E N I N G

Strategic planning process for long-

term multi-million dollar investment

based on your talent strategy

S T R AT E G I C A L L Y B U D G E T S A L A R Y I N C R E A S E S

© MERCER 2019 16

P R O A C T I V E L Y M A N A G E P AY E Q U I T Y A N D

C O M P E T I T I V E N E S S

MARKET

PAY EQUITY STUDY

COMPETITIVE

ANALYSIS

MANAGER

DISCRETION

X%

BUDGET

EQUITY

PERFORMANCE

(FUTURE)

BUSINESS

PERFORMANCE

© MERCER 2019 17

ANNUAL PAY

INCREASE PAY FOR

PERFORMANCE

RECOGNIT ION

INCENTIVE PAY

CAREER GROWTH

PAY EQUITY

MARKET

COMPETIT IVENESS

R E T H I N K P AY F O R P E R F O R M A N C E

© MERCER 2019 18

W O R K O N P AY T R A N S P A R E N C Y

5x EM PLO YEE’S

PERCEPTI O N O F

PAY I S 5X MO RE

I MPACT FUL O N

ENG AG EMENT

T HAN HO W THEY

ARE ACTU ALLY

PAI D RELAT I VE

T O MARKET

M O ST PEO PLE DO NO T KNO W HO W THEY ARE

PAI D

83%

64%

35%

14%

30%

45%

3%

6%

21%

People who are

actually paid

above market

believe they’re paid:

People who are

actually paid

at market believe

they’re paid:

People who are

actually paid

below market

believe they’re paid:

Below market

Below market

Below market

At Market Above Market

At Market Above

Market

At

Market

Above

Market

Source: PayScale Research 2017

69% 69% O F

EMPLO YEES

SAY PAY

TRANSP ARE NCY

I S I M PORTANT

T O T HEM

Source: PayScale Research 2017 Source: Mercer Global Talent Trends

© MERCER 2019 19

P O L L Q U E S T I O N 3 : C L E A R A S C R Y S T A L ?

Are you communicating pay structures or individual pay ranges to employees as part of your annual pay increase process?

a) Yes!

b) No, but considering implementing in the next few years

c) No way, and not considering implementing - EVER

© MERCER 2019 20

W H AT E L S E M A K E S P E O P L E S TAY ?

GENDER GENERATION LEVEL

Job

security

Flexible

hours

Convenient

location

Time off

Professional

development

Health benefits

Meaningful

work

Competitive

pay

Fun work

environment

Advancement

opportunities

Interesting/

varied work

Job

security

Flexible

hours

Convenient

location

Time off

Professional

development

Health benefits

Meaningful

work

Competitive

pay

Fun work

environment

Advancement

opportunities

Interesting/

varied work

Job

security

Flexible

hours

Convenient

location

Time off

Professional

development

Health benefits

Meaningful

work

Competitive

pay

Fun work

environment

Advancement

opportunities

Interesting/

varied work

Gen Y Gen

X

Baby

Boomer

Male Femal

e

Individual

contributor

All managerial

levels

© MERCER 2019 21

P O L L Q U E S T I O N 4 : D E C I S I O N S , D E C I S I O N S

Would you rather be paid 100K in your dream job OR 200K for a boring job with long hours?

a) I’ll take the dream job, thank you

b) Show me the money!!!

© MERCER 2019 22

Egalitarian Differentiated Rewards Levels

Fully Employer Sponsored

Employee Contribution

Reward Financing

Shared Responsibility

Personal Responsibility

Career & Wellbeing

Company to decide

Employees to decide

Rewards Choice

One Size Fits All Personalized Rewards Segmentation

N O M AT T E R W H AT, S E T T H E B O U N D A R I E S F I R S T

© MERCER 2019 23

W I T H A L I T T L E I N N O V AT I O N T O S T A N D O U T

Sick Leave

Donation

Digital Staff Kitchen

Date Night for

Working Parents

Six months’

supply of

Diapers

Free Behavioral

Therapy

Eyebrow

Trimming

On-site

Physiotherapist

Emergency

Nanny

Music to my

Ears

Transgender

Surgery

© MERCER 2019 24

R E M E M B E R … . .

B E S T F I T , N O T B E S T P R A C T I C E !

© MERCER 2019 25