Businesses and communities in Asia Pacific were among the first impacted by the COVID-19 pandemic, with thousands of employers and millions of employees affected. More than a year on, the crisis is far from over, but there are signs of optimism and recovery in some markets. For starters, GDP growth is expected to rebound across the region and outperform the global average this year.
Organisations are wasting no time attempting to bounce back. While the past year has been marred with budget cuts, shutdowns and lay-offs, employers have familiarised themselves with the situation, and adapted quickly to address workforce challenges. Employers are trying to not only pick up where they left off, but also use new learnings to do even better through recovery.
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01
Employers are adopting a pay-for-performance approach
Organisations have been differentiating pay by employee performance long before the pandemic began. Although last year saw a wave of headcount reductions, salary freezes and deferments, pay-for-performance has remained encouragingly consistent.
According to our 2020 Salary Budget Planning Survey Report Q4 – Asia Pacific, 21.7% of the average salary budget allocation was given to the top performing 10.5% of the employee population. The rest of the budget pie was shared with above average performers (30.8% of the employee population) who received 28.9% of the budget and average performers (52.9% of the employee population) who took a 44.1% share of the budget.1
These numbers show us that despite the disastrous events of 2020, organisations in the region were still willing to reward their best performers – those helping them survive the crisis – and continue to walk the talk when it comes to paying for performance.
with the top performing 10.5% receiving 21.7% of salary budgets, 30.8% above average performers receiving 28.9% and 52.9% average performers receiving 44.1%.
Figure 1. More than 20% of salary budgets are being awarded to top performing employees in Asia Pacific -
02
Recognising the need for a hybrid model for rewards and pay
With the pandemic changing the way work is done, pay and benefit programs will also need to adapt and evolve. Findings from our Flexible Work and Rewards Survey: 2021 Design and Budget Priorities show that 30% of organisations in the region recognise the need for a hybrid model for rewards and pay.2 These employers see a need to adopt a pay and rewards design that is responsive to the changes and demands in the workplace, such as factoring in geographic differentials for employees working in varied locations and the remote work-related expenses that employees are shouldering.
Adopting a hybrid model for pay will also provide flexibility for organisations to put a premium on critical skills to gain an edge in the talent market.
Greater China 50%, Philippines 50%, Malaysia 33%, India 30%, Thailand 30%, Indonesia 25% and Singapore 25%.
Figure 2. Pecentage of organisations in Asia Pacific recognising that new requirements for work require a hybrid model for rewards and pay -
03
Increasing adoption of alternative and flexible work arrangements
There has been a dramatic increase in the number of employees working from home, which is expected to continue in 2021 and beyond. Security and health concerns were the main reason for organisations to provide flexible work arrangements, such as remote working.2 It’s safe to say that most organisations acted in response to the situation, implementing safety protocols to contain the spread of the virus. However, employers see employee retention and engagement as increasingly important reasons also, recognising that a positive employee experience can be a game-changer. This presents an opportunity for organisations to look into how flexible work arrangements can be an effective tool for attracting and retaining talent and enhancing productivity.
Singapore 37%, Philippines 34%, Indonesia 33%, India 30%, Malaysia 28%, Thailand 27% and Greater China 12%
Figure 3. Proportion of Asia Pacific employees expected to be working remotely in three years -
04
The pandemic has spurred digital transformation, leading to higher demand for digital talent
The urgent fast-tracking of digital transformation in many organisations is one of the most extraordinary and few silver linings that can be taken away from 2020. The pandemic has pushed organisations to achieve digitalisation milestones that should supposedly take years to achieve. Moreover, this has increased the demand for digital talent as organisations look for talent with critical skills to help in setting up and maintaining an IT infrastructure to support remote working, cyber security, and powering the pandemic-induced boom of e-commerce, to name a few.
According to our HR Omni Index, IT Development tops the list of the hottest digital functions in demand in China, followed by Data Science and Business Intelligence, and IT Administration.4 In Hong Kong and Singapore, Digital Marketing and Sales, Digital Business Operations and Business Development roles are highly sought after, as organisations look to prioritise growth alongside their digital transformation.
with IT Development top with HR Omni Index rating of 83, Data Science and Business Intelligence second at 78, IT Administration third at 69.
Figure 4. China’s top three digital functions in 2020 from our HR Omni Index -
05
Understanding the role of skills in pay decisions
As mentioned above, one of the associated impacts of digital transformation in the workplace is the higher demand for digital talent with specialised skills. Therefore, it’s becoming increasingly important for organisations to employ skill-based pay differentiation, and place the value on what makes the biggest difference – critical skills. Across Asia Pacific, Data Science and Business Intelligence functions receive a 30% pay premium in Singapore and China, while functions supporting Digital Business Operations in India, receive a 36% premium.3
The value of skills to an organisation can change frequently as the required skills for a role may change over time as technology evolves. With the help of intuitive data and software, it can be easier for compensation professionals to conduct skill valuations and pay data analyses. Equipped with innovative tools and technology for appraising skills and appropriating pay, more employers may find it easier to shift from role-based to skill-based pay in order to add a layer of flexibility when it comes to making critical pay decisions post-pandemic.
There’s no telling when the crisis will truly be over. Markets across Asia Pacific are moving at differing paces of recovery and facing different challenges. But one thing’s for sure, employees and employers in the region have shown great resilience as they learned to navigate and thrive in such difficult times. As organisations now put their best foot forward, they need to attract and retain the very best people, and that means getting pay and workforce planning right.
Sources
1 Willis Towers Watson Salary Budget Planning Survey Report – Asia Pacific (2020 Q4 edition)
2 Flexible Work and Rewards Survey: 2021 Design and Budget Priorities
3 2020 Willis Towers Watson General Industry Compensation Survey – Asia Pacific
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