Towers Watson 2012 Talent Rewards Summit - Vietnam

2011 Towers Watson. All rights reserved.
Towers Watsons Seminar

WELCOME!
2011 Towers Watson. All rights reserved.
2
2012 Talent & Rewards Summit
Regional Update
by Sambhav Rakyan, Leader, Global Data Services SEA
Vietnam Total Compensation Survey Findings 2012
by Trang Vu, Manager, Global Data Services Vietnam
Coffee Break & Networking
2012-2013 Talent Management & Rewards Study
by Dung Kieu, Consultant, Global Data Services Vietnam
Lunch
Industry Forum: Financial Services, High Tech,
& Pharmaceutical
Agenda
towerswatson.com
2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
3
Source: EIU Country Briefing Report, Sep 2012
l Strongest GDP growth still lies in Asia Pacific, particularly in China;
l However, growth rate is expected to flatten out starting from 2013
Global Outlook Actual & Forecasted GDP (2007 2016)
Asia Pacific
lExpected to continue to outperform all other regions, developed or
emerging, in terms of economic growth.
lChina and India, the regions two economic engines, are both
expected to post lower GDP growths in 2012 due to domestic fiscal
policy and lower agricultural output, respectively.
Eastern Europe
lOngoing recession in the Euro zone is expected to continue
affecting the region, with weaker export growth and industrial
output, coupled with low domestic demand.
Latin America
lThe regions economic growth is projected to slow down to 3.1% in
2012, mainly because of the ongoing problems of its two main trading
partners, the US and EU, and its largest economy Brazil also
registering slower growth.
Middle East & North Africa
lThe region is projected to experience slight growth, on the back of
still-high oil prices and continued strong growth in its oil-producing
countries.
GDP
Slowdown continues, however
4
APAC
Eastern
Europe
Latin
America
Middle East
& North
Africa
the economic prospects seem brighter for the emerging markets
compared to the developed ones
Source: 2012 Asia Pacific HR Trends Result Report (3
rd
Quarter)
Global GDP
towerswatson.com
5
3.2
7.7
1.6
6.0
5.8
2.0
4.9
5.4
2.4
1.3
6.0
5.3
3.0
8.6
2.2
6.3
6.5
1.2
4.5
6.0
4.0
2.5
4.2
5.9
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0
AUS
CHI
HGK
IND
INA
JAP
MAL
PHI
SIN
TAI
THA
VIE
2013 (Projected)
2012
China and India are expected to continue to be the main growth
drivers in APAC
supported by healthy economic
growth in Indonesia, India, Vietnam and the Philippines
Asia GDP
Source: EIU Country Briefing Report, Nov 2012
Percentage (%)
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6
Asia CPI
Source: EIU Country Briefing Report, Nov 2012
Vietnam and India are expected to post the highest inflation rates in
the region in 2012
while Japan is the only country in APAC
projected to experience deflation in 2013
Percentage (%)
2012
2013 (Projected)
2.1
3.1
3.7
4.5
9.2
0.0
1.7
3.4
4.4
2.3
3.1
9.2
3.0
5.0
4.3
5.7
8.2
-0.4
2.2
3.9
3.6
2.0
2.6
6.6
-2.0 0.0 2.0 4.0 6.0 8.0 10.0
AUS
CHI
HGK
IND
INA
JAP
MAL
PHI
SIN
TAI
THA
VIE
towerswatson.com
7
* Source: Economist Corporate Network, Asian Business Outlook Survey 2012
lGlobal revenues from Asian MNCs
contributed to just under 19% of their
global revenues
l Mining, metals & minerals sector has
by far the largest share of global
revenues coming fromAsia (50%)
l Asia contributes the least share in
revenues for healthcare, financial
services and consumer goods.
By 2016, Asia is expected to contribute 28% of their
global revenues*
towerswatson.com
l Revenues in Asia Pacific have generally been increasing
l However, revenue growth prospects are projected to slow down in 2012
8
Increase to
more than 20%
Increase
10% to 20%
Stay
the
same
Increase
Up to 10%
Decrease
5%
How did your revenues in Asia grow (or decline) in 2011 and what do you expect in 2012?
Asia Revenue Growth (2011 2012)
Increase
Source: Economic Corporate Network, Asia Business Outlook Survey 2012
towerswatson.com
9
What is your organization's business revenue outlook for the next 12 months? (June 12 June 13)
Asia Revenue Growth 2013 (Projected)
l Revenue growth projections for 2013 are slowing down as most firms are only projecting
revenues to increase up to 10%
Up by 6-10%
Up by 0-5%
Upward projections shown in blue
Downwardprojections shown in red
Source: 2012 Salary Budget Planning Report Asia Pacific
2%
1%
5%
3%
31%
22%
31%
20%
8%
-10% -5% 0% 5% 10% 15% 20% 25% 30% 35%
Projections are down by 21% or higher
Projections are down by 11-20%
No change in projections
Projections are up by 0-5%
Projections are up by 21% or higher
towerswatson.com
India and Vietnam are projecting the highest salary increase rates in
the region in 2012 and 2013
GENERAL INDUSTRY
10
Salary Increase
rd
Quarter)
towerswatson.com
CPI vis--vis Salary Increase Rates
General Industry 2011 2012
In 2012, projected salary increase rates are generally 2% higher than
inflation figures
with notable projected salary increases in China, India, and Indonesia
AUS CHI HKG IND INA JAP MAL PHI SIN SKR TAI THA VIE
2011 CPI 2011 SI
AUS CHI HKG IND INA JAP MAL PHI SIN SKR TAI THA VIE
2012 CPI 2012 SI
11
CPI vis--vis Salary Increase
rd
Quarter)
towerswatson.com
12
Which of the following best describes your
organizations thrust in terms of managing costs?
When it comes to Human Capital Cost Control measures ...
a recent survey shows that cost control measures are likely to be
more stringent going forward
rd
Quarter)
towerswatson.com
Hiring Freeze & Adoption of alternative low-cost recruitment
channels are seen to be the most common cost measure used by
companies
13
Common Cost Measures Used by Companies
Hiring Freeze
Adoption of alternative low-cost recruitment
channels
Cutting down on Training budgets
Zero Salary increase
Cutting down on employee welfare programs
towerswatson.com
Vietnam Economic Landscape
Vietnam Economy Figures
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Economic Overview
Source: Economist Intelligence Unit Report, November 2012
0.6% decline in
GDP growth rate
from 2011 to 5.3% in
2012
Not really healthy
employment market
with unemployment at
4.1%, below the world
average rate (4.82%)
Domestic demand
growth
supported by both
private & public sectors
5.3% 4.1%
6.6%
Domestic demand
expected to be key driver of
economic growth
The dong has
remained stable
against the dollar
Consumer Price Inflation
expected to moderate to 9.2%
compared to 18.7% in 2011
External demand continues
to weaken
towerswatson.com
16
2 years: 100,000 business has withdrawn from the market
Business is very tough now: a significant number of
companies has suffered from huge losses while number of
enterprises having profit is just a few. To date, 30% of
companies has dissolved, or deactivated, the remaining 70
percent of businesses are striving. The forecasted number
of companies dissolved or shut down in 2012 is 50,000,
plus approximately 50,000 companies dissolved, shut
down last year. With this estimation, the total number of
companies withdrew from the market in two years (from
2011 to 2012 ) would be up to 100,000 businesses, equal
to 50% of the total number of companies withdrew
from the market in the past 20 years. It is really a worth-
warning sign. Besides, in the next 1 - 2 years, enterprises
will be expected to continue to cope with this hardship Vu
Tien Loc, Chairman of VietnamChamber of Commerce
and Industry
Challenge ahead
towerswatson.com
Survey Findings Best Practices from Leading Companies
2012 Total Compensation Survey
towerswatson.com
Survey Profile
250
Firms
Over
63,000
incumbents
235
Foreign Firms
15
Local Firms
10 years
20 years
50 years
100 years
Over
100 years
Years in Business
Source: 2012 Towers Watson Total Compensation Survey General Industry - Vietnam
towerswatson.com
We have a growing compensation database
Computer
Hardware & Office
Equipment
Electronic,
Electrical &
Scientific
Equipment &
Components
IT Consulting
/Solutions
Others
Semi
conductors
Software Products
& Services
45
43
44
30
18
21
49
Financial Services High Tech Manufacturing Pharmaceutical
Retail Consumer Products Others
Number of Participants in
different industries
45% Growth
towerswatson.com
20
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Expert
T1 T2
Entry Interm.
GENERAL ALIGNMENT OF GLOBAL GRADES TO CAREER LEVELS
Revenue (US$)
$75m $150m $500m $1bn $2bn $5bn $10bn $50bn $100b
16 17 18 19 20 21 22 23 24 25
FTE (Full Time Equivalent) Employees
90 240 620 1.6K 4.1K 10.6K 27.5K 75K 200K
Senior Lead
Technical Support (T)
T3 T4
15
Executive/Senior Management (EX)
16 17 18 19 20 21 22 23 24 25
Supervisory/Management (M)
M1 M2 M3 M4 M5
Supervisor Manager Sr. Manager
Group
Mgr.
Sr.
Group
P2 P5
Interm.
Sr.
Professionals (P)
P1 P3 P4 P6
Entry Career Expert Elite Expert
U2 U3
Interm. Senior Lead
Business Support (U)
U1 U4
Entry
Towers Watsons General Industry Total Rewards Survey Alignment
S2 S5
Interm.
Sr.
Expert
Sales Professionals (S)
S1 S3 S4 S6
Entry Career Expert Elite Expert
Our 2012 database this year has 63,000+
incumbents with 1000+ reported General
Industry specific jobs
W2 W3
Interm. Senior Lead
Productions/Operations (W)
W1 W4
Entry
Project Manager, Team Leader,
Supervisor, HR Manager, Sales Manager
Area Sales Manager,
Client Relationship Manager
IT Helpdesk,
Data Analyst
Clerk, Driver,
Dispatch
Legal Executive, HR Executive, IT
Analyst
CEO, COO, Head HR, Head - Sales
Operator, Mill Worker
towerswatson.com
Data Distribution
21
0
2000
4000
6000
8000
10000
12000
14000
16000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Data Distribution
by Global Grade
Data Distribution
by Career Level
towerswatson.com
Workforce Profile
22
Workforce
Education Level
Median
Age
31
Professionals
36
Middle
Management
40
Senior
Management
44
Top
Management
37
Senior
Professionals
Career progression by age
71.1%
78.7%
90.7%
92.4%
91.8%
70.2%
25.8%
17.1%
0.0% 50.0% 100.0% 150.0%
Executive
Senior Management
Middle Management
Professional
Sales Professional
Business/Technical Support
Bachelor Diploma MBA PhD
78%
19%
3%
Bachelor Diploma MBA PhD
towerswatson.com
23 Source: 2012 Towers Watson General Industry Compensation Survey - Vietnam
l Rates are expected to remain constant or increase slightly across all career bands.
General Industry Salary Increase Vietnam
l The General industry has seen an overall increase of 13.8% in 2012
12.0%
13.0% 13.0% 13.0% 13.0%
12.8%
13.8%
13.3%
13.4%
13.6%
13.7%
13.8%
13.0%
12.9%
13.3%
13.4%
13.9%
12.3%
11.0%
11.5%
12.0%
12.5%
13.0%
13.5%
14.0%
14.5%
Executive Management &
Supervisory
Professional Business/Technical
Service Support
Production/Operation
Support
Overall
2011 Actual 2012 Projected 2013
towerswatson.com
24
General Industry Salary Increase Vietnam
12.2
14.7
14.3
14.8
13.8
13.4
12.1
13.4
13.0
15.2
14.0
13.1
0
2
4
6
8
10
12
14
16
Financial Services High Tech Pharmaceutical Manufacturing Retail FMCG
2012 Actual 2013 Projected
towerswatson.com
CPI vs. Salary Increase
7.8%
8.0%
7.4%
8.3%
23.1%
7.0%
9.0%
18.7%
9.2%
6.6%
8.0%
8.3%
10.7%
12.2%
18.6%
11.7%
12.8%
14.4%
13.8%
12.3%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
04 05 06 07 08 09 10 11 12 13
CPI Salary Increase
Source: 2012 Towers Watson Total Compensation Survey General Industry Vietnam & EIU Country Briefing Report, Nov 2012
towerswatson.com
26
HR Budget
55%
28%
15%
Increase
Decrease
No change
Not decided at this point of time
0% 10% 20% 30% 40% 50% 60% 70% 80%
Introduction of new benefit(s)
More training and development
Update HR functional capability
Others
Increase in HR Budget
0% 10% 20% 30% 40% 50% 60% 70% 80%
Introduction of new benefit(s)
More training and development
Update HR functional capability
Others
Decrease in HR Budget
towerswatson.com
27
Ph. D
Graduates
Non-
University
Graduates
First Degrees
/University
Degrees
MBA
Graduates
VND 1.9M
VND 3M
VND 6M
VND 11M
l High salary increase (roughly more than 60%) from Bachelor to MBA graduates signifying
the monetary value added by pursuing a MBA.
VND 13M
VND 13.7M
VND 23M
VND 29M
Maximum salary
Minimumsalary
Entry Level Graduate Salaries
67%
100%
towerswatson.com
28
General Industry Turnover Rate
l The overall turnover rate has decreased from 13.1% in 2011 to 12.3% in 2012
l Professional & Supervisory and Technical/Business Support career levels record the highest
turnover rate
11% 11%
13%
12%
17%
13.1%
11.9%
11.3%
12.1%
12.5%
14.3%
12.3%
0%
5%
10%
15%
20%
Executive Management Professional Business/Technical
Support
Production/Operational
Support
Overall
2011 2012
towerswatson.com
Turnover Rate By Industry
29
towerswatson.com
30
30
Employee Turnover
* Data at average
21%
23.80%
21.00%
23.90%
16.90%
16%
0
0.05
0.1
0.15
0.2
0.25
0.3
2007 2008 2009 2010 2011 2012
Industry has highest rate Voluntary turnover rate
Pharmaceutical
Trading
High Tech
High Tech
FMCG
Financial Services
towerswatson.com
31
Better pay, growth and career opportunities are seen as
key reasons for staff leaving their current organisations
towerswatson.com
Hot Jobs
J obs
will be hired
J obs
hard to retain & recruit
towerswatson.com
Career Band Pay Mix Comparison
E Executive/Senior Management
M Supervisory/Management
P - Professionals
S Customer & Client Management, Sales Professionals
V Medical Sales Representatives
T Technical Support
U Business Support
W Productions/Operations
76%
75%
77%
69%
73%
72%
70%
73%
6%
7%
7%
6%
6%
5%
4%
6%
1%
3%
4%
6%
9%
11%
14%
8%
16%
16%
12%
19%
12%
12%
11%
14%
0% 20% 40% 60% 80% 100% 120%
E
M
P
S
T
U
W
Overall
Base 12 months Fixed Bonus Fixed Allowance Variable Pay
towerswatson.com
Pay Mix of Executive Band
34
towerswatson.com
Pay Mix of Management Band
35 Source: 2012 Towers Watson Total Compensation Survey General Industry - Vietnam
towerswatson.com
Pay Mix of Professional Band
36 Source: 2012 Towers Watson Total Compensation Survey General Industry - Vietnam
towerswatson.com
Pay Mix of Sales Band
37
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Salary Movement Annual Base Salary
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
2 4 6 8 10 12 14 16
Global Grade
2009
2010
2011
2012
Compound Annual Increase of 15% over 3 years
towerswatson.com
Total Cash Comparison by Location
Median of Total Cash
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
Executive Management Professional Sales Technical
Support
Bussiness
Support
Production
HCMC Hanoi
34%
difference
14%
difference
12%
difference
19%
difference
7%
difference
2%
difference
17%
difference
Overall, the average difference of all career level
between Hanoi and HCMC is
15%
towerswatson.com
Fixed Cash Allowances
Gasoline
Others
Meal
Communication
Transportation
Gasoline
Others
Meal
Communication
Transportation
Gasoline
Others
Meal
Communication
Transportation
Gasoline
Others
Meal
Communication
Transportation
Gasoline
Others
Meal
Communication
Transportation
E Executive/Senior Management
M Supervisory/Management
P - Professionals
S Customer & Client Management, Sales Professionals
V Medical Sales Representatives
T Technical Support
U Business Support
W Productions/Operations
towerswatson.com
1.6
1.1
1.3
4.0
1.1
1.7
1.2
1.6
1.9
2.0
1.9
3.5
1.9
2.6
2.5
2.3
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
W B T S P M EX Overall
2011
2012
M
o
n
t
h

o
f

B
a
s
e

S
a
l
a
r
y

(
M
B
S
)
41
Variable Bonus is higher this year compared to 2011, with Sales
earning decrease a little bit to 3.5 MBS
towerswatson.com
Top 5 Benefits Provided (Non Mandatory)
92%
82%
77%
71%
62%
91%
82%
75%
73%
68%
0% 20% 40% 60% 80% 100%
Health care
Life & Disability Insurance
Social Activities/Facilities/Gifts
Mobile Phone
Company Trip
2011
2012
towerswatson.com
Top Benefits Provision Healthcare
93%
86%
85%
77%
71%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Medical Examinations*
Clinical/ Outpatient
Hospitalization/Surgical
Dental
Maternity
towerswatson.com
Cars Benefit
57%
43%
Yes No
Companies
Provided Car
Employee
Eligibility
towerswatson.com
Closing Thoughts
towerswatson.com
46
Employer Need Employee Demand
HR Role
There is only one valid definition of a business purpose:
to create a customer.
Peter Drucker, The Practice of Management
towerswatson.com
47
Key Findings
47
13.8%
Actual Salary
increase 2012
(excl.
promotion)
1 Month
Fixed bonus
2.3
Months
Variable pay
Benefits
Healthcare
Accident Insurance
Social Activities
Allowance
Meal allowance
Communication
Transportation
Source: 2012 Financial Services Compensation Survey Vietnam
12.3%
Staff Turnover
towerswatson.com
48
Closing Thoughts
towerswatson.com
49
#1 : Define clearly, the Role of each item of Reward
Delivery
Location Specific
Considerations
Merit
Pay
Increase
Bonuses ESOP Allowances
Base
Salary
Increases
Shareholder Value Creation
Retention (Key Talent)
Corporate Performance
Business Unit Performance
Individual Perf. KPIs /
Competencies
Job Size / Responsibility
Inflation
Market Competitiveness
Benefits
Base
Salary
Drivers
Location Specific
Considerations
Merit
Pay
Increase
Bonuses ESOP Allowances
Base
Salary
Increases
Shareholder Value Creation
Retention (Key Talent)
Corporate Performance
Business Unit Performance
Individual Perf. KPIs /
Competencies
Job Size / Responsibility
Inflation
Market Competitiveness
Benefits
Base
Salary
Drivers
Agree
Somewhat agree
For Illustration Only
towerswatson.com
50
Categories
Top/ Senior
Management
Middle
Management
Junior
Management
Talent Market Prominent local & MNCs-
Top Local & Foreign
Banks / Financial
institutions
Prominent local
employers & General
Local Banks /
Financial institutions
General Business
Community (local
employers)
Fixed Pay (Base Pay + Allowances)
Positioning
Median to 67
th
percentile Median Median
Pay range spreads 200%+ 200-150%+ 150%
Total Annual Cash (Fixed Pay + Annual
Incentive Pay) Positioning
67
th
to 75
th
percentile Median to 67
th
percentile
Median
Ratio of Fixed Pay to Annual Incentive
Compensation
70:30 80:20 90:10
Long Term Incentive Compensation Yes Yes None
Benefits As Per Market Practice
Perquisites As Per Market Practice
#2 : Be prepared to differentiate Pay Positioning in Fast
Growing Markets
towerswatson.com
51
P
G
O
I
Yr 2 Yr 3 Yr 1
50% of the Super
Growth PGOI to be
shared amongst Super
Performers
Growth Plan
Super - Growth Plan
PGOI (Pre Global Operating Income) = Operating
Income before Global Allocations
#3 : Enable better Pay for Performance Leverage
through Short Term Incentives
towerswatson.com
52
Rising Stars (15%)
Base Salary: Market Competitive between 50
th
and up to 75
th
percentile
Annual Bonus: Average to above average payout for
business unit
LTIP: Selective participation
Career Path: To be monitored closely for future enhancements
in job skills and responsibility; provide stretch opportunities
Top Tier (5%)
Base Salary: Market Competitive at 75
th
percentile and above
Annual Bonus: Above average payout range for business unit
LTIP: Major Participation
Career Path: Ready for next responsibility with enhanced job
scope or skill set
Consistent Performers (50%)
Base Salary: Market Competitive between 50
th
and 75
th
percentile
Annual Bonus: Average payout for business unit
LTIP: No Participation
Career Path: To be coached in current job to grow skill or
responsibility
Significant Assets (25%)
Base Salary: Market Competitive around 75
th
percentile
Annual Bonus: Above average payout for business unit
LTIP: Selective Participation
Career Path: Evaluate for enhancements in current job skills or
responsibilities
PERFORMANCE
#4 : Make a Stronger link between Individual
Performance/ Potential and Rewards
towerswatson.com
53
#5. Use of Technology to integrate your HR Philosophy
and policies into reality
53
Automated job leveling
Automated TW leveling methodology GGS & Career Map
Career Framework methodology
Job Leveling
Performance Management, Learning Management, Career
Development & Succession Planning, Recruiting
Talent Management
Change
Management
Compensation &
Talent Programs
Manager
Effectiveness
Total Rewards &
EVP Statements
Involve managers in pay decisions
Provide real-time budget control
Compensation
Planning
Create survey data warehouse
Load employee, job and pay data
Market price jobs
Market Analysis
& Survey Admin
Create/model salary structures
Model costing scenarios
Compensation Design
Talent|REWARD
towerswatson.com
54
Contact Us
Vu Thi Huyen Trang
84-8-3821 9488 (ext. 188)
trang.thi.huyen.vu@towerswatson.com
Nguyen Thi Hanh
84-8-3821 9488 (ext. 208)
hanh.thi.nguyen@towerswatson.com
Pham Thi Anh Nguyet
84-8-3821 9488 (ext. 198)
nguyet.pham@towerswatson.com
Duong Thi Bao Ngan
84-8-3821 9488 (ext. 148)
ngan.duong@towerswatson.com
Nguyen Thi My Le
84-8-3821 9488 (ext. 318)
le.nguyen@towerswatson.com
Towers Watson Vietnam
Suite 808, 8th Floor Sun Wah
Tower
115 Nguyen Hue Blvd, District 1
Ho Chi Minh City, Vietnam
T +84 8 38219488
F +84 8 38219489
towerswatson.com
Thank You

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