CASH is still king when it comes to retaining or losing Asian corporate executives.
A study made by Bó Lè Associates, the largest executive search firm in Asia, showed that compensation is still the biggest determinant that prompts Asian corporate executives to leave their companies. This, in turn, apparently forces their employers to use cash incentives as their top retention strategy.
The survey was conducted at the end of 2011 with over 200 senior executives such as CEOs, COOs, CIOs and managing directors, VPs and AVPs, Senior HR managers and HR managers across industries in Greater China and Southeast Asia responding.
It showed that cash incentives were valued across the board as the most effective retention initiative overall, although individual industries differed in their choice of most valuable retention method.
“The financial-services sector in particular was found to heavily value higher bonuses, while changes to company culture edged out salary increases in IT by 14 percent. The consumer-goods industry, on the other hand, places heavy emphasis on strong leadership and organizational support,” the Bó Lè Associates report said.
Across industries, salary increases were the preferred retention strategy by 35 percent of the respondents, followed by higher performance variable bonuses at 18 percent, significant long-term incentives like stock options, 17 percent; additional benefits like medical, 13; strong leadership and organizational support, 11 percent, and implementation of changes to company culture, 6 percent.
The higher preference for the use of cash incentives as an employee retention mode appears to have been prompted by the behavior of the Asian executives themselves.
The survey results showed that 29 percent of the respondents identified “compensation” as the most common reason for executive departures.
Company performance was cited by 18 percent of the respondents, followed by lack of opportunities for input in business decisions at 15 percent; incompatibility with company culture, 10 percent; work-life balance, 10 percent; lack of trust in leadership, 9 percent, and career development opportunities, 9 percent.
For 2012, 51 percent of the respondents plan to hire executives to replace lost or reassigned executive employees, 21 percent are hiring to increase executive staff size for expansion, and 8 percent are hiring due to changes in business strategy or restructuring.
Fourteen percent of the respondents have no specific hiring plans, and only 6 percent are looking at a hiring freeze.
For talent acquisition, more senior executives now look to third-party headhunters to do the job than doing it in-house.
“Across all industries and company sizes, most employers in 2011 viewed outsourcing to executive search firms as the top option to acquire talent, at an average of 29 percent and up to 69 percent in the pharmaceutical and healthcare sector. This option was closely followed by in-house functions at 24 percent. This trend is expected to continue as executive search firms become an increasingly attractive option for acquiring executive level talent,” the report said.
