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Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited
A look at current trends and data
A look at current trends and data
Global salaries expected to rise
According to the 2008 Global Compensation Planning Report by Mercer, global salaries are expected to rise by an average of 6 percent in 2008 – 1.9 percent above inflation. The study of 62 countries worldwide shows a strong correlation between 2008 forecasted inflation and forecasted average pay increases, but also reveals wide global variation in both projections. India can expect one of the highest pay increases in the world at 14.1 percent, which is nearly 10 percent above local inflation, while North America and most Western European countries will experience the lowest salary increases worldwide.
Steve Gross, worldwide partner and global head of broad-based performance and rewards consulting at Mercer, comments: “Some multinational companies are experiencing labor cost savings of 75 percent by sourcing labor from emerging markets. On the flip side, they generally need to invest more in employing supervisory staff and in training. We are starting to see that short-term cost savings from sourcing labor in emerging markets can evaporate over time. It is therefore essential for multinational companies to consider both current pay levels and future salary increases when deciding where to source their labor.”
Variations by region
In Western Europe, the report shows that Ireland is predicted to experience the highest actual salary increase at 4.7 percent, as well as the highest increase above inflation at 2.6 percent. UK pay is projected to increase by 3.1 percent, which is 1.1 percent above inflation. Projected salary increases remain fairly consistent across Western Europe, with actual increases averaging 3.4 percent and increases above inflation averaging 1.3 percent.
In Eastern Europe, actual pay increase levels are forecast to stay among the highest in the world, at an average of 6.9 percent. Because inflation rates are also expected to remain high in this region (4.6 percent on average), increases above inflation will average only 2.3 percent.
In North America, modest pay increases and inflation rates are forecast for next year in both the USA and Canada, with average salary increases above inflation expected at 1.9 percent in the USA and at 1.8 percent in Canada. In the Asia Pacific region, pay increases will pick up next year, with actual increases expected to reach 6.6 percent and increases above inflation reaching 3.3 percent. In Australia and New Zealand, pay rises are more modest, projected at 4.0 percent and 3.9 percent while inflation is likely to be 2.5 percent and 2.6 percent.
For more information visit www.imercer.com/gcpr
Employers reward workers for healthy behavior
With continuing pressure to control healthcare costs, more companies plan to offer financial incentives to reward workers who adopt healthy lifestyles. This is according to the 2007/2008 Staying@Work Survey by global consulting firm Watson Wyatt and the National Business Group on Health, a non-profit association of 285 large employers, in which 355 large employers took part. Nearly half (46 percent) of employers surveyed currently offer financial incentives to encourage workers to monitor and improve their health or plan to offer incentives next year. By 2009, that number is expected to surpass 70 percent.
The survey also found that companies with effective health and productivity programs demonstrate superior performance. They achieve 20 percent more revenue per employee, have 16.1 percent higher market value and deliver 57 percent higher shareholder returns (from 2004 to 2006). Additionally, companies with highly effective health and productivity programs have cost increases that are five times lower for sick leave; four and one-half times lower for long-term disability; four times lower for short-term disability; and three and one-half times lower for general health coverage.
More companies are planning to connect employee health to company goals, the survey found. Almost one-third of employers (29 percent) currently link health and productivity programs to their broader initiatives, or plan to in 2008. Another 26 percent plan to do so in 2009. Employers are also implementing various programs to engage employees in managing their own health. Yet, while both companies and their workers say that a healthy workforce is a priority, accountability remains low.
For more information visit www.watsonwyatt.com
Staff need more support if businesses are to grow
New research by The Forum Corporation shows that staff play a vital role in the growth of a firm, yet receive inadequate support from senior management. The global survey of just over 300 executives from North America, Europe, and Asia-Pacific looks at firms that have achieved exceptional growth versus the industry average, benchmarking the attributes and performance of staff in leading growth.
At top-performing firms, 80 percent of senior executives cite the importance of staff in bringing about growth (two-thirds of senior executives at less successful growth firms agree). Yet in spite of this recognition, staff who are tasked with leading growth believe that their seniors have failed to give them sufficient guidance. Nearly two-thirds (64 percent) claim they have been under-prepared, while one in ten reveal they have been given no preparation whatsoever by senior staff.
The key complaint identified by those staff involved in leading growth is a lack of training, education and coaching. Eighteen percent cite the need for much greater management direction and support if they are to effectively champion growth within their organization. By contrast, this compares with only 4 percent arguing that they need to be given greater independence and decision-making authority.
Agility, leadership and cultural change
The need to better support staff is further reinforced by the survey’s analysis of what makes businesses grow. Essentially, it is firms with greater leadership and agility that succeed – by creating new chains of responsibility and ownership across an organization.
Top performing firms are 57 percent better at building “a climate of ownership” and are a third better at following through strategy and business development. They are 81 percent more able to “assign clear roles and accountability” to others and twice as likely to challenge policies and processes that impede their firm’s organic growth.
Less successful firms are able to focus on areas that affect growth, but fail to combine this with the agility, leadership and cultural change of their more successful peers. Staff at less successful firms in fact outstrip their more successful peers in two important strategic areas: product development (58 percent) and innovation strategies (57 percent), but fail to combine this with the vital agility to allow real change and success.
For more information visit www.forum.com
Survey points to looming leadership and skills crisis
The IBM Human Capital Management Survey points to a looming leadership crisis, as well as a skills crisis. Traditional means of talent acquisition, development and management are undergoing fundamental changes as corporations are becoming more global, virtual and integrated. As a result of these shifts, the global IBM study suggests that companies are placing their growth strategies at risk if they cannot identify and develop the next generation of leaders. The old rules no longer apply and global business now faces a leadership crisis.
According to the survey of over 400 HR executives in 40 countries, more than 75 percent stated that they are concerned with their ability to develop future leaders. Also, the study pinpoints the importance of the adaptable workforce as a precursor for future organizational success. There are many factors contributing to the leadership crisis including:
The need to source talent and ideas wherever they reside in the world.
The expansion of global operations in emerging economies.
An increase in the number of senior leaders retiring as a result of the aging workforce.
Developing a workforce that is adaptable to change has become essential. The study identifies three critical success factors to developing such an adaptable workforce – the ability to predict future skills, to locate experts and to foster collaboration.
For more information visit www.ibm.com