Good news! Employees may expect a 4.5% pay rise in 2013

A 2-month bonus payout is also coming your way in the next 12 months.

In a media release, Hay Group, the global management consultancy, said that for companies to rise up to the productivity challenge in the current global economic climate and the tight labour market, companies need to actively engage and enable their workforce.

Hay Group's market assessment was based on a survey that was conducted in March 2012, covering over 451 Singapore-based companies (local and foreign-owned) from both the private and public  sectors. They were polled on their business sentiments and salary and bonus projections for the next 12 months.

Working smarter, not harder
The report indicated that 51 percent of the surveyed companies are streamlining their business processes through workflow redesign and 42 percent are investing in ramping up their technology infrastructure.

With labour costs forming a large expense component for many companies and human ingenuity the main source of competitive advantage, unlocking the productivity potential of human capital will be the competitive advantage of successful firms.

According to the report, companies are driving productivity through initiatives in talent retention, employee engagement and leadership development, with 82 percent of the surveyed companies indicating that such initiatives will contribute to higher business performance. Some of the initiatives deployed by companies in the survey include developing strategic reward practices, reskilling of employees, redesigning jobs, outsourcing non-core jobs, and reemployment of older workers.

Mr Victor Chan, Regional General Manager (Singapore and ASEAN) for Productized Services, Hay Group, said, “In order for us to understand the productivity equation, organisations need to define the meaning of productivity in their context. In our view, productivity improvement must ultimately increase business results and contribute to improvements in the bottom line.”

He added, “From our report, most organisations focus on streamlining business processes and technology improvements to increase output. However, they must also focus on driving workforce engagement to harness the full benefits of their business processes and technology investments. 

Salary increases
The report showed that the actual average salary increases are 5.2 percent for 2012 while average salary increases for 2013 are forecasted at 4.5 percent.

The top three sectors with the highest average salary increases are Industrial Goods (6.8 percent), Oil & Gas (6.6 percent) and Natural Resources (6.6 percent).

Mr Chan said, “When making recommendations on salary increments, organisations take into account factors such as the uncertainty in the Euro zone, Singapore‟s rising inflation index, tight labour market and restrictions imposed on foreign worker recruitment. These factors would play a huge part in the 2012 salary increase movement of 5.2 percent.”

Bonus payout
The Hay Group report also showed that the actual average variable bonus (i.e. performance-based bonuses excluding annual wage supplement, contractual bonuses) is 2.5 months for a 12-month period.This is slightly lower than the average of 2.7 months in 2011.

A breakdown by employee level revealed that Middle Management received an average variable bonus payout of 2.7 months, followed by 2.6 months for Senior Management, 2.5 months for Junior Professionals and 2.2 months for Clerical Support.

The forecast average variable bonus payout is 2.3 months for the coming 12 months.

Hiring outlook for 2012
Reflecting the uncertainty in business sentiments, 37 percent of the surveyed organisations plan to increase staffing levels by five to 10 percent, compared to 50 percent this time last year.The Hay Group report stated that the employee group in high demand are Technical Specialists (47percent), Middle Management (30 percent) and Junior Professionals (25 percent). 

Drilling down into job functions, the main focus of recruitment is on Engineering (38 percent), Sales (36 percent), Finance & Accounting (33 percent) and Administration/Support Service (33 percent). Mr Chan said, “It is not surprising that the sales function features highly in the top three most recruited. Organisations are aware that having a high achieving sales team could generate surplus revenue streams to cover revenue gaps especially in the current economic context.”