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 Updateby Sambhav Rakyan, Leader, Global Data Services SEA

Vietnam Total Compensation Survey Findings 2012by Trang Vu, Manager, Global Data Services Vietnam

Coffee Break & Networking

2012-2013 Talent Management & Rewards Studyby Dung Kieu, Consultant, Global Data Services Vietnam

LunchIndustry Forum: Financial Services, High Tech,

& Pharmaceutical

Agenda

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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)

2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.

Asia PacificlExpected to continue to outperform all other regions, developed oremerging, in terms of economic growth.lChina and India, the regions two economic engines, are bothexpected to post lower GDP growths in 2012 due to domestic fiscalpolicy and lower agricultural output, respectively.

Eastern EuropelOngoing recession in the Euro zone is expected to continueaffecting the region, with weaker export growth and industrialoutput, coupled with low domestic demand.

Latin AmericalThe regions economic growth is projected to slow down to 3.1% in2012, mainly because of the ongoing problems of its two main tradingpartners, the US and EU, and its largest economy Brazil alsoregistering slower growth.

Middle East & North AfricalThe region is projected to experience slight growth, on the back ofstill-high oil prices and continued strong growth in its oil-producingcountries.

GDP

Slowdown continues, however

4

APAC EasternEurope

LatinAmerica

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 (3rd Quarter)

Global GDP


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

4.56.0

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 (%)


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 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.7* Source: Economist Corporate Network, Asian Business Outlook Survey 2012

lGlobal revenues from Asian MNCscontributed to just under 19% of theirglobal revenues

l Mining, metals & minerals sector hasby far the largest share of globalrevenues coming from Asia (50%)

l Asia contributes the least share inrevenues for healthcare, financialservices and consumer goods.

By 2016, Asia is expected to contribute 28% of their global revenues*

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l Revenues in Asia Pacific have generally been increasingl 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


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 blueDownward projections 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


India and Vietnam are projecting the highest salary increase rates in the region in 2012 and 2013

GENERAL INDUSTRY

10

Salary Increase



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



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



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

Source: 2012 Salary Budget Planning Report Asia Pacific


Vietnam Economic LandscapeVietnam Economy Figures


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 marketwith 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 Inflationexpected to moderate to 9.2% compared to 18.7% in 2011

External demand continues to weaken


2 years: 100,000 business has withdrawn from the market

Business is very tough now: a significant number ofcompanies has suffered from huge losses while number ofenterprises having profit is just a few. To date, 30% ofcompanies has dissolved, or deactivated, the remaining 70percent of businesses are striving. The forecasted numberof companies dissolved or shut down in 2012 is 50,000,plus approximately 50,000 companies dissolved, shutdown last year. With this estimation, the total number ofcompanies withdrew from the market in two years (from2011 to 2012 ) would be up to 100,000 businesses, equalto 50% of the total number of companies withdrewfrom the market in the past 20 years. It is really a worth-warning sign. Besides, in the next 1 - 2 years, enterpriseswill be expected to continue to cope with this hardship VuTien Loc, Chairman of Vietnam Chamber of Commerceand Industry

Challenge ahead


Survey Findings Best Practices from Leading Companies2012 Total Compensation Survey


Survey Profile

250Firms

Over 63,000 incumbents

235Foreign Firms

15Local Firms

10 years

20 years

50 years

100 years

Over100 years

Years in Business

Source: 2012 Towers Watson Total Compensation Survey General Industry - Vietnam


We have a growing compensation database

Computer Hardware & Office Equipment

Electronic, Electrical & Scientific Equipment & Components

IT Consulting /Solutions

Others Semiconductors

Software Products & Services

45

43

4430

18

21

49

Financial Services High Tech Manufacturing PharmaceuticalRetail Consumer Products Others

Number of Participants in different industries

45% Growth



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 25FTE (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


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



Workforce Profile

22

Workforce Education Level

Median Age

31

Professionals

36

Middle Management

40

Senior Management

44

TopManagement

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 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.23Source: 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 Vietnaml 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/TechnicalService Support

Production/OperationSupport

Overall

2011 Actual 2012 Projected 2013


General Industry Salary Increase Vietnam

12.2

14.714.3

14.8

13.813.4

12.1

13.413.0

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



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


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



Ph. DGraduates

Non-UniversityGraduates

First Degrees/UniversityDegrees

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

Minimum salary

Entry Level Graduate Salaries

67%

100%



General Industry Turnover Ratel The overall turnover rate has decreased from 13.1% in 2011 to 12.3% in 2012l 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/TechnicalSupport

Production/OperationalSupport

Overall

2011 2012


Turnover Rate By Industry

29Source: 2012 Towers Watson Total Compensation Survey General Industry - Vietnam


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 2012 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.31Source: 2012 Salary Budget Planning Report Asia Pacific

Better pay, growth and career opportunities are seen as key reasons for staff leaving their current organisations


Hot Jobs

Jobs will be hired

Jobs hard to retain & recruit



Career Band Pay Mix Comparison

E Executive/Senior ManagementM Supervisory/ManagementP - Professionals

S Customer & Client Management, Sales ProfessionalsV Medical Sales RepresentativesT Technical Support

U Business SupportW 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



Pay Mix of Executive Band



Pay Mix of Management Band



Pay Mix of Professional Band



Pay Mix of Sales Band



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



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 TechnicalSupport

BussinessSupport

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%


Fixed Cash Allowances

GasolineOthers

MealCommunicationTransportation

GasolineOthers


GasolineOthers


GasolineOthers


GasolineOthers

MealCommunicationTransportationE Executive/Senior Management

M Supervisory/ManagementP - Professionals

S Customer & Client Management, Sales ProfessionalsV Medical Sales RepresentativesT Technical Support

U Business SupportW Productions/Operations



1.6

1.11.3

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

Mon

th o

f Bas

e Sa

lary

(MB

S)

41

Variable Bonus is higher this year compared to 2011, with Sales earning decrease a little bit to 3.5 MBS



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

20112012



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



Cars Benefit

57%

43%

Yes No

Companies Provided Car

Employee Eligibility



Closing Thoughts


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


Key Findings

47

13.8%Actual Salary increase 2012

(excl. promotion)

1 MonthFixed bonus

2.3 MonthsVariable pay

Benefits

HealthcareAccident InsuranceSocial Activities

Allowance

Meal allowanceCommunicationTransportation

Source: 2012 Financial Services Compensation Survey Vietnam

12.3% Staff Turnover


Closing Thoughts


#1 : Define clearly, the Role of each item of Reward Delivery

Location Specific Considerations

Merit Pay

IncreaseBonuses ESOPAllowances

Base Salary

Increases

Shareholder Value Creation

Retention (Key Talent)

Corporate Performance

Business Unit Performance

Individual Perf. KPIs / Competencies

Job Size / Responsibility

Inflation

Market Competitiveness

BenefitsBase

SalaryDrivers

Location Specific Considerations

Merit Pay

IncreaseBonuses ESOPAllowances

Base Salary

Increases

Shareholder Value Creation

Retention (Key Talent)

Corporate Performance

Business Unit Performance

Individual Perf. KPIs / Competencies

Job Size / Responsibility

Inflation

Market Competitiveness

BenefitsBase

SalaryDrivers

Agree Somewhat agree

For Illustration Only


Categories Top/ Senior Management Middle

ManagementJunior

ManagementTalent 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 67th percentile Median Median

Pay range spreads 200%+ 200-150%+ 150%

Total Annual Cash (Fixed Pay + Annual Incentive Pay) Positioning

67th to 75th percentile Median to 67thpercentile

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



PGO

I

Yr 2 Yr 3Yr 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


Rising Stars (15%)Base Salary: Market Competitive between 50th and up to 75thpercentile

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 75th 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 50th and 75thpercentile

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 75th 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


#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, RecruitingTalent 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 scenariosCompensation Design

Talent|REWARD


Contact Us

Vu Thi Huyen Trang84-8-3821 9488 (ext. 188)[email protected] Thi Hanh84-8-3821 9488 (ext. 208)[email protected] Thi Anh Nguyet84-8-3821 9488 (ext. 198)[email protected] Thi Bao Ngan84-8-3821 9488 (ext. 148)[email protected] Thi My Le84-8-3821 9488 (ext. 318)[email protected]

Towers Watson VietnamSuite 808, 8th Floor Sun Wah Tower115 Nguyen Hue Blvd, District 1Ho Chi Minh City, Vietnam T +84 8 38219488F +84 8 38219489


Thank You

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