HKIHRM 2022 Pay Trend Survey Reveals the Driving Factors Influencing Salary and Benefits Practices By Chris Davis
Key takeaways:
Driven by a confluence of circumstances, including a talent shortage and staff quitting their jobs, employers are planning to increase their 2023 salary budgets, according to the Hong Kong Institute of Human Resource Management (HKIHRM) 2022 Pay Trend Survey findings.
Business performance, the salary offered by competitors and employees’ individual performance rank as the three foremost factors organisations considered when making their salary adjustment decisions.
Facing unpredictable economic and business headwinds as well as a tight labour market compounded by a skills shortage, almost two thirds of respondents that participated in the HKIHRM’s 2022 Pay Trend Survey indicated they are planning to increase employee salaries in 2023.
Based on the survey findings of the 117 responding companies which provided projection data for 2023, 68% of respondents plan to implement a pay rise, while 12% expected to implement a pay freeze. The remaining 20% had yet to conduct a forecast. For employees who are expected to receive a pay increase in 2023, the average projected pay adjustment is 3.6%.
Conducted between January and September 2022, the survey findings were based on pay adjustment and bonus incentives data provided by 178 companies from 12 different business sectors, employing about 120,000 full-time salaried employees. In 2022, Hong Kong employees received an average salary increase of 3.5%, the highest average increase since the COVID-19 outbreak began. According to the pay adjustment data provided by participating companies, the base pay adjustment for 2022 was 3.5% (weighted average). After deducting the 1.9% rise in the Composite Consumer Price Index from January to August 2022, the real base pay adjustment stood at 1.6%. Among the responding companies which provided data on pay adjustment, 96% offered a pay increase, while 4% froze their employees’ pay. Among the employees of these companies, an overwhelming majority, 98.3%, received a pay rise, while 1.7% experienced a wage freeze.
In 2022, small-sized companies (those with fewer than 500 employees) provided the biggest pay rise at an average of 3.9%. This was closely trailed by 3.6% on average by medium-sized companies employing between 500 and 1,000 staff and 3.4% for large companies employing more than 1,000 staff. For pay adjustment according to employee level, senior-level staff received the highest pay adjustment at 3.8%, while top-level staff lagged one percentage point behind at 3.7%. Middle level employees received 3.5% and general level employees received 3.4%.
Of the business sectors: telecommunications multi-media, and technology (TMT) and IT at 9.8% saw the highest pay increments in 2022, followed by banking and financial services 4.5% and accounting, professional services and business services at 4.3%. At 2.5% social services, NGOs, non-profit organisations/charities and the education sector offered the lowest pay increments in 2022. These were followed by medical, healthcare and related services, manufacturing and trading sectors which offered 2.9%. Of the major factors that companies took into account when making their pay adjustment decisions, the same as 2021, business performance was ranked as the main factor followed by pay adjustments offered by competitors/other companies in the market, which moved up one place from 2021, followed by individual employee performance in third place.
Guaranteed Bonus and Non-Guaranteed Bonus
Among the companies which provided data on guaranteed bonus payments in 2022, 42.8% reported they had guaranteed bonus scheme in place during the survey period. The average size of guaranteed bonus was 1.09 months of base pay – slightly above the level of 1.01 in recent years. Meanwhile, among the companies which provided data on non-guaranteed bonuses, 92.9% reported that they had a non-guaranteed bonus scheme in place during the survey period. Among all the employees of these companies, 71% were eligible for a non-guaranteed bonus plan. For those employees awarded a non-guaranteed bonus, the average size of the bonus was 1.57 months of base pay. In terms of employee level, the average size of non-guaranteed bonus received by top-level staff was 3.29 months of base pay, which exceeded the average amounts of senior-level, middle-level, and general staff at 2.37, 1.71, and 1.32 months of base pay, respectively.
The largest non-guaranteed bonus by sector was topped by the banking and financial services at 2.12 months of base pay, followed by telecommunications, multi-media, technology 1.70 and logistics and transport 1.67. The smallest non-guaranteed bonus payout by sector was led by the manufacturing and trading at 1.03, architecture, engineering and construction 1.2 and accounting, professional services and business services 1.25.
Survey findings provide an indication of business sentiment
Commenting on the survey findings, HKIHRM President Lawrence Hung noted that, to some extent, the average increase of 3.5% in employee pay in 2022 is an indication that business sentiment has started to improve. While Hong Kong is gradually revising COVID-related quarantine and isolation requirements, Hung pointed out that talent outflow and high staff turnover have pressured employers into offering more attractive pay and benefit packages in a bid to acquire and retain suitable talents. “Competition for high performing talents in the market has never been so fierce,” Hung said, adding that he expects the uptick in employers offering higher salaries to continue during 2023. Remuneration aside, Hung said with employees increasingly focusing on work-life balance, family-friendly workplace policies and the organisation’s commitment to social responsibility, employers can leverage these trends to compete on hiring and retaining talent.
Looking beyond compensation and benefits
Amid the evolving world of work, Cheung said managers need to find ways to help their team members to set healthy boundaries. “They need to show compassionate leadership, identify where support is needed and initiate conversations to understand emotional issues,” she said. Engaging with team members and showing empathy is a positive way of strengthening the connection between work and an organisation’s purpose and values. “When employees feel valued and respected there is a stronger sense of engagement,” Cheung said. Cultivating a strong sense of engagement is particularly important at a time when talent shortages can mean that employees are frequently asked to take on heavier workloads. At the same time it is also important team managers feel supported so they can feel a sense of their own value within the organisation and feel motivated to achieve positive talent management outcomes.
Tapping into a diverse talent pool through communication
With demand for talent more competitive than ever, when attracting, engaging and retaining talents, HR practitioners need to be creative, Cheung said. With this in mind she suggests that jobs need to be re-designed to match talent availability coupled with a willingness to recruit talent based on potential and attitude. “To do this effectively it is essential for the HR function to be aware of the new skills and competences required,” Cheung said. There is also a requirement to explore untapped pools of talent. A good example, Cheung said, is Hong Kong’s talent pool of people with disabilities.
Cheung believes a key factor to attract diverse talent is communication, which includes over-communicating. For instance, through the use of social media, external storytelling is an effective way that organisations can spread the message of what it stands for, its values and what makes it a great employer to work for.
“Storytelling strategies and tactics need to be targeted at an audience and connected to a purpose,” Cheung advised. Meanwhile, internally, storytelling can provide a valuable way to connect colleagues with each other and with the wider company culture. However, Cheung cautions that storytelling needs to be based on authentic and credible narratives. “It’s important to talk the walk and walk the talk,” she said, adding that inconsistent and misleading storytelling can do more harm than good.
Distinguished speakers offer different HR-related insights and perspectives
Under the theme of “Redefining C&B Strategies in the Face of the Great Resignation”, during HKIHRM’s day-long annual Pay Trend and Benefits Seminar, prominent speakers and topic experts provided fresh perspectives and insights pertinent to the HR profession and current trends. During the morning session keynote presentation, Irina Fan, Hong Kong Trade Development Council – Director of Research provided insightful viewpoints on “Global and HK Economic Outlook – is the worst of inflation behind us?” Meanwhile, Gabriel Kung, Chief Commercial Officer of Bowtie and Kobe So, Head, Workplace Advisory, Ricoh Hong Kong provided insights on “How to redefine the employee benefits strategies under the Great Resignation”. Highlights of the afternoon session included presentations by Jamie Lee, Managing Director & CEO of BCT Group who offered examples and solutions to “Rethinking Talent Retention Strategies Amid the Great Resignation”. Melody King, Vice President Human Resources Asia Pacific and China, Herbalife provided highlights relating to “The APAC Wellbeing Strategy Supporting the Power of One Team Campaign” while Alanis Hon Consulting Manager – Asia Career Regional at Mercer provided key points relevant to “APAC Rewards Trends & Insight – Shaping Rewards and be Ready for 2023”.
First conducted in 1984 and widely anticipated by Hong Kong’s HR community, the survey records the trends for pay adjustment, bonus incentives and benefits provided to employees.
