Press Release

Less than half of companies in Asia Pacific are getting compensation right, Willis Towers Watson survey finds

Gender pay equality will be an increasingly important factor in pay decisions in the next three years

September 18, 2018
| Taiwan, Indonesia, Malaysia +11 more
  • Philippines
  • Singapore
  • Thailand
  • Vietnam
  • Australia
  • China
  • Hong Kong
  • India
  • Japan
  • South Korea
  • New Zealand

ASIA PACIFIC, 18 September 2018 — Growing pressure to improve pay-for-performance programs and ensure fair pay throughout the workplace is sparking employers in Asia Pacific into action. However, only less than half of companies in Asia Pacific are currently getting compensation right, according to a new survey by leading global advisory, broking and solutions company Willis Towers Watson (NASDAQ: WLTW).

When it comes to meeting employee expectations for compensation, employers must clarify how base pay is determined, improve the differentiation of incentives, make effective use of technology, prioritize fair pay and build a culture of pay transparency.

“Getting compensation right is becoming increasingly important as companies look to drive higher levels of performance, attract and retain key talent, and make fair pay decisions,” says Maggy Fang, Head of Talent & Rewards, Asia Pacific, Willis Towers Watson. “Decisions around pay, however, are becoming more complex, and many employers say their base pay and short-term incentive programs are falling short of expectations. Not surprisingly, changes to these and other related programs are on the horizon for many companies.”

The 2018 Getting Compensation Right Survey showed that less than half of the organizations in Asia Pacific reported that their base salary programs are effective at differentiating pay and driving higher individual performance. Limited budgets (61%), manager capability (49%) and limited differentiation in base pay to drive performance (37%) were identified as top challenges in designing an effective pay-for-performance program.

The survey also found that many employers in the region may be using multiple factors to determine the base pay increment, Factors that are most likely to be considered by employers in the region include achievement of individual goals, year-end rating, criticality of the role, and possession of skills critical to future business success.

Trey Davis, Regional Leader for Executive Compensation, Asia Pacific, Willis Towers Watson, comments: “The complexity in base pay programs will likely continue in the region, which isn’t bad as it is positively related to effectiveness. Furthermore, many companies will consider even more factors when making pay decisions in the future, such as achievement of team goals and individual’s perceived potential.”

“Employers need to determine how they can better equip their managers to make appropriate base pay decisions, including the tools and technology that they need to be in place to support their decision making,” Trey adds.

Prioritize fair pay

Fair pay is another essential element of an effective compensation program and an integral part of the employee experience. The survey found that a majority of Asia Pacific employers give themselves high marks when it comes to having formal processes in place to prevent bias or inconsistency in their hiring and pay decisions. About three quarters of respondents have established formal processes across a range of areas, including performance review (77%), hiring decisions (76%), starting salaries (74%) and base pay increases (74%).

Despite giving themselves high marks, only one in five organizations (22%) in this region have formally structured and managed Inclusion & Diversity (I&D) programs targeted at diverse employee populations. Japan, Australia and India are leading the region in this aspect, while the Greater China market is lagging behind.

When it comes to gender pay equality, for example, women are still paid significantly less than men on average.

“The major factor affecting the pay gap between men and women is that there are fewer women taking senior roles in organizations. We observe that women represent less than a quarter of the top management roles within many organizations and the biggest disparities are observed in India, Japan and South Korea 1,” says Maggy.

In addition, only 13% of employers in Asia Pacific believe that addressing gender pay equality will become a more important factor in making base pay decisions over the next three years. This varies significantly from companies in Europe (39%) and North America (41%). In addition, only 36% of Asia Pacific employers responded that they have or are intending to conduct a gender pay or pay equity diagnostic. This compares to almost 60% globally.

Trey says, “Fair pay is a moral imperative, and also makes business sense for employers as it ensures that companies can have access to the best talent available in the market. This is critically important given the shrinking labour force and other demographic changes occurring in many markets in the region.”

Furthermore, “Companies must be aware of the increasing potential for legal or reputational costs due to maintaining even unintentionally discriminatory pay policies and practices. All employers should conduct a thorough pay equity review to help them understand whether they have fair pay or gender gap issues, where gaps may exist and their underlying causes, and to make fair pay an integral element in their organization’s compensation programs,” adds Maggy.

About the survey

The 2018 Getting Compensation Right Survey was conducted in April 2018. A total of 1,949 global companies from almost 50 countries around the world, including 707 employers in Asia Pacific, participated in the survey.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has over 40,000 employees serving more than 140 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.


Source: Willis Towers Watson 2018 Workforce Analytics Report – Asia Pacific.