HONG KONG October December The Hudson Report EMPLOYMENT & HR TRENDS
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1 HONG KONG October December 2004 The Hudson Report EMPLOYMENT & HR TRENDS
2 Introduction The Hudson Report has established a reputation as a key socioeconomic indicator in today s marketplace. It has been built on the premise that the expectation to increase or decrease net staffing levels represents a significant indication of employers optimism for the growth of their organisations. The Hudson Report receives extensive media coverage and acknowledgement from politicians, commentators and business leaders. First released in Australia in April 1995 and released quarterly since, the Hudson Report now combines the expectations of almost 6,000 key employment decision-makers from all major industries across a range of organisational sizes. In Asia, the Hudson Report was first released in December 1998 and now it combines the expectations of more than 2,000 key employment decision-makers. Hudson Global Resources recruitment professionals personally surveyed participants in this survey. The Hudson Report Hong Kong October December
3 Key Findings Business and therefore hiring in Hong Kong continues to improve. The results of the survey show continued confidence, however, some hiring intentions have been tempered by the usual end of year bonus cycle as many people are expecting a bonus next January or February. Erika Morton, General Manager, Hudson Global Resources, Hong Kong The economic situation continues to improve, however, despite this, plans to increase headcount across all sectors has lowered; as companies traditionally do not hire during Q4; The increase for permanent employment expectations for Q4 is 45.7% (4% less as compared to 49.7% in Q3); There is an increase of 3.4% in relation to steady employment expectations (50.9% in Q4) as compared to last quarter (47.5% in Q3); Some 44.7% of all organisations surveyed responded that no functions are outsourced and the most frequently outsourced function/ function under consideration is IT (15.4%); Some 56.4% of respondents across all sectors feel that management has addressed the issue of succession planning, as opposed to 43.6% who have not; Multi-national companies have taken the initiative when it comes to succession planning; many small companies, however, have yet to set this as a priority; Across all sectors some 66.5% of women and 67.3% of men feel they are paid on par with their peers in a similar role. The Hudson Report Hong Kong October December
4 Permanent employment expectations Permanent employment expectations in Hong Kong remain positive, with some 45.7% of respondents anticipating strong continued growth and expansion in the employment market, while 50.9% expect the employment situation to remain steady. A decrease in permanent employment expectations was expressed by only 3.4% of respondents. General opinion reflected the widely held view that few candidates change jobs during Q4, traditionally the time when employees are anticipating annual bonuses. In the Accounting, Financial Services & Consulting sector most recruitment was generated by a need to replace employees rather than to fill vacant positions. The IT & Telecommunications sector hires are primarily in revenue-generating roles such as sales and marketing. There has been steady growth in this sector this year as compared to the preceding two years. In the Legal sector, a number of companies have downsized prompting lawyers to leave Hong Kong or to join other firms. Capital markets, and mergers & acquisitions are the main practices that are expanding. Many legal transactions that were previously put on hold, are now being pushed forward, resulting in increased workloads and additional hiring. Overall 51.7% of respondents from large to medium-sized organisations stated the company was planning to expand, compared to 29.6% of small organisations. In the Engineering, Operations & Scientific sector, an increase in market demand for products has led to an increase in staffing requirements. In the Accounting, Financial Services & Consulting sector, moderation is the key and any increase in staffing levels was viewed as minimal and only where required. Permanent Employment Expectations in Hong Kong Accounting, Financial Services & Consulting Engineering, Operations & Scientific Health IT & Telecommunications Legal Consumer Overall % INCREASE HEADCOUNT STEADY HEADCOUNT DECREASE HEADCOUNT The Hudson Report Hong Kong October December
5 Permanent employment expectations by job roles In Hong Kong the business imperative is on profit margins and accountability to shareholders and investors and when this is combined with the increasing competition in a buoyant economy, frontline/sales roles (33.3%) have experienced a marked increase across all sectors. Engineering roles ranked second with a 15.7% increase in job roles. What Jobs are Hot? Marketing / PR Sales 11.8% 33.3% Management 4.9% Legal Professionals 4.1% Human Resources 2.7% 15.7% 8.4% 5.7% Secretarial / Administration Engineering / Operations / Technical 2% 11.4% Accounting / Finance Creative / Production Banking Operations / Middle Office The Hudson Report Hong Kong October December
6 Improving productivity Outsourcing vs. Inhouse Of all companies surveyed in relation to the outsourcing of specific job functions, some 44.7% responded that no functions are currently outsourced as companies are diversified enough to cater for the demands made on existing staff. IT-related functions ranked second (15.4%) as the most outsourced requirement across all industries. It is also of note that Banking & Finance related multi-national companies rarely outsource. Within Human Resources, areas such as benefits, payroll/recruitment and some training requirements are outsourced. Some organisations also believe that it is necessary to outsource Human Resources functions. In Sales and Marketing, most logistics and distribution functions are currently outsourced. Within the Accounting, Financial Services & Consulting sector, IT functions are currently outsourced and ongoing. Accounting roles in many cases have been relocated to regional centers. 6.8% Human Resources 5.3% Accounting 6.4% Administration / Data Processing 2.9% Legal 2.1% Manufacturing 3% Marketing 0.3% General Management 13.1% Others 10.0% Elsewhere 14.7% China 1.5% Indonesia 1.4% Thailand 3.2% 44.7% Malaysia 54.5% No functions 15.4% are outsourced Outsourced IT 6.7% Domestically India 2.1% Philippines 5.9% Singapore Outsourced functions Outsourcing locations Outsourcing Where does the work go to? More than half of respondents (54.5%) across all industries stated that they outsourced domestically. Some 20.6% of all outsourcing requirements for IT & Telecommunications organisations are outsourced to China. Within the Accounting, Financial Services & Consulting sector, some 42% of outsourced functions were assigned to a division of the same company located in China, Singapore, Malaysia or India. The Hudson Report Hong Kong October December
7 Human Resources: perception, contribution, focus The Hudson Report survey addressed three specific aspects of Human Resources and sought the opinions of both Human Resources and non-human Resources professionals in relation to the following questions: How is Human Resources viewed in your company? Where does Human Resources add value to your business? What do you think the focus of Human Resources in your company should be? HOW HUMAN RESOURCES IS VIEWED HUMAN RESOURCES PROFESSIONALS Within the IT & Telecommunications sector, some 45.9% of Human Resources professionals view themselves as a business partner, rather than a strategic partner. In the Accounting, Financial Services & Consulting sector, 45.1% of respondents stated that they view Human Resources professionals as a business partner with each business. Within the Legal sector, 50% of respondents stated that Human Resources is viewed as a strategic partner with top leadership with Human Resources personnel becoming increasingly involved in the strategic direction of the company. The Legal sector is placing greater emphasis on the importance of attracting quality candidates to the profession, hence relying increasingly on Human Resources expertise. In the Engineering, Operations & Scientific sector, each business unit has different requirements, therefore, Human Resources teams have to work as a business partner within each specific unit. Across all industries, some 41.8% of Human Resources professionals view themselves as a business partner as compared to 14% of non-human Resources professionals. NON-HUMAN RESOURCES PROFESSIONALS Across all industries, some 41.7% of all non- Human Resources professionals regard personnel administration as the main function of Human Resources, with a further 33.6% viewing their colleagues as providing a support function. Survey results clearly indicate an obvious perception gap between these two sets of employees. A Strategic Partner With Top Leadership A Business Partner With Each Business 10.7% 12.6% 25.5% 41.8% Support Function For Each Business Personnel Administration 14.0% 33.6% 41.7% Human Resources Professionals Non - Human Resources Professionals The Hudson Report Hong Kong October December
8 Human Resources: perception, contribution, focus (continued) WHERE HUMAN RESOURCES ADDS VALUE HUMAN RESOURCES PROFESSIONALS The general consensus of Human Resources professionals seems to indicate that businesses in general undervalue and underutilise Human Resources professionals. Human Resources professionals view their biggest contribution as adding value to businesses in the areas of recruitment (29.4%), learning & development (21.4%), and compensation & benefits (20.4 %). Staff retention and involvement in special ad hoc projects were also viewed as additional ways Human Resources professionals can add value to businesses. In the Legal sector, learning & development (17.9%) is generally handled by the Hong Kong Bar Association, while compensation & benefits (14.3%) are controlled by a head office, thereby negating the value-add these functions bring to the majority of businesses. In the Engineering, Operations & Scientific sector, Human Resources is generally viewed as adding value to businesses through the selection of appropriate personnel and the recruitment process (26.6%). In the Accounting, Financial & Consulting sector, Human Resources is viewed as adding value to businesses primarily through compensation & benefits (23.9%) and organisational development (16.2%). NON-HUMAN RESOURCES PROFESSIONALS Amongst non-human Resources professionals across all industries, Human Resources valueadd is in recruitment (28.6%), compensation & benefits (19.5%) and personnel administration (17.7%). 21.4% 29.4% 20.4% 7.4% 14.6% Human Resources Professionals 1.3% 0.1% 1.9% 3.5% Recruitment Little or No Value Add Industrial Relations Human Resources Systems Personnel Administration Organisational Development Compensation & Benefits Learning & Development Others 0.5% 4.9% 3.3% 1.0% 17.7% 28.6% 9.6% 19.5% 14.9% Non - Human Resources Professionals The Hudson Report Hong Kong October December
9 Human Resources: perception, contribution, focus (continued) THE FOCUS OF HUMAN RESOURCES IN YOUR COMPANY HUMAN RESOURCES PROFESSIONALS Some 25.2% of all survey respondents think learning & development should be the primary focus of Human Resources within their company, followed by organisational development (24.3%), and recruitment (20.7%). These functions have a businessoriented focus and a direct impact on the success of the business. NON-HUMAN RESOURCES PROFESSIONALS Management directs Human Resources to focus on attracting and retaining the best people for their organisations. 26.5% stated that they think that the role of Human Resources should relate primarily to learning & development followed by recruitment (20.9%), and compensation & benefits (14.9%). Within the Legal sector, recruitment is viewed as the primary focus of Human Resources personnel. Within the Engineering, Operations and Scientific sector, employees responded that they would like to have more exposure to learning & development opportunities, which is currently not common practice in Hong Kong. % Learning & Development Organisational Development Recruitment Compensation & Benefits Personnel Administration Human Resources Systems Industrial Relations Others Human Resources Professionals Non-Human Resources Professionals The Hudson Report Hong Kong October December
10 Succession planning SUCCESSION PLANNING AS A KEY PERFORMANCE INDICATOR (KPI) Some 56.4% of respondents across all industries feel that management has adequately addressed the issue of succession planning, as opposed to 43.6% who have not. Multi-national companies with the best practice application have addressed this issue and have set in place due process to cater for such an eventuality. WHO IS NEXT IN LINE? Across all industries, some 53.5% of respondents stated that identification of adequate talent for effective succession planning had not been addressed, as opposed to an affirmative 46.5%. This is regarded as a worrying trend and failure to address this issue may impede a company s ability to continue operations should such a scenario occur. Small organisations, however, who answer only to themselves, often fail to address the issue of succession planning. Salaries vs. Market rate Across all industries, some 66.5% of women feel they are paid on par with market rates according to their occupation and position within a company. In the Accounting, Financial Services and Consulting sector, more women feel they are paid below par (21.8%) as compared to other industries (Legal 5.6%; Consumer 13.7%). Across all industries, 67.3% of men stated that they felt they were paid on par with market rates. Some 16.1% of men stated that they felt they were well paid in relation to market rates for a similar function. Salaries vs. Market rate Women Men 66.5% 15.5% 14.2% 67.3% 16.1% 1.9% 2.4% 16.1% BELOW PAR ON PAR WELL PAID VERY WELL PAID (30% OR MORE ABOVE MARKET) The Hudson Report Hong Kong October December
11 YOUR POINT OF CONTACT HONG KONG Erika Morton Tel: (852) ASIA Gary Lazzarotto Tel: (852) gary. CHINA Odilia Poon Tel: (8621) JAPAN Gary Lazzarotto Tel: (81 3) gary. SINGAPORE Stefanie Cross-Wilson Tel: (65) GLOBAL RESOURCES & HUMAN CAPITAL SOLUTIONS
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