CFO Salary Guide: Which Country Pays the Most?

Sometimes we fixate a bit too much on how much money we make that we forget how lucky we are compared with most other citizens.
 
Take the CFO of a medium-sized company in Hong Kong. According to the just released 2014 Hays Asia Salary Guide Asia, this finance chief can expect to be paid HK$1.2 million to HK$2 million in annual salary this year – no change at all from what he or she made in 2013.
 
Plug the lower of that range – HK$1.2 million – into the Davos 2014 Global Wage Calculator, however, and you will discover that this amount is 754% of Hong Kong’s average annual wage, and 1,220% of the world’s average annual wage (see chart below).
 
CFO Salary: HK$1.2 Million Not Bad at All
Source: CNN
 
A salary of HK$1.2 million is 43 times the annual wage of a cleaner in Thailand, three times the pay of an administrative manager in Finland and equal to the compensation of a chief executive in the US. One person that makes much more is the Queen of England – HK$1.2 million is just 0.00423 times her salary – but then Elizabeth II is royalty.
 
It’s good to be reminded of this when perusing the latest annual salary survey conducted by global recruitment company Hays. This year, says Hays, the salaries of CFOs, controllers, treasurers, tax directors, heads of internal audit and heads of compliance in Hong Kong will remain the same as last year, regardless of whether they work in a medium to large sized company or a multinational.
 
In general, according to the report, salary raises across the organization in 2014 in Asia look tepid. More than six out of ten (65%) of the 2,600 employers Hays surveyed in the region intend to hand out less than 3% to 6% in increments, with another 6% saying there will be no increase at all.
 
What About Finance?
What about accountancy and finance specifically? In China, says Hays, the job market is “going through a readjustment.” Economic growth is slowing and manufacturing companies are relocating to Tier Two and Tier Three cities, where salaries are lower than in Shanghai and Beijing.
 
But Tier One cities are attracting more service companies, financial institutions and banks, “creating demand for skilled candidates with solid experience in financial planning and analysis, commercial analysis, control, audit and compliance.”
 
Of the various senior finance positions, treasurers and heads of compliance are the jobs that are seeing some gains in terms of salary increases. In 2013, an MNC treasurer could expect to be paid between RMB600,000 to RMB900,000 a year. In 2014, the Hays survey finds that the top rate has been stretched to RMB1.3 million, up 44% (see chart below).
 
Annual Salaries* in China: Focus on Treasury and Compliance
*Salaries do not include bonuses. Sources: 2013 and 2014 Hays Salary Guide Asia
 
“Remuneration expectations of senior professionals have moderated, with many executives placing greater importance on long-term stability and progression, rather than just short-term pay increases,” Hays noted. “Looking ahead, the job market looks positive and we expect hiring activity to increase.”
 
Little Movement in Hong Kong
In Hong Kong, the range of finance salaries is likely to remain the same as in 2013. “Cost cutting remains a focus in Hong Kong and recruiting budgets are heavily scrutinized,” says the Hays report. It’s a reversal of fortune from 2013, when the salary of a multinational CFO in Hong Kong ranged from HK$1.4 million to HK$3 million, a 16% increase at the lower end and a 7% rise at the top from 2012.
 
Annual Salaries* Hong Kong: No Change
*Salaries do not include bonuses. Sources: 2013 and 2014 Hays Salary Guide Asia
 
Middle management posts – finance managers, FP&A managers, project controllers, Shared Service Center team leaders – are more in demand, something that CFOs recruiting for new people or replacing leaving team members have to keep in mind.
 
There are two options. “Given the shortage at this level, employers often adapt their requirements and will either recruit at the lower level, and therefore lower the salary on offer, or recruit at a higher level and pay more for a more experienced professional,” says Hays.
 
Another trend is the growing acceptance of contractual work. “Candidates in Hong Kong are slowly gaining more confidence and acceptance of temporary roles,” says Hays. “A key part of this is the higher compensation package on offer since many contractors are working at a premium rate.”
 
Rising Tide in Singapore
Finance and accounting salaries did not move much in Singapore in 2013, particularly for CFOs, treasurers and tax directors. But in 2014, according to the Hays survey, increases are likely across virtually all senior finance posts (see chart below).
 
Annual Salaries* Singapore: All Rise  
*Salaries do not include bonuses. Sources: 2013 and 2014 Hays Salary Guide Asia
 
“Competition to attract the top talent remains high, with tax, compliance and management consulting candidates sought after,” explains Hays. “Firms are increasingly using less tangible benefits to attract candidates, such as long term career prospects, more varied client exposure or more rapid promotions.”
 
As in Hong Kong, increasing numbers of candidates in Singapore are becoming more open to contract opportunities and are “warming to the benefits of these roles, including the flexibility and shorter recruitment process. Hays expects salary rises for contract and temporary positions in 2014.
 
Increases in Malaysia, Too
The salary situation also looks positive in neighbouring Malaysia, whose accountancy and finance job market Hays describes as “very buoyant.” Both medium to large companies and multinational are paying more for senior finance professionals, particularly for finance controllers and heads of compliance (see chart below).
 
Annual Salaries* Malaysia: In Demand Controllers and Compliance
*Salaries do not include bonuses. Sources: 2013 and 2014 Hays Salary Guide Asia
 
“Competition for the top talent and wage pressure will remain key features of the jobs market in the year ahead,” reckons the Hays report, noting particularly strong demand for heads of finance, financial controllers and regional and senior finance managers. “It is at this level that salaries increased sharply,” says Hays.
 
Japan Perks Up
Abenomics, the vaunted monetary, fiscal and structural reform program Prime Minister Shinzo Abe launched in 2013, seems to be having an impact on accountancy and finance salaries. In the Hays survey, the top end of the salary ranges for financial controllers has soared 20% to ¥18 million (medium to large companies) and ¥20 million (multinationals), respectively.
 
Annual Salaries* Japan: Controllers Rule
*Salaries do not include bonuses. Sources: 2013 and 2014 Hays Salary Guide Asia
 
According to Hays, FP&A professionals and bilingual candidates are particularly in high demand. “We have also seen soft skills become more important as hiring and HR managers look for a well-rounded candidate rather than solely the best technical skills,” says the report.
 
But employers have become very selective, Hays warns. “They spend a lot of time benchmarking and looking for a candidate who meets every criteria, including related industry experience. This means that vacancies can remain open for several months until this ideal candidate is identified and secured.”
 
The Best Place for Finance
What’s the best place to be an expat senior finance professional, in terms purely of salary and disregarding lifestyle and other factors? While most CFOs and other finance executives work in their own country, an increasing number of them are going abroad.
 
To find out, CFO Innovation converted the Hays salary findings into US dollars, using the exchange rate on 4 February 2014, and then into Purchasing Power Parity (PPP) dollars. We used the World Bank’s 2012 PPP conversion factors, the latest available, to turn the nominal US dollar salaries into their PPP equivalents, which indicate how many US dollars or a fraction of a dollar is needed in a particular economy to buy US$1 of goods and services in the United States.
 
For example, the 2012 PPP conversion factor for Singapore is 0.6. This means that a CFO in the Lion City needs to spend only US$0.60 to buy US$1 worth of goods and services in America. In contrast, in Hong Kong, CFOs need to spend US$0.90 to buy US$1 worth of products in the United States (the PPP conversion factor for Hong Kong is 0.9). By the World Bank’s reckoning the cost of living in Singapore is lower than in Hong Kong.
 
China or Hong Kong: Measured by Purchasing Power Parity, it seems that it makes more financial sense to be a multinational CFO in China than in Hong Kong (see chart below). The China CFO can earn as much as PPP$585,000 a year compared with the top rate of PPP$429,000 of a Hong Kong-based CFO – 36% higher.
 
Annual Salaries*: China vs. Hong Kong
*Salaries do not include bonuses. US$ exchange rate as of 4 February 2014. Purchasing Power Parity (PPP) conversion factor is 0.7 for China, 0.9 for Hong Kong, 1.1 for Japan, 0.4 for Malaysia and 0.6 for Singapore, which are the 2012 factors used by the World Bank. Sources: 2014 Hays Salary Guide, CFO Innovation, OANDA
 
Note, however, that in nominal US dollars, Hong Kong-based finance executives in general still have the edge over their peers in China. This is an important advantage. Typically, a substantial part of salaries are set aside for mortgages and investment in the home country.
 
PPP dollars measure the affordability of living in a particular place, but they are not real currencies. You would need hard currency to buy property and invest in stocks and bonds. Since mutual funds, executive savings plans and international mortgages are usually denominated in US dollars, the more of it your local-currency salary can buy, the better for you.
 
Malaysia or Singapore: The 2014 Hays survey notes that, while finance salaries in Malaysia are still lower than in Singapore, “they are starting to align.” This is a key finding for Malaysians who are working abroad, typically in Singapore, Hays suggests. “Businesses are keen to attract these returning Malaysians as they recognise that candidates who have worked and studied abroad excel.”
 
At this point, however, Singapore salaries still trump those in Malaysia in both PPP and US dollar terms (see chart below).  
 
Annual Salaries*: Malaysia vs. Singapore
*Salaries do not include bonuses. US$ exchange rate as of 4 February 2014. Purchasing Power Parity (PPP) conversion factor is 0.7 for China, 0.9 for Hong Kong, 1.1 for Japan, 0.4 for Malaysia and 0.6 for Singapore, which are the 2012 factors used by the World Bank. Sources: 2014 Hays Salary Guide, CFO Innovation, OANDA
 
Hong Kong or Japan or Singapore: What if you have a choice among Asia’s three financial centers? Of the six markets surveyed by Hays, Hong Kong, Japan and Singapore pay the most. Which is the best place to be purely in terms of money?
 
Singapore appears to be the winner here, in both PPP and US dollar terms (see chart below).
 
Annual Salaries*: Hong Kong vs Japan vs Singapore
*Salaries do not include bonuses. US$ exchange rate as of 4 February 2014. Purchasing Power Parity (PPP) conversion factor is 0.7 for China, 0.9 for Hong Kong, 1.1 for Japan, 0.4 for Malaysia and 0.6 for Singapore, which are the 2012 factors used by the World Bank. Sources: 2014 Hays Salary Guide, CFO Innovation, OANDA
 
Of the three financial centres, Singapore is the best place, purely in monetary compensation, for CFOs, financial controllers and tax directors. When in comes to cost of living, treasurers, heads of internal audit and heads of compliance can stretch their pay further in Singapore as well, compared with peers in Hong Kong and Japan.
 
In nominal US dollars, however, treasurers are better off in Hong Kong, along with heads of internal audit and heads of compliance in multinationals. Heads of compliance in medium to large companies are better off in Japan in US dollar terms, despite the steep decline of the yen against the greenback.
 
As usual, Hays has a caveat about the salary survey. “While every care is taken in the collection and compilation of data, the guide is interpretive and indicative, not conclusive. Therefore information should be used as a guideline only.”
 
Fair enough. No one should make career decisions based on monetary compensation alone. Things such as the mission and governance of the organization, quality of life (including pollution – sorry, Beijing), availability of quality education (oops, Hong Kong) and other factors should also be considered.
 
About the Author

Cesar Bacani is Editor-in-Chief of CFO Innovation.  

 

Photo credit: Shutterstock

 

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