Employee salaries in the Philippines’ private sector increased only by 5% year-on-year, on average, according to a report released by Willis Towers Watson.
In the recently completed Philippine Total Compensation Survey, the 5% increase is a little lower compared to what companies have been budgeting for merit increase every year for their employees, which is at 6%.
The 1% differential exists because companies were not able to spend as they are now more careful in allocating this budget, making sure that they use it to reward their high performing employees.
The budget has been going down historically, and if that pattern continues in 2017, actual increases will be well below the 6% forecast by the companies surveyed.
The Total Compensation survey report covers three areas – compensation, policies and practices on salaries and human resources in general, and the benefits programs. Industries such as BPO, IT, financial services, pharmaceutical and health sciences, energy and natural resources, retail, construction and engineering, and consumer goods are covered. It is designed to provide companies with guidance on how competitive their compensation and benefits package are relative to their peer companies.
One highlight of the report shows how companies tend to differentiate the pay of their employees through factors such as results and performance, education and background, and proficiency level and expertise.
Differentiating pay through performance
"Allocating the merit increase budget conscientiously can go a long way in terms of sending a message of how serious the company is, in their performance-driven philosophy,” according to Vangie Daquilanea, Global Data Services Practice Lead for the Philippines, Thailand, Cambodia and Myanmar. "Well thought out metrics and performance indicators that align with the organization is critical in making the company's bonus/variable pay program a success.”
Depending on the industry, the amount of bonus could vary. From the Willis Towers Watson 2016 report, the pharmaceutical industry has the highest bonus pay out, primarily driven by their MedReps' incentive pay scheme.
Differentiating pay through education and background
As companies execute their recruitment strategies, they look at credentials and educational background, and differentiate the salary offers accordingly.
"Educational background is further differentiated in terms of the college course or discipline the candidates are in. Those who are in the information technology field command higher starting salaries compared to other courses," said Daquilanea.
"Nowadays IT professionals do not need to in an IT outsourcing company to receive a competitive pay. Sectors outside IT are now offering aggressive compensation coupled with travel and training opportunities to attract and lure IT talent."
"While companies may have all these programs in place, if they have not done a proper and thorough workforce analytics, to get a deeper understanding of what will motivate and what programs will be appreciated by the employees, all these investments can go to waste."
Based on the report, the employee workforce is now predominantly Gen Y, at 64% of the total workforce, 30% Generation X and 6% Baby Boomers.
"Employees are now looking at some flexibility in their benefits packages, something more attuned with their needs. Companies need to listen more to their employees and to be open in adopting a more holistic approach and consider total rewards factors such as career development opportunities, recognition, transparency and open communication, as well as flexible work arrangements," Daquilanea added.