2014 WORKFORCE METRICS ASIA PACIFIC...Source: Mercer’s 2014 Global Compensation Planning Report (citing International Monetary Fund, World Economic Outlook Database, October 2014)

2014 WORKFORCE METRICS ASIA PACIFICKEy hIghlIghTS

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© 2014 Mercer LLC. 2 2014 Workforce Metrics Asia Pacific

2014 Workforce Metrics AsiA PAcific: key highlights

Published by: Mercer (Us) inc., 1166 Avenue of the Americas, New York, New York 10036 USA.

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Copyright © 2014. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or be transmitted in any form or by any means, electronic or mechanical, photocopying, recording or otherwise, without the prior written permission of the publishers.

No responsibility for loss occurring to any person acting or refraining from acting as a result of the material in this publication can be accepted by the authors or the publishers.

If you have questions regarding Mercer’s Workforce Metrics Solution, or would like details about participating in our metrics surveys, please contact the appropriate regional professional below:

EUROPE/PACIFICDavid Elkjaer +45 4595 9624 [email protected]

ASIA/MIDDLE EAST/AFRICAAlexander Krasavin +65 6398 2849 [email protected]

LATIN AMERICAGabriel Regalado +57 1 742 1080 [email protected]

NORTH AMERICAAlice Carroll +1 502 561 4588 [email protected]

CONTRIbUTORSTom JacobAlexander KrasavinDora Wylee

DESIGNERAbhilash Prabhakaran

PRODUCT MANAGERDavid Elkjaer

MANAGING EDITORStefani Baldwin

EDITORVirginia McMorrow


In today’s highly competitive business arena, proactive managers require strategic know–how and informed decision–making when deploying staff. To support the success of their operations — both current and future — an analysis of workforce composition and retention metrics becomes essential.

Workforce metrics are rapidly becoming an important management tool in HR — in companies of every size. Workforce metrics data linked directly to monitoring and validating a company’s competitive performance can be a great foundation for improving performance and facilitating purposeful decision making.

Workforce metrics are…

•Measures to benchmark organisations on the overall level.

•An enabler to put a context on the metrics tracked internally.

•Useful for business planning and problem identification and solving.

InTROduCTIOn

Anecdotes

Realty checks

On-going reports

benchmark

Correlations

Simulations & forecasting

Predictive & causal modeling

Workforce metrics provide comprehensive integrated solutions:

•Information solutions: Workforce metrics data to support organisations in their workforce decisions and provide context to their internal metrics.

•Technology solutions: Innovative platform to track organisational metrics (Mercer Analytics).

•Consulting services: Answers to questions specific to an organisation: What should their organisational structure be? What should their optimal spans of control be?


InTROduCTIOn

MERCER’S WORKFORCE METRICS SOluTIOn And OnlInE TOOl

OVERVIEW OF SOLUTION

WORKFORCE METRICS SOLUTIONMercer’s Workforce Metrics Solution helps support HR’s role in business success by allowing you to present a viable business case for necessary policy revisions and strategic decisions. The solution covers:

•Financial Metrics — Overall productivity, operating expenses, and profit per full-time equivalent (FTE).

•Workforce Cost — Total compensation cost by career level and function.

•Workforce Structure — Percentage of employees by career level and function.

•Span of Control — Ratio of Executives and Management employees.

•Workforce Retention — Voluntary, involuntary, and retirement by country, career level, and function.

•Functional Outsourcing — Percentage of each function outsourced.

Online data delivery

Industry focus

Participation Pricing

• Flexible online solution.

• No implementation, web access.

• 2012-2014 data available to enable trend analysis.

• Ability to customise all metrics to be viewed by your specific industry.

• Compare your industry to the general industry.

• Centralised global data submission available.

• Workforce Metrics data from 11,000 organisations across 80 markets in 2014.

• Simple country-based pricing.

• Discount available based on multi-country and multi-year purchases.


InTROduCTIOn

NEW FOR 2014: ONLINE TOOLSlice and dice the data based on your organisation’s needs. The online tool’s dashboard shows workforce productivity – across years, headcount groups, and industries. With a swipe (on the iPad) or click of the mouse, each can be transformed into a table or graph. The dashboard can be filtered by region, country, organisational size, super sector, and sector.

Metric by year shows year-over-year development.

Metric by headcount groups shows how the metric depends on organisational size.

Ability to switch between graphs and tables is provided.

Description and information about the metric is provided.

Metric by each Super Sector enables detailed industry analysis.


introduction

Sample distribution by revenue Sample distribution by headcount size

39%

33%

10%

7%

6%4%

< USD50 million USD50 - 250 million

USD250 - 500 million USD0.5 - 1 billion

USD1 - 2.5 billion >USD2.5 billion

36%

38%

11%

13%2%

1%

< 100 101 - 500

501 - 1,000 1,001 - 5,000

5,001 - 10,000 10,001 - 20,000

> 20,000

PArticiPAtionA total of 6,167 organisations in Asia Pacific provided data.

The following charts represent an overview of the participants to the survey. They indicate the major industry categories and provide a breakdown of participants by revenue size (six categories, ranging from USD50 million to USD2.5 billion) and headcount (seven categories, ranging in size from under 100 to over 20,000 employees).

Sample distribution by industry

Industry % of organisations

Consumer Goods 17%

Other Durable Goods Manufacturing 14%

Other Nondurable Goods Manufacturing 13%

Life Sciences 11%

Transportation Equipment 10%

Other Nonmanufacturing 9%

High-Tech 8%

Retail and Wholesale 6%

Services (Nonfinancial) 6%

Energy 4%

Financial Services 2%

Mining and Metals 1%

Insurance 1%

Total 100%


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ECONOMIC CONTEXTBusiness conditions at the time of this metrics survey heavily influenced the data findings included in these highlights. Overall economic conditions, as well as conditions relevant to specific industries, have an impact on workforce areas — including productivity, staffing levels, and turnover (particularly voluntary turnover).

From 2013-2015, the economic outlook in Asia Pacific is generally strong, helped by political stability in the two emerging economy giants, China and India. From an examination of the sub-regions and specific countries below, a picture of more variable growth pattern emerges.

AUSTRALIA AND NEW ZEALANDAustralia and New Zealand are commodity-driven markets for mining and dairy, respectively. The downturn of commodity prices and demand, driven by China, has trimmed the outlook for this sub-region.

Economic conditions, Australia and New Zealand, 2013-2015

GDP change (%) Inflation rate (%) Unemployment rate (%)

2013 (actual)

2014 (estimate)

2015 (forecast)

2013 (actual)

2014 (estimate)

2015 (forecast)

2013 (actual)

2014 (estimate)

2015 (forecast)

Australia 2.3 2.8 2.4 2.5 2.7 2.6 5.7 6.2 6.1

New Zealand 2.8 3.6 2.8 1.1 1.6 2.0 6.2 5.7 5.2

Source: Mercer’s 2014 Global Compensation Planning Report (citing International Monetary Fund, World Economic Outlook Database, October 2014)

Economic conditions, Greater China, 2013-2015


2013 (actual)

2014 (estimate)

2015 (forecast)

2013 (actual)

2014 (estimate)

2015 (forecast)

2013 (actual)

2014 (estimate)

2015 (forecast)

China 7.7 7.4 6.7 2.6 2.3 2.5 4.1 4.1 4.1

Hong Kong 2.9 2.3 2.7 4.3 3.9 3.8 3.1 3.1 3.1

Taiwan 2.9 3.8 3.6 0.8 1.4 2.0 4.2 4.0 4.0


GREATER CHINAWith economic reforms in place, China strives to move away from investment-led growth to consumer-led growth. This strategy, coupled with the recent focus on uprooting corruption, has led to reduced gross domestic product (GDP) growth in China in the short term. Hong Kong is experiencing a volatile political situation with student-led protests, along with a continuing drop in retail sales due to China’s slower growth and lower spending by visitors. On the other hand, Taiwan has a robust economy with new product releases in the electronics industry that boosts exports and less offshoring of production due to rising labour costs in China.


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ASSOCIATION OF SOUTHEAST ASIAN NATIONS (ASEAN)With the ASEAN Economic Community (AEC) becoming effective in 2015, countries are gearing up for closer collaboration. Overall, there is steady growth in the ASEAN countries. However, there are varying outlooks when one focuses on the individual markets in the sub-region, for example:

•A likely rebound in Thailand after May’s military coup.

•Slower growth in Indonesia as it looks to cut the fuel subsidy.

•The Philippines’ preparation to deal with the impact of rising interest rates next year from record lows.

Economic conditions, ASEAN, 2013-2015


2013 (actual)

2014 (estimate)

2015 (forecast)

2013 (actual)

2014 (estimate)

2015 (forecast)

2013 (actual)

2014 (estimate)

2015 (forecast)

Indonesia 5.8 4.7 4.7 6.4 6.0 6.7 6.3 6.1 5.8

Malaysia 4.7 6.1 6.3 2.1 2.9 4.1 3.1 3.0 3.0

Philip–pines 7.2 6.0 5.7 2.9 4.5 3.9 7.1 6.9 6.8

Singa–pore 3.9 3.0 4.0 2.4 1.4 2.5 1.9 2.0 2.1

Thailand 2.9 1.1 4.2 2.2 2.1 2.0 0.7 0.7 0.8

Vietnam 5.4 5.5 5.7 6.6 5.2 5.2 4.4 4.4 4.4


Economic conditions, Japan and Korea, 2013-2015


2013 (actual)

2014 (estimate)

2015 (forecast)

2013 (actual)

2014 (estimate)

2015 (forecast)

2013 (actual)

2014 (estimate)

2015 (forecast)

Japan 1.5 0.4 0.7 0.4 2.7 2.0 4.0 3.7 3.8

Korea 3.0 3.6 3.6 1.3 1.6 2.4 3.1 3.1 3.1


JAPAN AND KOREAAs Japan shows signs of slowing down due to weak exports and declining domestic demand, the outlook for 2015 will depend on whether there will be a second sales tax rise and approval on a re-start of nuclear power. Meanwhile, soaring local power prices and a falling yen have hurt Japan’s consumers and firms.

Extra spending created from a fiscal stimulus in 2104 and 2015 has helped Korea, which has also showed a slump in export growth. In addition, Korea has received a boost from the steady growth in the Services sector, led by increasing tourism from Chinese visitors and a local demand in health services.


introduction

Economic conditions, South Asia 2013-2015


2013 (actual)

2014 (estimate)

2015 (forecast)

2013 (actual)

2014 (estimate)

2015 (forecast)

2013 (actual)

2014 (estimate)

2015 (forecast)

Bangla–desh 6.1 6.2 6.4 7.5 7.2 6.8 4.3 4.2 4.2

India 5.0 5.6 7.6 9.5 7.8 6.6 3.7 3.8 3.8

Pakistan 3.7 4.1 4.5 7.4 8.6 8.0 6.2 6.8 6.5

Sri Lanka 7.3 7.0 6.5 6.9 3.8 5.4 4.0 4.0 4.0


SoUth ASIAThe regional GDP for Bangladesh, India, Pakistan, and Sri Lanka grew with increasing exports and demand from high-income countries. Bangladesh’s key garments exports drives its economic growth, while Pakistan shows signs of progress through economic reforms and efforts by government to improve energy supply and security. India, with a strong new government since May, is set to grow with improved fiscal and monetary policies.


SuRVEy hIghlIghTS

PROduCTIVITy AnAlySIS — 2013-2014Workforce productivity is defined as the real value of output produced by a unit of labour during a certain period. Thus, productivity is one of the key drivers of an organisation’s business effectiveness. This section considers productivity for the period 2013-2014, which corresponds to Mercer’s latest survey statistics.

Mercer’s Workforce Metrics database enables an analysis of one commonly used indicator of organisational productivity, revenue per employee. Other factors affecting productivity, such as investments in new plant, equipment, technology and work processes, are not likely to have as great an impact on the change in productivity as does labour in the short-run — although they certainly have more of an effect over a medium- to long-term period. Revenue per employee, although an imperfect measure of productivity, is a useful barometer to gauge changes in productivity for the short period analysed in this report.

The calculation of productivity trends for 2013-2014 uses an analysis methodology known as “same-sample analysis.” This type of analysis considers data provided by the same participants in 2013 and 2014, which controls for changes in the statistics from companies that are only in the database for one year. Using this approach produces the most stable year-over-year measure of the change in revenue per employee, the proxy measure for productivity in this report.

By taking into consideration the presence of significant fluctuation of local currency exchange rates to USD for some of the countries in the Asia Pacific region, this analysis converts all revenue figures in 2013-2014 to a single fixed currency exchange rate used in 2014. This approach in removing exchange rate risk in the calculation of productivity growth reflects a useful proxy into market growth and movement.

Revenue per employee, although an imperfect measure of productivity, is a useful barometer to gauge changes in productivity for the short period analysed in this report.


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As measured by Mercer’s Workforce Metrics database:

•Asia Pacific “same company” participants experienced a 7% increase in productivity from last year, measured by revenue per employee. This increase is observed across all sub-regions, specifically in South Asia.

•China drives productivity growth in Greater China, with a 11% increase compared to 2013.

•In ASEAN, the range of productivity growth varies widely by country. The highest growth in this sub-region comes from Malaysia (37% increase), the Philippines (25% increase), and Indonesia (24% increase).

•In developed Australia/New Zealand, productivity in Australia grows at 4% while New Zealand shows a 7% increase.

•In South Asia, both India and Bangladesh show an increase in productivity, with India having the highest growth in Asia Pacific at 48%.

The following table shows the change in productivity analysed above, along with the average change in headcount, revenue size, and operating expenses by sub-region. It is notable that there may be some correlation between headcount and productivity. The “same company” participants in all sub-regions have increased their average headcount in 2014.

Interestingly, for sub-regions with a higher increase in headcount, specifically, ASEAN, Greater China, Japan, and Korea, productivity is not growing as fast as expected even though revenue growth has been substantial at over 10%. However, in South Asia, significantly higher productivity growth is attained with a lower increase in headcount size.

It is also important for companies to strike a balance and keep in mind the compensation costs associated in increasing headcount size and the other factors that might contribute to overall revenue or workforce productivity growth.

The graph below also shows an indication of the associated rise in operating expenses, which could have resulted from company investments in workforce or other variable expenses.

Asia Pacific average productivity growth by sub-region, 2013-2014

7%

29%

7% 7%5%

3%

Asia Pacific

South Asia

Greater China

Association of Southeast Asia (ASEAN)

Australia and New Zealand

Japan and Korea


SuRVEy hIghlIghTS

PRODUCTIVITY IN ASIA PACIFIC bY INDUSTRYOne of the most important factors when analysing productivity is the sector to which the company belongs. In most cases, the sector has a greater impact on productivity differences than the country in which the organisation operates — especially when comparing countries within a similar economic context (for example, advanced or developed economies, such as Australia/New Zealand, Japan, and Korea, or developing economies, such as Greater China, ASEAN, and South Asia).

The following graphs indicate the change in revenue per employee by select industries across Asia Pacific in the economic contexts of developed and developing markets, using the same sample methodology when the sample size was sufficient for reporting results. The graphs provide a better understanding of the overall movement in productivity reported above by highlighting the changes in different industries.

In developed markets, productivity growth ranged from a high of 16% in Other Nondurable Goods Manufacturing sector to a decline of 10% in the Transportation Equipment sector. If one applies the same set and order of industries to developing markets, a different picture emerges:

•High-Tech sector shows greater productivity growth.

•The Other Durable Goods Manufacturing and the Transportation Equipment sectors have a high positive growth of 26% and 24%, respectively.

•The Other Nondurable Goods Manufacturing and Other Nonmanufacturing sectors decline to 7% and 0%.

This finding further conveys the fact that different industries function and perform differently in different types of economies.

Change in productivity , headcount, revenue, and operating expenses by Asia Pacific sub-region, 2013-2014

Productivity Headcount Revenue Operating Expenses

Association of Southeast Asian Nations (ASEAN) 7% 10% 14% 21%

Australia/New Zealand 5% 4% 16% 37%

Greater China 7% 10% 11% 13%

Japan and Korea 3% 9% 10% 19%

South Asia 29% 5% 20% 18%

In most cases, the sector has a greater impact on productivity differences than the country in which the organisation operates — especially when comparing countries that have a similar economic context.

SURVEY HIGHLIGHTS


Asia Pacific developed markets, Australia/New Zealand, Japan, and Korea, average productivity growth by sample industries, 2013-2014

Asia Pacific developing markets, Greater China, ASEAN, and South Asia average productivity growth by sample industries, 2013-2014

16%

12% 12%

4%

0%

-2%

-9%-10%

Other Nondurable Goods Manufacturing

High-Tech

Other Nonmanufacturing

Life Sciences

Other Durable Goods Manufacturing

Consumer Goods

Energy

Transportation Equipment

26%

7%

0%

-1%

26%

3%1%

24%Other Nondurable Goods Manufacturing

High-Tech

Other Nonmanufacturing

Life Sciences

Other Durable Goods Manufacturing

Consumer Goods

Energy

Transportation Equipment

Knowing how an organisation’s productivity compares to others in its industry helps management develop an optimal competitive strategy. For specific industry productivity data, access Mercer’s Workforce Metrics Solution.

It is important to put these productivity results in perspective. A drop in productivity for a relatively short period of time (in this case, one year) can be due to an industry positioning itself for future growth. For example, it can be due to increases in headcount driving short-term productivity down and preparing for future growth.

http://www.imercer.com/workforcemetrics

SURVEY HIGHLIGHTS


undERSTAndIng WORKFORCE COSTAs employment increases in many organisations, management needs to closely monitor the cost of the workforce in order to positively impact the bottom line. Many companies have detailed compensation review policies in place to ensure that workforce compensation levels align with the market and remain appropriately competitive. When analysing total workforce costs, organisational structure is equally important in determining competitiveness. Organisational structure is determined by the business model, which drives productivity and labour costs. The analysis that follows examines how organisations in the report sample deploy their workforce and allocate compensation to drive business results.

ORGANISATIONAL STRUCTURE AND COMPENSATION COST FINDINGS FOR ASIA PACIFICMercer’s organisational structure data for Asia Pacific measures six workforce categories: Executive, Management, Professional Sales, Professional Nonsales, White Collar, and Blue Collar employees. In addition to data on the percentage of the labour force in each category, the 2014 survey collected new information —compensation cost by category — which enables a deeper look at the workforce and what it costs.

The following charts indicate how organisations in Asia Pacific distribute their labour force across the six workforce categories, along with the corresponding percentage of the compensation budget allocated to each category.

These charts reveal that:

•While the structure of Asia Pacific companies is pyramid-like with a larger distribution of workforce at lower levels, the compensation distribution is top-heavy. The proportion of compensation allocated to the Executive and Management levels is considerably higher than the percentage of the workforce in these two levels. The Executive level makes up 3.3% of the total workforce and is allocated 15.2% of total compensation, while the Management level makes up 15.2% of the total workforce and is allocated 28.1% of total compensation. (This finding does not indicate anything about the size of the compensation pool, only how the pool is distributed.)

•The four lower levels of the workforce receive a lower proportion of compensation. The biggest disparity is in Blue Collar employees, who make up 42.6% of the total workforce but are allocated only 26.5% of total compensation.

•On average, companies in Asia Pacific spend about 10.6% of their revenue on compensation. Companies in Australia/New Zealand and Greater China spend more on compensation, 12.5% and 11.6%, respectively.

Organisational structure is determined by the business model, which drives productivity and labour costs.

SURVEY HIGHLIGHTS


Benchmarking a company’s organisational structure to its industry peers can help achieve an optimal, cost-effective and competitive organisational structure. For specific organisational structure data by industry and across six career levels and 14 job functions, access Mercer’s Workforce Metrics Solution.

Organisational structure and distribution of compensation cost, Asia Pacific, 2014

29.6%

13.3%

25.6%

34.5%

17.7%

3.9%

Blue collar

White collar

Professional (nonsales)

Professional sales

Management

Executive

26.5%

10.6%

25.1%

16.5%

28.1%

15.2%

Blue collar

White collar


Professional sales

Management

Executive

Average percentage of the workforce Average percentage of total compensation

OrgAnisAtiOnAL strUCtUrE AnD COMPEnsAtiOn COst FinDings BY inDUstrY FOr AsiA PACiFiCThe aggregate findings for Asia Pacific reported in the previous section provide an interesting overview of the strucutre and cost of the labour force. However, these results mask key differences in the structure of varying industries and how they allocate the compensation budget.

The following charts indicate findings for three industries: Consumer Goods, Life Sciences, and Other Durable Goods Manufacturing. Although survey data is available for other industries, this analysis provides a clear example of how very different types of industries organise and allocate their compensation budget.

Considering the structure of these three industries, some interesting findings emerge:

•The Life Sciences sector places a high emphasis on the sales force, with most employees falling into the Professional Sales level at 34.5%. For the Other Durable Goods Manufacturing and Consumer Goods sectors, the majority of employees are in the Blue Collar category, at 47.3% and 40.3%, respectively.

•When comparing workforce structure to compensation allocation, the trend is similar across the industries: Compensation distribution is top-heavy, with the Executive and Management levels allocated a considerably higher proportion of the compensation pool. On average, 4.9% of the compensation pool goes to every 1% of Executives, and about 1.9% of the compensation pool goes to every 1% of Management.

•Of the four lower levels of workforce, only the Professional Nonsales employees, on average, receive a compensation allocation that is more comparable to their workforce distribution in the Life Sciences and Other Durable Goods Manufacturing sectors.


SURVEY HIGHLIGHTS


Organisational structure and distribution of compensation cost, Consumer goods, Asia Pacific, 2014

Organisational structure and distribution of compensation cost, Life sciences, Asia Pacific, 2014

Organsational structure and distribution of compensation cost, Other Durable goods Manufacturing, Asia Pacific, 2014

40.3%

19.9%

24.7%

21.1%

16.5%

3.4%

Blue collar

White collar


Professional sales

Management

Executive

29.6%

13.3%

25.6%

34.5%

17.7%

3.9%

Blue collar

White collar


Professional sales

Management

Executive

47.3%

15.3%

28.6%

15.6%

13.0%

2.5%

Blue collar

White collar


Professional sales

Management

Executive

27.4%

11.3%

20.1%

17.2%

30.0%

17.3%

Blue collar

White collar


Professional sales

Management

Executive

18.3%

8.3%

23.8%

24.9%

31.0%

17.8%

Blue collar

White collar


Professional sales

Management

Executive

26.4%

10.0%

26.6%

14.1%

26.8%

12.7%

Blue collar

White collar


Professional sales

Management

Executive




SURVEY HIGHLIGHTS


Organisational structure as percentage of overall headcount by function (core and support), Asia Pacific, by industry, 2014

Customer service Logistics and distribution

Marketing and sales Operations

Product/service development Quality

Strategic management

Administration Communication

Finance Human resources

Information technology Legal

Repair and maintenance

Core functions

Support functions

STAFF RATIO BY FUNCTION ANALYSIS – 2014Structure of organisation is a metric that provides insights into the breakdown or distribution of the workforce across different functions. This metric is most useful for a company that relies on key functional areas to achieve organisational strategy or that has identified the functional areas “at risk” for labour market changes.

The following chart indicates that in core functions, the majority of employees belong to Marketing and Sales (31%) and Operations (38%). In the category of support functions, Finance, along with Repair and Maintenance, are the most common sought at 7% and 6%, respectively.

Benchmarking a company’s organisational structure to its industry peers can help achieve an optimal, cost-effective, and competitive organisational structure. Similar analysis can be done for compensation cost structure. For specific organisational structure data by industry and across six career levels and 14 job functions, access Mercer’s Workforce Metrics Solution.

Cross referencing organisational and compensation structures in one’s industry enables a detailed analysis of the company’s competitiveness. For detailed total compensation results by industry and organisational size, and across 14 functions (core business and support), access Mercer’s Workforce Metrics Solution.









Core functions

Support functions

Administration

Communication









Core functions

Support functions

Finance









Core functions

Support functions

Human resources

Information technology

Legal









Core functions

Support functions










Core functions

Support functions

Customer service









Core functions

Support functions

Logistics and distribution









Core functions

Support functions

Marketing and sales









Core functions

Support functions

Operations









Core functions

Support functions

Product/service development









Core functions

Support functions

Quality









Core functions

Support functions


http://www.imercer.com/workforcemetricshttp://www.imercer.com/workforcemetrics

SURVEY HIGHLIGHTS


SPAN OF CONTROL ANALYSIS – 2014Span of control is a metric that indicates the level of an organisation’s “flatness.” It helps a company determine the number of direct and indirect reports per executives or managers and, thereby, understand the opportunity each executive or manager has to develop a relationship with their employees.

In general, each executive in the Asia Pacific region has a median span of control of 66 full-time employees (FTEs). When considering individual sub-regions, it is notable that Greater China has a significantly higher span of control than the other sub-regions.

Analysed from an industry perspective, this control number helps organisations understand how their operations are based in this growing sub-region. The High-Tech, Transportation Equipment, and Consumer Goods industries have a strong presence of production facilities in China, compared to other sectors, therefore skewing the metrics for the region.

Median span of control, FTEs per Executives, by sub-region, Asia Pacific, 2014

40

56

62

64

84

66

Australia and New Zealand

ASEAN

South Asia

Japan and Korea

Greater China

Asia Pacific

Span of Control indicates the type of managerial relationships that exist within an organisation. Knowing how to compare to other companies with similar headcount size helps management identify some problems that could affect turnover. For specific span of control data, access Mercer’s Workforce Metrics Solution.


SURVEY HIGHLIGHTS


TuRnOVER AnAlySIS – 2013-2014Employee retention is a key strategy for human resources. Mercer’s survey measures voluntary, involuntary, and retirement turnover. In Asia Pacific, overall turnover levels — as measured by voluntary, involuntary, and retirement —have not changed significantly over the last two years, ranging between 15.8% and 16.4%. But this figure masks significant differences among job functions, industries, and organisational sizes.

However, looking into this finding by sub-region, as shown in the following voluntary and involuntary turnover graph, Australia/New Zealand and Greater China both have higher than average turnover rates compared to the other sub-regions —but due to different contexts. Higher involuntary turnover in Australia’s Mining and Energy industries drives the trend in Australia, while Greater China is driven by higher voluntary turnover in the High-Tech and Retail and Wholesale sectors.

Voluntary and involuntary turnover (average % of workforce), by sub-region, Asia Pacific, 2014

12% 12% 13% 12% 10%8%

4% 7%4%

3%

3%3%

Asia Pacific Australia andNew Zealand

GreaterChina

ASEAN South Asia Japan andKorea

Voluntary turnover rate Involuntary turnover rate

When comparing turnover rates by core functions and support functions, the following charts reveal that:

•On average, all core functions show similar trends with overall voluntary and involuntary turnover rates, ranging from 13% in Strategic Management to 21% in Marketing and Sales.

•Within the category of support functions, Administration, Finance, and Human Resources show significantly higher voluntary and involuntary turnover rates than the other support functions, and even higher than the core function, Marketing and Sales.

•The highest rate of involuntary turnover also arises in the support functions, Administration and Finance.

SURVEY HIGHLIGHTS


Voluntary and involuntary turnover rate (average % of workforce), by core business functions, Asia Pacific, 2014

Voluntary and involuntary turnover rate (average % of workforce), by support business functions, Asia Pacific, 2014

13% 12%15% 13%

10% 11% 9%

5% 6%

6%

4%

4% 4% 4%

CustomerService

Logisticsand

Distribution

Marketingand

Sales

Operations Product orService

Development

Quality StrategicManagement


12%8%

15% 16%11%

7% 7%

7%

2%

6% 6%

4%

2% 3%

Admini-stration

Commu-nication

Finance HumanResources

InformationTechnology

Legal Repair andMaintenance


It is also helpful to conduct trend analysis on turnover rate by industries. The Consumers Goods, High-Tech, Retail and Wholesale, and Services (Nonfinancial) sectors have a higher than the overall region average voluntary turnover, with High-Tech showing the largest increase in voluntary turnover from 11.8% in 2013 to 12.7% in 2014. The key spotlight should be on High-Tech, which shows an increase in voluntary turnover from 11.8% in 2013 to 12.8% in 2014.

SURVEY HIGHLIGHTS


Understanding turnover trends can help determine what functions or areas of the organisation face challenges in retention. For turnover data (voluntary, involuntary, and retirement) across six career levels and 14 job functions, access Mercer’s Workforce Metrics Solution.

METRICS SuPPORTS STRATEgIC gOAlSTo provide optimal solutions to its human capital challenges, HR needs to identify which programme components to study, such as productivity, organisational structure, compensation structure, turnover, and others. With the right data in hand, HR can seek the best solutions.

PRODUCTIVITYRegarding employee productivity, a company with both increasing revenue and FTEs, while its competitors have increasing revenue and decreasing FTEs, is likely facing a competiveness issue. Recognising the sectors against which the company competes allows management to obtain a realistic view of their standing in the market.

ORGANISATION STRUCTURE AND COMPENSATIONBy looking at compensation structure data by career level and job function — and cross referencing that data with organisational structure — companies can generate a picture of how much of the compensation pie certain FTEs consume. Typically, Executives (the smallest percentage) show the highest expenditure for pay-related elements.

SPAN OF CONTROLSpan of control indicates the type of managerial relationships that exist within an organisation. Knowing how to compare to other companies with similar headcount size helps management identify some problems that could affect turnover.

TURNOVERTurnover tells the story of which career levels, job functions, or other designated units are experiencing difficulties in attraction and retention of talent. One of the key differences across both voluntary and involuntary turnover in Asia Pacific is that support functions indicate a higher level than core business functions.

Viewed within the right context, metrics provides key diagnostic information for decision-makers seeking to lead the company in a positive future direction.

But conducting a metrics analysis is not enough to obtain management support to address workforce challenges. Using metrics as the starting point, HR can use workforce planning and analytics to show management how their best asset — their people — can become more productive and the company, in turn, more profitable.

http://www.imercer.com/workforcemetricshttp://www.imercer.com/workforcemetrics


WORKFORCE METRICS PROduCTS dETAIlS SnAPShOT

Dashboard Type Metrics Available split by

Financial Metrics

Productivity per FTE (revenue /FTE). Overall.

Operating expenses per FTE. Overall.

Profit per FTE. Overall.

Compensation revenue % (available only from 2014). Overall, by career level, by function.

Compensation operating expense % (available only from 2014). Overall, by career level, by function.

Organisational Structure

Structure (% of headcount). By career level, by function.

Career level labour market map (% of employees). By career level.

Span of control (Executives). Overall.

Span of control (Management). Overall.

Compensation expense % (available only from 2014). By career level, by function.

Compensation expense labour market map (available only from 2014).

By career level.

Employees Outsourced by function (% of headcount) (available only from 2014).

By function.

Employee Turnover

Employee turnover (total). Overall, by career level, by function.

Employee turnover (voluntary). Overall, by career level, by function.

Employee turnover (involuntary). Overall, by career level, by function.

Employee turnover (retirement). Overall, by career level, by function.

Career Level filter

Functions filter

Core Functions Support Functions

Executive Customer service and after sales support Communication

Management logistics and distribution Finance

Professional (Sales) Marketing and Sales human Resources

Professional (Nonsales) Operations Information Technology

White Collar Product or Service development legal

blue CollarQuality Strategic Management

Administrative Support Repair and Maintenance

The splits above cover career and functional areas, allowing users to zoom in precisely on the data they are looking for.

WORKFORCE METRICS PROduCT dETAIlS SnAPShOTThis report provides a preview of insights gathered by this year’s survey data. All data used for analysis in this report is available through Mercer analytics portal via https://analytics.mercer.com, where the entire data set can be filtered according to your needs. All data can be filtered by:

•Year (2012, 2013, 2014).

•Geography.

•Industry (super sector, sector).

•Headcount groups.

•Revenue groups.

The metrics are classified into three dashboards.

Further analytics capabilities to the ones listed above are also possible with Workforce Metrics data:

•Benchmark Analysis – Comparison of your organisational data against customised peer groups and the overall market.

•Correlation Analysis – Correlation of workforce metrics against key indicators, such as country economic data, remuneration policies, hiring mix and intentions, and more. For more details go to: www.imercer.com/workforcemetrics


WORKFORCE METRICS PROduCTS dETAIlS SnAPShOT

AddITIOnAl dETAIlSReaders of this report may find of interest two additional publications by Mercer.

CHINA HUMAN CAPITAL METRICSMercer’s Human Capital Metrics (HCM) reports provide organisations with human capital benchmark market data that can be used to assess the effectiveness of the organisational structure, human capital management process effectiveness, and return on investment in human capital. This report helps organisations quantify the relationship between human capital management and organisational performance, and benchmark them against the market or against their own business units within the same organisation. With year-over-year assessments, organisations can also use this report to track the performance of human capital management over time, and make better decisions that improve organisational efficiency.

Human Capital Metrics service includes:

•Standard Report.

•Advanced Report.

•Executive Debrief (three-hour).

For more details go to: www.imercer.com/products/2014/human-capital-metrics.aspx

AUSTRALIA HUMAN RESOURCES EFFECTIVENESS MONITORMercer’s Human Resource Effectiveness Monitor (HREM) brings together financial and employee metrics that enable you to assess the effectiveness of workforce management practices and identify where your organisation’s performance sits in relation to competitors for benchmarking and planning decisions.

The 2014 Report has just been released (November 2014) and covers over 190 benchmarks across 11 key areas:

•Performance measures.

•Function budgets.

•Staffing ratios.

•Staff turnover.

•Training measures.

•Leave, unscheduled absences, and lost time occurrences.

•Overtime.

•Recruitment measures.

•Salary and benefits cost.

•Workforce planning.

•Parental leave.

Contributors to HREM receive a customised report, where their organisation’s data is superimposed onto the benchmark graphs in the relevant industry, organisation size, and across the market to compare with competitors.

For more details go to: www.imercer.com/australia/hrem

© 2014 Mercer LLC.

Mercer is a global consulting leader in talent, health, retirement, and investments. Mercer helps clients around the world advance the health, wealth, and performance of their most vital asset – their people. Mercer’s 20,500+ employees are based in more than 40 countries, and we operate in more than 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy, and human capital.

about mercer

http://www.mmc.com

For further information, please contact your local Mercer office or visit our website at:www.mercer.com

Argentina

Australia

Austria

Belgium

Brazil

Canada

Chile

Colombia

Denmark

Finland

France

Germany

Hong Kong

India

Indonesia

Ireland

Italy

Japan

Mainland China

Malaysia

Mexico

Netherlands

New Zealand

Norway

Peru

Philippines

Poland

Portugal

Copyright 2014 Mercer LLC. All rights reserved.

Saudi Arabia

Singapore

South Africa

South Korea

Spain

Sweden

Switzerland

Taiwan

Thailand

Turkey

United Arab Emirates

United Kingdom

United States

Venezuela

2014 - Workforce Metrics Asia PacificCorrespondenceIntroductionMercer’s workforce metrics solution and online toolParticipationSurvey HighlightsProductivity analysis — 2013-2014Understanding workforce costStaff ratio by function analysis – 2014Span of control analysis – 2014Turnover analysis – 2013-2014Metrics supports strategic goals

Workforce metrics product details snapshotAdditional details

About Mercer

Documents

2014 WORKFORCE METRICS ASIA PACIFIC...Source: Mercer’s 2014 Global Compensation Planning Report (citing International Monetary Fund, World Economic Outlook Database, October 2014)