The unprecedented economic slowdown may have shifted business focus to efficiency and cost cutting, but companies across the Asia-Pacific have
reacted differently to the job loss issues. Smita Anand, regional director, Asia Pacific, Hewitt Associates, spoke to ET on a host of HR issues that are challenging most companies:
Have the companies in Asia-Pacific region been different in reacting to the global slowdown from their western counterparts and India?
Leading organisations in APAC region are following a combination of cost cutting, efficiency improvement, investments and growth initiatives. This strategy of cost cutting and investing with strategic intent is really unique to a region like Asia which will continue its growth journey as and when recovery happens.
Hewitt’s findings across more than 800 companies in all the major countries in Asia show that APAC companies are less likely to freeze salaries than companies in the US (8% in Asia Pacific versus 15%). Instead, the emphasis here is on reducing merit budgets — clearly a short-term cost containment rather than a more drastic measure unless absolutely necessary. On the pay front there are some interesting signs with China preferring some sort of fixed/guaranteed cash and India ready to place bets on stock awards and special discretionary incentives. The rest of the region is generally taking up a position somewhere between the Indian and Chinese approaches.
Some believe the slowdown has brought sanity across the markets especially in terms of salaries and stakeholder demands...
Salaries are a function of demand and supply. We have seen a boom time in pay packages over the past 4-5 years, in line with the rapid rise in the global economic growth. And on most accounts growth was across industries, globally. APAC witnessed phenomenal growth with Chinese and Indian businesses leading the pack. Real growth leads to value creation, and part of the value creation is rewards for those who help create it.
I believe the right talent will still be valued at the market level and companies will continue to retain and hire high performing talent with relevant skill sets. Specifically on India, the salary increases were a reflection of the ‘coming of age’ for the Indian economy. So there had to be a catch-up on salaries considering that the base India started with was very low compared to the rest of the world.
Corporate governance is one big issue that has rocked India Inc post-Satyam. How can India Inc evolve a consensus on the way forward?
It is true that the global financial crisis and the recent Satyam scam have raised critical issues of executive compensation and corporate governance. But India’s growth story remains intact, and the IT industry stands tall on a strong foundation of ethics and credibility. We do believe that the recent governance scandal in India will serve as a trigger for organisations to conduct a strict due diligence on their current governance programmes and in the process will accelerate the adoption of best practices.
When corporate governance is effective, it helps safeguard the shareholders, customers, and employees without hindering appropriate risk-taking. But when it is ineffective, it can have a disastrous impact on the key stakeholders and on the long-term viability of the enterprise.
Key questions for most organisations are: Is the board going beyond its advisory role and actively overseeing the company’s strategy implementation and risk management? Are the skills and experience of the non-executive directors relevant for the company’s business? Is the board ensuring creation of shareholder value? Are the board’s compensation policies reflecting the critical accountability of the Board members?
How do you see Hewitt offshoring model evolving post Obama takeover?
While President Obama has provided some early insights into his thoughts on offshoring, they have largely been focused on the energy industry. Hewitt will not only be monitoring developments as the Obama administration evaluates its position, but we will also look for opportunities to provide inputs to appropriate parties. We remain fully committed to our offshoring strategy.
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