It takes more than salary to be the most admired firm
By Lee U-Wen
ONE would think that the globe's best companies to work for would naturally be paying top dollar for the best talent to join them.
Not so, it seems.
A new study by global management consultancy Hay Group has found that firms ranked in Fortune magazine's latest 'World's Most Admired Companies' list pay their managers and professionals about 5 per cent less in base salary, compared with companies that did not make the list.
But while some may regard this as counter-intuitive, these top companies likely pay less because of stronger programmes already in place to develop talent from within, said the study.
The processes that help to source internal candidates mean that there is less of a need to hire from outside sources which typically causes wages to be inflated, it added.
'Those companies with strong, corporate brands usually will have less difficulty attracting good employees,' Hay Group Singapore general manager Andrew How told BT yesterday.
'We're not saying that pay is not important, or you have to pay less. But you don't have to pay more if you have proper career progression and retention policies, and, of course, a good brand.'
But while the Most Admired Companies, or MACs, generally pay less, they are ahead of their peers in giving annual bonuses.
Over at the MACs, junior-level employees typically get paid above-average bonuses in their first few years of service.
This, said Mr How, is a signal to them that the company values them and wants them to stay for the long term.
After which comes the crucial stage of an employee's career, when he is closely assessed whether he is suitable to fill key positions within the company in future.
This is where attrition is at its highest, with many people battling for few key positions, said Mr How.
However, once an employee makes it to senior management, the big money starts rolling in, with bonuses at MACs far ahead of other companies.
'These are people who have proven themselves. They have delivered, the company has spent years grooming them, and wants to reward them for their loyalty. The message is clear that the company is willing to pay for results, and the variable is much higher,' said Mr How.
Other areas that make MACs stand out from the competition is to communicate their reward system effectively and regularly to staff, and the ability to transform business strategies into measurable results.
But money alone is not good enough to hold on to talent, no matter how much is on the table, said Richard Wong, vice-president of human resources (Asia) at electronics company Flextronics.
Flextronics is one of just two Singapore-based companies to make the coveted Fortune list, with Singapore Airlines being the other.
Looking ahead, Mr How said he hopes more local companies here can make the Fortune list in the coming years.
'First, there's your brand, to position yourself to be more global. The key challenge is to start attracting the right talent and developing them. The potential for Singapore companies is there, but the talent pool here is small, so companies must figure out how to get the brightest to work for them instead of going to places like Shanghai or the US,' said Mr How.
The Hay Group study, now into its 11th year in partnership with Fortune magazine, polled more than 160 companies that were placed in this year's most admired companies rankings.
