Human Capital & Careers

Seller’s Market

Finance salaries across Asia are rising, according to a salary survey. That's not necessarily good news for CFOs.
Don DurfeeMarch 21, 2007

To understand the topsy-turvy market for finance talent
in Asia these days, consider James Wu, a planning manager for U.S. restaurant
chain Burger King in Shanghai. In July 2005, he landed at the U.S. fast-food giant
with a 30 percent pay increase over his previous job at the China operations of Chubb,
a U.S.-based insurance company.

“I was getting a lot of calls,” he says. “I interviewed with many companies
and got three offers.” He chose his current employer because the company’s
growth plans promised better career prospects, and he liked its global reach.
Burger King had just moved its Asian headquarters from Singapore to Shanghai.
Convinced that Chinese consumers will succumb to the allure of its flame-broiled
fast food, it plans to open restaurants across China in 2007.

Wu had natural advantages. He speaks English, and has experience with U.S.
accounting rules. In addition to Chubb, he had worked for other major companies,
including Pillsbury and PricewaterhouseCoopers. He has a degree from Xiamen
University. He epitomizes the kind of mid-level finance manager that Asian
employers — both local and multinational — are falling over themselves to hire.

In fact, just as the hot sellers’ market for CFOs is
peaking, another has been emerging for second-tier
finance staff. That’s great news for controllers, in-house
audit professionals and planners like Wu, who
benefit from higher pay and, often, greater job
responsibility and a boost up the ladder earlier in
their career. But it’s a headache for their CFO bosses.
Finding and keeping staff to ensure compliance, prepare
financials, and support the business is more difficult
than ever.

“It’s become hard to find good people,” laments
Enrico Nora, CFO of interTouch, a Singapore-based
unit of NTT DoCoMo that provides broadband
internet connections to hotels. “And when you do
find them, it’s tough to keep them.”
Ironically enough, Wu now finds himself in the
same spot. To support Burger King’s expansion plans,
he’s helping hire new finance staff. “We need to hire
people for every area, but especially in finance,” he
says. “And it’s turning out to be quite difficult to find
candidates who meet our needs — particularly those
who have exposure to the region and speak English.”

Time for a Raise?

CFOs aren’t doing badly, either. CFO Asia‘s annual
pay survey shows that total expected compensation —
defined as base salary plus bonuses, benefits, and full-value
stock awards — is still climbing for most top finance executives.
For example, Asian CFOs who have revenue responsibility
of under U.S.$10m saw an increase in pay from U.S.$99,000 to
U.S.$107,000, an 8 percent rise.

But if Asia’s rising tide is lifting all boats, those occupied by
mid-level finance execs are generally rising faster than those captained
by CFOs. Controllers and internal audit professionals who
work with under U.S.$10m saw their salaries grow 33 percent last year,
from U.S.$58,000 to U.S.$77,000.

True, that salary growth hasn’t been even. Controllers who
look after U.S.$100m, for example, saw only a slight increase,
from U.S.$108,000 to U.S.$110,000. But the overall trend is swiftly
upward, especially for those at the lower end of the pay scale.
(Although the survey also shows falling pay for the CFOs and
controllers who manage the most money, that likely reflects a
change in methodology: this year we asked respondents not to
include hard-to-estimate stock option values. Executives with
the biggest responsibility tend to receive the most options.)

CFOs and recruiters across Asia also report double-digit pay
increases for lower- and mid-tier finance positions. “There is a
vast amount of hiring in the marketplace,” says Guy Day, managing
director of Ambition, a recruiting firm specializing in financial
talent. “We see most of the activity at the financial controller
level and below.” He adds that finance staff can typically negotiate
raises of about 10 percent when switching jobs.

This year’s pay survey generated a strong response: over 900
completed questionnaires from finance executives across many
industries and in countries throughout Asia. Actual salary levels
vary widely. The highest-paying
markets for CFOs are still found in Hong Kong, South Korea,
China, and Singapore; in Hong Kong, the average CFO pulls in
U.S.$248,000 per year. Pay is lower in countries such as India and
Malaysia, where top finance executives earn U.S.$73,000 and
U.S.$137,000, respectively (of course, the differences are smaller
when you consider the purchasing power of a dollar in India versus
in Hong Kong).

The big change has come at the junior levels, two tiers below
the CFO. This is a shift from just a few years ago, when pay levels
were stagnant and career opportunities seemed meager.
Recruiters say that today’s job market — which features junior candidates
job hopping and making extraordinary demands of
prospective employees — bears a striking resemblance to the frothiest
years of the internet boom. “Demand hasn’t been this robust
since 2000, at least,” says Florence Ng, managing director for
recruiter Michael Page in Singapore. “It’s becoming hard to manage
candidates’ expectations.” For example, it’s not uncommon to
see relatively inexperienced candidates asking not just for high pay,
but also a chance to manage regional finance operations.

Prepare to Pay

Asia’s booming economy is one reason for the surging demand.
Last year, China’s economy steamed ahead at a pace of 10.4 percent and
India’s grew 9.2 percent. Few Asian CFOs expect that growth rate to
flag — according to the latest Duke University/CFO magazine
Business Outlook Survey, finance executives are resolutely optimistic
about the region’s growth.

The characteristics of the boom vary by country. In India, for
example, new businesses are forming almost daily and existing
companies are hatching plans for international expansion. Both
require experienced CFOs at the helm and a horde of accountants
to keep the operation running, says Sanjiv Sachar, with
recruiting firm Egon Zender in India. That creates headaches
for the area’s more established employers. “All of these new companies
like to poach finance talent from us,” says Amrut Palan,
SVP of finance for HSBC in Mumbai.

In Singapore the hiring binge is a byproduct of the island
state’s success in drawing global financial services firms to set up
back-office operations there. Credit Suisse, Royal Bank of Scotland,
and Merrill Lynch are all boosting their Singapore presence,
contributing to what Ng of Michael Page estimates is a
near tripling of demand for finance talent.

Then there’s China, now the epicenter of most MNCs’ Asian
growth plans. Accordingly, many of these companies are uprooting
their existing regional offices and planting them instead in cities
like Shanghai and Beijing. That, of course, puts them in direct contention
with China’s own booming enterprises, which are also
vying for the same small pool of experienced CFOs, controllers,
and finance managers.

Asia’s growing attention to corporate governance also contributes
to the tightening market. Companies that once had a roving
internal audit professional are increasingly putting permanent
staff in their Asian offices. Others are splitting off regulatory compliance
from the controller’s duties and creating whole new departments
devoted to the task. And Asian companies who have listed
in the U.S. have had to cope with the same costly and time-consuming
governance requirements as their American counterparts.
That’s the case for AsiaInfo, a Beijing-based software
provider that is listed on Nasdaq. CFO Eileen Chu says that
China faces a severe shortage of candidates who know U.S.
GAAP, have experience with Sarbanes-Oxley compliance, and
speak English. “They’re hard to find and they are expensive,” says
Chu, who adds that she is paying 10-20 percent more for such talents
than she did last year.

CFOs also struggle to attract candidates who can think broadly
about business issues. Such traits are in demand at interTouch,
which is expanding its business into new markets in Asia, Europe,
and North America. “As the IT market grows more competitive,
there’s a burden on finance to support the business with a creative
approach to M&A, cash allocation, and investment,” says
Nora. “But if you want someone who can take on a more analytical,
managerial role, you have to fight more to get them.”

Given the lack of such candidates, many companies are trying
to lure away their external auditors and put them directly
into non-audit jobs, such as finance manager or controller positions.
Such a move can be risky, however. “Many of these auditors haven’t managed an accounting team before,” says Ng.
“Some do it well and some don’t.”

In any event, it’s getting harder to steal your auditor’s employees.
The Big Four passed out big raises last year, and some have
even granted rare mid-year increases — both steps that have
helped stanch the loss of talent. That, of course, only increases
pressure on corporate CFOs.

In response, companies are handing out raises of their own
and making counter-offers. Palan of HSBC says his company
recently increased finance employee pay by 20-25 percent. Employers
are also offering retention bonuses. Our survey shows that 19 percent
of Asian CFOs have received (or will receive) such bonuses this
year. A remarkable 28 percent of controllers will receive one.

More Than Money

Enrico Nora argues that while such steps are necessary — inter-
Touch adjusted its own finance pay levels recently — they are
insufficient. “In interviews I’m hearing many more questions
about what the candidate is going to learn and where they can go
next,” he says. His response has been to offer more job rotation
for finance staff than in the past. “We’re essentially a fast-growing
SME; we can’t pretend to offer a stable career path, but we
can offer a lot of variety.” After a new hire has worked in a job for
a year, she can try out another role, perhaps in compliance, pricing,
or taxation. The program’s benefits go beyond retention. By
putting new employees into different jobs, Nora has the chance
to see who his high-potential staff members are and find what
roles best suit each employee.

Indeed, employers large enough to offer greater career
opportunities are at an advantage in today’s market. Amrut
Palan says that HSBC’s global reach means that it can offer high-potential
employees their choice of training programs. “We consciously
focus on training, which has helped us get some of the
best talent,” he says. “Job candidates are looking not just for good
compensation but the right sort of job environment and job content.
They are people who want to be updated with the latest
developments in their fields, and we’re able to offer them specialist
training. Of course, the brand name HSBC also helps with
our recruiting.”

Eileen Chu is also experimenting with ways to keep her best
workers. In her case, it’s a matter of offering a more open and flexible
work environment than finance workers typically find in Chinese
companies. Some steps are straightforward: for example,
after a grueling quarterly close that involves unpaid overtime, she
lets her staff take additional paid time off over the following weeks.
Other steps are more subtle, such as extending greater trust
to her employees. She allows AsiaInfo’s treasurer, for instance,
to choose investments for the company’s cash without seeking
approval, as long as the investments meet certain guidelines
(such as AAA-rated fixed-income instruments only). “These are
experienced finance professionals,” she says. “There’s no reason
not to give them some leeway — if they aren’t performing well,
that will be clear after a quarter.”

As the top finance executives in their organizations, CFOs
see both sides of the job market: the nuisance of employee
turnover on one side and the temptation of a bigger paycheck
from other organizations on the other. Some ambivalence is
understandable. Even as Chu struggles to recruit new hires and
keep the ones she has, she fields weekly phone calls from headhunters.
She’s not interested, she says, stressing the loyalty she
feels toward her current employer. “But,” she adds after a pause,
“if the market continues to be so good, you never know.”