Hewitt Associates, which undertook an extensive survey from August to December last year, said pay rises in Singapore would be up on the 4.7 per cent increase recorded last year.

The talent squeeze is hitting many sectors in the country, especially hospitality and engineering with the integrated resorts coming up.

Salaries are expected to grow even more quickly in emerging economies. Pay in India, for example, will increase by 15.2 per cent this year, according to Hewitt.

It believes organisations in Asia are realising that their critical assets are fast evolving into their most expensive assets. They are, therefore, reviewing compensation strategies in search of a competitive advantage.

The top reason for employees leaving jobs, the report found, is external inequity in pay. This is followed by lack of career opportunities and role stagnation.

A bigger pay package alone, however, is no longer sufficient to retain talent.

'Compensation is no longer a hygiene factor,' said Mr Nishchae Suri, a principal of Hewitt in India.

This means salary, on its own, is a factor that can cause dissatisfaction if considered too low but that does not necessarily motivate employees if it is raised.

Traditional, one-size-fits-all compensation programmes are not expected to be effective in the next generation of talent management, Mr Suri said.

This is because today's economy faces a workforce - Hewitt dubs them 'new-age employees' - that is in short supply, empowered to 'switch jobs every other year', seeks instant gratification and fast-track growth, and is not afraid to 'toil for it'.

The lack of talent hampers a company's growth.

According to the study, a third of organisations in Asia had difficulties filling positions last year. This means they were, in effect, operating under sub-optimal conditions.

Singapore's workforce, however, is still the most satisfied with their pay packages compared with those in other countries in the region.

The average dissatisfaction with pay in the Asia-Pacific is 54 per cent, while Singapore registers about 42 per cent.

Japan's workforce is the most dissatisfied, with about 74 per cent reporting unhappiness.

Perhaps it has something to do with Singapore also having the highest prevalence of variable pay among organisations in the region - 97 per cent of companies here reward their employees with performance-pegged bonuses.

By comparison, 84.6 per cent of Japan's companies dole out variable pay.

Mr Puneet Swani, a Hewitt associate based in Singapore, advised companies to pay out performance-based bonuses as frequently as possible, to better link the reward to the performance.

'Good performance does not happen once a year,' he said.

michtay@sph.com.sg

NO ONE-SIZE-FITS-ALL

'Compensation is no longer a hygiene factor.'
MR NISHCHAE SURI, a principal of Hewitt Associates in India, explaining that salary, on its own, is a factor that can cause dissatisfaction if considered too low but that does not necessarily motivate employees if it is increased